** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

(Mark One)

 
| **ý**                                        | **QUARTERLY REPORT PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------|
|                                              |                                                                                          |
| **For the quarterly period ended March 29, 2003** |
|                                              |                                                                                          |
| **OR**                                            |
|                                              |
| **o**                                             | **TRANSITION REPORT PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**For the transition periodfrom               to**

** **

**Commission file number 0-7597**

 

**COURIER CORPORATION**

(Exact name of registrant as specified in itscharter)

 

| **Massachusetts**                                                                   |
|-------------------------------------------------------------------------------------|
| (State  or other jurisdiction of incorporation or organization)                     |
|                                                                                |   |   |
| **04-2502514**                                                                      |
| (I.R.S.  Employer Identification No.)                                               |
|                                                                                |   |   |
| **15 Wellman Avenue, North Chelmsford, Massachusetts**                              | **01863** |
| (Address  of principal executive offices)                                           | (Zip  Code) |
|                                                                                |   |   |
| **(978) 251-6000**                                                                  |
| (Registrant’s  telephone number, including area code)                          |
|                                                                                |   |   |
| **NO CHANGE**                                                                       |
| (Former  name, former address and former fiscal year, if changed since last report) |
|                                                                                     |  |  |  |

 

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 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

Yes     ý          No     o

 

Indicate by check mark whether the registrantis an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes     ý         No     o

 

 

Indicate the number of shares outstanding ofeach of the issuer’s classes of common stock, as of the latest practicabledate.

 

| **Class**                   |   | **Outstanding at May 8, 2003** |
|-----------------------------|--------|--------------------------------|
| Common  Stock, $1 par value |   | 5,238,661  Shares              |

 

 

 

----

**COURIER CORPORATION**

**CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)**

(Dollars in thousands except per share amounts)

 
|                                 |   | **QUARTER  ENDED** |   | **SIX MONTHS  ENDED** |   |
|--------------------------------------|--------|--------------------|--------|-----------------------|--------|
|                                 |   |               |   |                  |   |   |   |   |   |
|                                 |   | **March 29,**      |   | **March 30,**         |   | **March 29,** |   | **March 30,** |   |
|                                 |   | **2003**           |   | **2002**              |   | **2003** |   | **2002** |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Net sales                            |   | $                  | 48,605 |                  | $      | 48,102 |   | $ | 97,387 |   | $ | 93,716 |   |
| Cost of sales                        |   | 33,019             |   | 33,975                |   | 66,413 |   | 66,242 |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Gross profit                         |   | 15,586             |   | 14,127                |   | 30,974 |   | 27,474 |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Selling and  administrative expenses |   | 9,788              |   | 9,612                 |   | 19,486 |   | 18,734 |   |
| Interest expense                     |   | 26                 |   | 163                   |   | 68 |   | 313 |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Income before  taxes                 |   | 5,772              |   | 4,352                 |   | 11,420 |   | 8,427 |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Provision for income  taxes (Note C) |   | 1,984              |   | 1,474                 |   | 3,883 |   | 2,834 |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Income from  continuing operations   |   | $                  | 3,788  |                  | $      | 2,878 |   | $ | 7,537 |   | $ | 5,593 |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Discontinued  operations (Note E):   |   |               |   |                  |   |   |   |   |   |
| Loss from  operations, net of tax    |   | —             |   | (13                   | )      | (65 | ) | (107 | ) |
| Gain on  disposal, net of tax        |   | 33                 |   | —                |   | 861 |   | — |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Net income                           |   | $                  | 3,821  |                  | $      | 2,865 |   | $ | 8,333 |   | $ | 5,486 |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Income per basic  share (Note D):    |   |               |   |                  |   |   |   |   |   |
| Continuing  operations               |   | $                  | 0.72   |                  | $      | 0.56 |   | $ | 1.45 |   | $ | 1.09 |   |
| Discontinued  operations (Note E):   |   |               |   |                  |   |   |   |   |   |
| Loss from  operations                |   | —             |   | —                |   | (0.01 | ) | (0.02 | ) |
| Gain on disposal                     |   | 0.01               |   | —                |   | 0.16 |   | — |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Net income per  basic share          |   | $                  | 0.73   |                  | $      | 0.56 |   | $ | 1.60 |   | $ | 1.07 |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Income per  diluted share (Note D):  |   |               |   |                  |   |   |   |   |   |
| Continuing  operations               |   | $                  | 0.70   |                  | $      | 0.54 |   | $ | 1.40 |   | $ | 1.06 |   |
| Discontinued  operations (Note E):   |   |               |   |                  |   |   |   |   |   |
| Loss from  operations                |   | —             |   | —                |   | (0.01 | ) | (0.02 | ) |
| Gain on disposal                     |   | 0.01               |   | —                |   | 0.16 |   | — |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Net income per  diluted share        |   | $                  | 0.71   |                  | $      | 0.54 |   | $ | 1.55 |   | $ | 1.04 |   |
|                                 |   |               |   |                  |   |   |   |   |   |
| Cash dividends  declared per share   |   | $                  | 0.1125 |                  | $      | 0.10 |   | $ | 0.2250 |   | $ | 0.20 |   |

 

 

The accompanyingnotes are an integral part of the consolidated financial statements.

 

 

2

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**COURIER CORPORATION**

**CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)**

**(Dollars in thousands)**

** **

** **
|                                                                                                                         |   | **March 29,** |    | **September  28,** |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------------------|--------|
| **ASSETS**                                                                                                                   |   | **2003**      |    | **2002**           |   |
|                                                                                                                         |   |          |    |               |   |
| Current assets:                                                                                                              |   |          |    |               |   |
| Cash and cash  equivalents                                                                                                   |   | $             | 12,934  |               | $      | 5,630 |   |
| Accounts receivable,  less allowance                                                                                         |   |          |    |               |   |
| for  uncollectible accounts                                                                                                  |   | 28,862        |    | 30,892             |   |
| Inventories  (Note B)                                                                                                        |   | 21,725        |    | 21,412             |   |
| Deferred income  taxes                                                                                                       |   | 3,154         |    | 3,163              |   |
| Other current  assets                                                                                                        |   | 471           |    | 625                |   |
|                                                                                                                         |   |          |    |               |   |
| Total current  assets                                                                                                        |   | 67,146        |    | 61,722             |   |
|                                                                                                                         |   |          |    |               |   |
| Property, plant  and equipment, less accumulated depreciation: $100,357 at March 29, 2003 and  $96,813 at September 28, 2002 |   | 38,741        |    | 40,620             |   |
|                                                                                                                         |   |          |    |               |   |
| Prepublication  costs (Note A)                                                                                               |   | 3,517         |    | 3,219              |   |
|                                                                                                                         |   |          |    |               |   |
| Goodwill and  other intangibles, net (Note A)                                                                                |   | 24,944        |    | 24,952             |   |
|                                                                                                                         |   |          |    |               |   |
| Other assets                                                                                                                 |   | 1,156         |    | 1,145              |   |
|                                                                                                                         |   |          |    |               |   |
| Total assets                                                                                                                 |   | $             | 135,504 |               | $      | 131,658 |   |

 

 

The accompanyingnotes are an integral part of the consolidated financial statements.

 

3

----

 
|                                                                                                 |   | **March 29,** |    | **September  28,** |   |
|------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------------------|--------|
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                       |   | **2003**      |    | **2002**           |   |
|                                                                                                 |   |          |    |               |   |
| Current  liabilities:                                                                                |   |          |    |               |   |
| Current  maturities of long-term debt                                                                |   | $             | 78      |               | $      | 78 |   |
| Accounts payable                                                                                     |   | 7,174         |    | 6,708              |   |
| Accrued payroll                                                                                      |   | 5,845         |    | 7,642              |   |
| Accrued taxes                                                                                        |   | 4,418         |    | 6,965              |   |
| Other current  liabilities                                                                           |   | 5,822         |    | 6,362              |   |
|                                                                                                 |   |          |    |               |   |
| Total current  liabilities                                                                           |   | 23,337        |    | 27,755             |   |
|                                                                                                 |   |          |    |               |   |
| Long-term debt                                                                                       |   | 635           |    | 674                |   |
| Deferred income  taxes                                                                               |   | 5,175         |    | 4,658              |   |
| Other  liabilities                                                                                   |   | 2,370         |    | 2,652              |   |
|                                                                                                 |   |          |    |               |   |
| Total  liabilities                                                                                   |   | 31,517        |    | 35,739             |   |
|                                                                                                 |   |          |    |               |   |
| Stockholders’  equity:                                                                          |   |          |    |               |   |
| Preferred stock,  $1 par value – authorized 1,000,000 shares; none issued                       |   |          |    |               |   |
| Common stock, $1  par value – authorized 18,000,000 shares; issued 5,445,000 shares             |   | 5,445         |    | 5,445              |   |
| Additional  paid-in capital                                                                          |   | 2,893         |    | 2,246              |   |
| Retained  earnings                                                                                   |   | 98,220        |    | 91,061             |   |
| Unearned  compensation                                                                               |   | (430          | )       | (509               | )      |
| Treasury stock,  at cost: 210,000 shares at March 29, 2003 and 230,000 shares at September 28,  2002 |   | (2,141        | )       | (2,324             | )      |
|                                                                                                 |   |          |    |               |   |
| Total  stockholders’ equity                                                                     |   | 103,987       |    | 95,919             |   |
|                                                                                                 |   |          |    |               |   |
| Total  liabilities and stockholders’ equity                                                     |   | $             | 135,504 |               | $      | 131,658 |   |

 

 

The accompanyingnotes are an integral part of the consolidated financial statements.

** **

**4**

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**COURIER CORPORATION**

**CONSOLIDATEDCONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)**

**(Dollars inthousands)**

 
|                                                                             |   | **SIX MONTHS  ENDED** |   |
|----------------------------------------------------------------------------------|--------|-----------------------|--------|
|                                                                             |   |                  |   |   |   |
|                                                                             |   | **March 29,**         |   | **March 30,** |   |
|                                                                             |   | **2003**              |   | **2002** |   |
|                                                                             |   |                  |   |   |   |
| Operating  Activities:                                                           |   |                  |   |   |   |
| Net income                                                                       |   | $                     | 8,333  |   | $ | 5,486 |   |
| Adjustments to  reconcile net income to cash provided from operating activities: |   |                  |   |   |   |
| Depreciation and  amortization                                                   |   | 5,057                 |   | 5,565 |   |
| Deferred income  taxes                                                           |   | 526                   |   | 253 |   |
| Changes in  assets and liabilities:                                              |   |                  |   |   |   |
| Accounts  receivable                                                             |   | 2,030                 |   | 4,834 |   |
| Inventory                                                                        |   | (313                  | )      | 559 |   |
| Accounts payable                                                                 |   | 466                   |   | (2,744 | ) |
| Accrued taxes                                                                    |   | (2,581                | )      | (2,072 | ) |
| Other elements  of working capital                                               |   | (2,183                | )      | (1,046 | ) |
| Gain on sale of  discontinued operations (Note E)                                |   | (861                  | )      | — |   |
| Other, net                                                                       |   | (350                  | )      | 222 |   |
|                                                                             |   |                  |   |   |   |
| Cash provided  from operating activities                                         |   | 10,124                |   | 11,057 |   |
|                                                                             |   |                  |   |   |   |
| Investment  Activities:                                                          |   |                  |   |   |   |
| Capital  expenditures                                                            |   | (2,373                | )      | (2,333 | ) |
| Prepublication  costs                                                            |   | (1,107                | )      | (841 | ) |
| Proceeds from  sale of discontinued operations (Note E)                          |   | 1,500                 |   | — |   |
|                                                                             |   |                  |   |   |   |
| Cash used for  investment activities                                             |   | (1,980                | )      | (3,174 | ) |
|                                                                             |   |                  |   |   |   |
| Financing  Activities:                                                           |   |                  |   |   |   |
| Long-term debt  repayments                                                       |   | (39                   | )      | (7,538 | ) |
| Cash dividends                                                                   |   | (1,174                | )      | (1,024 | ) |
| Proceeds from  stock plans                                                       |   | 373                   |   | 547 |   |
|                                                                             |   |                  |   |   |   |
| Cash used for  financing activities                                              |   | (840                  | )      | (8,015 | ) |
|                                                                             |   |                  |   |   |   |
| Increase  (decrease) in cash and cash equivalents                                |   | 7,304                 |   | (132 | ) |
|                                                                             |   |                  |   |   |   |
| Cash and cash  equivalents at the beginning of the period                        |   | 5,630                 |   | 173 |   |
|                                                                             |   |                  |   |   |   |
| Cash and cash  equivalents at the end of the period                              |   | $                     | 12,934 |   | $ | 41 |   |

 

 

**The accompanying notes are an integral part of the consolidated financialstatements.**

** **

**5**

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**COURIER CORPORATION**

 

**NOTES TOCONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

 

 
| **A.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **SUMMARY OF SIGNIFICANT ACCOUNTING  POLICIES** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                            |
| **Unaudited Financial Statements**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| The  balance sheet as of March 29, 2003, the statements of income for the  three-month and six-month periods ended March 29, 2003 and March 30, 2002,  and the statements of cash flows for the six-month periods ended March 29,  2003 and March 30, 2002 are unaudited and, in the opinion of management, all  adjustments necessary for a fair presentation of such financial statements  have been recorded.  Such adjustments  consisted only of normal recurring items.   Certain amounts for fiscal 2002 have been reclassified in the  accompanying financial statements in order to be consistent with the current  year’s classification.                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                            |
| Certain  information and footnote disclosures normally included in financial  statements prepared in accordance with accounting principles generally  accepted in the United States (“generally accepted accounting principles”)  have been condensed or omitted.  The  balance sheet data as of September 28, 2002 was derived from audited year-end  financial statements, but does not include disclosures required by generally  accepted accounting principles.  It is  suggested that these interim financial statements be read in conjunction with  the Company’s most recent Form 10-K and Annual Report for the year ended  September 28, 2002.                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                            |
| **Prepublication Costs**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Prepublication  costs, associated with the specialty publishing segment, are amortized using  the straight-line method over an estimated useful life of four years.  Effective with the second quarter of  fiscal 2003, amortization expense of prepublication costs was reclassified to  cost of sales from selling and administrative expense.  Prior periods presented in the  accompanying financial statements have been reclassified in order to be  consistent with the current classification.                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                            |
| **Goodwill and Other Intangibles, Net**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| The Company accounts  for goodwill in accordance with SFAS No. 142, “Accounting for Goodwill and  Other Intangible Assets.”  As of March  29, 2003 and September 28, 2002, “Goodwill and other intangibles, net”  consists of goodwill of $24.9 million and other intangibles of $0.1  million.  Goodwill has been allocated  $9.3 million to the book manufacturing segment and $15.6 million to the  specialty publishing segment.  There  has been no change in the carrying amount of goodwill during the period or in  the allocation of goodwill by reportable segment.  Other intangible assets are subject to amortization over a  remaining seven-year life. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                 |  |

 

 

6

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# **                                               **B.            INVENTORIES

 

                                                Inventories arevalued at the lower of cost or market.  Costis determined using the last-in, first-out (LIFO) method for approximately 45%and 46% of the Company’s inventories at March 29, 2003 and September 28, 2002,respectively.  Other inventories,primarily at Dover, are determined on a first-in, first-out (FIFO) basis.  Inventories consisted of the following:

 

|            |   | **(000’s Omitted)** |   |
|-----------------|--------|--------------------------|--------|
|            |   | **March 29,**            |   | **September 28,****** |   |
|            |   | **2003**                 |   | **2002** |   |
| Raw materials   |   | $                        | 3,078  |   | $ | 3,405 |   |
| Work in process |   | 4,658                    |   | 4,852 |   |
| Finished goods  |   | 13,989                   |   | 13,155 |   |
| Total           |   | $                        | 21,725 |   | $ | 21,412 |   |

# ** **

 

**C.         INCOME TAXES**

 

The provision for income taxes from continuing operations differs fromthat computed using the statutory federal income tax rates for the followingreasons:   

|                                                  |   | **(000’s  Omitted)** |
|-------------------------------------------------------|--------|---------------------------|
|                                                  |   | **Quarter  Ended**        |   | **Six Months  Ended** |   |
|                                                  |   | **March 29,**             |   | **March 30,** |   | **March 29,****** |   | **March 30,** |   |
|                                                  |   | **2003**                  |   | **2002** |   | **2003** |   | **2002** |   |
| Federal taxes at statutory rates                      |   | $                         | 1,999 |   | $ | 1,526 |   | $ | 3,966 |   | $ | 2,931 |   |
| State taxes, net of federal benefit                   |   | 137                       |   | 108 |   | 254 |   | 196 |   |
| Foreign sales corporation (FSC) export related income |   | (184                      | ) | (154 | ) | (358 | ) | (285 | ) |
| Other                                                 |   | 32                        |   | (6 | ) | 21 |   | (8 | ) |
| Total                                                 |   | $                         | 1,984 |   | $ | 1,474 |   | $ | 3,883 |   | $ | 2,834 |   |

 

# ** **

# **                                               **D.            NET INCOME PER SHARE

 

Following is a reconciliationof the shares used in the calculation of basic and diluted income pershare.  Potentially dilutive shares,calculated using the treasury stock method,  consistof shares issued under the Company’s stock option plans.

 

|                                   |   | **(000’s  Omitted)** |   |
|----------------------------------------|--------|---------------------------|--------|
|                                   |   | **Quarter  Ended**        |   | **Six Months  Ended** |   |
|                                   |   | **March 29,**             |   | **March 30,** |   | **March 29,** |   | **March 30,** |   |
|                                   |   | **2003**                  |   | **2002** |   | **2003** |   | **2002** |   |
|                                   |   |                      |   |   |   |   |   |   |   |
| Average shares outstanding for basic   |   | 5,223                     |   | 5,134 |   | 5,219 |   | 5,125 |   |
| Effect of potentially dilutive shares  |   | 181                       |   | 189 |   | 174 |   | 174 |   |
| Average shares outstanding for diluted |   | 5,404                     |   | 5,323 |   | 5,393 |   | 5,299 |   |

 

 

7

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# **                E.             DISCONTINUED OPERATIONS**

 

On December 17, 2002, theCompany sold theassets of its wholly-owned subsidiary, Courier Custom Publishing, Inc., whichcomprised all of the activities of the Customized Education segment.  During the quarter ended March 29, 2003, theCompany adjusted its estimated costs associated with the sale of this segmentby $51,000.  The Customized Educationsegment provided customized coursepacks and textbooks. Financial results ofthis discontinued operation for the periods presented are:

 
|                                   |   | **(000’s  Omitted)** |   |
|----------------------------------------|--------|---------------------------|--------|
|                                   |   | **Quarter  Ended**        |   | **Six Months  Ended** |   |
|                                   |   | **March 29,**             |   | **March 30,** |   | **March 29,** |   | **March 30,** |   |
|                                   |   | **2003**                  |   | **2002** |   | **2003** |   | **2002** |   |
| Sales                                  |   | $                         | 9      |   | $ | 401 |   | $ | 142 |   | $ | 491 |   |
|                                   |   |                      |   |   |   |   |   |   |   |
| Pretax loss from  operations           |   | $                         | — |   | $ | (44 | ) | $ | (100 | ) | $ | (178 | ) |
| Income tax  benefit                    |   | —                    |   | (31 | ) | (35 | ) | (71 | ) |
| Loss after tax                         |   | $                         | — |   | $ | (13 | ) | $ | (65 | ) | $ | (107 | ) |
|                                   |   |                      |   |   |   |   |   |   |   |
| Proceeds from  sale                    |   | $                         | — |   |   |   | $ | 1,500 |   |   |   |
| Net assets sold  and costs of disposal |   | (51                       | )      |   |   | 148 |   |   |   |
| Pretax gain                            |   | $                         | 51     |   |   |   | $ | 1,352 |   |   |   |
| Income tax  provision                  |   | 18                        |   |   |   | 491 |   |   |   |
| Gain on  disposal, net of tax          |   | $                         | 33     |   |   |   | $ | 861 |   |   |   |

 

 

**                F.             BUSINESS SEGMENTS**

 

The Company has two business segments: full-service book manufacturingand specialty publishing. The book manufacturing segment offers a full range ofservices from production through storage and distribution for religious,educational and specialty trade book publishers. The specialty publishingsegment consists of Dover Publications, Inc.

 

Inevaluating segment performance, management primarily focuses on income or lossbefore taxes and other income.  Theelimination of intersegment sales and related profit represents sales from thebook manufacturing segment to the specialty publishing segment.  Corporate expenses that are allocated to thesegments include various support functions such as information technologyservices, finance, human resources and engineering, and include depreciationand amortization expense related to corporate assets*.*

 

 

8

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Thefollowing table provides segment information for the three-month and six-monthperiods ended March 29, 2003 and March 30, 2002. Information relating to thediscontinued Customized Education segment (Note E) is not included.

 
|                               |   | **(000’s  Omitted)** |   |
|------------------------------------|--------|---------------------------|--------|
|                               |   | **Quarter  Ended**        |   | **Six Months  Ended** |   |
|                               |   | **March 29,******         |   | **March 30,****** |   | **March 29,****** |   | **March 30,****** |   |
|                               |   | **2003**                  |   | **2002** |   | **2003** |   | **2002** |   |
|                               |   |                      |   |   |   |   |   |   |   |
| Net sales:                         |   |                      |   |   |   |   |   |   |   |
| Book manufacturing                 |   | $                         | 41,127 |   | $ | 40,500 |   | $ | 82,967 |   | $ | 78,777 |   |
| Specialty publishing               |   | 9,077                     |   | 8,854 |   | 17,442 |   | 17,398 |   |
| Elimination of intersegment sales  |   | (1,599                    | )      | (1,252 | ) | (3,022 | ) | (2,459 | ) |
| Total for continuing operations    |   | $                         | 48,605 |   | $ | 48,102 |   | $ | 97,387 |   | $ | 93,716 |   |
|                               |   |                      |   |   |   |   |   |   |   |
| Income (loss) before taxes:        |   |                      |   |   |   |   |   |   |   |
| Book manufacturing                 |   | $                         | 4,714  |   | $ | 3,635 |   | $ | 9,428 |   | $ | 6,780 |   |
| Specialty publishing               |   | 1,188                     |   | 901 |   | 2,249 |   | 1,809 |   |
| Elimination of intersegment profit |   | (130                      | )      | (184 | ) | (257 | ) | (162 | ) |
| Total for continuing operations    |   | $                         | 5,772  |   | $ | 4,352 |   | $ | 11,420 |   | $ | 8,427 |   |

 

 

9

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| **Item 2****.** | **COURIER  CORPORATION**                           |
|-----------------|----------------------------------------------------|
|            | **MANAGEMENT’S  DISCUSSION AND ANALYSIS OF**  |
|            | **FINANCIAL CONDITION AND RESULTS OF  OPERATIONS** |

 

 

**CriticalAccounting Policies and Estimates****:**

 

The Company’s consolidatedcondensed financial statements have been prepared in accordance with generallyaccepted accounting principles.  Thepreparation of these financial statements requires management to make estimatesand assumptions that affect the amounts reported in these financial statementsand accompanying notes.   On an ongoingbasis, management evaluates its estimates and judgments, including thoserelated to collectibility of accounts receivable, recovery of inventories,impairment of goodwill, prepublication costs and income taxes.  Management bases its estimates and judgmentson historical experience and various other factors believed to be reasonableunder the circumstances, the results of which form the basis for makingjudgments about the carrying value of assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses duringthe periods presented.  Actual resultsmay differ from these estimates.  Thesignificant accounting policies which management believes are most critical toaid in fully understanding and evaluating the Company’s reported financialresults include the following:

 

# **AccountsReceivable**   Managementperforms ongoing credit evaluations of the Company’s customers and adjustscredit limits based upon payment history and the customer’s current creditworthiness.  Collections and paymentsfrom customers are continuously monitored. A provision for estimated credit losses is determined based uponhistorical experience and any specific customer collection issues that havebeen identified.  If the financialcondition of the Company’s customers were to deteriorate, resulting in animpairment of their ability to make payments, additional allowances may berequired.

 

Inventories   Management records reductions in the cost basisof inventory for excess and obsolete inventory based primarily upon historicaland forecasted product demand.  Ifactual market conditions are less favorable than those projected by management,additional inventory charges may be required.

 

Goodwill  The Company accounts for goodwill inaccordance with SFAS No. 142, “Accounting for Goodwill and Other IntangibleAssets”.  Accordingly, the Companyevaluates possible impairment annually or whenever events or circumstancesindicate that the carrying value of the assets may not be recoverable.  The Company completed the annual impairmenttest required by SFAS No. 142 at September 28, 2002 resulting in no change tothe nature or carrying amounts of its intangible assets.  Changes in market conditions or pooroperating results could result in a decline in value thereby potentiallyrequiring an impairment charge in the future.

 

Prepublication Costs   The Companycapitalizes prepublication costs, which include the costs of acquiring rightsto publish a work and costs associated with bringing a manuscript topublication such as art-work and editorial efforts. Prepublication costs areamortized on a straight-line basis over a four-year period.  Management regularly evaluates the sales andprofitability of the products based upon historical and forecasted demand.  Based upon this evaluation, adjustments maybe required to amortization expense.

 

Income Taxes   Income tax liabilities and assets are determinedbased upon the differences among the financial statement and tax bases ofassets and liabilities, and taxes reported on the Company’s tax returns.  Changes in the recoverability of theCompany’s tax assets or audits by tax authorities could result in futurecharges or credits to income tax expense.

 

10

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**Results ofOperations****:**

 

For the second quarter of fiscal 2003, theCompany’s income from continuing operations was $3.8 million, or $.70 perdiluted share, an increase of 32% from last year’s corresponding period resultsof $2.9 million, or $.54 per diluted share. Sales in the second quarter of fiscal 2003 were $48.6 million, up 1%from $48.1 million in the corresponding period last year.  Gross profit increased to $15.6 million inthe second quarter compared to $14.1 million in the same period last year, and,as a percentage of sales, increased to 32% compared to 29% in the prior yearperiod.

 

For the first six months of fiscal 2003,income from continuing operations increased 35% to $7.5 million, or $1.40 perdiluted share, compared to $5.6 million, or $1.06 per diluted share, for thefirst half of fiscal 2002.  Six-monthsales were $97.4 million, up 4% from the first half of last year.  Gross profit as a percentage of sales alsoincreased to 32% on a year-to-date basis compared to 29% in the correspondingperiod of fiscal 2002. These quarter and year-to-date amounts do not includethe results of a discontinued operation, Courier Custom Publishing, a providerof customized teaching materials which was sold on December 17, 2002.

 

**ContinuingOperations**

 

*BookManufacturing Segment:*

Sales from the Company’s book manufacturing segment were $41.1 million,an increase of 2% over the second quarter of fiscal 2002.  Within this segment, sales to the religiousmarket declined 6% in the second quarter although sales were up 4% on ayear-to-date basis compared to fiscal 2002. Sales in the education market rose by 6% in the second quarter comparedto the prior year.  Sales in higher education,the largest portion of this market, were up 20% in the quarter reflectingrenewed demand for reprints of college texts following inventory reductions inthe previous year.  In theelementary/high school market, sales declined 20% in the second quartercompared to the same period last year, reflecting a lighter schedule of statetextbook adoptions and tighter state budgets this year.  Sales to the specialty trade market were up11% in the second quarter and 9% year to date compared to the correspondingperiod last year, reflecting a return to more normal order patterns after significantinventory reductions by publishers last year.

 

Gross profit as a percentage of sales in the book manufacturing segmentincreased by 240 basis points to 28.2% in the second quarter from 25.8% in thesame quarter last year.  The increasewas the result of a favorable shift in sales mix as well as improvements inprocess management and productivity combined with tight control of costs.

 

Selling and administrative expenses in the second quarter rose 1% to $6.9million compared to the same period in the prior year.

 

Pretax income in this segment increased 30% to $4.7 million or $.58 perdiluted share in the second quarter compared to $3.6 million or $.46 perdiluted share in the corresponding quarter last year.  As a percentage of sales, pretax income increased to 11.5% in thequarter from 9.0% in the same period last year.

 

For the first half of fiscal 2003, sales in the book manufacturingsegment were $83.0 million, an increase of 5% over the first half of fiscal2002.  As a percentage of sales, grossprofit increased 250 basis points to 28.0% year to date compared to 25.5% inthe same period last year reflecting productivity gains, cost reductions and amore favorable sales mix.  Pretaxearnings were $9.4 million, or $1.17 per diluted share, an increase of 39% overthe first six months of last year.

 

*SpecialtyPublishing Segment*

Sales from the Company’s specialty publishing segment, which is comprisedof Dover Publications, Inc. (“Dover”), were $9.1 million in the second quarterof fiscal 2003, an increase of 2.5% over the prior year’s second quarter. Theseresults reflect a mixed retail environment in the quarter.  Sales to U.S. wholesalers and retailers,which comprise approximately 75% of Dover’s sales, increased only 2% in thesecond quarter compared to the same period last year.  Sales declined at large bookstore chains but increased at craftstores, gift shops and other non-bookstore retailers.  Direct-to-consumer sales, which comprise approximately 14% ofDover’s total sales, increased 34% over the prior year second quarter.  International sales were down 3% in thesecond quarter, where significant increases to Canada and the U.K. were offsetby decreases in the Middle East, the Far East and South America.

 

11

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Gross profit as apercent of sales in the specialty publishing segment increased 200 basis pointsto 45.5% in the second quarter compared to the same period last year.  Amortization expense related toprepublication costs was reclassified from selling and administrative expenseto cost of sales in the second quarter of fiscal 2003.  All prior periods have been reclassified tobe consistent with this presentation. The improvement in the gross profit percentage reflects decliningproduct costs related to  the sale ofinventory from the original acquisition, which added approximately 130 basispoints, as well as increased prices and a favorable direct sales mix.

 

Selling and administrative expenses in this segment were $2.9million in the second quarter, or 31% of sales; an increase of 3% over thecorresponding prior year period due in part to increased spending on e-commerceand other marketing programs.

 

Pretax income in the specialty publishing segment was $1.2 million, a 32%increase over last year’s second quarter, reflecting the increase in sales andimprovement in gross profit margins.

 

For the first six months of fiscal 2003, Dover’s sales were comparable tothe same period last year at $17.4 million. Direct-to-consumer sales were up 22% over the first half of fiscal 2002,including a 46% increase in online consumer sales.  U.S. trade sales were down 2% on a year-to-date basis compared tothe prior year primarily because of the large bookstore chains.  Gross profit in the first half of the yearincreased 260 basis points to 45.9% as a percentage of sales compared to 43.3%last year, after adjusting both periods for the reclassification ofamortization of prepublication costs. Pretax income for the first six months increased 24% over last year to$2.2 million.  Factors that affected thesecond quarter similarly affected year-to-date results.

 

*Total Company*

Interest expense, net of interest income, was $26,000 in the secondquarter of fiscal 2003 compared to interest expense of $163,000 in the sameperiod of fiscal 2002.  During thesecond quarter of fiscal 2003, there were no borrowings under the Company’s $60million revolving credit facility, however, interest expense includescommitment fees and other costs associated with maintaining this creditfacility.  Cash investments in thesecond quarter of fiscal 2003 averaged approximately $15 million at a 1.2%annual investment rate generating interest income of approximately $46,000.  For the same period last year, the Companyaveraged borrowings of $11.4 million on its credit facility at 2.3%.  For the first six months of fiscal 2003,interest expense, net of interest income, was $68,000 compared to $313,000 inthe first half of last year.  Thisdecrease resulted from the same factors that affected the second quarter.

 

The Company’s effective tax rates for the second quarter andfirst six months of fiscal 2003 were slightly higher than the tax rates for thecorresponding periods last year.

 

For purposes of computing net income per diluted share, weightedaverage shares outstanding increased by approximately 81,000 shares over lastyear’s second quarter.  The increase waslargely due to options exercised under the Company’s stock plans.

 

**DiscontinuedOperations**

 

On December 17, 2002, the Company sold the assets of itswholly-owned subsidiary, Courier Custom Publishing, Inc. which comprised all ofthe activities of the Customized Education segment. The Customized Educationsegment provided customized coursepacks and textbooks.  Year-to-date results were a loss of $65,000,or $.01 per diluted share, in the current year compared to a loss of $107,000,or $.02 per diluted share, in the prior year. Proceeds from the sale of Courier Custom Publishing were $1.5 million resultingin an after tax gain of approximately $0.9 million, or $.16 per diluted share.

 

12

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**Liquidity and Capital Resources****:**

 

During the first six months of fiscal 2003, operationsprovided approximately $10.1 million of cash. Income from continuing operations was $7.5 million and depreciation andamortization were $5.1 million.  Workingcapital used approximately $2.6 million of cash, primarily for the payment ofaccrued taxes.

 

Investment activities in the first half of fiscal 2003 used approximately$2.0 million of cash. Proceeds from the sale of Courier Custom Publishing were$1.5 million. Capital expenditures were approximately $2.4 million andprepublication costs were approximately $1.1 million.  For the entire fiscal year, capital expenditures are expected tobe approximately $10 million to $12 million and prepublication costs areprojected to be approximately $2 million. In March 2003, the Company announced an agreement to sellapproximately 200,000 square feet of unoccupied and underutilized portions ofits multi-building manufacturing complex in Westford, Massachusetts for $1.7million.  Courier will continue itscurrent levels of book manufacturing at the site.  The agreement contains a number of significant contingencies.Assuming these contingencies can be resolved, closing is anticipated in late2003.  Although the carrying value ofthe property is nominal, the agreement requires that the Company incur certaincosts to complete the transaction, such as the separation of all utilities withinthe complex.  Although these costs couldbe significant, if the transaction is completed, the Company anticipatesrealizing a small gain on the sale.

 

Financing activities for the first six months of fiscal 2003 usedapproximately $0.8 million of cash. Dividend payments were $1.2 million while proceeds from stock plans were$0.4 million.  At March 29, 2003, theCompany had no borrowings under its $60 million long-term revolving creditfacility, which matures in March 2005 and bears interest at a floatingrate.   Therevolving credit facility is used by the Company for both its long-term andshort-term financing needs.  The Companybelieves that its cash from operations and available credit facilities will besufficient to meet its cash requirements through fiscal 2003.

 

The following table summarizes the Company’s contractual obligations andcommitments at September 28, 2002 to make future payments as well as itsexisting commercial commitments.

 
|                        |   |      |   | **(000’s omitted)**   |   |
|-----------------------------|--------|-----------|--------|----------------------------|--------|
|                        |   |      |   | **Payments due by period** |   |
|                        |   |      |   | **Less than**              |   | **1 to 3** |   | **4 to 5** |   | **After 5** |   |
|                        |   | **Total** |   | **1 Year**                 |   | **Years** |   | **Years** |   | **Years** |   |
| Contractual Payments:       |   |      |   |                       |   |   |   |   |   |   |   |
| Long-Term Debt              |   | $         | 752    |                       | $      | 78 |   | $ | 248 |   | $ | 178 |   | $ | 248 |   |
|                        |   |      |   |                       |   |   |   |   |   |   |   |
| Operating Leases            |   | $         | 12,968 |                       | $      | 3,869 |   | $ | 7,249 |   | $ | 1,850 |   | $ | — |   |
|                        |   |      |   |                       |   |   |   |   |   |   |   |
| Purchase Obligations (1)    |   | $         | 1,969  |                       | $      | 1,969 |   | $ | — |   | $ | — |   | $ | — |   |
|                        |   |      |   |                       |   |   |   |   |   |   |   |
| Other Long-Term Liabilities |   | $         | 2,652  |                       | $      | — |   | $ | 1,157 |   | $ | 350 |   | $ | 1,145 |   |

 

----

(1)          Represent amountsat March 29, 2003.

 

**Forward-LookingInformation****:**

 

Statements that describefuture expectations, plans or strategies are considered “forward-lookingstatements” as that term is defined under the Private Securities LitigationReform Act of 1995 and releases issued by the Securities and ExchangeCommission.  The words “believe,”“expect,” “anticipate,” “intend,” “estimate” and other expressions which arepredictions of or indicate future events and trends and which do not relate tohistorical matters identify forward-looking statements.  Such statements are subject to risks and uncertaintiesthat could cause actual results to differ materially from those currentlyanticipated.  Factors that could affectactual results include, among others, changes in customers’ demand for theCompany’s products, changes in raw material costs, pricing actions bycompetitors, success in the integration of acquired businesses, unanticipatedchanges in operating expenses, changes in technology, changes in copyrightlaws, changes in tax policy including export credits, and general changes ineconomic conditions.  Although theCompany believes that the assumptions underlying the forward-looking statementsare reasonable, any of the assumptions could be inaccurate, and therefore,there can be no assurance that the forward-looking statements will prove to beaccurate.  The forward-lookingstatements included herein are made as of the date hereof, and the Companyundertakes no obligation to update publicly such statements to reflectsubsequent events or circumstances.

 

13

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**Item 3****.                    QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

 

There have been no material changes from the information concerning theCompany’s “Quantitative and Qualitative Disclosures About Market Risk” aspreviously reported in the Company’s Annual Report on Form 10-K for the yearended September 28, 2002.

#### ** **

 

#### **Item 4**.                    CONTROLS AND PROCEDURES

 

**(a)       Evaluationof disclosure controls and procedures**

 

            As required by Rule 13a-15 under the Securities ExchangeAct of 1934, within the 90 days prior to the date of this report, the Companycarried out an evaluation under the supervision and with the participation ofthe Company’s management, including the Company’s Chief Executive Officer andChief Financial Officer, of the effectiveness of the design and operation ofthe Company’s disclosure controls and procedures.  Based upon that evaluation, the Chief Executive Officer and ChiefFinancial Officer concluded that the Company’s disclosure controls and proceduresare effective to ensure that information required to be disclosed by theCompany in the reports it files or submits under the Exchange Act is recorded,processed, summarized and reported, within the time periods specified in theSecurities and Exchange Commission’s rules and forms.  The Company continually reviews its disclosure controls andprocedures, including its internal controls and procedures for financialreporting, and may from time to time make changes aimed at enhancing theireffectiveness and to ensure that its systems evolve with its business.

 

**(b)       Changesin internal controls**

 

            There were no significant changes in the Company’sinternal controls or in other factors that could significantly affect thesecontrols subsequent to the date of their most recent evaluation.

 

 

14

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#### **PART II.  OTHERINFORMATION**

 

| **Item 1****.** | **Legal Proceedings**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item 2****.** | **Changes in Securities and Use of  Proceeds**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item  3**.    | **Defaults  Upon Senior Securities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item 4****.** | **Submission of Matters to a Vote of  Security Holders**                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|            | The  Annual Meeting of Stockholders of the registrant was held on January 16,  2003.  The election of directors was  the only matter voted on.  All  nominees of the Board of Directors of the registrant were re-elected for a  three-year term.  Votes were cast as  follows:  James F. Conway III -  4,769,494 votes for and 18,778 votes withheld; Kathleen Foley Curley -  4,770,216 votes for and 18,056 votes withheld; W. Nicholas Thorndike —  4,770,216 votes for and 18,056 votes withheld. |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item 5****.** | **Other Information**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **Item  6**.    | **Exhibits  and Reports on Form 8-K**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | (a)  Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | Exhibit No.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Description |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
|            | **99.1**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **Certification of Chief Executive Officer** |
|            | 99.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Certification of Chief Financial Officer |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | (b)  Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | Filed  March 21, 2003, reporting under Item 5 a press release dated March 19, 2003  announcing the election of Ronald L. Skates to the Courier Corporation board  of directors.                                                                                                                                                                                                                                                                                                                                                 |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | Filed  March 28, 2003, reporting under Item 5 a press release dated March 28, 2003  announcing an agreement to sell the unused portion of its multi-building  manufacturing complex in Westford, Massachusetts.                                                                                                                                                                                                                                                                                                                 |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            | Filed  April 17, 2003, reporting under Item 12 a press release dated April 17, 2003  reporting financial results for the quarter ended March 29, 2003.                                                                                                                                                                                                                                                                                                                                                                          |

 

 

 

15

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**SIGNATURES**

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, theCompany has duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.

 

 

**COURIERCORPORATION**

**(Registrant)**

 

 
| *May 9, 2003* |   | By:    | *s/James F. Conway III*   |
|---------------|--------|--------|---------------------------|
| Date          |   |   | James F. Conway III       |
|          |   |   | Chairman, President and   |
|          |   |   | Chief Executive Officer   |
|          |   |   |                      |
| *May 9, 2003* |   | By:    | *s/Robert P. Story, Jr.*  |
| Date          |   |   | Robert P. Story, Jr.      |
|          |   |   | Senior Vice President and |
|          |   |   | Chief Financial Officer   |
|          |   |   |                      |
| *May 9, 2003* |   | By:    | *s/Peter M. Folger*       |
| Date          |   |   | Peter M. Folger           |
|          |   |   | Vice President and        |
|          |   |   | Chief Accounting Officer  |

 

16

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**CERTIFICATION**

 

I, James F. Conway III, certify that:

 

1.                                       I have reviewed this quarterly report onForm 10-Q of Courier Corporation;

 

2.                                       Based on my knowledge, this quarterlyreport does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.                                       Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.                                       The registrant’s other certifying officerand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have:

 

a)                                      designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

b)                                     evaluated the effectiveness of theregistrant’s disclosure controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the “Evaluation Date”); and

c)                                      presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

 

5.                            The registrant’s other certifying officer and I havedisclosed, based on our most recent evaluation, to the registrant’s auditorsand the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):

 

a)                                      all significant deficiencies in the designor operation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

b)                                     any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

 

6.                            The registrant’s other certifying officer and I haveindicated in this quarterly report whether there were significant changes ininternal controls or in other factors that could significantly affect internalcontrols subsequent to the date of our most recent evaluation, including anycorrective actions with regard to significant deficiencies and materialweaknesses.

 
| *May 9, 2003* |   | By:    | *s/James F. Conway III* |
|---------------|--------|--------|-------------------------|
| Date          |   |   | James F. Conway III     |
|          |   |   | Chairman, President and |
|          |   |   | Chief Executive Officer |

 

17

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# ** **

# **CERTIFICATION**

 

I, Robert P. Story, Jr., certify that:

 

1.               I have reviewed this quarterly report on Form 10-Q ofCourier Corporation;

 

2.               Based on my knowledge, this quarterly report does notcontain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances underwhich such statements were made, not misleading with respect to the periodcovered by this quarterly report;

 

3.               Based on my knowledge, the financial statements, andother financial information included in this quarterly report, fairly presentin all material respects the financial condition, results of operations andcash flows of the registrant as of, and for, the periods presented in thisquarterly report;

 

4.               The registrant’s other certifying officer and I areresponsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant andhave:

 

a)              designed such disclosure controls and procedures toensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this quarterly report is beingprepared;

b)             evaluated the effectiveness of the registrant’sdisclosure controls and procedures as of a date within 90 days prior to thefiling date of this quarterly report (the “Evaluation Date”); and

c)              presented in this quarterly report our conclusionsabout the effectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date;

 

5.               The registrant’s other certifying officer and I havedisclosed, based on our most recent evaluation, to the registrant’s auditorsand the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):

 

a)              all significant deficiencies in the design or operation ofinternal controls which could adversely affect the registrant’s ability torecord, process, summarize and report financial data and have identified forthe registrant’s auditors any material weaknesses in internal controls; and

b)             any fraud, whether or not material, that involves managementor other employees who have a significant role in the registrant’s internalcontrols; and

 

6.               The registrant’s other certifying officer and I haveindicated in this quarterly report whether there were significant changes ininternal controls or in other factors that could significantly affect internalcontrols subsequent to the date of our most recent evaluation, including anycorrective actions with regard to significant deficiencies and materialweaknesses.

 
| *May 9, 2003* |   | By:    | *s/Robert P. Story, Jr.*  |
|---------------|--------|--------|---------------------------|
| Date          |   |   | Robert P. Story, Jr.      |
|          |   |   | Senior Vice President and |
|          |   |   | Chief Financial Officer   |

 

18

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