**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

 

**FORM 10-Q**

 

**(Mark One)**

 

**ý****                                ****QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended March26, 2005**

 

**OR**

 

**o****                                ****TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the transition period from                        to                        **

 

**Commission file number  0-7597**

 

**COURIERCORPORATION**

(Exactname of registrant as specified in its charter)

 

**Massachusetts**

(Stateor 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’stelephone number, including area code)

 

**NOCHANGE**

(Formername, former address and former fiscal year, if changed since last report)

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.

 

Yes    ý    No    o

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in Exchange Act Rule12b-2).

 

Yes    ý    No    o

 

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.

 
| **Class**                   | ** ** | **Outstanding  at April 22, 2005** |
|-----------------------------|------------|------------------------------------|
| Common  Stock, $1 par value |       | 8,123,722  Shares                  |

 

 

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COURIERCORPORATION

CONSOLIDATED CONDENSEDSTATEMENTS OF INCOME (UNAUDITED)

(Dollarsin thousands except per share amounts)

 
| ** **                          | ** ** | **QUARTER ENDED**   | ** ** | **SIX MONTHS ENDED** | ** ** |
|-------------------------------------|------------|---------------------|------------|----------------------|------------|
| ** **                          | ** ** | **March 26,  2005** | ** ** | **March 27,  2004**  | ** ** | **March 26,  2005** | ** ** | **March 27,  2004** | ** ** |
|                                |       |                |       |                 |       |   |   |   |   |
| Net sales                           |       | $                   | 53,495     |                 | $          | 49,663 |   | $ | 104,764 |   | $ | 96,482 |   |
| Cost of sales                       |       | 37,141              |       | 34,136               |       | 71,710 |   | 65,326 |   |
|                                |       |                |       |                 |       |   |   |   |   |
| Gross profit                        |       | 16,354              |       | 15,527               |       | 33,054 |   | 31,156 |   |
|                                |       |                |       |                 |       |   |   |   |   |
| Selling and administrative expenses |       | 9,915               |       | 9,636                |       | 20,198 |   | 19,274 |   |
| Interest income, net                |       | (42                 | )          | (27                  | )          | (69 | ) | (54 | ) |
|                                |       |                |       |                 |       |   |   |   |   |
| Pretax income                       |       | 6,481               |       | 5,918                |       | 12,925 |   | 11,936 |   |
|                                |       |                |       |                 |       |   |   |   |   |
| Provision for income taxes (Note C) |       | 2,327               |       | 2,067                |       | 4,640 |   | 4,173 |   |
|                                |       |                |       |                 |       |   |   |   |   |
| Net income                          |       | $                   | 4,154      |                 | $          | 3,851 |   | $ | 8,285 |   | $ | 7,763 |   |
|                                |       |                |       |                 |       |   |   |   |   |
| Net income per share (Note D):      |       |                |       |                 |       |   |   |   |   |
|                                |       |                |       |                 |       |   |   |   |   |
| Basic                               |       | $                   | 0.51       |                 | $          | 0.48 |   | $ | 1.03 |   | $ | 0.98 |   |
|                                |       |                |       |                 |       |   |   |   |   |
| Diluted                             |       | $                   | 0.50       |                 | $          | 0.47 |   | $ | 1.00 |   | $ | 0.95 |   |
|                                |       |                |       |                 |       |   |   |   |   |
| Cash dividends declared per share   |       | $                   | 0.25       |                 | $          | 0.0875 |   | $ | 0.35 |   | $ | 0.175 |   |

 

The accompanying notes are an integral partof the consolidated condensed financial statements.

 

2

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COURIER CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS(UNAUDITED)

(Dollars in thousands)

 
| ** **                                                                                                                    | ** ** | **March  26,  2005** | ** ** | **September  25,  2004** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------|------------|----------------------|------------|--------------------------|------------|
| ASSETS                                                                                                                        |       |                 |       |                     |       |
|                                                                                                                          |       |                 |       |                     |       |
| Current assets:                                                                                                               |       |                 |       |                     |       |
| Cash and cash equivalents                                                                                                     |       | $                    | 24,515     |                     | $          | 23,965 |   |
| Accounts receivable, less allowance for  uncollectible accounts of $1,704 at March 26, 2005 and $1,630 at September  25, 2004 |       | 29,335               |       | 34,072                   |       |
| Inventories (Note B)                                                                                                          |       | 26,442               |       | 25,108                   |       |
| Deferred income taxes                                                                                                         |       | 2,851                |       | 2,852                    |       |
| Other current assets                                                                                                          |       | 801                  |       | 840                      |       |
|                                                                                                                          |       |                 |       |                     |       |
| Total current assets                                                                                                          |       | 83,944               |       | 86,837                   |       |
|                                                                                                                          |       |                 |       |                     |       |
| Property, plant and equipment, less accumulated  depreciation: $114,032 at March 26, 2005 and $109,383 at September 25, 2004  |       | 51,766               |       | 48,482                   |       |
|                                                                                                                          |       |                 |       |                     |       |
| Goodwill (Note A)                                                                                                             |       | 33,255               |       | 33,255                   |       |
|                                                                                                                          |       |                 |       |                     |       |
| Prepublication costs (Note A)                                                                                                 |       | 5,291                |       | 5,127                    |       |
|                                                                                                                          |       |                 |       |                     |       |
| Other assets                                                                                                                  |       | 1,526                |       | 1,498                    |       |
|                                                                                                                          |       |                 |       |                     |       |
| Total assets                                                                                                                  |       | $                    | 175,782    |                     | $          | 175,199 |   |

 

The accompanying notes are an integral partof the consolidated condensed financial statements.

 

3

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COURIERCORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

(Dollarsin thousands)

 
| ** **                                                                                                                          | ** ** | **March 26,  2005** | ** ** | **September 25,  2004** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|------------|-------------------------|------------|
| LIABILITIES  AND STOCKHOLDERS’ EQUITY                                                                                          |       |                |       |                    |       |
|                                                                                                                                |       |                |       |                    |       |
| Current liabilities:                                                                                                                |       |                |       |                    |       |
| Current maturities of long-term debt                                                                                                |       | $                   | 83         |                    | $          | 83 |   |
| Accounts payable                                                                                                                    |       | 8,756               |       | 10,059                  |       |
| Accrued payroll                                                                                                                     |       | 5,585               |       | 6,470                   |       |
| Accrued taxes                                                                                                                       |       | 3,056               |       | 5,557                   |       |
| Other current liabilities                                                                                                           |       | 5,566               |       | 7,194                   |       |
|                                                                                                                                |       |                |       |                    |       |
| Total current liabilities                                                                                                           |       | 23,046              |       | 29,363                  |       |
|                                                                                                                                |       |                |       |                    |       |
| Long-term debt                                                                                                                      |       | 469                 |       | 510                     |       |
| Deferred income taxes                                                                                                               |       | 7,702               |       | 7,706                   |       |
| Other liabilities                                                                                                                   |       | 2,642               |       | 2,630                   |       |
|                                                                                                                                |       |                |       |                    |       |
| Total liabilities                                                                                                                   |       | 33,859              |       | 40,209                  |       |
|                                                                                                                                |       |                |       |                    |       |
| 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 8,123,000 at March 26, 2005 and 8,031,000 at September 25,  2004 |       | 8,123               |       | 8,031                   |       |
| Additional paid-in capital                                                                                                          |       | 2,155               |       | 869                     |       |
| Retained earnings                                                                                                                   |       | 132,029             |       | 126,573                 |       |
| Unearned compensation                                                                                                               |       | (384                | )          | (483                    | )          |
|                                                                                                                                |       |                |       |                    |       |
| Total stockholders’ equity                                                                                                     |       | 141,923             |       | 134,990                 |       |
|                                                                                                                                |       |                |       |                    |       |
| Total liabilities and stockholders’ equity                                                                                     |       | $                   | 175,782    |                    | $          | 175,199 |   |

 

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

 

4

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COURIER CORPORATION

CONSOLIDATED CONDENSEDSTATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

 
| ** **                                                                       | ** ** | **SIX MONTHS ENDED** | ** ** |
|----------------------------------------------------------------------------------|------------|----------------------|------------|
| ** **                                                                       | ** ** | **March 26,  2005**  | ** ** | **March 27,  2004** | ** ** |
|                                                                             |       |                 |       |   |   |
| Operating Activities:                                                            |       |                 |       |   |   |
| Net income                                                                       |       | $                    | 8,285      |   | $ | 7,763 |   |
| Adjustments to reconcile net income to cash  provided from operating activities: |       |                 |       |   |   |   |   |
| Depreciation and amortization                                                    |       | 5,935                |       | 5,329 |   |
| Deferred income taxes                                                            |       | (3                   | )          | 1,071 |   |
| Changes in assets and liabilities:                                               |       |                 |       |   |   |
| Accounts receivable                                                              |       | 4,737                |       | (61 | ) |
| Inventories                                                                      |       | (1,334               | )          | (2,325 | ) |
| Accounts payable                                                                 |       | (2,522               | )          | (869 | ) |
| Accrued taxes                                                                    |       | (2,501               | )          | (2,650 | ) |
| Other elements of working capital                                                |       | (2,425               | )          | (2,645 | ) |
| Tax benefits of stock option activity                                            |       | 313                  |       | 384 |   |
| Other, net                                                                       |       | 26                   |       | 1 |   |
|                                                                             |       |                 |       |   |   |
| Cash provided from operating activities                                          |       | 10,511               |       | 5,998 |   |
|                                                                             |       |                 |       |   |   |
| Investment Activities:                                                           |       |                 |       |   |   |
| Capital expenditures                                                             |       | (7,933               | )          | (7,580 | ) |
| Prepublication costs                                                             |       | (1,442               | )          | (1,249 | ) |
| Business acquisition (Note G)                                                    |       | —               |       | (11,850 | ) |
|                                                                             |       |                 |       |   |   |
| Cash used for investment activities                                              |       | (9,375               | )          | (20,679 | ) |
|                                                                             |       |                 |       |   |   |
| Financing Activities:                                                            |       |                 |       |   |   |
| Long-term debt repayments                                                        |       | (41                  | )          | (40 | ) |
| Cash dividends paid                                                              |       | (1,610               | )          | (1,399 | ) |
| Proceeds from stock plans                                                        |       | 1,065                |       | 460 |   |
|                                                                             |       |                 |       |   |   |
| Cash used for financing activities                                               |       | (586                 | )          | (979 | ) |
|                                                                             |       |                 |       |   |   |
| Increase (decrease) in cash and cash  equivalents                                |       | 550                  |       | (15,660 | ) |
|                                                                             |       |                 |       |   |   |
| Cash and cash equivalents at the beginning  of the period                        |       | 23,965               |       | 23,824 |   |
|                                                                             |       |                 |       |   |   |
| Cash and cash equivalents at the end of the  period                              |       | $                    | 24,515     |   | $ | 8,164 |   |

 

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

 

5

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**COURIER CORPORATION**

 

**NOTES TO CONSOLIDATED CONDENSEDFINANCIAL STATEMENTS (UNAUDITED)**

 

**A.****            SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

**Unaudited Financial Statements**

The balance sheet as of March 26, 2005, thestatements of income for the three-month and six-month periods ended March 26,2005 and March 27, 2004, and the statements of cash flows for the six-month periodsended March 26, 2005 and March 27, 2004 are unaudited.  In the opinion of management, all adjustmentsnecessary for a fair presentation of such financial statements have beenrecorded.  Such adjustments consistedonly of normal recurring items. Certain amounts for fiscal 2004 have beenreclassified in the accompanying financial statements in order to be consistentwith the current year’s classification.

 

Certain information and footnote disclosuresnormally included in financial statements prepared in accordance withaccounting principles generally accepted in the United States of America (“generallyaccepted accounting principles”) have been condensed or omitted.  The balance sheet data as of September 25,2004 was derived from audited year-end consolidated financial statements, butdoes not include disclosures required by generally accepted accountingprinciples.  These interim financialstatements should be read in conjunction with the Company’s most recent AnnualReport on Form 10-K for the year ended September 25, 2004.

 

**Prepublication Costs**

Prepublication costs, associated with thespecialty publishing segment, are amortized using the straight-line method overan estimated useful life of four years for Dover Publications and three yearsfor Research and Education Association (“REA”) which was acquired in January2004.

 

**Goodwill**

The Company evaluates possible impairment annually or whenever eventsor circumstances indicate that the carrying value of the assets may not berecoverable.

 

**Stock-Based Compensation**

Pursuant to SFAS No. 123, “Accounting for Stock-Based Compensation,” asamended by SFAS No. 148, the Company applies the recognition and measurementprinciples of APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB25”) and related interpretations. Accordingly, because the number of shares is fixed and the exerciseprice of the stock options equals the market price of the underlying stock onthe date of grant, no stock compensation expense has been recognized.

 

6

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**Stock-Based Compensation (continued)**

Had compensation cost for stock options, and grants under the EmployeeStock Purchase Plan, been determined under the provisions of SFAS No. 123, theCompany’s net income would have been as follows:

 
| ** **                                                                                          | ** ** | **(000’s Omitted)** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                                                                          | ** ** | **Quarter Ended**        | ** ** | **Six Months Ended** | ** ** |
| ** **                                                                                          | ** ** | **March 26,  2005**      | ** ** | **March 27,  2004** | ** ** | **March 26,  2005** | ** ** | **March 27,  2004** | ** ** |
| ** **                                                                                          | ** ** | ** **               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net income as reported                                                                              |       | $                        | 4,154      |   | $ | 3,851 |   | $ | 8,285 |   | $ | 7,763 |   |
| Deduct: Stock-based compensation expense determined  under SFAS No. 123, net of related tax effects |       | (331                     | )          | (316 | ) | (641 | ) | (632 | ) |
| Pro forma net income                                                                                |       | $                        | 3,823      |   | $ | 3,535 |   | $ | 7,644 |   | $ | 7,131 |   |
|                                                                                                |       |                     |       |   |   |   |   |   |   |
| Net income per share as reported:                                                                   |       |                     |       |   |   |   |   |   |   |
| Basic                                                                                               |       | $                        | 0.51       |   | $ | 0.48 |   | $ | 1.03 |   | $ | 0.98 |   |
| Diluted                                                                                             |       | 0.50                     |       | 0.47 |   | 1.00 |   | 0.95 |   |
|                                                                                                |       |                     |       |   |   |   |   |   |   |
| Pro forma net income per share:                                                                     |       |                     |       |   |   |   |   |   |   |
| Basic                                                                                               |       | $                        | 0.47       |   | $ | 0.44 |   | $ | 0.95 |   | $ | 0.90 |   |
| Diluted                                                                                             |       | 0.46                     |       | 0.43 |   | 0.92 |   | 0.87 |   |

 

**New Accounting Pronouncements**

# **In December 2004, the Financial Accounting Standards Board(“FASB”) issued SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”).  Under this new standard, companies will nolonger be able to account for share-based compensation transactions using theintrinsic method in accordance with APB 25. Instead, companies will be required to account for such transactionsusing a fair-value method and to recognize the expense over the serviceperiod.  SFAS 123R allows for severalalternative transition methods.  On April14, 2005, the Securities and Exchange Commission announced the adoption of arule that defers the required effective date of SFAS 123R for registrants tothe beginning of the first fiscal year beginning after June 15, 2005, whichwould be the beginning of the Company’s 2006 fiscal year.  The Company can also early adopt SFAS123R.  The Company is in the process ofevaluating this recent announcement and it has not yet determined when it willadopt SFAS 123R or the transition method it will use.**

 

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs” (“SFAS151”), an amendment of ARB No. 43, Chapter 4. SFAS 151 clarifies the accounting for abnormal amounts of idle facilityexpense, freight, handling costs and wasted material.  SFAS 151 is effective for inventory costsincurred during fiscal years beginning after June 15, 2005.  The Company does not believe the adoption ofSFAS 151 will have a material effect on its consolidated financial position,results of operations or cash flows.

 

7

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# **B.**           INVENTORIES

 

Inventories are valued at the lower of costor market.  Cost is determined using thelast-in, first-out (LIFO) method for approximately 39% and 37% of the Company’sinventories at March 26, 2005 and September 25, 2004, respectively.  Other inventories, primarily at Dover andREA, are determined on a first-in, first-out (FIFO) basis.  Inventories consisted of the following:

 

| ** **       | ** ** | **(000’s Omitted)** | ** ** |
|------------------|------------|--------------------------|------------|
| ** **       | ** ** | **March 26,  2005**      | ** ** | **September 25,  2004** | ** ** |
| Raw materials    |       | $                        | 2,761      |   | $ | 3,338 |   |
| Work in  process |       | 6,762                    |       | 5,317 |   |
| Finished goods   |       | 16,919                   |       | 16,453 |   |
| Total            |       | $                        | 26,442     |   | $ | 25,108 |   |

 

# **C.**            INCOME TAXES

 

The provision for income taxesdiffers from that computed using the statutory federal income tax rates for thefollowing reasons:

 
| ** **                            | ** ** | **(000’s Omitted)** | ** ** |
|---------------------------------------|------------|--------------------------|------------|
| ** **                            | ** ** | **Quarter Ended**        | ** ** | **Six Months Ended** | ** ** |
| ** **                            | ** ** | **March 26,  2005**      | ** ** | **March 27,  2004** | ** ** | **March 26,  2005** | ** ** | **March 27,  2004** | ** ** |
| Federal taxes  at statutory rates     |       | $                        | 2,268      |   | $ | 2,071 |   | $ | 4,524 |   | $ | 4,178 |   |
| State taxes,  net of federal benefit  |       | 189                      |       | 176 |   | 376 |   | 329 |   |
| Tax benefit of  export related income |       | (145                     | )          | (181 | ) | (284 | ) | (343 | ) |
| Other                                 |       | 15                       |       | 1 |   | 24 |   | 9 |   |
| Total                                 |       | $                        | 2,327      |   | $ | 2,067 |   | $ | 4,640 |   | $ | 4,173 |   |

 

# **D.**            NET INCOME PER SHARE

 

Followingis a reconciliation of the shares used in the calculation of basic and dilutedincome per share.  Potentially dilutiveshares, calculated using the treasury stock method,   consist of shares issued under the Company’s stock optionplans.

 
| ** **                              | ** ** | **(000’s Omitted)** | ** ** |
|-----------------------------------------|------------|--------------------------|------------|
| ** **                              | ** ** | **Quarter Ended**        | ** ** | **Six Months Ended** | ** ** |
| ** **                              | ** ** | **March 26,  2005**      | ** ** | **March 27,  2004** | ** ** | **March 26,  2005** | ** ** | **March 27,  2004** | ** ** |
|                                    |       |                     |       |   |   |   |   |   |   |
| Average shares  outstanding for basic   |       | 8,074                    |       | 7,944 |   | 8,057 |   | 7,938 |   |
| Effect of  potentially dilutive shares  |       | 252                      |       | 285 |   | 252 |   | 272 |   |
| Average shares  outstanding for diluted |       | 8,326                    |       | 8,229 |   | 8,309 |   | 8,210 |   |

 

**E.****            ****DERIVATIVE FINANCIAL INSTRUMENTS**

 

At March 26, 2005, the Company had aforward exchange contract to purchase approximately 3.4 million euros as ahedge against a foreign currency equipment purchase commitment, designated as afair value hedge.  The Company hasrecorded this transaction in accordance with the provisions of SFAS No. 133,with no effect on earnings.  Theequipment is scheduled to be delivered and the forward exchange contractsettled early in fiscal 2006.  TheCompany does not use financial instruments for trading or speculative purposes.

 

8

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# **F.**             BUSINESS SEGMENTS

 

The Company has two business segments:full-service book manufacturing and specialty publishing. The bookmanufacturing segment offers a full range of services from production throughstorage and distribution for religious, educational and specialty trade bookpublishers. The specialty publishing segment consists of Dover Publications,Inc. and, beginning in the second quarter of fiscal 2004, REA (see Note G).

 

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*.*

 

Thefollowing table provides segment information for the three-month and six-monthperiods ended March 26, 2005 and March 27, 2004.

 
| ** **                          | ** ** | **(000’s) Omitted)** | ** ** |
|-------------------------------------|------------|---------------------------|------------|
| ** **                          | ** ** | **Quarter Ended**         | ** ** | **Six Months Ended** | ** ** |
| ** **                          | ** ** | **March 26,  2005**       | ** ** | **March 27,  2004** | ** ** | **March 26,  2005** | ** ** | **March 27,  2004** | ** ** |
|                                |       |                      |       |   |   |   |   |   |   |
| Net sales:                          |       |                      |       |   |   |   |   |   |   |
| Book manufacturing                  |       | $                         | 45,278     |   | $ | 40,988 |   | $ | 88,201 |   | $ | 80,645 |   |
| Specialty publishing                |       | 9,737                     |       | 10,124 |   | 20,007 |   | 19,191 |   |
| Elimination of intersegment  sales  |       | (1,520                    | )          | (1,449 | ) | (3,444 | ) | (3,354 | ) |
| Total                               |       | $                         | 53,495     |   | $ | 49,663 |   | $ | 104,764 |   | $ | 96,482 |   |
|                                |       |                      |       |   |   |   |   |   |   |
| Income before taxes:                |       |                      |       |   |   |   |   |   |   |
| Book manufacturing                  |       | $                         | 5,757      |   | $ | 4,907 |   | $ | 11,312 |   | $ | 9,730 |   |
| Specialty publishing                |       | 792                       |       | 1,067 |   | 1,853 |   | 2,380 |   |
| Elimination of intersegment  profit |       | (68                       | )          | (56 | ) | (240 | ) | (174 | ) |
| Total                               |       | $                         | 6,481      |   | $ | 5,918 |   | $ | 12,925 |   | $ | 11,936 |   |

 

**G.****            BUSINESS ACQUISITION**

 

OnJanuary 6, 2004, the Company purchased substantially all of the assets ofResearch & Education Association (“REA”), a publisher of test preparationand study guide books and software for high school, college, graduate students,and professionals.  The acquisition wasaccounted for as a purchase, and accordingly, REA’s financial results wereincluded in the specialty publishing segment in the consolidated financialstatements from the date of acquisition. The purchase price was approximately $12 million, with an allocation ofapproximately $8.4 million to goodwill and $0.7 million to prepublication costsin the accompanying financial statements.

 

**H.****            SUBSEQUENT EVENT**

 

On March 10, 2005, the Companyannounced a three-for-two stock split to be effected in the form of a 50% stockdividend to be distributed on May 27, 2005 to stockholders of record on May 6,2005.  Share and per share amounts willbe adjusted beginning in the third quarter to reflect this subsequent stocksplit.

 

9

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

 

**Critical Accounting Policies and Estimates:**

 

The Company’s consolidated condensedfinancial statements have been prepared in accordance with generally acceptedaccounting principles.  The preparationof these financial statements requires management to make estimates and assumptionsthat affect the amounts reported in these financial statements and accompanyingnotes.   On an ongoing basis, managementevaluates its estimates and judgments, including those related tocollectibility of accounts receivable, recovery of inventories, impairment ofgoodwill, 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 Management performs ongoing credit evaluations of the Company’scustomers and adjusts credit limits based upon payment history and the customer’scurrent creditworthiness.  Collectionsand payments from customers are continuously monitored.  A provision for estimated credit losses isdetermined based upon historical experience and any specific customercollection issues that have been identified. If the financial condition of the Company’s customers were todeteriorate, resulting in an impairment of their ability to make payments,additional allowances may be required.

 

Inventories Management records reductions in thecost basis of inventory for excess and obsolete inventory based primarily uponhistorical and forecasted product demand. If actual market conditions are less favorable than those projected bymanagement, additional inventory charges may be required.

 

Goodwill  The Company evaluates possible impairmentannually or whenever events or circumstances indicate that the carrying valueof the assets may not be recoverable. The Company completed the annual impairment test at September 25, 2004resulting in no change to the nature or carrying amounts of its intangibleassets.  Changes in market conditions orpoor operating results could result in a decline in value thereby potentiallyrequiring an impairment charge in the future.

 

Prepublication Costs  The Company capitalizes prepublication costs,which include the costs of acquiring rights to publish a work and costsassociated with bringing a manuscript to publication such as artwork andeditorial efforts. Prepublication costs are amortized on a straight-line basisover periods ranging from three to four years. Management regularly evaluates the sales and profitability of theproducts based upon historical and forecasted demand.  Based upon this evaluation, adjustments maybe required to amortization expense.

 

Income Taxes The income tax provision and related accrued taxes are based on amountsreported on the Company’s tax returns and changes in deferred taxes.  Deferred income tax liabilities and assets are determined based upon the differences betweenthe financial statement and tax bases of assets and liabilities.  Changes in the recoverability of the Company’sdeferred tax assets or audits by tax authorities could result in future chargesor credits to income tax expense, and related accrued and deferred taxes.

 

10

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**Overview:**

Courier Corporation, founded in1824, is one of America’s leading book manufacturers and specialtypublishers.  The Company has two businesssegments: full-service book manufacturing and specialty publishing.  The book manufacturing segment streamlinesthe process of bringing books from the point of creation to the point ofuse.  Based on sales, Courier is thefifth largest book manufacturer in the United States and largest in theNortheast, offering services from content management, prepress and productionthrough storage and distribution.  Thespecialty publishing segment consists of Dover Publications, Inc. (“Dover”) aswell as Research & Education Association, Inc. (“REA”).  Dover publishes over 8,500 titles in morethan 30 specialty categories ranging from literature and poetry classics topaper dolls, and from musical scores to typographical fonts.  REA publishes test preparation andstudy-guide books and software for high school, college, graduate students andprofessionals.

 

**Results of Operations:**

 

FINANCIAL HIGHLIGHTS

(dollars in thousands except per shareamounts)

 
| ** **                           | ** ** | **Quarter Ended**   | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------|------------|---------------------|------------|----------------------|------------|
| ** **                           | ** ** | **March 26,  2005** | ** ** | **March 27,  2004**  | ** ** | **%  Change** | ** ** | **March 26,****2005** | ** ** | **March 27,  2004** | ** ** | **%  Change** | ** ** |
|                                 |       |                |       |                 |       |   |   |   |   |   |   |   |   |
| Net sales                            |       | $                   | 53,495     |                 | $          | 49,663 |   | 7.7 | % | $ | 104,764 |   | $ | 96,482 |   | 8.6 | % |
| Gross profit                         |       | 16,354              |       | 15,527               |       | 5.3 | % | 33,054 |   | 31,156 |   | 6.1 | % |
| As a percentage of sales             |       | 30.6                | %          | 31.3                 | %          |   |   | 31.6 | % | 32.3 | % |   |   |
| Selling and administrative  expenses |       | 9,915               |       | 9,636                |       | 2.9 | % | 20,198 |   | 19,274 |   | 4.8 | % |
| Interest income, net                 |       | 42                  |       | 27                   |       |   |   | 69 |   | 54 |   |   |   |
| Pretax income                        |       | 6,481               |       | 5,918                |       | 9.5 | % | 12,925 |   | 11,936 |   | 8.3 | % |
| Net income                           |       | 4,154               |       | 3,851                |       | 7.9 | % | 8,285 |   | 7,763 |   | 6.7 | % |
| Net income per diluted share         |       | $                   | 0.50       |                 | $          | 0.47 |   | 6.4 | % | $ | 1.00 |   | $ | 0.95 |   | 5.3 | % |

 

# **Revenues were higher in both the second quarter and year todate compared to the same periods last year. Gains in the second quarter were concentrated in the book manufacturingsegment, reflecting continued growth in demand for the Company’s expandedcapabilities in four-color textbook production. Second-quarter sales in the specialty publishing segment were downdespite a gain in the segment’s newest business, Research & EducationAssociation (“REA”). On January 6, 2004, the Company purchased substantiallyall of the assets of REA, a publisher of test preparation and study-guide booksand software for high school, college, graduate students, andprofessionals.  The acquisition wasaccounted for as a purchase, and accordingly, REA’s financial results wereincluded in the specialty publishing segment in the consolidated financialstatements from the date of acquisition.**

 

*Book Manufacturing Segment*

 

SEGMENT HIGHLIGHTS

(dollars in thousands except per share amounts)

 
| ** **                           | ** ** | **Quarter Ended**   | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------|------------|---------------------|------------|----------------------|------------|
| ** **                           | ** ** | **March 26,  2005** | ** ** | **March 27,  2004**  | ** ** | **%  Change** | ** ** | **March 26,  2005** | ** ** | **March 27,  2004** | ** ** | **%  Change** | ** ** |
|                                 |       |                |       |                 |       |   |   |   |   |   |   |   |   |
| Net sales                            |       | $                   | 45,278     |                 | $          | 40,988 |   | 10.5 | % | $ | 88,201 |   | $ | 80,645 |   | 9.4 | % |
| Gross profit                         |       | 11,850              |       | 10,982               |       | 7.9 | % | 23,797 |   | 22,318 |   | 6.6 | % |
| As a percentage of sales             |       | 26.2                | %          | 26.8                 | %          |   |   | 27.0 | % | 27.7 | % |   |   |
| Selling and administrative  expenses |       | 6,231               |       | 6,187                |       | 0.7 | % | 12,739 |   | 12,774 |   | -0.3 | % |
| Interest income                      |       | 138                 |       | 112                  |       | 23.2 | % | 254 |   | 186 |   | 36.6 | % |
| Pretax income                        |       | 5,757               |       | 4,907                |       | 17.3 | % | 11,312 |   | 9,730 |   | 16.3 | % |
|                                      |            |                     |            |                      |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

11

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Withinthis segment, the Company focuses on three key markets: education, religiousand specialty trade.  Sales to theeducation market rose 33% in the quarter, with gains split equally between theelementary/high school and college markets. For the year to date, education sales were up 22% over fiscal 2004, withslightly larger gains at the elementary/high school level.  Growth in four-color textbooks to the educationmarket was particularly strong in fiscal 2005, enabled by the new four-colorpress installed last April.  Sales to thereligious market were down 16% for the quarter and 5% for the first six monthsof the year, reflecting timing issues on the receipt of orders as well as adecision to discontinue certain types of low-priced manufacturing work.  Sales to the specialty trade market were up5% for the second quarter and 6% for the first six months of the fiscal year,as this diverse market continued its gradual recovery from the declines ofprevious years.

 

Grossprofit increased in both the quarter and year to date, but decreased as apercentage of sales compared to the same periods last year.  Continued productivity gains and employeetraining programs, as well as tight cost controls, reduced the impact ofpricing pressure and increased energy and medical costs on the segment’s grossprofit percentage.

 

Sellingand administrative expenses in both the second quarter and first six months offiscal 2005 were comparable to the same periods last year.  As a percentage of sales, selling andadministrative expenses were 13.8% for the second quarter of fiscal 2005 versus15.1% last year and 14.4% of sales for the first six months compared to 15.8%for the corresponding period of fiscal 2004.

 

Intercompanyinterest income allocated to the book manufacturing segment increased to$138,000 in the second quarter and $254,000 for the first six months of thisyear, compared to $112,000 and $186,000 for the second quarter and first halfof fiscal 2004, respectively, as a result of the cash flow produced by thissegment.

 

Secondquarter pretax income in this segment was $5.8 million, or $.45 per dilutedshare, up 17% from the corresponding quarter last year.  For the first half of the year, pretax incomewas up 16% over last year to $11.3 million, or $.88 per diluted share.

 

*Specialty Publishing Segment*

 

SEGMENT HIGHLIGHTS

(dollars in thousands except per share amounts)

 
| ** **                           | ** ** | **Quarter Ended**   | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------|------------|---------------------|------------|----------------------|------------|
| ** **                           | ** ** | **March 26,  2005** | ** ** | **March 27,  2004**  | ** ** | **%  Change** | ** ** | **March 26,  2005** | ** ** | **March 27,  2004** | ** ** | **%  Change** | ** ** |
|                                 |       |                |       |                 |       |   |   |   |   |   |   |   |   |
| Net sales                            |       | $9,737              |       | $10,124              |       | -3.8 | % | $20,007 |   | $19,191 |   | 4.3 | % |
| Gross profit                         |       | 4,572               |       | 4,601                |       | -0.6 | % | 9,497 |   | 9,012 |   | 5.4 | % |
| As a percentage of sales             |       | 47.0                | %          | 45.4                 | %          |   |   | 47.5 | % | 47.0 | % |   |   |
| Selling and administrative  expenses |       | 3,684               |       | 3,449                |       | 6.8 | % | 7,459 |   | 6,500 |   | 14.8 | % |
| Interest expense                     |       | 96                  |       | 85                   |       | 12.9 | % | 185 |   | 132 |   | 40.2 | % |
| Pretax income                        |       | 792                 |       | 1,067                |       | -25.8 | % | 1,853 |   | 2,380 |   | -22.1 | % |

 

The Company’s specialty publishing segment iscomprised of Dover Publications, Inc. (“Dover”), as well as REA since itsacquisition on January 6, 2004.  Secondquarter sales at REA were up 19% to $1.4 million, reflecting contributions fromnew products and direct marketing initiatives. At Dover, sales in the quarter were $8.4 million, down 7% from $9.0million last year.  Direct-to-consumersales increased 20% in the quarter, but sales to major bookstore chains andnon-bookstore retailers such as gift shops and craft stores were down.  For the first six months, sales in thissegment increased 4% over the same period last year to $20.0 million.  The increase was primarily due to theinclusion of $1.1 million of REA sales in this year’s first quarter.

 

Within this segment, Dover’s gross profit as a percentage of salesincreased slightly for both the quarter and year to date compared to last year,reflecting a more favorable sales mix tied to the increase indirect-to-consumer sales, as well as modest price increases.  REA’s gross profit percentage for the secondquarter of fiscal 2005 was 43.9% versus 31.2% last year.  This improvement is due, in large part, tothe expense related

 

12

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to a required purchaseaccounting write up of inventory to fair market value when REA wasacquired.  The original inventory writeup was approximately $1 million and is being expensed as the acquired inventoryis sold.  The second quarter of fiscal2005 included $60,000 of such expense compared to $210,000 in the secondquarter of fiscal 2004.  To date,approximately $750,000 of the $1 million has been expensed.

 

Selling and administrativeexpenses in this segment were $3.7 million in the second quarter, an increaseof 7% over the corresponding prior year period, in part due to $140,000 ofexpenses incurred in connection with two significant projects to upgrade thepublishing segment infrastructure.  Oneproject consists of replacing old information systems at Dover and REA with anew integrated solution, with initial implementation scheduled for Dover laterthis fiscal year.  The other project aimsto save on warehousing costs by relocating a significant portion of Dover’sleased warehousing space to available warehouse space owned by the Company.While these projects are expected to result in $350,000 to $400,000 ofadditional expenses in the second half of fiscal 2005, we expect to generateannual savings on warehousing costs of approximately $800,000 beginning infiscal 2006.  For the first six months offiscal 2005, the increase in selling and administrative expenses over the prioryear was 15% to $7.5 million.  Thisincrease was due to the addition of REA to the segment in January 2004.

 

Intercompanyinterest expense is allocated to the specialty publishing segment based on theacquisition costs of Dover and REA, reduced by cash generated by each businesssince acquisition.  Such interest expensefor the second quarter was $96,000, comparable to the same period last year.  Intercompany interest expense for the first sixmonths was $185,000 compared to $132,000 for the first half of the prior yearwith the increase primarily attributable to the acquisition of REA.

 

Pretaxincome in the specialty publishing segment was $0.8 million, or, on anafter-tax basis, $.06 per diluted share, in the second quarter of fiscal 2005,compared to $1.1 million, or $.08 per diluted share, in last year’s secondquarter.  For the first six months,pretax income in this segment was $1.9 million, or $.14 per diluted share,compared to $2.4 million, or $.18 per diluted share, for the same period lastyear.

 

*Total Consolidated Company*

Interestincome, net of interest expense, was $42,000 in the second quarter of fiscal2005, compared to $27,000 in the same period of fiscal 2004.  There were no borrowings under the Company’s$60 million revolving credit facility in the first half of either year,however, interest expense includes commitment fees and other costs associatedwith maintaining this credit facility. Cash investments in the second quarter of fiscal 2005 averagedapproximately $22.3 million invested at an average annual interest rate of 2.2%generating interest income of approximately $120,000.  For the same period last year, the Company’saverage cash investments were $13.1 million invested at an average interestrate of 1.4% generating interest income of approximately $50,000.  For the first six months of fiscal 2005,interest income, net of interest expense, was $69,000 compared to $54,000 inthe first half of fiscal 2004.  In fiscal2004, capitalized interest was $38,000 in the second quarter and $61,000 forthe first six months.  No interest wascapitalized in fiscal 2005.

 

TheCompany’s effective tax rate for the second quarter and first six months offiscal 2005 was 36% compared to 35% for corresponding periods last year,reflecting a reduced federal tax benefit from export related income associatedwith the American Jobs Creation Act of 2004.

 

Forpurposes of computing net income per diluted share, weighted average sharesoutstanding increased by approximately 97,000 shares and 99,000 shares overlast year’s second quarter and first six months, respectively.  The increase in both periods was largely dueto options exercised.

 

Subsequent Event 

On March 10, 2005, the Company announced athree-for-two stock split to be effected in the form of a 50% stock dividend tobe distributed on May 27, 2005 to stockholders of record on May 6, 2005.  Share and per share amounts will be adjustedbeginning in the third quarter to reflect this May 2005 stock split.

 

13

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**Liquidity and Capital Resources:**

During the first six months of fiscal 2005,operations provided approximately $10.5 million of cash.  Net income was $8.3 million and depreciationand amortization were $5.9 million. Working capital used approximately $4.0 million of cash, due in part topayment of taxes and annual profit sharing contributions.

 

Investment activities in the first half offiscal 2005 used approximately $9.4 million of cash. Capital expenditures wereapproximately $7.9 million, primarily for deposits on another four-color pressto be installed in late 2005.  This pressis identical to the press installed in 2004 and will further expand the Company’scapacity to produce four-color textbooks. Capital also included investments in the specialty publishing segmentfor an integrated software solution to be installed later this year, as well asa program to relocate and improve warehousing operations.  For the entire fiscal year, capitalexpenditures are expected to be approximately $18 to $20 million, approximatelyhalf of which will be payments on the new press.  Prepublication costs were $1.4 million andfor the full fiscal year are projected to be approximately $3 million.

 

Financing activities for the first six monthsof fiscal 2005 used approximately $0.6 million of cash.  Cash dividends were $1.6 million whileproceeds from stock plans were $1.1 million, primarily from the exercise ofstock options.  On March 10, 2005, theCompany announced, along with the three-for-two stock split, a 50% increase inits quarterly dividend, which will be paid on May 27, 2005.  At March 26, 2005, the Company had $24.5million in cash and no borrowings under its long-term revolving creditfacility, which bears interest at a floating rate.  The revolving credit facility is used by theCompany for both its long-term and short-term financing needs. On April 29,2005, the Company extended the maturity date of this facility to March 2008 andamended certain provisions, including reducing the amount of the facility to$45 million from $60 million to reduce the cost of the commitment fee.  The Company believes that its cash fromoperations and available credit facilities will be sufficient to meet its cashrequirements through 2005.

 

The following table summarizes the Company’scontractual obligations and commitments at September 25, 2004 to make futurepayments as well as its existing commercial commitments.

 
| ** **                  | ** ** | ** ** | ** ** | **(000’s omitted)**   | ** ** |
|-----------------------------|------------|------------|------------|----------------------------|------------|
| ** **                  | ** ** | ** ** | ** ** | **Payments due by period** | ** ** |
| ** **                  | ** ** | **Total**  | ** ** | **Less than 1 Yr.**        | ** ** | **1-3 Yrs.** | ** ** | **4-5 Yrs.** | ** ** | **After 5 Yrs.** | ** ** |
| Contractual  Payments:      | ** ** | ** ** | ** ** | ** **                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Long-Term Debt              |       | $          | 593        |                       | $          | 83 |   | $ | 173 |   | $ | 184 |   | $ | 153 |   |
| Operating Leases            |       | 11,039     |       | 3,198                      |       | 3,700 |   | 1,691 |   | 2,450 |   |
| Purchase Obligations (1)    |       | 6,962      |       | 6,962                      |       | — |   | — |   | — |   |
| Other Long-Term Liabilities |       | 2,630      |       | —                     |       | 635 |   | 210 |   | 1,785 |   |
|                             |            |            |            |                            |            |  |  |  |  |  |  |  |  |  |  |  |

 

----

(1)          Represent amounts at March 26, 2005 for capitalcommitments for new four-color press and other projects.

 

**New Accounting Pronouncements:**

In December 2004, the Financial AccountingStandards Board issued SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”).  Under this new standard, companies will nolonger be able to account for share-based compensation transactions using theintrinsic method in accordance with APB 25. Instead, companies will be required to account for such transactionsusing a fair-value method and to recognize the expense over the serviceperiod.  SFAS 123R allows for severalalternative transition methods. On April 14, 2005, the Securitiesand Exchange Commission announced the adoption of a rule that defers therequired effective date of SFAS 123R for registrants to the beginning of thefirst fiscal year beginning after June 15, 2005, which would be the beginningof the Company’s 2006 fiscal year.  TheCompany can also early adopt SFAS 123R. The Company is in the process of evaluating this recent announcement andit has not yet determined when it will adopt SFAS 123R or the transition methodit will use.

 

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs” (“SFAS151”), an amendment of ARB No. 43, Chapter 4. SFAS 151 clarifies the accounting for abnormal amounts of idle facilityexpense, freight, handling costs and wasted material.  SFAS 151 is effective for inventory costsincurred during fiscal years beginning after June 15, 2005.  The Company does not believe the adoption ofSFAS 151 will have a material effect on its consolidated financial position,results of operations or cash flows.

 

14

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**Forward-Looking Information:**

This Quarterly Report onForm 10-Q and the Company’s Annual Report for the year ended September 25, 2004on Form 10-K include forward-looking statements.  Statements that describe future expectations,plans or strategies are considered “forward-looking statements” as that term isdefined under the Private Securities Litigation Reform Act of 1995 and releasesissued by the Securities and Exchange Commission.  The words “believe,” “expect,” “anticipate,” “intend,”“estimate” and other expressions which are predictions of or indicate futureevents and trends and which do not relate to historical matters identifyforward-looking statements.  Suchstatements are subject to risks and uncertainties that could cause actualresults to differ materially from those currently anticipated.  Factors that could affect actual resultsinclude, among others, changes in customers’ demand for the Company’s products,changes in raw material costs and availability, seasonal changes in customers’orders, pricing actions by competitors, changes in copyright laws,consolidation among customers and competitors, success in the integration ofacquired businesses, changes in technology, and general changes in economicconditions.  Although the Companybelieves that the assumptions underlying the forward-looking statements arereasonable, any of the assumptions could be inaccurate, and therefore, therecan be no assurance that the forward-looking statements will prove to beaccurate.  The forward-looking statementsincluded herein are made as of the date hereof, and the Company undertakes noobligation to update publicly such statements to reflect subsequent events orcircumstances.

 

**Item 3.****                                   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK**

 

There have been no material changes from theinformation concerning the Company’s “Quantitative and Qualitative DisclosuresAbout Market Risk” as previously reported in the Company’s Annual Report onForm 10-K for the year ended September 25, 2004.

 

**Item 4.****                                   CONTROLSAND PROCEDURES**

 

**(a)****          ****Evaluation of disclosure controls and procedures**

 

Asrequired by Rule 13a-15 under the Securities Exchange Act of 1934, as of theend of the period covered by this quarterly report, the Company carried out anevaluation under the supervision and with the participation of the Company’smanagement, including the Company’s Chief Executive Officer and Chief FinancialOfficer, of the effectiveness of the design and operation of the Company’sdisclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and ChiefFinancial Officer concluded that the Company’s disclosure controls andprocedures are effective to ensure that information required to be disclosed bythe Company in the reports it files or submits under the Exchange Act isrecorded, processed, summarized and reported, within the time periods specifiedin the Securities and Exchange Commission’s rules and forms.

 

**(b)****          ****Changes in internal controls over financialreporting**

 

Therewas no change in the Company’s internal control over financial reporting thatoccurred during the period covered by this quarterly report that has materiallyaffected, or that is reasonably likely to materially affect, the Company’sinternal control over financial reporting.

 

15

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#### **PART II.  OTHER INFORMATION**

 
| **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 20, 2005. Following are the matters voted on at the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |       | 1) All nominees of the Board of Directors of the registrant were  elected for a three-year term. Votes were cast as follows: Richard K. Donahue  – 7,415,594 for and 309,587 withheld; Edward J. Hoff – 7,337,490 for and  387,691 withheld, Robert P. Story, Jr. – 7,444,162 for and 281,109 withheld,  and Susan L. Wagner – 7,514,965 for and 210,216 withheld.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |       | 2) Stockholders approved an amendment to Courier Corporation’s  Amended and Restated 1993 Stock Incentive Plan, which, among other things,  increased the number of shares of the registrant’s common stock available  under the Plan by 150,000 shares. Votes were cast as follows: 6,087,038 votes  for, 397,554 votes against, 36,428 votes abstained, and 1,204,161 no votes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |       | 3) Stockholders approved the adoption of the Courier Corporation 2005  Stock Equity Plan for Non-Employee Directors under which 150,000 shares of  the registrant’s common stock may be issued. Votes were cast as follows:  5,807,239 votes for, 663,088 votes against, 50,693 votes abstained, and  1,204,161 no votes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |       | 4) Stockholders voted to ratify and approve the selection by the  Audit and Finance Committee of the Board of Directors, of Deloitte &  Touche LLP as independent public accountants for the Corporation for the  fiscal year ending September 24, 2005. Votes were cast as follows: 7,690,438  votes for, 16,065 votes against, and 18,678 votes abstained.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Item 5.** |       | **Other Information**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |       | On April 29, 2005, the Company extended the  maturity date of its Amended and Restated Revolving Credit Agreement to March  2008 and amended certain other provisions, including reducing the amount of  the facility to $45 million from $60 million to reduce the cost of the  commitment fee. The full text of the amendment is furnished as Exhibit 10.1  hereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        |       | On March 10,  2005, the Company announced a three-for-two stock split to be effected in the  form of a 50% stock dividend to be distributed on May 27, 2005 to  stockholders of record on May 6, 2005. Pursuant to the Company’s Shareholder  Rights Agreement, dated as of March 18, 1999, (the “Rights Agreement”), the  Company issued one Right (as defined in the Rights Agreement) for each share  of Common Stock of the Company, par value $1.00 per share (the “Common  Stock”), outstanding as of the close of business on March 19, 1999. In  addition, one Right automatically attaches to each share of Common Stock  issued thereafter until the occurrence of certain events referred to in the  Rights Agreement. In connection with the foregoing stock split, as well as  prior stock splits effected since March 19, 1999, certain corresponding adjustments  to the terms of the Rights have automatically been made in accordance with  and as required by the applicable provisions of the Rights Agreement. |

 

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| **Item 6**. |       | **Exhibits and Reports on Form  8-K**                                                                                                                                                                                                                                                                                          |
|-------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |       |                                                                                                                                                                                                                                                                                                                           |
|        |       | (a) Exhibits                                                                                                                                                                                                                                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                                                                           |
| ** **  |       | **Exhibit  No.**                                                                                                                                                                                                                                                                                                               | ** ** | **Description** |
|        |       |                                                                                                                                                                                                                                                                                                                           |   |   |
|        |       | 10.1                                                                                                                                                                                                                                                                                                                           |   | Amendment, dated April 29, 2005, 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 $45  million revolving credit facility. |
|        |       | 10.2                                                                                                                                                                                                                                                                                                                           |   | Amendment, dated November 8, 2001, to  Shareholder Rights Agreement dated March 18, 1999, changing the Rights Agent. |
|        |       | 31.1                                                                                                                                                                                                                                                                                                                           |   | Certification of Chief Executive Officer |
|        |       | 31.2                                                                                                                                                                                                                                                                                                                           |   | Certification of Chief Financial Officer |
| ** **  | ** ** | **32.1**                                                                                                                                                                                                                                                                                                                       | ** ** | **Certification of Chief Executive Officer** |
|        |       | 32.2                                                                                                                                                                                                                                                                                                                           |   | Certification of Chief Financial Officer |
|        |       |                                                                                                                                                                                                                                                                                                                           |   |   |
|        |       | (b) Reports on  Form 8-K                                                                                                                                                                                                                                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                           |
|        |       | Filed January  20, 2005, reporting under Item 2.02 a press release dated January 20, 2005  reporting financial results for the quarter ended December 25,2004.                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                           |
|        |       | Filed March  14, 2005, reporting under Item 8.01 a press release dated March 10, 2005  reporting a three-for-two stock split and a 50% increase in the quarterly  cash dividend to be distributed on May 27, 2005.                                                                                                             |
|        |       |                                                                                                                                                                                                                                                                                                                           |
|        |       | Filed March  29, 2005, reporting under Item 5.03 an amendment, effective March 24, 2005,  to the registrant’s By-Laws so as to authorize uncertificated shares with a  view toward making the registrant’s securities eligible for participation in  the Direct Registration System of The Depository Trust Company. |

 

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**SIGNATURES**

 

Pursuant to the requirements of theSecurities Exchange Act of 1934, the Company has duly caused this report to besigned on its behalf by the undersigned thereunto duly authorized.

 
|          |       | **COURIER CORPORATION** |             |
|---------------|------------|-------------------------|------------------|
|          |       |                    | **(Registrant)** |   |
|          |       |                    |             |   |
|          |       |                    |             |   |
| *May 2, 2005* | * *   | * *                | By:              | *s/James F. Conway III* | * * | * * |
| Date          |       |                    |             | James F. Conway III |   |
|          |       |                    |             | Chairman, President and |   |
|          |       |                    |             | Chief  Executive Officer |   |
|          |       |                    |             |   |
|          |       |                    |             |   |
| *May 2, 2005* | * *   | * *                | By:              | *s/Robert P. Story, Jr.* | * * | * * |
| Date          |       |                    |             | Robert P. Story, Jr. |   |
| ** **    | ** ** | ** **              | ** **       | Senior Vice President and | ** ** |
|          |       |                    |             | Chief Financial Officer |   |
|          |       |                    |             |   |
|          |       |                    |             |   |
| *May 2, 2005* | * *   | * *                | By:              | *s/Peter M. Folger* | * * | * * |
| Date          |       |                    |             | Peter M. Folger |   |
| ** **    | ** ** | ** **              | ** **       | Vice President and | ** ** |
|          |       |                    |             | Chief  Accounting Officer |   |
|               |            |                         |                  |  |  |  |  |  |  |

 

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