**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

 

**(Mark One)**

 

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

 

**For thequarterly period ended June 25, 2005**

 

**OR**

 

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

 

**For the transition period from                          to                          **

 

**Commission file number 0-7597**

 

**COURIER CORPORATION**

(Exact name of registrant as specifiedin its charter)

 

**Massachusetts**

(State or other jurisdiction ofincorporation or organization)

 

**04-2502514**

(I.R.S. Employer Identification No.)

 
| **15 Wellman Avenue,  North Chelmsford, Massachusetts** | ** ** | **01863**  |
|---------------------------------------------------------|------------|------------|
| (Address of principal executive  offices)               |       | (Zip Code) |

 

**(978) 251-6000**

(Registrant’s telephone number,including area code)

 

**NO CHANGE**

(Former name, former address and formerfiscal year, if changed since last report)

 

Indicate bycheck mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

Yes                            ý                                    No                                o

 

Indicate bycheck mark whether the registrant is an accelerated filer (as defined inExchange Act Rule 12b-2).

 

Yes                            ý                                    No                                o

 

Indicate thenumber of shares outstanding of each of the issuer’s classes of common stock,as of the latest practicable date.

 
| **Class**                  | ** ** | **Outstanding at August 1,  2005** |
|----------------------------|------------|-----------------------------------------|
| Common Stock, $1 par value |       | 12,284,623 Shares                       |

 

 

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COURIER CORPORATIONCONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)(Dollars in thousands except per share amounts)

 
| ** **                                  | ** ** | **QUARTER ENDED** | ** ** | **NINE MONTHS ENDED** | ** ** |
|---------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **June 25,** | ** ** | **June 26,**     | ** ** | **June 25,** | ** ** | **June 26,** | ** ** |
| ** **                                  | ** ** | **2005**          | ** ** | **2004**              | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                        |       |              |       |                  |       |   |   |   |   |
| Net sales                                   |       | $                 | 58,758     |                  | $          | 55,489 |   | $ | 163,522 |   | $ | 151,971 |   |
| Cost of  sales                              |       | 39,343            |       | 38,140                |       | 111,053 |   | 103,466 |   |
|                                        |       |              |       |                  |       |   |   |   |   |
| Gross profit                                |       | 19,415            |       | 17,349                |       | 52,469 |   | 48,505 |   |
|                                        |       |              |       |                  |       |   |   |   |   |
| Selling and  administrative expenses        |       | 10,533            |       | 9,604                 |       | 30,731 |   | 28,878 |   |
| Interest  (income)/expense, net             |       | (113              | )          | 28                    |       | (182 | ) | (26 | ) |
| Gain on real  estate sale                   |       | —            |       | 250                   |       | — |   | 250 |   |
|                                        |       |              |       |                  |       |   |   |   |   |
| Pretax  income                              |       | 8,995             |       | 7,967                 |       | 21,920 |   | 19,903 |   |
|                                        |       |              |       |                  |       |   |   |   |   |
| Provision  for income taxes (Note C)        |       | 3,142             |       | 2,773                 |       | 7,782 |   | 6,946 |   |
|                                        |       |              |       |                  |       |   |   |   |   |
| Net income                                  |       | $                 | 5,853      |                  | $          | 5,194 |   | $ | 14,138 |   | $ | 12,957 |   |
|                                        |       |              |       |                  |       |   |   |   |   |
| Net income  per share (Note D):             |       |              |       |                  |       |   |   |   |   |
|                                        |       |              |       |                  |       |   |   |   |   |
| Basic                                       |       | $                 | 0.48       |                  | $          | 0.43 |   | $ | 1.17 |   | $ | 1.09 |   |
|                                        |       |              |       |                  |       |   |   |   |   |
| Diluted                                     |       | $                 | 0.47       |                  | $          | 0.42 |   | $ | 1.13 |   | $ | 1.05 |   |
|                                        |       |              |       |                  |       |   |   |   |   |
| Cash  dividends declared per share (Note A) |       | $                 | 0.00       |                  | $          | 0.058 |   | $ | 0.234 |   | $ | 0.175 |   |

 

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

 

2

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COURIER CORPORATIONCONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)(Dollars in thousands)

 
| ** **                                                                                                                             | ** ** | **June 25,** | ** ** | **September 25,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|------------------------|------------|
| ** **                                                                                                                             | ** ** | **2005**          | ** ** | **2004**               | ** ** |
| ASSETS                                                                                                                                 |       |              |       |                   |       |
|                                                                                                                                   |       |              |       |                   |       |
| Current  assets:                                                                                                                       |       |              |       |                   |       |
| Cash and  cash equivalents                                                                                                             |       | $                 | 28,896     |                   | $          | 23,965 |   |
| Accounts  receivable, less allowance for uncollectible accounts of $1,691 at June 25,  2005 and $1,630 at September 25, 2004 |       | 31,977            |       | 34,072                 |       |
| Inventories  (Note B)                                                                                                                  |       | 26,624            |       | 25,108                 |       |
| Deferred  income taxes                                                                                                                 |       | 2,857             |       | 2,852                  |       |
| Other  current assets                                                                                                                  |       | 1,171             |       | 840                    |       |
|                                                                                                                                   |       |              |       |                   |       |
| Total  current assets                                                                                                                  |       | 91,525            |       | 86,837                 |       |
|                                                                                                                                   |       |              |       |                   |       |
| Property,  plant and equipment, less accumulated depreciation: $116,230 at June 25,  2005 and $109,383 at September 25, 2004 |       | 51,316            |       | 48,482                 |       |
|                                                                                                                                   |       |              |       |                   |       |
| Goodwill  (Note A)                                                                                                                     |       | 33,255            |       | 33,255                 |       |
|                                                                                                                                   |       |              |       |                   |       |
| Prepublication  costs (Note A)                                                                                                         |       | 5,394             |       | 5,127                  |       |
|                                                                                                                                   |       |              |       |                   |       |
| Other assets                                                                                                                           |       | 1,538             |       | 1,498                  |       |
|                                                                                                                                   |       |              |       |                   |       |
| Total assets                                                                                                                           |       | $                 | 183,028    |                   | $          | 175,199 |   |

 

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

 

3

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COURIER CORPORATIONCONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)(Dollars in thousands)

 
| ** **                                                                                                                                    | ** ** | **June 25,** | ** ** | **September 25,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|------------------------|------------|
| ** **                                                                                                                                    | ** ** | **2005**          | ** ** | **2004**               | ** ** |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                     |       |              |       |                   |       |
|                                                                                                                                          |       |              |       |                   |       |
| Current  liabilities:                                                                                                                         |       |              |       |                   |       |
| Current  maturities of long-term debt                                                                                                         |       | $                 | 83         |                   | $          | 83 |   |
| Accounts  payable                                                                                                                             |       | 6,604             |       | 10,059                 |       |
| Accrued  payroll                                                                                                                              |       | 6,650             |       | 6,470                  |       |
| Accrued  taxes                                                                                                                                |       | 3,389             |       | 5,557                  |       |
| Other  current liabilities                                                                                                                    |       | 7,464             |       | 7,194                  |       |
|                                                                                                                                          |       |              |       |                   |       |
| Total  current liabilities                                                                                                                    |       | 24,190            |       | 29,363                 |       |
|                                                                                                                                          |       |              |       |                   |       |
| Long-term  debt                                                                                                                               |       | 448               |       | 510                    |       |
| Deferred  income taxes                                                                                                                        |       | 7,743             |       | 7,706                  |       |
| Other  liabilities                                                                                                                            |       | 2,736             |       | 2,630                  |       |
|                                                                                                                                          |       |              |       |                   |       |
| Total  liabilities                                                                                                                            |       | 35,117            |       | 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 12,202,000 at June 25,  2005 and 8,031,000 at September 25, 2004 |       | 12,202            |       | 8,031                  |       |
| Additional  paid-in capital                                                                                                                   |       | 106               |       | 869                    |       |
| Retained  earnings                                                                                                                            |       | 135,976           |       | 126,573                |       |
| Unearned  compensation                                                                                                                        |       | (373              | )          | (483                   | )          |
|                                                                                                                                          |       |              |       |                   |       |
| Total  stockholders’ equity                                                                                                              |       | 147,911           |       | 134,990                |       |
|                                                                                                                                          |       |              |       |                   |       |
| Total  liabilities and stockholders’ equity                                                                                              |       | $                 | 183,028    |                   | $          | 175,199 |   |

 

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

 

4

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COURIER CORPORATIONCONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)(Dollars in thousands)

 
| ** **                                                                       | ** ** | **NINE MONTHS ENDED** | ** ** |
|----------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                       | ** ** | **June 25,**     | ** ** | **June 26,** | ** ** |
| ** **                                                                       | ** ** | **2005**              | ** ** | **2004** | ** ** |
|                                                                             |       |                  |       |   |   |
| Operating  Activities:                                                           |       |                  |       |   |   |
| Net income                                                                       |       | $                     | 14,138     |   | $ | 12,957 |   |
| Adjustments  to reconcile net income to cash provided from operating activities: |       |                  |       |   |   |
| Depreciation  and amortization                                                   |       | 8,904                 |       | 8,304 |   |
| Deferred  income taxes                                                           |       | 32                    |       | 1,607 |   |
| Changes in  assets and liabilities:                                              |       |                  |       |   |   |
| Accounts  receivable                                                             |       | 2,095                 |       | (1,086 | ) |
| Inventories                                                                      |       | (1,516                | )          | (2,780 | ) |
| Accounts  payable                                                                |       | (3,455                | )          | (133 | ) |
| Accrued  taxes                                                                   |       | (2,168                | )          | (2,082 | ) |
| Other  elements of working capital                                               |       | 119                   |       | (492 | ) |
| Gain on sale  of assets (Note F)                                                 |       | —                |       | (163 | ) |
| Tax benefits  of stock option activity                                           |       | 315                   |       | 384 |   |
| Other, net                                                                       |       | 178                   |       | (1,206 | ) |
|                                                                             |       |                  |       |   |   |
| Cash  provided from operating activities                                         |       | 18,642                |       | 15,310 |   |
|                                                                             |       |                  |       |   |   |
| Investment  Activities:                                                          |       |                  |       |   |   |
| Capital  expenditures                                                            |       | (9,810                | )          | (10,069 | ) |
| Prepublication  costs                                                            |       | (2,183                | )          | (2,032 | ) |
| Business  acquisition (Note G)                                                   |       | —                |       | (11,850 | ) |
| Proceeds  from sale of assets (Note F)                                           |       | —                |       | 1,664 |   |
|                                                                             |       |                  |       |   |   |
| Cash used  for investment activities                                             |       | (11,993               | )          | (22,287 | ) |
|                                                                             |       |                  |       |   |   |
| Financing  Activities:                                                           |       |                  |       |   |   |
| Long-term  debt repayments                                                       |       | (62                   | )          | (61 | ) |
| Cash  dividends paid                                                             |       | (2,838                | )          | (2,094 | ) |
| Proceeds  from stock plans                                                       |       | 1,182                 |       | 580 |   |
|                                                                             |       |                  |       |   |   |
| Cash used  for financing activities                                              |       | (1,718                | )          | (1,575 | ) |
|                                                                             |       |                  |       |   |   |
| Increase  (decrease) in cash and cash equivalents                                |       | 4,931                 |       | (8,552 | ) |
|                                                                             |       |                  |       |   |   |
| Cash and  cash equivalents at the beginning of the period                        |       | 23,965                |       | 23,824 |   |
|                                                                             |       |                  |       |   |   |
| Cash and  cash equivalents at the end of the period                              |       | $                     | 28,896     |   | $ | 15,272 |   |

 

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

 

5

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**COURIER CORPORATION**

 

**NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**

 

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

 

**Unaudited Financial Statements**

 

The balance sheet as of June 25, 2005,the statements of income for the three-month and nine-month periods ended June 25,2005 and June 26, 2004, and the statements of cash flows for thenine-month periods ended June 25, 2005 and June 26, 2004 areunaudited. In the opinion of management, all adjustments necessary for a fairpresentation of such financial statements have been recorded.  Such adjustments consisted only of normalrecurring items. Certain amounts for fiscal 2004 have been reclassified in theaccompanying financial statements in order to be consistent with the currentyear’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 balancesheet data as of September 25, 2004 was derived from audited year-endconsolidated financial statements, but does not include disclosures required bygenerally accepted accounting principles. These interim financial statements should be read in conjunction withthe Company’s most recent Annual Report 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, Inc. andthree years for Research & Education Association, Inc. (“REA”)which was acquired in January 2004.

 

**Goodwill**

 

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

 

**StockSplit and Dividend Increase**

 

On March 10, 2005, the Company announced a three-for-two stocksplit effected in the form of a 50% stock dividend, which was distributed on May 27,2005.  Simultaneously, the quarterly cashdividend was increased to $.10 per post-split share of common stock, 50% higherthan the $.067 cents per post-split share declared in January 2005.  It was the second dividend declared in theCompany’s second fiscal quarter and, therefore, no dividend was declared in thethird quarter.  Weighted average sharesoutstanding and per share amounts presented in the accompanying financialstatements for periods prior to the stock split have been restated to giveeffect to the stock split.

 

**Stock-Based Compensation**

 

Pursuant to SFAS No. 123, “Accounting for Stock-BasedCompensation,” as amended by SFAS No. 148, the Company applies therecognition and measurement principles of APB Opinion No. 25, “Accountingfor Stock Issued to Employees” (“APB 25”) and related interpretations.  Accordingly, because the number of shares isfixed and the exercise price of the stock options equals the market price ofthe underlying stock on the date of grant, no stock compensation expense hasbeen recognized.

 

6

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

 
| ** **                                                                                                | ** ** | **(000’s Omitted)** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                                                                                | ** ** | **Quarter Ended**        | ** ** | **Nine Months Ended** | ** ** |
| ** **                                                                                                | ** ** | **June 25,  2005**  | ** ** | **June 26,  2004** | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** |
|                                                                                                      |       |                     |       |   |   |   |   |   |   |
| Net income  as reported                                                                                   |       | $                        | 5,853      |   | $ | 5,194 |   | $ | 14,138 |   | $ | 12,957 |   |
| Deduct:  Stock-based compensation expense determined under SFAS No. 123, net of  related tax effects |       | (306                     | )          | (353 | ) | (921 | ) | (1,051 | ) |
| Pro forma  net income                                                                                     |       | $                        | 5,547      |   | $ | 4,841 |   | $ | 13,217 |   | $ | 11,906 |   |
|                                                                                                      |       |                     |       |   |   |   |   |   |   |
| Net income  per share as reported:                                                                        |       |                     |       |   |   |   |   |   |   |
| Basic                                                                                                     |       | $                        | 0.48       |   | $ | 0.43 |   | $ | 1.17 |   | $ | 1.09 |   |
| Diluted                                                                                                   |       | 0.47                     |       | 0.42 |   | 1.13 |   | 1.05 |   |
|                                                                                                      |       |                     |       |   |   |   |   |   |   |
| Pro forma  net income per share:                                                                          |       |                     |       |   |   |   |   |   |   |
| Basic                                                                                                     |       | $                        | 0.46       |   | $ | 0.41 |   | $ | 1.09 |   | $ | 1.00 |   |
| Diluted                                                                                                   |       | 0.44                     |       | 0.39 |   | 1.06 |   | 0.97 |   |

 

**New Accounting Pronouncements**

 

# **In December 2004, the FinancialAccounting Standards Board (“FASB”) issued SFAS No. 123R, “Share-BasedPayment” (“SFAS 123R”).  Under this newstandard, companies will no longer be able to account for share-basedcompensation transactions using the intrinsic method in accordance with APB25.  Instead, companies will be requiredto account for such transactions using a fair-value method and to recognize theexpense over the service period.  SFAS 123Rallows for several alternative transition methods.  On April 14, 2005, the Securities andExchange 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.  Accordingly the Company will implement thisnew standard in the first quarter of its fiscal year 2006.  The Company believes that the pro formadisclosures in Note A under Stock-Based Compensation appropriately reflect theanticipated impact this standard would have had on reported net income ifadopted in the periods presented.**

 

In November 2004, the FASB issued SFAS No. 151, “InventoryCosts” (“SFAS 151”), an amendment of ARB No. 43, Chapter 4.  SFAS 151 clarifies the accounting forabnormal amounts of idle facility expense, freight, handling costs and wastedmaterial.  SFAS 151 is effective forinventory costs incurred during fiscal years beginning after June 15,2005.  The Company does not believe theadoption of SFAS 151 will have a material effect on its consolidated financialposition, results of operations or cash flows.

 

7

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# **B.**                                    INVENTORIES

# ** **

Inventoriesare valued at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO) method forapproximately 41% and 37% of the Company’s inventories at June 25, 2005and September 25, 2004, respectively. Other inventories, primarily at Dover and REA, are determined on afirst-in, first-out (FIFO) basis.  Inventoriesconsisted of the following:

 
| ** **      | ** ** | **(000’s  Omitted)** | ** ** |
|-----------------|------------|---------------------------|------------|
| ** **      | ** ** | **June 25,  2005**   | ** ** | **September 25,  2004** | ** ** |
| Raw materials   |       | $                         | 3,254      |   | $ | 3,338 |   |
| Work in process |       | 6,459                     |       | 5,317 |   |
| Finished goods  |       | 16,911                    |       | 16,453 |   |
| Total           |       | $                         | 26,624     |   | $ | 25,108 |   |

 

# **C.**                                    INCOMETAXES

 

The provisionfor income taxes differs from that computed using the statutory federal incometax rates for the following reasons:

 
| ** **                           | ** ** | **(000’s Omitted)** | ** ** |
|--------------------------------------|------------|--------------------------|------------|
| ** **                           | ** ** | **Quarter Ended**        | ** ** | **Nine Months Ended** | ** ** |
| ** **                           | ** ** | **June 25,  2005**  | ** ** | **June 26,  2004** | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** |
| Federal taxes at statutory rates     |       | $                        | 3,148      |   | $ | 2,788 |   | $ | 7,672 |   | $ | 6,966 |   |
| State taxes, net of federal benefit  |       | 246                      |       | 222 |   | 622 |   | 552 |   |
| Tax benefit of export related income |       | (240                     | )          | (232 | ) | (524 | ) | (575 | ) |
| Other                                |       | (12                      | )          | (5 | ) | 12 |   | 3 |   |
| Total                                |       | $                        | 3,142      |   | $ | 2,773 |   | $ | 7,782 |   | $ | 6,946 |   |

 

# **D.**                                    NETINCOME PER SHARE

 

Following is a reconciliation of the shares used in thecalculation of basic and diluted income per share.  Potentially dilutive shares, calculated usingthe treasury stock method, consist of shares issued under the Company’s stockoption plans. These shares have been adjusted to reflect the three-for-twostock split effected in the form of a dividend distributed on May 27, 2005(Note A).

 
| ** **                             | ** ** | **(000’s Omitted)** | ** ** |
|----------------------------------------|------------|--------------------------|------------|
| ** **                             | ** ** | **Quarter Ended**        | ** ** | **Nine Months Ended** | ** ** |
| ** **                             | ** ** | **June 25,  2005**  | ** ** | **June 26,  2004** | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** |
|                                   |       |                     |       |   |   |   |   |   |   |
| Average shares outstanding for basic   |       | 12,189                   |       | 11,951 |   | 12,120 |   | 11,922 |   |
| Effect of potentially dilutive shares  |       | 309                      |       | 394 |   | 355 |   | 403 |   |
| Average shares outstanding for diluted |       | 12,498                   |       | 12,345 |   | 12,475 |   | 12,325 |   |

 

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

 

At June 25,2005, the Company had a forward exchange contract to purchase approximately 3.4million euros as a hedge against a foreign currency equipment purchasecommitment, designated as a fair value hedge. The Company has recorded this transaction in accordance with theprovisions of SFAS No. 133, with no effect on earnings.  The forward exchange contract is scheduled tobe settled in September 2005.  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*.*

 

The following table provides segment information for the three-monthand nine-month periods ended June 25, 2005 and June 26, 2004.

 
| ** **                         | ** ** | **(000’s)  Omitted)** | ** ** |
|------------------------------------|------------|----------------------------|------------|
| ** **                         | ** ** | **Quarter Ended**          | ** ** | **Nine Months Ended** | ** ** |
| ** **                         | ** ** | **June 25,  2005**    | ** ** | **June 26,  2004** | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** |
|                               |       |                       |       |   |   |   |   |   |   |
| Net sales:                         |       |                       |       |   |   |   |   |   |   |
| Book manufacturing                 |       | $                          | 50,585     |   | $ | 46,955 |   | $ | 138,787 |   | $ | 127,600 |   |
| Specialty publishing               |       | 9,936                      |       | 10,394 |   | 29,943 |   | 29,585 |   |
| Elimination of intersegment sales  |       | (1,763                     | )          | (1,860 | ) | (5,208 | ) | (5,214 | ) |
| Total                              |       | $                          | 58,758     |   | $ | 55,489 |   | $ | 163,522 |   | $ | 151,971 |   |
|                               |       |                       |       |   |   |   |   |   |   |
| Income before taxes:               |       |                       |       |   |   |   |   |   |   |
| Book manufacturing                 |       | $                          | 8,334      |   | $ | 6,352 |   | $ | 19,646 |   | $ | 16,082 |   |
| Specialty publishing               |       | 715                        |       | 1,503 |   | 2,568 |   | 3,883 |   |
| Elimination of intersegment profit |       | (54                        | )          | (138 | ) | (294 | ) | (312 | ) |
| Gain on sale of real estate        |       | —                     |       | 250 |   | — |   | 250 |   |
| Total                              |       | $                          | 8,995      |   | $ | 7,967 |   | $ | 21,920 |   | $ | 19,903 |   |

 

**G.****                                    BUSINESSACQUISITION**

 

On January 6, 2004, the Companypurchased substantially all of the assets of Research & EducationAssociation (“REA”), a publisher of test preparation and study guide books andsoftware for high school, college, graduate students, and professionals.  The acquisition was accounted for as apurchase, and accordingly, REA’s financial results were included in the specialtypublishing segment in the consolidated financial statements from the date ofacquisition.  The purchase price wasapproximately $12 million, with an allocation of approximately $8.4 million togoodwill and $0.7 million to prepublication costs in the accompanying financialstatements.

 

9

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

 

**Critical Accounting Policiesand Estimates:**

 

The Company’sconsolidated condensed financial statements have been prepared in accordancewith generally accepted accounting principles. The preparation of these financial statements requires management tomake estimates and assumptions that affect the amounts reported in thesefinancial statements and accompanying notes.  On an ongoing basis, management evaluates its estimates and judgments,including those related to collectibility of accounts receivable, recovery ofinventories, impairment of goodwill, prepublication costs and incometaxes.  Management bases its estimatesand judgments on historical experience and various other factors believed to bereasonable under the circumstances, the results of which form the basis formaking judgments about the carrying value of assets and liabilities at the dateof the financial statements and the reported amounts of revenues and expensesduring the periods presented.  Actualresults may differ from these estimates. The significant accounting policies which management believes are mostcritical to aid in fully understanding and evaluating the Company’s reportedfinancial results include the following:

 

# **Accounts Receivable** 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   Managementrecords reductions in the cost basis of inventory for excess and obsoleteinventory based primarily upon historical and forecasted product demand.  If actual market conditions are lessfavorable than those projected by management, additional inventory charges maybe 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, 2004,resulting 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 prepublicationcosts, 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 accruedtaxes are based on amounts reported on the Company’s tax returns and changes indeferred taxes.  Deferred income tax liabilities and assets are determined based uponthe differences between the financial statement and tax bases of assets andliabilities.  Changes in therecoverability of the Company’s deferred tax assets or audits by taxauthorities could result in future charges or credits to income tax expense,and related accrued and deferred taxes.

 

10

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**Overview:**

 

Courier Corporation,founded in 1824, 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, offering services fromcontent management, prepress and production through storage anddistribution.  The specialty publishingsegment consists of Dover Publications, Inc. (“Dover”) as well as Research &Education Association, Inc. (“REA”). Dover publishes over 9,000 titles in more than 30 specialty categoriesranging from literature and poetry classics to paper dolls, and from musicscores to clip art.  REA publishes testpreparation and study-guide books and software for high school, college,graduate students and professionals.

 

**Results of Operations:**

 

FINANCIALHIGHLIGHTS

(dollars in thousands exceptper share amounts)

 
| ** **                          | ** ** | **Quarter Ended**       | ** ** | **Nine Months Ended**   | ** ** |
|-------------------------------------|------------|-------------------------|------------|-------------------------|------------|
| ** **                          | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** | **%  Change** | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** | **%  Change** | ** ** |
|                                |       |                    |       |
| Net sales                           |       | $                       | 58,758     |                    | $          | 55,489 |   | 5.9 | % | $ | 163,522 |   | $ | 151,971 |   | 7.6 | % |
| Gross profit                        |       | 19,415                  |       | 17,349                  |       | 11.9 | % | 52,469 |   | 48,505 |   | 8.2 | % |
| As a percentage of sales            |       | 33.0                    | %          | 31.3                    | %          |   |   | 32.1 | % | 31.9 | % |   |   |
| Selling and administrative expenses |       | 10,533                  |       | 9,604                   |       | 9.7 | % | 30,731 |   | 28,878 |   | 6.4 | % |
| Interest (income)/expense, net      |       | (113                    | )          | 28                      |       |   |   | (182 | ) | (26 | ) |   |   |
| Gain on real estate sale            |       | —                  |       | 250                     |       |   |   | — |   | 250 |   |   |   |
| Pretax income                       |       | 8,995                   |       | 7,967                   |       | 12.9 | % | 21,920 |   | 19,903 |   | 10.1 | % |
| Net income                          |       | 5,853                   |       | 5,194                   |       | 12.7 | % | 14,138 |   | 12,957 |   | 9.1 | % |
|                                |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Net income per diluted share        |       | $                       | 0.47       |                    | $          | 0.42 |   | 11.9 | % | $ | 1.13 |   | $ | 1.05 |   | 7.6 | % |

 

# **Revenues were higher in both the thirdquarter and year to date compared to the same periods last year.  Sales gains in the third quarter wereconcentrated in the book manufacturing segment, which continued to see growthin demand for the Company’s expanded capabilities in four-color textbookproduction.  Third-quarter sales in thespecialty publishing segment were down despite a gain in the segment’s newestbusiness, REA.  On January 6, 2004,the Company purchased substantially all of the assets of REA, a publisher oftest preparation and study-guide books and software for high school, college,graduate students, and professionals. The acquisition was accounted for as a purchase, and accordingly, REA’sfinancial results were included in the specialty publishing segment in theconsolidated financial statements from the date of acquisition.**

 

*Book Manufacturing Segment*

 

SEGMENTHIGHLIGHTS

(dollars in thousands exceptper share amounts)

 
| ** **                          | ** ** | **Quarter Ended**       | ** ** | **Nine Months Ended**   | ** ** |
|-------------------------------------|------------|-------------------------|------------|-------------------------|------------|
| ** **                          | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** | **%  Change** | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** | **%  Change** | ** ** |
|                                |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Net sales                           |       | $                       | 50,585     |                    | $          | 46,955 |   | 7.7 | % | $ | 138,787 |   | $ | 127,600 |   | 8.8 | % |
| Gross profit                        |       | 15,046                  |       | 12,569                  |       | 19.7 | % | 38,843 |   | 34,887 |   | 11.3 | % |
| As a percentage of sales            |       | 29.7                    | %          | 26.8                    | %          |   |   | 28.0 | % | 27.3 | % |   |   |
| Selling and administrative expenses |       | 6,891                   |       | 6,270                   |       | 9.9 | % | 19,630 |   | 19,044 |   | 3.1 | % |
| Interest income                     |       | (179                    | )          | (53                     | )          |   |   | (433 | ) | (239 | ) |   |   |
| Pretax income                       |       | 8,334                   |       | 6,352                   |       | 31.2 | % | 19,646 |   | 16,082 |   | 22.2 | % |
|                                     |            |                         |            |                         |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

11

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Within this segment, the Company focuses onthree key markets: education, religious and specialty trade.  Sales to the education market rose 8% in thequarter and 16% for the first nine months of fiscal 2005, with gains achievedin both the elementary/high school and college markets.  Growth in four-color textbooks to theeducation market was particularly strong in fiscal 2005, enabled by the newfour-color press installed last April. Sales to the religious market were up 8% for the quarter with some ofthe gain resulting from order timing.  Ona year-to-date basis, religious sales were down 1%, reflecting a decision todiscontinue manufacturing certain low-priced work this year.  Sales to the specialty trade market were down3% for the third quarter, but up 3% for the first nine months of the fiscalyear, as this diverse market continued to exhibit modest overall growth.

 

Gross profit in this segment increased by 20%for the third quarter and was up 11% through three quarters.  Gross profit also increased as a percentageof sales to 29.7% in the third quarter from 26.8% a year earlier and was 28.0%through nine months versus 27.3% for the same period last year.  Growing volume, especially in four colortextbooks, and continued productivity gains more than offset the effects ofselectively lowered prices, tied to market share gains achieved in the pastyear, as well as increased energy and medical costs.

 

Selling and administrative expenses for thesegment increased 10% in the third quarter to $6.9 million and for the firstnine months of fiscal 2005 were $19.6 million, 3% higher than the correspondingperiod last year.  The increase reflectsaudit, legal and other expenses related to compliance with the provisions ofSarbanes-Oxley, as well as higher incentive compensation costs associated withincreased profitability in the third quarter. As a percentage of sales, selling and administrative expenses increasedto 13.6% in the third quarter of fiscal 2005 from 13.4% last year and decreasedto 14.1% of sales for the first nine months from 14.9% for the correspondingperiod of fiscal 2004.

 

Intercompany interest income allocated to thebook manufacturing segment increased to $179,000 in the third quarter and$433,000 for the first nine months of this year, compared to $53,000 and$239,000 for the third quarter and first nine months of fiscal 2004,respectively.  The increase was a resultof the cash flow produced by this segment and increasing interest rates.

 

Third quarter pretax income in this segmentwas $8.3 million, up 31% from the corresponding quarter last year.  For the first nine months of the year, pretaxincome was up 22% over last year to $19.6 million.

 

*Specialty Publishing Segment*

 

SEGMENTHIGHLIGHTS

(dollars in thousands exceptper share amounts)

 
| ** **                          | ** ** | **Quarter Ended**       | ** ** | **Nine Months Ended**   | ** ** |
|-------------------------------------|------------|-------------------------|------------|-------------------------|------------|
| ** **                          | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** | **%  Change** | ** ** | **June 25,  2005** | ** ** | **June 26,  2004** | ** ** | **%  Change** | ** ** |
|                                |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Net sales                           |       | $                       | 9,936      |                    | $          | 10,394 |   | (4.4 | )% | $ | 29,943 |   | $ | 29,585 |   | 1.2 | % |
| Gross profit                        |       | 4,423                   |       | 4,917                   |       | (10.0 | )% | 13,920 |   | 13,929 |   | (0.1 | )% |
| As a percentage of sales            |       | 44.5                    | %          | 47.3                    | %          |   |   | 46.5 | % | 47.1 | % |   |   |
| Selling and administrative expenses |       | 3,642                   |       | 3,333                   |       | 9.3 | % | 11,101 |   | 9,833 |   | 12.9 | % |
| Interest expense                    |       | 66                      |       | 81                      |       | (18.5 | )% | 251 |   | 213 |   | 17.8 | % |
| Pretax income                       |       | 715                     |       | 1,503                   |       | (52.4 | )% | 2,568 |   | 3,883 |   | (33.9 | )% |
|                                     |            |                         |            |                         |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

The Company’s specialty publishing segment iscomprised of Dover Publications, Inc. (“Dover”), as well as REA since itsacquisition on January 6, 2004.  Thesegment reported third quarter sales of $9.9 million, down 4% from $10.4million in last year’s third quarter. Third quarter sales at REA were $1.4 million, up 7% from $1.3 millionlast year.  At Dover, sales in thequarter were $8.6 million, down 6% from $9.1 million in the prior year, as an11% decline in sales to U.S. retailers more than offset an 11% increase ininternational sales and a 13% gain in direct-to-consumer sales.  For the first nine months, sales in thissegment were $29.9 million, up 1% over the same period last year.  The increase was primarily due to theinclusion of $1.1 million of REA sales in this year’s first quarter.

 

12

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Within this segment, Dover’s gross profit as a percentage of salesdecreased for the quarter to 44.8% from 49.2% last year and on a year to datebasis decreased to 47.1% from 48.4% last year, reflecting the reduction insales.  In addition, Dover incurred costsof approximately $200,000 in the third quarter in connection with relocating asignificant portion of Dover’s leased warehousing space to available warehousespace owned by the Company.  This projectwill be completed by the end of September at an additional cost ofapproximately $50,000 and we expect to generate annual savings on warehousingcosts of approximately $800,000 beginning in fiscal 2006.  REA’s gross profit percentage for the thirdquarter of fiscal 2005 was 43.0% versus 33.7% last year.  This improvement is due, in large part, tothe expense related to a required purchase accounting write up of inventory tofair market value when REA was acquired. The original inventory write up was approximately $1 million and isbeing expensed as the acquired inventory is sold.  To date, approximately $750,000 of the $1million has been expensed.

 

Selling and administrative expenses in this segment were $3.6 millionin the third quarter, an increase of 9% over the corresponding prior yearperiod, in part due to $100,000 of expenses incurred in connection with a majorproject to replace information systems at Dover and REA with a new fullyintegrated system.  The systemsimplementation began in July 2005 at Dover and is expected to result inadditional expenses in the fourth quarter of approximately $50,000.  For the first nine months of fiscal 2005, theincrease in selling and administrative expenses over the prior year was 13% to$11.1 million.  The addition of REA tothe segment in January 2004 contributed to the increase.

 

Intercompany interest expense is allocated tothe specialty publishing segment based on the acquisition costs of Dover andREA, reduced by cash generated by each business since acquisition.  Such interest expense for the third quarterwas $66,000, slightly lower than last year. Intercompany interest expense for the first nine months was $251,000compared to $213,000 for the same period of the prior year with the increaseprimarily attributable to the acquisition of REA.

 

Pretax income in the specialty publishingsegment was $0.7 million in the third quarter of fiscal 2005 compared to $1.5million in last year’s third quarter. For the first nine months, pretax income in this segment was $2.6million compared to $3.9 million for the same period last year.

 

*Total Consolidated Company*

 

Interest income, net of interest expense, was$113,000 in the third quarter of fiscal 2005, compared to interest expense of$28,000 in the same period of fiscal 2004. There were no borrowings under the Company’s revolving credit facilityin the first nine months of either year, however, interest expense includescommitment fees and other costs associated with maintaining this creditfacility. Cash investments in the third quarter of fiscal 2005 averagedapproximately $26.0 million invested at an average annual interest rate of 2.8%generating interest income of approximately $180,000.  For the same period last year, the Company’saverage cash investments were $12.2 million invested at an average interestrate of 1.3% generating interest income of approximately $40,000.  For the first nine months of fiscal 2005,interest income, net of interest expense, was $182,000 compared to $26,000 forthe same period last year.  In fiscal2004, capitalized interest was $13,000 in the third quarter and $74,000 for thefirst nine months.  No interest wascapitalized in fiscal 2005.

 

The Company’s effectivetax rate for the third quarter of fiscal 2005 was 34.9% comparable to 34.8% inthe third quarter of 2004.  For the firstnine months of fiscal 2005, the effective tax rate was 35.5% compared to 34.9%for the corresponding period last year, reflecting a reduced federal taxbenefit from export related income associated with the American Jobs CreationAct of 2004.

 

For purposes ofcomputing net income per diluted share, weighted average shares outstandingincreased by approximately 153,000 shares and 150,000 shares over last year’sthird quarter and first nine months, respectively.  The increase in both periods was largely dueto options exercised.  On March 10,2005, the Company announced a three-for-two stock split effected in the form ofa 50% stock dividend, which was distributed on May 27, 2005 tostockholders of record on May 6, 2005. Weighted average shares outstanding and net income per share amountshave been restated to give effect to the stock split.

 

13

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**Liquidity and Capital Resources:**

 

During the first ninemonths of fiscal 2005, operations provided approximately $18.6 million of cashcompared to $15.3 million in the same period last year.  Net income in the first nine months of 2005was $14.1 million and depreciation and amortization were $8.9 million.  Working capital used approximately $4.9million of cash, due in part to the payment of taxes and annual profit sharingcontributions.

 

Investment activities in the first ninemonths of fiscal 2005 used approximately $12.0 million of cash. Capitalexpenditures were approximately $9.8 million, primarily for deposits on anotherfour-color press to be installed in late 2005. This press is identical to the press installed in 2004 and will furtherexpand the Company’s capacity to produce four-color textbooks.  Capital also included investments in thespecialty publishing segment for an integrated software solution to be installedlater this year, as well as a program to relocate and improve warehousingoperations.  For the entire fiscal year,capital expenditures are expected to be approximately $18 to $20 million,approximately half of which will be payments related to the new pressproject.  Prepublication costs were $2.2million and for the full fiscal year are projected to be approximately $3million.

 

Financing activities for the first ninemonths of fiscal 2005 used approximately $1.7 million of cash.  Cash dividends were $2.8 million whileproceeds from stock plans were $1.2 million, primarily from the exercise ofstock options.  On March 10, 2005,the Company announced a three-for-two stock split, and a 50% increase in itsquarterly dividend, which was paid on May 27, 2005.  At June 25, 2005, the Company had $28.9million 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 2008and amended certain provisions, including reducing the amount of the facilityto $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 makefuture payments 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)    |       | 7,003      |       | 7,003                       |       | — |   | — |   | — |   |
| Other Long-Term Liabilities |       | 2,630      |       | —                      |       | 635 |   | 210 |   | 1,785 |   |
|                             |            |            |            |                             |            |  |  |  |  |  |  |  |  |  |  |  |

 

----

(1)          Representamounts at June 25, 2005 for capital commitments for new four-color pressand other projects.

 

**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 April 14,2005, the Securities and Exchange Commission announced the adoption of a rule thatdefers the required effective date of SFAS 123R for registrants to thebeginning of the first fiscal year beginning after June 15, 2005.  Accordingly the Company will implement thisnew standard in the first quarter of its fiscal year 2006.  The Company believes that the pro formadisclosures in Note A under Stock-Based Compensation appropriately reflect theimpact this standard would have on reported net income if adopted in theperiods presented.

 

In November 2004, the FASB issued SFAS No. 151, “InventoryCosts” (“SFAS 151”), an amendment of ARB No. 43, Chapter 4.  SFAS 151 clarifies the accounting forabnormal amounts of idle facility expense, freight, handling costs and wastedmaterial.  SFAS 151 is effective forinventory costs incurred during fiscal years beginning after June 15,2005.  The Company does not believe theadoption of SFAS 151 will have a material effect on its consolidated financialposition, results of operations or cash flows.

 

14

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**Forward-Looking Information:**

 

ThisQuarterly Report on Form 10-Q and the Company’s Annual Report for the yearended September 25, 2004 on Form 10-K include forward-lookingstatements.  Statements that describefuture expectations, plans or strategies are considered “forward-lookingstatements” as that term is defined under the Private Securities LitigationReform Act of 1995 and releases issued by the Securities and ExchangeCommission.  The words “believe,” “expect,”“anticipate,” “intend,” “estimate” and other expressions that are predictionsof or indicate future events and trends and which do not relate to historicalmatters identify forward-looking statements. Such statements are subject to risks and uncertainties that could causeactual results 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, difficulties in the start up of newequipment or information technology systems, unanticipated changes in operatingexpenses, changes in tax regulations and accounting rules and generalchanges in economic conditions.  Althoughthe Company believes that the assumptions underlying the forward-lookingstatements are reasonable, any of the assumptions could be inaccurate, andtherefore, there can be no assurance that the forward-looking statements willprove to be accurate.  Theforward-looking statements included herein are made as of the date hereof, andthe Company undertakes no obligation to update publicly such statements toreflect subsequent events or circumstances.

 
| **Item 3.** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET 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 on Form 10-Kfor the year ended September 25, 2004.

 
| **Item 4**. | **CONTROLS AND PROCEDURES** |
|-------------|-----------------------------|

 

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

 

Asrequired by Rule 13a-15 under the Securities Exchange Act of 1934, as ofthe end of the period covered by this quarterly report, the Company carried outan evaluation 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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**COURIERCORPORATION**

 

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

#### ** **

| **Item 1.** | ** ** | **Legal Proceedings**                                    |
|-------------|------------|----------------------------------------------------------|
| ** **  | ** ** | ** **                                               |
| ** **  | ** ** | None.                                                    |
| ** **  | ** ** | ** **                                               |
| **Item 2.** | ** ** | **Changes in Securities and Use  of Proceeds**           |
| ** **  | ** ** | ** **                                               |
| ** **  | ** ** | None.                                                    |
| ** **  | ** ** | ** **                                               |
| **Item 3.** | ** ** | **Defaults Upon Senior Securities**                      |
| ** **  | ** ** | ** **                                               |
| ** **  | ** ** | None.                                                    |
| ** **  | ** ** | ** **                                               |
| **Item 4.** | ** ** | **Submission of Matters to a  Vote of Security Holders** |
| ** **  | ** ** | ** **                                               |
| ** **  | ** ** | None.                                                    |
| ** **  | ** ** | ** **                                               |
| **Item 5.** | ** ** | **Other Information**                                    |
| ** **  | ** ** | ** **                                               |
| ** **  | ** ** | None.                                                    |
| ** **  | ** ** | ** **                                               |
| **Item 6.** | ** ** | **Exhibits and Reports on Form 8-K**                |

 
| (a) Exhibits                                                                                                                                                       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                    |   |   |
| **Exhibit No.**                                                                                                                                                    | ** ** | **Description** |
|                                                                                                                                                                    |   |   |
| 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 April 14, 2005,  reporting under Item 2.02 a press release dated April 14, 2005 reporting  financial results for the quarter ended March 26, 2005. |

 

16

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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)**

 

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

 

17

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