Courier Reports Solid Second Quarter

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Earnings Up on Contributions from Both Segments
NORTH CHELMSFORD, Mass.--(Business Wire)--
Courier Corporation (Nasdaq: CRRC), one of America`s leading book manufacturers
and specialty publishers, today announced results for the quarter ended March
27, 2010, the second quarter of its 2010 fiscal year. With the American economy
moving slowly from recession toward recovery, Courier revenues for the quarter
were $58.9 million, off marginally from last year`s second-quarter sales of
$59.4 million. Yet with improved performance in both its publishing and book
manufacturing segments, the company reported net income of $1.4 million or $.12
per diluted share, versus $.10 per diluted share in fiscal 2009, excluding
restructuring and impairment charges in last year`s second quarter. Including
those charges, last year`s second quarter resulted in a net loss of $11.2
million or $.94 per diluted share. Details of last year`s restructuring and
impairment charges can be found in the table at the end of this release.

For the first six months of fiscal 2010, Courier sales were $122.0 million, up
3% from $119.0 million in 2009. Net income through six months was $4.2 million
or $.35 per diluted share, versus $2.0 million or $.17 per diluted share last
year prior to the restructuring and impairment charges noted above. Including
those charges, Courier`s net loss for the first six months of fiscal 2009 was
$10.5 million or $.88 per diluted share.

Both of Courier`s business segments contributed positively to earnings despite
an uneven sales environment. Sales were flat in book manufacturing, but demand
for four-color books remained strong, with Courier`s main four-color plant in
Kendallville, Indiana running nearly at capacity as the quarter ended. In
publishing, Research & Education Association (REA) achieved double-digit sales
gains for the second consecutive quarter, but sales were lower at Dover
Publications and Creative Homeowner.

"We were pleased to beat last year`s results, and we are encouraged by our
continued strong cash flow and the healthy pace of orders in book
manufacturing," said Courier Chairman and Chief Executive Officer James F.
Conway III. "I`m also pleased to announce that Courier`s Board of Directors has
voted to declare our regular quarterly dividend of 21 cents per common share.

"While the economy is certainly better than it was a year ago, it is still
moving only fitfully toward the sustained recovery we all want. Pricing remains
very competitive, retailers remain cautious, and consumers are still coming out
of a long winter. Much of our success in the second quarter came from internal
efficiencies and share gains, and we look for more of both in the future. Also,
while Creative Homeowner sales were down, its overall performance represented a
significant improvement over the prior quarter.

"In the meantime, we have continued on track with our installation of a complete
four-color digital printing solution for short-run book production. We believe
this innovative HP technology will create an attractive new option for book
publishers everywhere, including those in our own company."

Book manufacturing: continued strength in four-color

Courier`s book manufacturing segment had second-quarter sales of $50.0 million,
up slightly from $49.9 million in fiscal 2009`s second quarter. The segment`s
operating income was $2.8 million, versus $2.6 million a year ago excluding
restructuring costs; including those costs, the segment had a second-quarter
operating loss of $652,000 last year. Despite a highly competitive pricing
environment, gross profit in the segment was $9.7 million, or 19% of sales, up
62% from $6.0 million, or 12% of sales, in the second quarter of fiscal 2009,
helped by higher capacity utilization and cost reductions achieved by last
year`s restructuring.

For the first six months of fiscal 2010, book manufacturing sales were $104.8
million, up 4% from the first six months of fiscal 2009. Six-month operating
income was $8.5 million versus $6.2 million last year excluding restructuring
costs. The segment`s gross profit through six months was $22.8 million or 22% of
sales, up from $16.6 million or 17% of sales last year.

The book manufacturing segment focuses on three publishing markets: education,
religion, and specialty trade. Sales to the education market were down 2% in the
quarter but up 6% for the fiscal year to date amidst continuing demand for
four-color textbooks, particularly at the college level. Sales to the specialty
trade market were up 6% from last year`s second quarter and up 3% for the first
six months of fiscal 2010, with much of this increase also coming from
four-color sales. Sales to the religious market were even with last year`s
second quarter and up 7% through six months.

"As the economy struggled to emerge from recession, we continued to build for
the future," said Mr. Conway. "We had good growth in sales of specialty trade
books as well as sustained demand in education. Our plant utilization was high,
and we entered the third quarter with very strong bookings. We expect this
strong demand for our four-color capacity to continue into 2011 based on our
current level of business in the college market and the continuing shift toward
more four-color production in both education and specialty trade. To ensure our
continuing service leadership, we will soon be expanding our four-color capacity
with the addition of a fourth manroland press at our Kendallville plant, which
will be available for the 2011 education season.

"The other major accomplishment during the quarter was the completion of our
Highcrest Media acquisition and HP digital printing system installation, on
schedule and on budget. The combined effect of these moves is to place us at the
forefront of customized textbook development and digital book production, two of
the most promising growth areas in our industry."

Specialty publishing: strong quarter for REA, improvement at Creative Homeowner

Courier`s specialty publishing segment includes three businesses: Dover
Publications, a niche publisher with thousands of titles in dozens of specialty
trade markets; Research & Education Association (REA), a publisher of test
preparation books and study guides; and Creative Homeowner, which publishes
books on home design, decorating, landscaping and gardening.

Second-quarter revenues for the segment were $11.7 million, down 3% from $12.1
million in last year`s second quarter. REA continued to perform well, with sales
up 22% in the quarter and up 32% through the first six months of fiscal 2010.
Sales at Dover were down 4% in the quarter but up 7% through six months.
Creative Homeowner sales were down 14% in the quarter and down 37% through six
months, reflecting continued weakness in home center sales as well as the
absence of revenues from book distribution services that Creative Homeowner
ceased in fiscal 2009. However, sales to other specialty retailers and
direct-to-consumer home plan sales were up. In addition, Creative Homeowner`s
second-quarter operating loss of $259,000 represented a substantial improvement
over its loss of $1.2 million in this year`s first quarter. Overall, the
segment`s second-quarter operating income was $13,000, versus an operating loss
of $566,000 a year earlier, which included $300,000 of restructuring charges.

For the first six months of fiscal 2010, specialty publishing sales were $23.3
million, down 1% from $23.6 million in fiscal 2009. The segment`s six-month
operating loss was $501,000, with positive results at Dover and REA offset by a
$1.4 million loss at Creative Homeowner. For the first six months of fiscal
2009, the segment`s operating loss was $2.5 million, including approximately
$500,000 in restructuring costs.

"The retail environment continued to pose challenges for our publishing
businesses," said Mr. Conway. "Dover was hurt by reduced ordering among major
retailers following the weak holiday season, but REA rose above it with a
combination of new and re-branded products targeted to key testing markets.
Equally important, there were encouraging signs at Creative Homeowner, with
direct home plan sales and sales to non-home centers both rising. In fact, both
Dover and Creative Homeowner had good growth in direct-to- consumer sales.
Building on these positives, both brands continued to adapt their publishing
programs with new products designed to attract consumers and help retailers. And
throughout the segment, we continued to execute efficiently while positioning
ourselves for a gradual consumer recovery."

Outlook

"While we are cautiously optimistic about the balance of the year, we are taking
nothing for granted," said Mr. Conway. "In publishing, we are leaving no stone
unturned to attract readers and retailers with well-targeted products and
excellent support. In book manufacturing, we are building on a good first half
in the religious market, working around the clock to meet demand for four-color
college textbooks, and even seeing glimpses of renewed life in the elementary
and high school market. At the same time, we recognize the budget squeezes still
affecting local and state school boards, and the fundraising challenges for
religious organizations in today`s economy.

"Faced with this environment, we are responding in the classic Courier manner,
working closely with customers to anticipate their needs and ensure they get the
best possible service. At the same time, we are proceeding with our own plans to
offer innovative capabilities to benefit both existing and new customers. We`re
pleased to be announcing yet another expansion in Indiana, and we`re confident
that our installation of new digital printing technology in Massachusetts will
create significant opportunities for book publishers everywhere, transforming
backlist economics while streamlining the test marketing of new titles. The very
first beneficiary will be our own publishing operations, beginning this spring.
As previously noted, startup costs associated with this system will likely
reduce fiscal 2010 income by between $.05 and $.10 per share. These costs have
been factored into our fiscal 2010 guidance.

"For fiscal 2010 overall, we expect to achieve total sales of between $255
million and $262 million. We expect earnings per diluted share of between $.80
and $1.00, versus our fiscal 2009 earnings of $.86 per diluted share, excluding
restructuring and impairment charges.

"Factors not incorporated into our guidance include the potential impact of
continued weakness in the credit markets on customers, competitors and vendors
in both of our business segments, and the possibility of future impairment or
restructuring charges.

"In addition to measuring our performance by generally accepted accounting
principles, we also track several non-GAAP measures including EBITDA (earnings
before interest, taxes, depreciation and amortization) as an additional
indicator of the company's operating cash flow performance. This measure should
be considered in addition to, not a substitute for or superior to, measures of
financial performance prepared in accordance with GAAP. Excluding impairment and
restructuring charges, in fiscal 2010 we expect EBITDA to be between $38 million
and $42 million, compared to $37 million in fiscal 2009."

About Courier Corporation

Courier Corporation prints, publishes and sells books. Headquartered in North
Chelmsford, Massachusetts, Courier has two business segments, full-service book
manufacturing and specialty book publishing. For more information, visit
www.courier.com.

This news release includes forward-looking statements.Statements that describe
future expectations, plans or strategies are considered "forward-looking
statements" as that term is defined under the Private Securities Litigation
Reform Act of 1995 and releases issued by the Securities and Exchange
Commission.The words "believe," "expect," "anticipate," "intend," "estimate" and
other expressions which are predictions of or indicate future events and trends
and which do not relate to historical matters identify forward-looking
statements.Such statements are subject to risks and uncertainties that could
cause actual results to differ materially from those currently anticipated.Some
of the factors that could affect actual results include, among others, changes
in customers` demand for the Company`s products, including seasonal changes in
customer orders and shifting orders to lower cost regions, changes in market
growth rates, changes in raw material costs and availability, pricing actions by
competitors and other competitive pressures in the markets in which the Company
competes, consolidation among customers and competitors, success in the
execution of acquisitions and the performance and integration of acquired
businesses including carrying value of intangible assets, restructuring and
impairment charges required under generally accepted accounting principles,
changes in operating expenses including medical and energy costs, changes in
technology including migration from paper-based books to digital, difficulties
in the start up of new equipment or information technology systems, changes in
copyright laws, changes in consumer product safety regulations, changes in
environmental regulations, changes in tax regulations, changes in the Company`s
effective income tax rate and general changes in economic conditions, including
currency fluctuations, changes in interest rates, changes in consumer
confidence, changes in the housing market, and tightness in the credit
markets.Although the Company believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could be
inaccurate, and therefore, there can be no assurance that the forward-looking
statements will prove to be accurate.The forward-looking statements included
herein are made as of the date hereof, and the Company undertakes no obligation
to update publicly such statements to reflect subsequent events or
circumstances.

COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)

QUARTER ENDED SIX MONTHS ENDED
March 27, March 28, March 27, March 28,
2010 2009 2010 2009

Net sales $58,879 $59,360 $121,983 $119,007
Cost of sales 44,579 48,737 90,387 93,956

Gross profit 14,300 10,623 31,596 25,051

Selling and administrative expenses 11,846 12,081 24,497 25,157
Impairment charge (1) - 15,607 - 15,607

Operating income (loss) 2,454 (17,065 ) 7,099 (15,713 )

Interest expense, net 119 194 237 421

Income (loss) before taxes 2,335 (17,259 ) 6,862 (16,134 )

Income tax provision (benefit) 900 (6,086 ) 2,643 (5,664 )

Net income (loss) $1,435 ($11,173 ) $4,219 ($10,470 )

Net income (loss) per diluted share $0.12 ($0.94 ) $0.35 ($0.88 )

Cash dividends declared per share $0.21 $0.21 $0.42 $0.42

Wtd. average diluted shares outstanding 11,941 11,842 11,925 11,835

SEGMENT INFORMATION:

Net sales:
Book Manufacturing $49,980 $49,899 $104,821 $100,781
Specialty Publishing 11,721 12,058 23,282 23,561
Elimination of intersegment sales (2,822 ) (2,597 ) (6,120 ) (5,335 )
Total $58,879 $59,360 $121,983 $119,007

Operating income (loss):
Book Manufacturing $2,796 ($652 ) $8,497 $2,936
Specialty Publishing 13 (566 ) (501 ) (2,493 )
Impairment charge (1) - (15,607 ) - (15,607 )
Stock based compensation (334 ) (342 ) (683 ) (725 )
Intersegment profit (21 ) 102 (214 ) 176
Total $2,454 ($17,065 ) $7,099 ($15,713 )

(1) This amount represents a non-cash pre-tax impairment charge related to Dover Publications, Inc. which, on an after-tax basis, was $10.1 million, or $0.86 per diluted share.

COURIER CORPORATION
SEGMENT RESULTS OF OPERATIONS (Unaudited)
(In thousands)

BOOK MANUFACTURING SEGMENT QUARTER ENDED SIX MONTHS ENDED
March 27, March 28, March 27, March 28,
2010 2009 2010 2009

Net sales $49,980 $49,899 $104,821 $100,781
Cost of sales 40,243 43,870 82,009 84,140

Gross profit 9,737 6,029 22,812 16,641

Selling and administrative expenses 6,941 6,681 14,315 13,705

Operating income (loss) $2,796 ($652 ) $8,497 $2,936

SPECIALTY PUBLISHING SEGMENT QUARTER ENDED SIX MONTHS ENDED
March 27, March 28, March 27, March 28,
2010 2009 2010 2009

Net sales $11,721 $12,058 $23,282 $23,561
Cost of sales 7,136 7,566 14,284 15,327

Gross profit 4,585 4,492 8,998 8,234

Selling and administrative expenses 4,572 5,058 9,499 10,727

Operating income (loss) $13 ($566 ) ($501 ) ($2,493 )

COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)

March 27, September 26,
ASSETS 2010 2009

Current assets:
Cash and cash equivalents $93 $492
Investments 1,117 1,017
Accounts receivable 31,559 34,176
Inventories 41,291 38,026
Deferred income taxes 4,465 4,462
Other current assets 2,465 1,404
Total current assets 80,990 79,577

Property, plant and equipment, net 84,989 89,754
Goodwill and other intangibles 31,955 28,700
Prepublication costs 8,683 9,194
Other assets 1,277 1,212

Total assets $207,894 $208,437

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current maturities of long-term debt $96 $96
Accounts payable 11,300 10,974
Accrued taxes 1,187 3,032
Other current liabilities 15,135 13,048
Total current liabilities 27,718 27,150

Long-term debt 11,641 13,514
Deferred income taxes 497 177
Other liabilities 3,416 3,006

Total liabilities 43,272 43,847

Total stockholders' equity 164,622 164,590

Total liabilities and stockholders' equity $207,894 $208,437

COURIER CORPORATION
CONSOLIDATED STATEMENTS OF FREE CASH FLOW (Unaudited)
(In thousands)

For the Six Months Ended
March 27, March 28,
2010 2009

Operating activities:
Net income (loss) $4,219 ($10,470 )
Adjustments to reconcile net income (loss) to
cash provided from operating activities:
Depreciation and amortization 10,348 10,589
Impairment charge - 15,607
Stock based compensation 683 725
Deferred income taxes 317 (4,177 )
Changes in working capital (1,010 ) (1,834 )
Other, net 28 (167 )

Cash provided from operating activities 14,585 10,273

Investments in organic growth:
Capital expenditures (2,864 ) (4,463 )
Prepublication costs (2,102 ) (2,240 )
Proceeds from disposition of assets 590 -

Free cash flow 10,209 3,570

Other investing and financing activities:
Long-term borrowings, net (1,873 ) 941
Cash dividends (5,026 ) (4,994 )
Proceeds from stock plans 241 412
Business acquisition, net of cash acquired (3,850 ) -
Other (100 ) 17

Cash used for other investing and financing activities (10,608 ) (3,624 )

Decrease in cash and cash equivalents ($399 ) ($54 )

RECONCILIATION TO GAAP PRESENTATION

Investing activities:
Capital expenditures ($2,864 ) ($4,463 )
Business acquisition, net of cash acquired (3,850 ) -
Prepublication costs (2,102 ) (2,240 )
Proceeds from disposition of assets 590 -
Other (100 ) 17
Cash used for investing activities ($8,326 ) ($6,686 )

Financing activities:
Long-term borrowings, net ($1,873 ) $941
Cash dividends (5,026 ) (4,994 )
Proceeds from stock plans 241 412
Cash used for financing activities ($6,658 ) ($3,641 )

Other non-GAAP measures - EBITDA:
Net income (loss) $4,219 ($10,470 )
Income tax provision (benefit) 2,643 (5,664 )
Interest expense, net 237 421
Depreciation and amortization 10,348 10,589
Impairment charge - 15,607
Restructuring costs - 3,729
EBITDA $17,447 $14,212

In addition to measuring our performance by generally accepted accounting principles, we also track several non-GAAP measures including Free Cash Flow and EBITDA (earnings before interest, taxes, depreciation and amortization) as additional indicators of the company's operating cash flow performance. These measures should be considered in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP.

COURIER CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands)

Quarter Ended Six Months Ended
BOOK MANUFACTURING SEGMENT March 28, 2009 March 28, 2009
GAAP Restruc- Non- GAAP Restruc- Non-
Basis turing GAAP Basis turing GAAP
Measures Costs (1) Measures Measures Costs (1) Measures

Net sales $49,899 $49,899 $100,781 $100,781
Cost of sales 43,870 (2,754 ) 41,116 84,140 (2,754 ) 81,386

Gross profit 6,029 2,754 8,783 16,641 2,754 19,395

Selling and administrative expenses 6,681 (475 ) 6,206 13,705 (491 ) 13,214

Operating income (loss) ($652 ) $3,229 $2,577 $2,936 $3,245 $6,181

Quarter Ended Six Months Ended
SPECIALTY PUBLISHING SEGMENT March 28, 2009 March 28, 2009
GAAP Restruc- Non- GAAP Restruc- Non-
Basis turing GAAP Basis turing GAAP
Measures Costs (1) Measures Measures Costs (1) Measures

Net sales $12,058 $12,058 $23,561 $23,561
Cost of sales 7,566 (107 ) 7,459 15,327 (107 ) 15,220

Gross profit 4,492 107 4,599 8,234 107 8,341

Selling and administrative expenses 5,058 (192 ) 4,866 10,727 (377 ) 10,350

Operating income (loss) ($566 ) $299 ($267 ) ($2,493 ) $484 ($2,009 )

(1 ) In fiscal 2009, restructuring costs included employee severance expenses related to cost savings initiatives in both of the Company's segments as well as ceasing Creative Homeowner's distribution service within the Specialty Publishing segment. Restructuring costs also included expenses related to closing the Book-mart Press manufacturing facility within the Book Manufacturing segment.

Quarter Ended Six Months Ended
March 28, 2009 March 28, 2009
Book Specialty Book Specialty
Manufacturing Publishing Total Manufacturing Publishing Total
Segment Segment Company Segment Segment Company

Employee severance expenses $1,112 $299 $1,411 $1,128 $484 $1,612
Lease termination and other facility closure costs
2,117 0 2,117 2,117 0 2,117

Total restructuring costs $3,229 $299 $3,528 $3,245 $484 $3,729

Courier Corporation
James F. Conway III, 978-251-6000
Chairman, President and Chief Executive Officer
or
Peter M. Folger, 978-251-6000
Senior Vice President and Chief Financial Officer
www.courier.com

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