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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________to_______________
Commission file number 0-7597
COURIER CORPORATION
A Massachusetts corporation
I.R.S. Employer Identification No. 04-2502514
165 Jackson Street
Lowell, Massachusetts 01852
Telephone No. 508-458-6351
___________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1 par value
_____________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of November 16, 1995
Common Stock, $1 par value - $33,088,877
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of November 16, 1995
Common Stock, $1 par value - 2,011,470
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement for the annual meeting of
stockholders scheduled to be held on January 18, 1996 (Part III).
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PART I
ITEM 1. BUSINESS.
INTRODUCTION
Registrant, Courier Corporation ("Courier" or the "Company"), was
incorporated under the laws of Massachusetts on June 30, 1972. Courier owns
all of the capital stock of Courier-Citizen Company, a Massachusetts
corporation organized in 1894 as successor to a printing business which
originated in 1824.
Courier helps organizations manage the process of creating and
distributing intellectual properties. It provides a variety of specialized
services to publishers and other information providers, including the
preparation, production, storage and distribution of information in a variety
of media formats from traditional books to CD-ROMs and online services.
Courier is the sixth largest book manufacturer in the United States. Products
include Bibles, reference texts, books, software manuals and technical
documentation.
In October 1992, the Company launched Courier EPIC (short for Electronic
Publishing Innovations Center) which provides technology-based publishing
services ranging from processing electronic files through reproduction and end
user distribution. Courier EPIC began offering customized on-demand printing
services in 1993.
In December 1994, the Company announced the formation of Courier New
Media, Inc. (Courier New Media), an information management services company
which works with publishers and other information developers to create new
products from new and existing intellectual properties. Courier New Media
includes two operating units, Courier EPIC and Copyright Management Services
(CMS), a new division established in December 1994. CMS specializes in
helping publishers and college bookstores manage the process of obtaining
copyright permissions for products such as multiple-publisher college
coursepacks.
PRODUCTS
Courier's products include the manufacture of books, manuals,
diskettes and CD-ROMs for publishers, software developers and other
information providers as well as related services involved in managing
the process of creating and distributing these products. Courier
provides manufacturing and related services from seven facilities in
Westford, Stoughton, North Chelmsford and Lowell, Massachusetts;
Philadelphia, Pennsylvania (2); and Kendallville, Indiana.
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Courier's book manufacturing operations consist of both electronic and
conventional film processing, platemaking, printing and binding of soft and
hard bound books and manuals. These book manufacturing operations are
conducted through four subsidiaries, Courier Westford, Inc. ("Westford"),
Courier Stoughton, Inc. ("Stoughton"), Courier Kendallville, Inc.
("Kendallville"), and National Publishing Company ("National"). Each of these
subsidiaries has certain specialties adapted to the needs of the selected
market niches they serve.
In December 1994, the Company formed Courier New Media, Inc. to
work with publishers, software developers and other information providers to
develop new products from new and existing intellectual properties. Courier
New Media includes two operating units, Courier EPIC and a newly launched
division, Copyright Management Services. Courier EPIC conducts electronic
publishing services including customized, on-demand printing and binding
services through Courier On-Demand and product assembly, packaging,
fulfillment, distribution and project management services through Courier
FulServ. CMS specializes in helping publishers and college bookstores manage
the process of obtaining copyright permissions for products such as
multiple-publisher college coursepacks.
MARKETING AND CUSTOMERS
Courier's products and services are primarily sold to publishers of
educational, religious, consumer, professional and reference books and to
computer software and hardware manufacturers. The Company distributes
products around the world; export sales, as a percentage of consolidated
sales, were approximately 16% in both fiscal 1995 and fiscal 1994 and 17% in
fiscal 1993.
Courier's sales force of 24 people is responsible for all of the
Company's sales to over 600 customers. Courier's salespeople operate out
of sales offices located in New York, Chicago, Philadelphia, San Mateo,
California, Orlando, Florida, and Lowell, Massachusetts. Sales to one
customer, the Gideon Society, aggregated approximately 27% of consolidated
sales in fiscal 1995; the loss of this customer would have a material
adverse effect on the Company. No other single customer accounted for more
than 10% of fiscal 1995 consolidated sales.
COMPETITION
All phases of Courier's business are highly competitive. The
printing and publishing industries, exclusive of newspapers, include over
50,000 establishments. While most of these establishments are relatively
small, several of Courier's competitors are considerably larger or are
affiliated with companies which are considerably larger and have greater
financial resources than Courier. In recent years, consolidation of both
customers and competitors within the Company's markets has increased
competitive pricing pressures. The major competitive factors in Courier's
business in addition to price are product quality, customer service,
availability of appropriate printing capacity, related services and,
increasingly, technology support.
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MATERIALS AND SUPPLIES
Courier purchases its principal raw materials, primarily paper, but also
plate materials, ink and cover stock, from numerous suppliers, and is not
dependent upon any one source for its requirements. Many customers of
Westford, Stoughton, and Kendallville purchase their own paper and furnish it
at no charge to these operations for book production purposes.
Paper markets began tightening in the latter half of 1994 causing
shortages in supply and significant increases in prices throughout 1995; a
trend that may continue into 1996. The Company passes on paper price increases
to its customers and believes that its long-term relationships with several
paper suppliers will enable it to continue to maintain an adequate
availability of paper for its book manufacturing operations.
ENVIRONMENTAL REGULATIONS
The Company believes that its operations comply in all material
respects with applicable federal, state and local environmental laws and
regulations. Although the Company makes capital expenditures for
environmental protection, it does not anticipate any significant expenditures
in order to comply with such laws and regulations which would have a material
impact on the Company's capital expenditures, earnings or competitive position.
EMPLOYEES
The Company and its subsidiaries employed 1,103 persons at September 30,
1995 compared to 1,093 a year ago.
OTHER
Courier's overall business is not significantly seasonal in nature,
although sales are generally lower in the Company's second quarter.
There is no portion of Courier's business subject to cancellation of
government contracts or renegotiation of profits. Courier holds no patents,
licenses, franchises or concessions which are important to its operations.
The Company considers Courier, Courier EPIC, Courier New Media, Copyright
Management Services, and CourieReader to be proprietary trademarks.
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<TABLE>
ITEM 2. PROPERTIES.
REAL PROPERTIES
The following schedule lists the facilities occupied by Courier. The
list also includes real estate which is held for sale or lease, as discussed in
Note H to the Consolidated Financial Statements, which appears on page F-14 of
this Annual Report on Form 10-K. Courier considers its plants and other
facilities to be well maintained and suitable for the purpose intended.
<CAPTION>
Owned/ Size in
Principal Activity and Location (Year Constructed) Leased Sq. Ft.
-------------------------------------------------- ------ -------
<S> <C> <C>
CORPORATE HEADQUARTERS AND EXECUTIVE OFFICES
Jackson Street, Lowell, MA (1825, 1967, 1977) Owned 88,000
BOOK MANUFACTURING AND WAREHOUSING
Westford plant, Westford, MA (1900, 1968, 1969, 1981, 1990) Owned 593,000 (1)
Kendallville plant, Kendallville, IN (1978) Owned 155,000
National plant, Philadelphia, PA (1912) Owned 219,000
National plant, Philadelphia, PA (1975) Owned 128,000 (2)
Stoughton plant, Stoughton, MA (1980) Leased 169,000
Courier EPIC facility, North Chelmsford, MA (1973) Owned 69,000
REAL ESTATE HELD FOR SALE OR LEASE
Hall Street, Lowell, MA (1916, 1956, 1980) Owned 227,000 (3)
Raymond, NH (1973) Owned 59,000 (4)
<FN>
(1) The Company completed a $4 million restructuring program in 1990 which
consolidated several scattered manufacturing operations into one modern
existing building, freeing up space in the adjacent older multi-story mill
complex which comprises approximately 350,000 square feet of the 593,000
square foot Westford facility. This mill complex remains approximately 50%
vacant pending lease.
(2) In July 1994, the Company exercised an option to purchase this
previously leased manufacturing facility for $2.6 million. The transaction
closed in October 1994.
(3) This building, which had been leased through September 1994 to the
Company's former telephone directory printing operation, is now vacant pending
sale or lease.
(4) This building continues to be leased to the purchaser of the Company's
former forms printing business.
</TABLE>
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EQUIPMENT
The Company's products are manufactured on equipment which in most cases
is owned by the Company, although it leases computers, image setters and
electronic printing systems which are subject to more rapid obsolescence.
Capital expenditures amounted to approximately $15.0 million in 1995, $2.2
million in 1994 and $3.4 million in 1993. Capital expenditures in 1995
included approximately $5.5 million for four new binding lines, $4.3 million
for a four-color web press, $2.6 million for the purchase of a previously
leased 128,000 square foot facility in Philadelphia, and continued
improvements to Company information systems. Another press, installed early
in fiscal 1995, was financed under a $4.5 million operating lease. Capital
expenditures for fiscal 1996 are expected to be approximately half of the
fiscal 1995 level. Courier considers its equipment to be in good operating
condition and adequate for its present needs.
ENCUMBRANCES AND RENTAL OBLIGATIONS
For a description of encumbrances on certain properties and equipment,
see Note D of Notes to Consolidated Financial Statements on page F-11 of
this Annual Report on Form 10-K. Information concerning leased properties
and equipment is disclosed in Note F of Notes to Consolidated Financial
Statements, which appears on page F-12 of this Annual Report on Form 10-K.
ITEM 3. LEGAL PROCEEDINGS.
In the ordinary course of business, the Company is subject to various
legal proceedings and claims. The Company believes that the ultimate outcome
of these matters will not have a material effect on its financial
statements.
<TABLE>
ITEM 3A. EXECUTIVE OFFICERS OF THE REGISTRANT.
Courier's executive officers, together with their ages and all positions
and offices with the Company presently held by each person named, are as
follows:
<S> <C> <C>
James F. Conway III 43 Chairman, President and Chief
Executive Officer
George Q. Nichols 66 Vice President and
President of National Publishing
Company
Robert P. Story, Jr. 44 Senior Vice President and
Chief Financial Officer
Thomas G. Osenton 42 Senior Vice President and
Chief Marketing Officer
</TABLE>
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The terms of office of all of the above executive officers continue
until the first meeting of the Board of Directors following the next
annual meeting of stockholders and the election or appointment and
qualification of their successors, unless any officer sooner dies,
resigns, is removed or becomes disqualified.
Mr. Conway III was elected Chairman of the Board in September
1994. He has been Chief Executive Officer since December 1992 and President
since July 1988.
Mr. Nichols became an executive officer of Courier in June 1989 while
retaining his position as President of National Publishing Company, a
position he has held since 1975. He was elected a Director of the Company
in March 1995.
Mr. Story became Senior Vice President and Chief Financial Officer in
April 1989. He joined Courier in November 1986 as Vice President and
Treasurer. He was elected a Director of the Company in February 1995.
Mr. Osenton joined Courier in October 1993 as Senior Vice President
and Chief Marketing Officer. He had previously served as
President/Chief Executive Officer and Publisher of The Sporting News
Publishing Company, a subsidiary of the Times Mirror Company, since 1989.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders
during the quarter ended September 30, 1995.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information required by this Item is contained in the section
captioned "Selected Quarterly Financial Data" which appears on page F-16 of
this Annual Report on Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this Item is contained in the section
captioned "Five-Year Financial Summary" appearing on page F-17 of this Annual
Report on Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information required by this Item is contained in the section
captioned "Management's Discussion and Analysis" appearing on pages F-18
through F-20 of this Annual Report on Form 10-K.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item is contained on pages F-2 through
F-16 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
and
ITEM 11. EXECUTIVE COMPENSATION.
and
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
and
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information regarding executive officers called for by paragraph (b) of
Item 401 of Regulation S-K for inclusion in answer to Item 10 is furnished
in Part I of this report under Item 3A, Executive Officers of the
Registrant. All other information called for by Items 10, 11, 12 and 13 is
contained in the definitive Proxy Statement to be delivered to stockholders
in connection with the Annual Meeting of Stockholders scheduled to be held
on Thursday, January 18, 1996. Such information is incorporated herein by
reference.
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PART IV
<TABLE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) DOCUMENTS FILED AS PART OF THIS REPORT
<CAPTION>
1. FINANCIAL STATEMENTS PAGE(S)
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<S> <C> <C>
_ Report of Independent Accountants F-1
_ Consolidated Balance Sheets as of September 30, 1995
and September 24, 1994 F-2 to F-3
_ Consolidated Statements of Operations for each of the
three years in the period ended September 30, 1995 F-4
_ Consolidated Statements of Cash Flows for each of the
three years in the period ended September 30, 1995 F-5
_ Consolidated Statements of Stockholders' Equity for
each of the three years in the period ended
September 30, 1995 F-6
_ Notes to Consolidated Financial Statements F-7 to F-15
2. FINANCIAL STATEMENT SCHEDULE
_ Schedule II - Valuation and Qualifying Accounts S-1
</TABLE>
<TABLE>
3. EXHIBITS
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
3A-1 Articles of Organization of Courier Corporation, as of June 29, 1972 (filed as Exhibit 3A-1 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 26, 1981, and incorporated herein by reference).
3A-2 Articles of Amendment of Courier Corporation (changing stockholder vote required for merger or consolidation), as
of January 20, 1977 (filed as Exhibit 3A-2 to the Company's Annual Report on Form 10-K for the fiscal year ended
September 26, 1981, and incorporated herein by reference).
3A-3 Articles of Amendment of Courier Corporation (providing for staggered election of directors), as of January 20,
1977 (filed as Exhibit 3A-3 to the Company's Annual Report on Form 10-K for the fiscal year ended September 26,
1981, and incorporated herein by reference).
3A-4 Articles of Amendment of Courier Corporation (authorizing class of Preferred Stock), as of February 15, 1978
(filed as Exhibit 3A-4 to the Company's Annual Report on Form 10-K for the fiscal year ended September 26, 1981,
and incorporated herein by reference).
3A-5 Articles of Amendment of Courier Corporation (increasing number of shares of authorized Common Stock), as of
January 16, 1986 (described in item #2 of the Company's Proxy Statement for the Annual Meeting of Stockholders
held on January 16, 1986, and incorporated herein by reference).
</TABLE>
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<TABLE>
<S> <C>
3A-6 Articles of Amendment of Courier Corporation (providing for fair pricing procedures for stock to be sold in
certain business combinations), as of January 16, 1986 (filed as Exhibit A to the Company's Proxy Statement for
the Annual Meeting of Stockholders held on January 16, 1986, and incorporated herein by reference).
3A-7 Articles of Amendment of Courier Corporation (limiting personal liability of directors to the Corporation or to
any of its stockholders for monetary damages for breach of fiduciary duty), as of January 28, 1988 (filed as
Exhibit 3A-7 to the Company's Annual Report on Form 10-K for the fiscal year ended September 24, 1988, and
incorporated herein by reference).
3A-8 Articles of Amendment of Courier Corporation (establishing Series A Preferred Stock), as of November 8, 1988
(filed as Exhibit 3A-8 to the Company's Annual Report on Form 10-K for the fiscal year ended September 24, 1988,
and incorporated herein by reference).
3B By-Laws of Courier Corporation, as amended through April 28, 1988 (filed as Exhibit 3B to the Company's Annual
Report on Form 10-K for the fiscal year ended September 24, 1988, and incorporated herein by reference).
4A-1 Mortgage and Indenture of Trust and Agreement between Courier Westford, Inc., Massachusetts Industrial Finance
Agency, and related trustee, dated as of December 22, 1980 (filed as Exhibit 4 (a) to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended December 27, 1980, and incorporated herein by reference).
4A-2 Bond Purchase Agreement between Massachusetts Industrial Finance Agency and participating bank, dated as of
December 22, 1980 (filed as Exhibit 4 (b) to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 27, 1980, and incorporated herein by reference).
4A-3 Guaranty Agreement of Courier Corporation, dated as of December 22, 1980 (filed as Exhibit 4 (c) to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended December 27, 1980, and incorporated herein by
reference).
4B+ Courier Employee Stock Ownership Plan, as adopted effective November 1, 1988 and as amended and restated on
November 4, 1993 (filed as Exhibit 4B to the Company's Annual Report on Form 10-K for the fiscal year ended
September 25, 1993, and incorporated herein by reference).
4C Courier Employee Stock Ownership Plan Trust Agreement effective December 30, 1988 (filed as Exhibit 4H to the
Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1989, and incorporated herein by
reference).
4D+ Courier Corporation 1988 Employee Stock Purchase Plan (filed as Exhibit A to the Company's Proxy Statement for
the Annual Meeting of Stockholders held on January 21, 1988, and incorporated herein by reference).
</TABLE>
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<TABLE>
<S> <C>
4E First Refusal Agreement, dated July 5, 1989, relating to stock owned by the Estate of Dorothy F. French (filed as
Exhibit 3 to the Company's Current Report on Form 8-K, dated July 6, 1989, and incorporated herein by reference).
10A-1+ Courier Corporation Stock Grant Plan (filed as Exhibit C to the Company's Proxy Statement for the Annual Meeting of
Stockholders held on January 20, 1977, and incorporated herein by reference).
10A-2+ Amendment, effective January 19, 1989, to the Courier Corporation Stock Grant Plan (described in Item 4 of the
Company's Proxy Statement for the Annual Meeting of Stockholders held January 19, 1989, and incorporated herein
by reference).
10B+ Letter Agreement, dated February 8, 1990, of Courier Corporation relating to supplemental retirement benefit and
consulting agreement with James F. Conway, Jr. (filed as Exhibit 10B to the Company's Annual Report on Form 10-K
for the fiscal year ended September 29, 1990, and incorporated herein by reference).
10C-1+ Courier Corporation 1989 Deferred Income Stock Option Plan for Non-employee Directors, effective September 28,
1989 (filed as Exhibit A to the Company's Proxy Statement for the Annual Meeting of Stockholders held January 18,
1990, and incorporated herein by reference).
10C-2+ Amendment, effective November 4, 1993, to the 1989 Deferred Income Stock Option Plan for Non-employee Directors
(filed as Exhibit 10C-2 to the Company's Annual Report on Form 10-K for the fiscal year ended September 25, 1993,
and incorporated herein by reference).
10D-1+ Courier Corporation 1983 Stock Option Plan (filed as Exhibit A to the Company's Proxy Statement for the Annual
Meeting of Stockholders held on January 20, 1983, and incorporated herein by reference).
10D-2+ Amendment, effective January 17, 1985, to the Courier Corporation 1983 Stock Option Plan (described in item 2 of
the Company's Proxy Statement for the Annual Meeting of Stockholders held on January 17, 1985, and incorporated
herein by reference).
10D-3+ Amendment, effective January 19, 1989, to the Courier Corporation 1983 Stock Option Plan (described in Item 3 of
the Company's Proxy Statement for the Annual Meeting of Stockholders held January 19, 1989, and incorporated
herein by reference).
10E-1+ Executive Incentive Compensation Program as amended and restated effective December, 1987 (filed as Exhibit 10L-1
to the Company's Annual Report on Form 10-K for the fiscal year ended September 24, 1988, and incorporated herein
by reference).
10E-2+ The Courier Executive Compensation Program, effective October 4, 1993 (filed as Exhibit 10E-2 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 25, 1993, and incorporated herein by reference).
</TABLE>
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<TABLE>
<S> <C>
10E-3+ The Management Incentive Compensation Program, effective October 4, 1993 (filed as Exhibit 10E-3 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 25, 1993, and incorporated herein by reference).
10F+ Courier Corporation Senior Executive Severance Program and Agreements, dated October 25, 1988 pursuant to the
program with Messrs. Conway III, Nichols and Story (filed as Exhibit 10P to the Company's Annual Report on
Form 10-K for the fiscal year ended September 24, 1988, and incorporated herein by reference).
10G Rights Amendment between Courier Corporation and State Street Bank and Trust Company dated October 25, 1988
(filed as Exhibit 1 to the Company's Current Report on Form 8-K, dated October 28, 1988, and incorporated herein
by reference).
10H+ 1989 Incentive Program, as amended and restated on May 28, 1992 for the purchase of Courier Common Stock by
Executive Officers and Key Employees of the Corporation (filed as Exhibit 10H to the Company's Annual Report on
Form 10-K for the fiscal year ended September 24, 1994, and incorporated herein by reference).
10I-1+ Courier Profit Sharing and Savings Plan, as adopted effective January 1, 1989 (filed as Exhibit 10I-1 to the
Company's Annual Report on Form 10-K for the fiscal year ended September 29, 1990, and incorporated herein by
reference).
10I-2+ Amendment, effective February 8, 1990, to the Courier Profit Sharing and Savings Plan (filed as Exhibit 10I-2 to
the Company's Annual Report on Form 10-K for the fiscal year ended September 29, 1990, and incorporated herein by
reference).
10I-3+ Amendment, effective November 8, 1990, to the Courier Profit Sharing and Savings Plan (filed as Exhibit 10I-3 to
the Company's Annual Report on Form 10-K for the fiscal year ended September 29, 1990, and incorporated herein by
reference).
10I-4+ Amendment, effective January 1, 1989, to the Courier Profit Sharing and Savings Plan (filed as Exhibit 10I-4 to
the Company's Annual Report on Form 10-K for the fiscal year ended September 24, 1994, and incorporated herein by
reference).
10I-5+ Amendment, effective January 1, 1993, to the Courier Profit Sharing and Savings Plan (filed as Exhibit 10I-5 to
the Company's Annual Report on Form 10-K for the fiscal year ended September 24, 1994, and incorporated herein by
reference).
10I-6+ Amendment, effective December 1, 1994, to the Courier Profit Sharing and Savings Plan (filed as Exhibit 10I-6 to
the Company's Annual Report on Form 10-K for the fiscal year ended September 24, 1994, and incorporated herein by
reference).
10I-7*+ Amendment, effective April 1, 1995, to the Courier Profit Sharing and Savings Plan.
</TABLE>
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<TABLE>
<S> <C>
10J+ Agreement, as of March 3, 1993, of Courier Corporation relating to employment contract and supplemental
retirement benefit with George Q. Nichols (filed as Exhibit 10J to the Company's Annual Report on Form 10-K for
the fiscal year ended September 25, 1993, and incorporated herein by reference).
10K* Agreement, dated as of October 16, 1995, of Courier Corporation relating to employment of John Pugsley.
10L-1 Revolving Credit Agreement, dated as of September 26, 1991, between Courier Corporation and the First National
Bank of Boston, providing for an $11,000,000 revolving credit facility (filed as Exhibit 4E to the Company's
Annual Report on Form 10-K for the fiscal year ended September 28, 1991, and incorporated herein by reference).
10L-2 Amendment, dated November 17, 1992, to Note Agreement between Courier Corporation and the First National Bank of
Boston, providing for $11,000,000 revolving credit facility (filed as Exhibit 10L-2 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 26, 1992, and incorporated herein by reference).
10L-3 Amendment, dated March 12, 1993, to Note Agreement between Courier Corporation and the First National Bank of
Boston, providing for $11,000,000 revolving credit facility (filed as Exhibit 10L-3 to the Company's Annual Report
on Form 10-K for the fiscal year ended September 25, 1993, and incorporated herein by reference).
10L-4 Amendment, dated September 20, 1993, to Note Agreement between Courier Corporation and the First National Bank of
Boston, providing for $11,000,000 revolving credit facility (filed as Exhibit 10L-4 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 25, 1993, and incorporated herein by reference).
10L-5 Amendment, dated March 31, 1994, to Note Agreement between Courier Corporation and the First National Bank of
Boston, providing for $11,000,000 revolving credit facility (filed as Exhibit 10L-5 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 24, 1994, and incorporated herein by reference).
10L-6* Amendment, dated January 26, 1995, to Note Agreement between Courier Corporation and the First National Bank of
Boston, providing for $11,000,000 revolving credit facility.
10L-7* Amendment, dated March 31, 1995, to Note Agreement between Courier Corporation and the First National Bank of
Boston, regarding $11,000,000 revolving credit facility.
10M-1 Term Promissory Note, dated as of October 15, 1991, between Courier Corporation and MetLife Capital Credit
Corporation for the principal sum of $2,000,000 at 9.5% due October 15, 2001 (filed as Exhibit 4F-1 to the
Company's Annual Report on Form 10-K for the fiscal year ended September 28, 1991, and incorporated herein by
reference).
</TABLE>
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<TABLE>
<S> <C>
10M-2 Loan and Security Agreement, dated as of October 15, 1991, between Courier Corporation and MetLife Capital Credit
Corporation (filed as Exhibit 4F-2 to the Company's Annual Report on Form 10-K for the fiscal year ended
September 28, 1991, and incorporated herein by reference).
10N-1+ Courier Corporation 1993 Stock Incentive Plan (filed as Exhibit A to the Company's Proxy Statement for the Annual
Meeting of Stockholders held January 21, 1993, and incorporated herein by reference).
10N-2+ Amendment, effective November 4, 1993, to the Courier Corporation 1993 Stock Incentive Plan (filed as Exhibit
10N-2 to the Company's Annual Report on Form 10-K for the fiscal year ended September 25, 1993, and incorporated
herein by reference).
10O Master Lease Finance Agreement, dated as of July 27, 1994, between Courier Corporation and BancBoston Leasing
(filed as Exhibit 10P to the Company's Annual Report on Form 10-K for the fiscal year ended September 24, 1994,
and incorporated herein by reference).
11* Computation of Per Share Earnings.
21* Schedule of Subsidiaries.
23* Consent of Coopers & Lybrand L.L.P., independent accountants
27* Financial Data Schedule
<FN>
_______________________________________________________
* Exhibit is furnished herewith.
+ Designates a Company compensation plan or arrangement.
</TABLE>
(c) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the last quarter of the
Company's fiscal year ended September 30, 1995.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on November 20,
1995.
COURIER CORPORATION
By: s/James F. Conway III
-------------------------------
James F. Conway III
Chairman, President and
Chief Executive Officer
By: s/Robert P. Story, Jr.
-------------------------------
Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
By: s/Peter M. Folger
-------------------------------
Peter M. Folger
Vice President and Chief
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated, on November 20, 1995.
<TABLE>
<S> <C>
s/James F. Conway III s/Charles E. Otto
---------------------------------- ------------------------------------
James F. Conway III Charles E. Otto
Chairman, President and Director
Chief Executive Officer
s/Edward J. Hoff s/W. Nicholas Thorndike
-------------------------------------- --------------------------------------
Edward J. Hoff W. Nicholas Thorndike
Director Director
s/Arnold S. Lerner s/Kathleen Foley Curley
--------------------------------------- --------------------------------------
Arnold S. Lerner Kathleen Foley Curley
Director Director
s/George Q. Nichols s/Richard K. Donahue, Sr.
------------------------------------- --------------------------------------
George Q. Nichols Richard K. Donahue, Sr.
Director Director
s/Robert P. Story, Jr.
----------------------------------------
Robert P. Story, Jr.
Director
</TABLE>
14
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Courier Corporation:
We have audited the consolidated financial statements and the financial
statement schedule of Courier Corporation listed in the index on page 8 of
this Form 10-K. These financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Courier
Corporation as of September 30, 1995 and September 24, 1994, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended September 30, 1995, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.
As described in Note C of Notes to the Consolidated Financial Statements, the
Company changed its method of accounting for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 in 1994.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
November 9, 1995
F-1
<PAGE> 17
<TABLE>
COURIER CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
SEPTEMBER 30, 1995 SEPTEMBER 24, 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note A) $ 1,147,000 $ 3,033,000
Accounts receivable, less allowance for uncollectible
accounts of $564,000 in 1995 and $588,000 in 1994 20,019,000 19,150,000
Inventories (Note B) 9,449,000 8,098,000
Deferred income taxes (Note C) 1,236,000 1,738,000
Other current assets 1,054,000 529,000
------------ ------------
Total current assets 32,905,000 32,548,000
Property, plant and equipment (Notes A and D):
Land 3,288,000 2,516,000
Buildings and improvements 15,580,000 13,298,000
Favorable building lease 2,816,000 2,816,000
Machinery and equipment 59,417,000 58,454,000
Furniture and fixtures 1,529,000 1,521,000
Construction in progress 8,981,000 924,000
------------ ------------
91,611,000 79,529,000
Less-Accumulated depreciation and amortization (55,386,000) (52,110,000)
------------ ------------
Net property, plant and equipment 36,225,000 27,419,000
Real estate held for sale or lease, net (Note H) 2,055,000 2,142,000
Investment in AlphaGraphics, at cost (Note H) - 624,000
Goodwill, at cost (Note A) 1,204,000 1,204,000
Other assets 572,000 437,000
------------ ------------
TOTAL ASSETS $ 72,961,000 $ 64,374,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-2
<PAGE> 18
<TABLE>
COURIER CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
SEPTEMBER 30, 1995 SEPTEMBER 24, 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Note D) $ 382,000 $ 2,080,000
Accounts payable 8,979,000 7,898,000
Accrued payroll 3,152,000 2,816,000
Income taxes payable 1,373,000 1,918,000
Other current liabilities 6,042,000 5,083,000
----------- -----------
Total current liabilities 19,928,000 19,795,000
Long-term debt (Note D) 9,488,000 5,848,000
Deferred income taxes (Note C) 3,447,000 3,972,000
Other liabilities 3,272,000 3,190,000
----------- -----------
Total liabilities 36,135,000 32,805,000
Commitments and contingencies (Note F)
Stockholders' equity (Note G):
Preferred stock, $1 par value-authorized 1,000,000 shares; none issued
Common stock, $1 par value:
Shares 1995 1994
-----------------------------------------------------
Authorized 6,000,000 6,000,000
Issued 4,500,000 4,500,000
Outstanding 2,007,000 1,957,000 4,500,000 4,500,000
Additional paid-in capital 8,884,000 8,520,000
Retained earnings 47,133,000 42,696,000
Treasury stock, at cost: 2,493,000 shares in 1995
and 2,543,000 shares in 1994 (23,691,000) (24,147,000)
----------- -----------
Total stockholders' equity 36,826,000 31,569,000
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $72,961,000 $64,374,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 19
<TABLE>
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
FOR THE YEARS ENDED
-------------------
SEPTEMBER 30, 1995 SEPTEMBER 24, 1994 SEPTEMBER 25, 1993
------------------ ------------------ ------------------
<S> <C> <C> <C>
Net sales $120,701,000 $122,727,000 $115,238,000
Cost of sales 94,666,000 98,213,000 93,911,000
------------ ------------ ------------
Gross profit 26,035,000 24,514,000 21,327,000
Selling and administrative expenses 18,351,000 17,941,000 17,237,000
Interest expense 990,000 1,400,000 1,815,000
Other income (Note H) 1,066,000 666,000 1,080,000
------------ ------------ ------------
Income before taxes 7,760,000 5,839,000 3,355,000
Provision for income taxes (Note C) 2,530,000 2,133,000 1,166,000
------------ ------------ ------------
Net income before cumulative effect
of accounting change 5,230,000 3,706,000 2,189,000
Cumulative effect on prior years of change
in accounting for income taxes (Note C) - 1,525,000 -
------------ ------------ ------------
Net income $5,230,000 $5,231,000 $2,189,000
============ =========== ============
Net income per share:
Net income before cumulative effect
of accounting change $2.60 $1.92 $1.20
Cumulative effect on prior years of change
in accounting for income taxes - 0.79 -
------------ ------------ ------------
Net income per share $2.60 $2.71 $1.20
============ =========== ============
Cash dividends declared per share $0.40 $0.20 -
============ =========== ============
Weighted average shares outstanding 2,015,000 1,930,000 1,823,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 20
<TABLE>
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
FOR THE YEARS ENDED
-------------------
SEPTEMBER 30, 1995 SEPTEMBER 24, 1994 SEPTEMBER 25, 1993
------------------ ------------------ ------------------
<S> <C> <C> <C>
Operating Activities
Net income $ 5,230,000 $5,231,000 $2,189,000
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization 5,950,000 5,830,000 6,338,000
Other non-cash items 382,000 426,000 412,000
Deferred income taxes (23,000) (216,000) (1,539,000)
Tax accounting change (Note C) - (1,525,000) -
Change in accounts receivable (869,000) 618,000 41,000
Change in inventory (1,351,000) 1,202,000 (1,358,000)
Change in accounts payable 1,081,000 (185,000) 1,294,000
Change in income taxes payable (545,000) 629,000 4,302,000
Change in other elements of working capital 770,000 (326,000) (490,000)
Other, net (827,000) 273,000 681,000
----------- ----------- -----------
Cash provided from operations 9,798,000 11,957,000 11,870,000
Investment Activities
Capital expenditures (14,961,000) (2,242,000) (3,428,000)
Proceeds from sale of assets 820,000 324,000 140,000
Proceeds from sale of investment in AlphaGraphics (Note H) 953,000 - -
----------- ----------- -----------
Cash used for investment activities (13,188,000) (1,918,000) (3,288,000)
Financing Activities
Scheduled long-term debt repayments (2,080,000) (2,065,000) (2,231,000)
Other long-term borrowings (repayments) 4,022,000 (5,833,000) (6,368,000)
Cash dividends (793,000) (382,000) -
Proceeds from stock plans 355,000 666,000 251,000
----------- ----------- -----------
Cash provided from (used for) financing activities 1,504,000 (7,614,000) (8,348,000)
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents (1,886,000) 2,425,000 234,000
Cash at the beginning of the period 3,033,000 608,000 374,000
----------- ----------- -----------
Cash at the end of the period $1,147,000 $3,033,000 $608,000
=========== =========== ===========
Supplemental cash flow information:
Interest paid $1,173,000 $1,435,000 $1,926,000
Income taxes paid (net of receipts) $2,880,000 $1,667,000 ($2,600,000)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 21
<TABLE>
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
COMMON ADDITIONAL RETAINED TREASURY STOCKHOLDERS'
STOCK PAID-IN CAPITAL EARNINGS STOCK EQUITY
---------- --------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance, September 26, 1992 $4,500,000 $8,165,000 $35,658,000 $(25,776,000) $22,547,000
Net income - - 2,189,000 - 2,189,000
Allocation of stock by ESOP - - - 372,000 372,000
Shares issued under stock plans - (8,000) - 483,000 475,000
--------------------------------------------------------------------------
Balance, September 25, 1993 4,500,000 8,157,000 37,847,000 (24,921,000) 25,583,000
Net income - - 5,231,000 - 5,231,000
Cash dividends - - (382,000) - (382,000)
Purchase of Company stock - - - (18,000) (18,000)
Allocation of stock by ESOP - 201,000 - 186,000 387,000
Shares issued under stock plans - 162,000 - 606,000 768,000
--------------------------------------------------------------------------
Balance, September 24, 1994 4,500,000 8,520,000 42,696,000 (24,147,000) 31,569,000
Net income - - 5,230,000 - 5,230,000
Cash dividends - - (793,000) - (793,000)
Allocation of stock by ESOP - 153,000 - 190,000 343,000
Shares issued under stock plans - 211,000 - 266,000 477,000
--------------------------------------------------------------------------
Balance, September 30, 1995 $4,500,000 $8,884,000 $47,133,000 $(23,691,000) $36,826,000
==========================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS: Courier Corporation helps organizations manage the process of
creating and distributing intellectual properties. Services include the
preparation, production, storage and distribution of information in a variety
of formats from traditional books to CD-ROMs and online services. Products
include Bibles, reference texts, books, software manuals and technical
documentation.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements, prepared on
a fiscal year basis, include the accounts of Courier Corporation and its
subsidiaries after elimination of all significant intercompany transactions.
Fiscal year 1995 was a 53 week period compared with fiscal years 1994 and 1993
which were 52 week periods.
CASH EQUIVALENTS: The Company classifies as cash and cash equivalents amounts
on deposit in banks and cash invested temporarily in various instruments with
maturities of three months or less at time of purchase.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are recorded at
cost, including interest on funds borrowed to finance the acquisition or
construction of major capital additions. Interest of approximately $120,000 was
capitalized in fiscal 1995. No interest was capitalized in fiscal 1994 or
fiscal 1993. The Company provides for depreciation of plant and equipment on a
straight-line basis over periods ranging from 3 to 11 years, except for
depreciation on buildings and improvements which is based on estimated useful
lives ranging from 10 to 40 years.
Leasehold improvements are amortized on a straight-line basis over the shorter
of the useful life of the improvement or the term of the lease. A favorable
building lease is being amortized over the life of the lease, which expires in
2005. Expenditures for maintenance and repairs are charged against income as
incurred; betterments which increase the value or materially extend the life of
the related assets are capitalized. When assets are sold or retired, the cost
and accumulated depreciation are removed from the accounts and any gain or loss
is included in income.
GOODWILL: Goodwill is stated at cost and represents the excess of the
consideration paid over the estimated fair value of the net assets of a company
purchased prior to October 31, 1970; such amount is not being amortized because
management believes that the value has not diminished.
INCOME TAXES: The provision for income taxes includes federal and state taxes
based on income. Deferred income taxes are recorded based upon the differences
between the financial statement and tax bases of assets and liabilities and
available tax credit carryforwards.
F-7
<PAGE> 23
<TABLE>
NOTE B. INVENTORIES
Inventories are valued at the lower of cost or market using the last-in,
first-out (LIFO) method for substantially all inventories. Inventories as of
September 30, 1995 and September 24, 1994 consisted of:
<CAPTION>
Fiscal Year
------------------------------------
1995 1994
---- ----
<S> <C> <C>
Raw materials $4,984,000 $2,913,000
Work in process 3,529,000 4,368,000
Finished goods 936,000 817,000
---------- ----------
Total $9,449,000 $8,098,000
========== ==========
</TABLE>
On a first-in, first-out (FIFO) basis, reported year-end inventories would have
increased by $5.9 million in 1995 and $5.1 million in 1994.
NOTE C. INCOME TAXES
Effective September 26, 1993, the Company adopted the provisions of SFAS No.
109, "Accounting for Income Taxes." SFAS No. 109 requires the use of the
liability method of accounting for deferred income taxes. This method utilizes
current tax rates, whereas much of the Company's deferred tax liabilities had
been determined in past years when the liabilities arose and when tax rates
were higher. As a result, the cumulative effect on prior years relating to the
adoption of this required accounting change was an increase in net income of
$1,525,000 or $.79 per share, reported in the first quarter of fiscal year
1994. Financial statements for years prior to fiscal 1994 have not been
restated to apply the provisions of SFAS No. 109.
<TABLE>
The statutory federal tax rate is 34%. The total provision differs from that
computed using the statutory federal income tax rate for the following reasons:
<CAPTION>
Fiscal Year
------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal income taxes at statutory rate $2,638,000 $1,985,000 $1,141,000
State income taxes, net of federal income tax benefit 259,000 449,000 448,000
Export related income (277,000) (277,000) (297,000)
Dividend deduction (96,000) - -
Income from life insurance proceeds - - (70,000)
Other 6,000 (24,000) (56,000)
---------- ---------- ----------
Total $2,530,000 $2,133,000 $1,166,000
========== ========== ==========
</TABLE>
F-8
<PAGE> 24
<TABLE>
The provision for income taxes consisted of the following:
<CAPTION>
Fiscal Year
-----------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Currently payable:
Federal $2,127,000 $1,591,000 $ 2,022,000
State 426,000 758,000 683,000
---------- ---------- ----------
2,553,000 2,349,000 2,705,000
---------- ---------- ----------
Deferred:
Federal 11,000 (138,000) (1,535,000)
State (34,000) (78,000) (4,000)
---------- ---------- ----------
(23,000) (216,000) (1,539,000)
---------- ---------- ----------
Total $2,530,000 $2,133,000 $ 1,166,000
========== ========== ===========
</TABLE>
<TABLE>
The deferred income tax provision (benefit) arose from the following temporary
differences:
<CAPTION>
Fiscal Year
------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Accelerated depreciation $(479,000) $(262,000) $ (312,000)
Non-deductible accruals and reserves 281,000 42,000 (490,000)
Utilization of tax credits 214,000 21,000 -
Retirement plan contributions (61,000) (10,000) 81,000
Deduction of foreign advances - - (678,000)
Other 22,000 (7,000) (140,000)
--------- ---------- ------------
Total $ (23,000) $(216,000) $(1,539,000)
========= ========= ===========
</TABLE>
F-9
<PAGE> 25
<TABLE>
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of September 30, 1995 and September 24,
1994:
<CAPTION>
Fiscal Year
-----------------------------
1995 1994
---- ----
<S> <C> <C>
Deferred tax assets:
Vacation accrual not currently deductible $ 389,000 $ 391,000
Other accruals not currently deductible 252,000 524,000
Non-deductible reserves 567,000 572,000
Alternative minimum tax carryforward - 214,000
Other 28,000 37,000
---------- ----------
Classified as current 1,236,000 1,738,000
Deferred compensation arrangements 713,000 654,000
Other (6,000) 7,000
---------- ----------
Total $1,943,000 $2,399,000
========== ==========
Deferred tax liabilities:
Accelerated depreciation $4,154,000 $4,633,000
========== ==========
</TABLE>
Non-current deferred tax assets have been netted against non-current deferred
tax liabilities for balance sheet classification purposes.
<TABLE>
NOTE D. LONG-TERM DEBT
Long-term debt of the Company and its consolidated subsidiaries consisted of
the following:
<CAPTION>
Fiscal Year
----------------------------
1995 1994
---- ----
<S> <C> <C>
9.5% secured promissory note, payable in monthly installments $1,405,000 $1,571,000
through October 2001
Obligation under revolving bank credit facility at 7.5% as of
September 30, 1995 7,965,000 -
Obligation under industrial revenue bond arrangement at 65% of
prime rate (5.7% at September 30, 1995), payable in
semi-annual installments of $100,000 through December 1997 500,000 700,000
10.55% senior promissory note - 5,657,000
---------- ---------
9,870,000 7,928,000
Less: Current maturities 382,000 2,080,000
---------- ----------
Total $9,488,000 $5,848,000
========== ==========
</TABLE>
F-10
<PAGE> 26
Scheduled aggregate principal payments of long-term debt are $382,000 in fiscal
1996, $401,000 in fiscal 1997, $8,285,000 in fiscal 1998, $242,000 in fiscal
1999, $266,000 in fiscal 2000 and $294,000 thereafter.
The Company maintains an $11 million long-term revolving credit agreement at
the lender's prime interest rate. Borrowings under this facility amounted to
approximately $8.0 million at September 30, 1995. This revolving facility
matures in January 1998 and is included in scheduled aggregate principal
payments due in 1998, although the maturity date is expected to be extended
periodically. A provision of the revolving credit agreement requires a
commitment fee of 1/2% per annum of the unused portion.
Subsequent to its annual $1.7 million installment payment made in June 1995,
the Company redeemed the outstanding balance of its 10.55% senior promissory
note. The $3.9 million principal balance on the note, which originally provided
for annual installments through 1998, was paid in its entirety in August 1995.
A prepayment penalty of $92,000 was also paid at that time.
The revolving credit facility contains restrictive covenants including
provisions relating to the maintenance of working capital, incurrence of
additional indebtedness and a quarterly test of cash flow to debt service. The
industrial revenue bond arrangement and the 9.5% promissory note provide for a
lien on the assets acquired with the proceeds.
The Company also maintains an informal line of credit providing for aggregate
borrowings of $10 million at an interest rate not to exceed the lender's prime
rate. There have been no short-term borrowings against the Company's line
during the three fiscal years ended September 30, 1995.
NOTE E. RETIREMENT PLANS
The Company and its consolidated subsidiaries maintain various retirement plans
covering substantially all of its employees. Pension costs of multi-employer
union plans consist of defined contributions determined in accordance with the
respective collective bargaining agreements. Retirement benefits for non-union
employees are provided through the Courier Employee Stock Ownership Plan (ESOP)
and the Courier Profit Sharing and Savings Plan. Non-union employees become
participants in these retirement plans after completing at least one year of
eligible service. Retirement costs for the Company's principal plans amounted
to $1,328,000 in fiscal 1995, $1,338,000 in fiscal 1994, and $1,325,000 in
fiscal 1993.
The ESOP allocates shares of Company common stock to participants annually
based on their compensation as defined in the plan. During fiscal 1995, 20,761
shares were allocated to participants representing the contribution for the
plan year ended December 31, 1994. The shares allocated to participants were
contributed to the ESOP from the Company's treasury stock during fiscal 1995.
Shares held by the ESOP on behalf of the participants were 153,970 at September
30, 1995.
The Profit Sharing and Savings Plan is qualified under Section 401(k) of the
Internal Revenue Code. The plan allows eligible employees to contribute up to
F-11
<PAGE> 27
16% of their compensation, with the Company matching 25% of the first 6% of
employee contributions. The Company also makes contributions based on profits
each year for the benefit of all eligible employees under the plan.
NOTE F. COMMITMENTS AND CONTINGENCIES
The Company is committed under various operating leases to make annual rental
payments for certain buildings and equipment. Amounts charged against income
under such leases approximated $2,428,000 in fiscal 1995, $1,681,000 in fiscal
1994, and $1,294,000 in fiscal 1993. As of September 30, 1995, minimum annual
rental commitments under the Company's long-term operating leases were
projected to amount to $1,871,000 in fiscal 1996, $1,355,000 in fiscal 1997,
$1,120,000 in fiscal 1998, $1,117,000 in fiscal 1999, $1,103,000 in fiscal 2000
and $4,745,000 thereafter.
NOTE G. STOCK ARRANGEMENTS
STOCK OPTION/INCENTIVE PLANS: In January 1993, shareholders approved the
Courier Corporation 1993 Stock Incentive Plan to replace the expiring 1983
Stock Option Plan. Under the provisions of each plan, both non-qualified and
incentive stock options to purchase shares of the Company's common stock may be
granted to key employees. The option price per share for incentive stock
options may not be less than the fair market value of stock at the time the
option is granted and incentive stock options must expire not later than ten
years from the date of grant. The 1993 Stock Incentive Plan provides that
130,000 shares be reserved for the granting of stock options, stock grants or
stock appreciation rights.
The following table summarizes stock option activity for these plans for each
of the last three fiscal years:
<TABLE>
<CAPTION>
Fiscal Year
---------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Option Shares:
Outstanding at beginning of period 227,550 229,574 153,324
Issued during period 21,930 72,150 102,000
Exercised during period (12,450) (52,224) (22,500)
Canceled during period (3,350) (21,950) (3,250)
------- ------- -------
Outstanding at end of period 233,680 227,550 229,574
======= ======= =======
Exercisable at end of period 133,323 101,650 109,964
Shares available for granting of options
at end of period 6,270 28,200 97,000
Average price of options outstanding at
end of period $ 14.48 $ 13.87 $ 12.80
Average price of options exercised during
the period $ 13.41 $ 10.57 $ 5.95
</TABLE>
F-12
<PAGE> 28
STOCK GRANT PLAN: The Company established a stock grant plan in 1977 entitling
key employees to receive shares of common stock of the Company. Shares granted
are either fully vested or vest after a 5 year period. The maximum number of
shares of common stock which may be awarded under the stock grant plan is
132,500 shares and no more than 22,500 shares may be awarded in any one fiscal
year. No shares were granted under the plan in fiscal 1995 and fiscal 1994;
2,700 shares were granted in fiscal 1993. The related compensation expense,
based on the amortization over a five-year vesting period of the fair market
value of the shares on the date granted, was $39,000 in 1995, $63,000 in 1994
and $153,000 in 1993. As of September 30, 1995, there were 10,719 shares
available for future grants under the plan.
EMPLOYEE STOCK PURCHASE PLAN: Under the Company's Employee Stock Purchase Plan
adopted in fiscal 1988, eligible employees may purchase shares of Company
common stock at not less than 85% of fair market value at the beginning or end
of the grant period. At September 30, 1995, 44,694 shares had been issued under
the plan at an average price of $11.32 per share with an additional 45,306
shares reserved for future issuances.
DIRECTORS' OPTION PLAN: A 1989 plan, as amended in November 1993, allows
members of the Company's Board of Directors to make an election to apply either
50% or 100% of their annual director's fee toward the annual grant of a stock
option to be offered at a price per share $5 below the fair market value of the
Company's common stock at the time the option is granted. The annual director's
fee for 1995 was $12,000. The plan, as approved by stockholders, provides that
100,000 shares be reserved for the granting of options.
<TABLE>
The following table summarizes stock option activity for this plan for each of
the last three fiscal years:
<CAPTION>
Fiscal Year
------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Option Shares:
Outstanding at beginning of period 18,600 13,200 19,600
Issued during period 9,200 9,600 6,000
Exercised during period (9,400) (4,200) (10,800)
Canceled during period (6,000) - (1,600)
------ ------ ------
Outstanding at end of period 12,400 18,600 13,200
====== ====== ======
Exercisable at end of period 12,400 18,600 13,200
Shares available for granting of options at end of period 62,400 65,600 75,200
Average price of options outstanding at end of period $10.89 $10.89 $10.78
Average price of options exercised during the period $ 7.69 $ 6.49 $ 5.63
</TABLE>
F-13
<PAGE> 29
STOCKHOLDERS' RIGHTS PLAN: In October 1988, the Board of Directors adopted a
stockholders' rights plan. Under the plan, the Company's stockholders of record
at November 4, 1988 received rights to purchase one one-hundredth of a share of
preferred stock for each share of common stock held on that date, at an
exercise price of $75 per one-hundredth of a share. The rights will be
exercised only if a person or group either acquires or announces a proposal to
acquire 20% or more of the Company's outstanding stock. In addition, if a large
holder of the Company's stock merges with the Company or acquires a substantial
part of the Company's assets, the rights will entitle holders to purchase stock
in the surviving Company at half of its then-current market price. If there is
no merger, but a large stockholder engages in one of a number of specified
self-dealing transactions involving the Company, the rights will entitle
holders to purchase stock in the Company at half of its then-current market
price. The rights may also be redeemed by the Company at $.01 per right for up
to ten business days after the time any person or group has acquired 20% or
more of the Company's shares. The rights expire in 1998.
<TABLE>
NOTE H. OTHER INCOME
Other income as reported in the accompanying income statements consisted of the
following:
<CAPTION>
Fiscal Year
--------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net rental income $ 335,000 $601,000 $ 710,000
Gain on sale of investment in AlphaGraphics 329,000 - -
Dividend income 402,000 65,000 70,000
Income from life insurance policy - - 175,000
Other - - 125,000
---------- -------- ----------
Total $1,066,000 $666,000 $1,080,000
========== ======== ==========
</TABLE>
Net rental income is derived from two buildings which are separately reported
in the accompanying balance sheets as "Real estate held for sale or lease,
net." The lease on one of these properties expired September 30, 1994 and the
facility is currently vacant pending sale or lease. Management does not believe
that there is any material impairment of this or any other asset of the Company
as measured in accordance with recently issued SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
of."
On September 29, 1995, AlphaGraphics repurchased the Company's investment
interest and paid the related cumulative dividends. The Company received
$953,000 for its investment in AlphaGraphics resulting in a gain of $329,000.
In addition, the Company received $347,000 in cumulative dividends.
F-14
<PAGE> 30
NOTE I. BUSINESS SEGMENTS AND FOREIGN OPERATIONS
The Company is engaged in one industry, the manufacture of printed products.
Customers, which consist primarily of publishers, are granted credit on an
unsecured basis.
Export sales as a percentage of consolidated sales were approximately 16% in
fiscal 1995 and fiscal 1994 and 17% in fiscal 1993. Sales to a religious book
customer amounted to approximately 27% of consolidated sales in fiscal 1995,
25% in fiscal 1994 and 27% in fiscal 1993. No other customer accounted for more
than 10% of consolidated sales.
F-15
<PAGE> 31
<TABLE>
COURIER CORPORATION
FINANCIAL AND MARKET DATA (UNAUDITED)
<CAPTION>
Fiscal 1995: (dollars in thousands except per share amounts)
- -------------------------------------------------------------------------------------------
First Second Third Fourth
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Results:
Net sales $30,916 $29,643 $30,210 $29,932
Gross profit 6,687 6,171 6,458 6,719
Net income 1,002 758 1,217 2,253
Net income per share 0.50 0.38 0.60 1.10
Dividends declared per share 0.10 0.10 0.10 0.10
Stock Price:
Highest bid 18 1/2 18 3/4 20 21 1/2
Lowest bid 15 1/2 16 1/4 17 1/4 18 3/4
</TABLE>
<TABLE>
<CAPTION>
Fiscal 1994: (dollars in thousands except per share amounts)
- -------------------------------------------------------------------------------------------
First Second Third Fourth
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Results:
Net sales $30,037 $30,576 $32,343 $29,771
Gross profit 5,670 5,107 6,545 7,192
Net income before cumulative effect of
accounting change 675 340 1,100 1,591
Net income 2,200 340 1,100 1,591
Net income per share before cumulative effect
of accounting change 0.35 0.18 0.57 0.81
Net income per share 1.15 0.18 0.57 0.81
Dividends declared per share 0.05 0.05 0.05 0.05
Stock Price:
Highest bid 20 19 1/2 18 1/2 16 1/2
Lowest bid 12 3/4 16 3/4 14 1/2 14 1/2
</TABLE>
Common shares of the Company are traded over-the-counter on the Nasdaq national
market system-symbol "CRRC".
There were approximately 635 shareholders of record as of September 30, 1995.
F-16
<PAGE> 32
<TABLE>
COURIER CORPORATION
FINANCIAL SUMMARY
<CAPTION>
(Dollar amounts in millions except per share data)
- --------------------------------------------------------------------------------------------------------
1995 1994* 1993 1992** 1991
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $120.7 $122.7 $115.2 $121.9 $124.2
Gross profit 26.0 24.5 21.3 16.5 21.2
Net income (loss) before cumulative effect
of accounting change 5.2 3.7 2.2 (6.0) 1.3
Net income (loss) 5.2 5.2 2.2 (6.0) 1.3
Net income (loss) per share before cumulative
effect of accounting change 2.60 1.92 1.20 (3.44) 0.75
Dividends per share 0.40 0.20 - 0.20 0.40
Working capital 13.0 12.8 10.5 13.9 16.5
LIFO reserve 5.9 5.1 5.2 5.4 5.3
Current ratio (FIFO basis) 1.9 1.9 1.8 2.1 2.1
Total assets 73.0 64.4 66.0 70.7 82.4
Long-term debt 9.5 5.8 13.8 22.2 23.9
Long-term debt as a percentage of capitalization 20.5% 15.6% 35.0% 49.6% 45.6%
Depreciation and amortization 6.0 5.8 6.3 6.8 6.2
Capital expenditures 15.0 2.2 3.4 2.5 8.7
Stockholders' equity 36.8 31.6 25.6 22.5 28.4
Return on stockholders' equity 14.2% 16.6% 8.6% -26.8% 4.5%
Stockholders' equity per share 18.35 16.13 13.67 12.77 16.49
Shares outstanding (000's omitted) 2,007 1,957 1,872 1,766 1,725
Number of employees 1,103 1,093 1,165 1,155 1,396
<FN>
Earnings per share are based on weighted average shares outstanding;
stockholders' equity per share is based on shares outstanding at year end.
* Fiscal 1994 net income includes non-cash income of $1.5 million from the
adoption of SFAS No. 109, "Accounting for Income Taxes," resulting in net
income per share of $2.71 (Note C).
** Fiscal 1992 results include a charge of $2.1 million or $1.18 per share for
closing the Company's U.K. plant.
</TABLE>
F-17
<PAGE> 33
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales in fiscal 1995 were $120.7 million, down 1.7% from fiscal 1994 sales
of $122.7 million. (Fiscal 1995 included 53 weeks compared to 52 weeks in
1994). The decline in sales reflects the impact of a Company initiative
designed to improve the quality of revenue by shifting the focus away from
commodity-like business, adding new services enabling growth in higher
value-added turnkey relationships and enhancing the skills of the sales and
service teams to deliver these new services. Sales in fiscal 1994 were $122.7
million, compared to fiscal 1993 sales of $115.2 million. The 6.5% increase in
sales was attributable to sales growth across nearly all the major markets
served by the Company. Sales of software documentation and educational
publishers' materials were particularly strong.
Gross profits in 1995 were approximately $1.5 million higher than 1994 and,
as a percentage of sales, increased from 20.0% to 21.6%. The increase was
attributable to the improvement in the quality of revenue, as well as cost
reductions and other benefits associated with process improvements. Gross
profits increased by approximately $3.2 million from 1993 to 1994. As a
percentage of sales, gross profit improved from 18.5% to 20.0%. The improvement
reflects the impact of sales growth, cost containment efforts and productivity
gains, reduced by on-going development costs at the Company's Electronic
Publishing Innovations Center (Courier EPIC).
Selling and administrative expenses in 1995 increased by approximately $0.4
million or 2% over 1994. As a percentage of sales, selling and administrative
expenses were 14.6% in 1994 compared to 15.2% in 1995. The increase resulted
from higher selling costs, the introduction of copyright management services,
costs associated with improvements to the Company's information systems, and
the additional week in fiscal 1995. These factors more than offset a reduction
in administrative expenses. From 1993 to 1994, selling and administrative
expenses increased by $0.7 million or 4% due to continued growth and expansion
of services at Courier EPIC and increased selling expenses. However, as a
percentage of sales, selling and administrative expenses decreased from 15.0%
to 14.6%.
Interest expense for fiscal 1995 was $0.4 million lower than fiscal 1994 as
average borrowings were approximately $4.8 million lower in fiscal 1995 than
fiscal 1994. A lower average borrowing rate also contributed to the reduction
in interest expense. From 1993 to 1994, interest expense decreased by
approximately $0.4 million due to a reduction in borrowings of approximately
$7.9 million during the year.
In 1995, other income includes a $329,000 gain on the sale of the Company's
investment in AlphaGraphics and dividend income of approximately $400,000
related to that investment. Net rental income was $335,000 in 1995. In 1994,
other income includes approximately $65,000 in dividends received from
AlphaGraphics, as well as $601,000 of net rental income. The 1994 net rental
income includes $425,000 from a building lease which expired on September 30,
1994. The property is currently vacant pending sale or lease. In 1993, other
F-18
<PAGE> 34
income included approximately $175,000 from a life insurance policy and
approximately $70,000 in dividends from AlphaGraphics, as well as $710,000 of
net rental income.
The Company's tax rate was 33% for 1995 compared to 37% for 1994. The lower
tax rate reflects the benefit of the tax exempt portion of dividend income and
a lower effective state income tax rate. The Company's tax rate of 37% for 1994
was slightly higher than the 1993 rate of 35% because 1993 included tax exempt
income from life insurance proceeds.
Net income before the cumulative effect of an accounting change was $5.2
million for fiscal 1995, up 41% from $3.7 million in fiscal 1994. These
earnings, on a per share basis, increased 35% to $2.60 per share in fiscal 1995
versus $1.92 per share in fiscal 1994. The improvement in gross profit margins
and income associated with the sale of the Company's investment in
AlphaGraphics were the primary factors contributing to the improvement in
earnings. Net income before the cumulative effect of an accounting change for
fiscal 1994 was $3.7 million or $1.92 per share compared to $2.2 million or
$1.20 per share for fiscal 1993. The increase in income of $1.5 million or 69%
reflects the impact of increased sales, cost containment efforts and
productivity improvements. Weighted average shares outstanding increased by
85,000 shares from 1994 to 1995 and 107,000 shares from 1993 to 1994 due to
shares allocated under the Employee Stock Ownership Plan and additional
equivalent shares for stock options.
At the beginning of fiscal 1994, the Company adopted SFAS No. 109
"Accounting for Income Taxes," which requires companies to determine deferred
income taxes under the liability method of accounting. The cumulative effect on
prior years relating to the adoption of this required accounting change
produced one-time, non-cash income of $1.5 million, increasing net income for
fiscal 1994 to $5.2 million or $2.71 per share.
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation," which establishes
accounting and reporting standards for stock-based employee compensation plans.
The Company has until fiscal 1997 to adopt SFAS No. 123; this pronouncement will
apply to options granted after 1995.
LIQUIDITY AND CAPITAL RESOURCES
In fiscal 1995, operations provided approximately $9.8 million in cash.
Cash provided from earnings was $5.2 million and depreciation was $6.0 million.
This cash was utilized in part to fund a $1.4 million increase in inventory,
primarily because of higher paper prices and stocking levels.
Investment activities in 1995 utilized approximately $13.2 million in cash.
Capital expenditures were $15.0 million while proceeds of approximately $1.0
million were received from the sale of the Company's investment in
AlphaGraphics and $0.8 million from the sale of equipment. Capital expenditures
included approximately $5.5 million for four new binding lines, $4.3 million
for a four-color web press, $2.6 million for the purchase of a previously
leased 128,000 square foot manufacturing facility in Philadelphia, and
continued improvements to Company information systems. Another press installed
early in fiscal 1995 was financed under a $4.5 million operating lease. Capital
expenditures for fiscal 1996 are expected to be approximately half of the
fiscal 1995 level.
F-19
<PAGE> 35
Financing activities provided approximately $1.5 million of cash in 1995,
primarily in long-term borrowings of $1.9 million. Dividend payments were
approximately $0.8 million while proceeds received from Company stock plans
were $0.4 million. In August 1995, the Company redeemed the entire outstanding
principal amount of the 10.55% senior promissory note outstanding of $3.9
million. The redemption was funded by utilizing available credit lines at more
favorable interest rates than the promissory note. In November 1995, the
Company increased its quarterly dividend from $.10 per common share to $.12
per common share.
The Company maintains an $11 million long-term revolving credit facility.
This revolving facility matures in January 1998 and is expected to be extended
periodically. The revolving credit facility contains restrictive covenants,
including provisions related to the maintenance of working capital, incurrence
of additional indebtedness and a quarterly test of cash flow to debt service.
The Company continues to maintain an informal bank credit line of $10
million. There were no short-term borrowings during fiscal 1995. The Company
expects that its cash from operations and available credit facilities will be
sufficient to meet its cash requirements through fiscal 1996. In fiscal 1996,
the Company expects to obtain approximately $1 million of development bond
financing at a 3% interest rate in connection with the fiscal 1995 purchase of
the Philadelphia building.
EFFECTS OF INFLATION
The Company attempts to minimize the impact of inflation on production and
operating costs through cost control programs and productivity improvements.
Over the past three years, the rate of inflation has remained moderate, which
has allowed the Company to pass on to customers a significant portion of
inflationary cost increases through price adjustments, except where otherwise
dictated by competition. By accounting for most inventories on a LIFO basis,
the earnings reported in the Company's financial statements more closely
approximate the level of earnings which would be reported if measured in terms
of constant, current value dollars.
Paper markets began tightening in the latter half of 1994 and paper prices
rose significantly throughout 1995; a trend that may continue into 1996. The
Company believes that it can continue to pass on paper cost increases to its
customers through price adjustments.
F-20
<PAGE> 36
<TABLE>
COURIER CORPORATION
SCHEDULE II - CONSOLIDATED VALUATION
AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal year ended September 30, 1995:
Allowance for uncollectible accounts $588,000 $204,000 $228,000 $564,000
Fiscal year ended September 24, 1994:
Allowance for uncollectible accounts $683,000 $269,000 $364,000 $588,000
Fiscal year ended September 25, 1993:
Allowance for uncollectible accounts $594,000 $183,000 $94,000 $683,000
</TABLE>
S-1
<PAGE> 1
COURIER PROFIT SHARING AND SAVINGS PLAN
1995 AMENDMENT
A. Courier Corporation, a corporation duly organized and existing under the
laws of the Commonwealth of Massachusetts, having established the Courier
Profit Sharing and Savings Plan (the "Plan") pursuant to an instrument dated
December 28, 1989, and having reserved the power to amend the Plan from time to
time, hereby amends the Plan as set forth below.
1. Section 7.2 of the Plan shall be amended so that the first
sentence of said section shall read:
"Each Participating Company shall make contributions to the Matching
Contributions Account of each of its Employees equal to twenty-five
percent (25%) of the salary reduction contributions made by such
Employee to the extent such Employee's salary reduction contribution in
a monthly period do not exceed six percent (6%) of his Compensation in
such monthly period."
B. The effective date of this 1995 Amendment shall be April 1, 1995.
C. Except as hereinabove amended, the provisions of the Plan, as previously
amended, shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this 1995 Amendment to the
Plan to be executed on this 16th day of March , 1995.
-------- -----------
COURIER CORPORATION
[Corporate Seal]
s/ James F. Conway III
By:_______________________________
James F. Conway III
Attest:
s/ Mary Gail D. McCarthy
_________________________
Mary Gail D. McCarthy
Assistant Secretary
<PAGE> 1
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") is made as of October 16, 1995 (the
Effective Date"), by and between Courier Corporation, a Massachusetts
corporation with its headquarters located in Lowell, Massachusetts (the
"Employer"), and John Pugsley (the "Executive"). In consideration of the mutual
covenants contained in this Agreement, the Employer and the Executive agree as
follows:
1. EMPLOYMENT. The Employer agrees to employ the Executive and the
Executive agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.
2. CAPACITY. The Executive shall initially serve as a Vice President of
the Employer, an Executive Vice President of the Employer's wholly-owned
subsidiary, National Publishing Company ("National") and, in these capacities,
shall be a member of the Executive Committee of the Employer. The Executive
shall also serve the Employer and National (collectively, the "Company") in
such other or additional offices or capacities as the Executive may be
requested to serve by the Chief Executive Officer of the Employer (the "Chief
Executive Officer") following discussion with the employee regarding the nature
and scope of such offices or capacities as mutually defined and agreed upon.
In such capacity or capacities, the Executive shall perform such services and
duties in connection with the business, affairs and operations of the Company
as may be assigned or delegated to him from time to time by or under the
authority of the Chief Executive Officer of the Employer.
As Executive Vice President of National, Executive shall be based at
National's headquarters in or about Philadelphia, Pennsylvania, or such other
headquarters as may be established by the Employer, shall report to the
President of National and shall have overall responsibility for developing and
implementing a business plan designed to improve National's business in the
religious publishing market. Subject to the approval of the Executive
Committee and the Chief Executive Officer, the Executive shall also have
responsibility for exploring opportunities in other markets for the Company and
developing and implementing business plans to exploit such opportunities.
3. TERM. Subject to the provisions of Section 6, the term of employment
pursuant to this Agreement shall be two (2) years from the Effective Date (the
"Term"). After expiration of the Term, unless the Executive's employment is
terminated sooner pursuant to Section 6, the Executive shall continue as an
at-will employee of the Employer, subject to termination by either party with
or without cause and without further obligation hereunder, except that if the
Executive is terminated without cause as defined by Section 6, the Executive
will be eligible to receive the termination benefits set forth in Section 6(d).
4. COMPENSATION AND BENEFITS. The regular compensation and benefits
payable to the Executive under this Agreement shall be as follows:
(a) EXECUTIVE COMPENSATION PROGRAM. The Executive shall be entitled
to base salary and incentive compensation in accordance with the Courier
Executive Compensation Program as follows:
<PAGE> 2
(i) BASE SALARY. For all services rendered by the Executive
under this Agreement, the Employer shall pay the Executive a base
salary (the "Salary") at the annual rate of One Hundred Seventy-Five
Thousand Dollars ($175,000). The Salary shall be payable in periodic
installments in accordance with the Employer's usual practice for its
senior executives.
(ii) ANNUAL CASH BONUS. Beginning with fiscal year 1996, the
Executive shall be eligible to participate in the Annual Cash
Incentive component of the Executive Compensation Program established
by the Board of Directors of the Employer (the "Board of Directors")
or the Compensation Committee of the Board of Directors (the
"Compensation Committee") with such terms as may be established in the
sole discretion of the Board of Directors or Compensation Committee
so long as the Executive's employment has not been terminated
pursuant to Section 6(a) or 6(b) prior to the date on which such cash
incentives are paid by the Employer; PROVIDED, that for fiscal year
1996, the Executive's annual cash incentive target shall be
Seventy-Five Thousand Dollars ($75,000) (the "Target") and the
Executive shall be eligible to receive an amount equal to up to 200%
of the Target based on the attainment by the Employer and National of
performance targets preset by the Board of Directors or the
Compensation Committee for said fiscal year; and PROVIDED, FURTHER,
that the Executive's annual cash incentive payment for the fiscal
year 1996 shall not be less than Fifty Thousand Dollars ($50,000) so
long as the Executive's employment has not been terminated pursuant
to Section 6(a) or 6(b) prior to the date on which such cash
incentives are paid by the Employer for fiscal year 1996.
(iii) LONG-TERM STOCK INCENTIVE. The Executive shall be
entitled to participate in the 1993 Stock Incentive Plan component of
the Executive Compensation Program ("Stock Plan"). Such
participation shall be subject to the terms and conditions of the
Stock Plan as presently in effect or hereafter modified or amended by
the Board of Directors or the Compensation Committee. Nothing
contained in this Agreement shall be construed to create any
obligation on the part of the Employer or National to maintain the
effectiveness of the Stock Plan, as may be amended and in effect from
time to time. Upon approval of the Board of Directors at its next
scheduled meeting and execution of a Stock Option Agreement in a form
acceptable to the Board of Directors, Executive shall be awarded Five
Thousand (5,000) Incentive Stock Options under the Stock Plan. The
Executive's vesting in and right to exercise said Options shall be
subject to the terms and conditions of the grant by the Board of
Directors, the Stock Plan and the Stock Option Agreement executed by
Executive.
(iv) LONG-TERM PERFORMANCE INCENTIVE. The Executive shall be
eligible to receive a long-term performance incentive award of up to
Twenty-Five Thousand Dollars ($25,000) based on the Employer's
attainment of performance targets preset by the Board of Directors or
the Compensation Committee for the
2
<PAGE> 3
Employer's 1996, 1997 and 1998 fiscal years and in accordance with
and subject to the terms and conditions established by the Employer
for the long-term performance incentive component of its Executive
Compensation Program ("Performance Plan") so long as the Executive's
employment has not been terminated pursuant to Section 6(a) or 6(b)
prior to the date on which such long-term performance incentive
awards are paid by the Employer. The Executive's award under the
Performance Plan, if any, shall be made as soon as practicable
following the close of the 1998 fiscal year of the Employer. Nothing
contained in this Agreement shall be construed to create any
obligation on the part of the Employer or National to maintain the
effectiveness of the Performance Plan, as may be amended and in
effect from time to time. Nothing contained in this Agreement shall
be construed as an implied promise by the Employer to retain
Executive beyond expiration of the Term.
(b) SIGNING BONUS. Promptly after execution of this Agreement by
the Executive and the Employer and commencement of employment hereunder by
the Executive, the Employer shall pay the Executive a signing bonus of
Twenty-Five Thousand Dollars ($25,000).
(c) REGULAR BENEFITS. The Executive shall also be entitled to
participate in any employee benefit plans, medical insurance plans, life
insurance plans, disability income plans, retirement plans, expense
reimbursement and other benefit plans which the Employer may from time to
time have in effect for all or most of its senior executives. Such
participation shall be subject to the terms of the applicable plan
documents, generally applicable policies of the Employer, applicable law
and the discretion of the Board of Directors, the Compensation Committee
or any administrative or other committee provided for in or contemplated
by any such plan. Nothing contained in this Agreement shall be construed
to create any obligation on the part of the Employer to establish any such
plan or to maintain the effectiveness of any such plan which may be in
effect from time to time.
(d) ADDITIONAL BENEFITS. The Employer shall provide the following
additional benefits to the Executive:
3
<PAGE> 4
(i) AUTOMOBILE ALLOWANCE. The Employer shall provide the
Executive with a car allowance of Seven Hundred Dollars ($700) per
month.
(ii) TELEPHONE. The Employer will provide the Executive with a
portable telephone for his automobile for business use. The
Executive shall be solely responsible for telephone tolls or use
charges incurred as a result of non-business use of said portable
telephone.
(iii) VACATION. The Executive shall be entitled to take up
to fifteen vacation days per calendar year, in accordance with and
subject to the Employer's vacation policies.
(iv) REIMBURSEMENT OF RELOCATION EXPENSE. The Employer shall
provide the Executive with reimbursement of his relocation expenses in
accordance with the terms set forth in Exhibit A attached hereto and
incorporated herein.
(e) TAXATION OF PAYMENTS AND BENEFITS. The Employer shall undertake
to make deductions, withholdings and tax reports with respect to payments
and benefits under this Agreement to the extent that it reasonably and in
good faith believes that it is required to make such deductions,
withholdings and tax reports. Payments under this Agreement shall be in
amounts net of any such deductions or withholdings. Nothing in this
Agreement shall be construed to require the Employer to make any payments
to compensate the Executive for any adverse tax effect associated with any
payments or benefits or for any deduction or withholding from any payment
or benefit except to the extent expressly provided in Exhibit A hereto.
(f) EXCLUSIVITY OF SALARY AND BENEFITS. The Executive shall not be
entitled to any payments or benefits other than those provided under this
Agreement.
5. EXTENT OF SERVICE. During the Executive's employment, the Executive
shall, subject to the direction and supervision of the Chief Executive Officer,
devote the Executive's full business time, best efforts and business judgment,
skill and knowledge to the advancement of the Employer's interests and to the
discharge of the Executive's duties and responsibilities. The Executive shall
not engage in any other business activity, except as may be approved by the
Chief Executive Officer; PROVIDED, that nothing in this Agreement shall be
construed as preventing the Executive from:
(a) investing the Executive's assets in any company or other entity
in a manner not prohibited by Section 7(d) and in such form or manner as
shall not require any material activities on the Executive's part in
connection with the operations or affairs of the companies or other
entities in which such investments are made; or
(b) engaging in religious, charitable or other community or
non-profit activities that do not impair the Executive's ability to
fulfill the Executive's duties and responsibilities under this Agreement.
4
<PAGE> 5
6. TERMINATION AND TERMINATION BENEFITS. Notwithstanding the provisions
of Section 3, the Executive's employment under this Agreement shall terminate
during the Term under the following circumstances set forth in this Section 6.
(a) TERMINATION BY THE EMPLOYER FOR CAUSE. The Executive's
employment under this Agreement may be terminated for cause by the
Employer without further liability on the part of the Employer effective
immediately upon written notice to the Executive. Only the following
shall constitute "cause" for such termination:
(i) dishonest statements or acts of the Executive with respect
to the Employer, National or any other affiliate of the Employer;
(ii) the commission by or indictment of the Executive for (A) a
felony or (B) any misdemeanor involving moral turpitude, deceit,
dishonesty or fraud ("indictment", for these purposes, meaning an
indictment, probable cause hearing or any other procedure pursuant to
which an initial determination of probable or reasonable cause with
respect to such offense is made);
(iii) gross negligence, willful misconduct or insubordination of
the Executive with respect to the Employer, National or any other
affiliate of the Employer; or
(iv) material breach by the Executive of any of the Executive's
obligations under this Agreement.
(b) TERMINATION BY THE EXECUTIVE. The Executive's employment under
this Agreement may be terminated by the Executive by written notice to the
Chief Executive Officer at least thirty (30) days prior to such
termination. The Employer may waive such notice in its discretion.
(c) TERMINATION BY THE EMPLOYER WITHOUT CAUSE. Subject to the
payment of Termination Benefits pursuant to Section 6(d), the Executive's
employment under this Agreement may be terminated by the Employer without
cause upon written notice to the Executive.
(d) CERTAIN TERMINATION BENEFITS. Unless otherwise specifically
provided in this Agreement or otherwise required by law, all compensation
and benefits payable to the Executive under this Agreement shall terminate
on the date of termination of the Executive's employment under this
Agreement. Notwithstanding the foregoing, in the event of termination of
the Executive's employment with the Employer prior to expiration of the
Term pursuant to Section 6(c) above, the Employer shall provide to the
Executive the following termination benefits ("Termination Benefits"):
(i) continuation of the Executive's Salary at the rate then in
effect pursuant to Section 4(a); and
5
<PAGE> 6
(ii) continuation of group health plan benefits to the extent
authorized by and consistent with 29 U.S.C. [Section] 1161 ET SEQ.
(commonly known as "COBRA"), with the cost of the regular premium for
such benefits shared in the same relative proportion by the Employer
and the Executive as in effect on the date of termination. Executive
acknowledges that the benefits provided under this Section 6(d)(ii)
shall constitute a portion of the extended coverage Executive would
otherwise be entitled to elect under COBRA.
The Termination Benefits set forth in (i) and (ii) above shall continue
for twelve (12) months after the date of termination (the "Termination
Benefits Period"); PROVIDED, that commencing six (6) months after the
start of the Termination Benefits Period, the remaining amount of Salary,
if any, payable pursuant to Section 6(d)(i) shall be reduced by an amount
equal to the gross remuneration Executive receives or is entitled to
receive as a result of any other employment, whether as an employee,
independent contractor, sole proprietor, or partner or owner of an entity,
during such remainder of the Termination Benefits Period; PROVIDED
FURTHER, that in the event the Executive breaches any of his obligations
under Section 7 or 8 during the Termination Benefits Period, all further
payments under Sections 6(d)(i) and 6(d)(ii) shall cease without further
obligation on the part of the Employer. The payments provided under
Section 6(d)(ii) shall cease effective as of the date of commencement of
any such employment or self-employment. Notwithstanding the foregoing,
nothing in this Section 6(d) shall be construed to affect the Executive's
right to receive COBRA continuation entirely at the Executive's own cost
to the extent that the Executive may continue to be entitled to COBRA
continuation after the Executive's right to cost sharing under Section
6(d)(ii) ceases. The Executive shall be obligated to give prompt notice of
the date of commencement of any employment or self-employment during the
Termination Benefits Period and shall respond promptly to any reasonable
inquiries concerning any employment or self-employment in which the
Executive engages during the Termination Benefits Period.
(e) DISABILITY. During the Term, if the Executive shall be disabled
so as to be unable to perform the essential functions of the Executive's
then existing position or positions under this Agreement with or without
reasonable accommodation, the Employer may remove the Executive from any
responsibilities for the remainder of the Term or during the period of
such disability. If any question shall arise as to whether during any
period the Executive is disabled so as to be unable to perform the
essential functions of the Executive's then existing position or positions
with or without reasonable accommodation, the Executive may, and at the
request of the Employer shall, submit to the Employer a certification in
reasonable detail by a physician selected by the Employer to whom the
Executive or the Executive's guardian has no reasonable objection as to
whether the Executive is so disabled or how long such disability is
expected to continue, and such certification shall for the purposes of
this Agreement be conclusive of the issue. If such question shall arise
and the Executive shall fail to submit such certification, the Employer's
determination of such issue shall be binding on the Executive. Nothing in
this Section 6(e) shall be construed to waive the Executive's rights, if
any, under existing law
6
<PAGE> 7
including, without limitation, the Family and Medical Leave Act of 1993,
29 U.S.C. [Section] 2601 ET SEQ. and the Americans with Disabilities
Act, 42 U.S.C. [Section] 1210 ET SEQ.
7. CONFIDENTIAL INFORMATION, NONCOMPETITION AND COOPERATION.
(a) CONFIDENTIAL INFORMATION. As used in this Agreement,
"Confidential Information" means information belonging to the Company which
is of value to the Company in the course of conducting its business and
the disclosure of which could result in a competitive or other
disadvantage to the Company. Confidential Information includes, without
limitation, financial information, reports, and forecasts; inventions,
improvements and other intellectual property; trade secrets; know-how;
designs, processes or formulae; software; market or sales information or
plans; customer lists; and business plans, prospects and opportunities
(such as possible acquisitions or dispositions of businesses or
facilities) which have been discussed or considered by the management of
the Company. Confidential Information includes information developed by
the Executive in the course of the Executive's employment by the Company,
as well as other information to which the Executive may have access in
connection with the Executive's employment. Confidential Information also
includes the confidential information of others with which the Company has
a business relationship. Notwithstanding the foregoing, Confidential
Information does not include information in the public domain, unless due
to breach of the Executive's duties under Section 7(b).
(b) CONFIDENTIALITY. The Executive understands and agrees that the
Executive's employment creates a relationship of confidence and trust
between the Executive and the Company with respect to all Confidential
Information. At all times, both during the Executive's employment with
the Company and after its termination, the Executive will keep in
confidence and trust all such Confidential Information, and will not use
or disclose any such Confidential Information without the written consent
of the Company, except as may be necessary in the ordinary course of
performing the Executive's duties to the Company.
(c) DOCUMENTS, RECORDS, ETC. All documents, records, apparatus,
equipment and other physical property, whether or not pertaining to
Confidential Information, which are furnished to the Executive by the
Company or are produced by the Executive in connection with the Executive's
employment will be and remain the sole property of the Company. The
Executive will return to the Company all such materials and property as
and when requested by the Company. In any event, the Executive will
return all such materials and property immediately upon termination of the
Executive's employment for any reason. The Executive will not retain with
the Executive any such material or property or any copies thereof after
such termination.
(d) NONCOMPETITION AND NONSOLICITATION. While the Executive is
employed by the Employer and thereafter for the duration of the
"Restricted Period" (as hereinafter defined) the Executive (i) will not,
directly or indirectly, whether as owner, partner, shareholder,
consultant, agent, employee, co-venturer or otherwise, engage,
participate or
7
<PAGE> 8
invest in any Competing Business (as hereinafter defined); (ii) will
refrain from directly or indirectly employing, attempting to employ,
recruiting or otherwise soliciting, inducing or influencing any person to
leave employment with the Company (other than terminations of employment
of subordination employees undertaken in the course of the Executive's
employment with the Company); and (iii) will refrain from soliciting or
encouraging any customer or supplier to terminate or otherwise modify
adversely its business relationship with the Company. The Executive
understands that the restrictions set forth in this Section 7(d) are
intended to protect the Company's interest in its Confidential Information
and established employee, customer and supplier relationships and
goodwill, and agrees that such restrictions are reasonable and appropriate
for this purpose.
For purposes of this Agreement, the term "Competing Business" shall mean a
business which is competitive with any business which the Employer or any
of its affiliates conducts or proposes to conduct at any time during the
employment of the Executive. Notwithstanding the foregoing, the Executive
may own up to One Percent (1%) of the outstanding stock of a publicly held
corporation which constitutes or is affiliated with a Competing Business.
For purposes of this Agreement, the term "Restricted Period" shall mean a
period of one (1) years immediately following the termination of the
Executive's employment except that with respect to The Gideons Bible
Society ("The Gideons"), the term Restricted Period shall be deemed to be
continuous. The Executive understands and acknowledges that (i) The
Gideons is National's largest and most significant customer, (ii) National
heretofore has expended substantial time, money and effort to develop
substantial goodwill with The Gideons, (iii) National heretofore has
expended substantial time, money and effort to develop Confidential
Information that provides National with a significant competitive
advantage in selling and marketing to The Gideons and (iv) Executive shall
come into contact with key Gideons, have access to and become informed of
such Confidential Information, and otherwise benefit from the goodwill and
customer relationship with The Gideons heretofore developed by National
solely by virtue of his capacity as Executive Vice President of National.
Executive therefore acknowledges and agrees that the Restricted Period as
applied to The Gideons is reasonable.
(e) THIRD-PARTY AGREEMENTS AND RIGHTS. The Executive hereby
confirms that the Executive is not bound by the terms of any agreement
with any previous employer or other party which restricts in any way the
Executive's use or disclosure of information or the Executive's engagement
in any business. The Executive represents to the Employer that the
Executive's execution of this Agreement, the Executive's employment with
the Company and the performance of the Executive's proposed duties for the
Company will not violate any obligations the Executive may have to any
such previous employer or other party. In the Executive's work for the
Company, the Executive will not disclose or make use of any information in
violation of any agreements with or rights of any such previous employer
or other party, and the Executive will not bring to the premises of the
Company any copies or other tangible embodiments of non-public information
belonging to or obtained from any such previous employment or other party.
8
<PAGE> 9
(f) LITIGATION AND REGULATORY COOPERATION. During and after the
Executive's employment, the Executive shall cooperate fully with the
Company in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of
the Company which relate to events or occurrences that transpired while
the Executive was employed by the Employer. The Executive's full
cooperation in connection with such claims or actions shall include, but
not be limited to, being available to meet with counsel to prepare for
discovery or trial and to act as a witness on behalf of the Employer at
mutually convenient times. During and after the Executive's employment,
the Executive also shall cooperate fully with the Employer in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or
occurrences that transpired while the Executive was employed by the
Employer. The Employer shall reimburse the Executive for any reasonable
out-of-pocket expenses incurred in connection with the Executive s
performance of obligations pursuant to this Section 7(f).
(g) INJUNCTION. The Executive agrees that it would be difficult to
measure any damages caused to the Employer which might result from any
breach by the Executive of the promises set forth in this Section 7, and
that in any event money damages would be an inadequate remedy for any such
breach. Accordingly, subject to Section 8 of this Agreement, the
Executive agrees that if the Executive breaches, or proposes to breach,
any portion of this Agreement, the Employer shall be entitled, in addition
to all other remedies that it may have, to an injunction or other
appropriate equitable relief to restrain any such breach without showing
or proving any actual damage to the Employer.
8. ARBITRATION OF DISPUTES. Any controversy or claim between the
Executive and the Employer arising out of or relating to this Agreement or the
breach thereof or otherwise arising out of the Executive's employment or the
termination of that employment (including, without limitation, any claims of
unlawful employment discrimination whether based on age or otherwise) shall, to
the fullest extent permitted by law, be settled by arbitration in any forum and
form agreed upon by the parties or, in the absence of such an agreement, under
the auspices of the American Arbitration Association ("AAA") in Boston,
Massachusetts in accordance with the Employment Dispute Resolution Rules of the
AAA, including, but not limited to, the rules and procedures applicable to the
selection of arbitrators, except that the arbitrator shall apply the law as
established by decisions of the U.S. Supreme Court, the Court of Appeals for
the First Circuit and the U.S. District Court for the District of Massachusetts
in deciding the merits of claims and defenses under federal law or any state or
federal anti-discrimination law, and any awards to the Executive for violation
of any anti-discrimination law shall not exceed the maximum award to which the
Executive could be entitled under the applicable (or most analogous) federal
anti-discrimination or civil rights laws. In the event that any person or
entity other than the Executive or the Employer may be a party with regard to
any such controversy or claim, such controversy or claim shall be submitted to
arbitration subject to such other person or entity's agreement. For purposes
of this Section 8, the term "Employer" shall be deemed to include the Employer,
its affiliated entities, and its shareholders, directors, officers and
managerial employees. Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. This Section 8 shall be
specifically enforceable. Notwithstanding the
9
<PAGE> 10
foregoing, this Section 8 shall not preclude either party from pursuing a court
action for the sole purpose of obtaining a temporary restraining order or a
preliminary injunction in circumstances in which such relief is appropriate;
PROVIDED THAT any other relief shall be pursued through an arbitration
proceeding pursuant to this Section 8.
9. CONSENT TO JURISDICTION. To the extent that any court action is
permitted consistent with or to enforce Section 8 of this Agreement, the
parties hereby consent to the jurisdiction of the Superior Court of the
Commonwealth of Massachusetts and the United States District Court for the
District of Massachusetts. Accordingly, with respect to any such court action,
the Executive (a) submits to the personal jurisdiction of such courts; (b)
consents to service of process; and (c) waives any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.
10. INTEGRATION/AMENDMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements between the parties with respect to any related
subject matter. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a duly authorized representative of
the Employer.
11. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. Neither the Employer nor
the Executive may make any assignment of this Agreement or any interest herein,
by operation of law or otherwise, without the prior written consent of the
other party; PROVIDED, that the Employer may assign its rights under this
Agreement without the consent of the Executive in the event that the Employer
shall effect a reorganization, consolidate with or merge into any other
corporation, partnership, organization or other entity, or transfer all or
substantially all of its properties or assets to any other corporation,
partnership, organization or other entity. This Agreement shall inure to the
benefit of and be binding upon the Employer and the Executive, their respective
successors, executors, administrators, heirs and permitted assigns.
12. ENFORCEABILITY. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as
to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
13. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
14. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight mail service or by
registered or certified mail, postage prepaid, return
10
<PAGE> 11
receipt requested, to the Executive at the last address the Executive has filed
in writing with the Employer or, in the case of the Employer, at its main
offices, attention of the Chief Executive Officer, and shall be effective on
the earliest of the date of actual receipt, deposit at the address for delivery
or postal notice of the availability of the communication.
15. GOVERNING LAW. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts, without giving effect to the conflict of laws principles of
such Commonwealth.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employer, by its duly authorized officer, and by the
Executive, as of the Effective Date.
COURIER CORPORATION
s/ James F. Conway III
By: _____________________________
Its: President
s/ John W. Pugsley
__________________________________
Executive
11
<PAGE> 1
COURIER CORPORATION
COURIER CITIZEN COMPANY
COURIER COMPANIES, INC.
COURIER DELAWARE HOLDING CORPORATION
COURIER FOREIGN SALES CORPORATION LIMITED
COURIER INVESTMENT CORPORATION
COURIER KENDALLVILLE, INC.
COURIER PROPERTIES, INC.
COURIER STOUGHTON, INC.
COURIER WESTFORD, INC.
NATIONAL PUBLISHING COMPANY
COURIER EPIC, INC.
(formerly known as THE COURIER CONNECTION, INC.)
165 Jackson Street
Lowell, Massachusetts 01852
Dated as of: January 26, 1995
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Re: Modification No. 5 to Revolving Credit Agreement
------------------------------------------------
Ladies and Gentlemen:
We refer to the Revolving Credit Agreement, dated as of September 26,
1991 (as amended, the "Agreement"), by and between each and all of the twelve
entities listed at the top of this letter of agreement (collectively, the
"Borrowers"), on the one hand, and The First National Bank of Boston (the
"Lender"), on the other. Terms and expressions used in this letter of
agreement (hereinafter, the "Modification No. 5") which are not defined herein,
but which are defined in the Agreement, shall have the same respective meanings
herein as therein.
We have requested you to make certain amendments to the Agreement. You
have advised us that you are willing to make the amendments so requested by us
on the condition that we join with you in this Modification No. 5.
Accordingly, in consideration of these premises, the promises, mutual
covenants and agreements contained in this Modification No. 5, and fully
intending to be legally bound by this Modification No. 5, we hereby agree with
you as follows:
ARTICLE I
---------
MODIFICATION OF AGREEMENT
-------------------------
Effective as of January 26, 1995 (the "Modification Date"), the Agreement
is amended as follows:
<PAGE> 2
(a) The term "Loan Documents" shall, whenever used in the Agreement or
any of the other Loan Documents, be deemed to also mean and include
Modification No. 5 to Revolving Credit Agreement, dated as of January 26, 1995,
by and among the Borrowers and the Lender.
(b) Clause (iv) of Section 1.1.45 is amended to read in its entirety as
follows:
"(iv) minus Capital Expenditures actually paid for by the
Borrowers out of earnings from operations (and not financed)
during such period."
(c) Section 1.1.57 is amended to read in its entirety as follows:
1.1.57 "Revolving Loan Maturity Date" means January 30, 1998.
(d) The fourth sentence of Section 2.5.4 (i) is amended to read in its
entirety as follows:
2.5.4 (i) Except as otherwise provided herein, each Euroloan
Rate Amount shall bear interest during each Interest Period
relating thereto at an annual rate (the "Euroloan Rate")
equal to the Eurocurrency Rate plus one and one-quarter
percent (1-1/4%).
(d) The third paragraph of EXHIBIT A to the Agreement is amended: (i)
by deleting the reference to "January 30, 1996" from the first line thereof;
and (ii) by inserting in place thereof the following: "January 30, 1998."
ARTICLE II
----------
AMENDMENT TO NOTE
-----------------
Effective January 26, 1995, the third paragraph of the Note is amended:
(i) by deleting the reference to "January 30, 1996" from the first line
thereof; and (ii) by inserting in place thereof the following: "January 30,
1998."
ARTICLE III
-----------
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
The Borrowers hereby jointly and severally represent, warrant and
covenant to you as follows:
(a) REPRESENTATIONS IN AGREEMENT. Each of the representations and
warranties made by or on behalf of the Borrowers to you in the Agreement was
true and correct when made and is true and correct in all material respects on
and as of the Modification Date with the same full force and effect as if each
of such representations and warranties had been made by the Borrowers on such
date, except to the extent that such representations and warranties relate
solely to a prior date.
(b) NO EVENTS OF DEFAULT. No Event of Default exists on the
Modification Date (after giving effect to all of the arrangements and
transactions contemplated by this Modification No. 5). No condition exists on
the Modification Date which would, with notice or the lapse of time, or both,
constitute an Event of Default.
(c) BINDING EFFECT OF DOCUMENTS. This Modification No. 5 has been duly
executed and delivered to you by the Borrowers, and is in full force and effect
as of the date hereof, and the agreements and obligations of the Borrowers
contained herein constitute legal, valid and binding obligations of the
Borrowers enforceable against the Borrowers in accordance with their respective
terms.
<PAGE> 3
ARTICLE IV
----------
MISCELLANEOUS
-------------
This Modification No. 5 may be executed in any number of counterparts,
but all such counterparts shall together constitute but one and the same
agreement. In making proof of this Modification No. 5, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto. Except to the extent specifically amended and
supplemented hereby, all of the terms, conditions and the provisions of the
Agreement, the Note and each of the Loan Documents shall remain unmodified, and
the Agreement, the Note and each of the Loan Documents as amended and
supplemented by this Modification No. 5 are confirmed as being in full force
and effect.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter of agreement and return
such counterpart to the undersigned, whereupon this letter agreement, as so
accepted by you, shall become a binding agreement between you and the
undersigned.
Very truly yours,
The Borrowers:
--------------
COURIER CORPORATION
/s/ Robert Story, Jr.
By:__________________________
Title: Senior V.P. and CFO
COURIER CITIZEN COMPANY
/s/ Robert Story, Jr.
By:__________________________
Title: Senior V.P. and CFO
COURIER COMPANIES, INC.
/s/ Robert Story, Jr.
By:__________________________
Title: Treasurer
COURIER DELAWARE HOLDING
CORPORATION
/s/ George Q. Nichols
By:__________________________
Title: President
<PAGE> 4
COURIER FOREIGN SALES CORPORATION
LIMITED
/s/ Robert Story, Jr.
By:__________________________
Title: President
COURIER INVESTMENT CORPORATION
/s/ Robert Story, Jr.
By:__________________________
Title: Treasurer
COURIER KENDALLVILLE, INC.
/s/ Robert Story, Jr.
By:__________________________
Title: Treasurer
COURIER PROPERTIES, INC.
/s/ Robert Story, Jr.
By:__________________________
Title: Treasurer
COURIER STOUGHTON, INC.
/s/ Robert Story, Jr.
By:__________________________
Title: Treasurer
COURIER WESTFORD, INC.
/s/ Robert Story, Jr.
By:__________________________
Title: Treasurer
NATIONAL PUBLISHING COMPANY
/s/ George Q. Nichols
By:__________________________
Title: President
COURIER EPIC, INC. (formerly known as THE
COURIER CONNECTION, INC.)
/s/ Robert Story, Jr.
By:__________________________
Title: Treasurer
The foregoing letter of agreement is accepted by the undersigned as of
January 26, 1995.
The Lender:
-----------
THE FIRST NATIONAL BANK OF BOSTON
/s/ Gregory G. O'Brien
By:__________________________
Title: Director
<PAGE> 1
COURIER CORPORATION
COURIER CITIZEN COMPANY
COURIER COMPANIES, INC.
COURIER DELAWARE HOLDING CORPORATION
COURIER FOREIGN SALES CORPORATION LIMITED
COURIER INVESTMENT CORPORATION
COURIER KENDALLVILLE, INC.
COURIER PROPERTIES, INC.
COURIER STOUGHTON, INC.
COURIER WESTFORD, INC.
NATIONAL PUBLISHING COMPANY
COURIER EPIC, INC.
(formerly known as THE COURIER CONNECTION, INC.)
165 Jackson Street
Lowell, Massachusetts 01852
Dated as of: March 31, 1995
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Re: Modification No. 6 to Revolving Credit Agreement
------------------------------------------------
Ladies and Gentlemen:
We refer to the Revolving Credit Agreement, dated as of September 26,
1991 (as amended, the "Agreement"), among the twelve entities listed at the
top of this letter of agreement (collectively, the "Borrowers") and The First
National Bank of Boston (the "Lender"). Terms and expressions used in this
letter of agreement (hereinafter, "Modification No. 6") which are not defined
herein, but which are defined in the Agreement, shall have the same respective
meanings herein as therein.
We have requested you to make certain amendments to the Agreement. You
have advised us that you are willing to make the amendments so requested by us
on the condition that we join with you in this Modification No. 6.
Accordingly, in consideration of these premises, the promises, mutual
covenants and agreements contained in this Modification No. 6, and fully
intending to be legally bound by this Modification No. 6, we hereby agree with
you as follows:
ARTICLE I
---------
MODIFICATION OF AGREEMENT
-------------------------
Effective as of March 31, 1995 (the "Modification Date"), the Agreement
is amended as follows:
(a) The term "Loan Documents" shall, whenever used in the Agreement or
any of the other Loan Documents, be deemed to also mean and include
<PAGE> 2
Modification No. 6 to Revolving Credit Agreement, dated as of March 31, 1995,
among the Borrowers and the Lender.
(b) Clause (iv) of Section 1.1.45 is amended to read in its entirety as
follows:
"(iv) minus (a) for the fiscal quarter ending December 31, 1994
and for each fiscal quarter prior thereto, actual Capital
Expenditures made during such period, (b) for the fiscal
quarter ending March 31, 1995, the lesser of $7,000,000 or actual
Capital Expenditures made during such period, (c) for the fiscal
quarter ending June 30, 1995, the lesser of $5,000,000 or actual
Capital Expenditures made during such period, (d) for the fiscal
quarter ending September 30, 1995, the lesser of $7,000,000 or
actual Capital Expenditures made during such period, and (e) for
the fiscal quarter ending December 31, 1995 and each fiscal
quarter thereafter, actual Capital Expenditures made during such
period."
ARTICLE II
----------
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
The Borrowers hereby jointly and severally represent, warrant and
covenant to you as follows:
(a) REPRESENTATIONS IN AGREEMENT. Each of the representations and
warranties made by or on behalf of the Borrowers to you in the Agreement was
true and correct when made and is true and correct in all material respects on
and as of the Modification Date with the same full force and effect as if each
of such representations and warranties had been made by the Borrowers on such
date, except to the extent that such representations and warranties relate
solely to a prior date.
(b) NO EVENTS OF DEFAULT. No Event of Default exists on the
Modification Date (after giving effect to all of the arrangements and
transactions contemplated by this Modification No. 6). No condition exists on
the Modification Date which would, with notice or the lapse of time, or both,
constitute an Event of Default.
(c) BINDING EFFECT OF DOCUMENTS. This Modification No. 6 has been
duly executed and delivered to you by the Borrowers, and is in full force and
effect as of the date hereof, and the agreements and obligations of the
Borrowers contained herein constitute legal, valid and binding obligations of
the Borrowers enforceable against the Borrowers in accordance with their
respective terms.
ARTICLE III
-----------
MISCELLANEOUS
-------------
This Modification No. 6 may be executed in any number of counterparts,
but all such counterparts shall together constitute but one and the same
agreement. In making proof of this Modification No. 6, it shall not be
necessary to produce or account for more than one counterpart thereof signed
by each of the parties hereto. Except to the extent specifically amended and
supplemented hereby, all of the terms, conditions and the provisions of the
Agreement, the Note and each of the Loan Documents shall remain unmodified,
and the Agreement, the Note and each of the Loan Documents as amended and
supplemented by this Modification No. 6 are confirmed as being in full force
and effect.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter of agreement and return
<PAGE> 3
such counterpart to the undersigned, whereupon this letter agreement, as so
accepted by you, shall become a binding agreement between you and the
undersigned.
Very truly yours,
The Borrowers:
--------------
COURIER CORPORATION
/s/ Robert Story, Jr.
By:________________________________
Title:
COURIER CITIZEN COMPANY
/s/ Robert Story, Jr.
By:________________________________
Title:
COURIER COMPANIES, INC.
/s/ Robert Story, Jr.
By:________________________________
Title:
COURIER DELAWARE HOLDING CORPORATION
/s/ William L. Lampe, Jr.
By:________________________________
Title: Treasurer, Vice President
COURIER FOREIGN SALES CORPORATION
LIMITED
/s/ Robert Story, Jr.
By:________________________________
Title:
COURIER INVESTMENT CORPORATION
/s/ Robert Story, Jr.
By:________________________________
Title:
COURIER KENDALLVILLE, INC.
/s/ Robert Story, Jr.
By:________________________________
Title:
<PAGE> 4
COURIER PROPERTIES, INC.
s/ Robert Story, Jr.
By:_______________________________
Title:
COURIER STOUGHTON, INC.
s/ Robert Story, Jr.
By:_______________________________
Title:
COURIER WESTFORD, INC.
s/ Robert Story, Jr.
By:_______________________________
Title:
NATIONAL PUBLISHING COMPANY
s/ William L. Lampe, Jr.
By:_______________________________
Title: Treasurer
COURIER EPIC, INC. (formerly known as THE
COURIER CONNECTION, INC.)
s/ Robert Story, Jr.
By:_______________________________
Title:
The foregoing letter of agreement is accepted by the undersigned as of
March 31, 1995.
The Lender:
--- -------
THE FIRST NATIONAL BANK OF BOSTON
s/ Gregory G. O'Brien
By:_______________________________
Title: Director
<PAGE> 1
<TABLE>
COURIER CORPORATION
COMPUTATION OF PER SHARE EARNINGS
EXHIBIT 11
<CAPTION>
Fiscal Year
------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Average Shares Outstanding (1) 1,980,000 1,902,000 1,810,000
Common Equivalent Shares (2) 35,000 28,000 13,000
---------- ---------- ----------
2,015,000 1,930,000 1,823,000
========== ========== ==========
Net Income $5,230,000 $5,231,000 $2,189,000
Net Income Per Share (3) $2.60 $2.71 $1.20
<FN>
(1) Computed as weighted average (including ESOP shares allocated to
participants
(2) 1983 and 1993 Stock Option Plans
(3) Primary earnings per share (fully diluted earnings per share are
comparable
</TABLE>
<PAGE> 1
<TABLE>
COURIER CORPORATION
-------------------
SUBSIDIARIES OF REGISTRANT
--------------------------
EXHIBIT 21
Registrant has the following subsidiaries:
<CAPTION> ------------
--------------- % of Owned
- -------------------------------------- ----------------------------- Jurisdiction of by Immediate
Name Immediate Parent Incorporation Parent
- -------------------------------------- ----------------------------- --------------- ------------
<S> <C> <C> <C>
Courier-Citizen Company Courier Corporation Massachusetts 100%
Courier Investment Corporation Courier Corporation Massachusetts 100%
Courier Westford, Inc. Courier Delaware Holding Corp. Massachusetts 100%
National Publishing Company Courier Delaware Holding Corp. Pennsylvania 100%
Courier Stoughton, Inc. Courier Delaware Holding Corp. Massachusetts 100%
Courier Companies, Inc. Courier Delaware Holding Corp. Massachusetts 100%
Courier Kendallville, Inc. Courier Delaware Holding Corp. Indiana 100%
Courier New Media, Inc. Courier Delaware Holding Corp. Massachusetts 100%
Courier Foreign Sales Corporation Ltd. National Publishing Company Jamaica 99%
Courier Delaware Holding Corp. Courier-Citizen Company Delaware 100%
Courier Properties, Inc. Courier-Citizen Company Massachusetts 100%
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
Courier Corporation Employee Stock Ownership Plan on Form S-8 (File No.
33-76818), Courier Corporation 1993 Stock Incentive Plan on Form S-8 (File No.
33-76816), Courier Corporation 1989 Deferred Income Stock Option Plan for
Non-Employee Directors on Form S-8 (File No. 33-76814) and Courier Corporation
1983 Stock Option Plan and Stock Grant Plan on Form S-8 (File No. 33-76812) of
our report dated November 9, 1995 on our audits of the consolidated financial
statements and financial statement schedule of Courier Corporation as of
September 30, 1995 and September 24, 1994, and for each of the three years in
the period ended September 30, 1995 which report is included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
November 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,147
<SECURITIES> 0
<RECEIVABLES> 20,019<F1>
<ALLOWANCES> 564
<INVENTORY> 9,449
<CURRENT-ASSETS> 32,905
<PP&E> 91,611
<DEPRECIATION> 55,386
<TOTAL-ASSETS> 72,961
<CURRENT-LIABILITIES> 19,928
<BONDS> 0
<COMMON> 4,500
0
0
<OTHER-SE> 32,326<F2>
<TOTAL-LIABILITY-AND-EQUITY> 72,961
<SALES> 120,701
<TOTAL-REVENUES> 120,701
<CGS> 94,666
<TOTAL-COSTS> 94,666
<OTHER-EXPENSES> 17,081
<LOSS-PROVISION> 204
<INTEREST-EXPENSE> 990
<INCOME-PRETAX> 7,760
<INCOME-TAX> 2,530
<INCOME-CONTINUING> 5,230
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,230
<EPS-PRIMARY> 2.60
<EPS-DILUTED> 2.60
<FN>
<F1>RECEIVABLES ARE NET OF ALLOWANCES FOR UNCOLLECTIBLE ACCOUNTS.
<F2>INCLUDES TREASURY STOCK.
</FN>
</TABLE>
