<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended December 27, 1997
-------------------------------------------------
or
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to ________________________
Commission file number 0-7597
---------------------------------------------------
COURIER CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2502514
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15 Wellman Avenue, North Chelmsford, Massachusetts 01863
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(978) 251-6000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NO CHANGE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at January 30, 1998
- -------------------------------------- -------------------------------------
Common Stock, $1 par value 2,079,649 shares
Page 1 of 11
<PAGE> 2
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
December 27, September 27,
ASSETS 1997 1997
- ------ ------------ -------------
Current assets:
Cash and cash equivalents $ 23 $ 27
Accounts receivable, less allowance
for uncollectible accounts 28,607 25,919
Inventories (Note B) 11,703 9,695
Deferred income taxes 1,670 1,642
Other current assets 699 780
------- -------
Total current assets 42,702 38,063
Property, plant and equipment, less
accumulated depreciation: $64,299
at December 27, 1997 and $62,398
at September 27, 1997 35,548 36,942
Real estate held for sale or lease, net 2,440 2,459
Goodwill and other intangibles 11,906 11,618
Other assets 546 561
------- -------
Total assets $93,142 $89,643
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
Page 2 of 11
<PAGE> 3
COURIER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
December 27, September 27,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1997
- ------------------------------------ ------------ -------------
Current liabilities:
Current maturities of long-term debt $ 287 $ 387
Accounts payable 9,585 9,557
Accrued taxes 4,927 4,961
Other current liabilities 9,023 9,070
-------- --------
Total current liabilities 23,822 23,975
Long-term debt 20,773 18,593
Deferred income taxes 3,239 3,375
Other liabilities 2,117 1,952
-------- --------
Total liabilities 49,951 47,895
-------- --------
Stockholders' equity:
Preferred stock, $1 par value - authorized
1,000,000 shares; none issued
Common stock, $1 par value - authorized
6,000,000 shares; issued 4,500,000 shares 4,500 4,500
Additional paid-in capital 9,445 9,277
Retained earnings 52,988 52,060
Treasury stock, at cost: 2,444,000 shares
at December 27, 1997 and 2,493,000
shares at September 27, 1997 (23,742) (24,089)
-------- --------
Total stockholders' equity 43,191 41,748
-------- --------
Total liabilities and stockholders' equity $ 93,142 $ 89,643
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
Page 3 of 11
<PAGE> 4
COURIER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per share amounts)
THREE MONTHS ENDED
------------------------------
December 27, December 28,
1997 1996
------------ ------------
Net sales $35,306 $30,539
Cost of sales 26,517 24,218
------- -------
Gross profit 8,789 6,321
Selling and administrative expenses 6,525 4,850
Interest expense 347 160
Other income 5 7
------- -------
Income before taxes 1,922 1,318
Provision for income taxes (Note C) 712 389
------- -------
Net income $ 1,210 $ 929
======= =======
Net income per share (Note D):
Diluted $ 0.57 $ 0.45
======= =======
Basic $ 0.60 $ 0.46
======= =======
Cash dividends declared per share $ 0.14 $ 0.12
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
Page 4 of 11
<PAGE> 5
COURIER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------
December 27, December 28,
1997 1996
------------ ------------
<S> <C> <C>
Cash provided from (used for) operating activities $(1,220) $ 1,432
------- -------
Investment activities:
Capital expenditures (506) (2,543)
Business acquisition (563) --
------- -------
Cash used for investment activities (1,069) (2,543)
------- -------
Financing activities:
Repayment of long-term debt (170) (165)
Increase in long-term borrowings 2,250 1,532
Cash dividends (282) (243)
Stock repurchase program - (47)
Proceeds from stock plans 487 30
------- -------
Cash provided from financing activities 2,285 1,107
------- -------
Decrease in cash and cash equivalents (4) (4)
Cash at the beginning of the period 27 33
------- -------
Cash at the end of the period $ 23 $ 29
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 5 of 11
<PAGE> 6
COURIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED FINANCIAL STATEMENTS
The balance sheet as of December 27, 1997, the statements of income for
the three-month periods ended December 27, 1997 and December 28, 1996, and
the statements of cash flows for the three-month periods ended December
27, 1997 and December 28, 1996 are unaudited and, in the opinion of
management, all adjustments necessary for a fair presentation of such
financial statements have been recorded. Such adjustments consisted only
of normal recurring items.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The year-end balance
sheet data as of September 27, 1997 was derived from audited financial
statements, but does not include disclosures required by generally
accepted accounting principles. It is suggested that these interim
financial statements be read in conjunction with the Company's most recent
Form 10-K and Annual Report as of September 27, 1997.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board recently issued SFAS No. 130,
"Reporting Comprehensive Income", SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information" and SFAS No. 132,
"Employer Disclosures about Pensions and Other Postretirement
Benefits". These new standards will be effective in the Company's
fiscal year ending September 25, 1999. The Company has not determined
the effects, if any, that these standards will have on its consolidated
financial statements.
B. INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out (LIFO) method for substantially all
inventories. Inventories consisted of the following:
(000's Omitted)
------------------------------
December 27, September 27,
1997 1997
------------ -------------
Raw materials $ 4,204 $3,912
Work in process 5,603 4,108
Finished goods 1,896 1,675
------- ------
$11,703 $9,695
======= ======
Page 6 of 11
<PAGE> 7
COURIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
C. INCOME TAXES
The statutory federal tax rate is 34%. The total tax provision differs
from that computed using the statutory federal tax rate for the following
reasons:
(000's Omitted)
Three Months Ended
-------------------------------
December 27, December 28,
1997 1996
------------ ------------
Federal income taxes at
statutory rate $653 $448
State income taxes, net 50 23
Goodwill amortization 49 -
Export related income (52) (52)
Other 12 (30)
---- ----
Total provision $712 $389
==== ====
D. NET INCOME PER SHARE
During the first quarter of fiscal 1998, the Company adopted SFAS No. 128,
"Earnings per Share." Prior period net income per share has been restated
to reflect current presentation. Following is a reconciliation of the
shares used in the calculation of basic and diluted net income per share.
Potentially dilutive securities consist of options issued under the
Company's stock option plans.
(000's Omitted)
---------------------------------
Net Net Income
Income Shares Per Share
------ ------ ----------
For the three months ended
December 27, 1997:
Basic net income per share $1,210 2,030 $.60
Effect of dilutive securities 84 .03
------ ----- ----
Diluted net income per share $1,210 2,114 $.57
====== ===== ====
For the three months ended
December 28, 1996:
Basic net income per share $ 929 2,029 $.46
Effect of dilutive securities 21 .01
------ ----- ----
Diluted net income per share $ 929 2,050 $.45
====== ===== ====
Page 7 of 11
<PAGE> 8
COURIER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Sales in the first quarter of fiscal 1998 increased 16% to $35.3 million from
$30.5 million in the prior year's first quarter. The sales growth reflects
increased sales to educational and religious publishing customers. Also,
Book-mart Press, Inc. (Book-mart), a New Jersey based printer of short and
medium-run books, which was acquired by the Company in July 1997, contributed
approximately $3 million to the improvement in revenues. These increases were
offset by lower software documentation sales reflecting the continuing
industry-wide decline in demand for software documentation manufacturing. On
September 30, 1997, the Company acquired the assets of The Home School Books &
Supplies (The Home School), a direct marketer of books and other educational
products for supplementing or replacing traditional education with home-based
learning.
Gross profit increased to $8.8 million, or 25% of sales, in the first quarter
from $6.3 million, or 21% of sales, in the same period last year. The
improvement in gross profit reflects the benefits of increased sales volume and
gains in productivity. In addition, last year's first quarter included $350,000
in costs associated with consolidating operations in Philadelphia into a newer,
more efficient manufacturing facility.
Selling and administrative expenses increased to $6.5 million in the first
quarter of fiscal 1998 from $4.9 million in the same period last year. As a
percentage of sales, selling and administrative expenses were 18% compared to
16% in the first quarter last year. The increase was attributable to the
incremental selling and administrative expenses of Book-mart and The Home
School of approximately $0.9 million, including goodwill amortization of
approximately $150,000. In addition, selling and administrative expenses in the
first quarter of fiscal 1998 increased due to expansion of the Company's
Copyright Management Services (CMS) division and expenses that relate to the
increase in profitability.
Interest expense was $347,000 compared to $160,000 in the first quarter of
fiscal 1997 reflecting increased average borrowings which were primarily due to
the acquisitions of Book-mart and The Home School. Interest of approximately
$28,000 was capitalized in the first quarter of fiscal 1997. No interest was
capitalized in the first quarter of fiscal 1998.
The Company's effective tax rate for the first quarter was 37%. This rate was
higher than the 30% rate in the corresponding period last year primarily because
of nondeductible goodwill related to the recent acquisitions. In addition, a
higher effective state tax rate and a proportionately lower benefit from
export-related income also resulted in an increase in the overall effective tax
rate.
Net income for the first quarter of fiscal 1998 was $1,210,000, up 30% over last
year's earnings of $929,000. Net income per share on a diluted basis increased
27% to $.57 per share from $.45 per share in the corresponding period last year.
Earnings from the Company's core book manufacturing operations increased 48%
over last year's first quarter reflecting increased sales volume combined with
higher levels of productivity and lower costs. The Company's newer businesses,
CMS and The Home School, which focus on providing customized educational
products, reduced first quarter earnings by $.23 per share compared to a
reduction of $.07 per share for the same period last year, attributable to CMS.
Revenues and related earnings for these businesses, both of which are highly
seasonal, are expected to increase in the fourth quarter coinciding with the
months of highest market demand. Weighted average shares outstanding were
comparable to last year's first quarter. Shares exercised under the Company's
stock option plans and shares issued as compensation for non-compete agreements
were offset by shares acquired under the Company's 1997 stock repurchase
program.
The Financial Accounting Standards Board recently issued SFAS No. 130,
"Reporting Comprehensive Income", SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information" and SFAS No. 132, "Employer
Disclosures about Pensions and Other Postretirement Benefits". These new
standards will be effective in the Company's fiscal year ending September 25,
1999. The Company has not determined the effects, if any, that these
standards will have on its consolidated financial statements.
Page 8 of 11
<PAGE> 9
COURIER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES:
During the first quarter of fiscal 1998, operations used approximately $1.2
million of cash. Net income was $1.2 million and depreciation was $2.1 million.
Working capital utilized approximately $4.6 million of cash due to increases in
accounts receivable of $2.7 million and inventories of $1.9 million.
Investment activities in the first three months of fiscal 1998 used
approximately $0.5 million of cash for capital expenditures and $0.6 million for
the acquisition of The Home School. For the entire fiscal year, capital
expenditures are expected to approximate $10 million, which includes plans for
the purchase and installation of a new web press to provide additional book
printing capacity. In addition, up to $1 million is expected to be used on
upgrading the Company's management information systems.
In December 1996, the Company completed the consolidation of operations in
Philadelphia from an older, multistory facility to the recently expanded, more
efficient manufacturing facility. In September 1997, the Company signed an
agreement to sell the old multistory facility to a developer for approximately
$4.6 million. Closing is scheduled for the spring of 1998, but a number of
contingencies remain. The Company's Raymond, New Hampshire facility, which had
been leased through June 1996, continues to be vacant pending sale or lease.
Financing activities for the first quarter of fiscal 1998 provided approximately
$2.3 million of cash. At December 27, 1997, the Company utilized approximately
$19 million of its borrowing capacity available under a $30 million long-term
revolving credit facility.
Management is currently assessing the impact of the "Year 2000" problem on the
Company's operations and is working with vendors and consultants to formulate
and implement cost effective approaches to resolving this issue. As part of this
process, the Company expects to replace or upgrade certain information systems
with systems designed to give the Company the benefit of new technology with
enhanced functionality and resultant improvements in service and productivity.
The total cost of the Year 2000 problem and its impact on the Company's future
results is in the process of being determined.
FORWARD-LOOKING INFORMATION:
Statements that describe future expectations, plans or strategies are considered
forward looking. Such statements are subject to certain risks and uncertainties
which could cause actual results to differ materially from those currently
anticipated. Factors that could affect actual results include, among others,
changes in customers' demand for the Company's products, changes in raw material
costs and availability, seasonal changes in customer orders, pricing actions by
competitors, success in the integration of recently acquired businesses, and
general changes in economic conditions. These factors should be considered in
evaluating the forward-looking statements, and undue reliance should not be
placed on such statements. The forward-looking statements included herein are
made as of the date hereof, and the Company undertakes no obligation to update
publicly such statements to reflect subsequent events or circumstances.
Page 9 of 11
<PAGE> 10
COURIER CORPORATION
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
10 Courier Corporation Deferred Compensation Program dated
November 6, 1997 with Messrs. Conway III, Story,
Nichols and Osenton.
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
Page 10 of 11
<PAGE> 11
SIGNATURES
Pursuant to the requirements 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.
COURIER CORPORATION
-------------------
(REGISTRANT)
February 9, 1998 By: /s/ James F. Conway III
- --------------------------- ----------------------------------
Date James F. Conway III
Chairman, President and
Chief Executive Officer
February 9, 1998 By: /s/ Robert P. Story, Jr.
- --------------------------- ----------------------------------
Date Robert P. Story, Jr.
Senior Vice President and
Chief Financial Officer
February 9, 1998 By: /s/ Peter M. Folger
- --------------------------- ----------------------------------
Date Peter M. Folger
Vice President and
Chief Accounting Officer
Page 11 of 11
<PAGE> 1
Exhibit 10
TERMS AND CONDITIONS OF THE
COURIER CORPORATION DEFERRED COMPENSATION PROGRAM
1. Eligibility in the Courier Corporation Deferred Compensation
Program (the "Program") shall be granted to the following employees of Courier
Corporation (the "Company") who have been designated by the Board of Directors
of the Company (the "Board") as being eligible for the Program: James F. Conway
III, Robert P. Story, Jr., George Q. Nichols, and Thomas A. Osenton (the
"Participants"). The Board shall have full power and discretion to name
additional employees of the Company as Participants and at such times as it
shall decide in its sole discretion.
2. Each capitalized term herein shall have the same meaning
attributed to such term in the Courier Profit Sharing and Savings Plan (the
"Plan"), except as otherwise provided.
3. (a) RETROACTIVE AWARD. Each Participant who is actively
employed by the Company on November 6, 1997 shall
receive a deferred compensation award in an amount equal
to the sum of the differences for each of 1994, 1995,
and 1996 between (i) the amount of the Profit Sharing
Contributions to which he would have been entitled under
the Plan and the amount of ESOP Contributions to which
he would have been entitled under the Courier Employee
Stock Ownership Plan (the "ESOP"), were such
Participant's Compensation under the Plan and the ESOP
not limited each year to $150,000 (or such amount as may
be increased from time to time pursuant to Section
401(a)(17) of the Code) as provided in Section 2.10 of
the Plan and 2.10 of the ESOP for such calendar year,
and (ii) the actual amount of Profit Sharing
Contributions credited to such Participant's Profit
Sharing Contribution Account under the Plan and the
actual amount of ESOP Contributions credited to such
Participant's Account under the ESOP for such calendar
year. Such award shall be adjusted with interest in an
amount determined at the discretion of the Administrator
(as such term is defined in Paragraph 15 hereof) and
credited to a separate book account (a "Deferred
Compensation Account") in the Participant's name on or
before December 31, 1997.
(b) Annual Award. Each Participant who is actively employed
by the Company on the last day of each calendar year
beginning on and after January 1, 1997 shall receive a
deferred compensation award for such calendar year in an
amount equal to the difference between (i) the amount of
the Profit Sharing Contributions and ESOP Contributions
to which he would have been entitled under Sections 7.3
and 7.5 of the Plan were such Participant's Compensation
under the Plan not limited to $160,000 (or such amount
as may be increased from time to time pursuant to
Section 401(a)(17) of the Code) as provided in Section
2.10 of the Plan, and (ii)
<PAGE> 2
the actual amount of Profit Sharing Contributions and
ESOP Contributions credited to such Participant's Profit
Sharing Contribution Account and ESOP Account for such
calendar year. All amounts awarded to a Participant
under this Paragraph 3(b) shall be credited to the
Deferred Compensation Account in his name the following
calendar year.
4. On or before January 15th of each calendar year, beginning with
January 15, 1999, the amount standing to the credit of a Participant's Deferred
Compensation Account on such date shall be adjusted for deemed earnings or
losses as if such amount had been invested in the Participant's investment
choice for the entire preceding calendar year. The reasonable determination of
such adjustment by the Administrator shall be conclusive and binding on all
Participants and their Beneficiaries. The investment choices available to
Participants shall be as specified by the individual appointed by the Board to
administer the Program pursuant to Paragraph 15 hereof (the "Administrator")
from time to time, but each Participant may select only one investment choice
for each annual period on a prospective basis. On an ongoing basis, each
Participant must make an investment choice for a calendar year prior to January
15 of such calendar year. If a Participant fails to make a timely election, such
Participant's investment choice which was in effect for the prior calendar year
will continue in effect, unless such failure occurs in 1998, in which event the
Administrator shall make an election on behalf of such Participant.
5. During his period of active employment, each Participant shall
be fully vested in all amounts credited to his Deferred Compensation Account,
but no Participant shall have any rights to the amounts which he has been
awarded hereunder. Participation in the Program, and any actions taken pursuant
to the Program, shall not create or be deemed to create a trust or fiduciary
relationship of any kind between the Company and the Participant. The Company
may, but shall have no obligation to, establish any separate fund, reserve, or
escrow or to provide security with respect to any amounts awarded under the
Program. Any assets of the Company which are set aside in any separate fund,
reserve or escrow shall continue for all purposes to be a part of the general
assets of the Company, with title to the beneficial ownership of any such assets
remaining at all times in the Company. No Participant, nor his legal
representatives, nor any of his beneficiaries shall have any right, other than
the right of an unsecured general creditor of the Company, in respect of the
Deferred Compensation Account established hereunder, and such persons shall have
no property interest whatsoever in any specific assets of the Company.
6. Upon the termination of a Participant's employment with the
Company for any reason other than Retirement, death or disability, the
Participant shall be entitled to receive all amounts standing to the credit of
his Deferred Compensation Account (including amounts to be credited under
Paragraph 3(b) for the prior calendar year), as adjusted for earnings or losses
based on the total investment return based on the Participant's investment
choice through December 31 of the year of termination in one (1) lump sum
payment. Such payment shall be made within 90 days after the beginning of the
calendar year following the calendar year in which such Participant's
termination of employment occurs, and shall completely discharge the Company's
obligation under the Program.
2
<PAGE> 3
7. Upon the Retirement of a Participant from employment with the
Company or the termination of the Participant's employment with the Company by
reason of death or disability, the Participant (or his Beneficiary, in the case
of death) shall be entitled to receive all amounts standing to the credit of his
Deferred Compensation Account as of the December 31 preceding the date of
termination, as well as any amounts to be credited under Paragraph 3(b) for the
prior calendar year, all as adjusted for earnings or losses based on the total
investment return of the Participant's investment choice from January 1 of the
year of termination until the actual date of termination, in one (1) lump sum
payment. The Company shall also credit to the Participant's Deferred
Compensation Account an award for the year of termination as calculated pursuant
to Paragraph 3(b), but based on the Participant's Compensation earned through
the date of termination and based on the rate of Profit Sharing Contributions
and ESOP Contributions estimated by the Administrator in good faith. Such
payment shall be made within 60 days after such Participant's termination of
employment, and shall completely discharge the Company's obligation under the
Program.
8. Notwithstanding anything to the contrary contained herein, in
the event of a good faith determination by the Administrator that any of the
following acts or omissions were committed by a Participant, then such
Participant shall immediately forfeit all rights to amounts credited to such
Participant's Deferred Compensation Account, and the Participant, his estate,
his legal representative and his Beneficiaries shall have no further rights with
respect to such Participant's Deferred Compensation Account or any claims
against the Company under this Program:
(a) dishonest statements or acts of the Participant with respect
to the Company, or any subsidiary or affiliate of the Company;
(b) the commission by or indictment of the Participant for (i) a
felony or (ii) 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);
(c) gross negligence, willful misconduct or insubordination of
the Participant with respect to the Company or any subsidiary or
affiliate of the Company; or
(d) breach by the Participant of any contract with, or other
obligation to, the Company.
9. Any distribution of deferred compensation payments will be
reduced by the amounts required to be withheld pursuant to any governmental law
or regulation with respect to taxes or similar provisions.
3
<PAGE> 4
10. If a Participant who has deferred compensation under the Program
dies before he has received full payment of the amount credited to his Deferred
Compensation Account, such unpaid portion shall be paid to the Participant's
Beneficiary as designated by the Participant in writing. If no Beneficiary has
been designated or if a designated Beneficiary has predeceased the Participant,
such unpaid portion shall be paid to the Participant's estate.
11. The deferred compensation payable under this Program shall not
be subject to alienation, assignment, garnishment, execution, or levy of any
kind, and any attempt to cause any compensation to be so subjected shall not be
recognized.
12. All expenses incurred, or taxes paid by the Company, and
attributable to a Participant's Deferred Compensation Account shall be borne by
the Company and shall not reduce the amount credited to such Deferred
Compensation Account.
13. Nothing in this Program shall be construed as giving any
Participant the right to be retained in the employ of the Company in any
capacity. The Company expressly reserves the right to dismiss any employee, at
any time, without liability for the effect which such dismissal may have upon
such employee hereunder.
14. This Program may be amended in any way or may be terminated, in
whole or in part, at any time, and from time to time, by the Board. The
foregoing provisions of this paragraph notwithstanding, no amendment or
termination of the Program shall adversely affect the amounts payable hereunder
on account of compensation awarded under the Program prior to the effective date
of such amendment or termination.
15. The Board shall delegate the administration of this Program to
an individual who shall serve as the Administrator. The Administrator shall have
the exclusive discretionary authority to determine eligibility for and the
amounts of benefits under the Program, make factual determinations, construe and
interpret terms of the Program, supply omissions and determine any questions
which may arise in connection with its operation and administration. Its
decisions or actions in respect thereof, including any determination of any
amount credited or charged to the Participant's Deferred Compensation Account or
the amount or recipient of any payment to be made therefrom, shall be conclusive
and binding for all purposes upon the Company and upon any and all Participants,
their Beneficiaries, and their respective heirs, distributees, executors,
administrators and assignees; subject, however, to the right of a Participant or
his Beneficiary to file a written claim under the provisions of Paragraph 22.
16. All notices, elections, or designations by a Participant to the
Company shall be delivered in person or by registered mail, postage prepaid, and
noted to be brought to the attention of the Administrator.
17. The terms of this Program shall be binding upon and shall inure
to the benefit of the Company and its successors or assigns and each Participant
and his Beneficiaries, heirs, executors, and administrators.
4
<PAGE> 5
18. Subject to its obligation to pay the amount credited to the
Participant's Deferred Compensation Account at the time distribution is called,
neither the Company, any person acting on behalf of the Company, nor the
Administrator shall be liable for any act performed or the failure to perform
any act with respect to the terms of the Program, except in the event that there
has been a judicial determination of willful misconduct on the part of the
Company, such person or the Administrator.
19. This Program, and all actions taken hereunder, shall be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts, except as such laws may be superseded by any applicable Federal
laws.
20. Notwithstanding anything to the contrary contained herein, in
the event of a "Change in Control," each Participant shall have the right to
receive a distribution, within 30 days of such Change in Control, of all amounts
standing to the credit of his Deferred Compensation Account as of the December
31 preceding the date of the Change in Control, as adjusted for earnings and
losses based on the total investment return of the Participant's investment
choice from January 1 of the year of the Change in Control until the actual date
of such Change in Control, in one (1) lump sum payment. "Change in Control"
shall mean an event which shall be deemed to have occurred if (i) any "person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities; or (ii) individuals who at November 6,
1997 constitute the Board and any new director (other than a director designated
by a person who has entered into an agreement with the Company to effect a
transaction described in clauses (i) or (iii) of this paragraph) whose election
by the Board or nomination for election by the Company's stockholders was
approved by a vote of at least 80% of the directors then still in office who
either were directors at November 6, 1997 or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of the Board; or (iii) the stockholders of the Company approve a merger
or consolidation of the Company with or into any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets.
21. This Program shall be effective as of November 6, 1997.
5
<PAGE> 6
22. (a) All claims for benefits under this Program shall be
filed in writing with the Administrator in accordance with such procedures as
the Administrator shall reasonably establish.
(b) The Administrator shall, within 90 days of submission of
a claim, provide adequate notice in writing to any claimant whose claim for
benefits under the Program has been denied. Such notice shall contain the
specific reason or reasons for the denial and references to specific Program
provisions on which the denial is based. The Administrator shall also provide
the claimant with a description of any material or information which is
necessary in order for the claimant to perfect his claim and an explanation of
why such information is necessary. If special circumstances require an extension
of time for processing the claim, the Administrator shall furnish the claimant a
written notice of such extension prior to the expiration of the 90-day period.
The extension notice shall indicate the reasons for the extension and the
expected date for a final decision, which date shall not be more than 180 days
from the initial claim.
(c) The Administrator shall, upon written request by a
claimant within 60 days of receipt of the notice that his claim has been denied,
afford a reasonable opportunity to such claimant for a full and fair review by
the Administrator of the decision denying the claim. The Administrator will
afford the claimant an opportunity to review pertinent documents and submit
issues and comments in writing. The claimant shall have the right to be
represented.
(d) The Administrator shall, within 60 days of receipt of a
request for a review, render a written decision on his review. If special
circumstances require extra time for the Administrator to review his decision,
the Administrator will attempt to make his decision as soon as practicable, and
in no event will the Administrator take more than 120 days to send the claimant
a written notice of his decision.
IN WITNESS WHEREOF, this Program has been signed and sealed for and on
behalf of the Company by its duly authorized officer this 6th day of November,
1997.
COURIER CORPORATION
By: /s/ Diana L. Sawyer
----------------------------
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-26-1998
<PERIOD-START> SEP-28-1997
<PERIOD-END> DEC-27-1997
<CASH> 23
<SECURITIES> 0
<RECEIVABLES> 28,607<F1>
<ALLOWANCES> 1,166
<INVENTORY> 11,703
<CURRENT-ASSETS> 42,702
<PP&E> 99,847
<DEPRECIATION> 64,299
<TOTAL-ASSETS> 93,142
<CURRENT-LIABILITIES> 23,822
<BONDS> 0
0
0
<COMMON> 4,500
<OTHER-SE> 38,691<F2>
<TOTAL-LIABILITY-AND-EQUITY> 93,142
<SALES> 35,306
<TOTAL-REVENUES> 35,306
<CGS> 26,517
<TOTAL-COSTS> 26,517
<OTHER-EXPENSES> 6,482
<LOSS-PROVISION> 38
<INTEREST-EXPENSE> 347
<INCOME-PRETAX> 1,922
<INCOME-TAX> 712
<INCOME-CONTINUING> 1,210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,210
<EPS-PRIMARY> 0.60<F3>
<EPS-DILUTED> 0.57<F4>
<FN>
<F1> RECEIVABLES ARE NET OF ALLOWANCES FOR UNCOLLECTIBLE ACCOUNTS.
<F2> OTHER SE INCLUDES TREASURY STOCK.
<F3> BASIC EPS AS PER SFAS NO. 128, "EARNINGS PER SHARE."
<F4> DILUTED EPS AS PER SFAS NO. 128, "EARNINGS PER SHARE."
</FN>
</TABLE>
