Courier Corporation

1814–2000

Courier Corporation is the largest book manufacturer in the Northeast, the fifth largest in the nation, and a full-service publisher, printer, distributor, and marketer of a wide variety of books. The company focuses on streamlining and enhancing the process by which printed books and digital content reach end-user markets; services include prepress and production through storage and distribution. Courier has three business segments: book manufacturing, customized education, and specialized book publishing. Five of the company's subsidiaries focus on such specialties as short-run book manufacturing, printing on lightweight paper, and four-color manufacturing. This latter segment serves more than 650 book-manufacturing customers. Sales to one customer, The Gideons International (distributor of bibles), generated about 26 percent of fiscal 2000 consolidated sales, and Pearson plc (world's leading education business and international media company) accounted for about 17 percent of fiscal 2000 consolidated sales. Customized education is the specialty of Courier subsidiary Copyright Management Services (CMS), which provides Internet-based solutions to educators wanting to combine materials from multiple publishers into customized books and coursepacks. At the heart of the specialized book publishing segment is Dover Publications, Inc. (Dover), one of the world's most successful niche publishers. Dover sells books worldwide and mails its proprietary catalogs to over 500,00 consumers. Dover publishes books, including Dover Thrift editions that usually sell for $1.00, in more than 40 specialty categories ranging from military history to paper dolls, and from musical scores, typographic fonts, and Egyptian hieroglyphics to CD-ROMs. In fiscal 2000, Courier produced over 300 million books. Forbes magazine, in its October 30, 2000 issue, recognized Courier as one of 'The Best 200 Small Companies in America' and rated Courier as one of 11 companies to watch.

Long before the Industrial Revolution got underway, English-speaking settlers had been drawn to New England's surging waterways. Francis Cabot Lowell, an early settler, was a key player in the industrial development of that region. In 1814, after touring several English textile mills, he wanted to bring textile machinery back to the United States but British law prohibited its export to the United States. Upon his return home, Lowell 'built from memory the first power loom in the United States, set it up in Waltham, Massachusetts, and in 1815 began textile production,' wrote John A. Conway in The Citizens of Courier, a history of the early years of Courier Corporation. The success of Lowell's venture led to a search for a site having enough water to expand the Waltham Experiment. Lowell died in 1817, but his dream of producing textiles became a reality when friends from Boston searched for a good source of hydraulic power to run a textile operation (steam power did not become available until the 1850s and electricity until the end of the 19th century).

After traveling to East Chelmsford and inspecting the so-called 'raging rapids of the Merrimack River,' several of Lowell's admiring friends and entrepreneurs banded together 'to form a new company, the Merrimack Manufacturing Co., ... which was to develop the finest textile mills in the world,' wrote Conway. Ingenious engineering of the Merrimack enabled mills to garner the energy needed to support many mills on the river's banks, thereby fostering the development of bustling factory villages, such as Lowell and Chelmsford.

William Baldwin was the first journalist to comment on these new communities when--on June 25, 1824--he began publishing the Chelmsford Journal, the predecessor of Courier Corporation. In every issue, the Journal ran an ad for itself under the headline: 'Book and job printing ... in all branches, executed on new type, with neatness and expedition, at this office.' Conway commented that, like other newspapers of this period, the Journal was 'well written, political, candid and, at times,' quite humorous. As the textile mills prospered, the population increased and so did the number of newspapers. By 1840 Lowell had more than 20,000 residents and newspapers for about every political viewpoint. After various name changes and mergers, the Chelmsford Journal became the Lowell Courier. Then, in 1856, three other newspapers merged with the Chelmsford Journal to form the Lowell Daily Citizen , which in 1882 was known as the Citizen Newspaper Co.

Meanwhile, Alexander Graham Bell had invented the telephone (1876) and created a singular marketing opportunity for the Lowell Daily Citizen. In 1878, that newspaper company printed the first issue of the Boston Telephone Directory--a one-page broadside containing 67 listings.

By 1890, however, the town's more than 11 newspaper publishers offered Lowell's 95,000 residents more newspapers than they wanted. In 1894, to counter the diminishing profitability of newspaper publishing, the Lowell Daily Citizen and the Citizen Newspaper Company. merged into one company, to be known as the Courier-Citizen Company (Courier). The new company was to publish, print and sell newspapers, periodicals, and books as well as develop a general job printing and book-binding business, Conway reported in The Citizens of Courier. By 1900, Courier was one of the largest printing firms north of Boston; printing was the company's most profitable sector.

As New England towns and cities prospered, telephones and the need for local telephone directories increased. New England Telephone's widespread operation called for centralized records. To this end, the telephone company developed business forms for various activities, especially for billing, purchasing, and requisitions. Courier, the telephone company's long-time printer of choice for directories, picked up a contract for printing these business forms. This was Courier's first stationery contract; it was soon followed by a contract to meet the printing needs of New York's Waldorf-Astoria Hotel. In 1920, Courier agreed to produce forms and to print all of Western Union's telegrams as well as meet all the telephone company's printing needs east of the Mississippi River. For the first time, Courier also included warehousing and distribution services in this contract. During the 1930s, Courier became one of America's premier printers of business forms by servicing accounts for other large corporations; for example, American Cyanamid, Atlantic Refining, Uniroyal, United Fruit, and General Motors.

Forms, War, Recession, Computers: 1940-72

Courier further committed itself to printing forms when it sold the newspaper side of its business to the Lowell Sun. The company's next move was to buy the Chicago-based Uniform Printing and Supply Company, which printed and distributed 'standardized [insurance] policy forms from a central location,' according to The Citizens of Courier. The acquisition included control of two plants--one in Chicago and the other in Brooklyn, New York--marking the first time Courier operated printing operations outside of its home base in Lowell. Courier gained the unofficial title of Printer by Appointment to the Insurance Industry.

Conway, Jr.--newly named as Courier's president--authorized a $4.5 million bank loan to acquire the Westford, Massachusetts-based Murray Printing Company, one of the world's finest black and white printers.

1956–1997

During the two decades following World War II, the insurance industry grew at a record pace--and so did Courier's coast-to-coast market, which had more than 300,000 agents to whom it sent documents. Courier set up new systems for printing, distributing, and warehousing forms and manuals as well as for maintaining mailing lists and inventories. To assure an effective operation and to keep customers abreast of changes in state laws affecting the insurance industry, Courier also established central clearinghouses for each state.

By the early 1950s, Courier was prospering from its work with insurance companies. At about this time, James F. Conway, Jr. joined Courier as general manager. A lengthy study convinced him that moving most of the distribution out of Brooklyn to strategically placed locations would 'minimize shipping time and reduce expenses for delivering forms to insurance agents,' according to The Citizens of Courier. Conway set up 15 distribution outlets, for which start-up costs were met within six months of operation.

Courier acquired the San Francisco-based Bosqui Printing Company in 1956 and became a truly nationwide manufacturing operation with a lucrative forms business. In 1966, James F. Conway, Jr.--newly named as Courier's president--authorized a $4.5 million bank loan to acquire the Westford, Massachusetts-based Murray Printing Company, one of the world's finest black and white printers. Murray had more than 500 employees working on college textbooks, dictionaries, and scientific books.

In the 1960s, however, a general shift in the insurance industry had a negative impact on Courier's Forms Division. Tough economic times and the introduction of business computers diminished the need for forms used by individual insurance agents; there was a trend to consolidate the writing of policies in regional offices. This shift in operation, 'pushed Courier's profits in the Forms Division to a low in 1968 and forced the company to adopt a new approach to the business,' John Conway wrote in The Citizens of Courier.

To distinguish itself from the typical operation of other printing companies operating in 1970, Courier targeted some of the biggest companies in America by focusing on 'a full-service approach.' Conway illustrated this new approach by quoting part of a Forms Division manager's sales pitch: 'We tell a customer we can do two things, affect an economy and improve efficiency. ... We are attempting to provide a wider range of products and services, taking ourselves out of the arena of the traditional neighborhood printer. We will accomplish for you something you probably don't even appreciate you are paying for right now.' The new marketing strategy paid off. By 1972 the forms business was at the top of Courier's divisions, accounting for more than $20 million of the company's total gross of approximately $53.8 million. However, severe price cutting throughout the business forms industry kept the division's profits on the 1971 level.

Going Public, Technology and Unions, a Joint Venture:1972-89

The next question that the company faced was whether the forms business would assure Courier's profitable longevity. Courier President and CEO Conway was well aware of the company's assets (printing equipment, various contracts, land, and little long-term debt) but equally attuned to a trend toward consolidation: large printing firms were buying relatively small printing companies. With funds generated from a public offering, he believed, the company would be positioned to grow while maintaining its reputation for product quality, competitive prices, and technology support. To go public, the Courier-Citizen Company created a holding company, called Courier Corporation; stock was offered for $15 a share on November 16, 1972 and more than $2.6 million was raised. The company planned to use the new funds to finance plant and equipment expansion.

Within a year of its public offering, Courier Corporation recorded its fifth consecutive annual increase in sales and earnings; in 1973 sales topped $60 million for the first time. The company was making good its promise of expansion and continued growth. In 1975, Courier acquired Philadelphia-based National Publishing Company, considered to be 'the finest printer of light-weight papers in the nation ... and specializing in reference texts, bibles and other religious products' according to the company's history in The Citizens of Courier. 'National was able to handle the demanding binding assignments related to these high-quality books, making it a printer of unique capabilities and skill.' Courier's new subsidiary spearheaded Courier's international expansion and reputation for excellence. National moved to a modern facility in Philadelphia in 1997.

In 1978 Conway was named chairman of the board and Alden French, Jr., became Courier's president. During the 1980s, Conway noted that the demand for forms was in steady decline, possibly because computers were making many business forms obsolete. In 1984, the company sold its Forms Division to a private investor. At the same time, Conway began to question the future profitability of printing telephone directories. This industry was changing from hand-laid, hot-metal type to a business based on new technology. The phone companies, with eyes on their bottom line, were pushing for change, and there was stiff competition for contracts. In 1985 Conway and French set up Courier in a joint venture--called North American Directory Corporation (NADCO)--with Toronto-based Bell Canada Enterprises, Inc. (BCE). That same year, Courier acquired Stoughton, Massachusetts-based Alpine Press Inc., a leading manufacturer of hard cover and softbound books serving educational, trade, and high technology markets. Alpine was later renamed Courier Stoughton.

1951–2000

NADCO sales grew quickly: the venture was well positioned to win the top position for publishing telephone directories in the United States. However, due in part to the rising cost of paper and to unrest resulting from jobs lost because of computers and other new equipment, there was growing unhappiness in both the workforce and management. Although sales increased, net income remained flat from year to year and in 1988 Courier sold its 50 percent interest in NADCO. That same year Alden French was succeeded as president by James F. Conway III.

Going Digital, Defining Growth Markets, E-Commerce, Consolidation:1990-2000

During the 1980s, the technological revolution that swept American businesses had a very powerful impact on the traditional American printing industry in general and on Courier Corporation in particular. Electronic prepress and desktop publishing were the first signs that printing and publishing workflow were going digital. In 1990, Courier became a pioneer in the book industry when it established Courier Connection, designed as 'an electronic, integrated publishing service bureau ... to provide the widest possible range of services using desktop publishing technology,' according to newswriter Sally Taylor's story in the August 2, 1991 issue of Publishers Weekly. Customers gained instant online access to the company's prepress services--and Courier positioned itself as a full-service printer. This innovation notwithstanding, however, 1992 was the worst year in Courier's history.

The toll on sales came from the company's shift of focus from commodity-like business, the addition of new services to enable growth in higher value-added turnkey relationships, and the training of service teams to deliver these new services. The company revised its operating and marketing strategies; it began to regain its leadership position by forming an Electronic Publishing Innovations Center (EPIC), which in 1993 offered on-demand, technology-based publishing services ranging from processing electronic files through reproduction and end-user distribution; products for the growing software market included kitting, fulfillment manuals, and floppy disks. The quarterly dividend was restored. In a rapid turnaround, Courier reaped the benefit of the 1993 decision to focus on three specific markets--religion, education, and specialized publishing--where it could be the best and find customers who would place the most value on the company's services. Sales of software documentation and educational publishers' materials were particularly strong for fiscal 1994 and rose to $122.73 million. Sales dipped by about $2 million in 1995 but in 1996 Courier again reported a profit.

In December 1994, the company formed Courier New Media, Inc. (CNM), an information-management services company that worked with publishers, software developers, and other information providers to create products from new and existing intellectual properties. CNM included two operating units, Courier EPIC and Copyright Management Services (CMS), a new division established in December 1994, to help publishers and college bookstores obtain copyright permissions for products such as multiple-publisher college coursepacks. Courier EPIC conducted an electronic publishing service, including customized, on-demand printing and binding services. CMS specialized in helping publishers and college bookstores to obtain copyright permissions for educational products, such as multiple-publisher college coursepacks.

In 1996 Courier moved its corporate headquarters to North Chelmsford. In 1997, the company acquired Book-Mart Press, Inc., a book manufacturer specializing in short to medium runs of softcover and hardcover books. Book-Mart offered high-quality offset printing and binding for orders as low as 300 copies. This acquisition allowed Courier to complement its existing range of services by enabling its customers to shop for full-service book production of any run length. The company also acquired The Home School, Inc., a direct marketer (through retail, catalog and e-commerce) of educational materials to families who were educating their children at home.

By 1998 Courier was the largest book manufacturer in the Northeast. Over and above the manufacture of books and manuals, the company replicated diskettes and CD-ROMs for publishers, software developers, and other information providers--and managed the creation and distribution of these products. The company consolidated the kitting, assembly, inventory management, and related services of Courier New Media with those of Courier Stoughton's. North Chelmsford's end-user fulfillment operation was expanded to handle The Home School's national catalog roll-out and other end-user fulfillment business.

In 1999, Courier launched an e-commerce business--bookhound.com--for out-of-print books that it offered as replica books manufactured from an original; copyright permission was obtained from either publishers or authors. During the last quarter of fiscal 1999--for $39 million in cash--Courier acquired Mineola, New York-based Dover Publications, Inc., a consistently successful company that, in 1951, broke new ground with the introduction of the first trade paperbacks; Courier was the manufacturer of these high-quality books.

Dover sold its products through catalogs and a diverse range of wholesalers and booksellers, children's stores, craft stores, and gift shops in museums and historic sites&mdashø name but a few of its outlets. In an interview in the September 2000 issue of Graphic Arts Monthly, Courier's president and CEO, James Conway III, commented on Dover's 'unique process of identifying pockets of demand and its track record of bringing more than 400 new specialized publications to market each year.' He went on to say that 'The combination of Dover's publishing, sales, and distribution skills with Courier's book manufacturing, digital-content conversion, and e-commerce skills' would 'produce a powerful end-to end solution for Dover,' and that Courier would 'capture revenue and profits from every step of the process.'

1997–2001

In fiscal 1999 Courier's net income rose to $8.38 million, or $2.52 per diluted share, and sales peaked at $163.99 million--compared to 1997 net income of $4.32 million in fiscal 1997, or $1.41 per diluted share, and sales of $131.43 million.

2000 and Beyond

Within its chosen markets--religion, education, and specialized printing--Courier was agile at anticipating customer needs. In early fiscal 2000 the company invested $16 million in new technology, printing presses, and bindery lines. In 2000, the company reported that it was the only major book manufacturer to respond as quickly to what it described as 'an industry-wide capacity shortage.'

In March 2000, Dover--operating as an autonomous subsidiary--brought its list of more than 7,500 books directly to consumers through a brand-new web site, doverpublications .com. Customers could buy books in more than 40 categories, including more than 2,000 children's books, some priced as low as $1.00. Additionally, Dover offered sticker books, gift wrap, tattoo books, card, and paper-doll books--including ones on both Princess Diana and the Queen Mother. Among the new books selling for $1.00 each was Wit and Wisdom of the American Presidents, which contained over 400 bon mots by presidents from George Washington to Bill Clinton.

Having launched the Dover web site, Courier sold The Home School, Inc. to privately held Christian Book Distributors, Inc. of Peabody, Massachusetts. James Conway III, president and CEO, pointed out that this sale would allow Courier to focus more of its time and energy on Dover, a much larger business that offered far greater opportunity for development. Courier reported fiscal 2000 as another year of record growth, bringing the company's five-year compound annual growth rate to 9.3 percent for revenue and 15.3 percent for net income. Net sales for the year reached $188.32 million, and net income rose to $10.64 million, or $3.15 per diluted share. Book manufacturing accounted for 98 percent of fiscal 2000 revenues, and customized education accounted for 2 percent.

Building on three consecutive best-ever years, Courier management had reason to be optimistic about continuously profitable growth in fiscal 2001, and beyond.