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Courier Corporation (NASDAQ:CRRC)

F1Q09 Earnings Call

January 14, 2009 2:30 pm ET

Executives

James F. Conway, III – Chairman of the Board, President & Chief Executive Officer

Robert P. Story, Jr. – Executive Vice President, Chief Operating Officer & Director

Peter M. Folger – Chief Financial Officer & Senior Vice President

Analysts

Jamie Clement – Sidoti & Company

Paul Hogan – Fenimore Asset Management

Operator

Welcome to the quarterly one 2009 Courier Corporation earnings conference call. My name is Nancy and I will be your coordinator for today. At this time all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call Mr. Jim Conway, Chairman and Chief Executive Officer.

James F. Conway, III

Welcome to Courier Corporation’s first quarter conference call. I’m Jim Conway, Chairman and Chief Executive Officer. Thank you for joining us. We released our earnings at about nine o’clock this morning. I hope you have all had a chance to see the results. Faced with an unusually challenging economy we had a mixed quarter that was far from what we wanted but better than many other companies were experiencing at the same time.

Our publishing businesses all reported sales decline with Creative Homeowner once again, the hardest hit. On the other hand, we had an up quarter in book manufacturing with healthy growth in sales of Four-color books for the education and trade markets and modest growth in religious books. As previously announced, we’ve taken a variety of steps both during the quarter and as recently as this week to bring our costs in line with market conditions in both of our business segments.

Painful as some of these steps have been we are confident that they will keep us on the firmest possible footing going forward. We also had our annual shareholders meeting this morning and I’m pleased to report that all votes passed. We reelected three directors and reappointed Deloitte & Touche as auditors, all by a wide margin. I would like to thank all of you for your support.

Courier’s Chief Operating Officer Bob Story is here with me today and Peter Folger, Courier’s Chief Financial Officer is also here with us. Bob will begin with an overview of financial results for the first quarter. I will then discuss the key issues driving our business. I’ll also provide an outlook for the remainder of the year. Bob, please go ahead.

BB

Before I begin I’ll remind you that during this call we will be making forward-looking statements relating to the company’s financial goals and business environment. Actual results may differ materially. Information about the factors that could potentially impact our financial results is included in today’s press release and in our filings with the SEC including our 2008 annual report on Form 10K.

We encourage you to review those factors in conjunction with any forward-looking statements we make today. During this call we will discuss certain non-GAAP financial measures including EBTIDA. You will find additional disclosures regarding these non-GAAP measures in our press release including reconciliations of these measures with comparable GAAP measures. These non-GAAP measures should be considered in addition to not as a substitute for or superior to GAAP financial measures.

Also during this call whenever we refer to earnings per share it will be on a diluted basis. That’s the administrative stuff and now the results. This quarter we were operating in a very difficult economic environment that challenged most every business in the US and most certainly challenged all of us in the book business. For Courier the impact was felt most significantly in our publishing segment where sales were down 25% compared to a year ago.

Contrasting this, sales were up 2% in our book manufacturing segment where we experienced weakness in certain products or markets but we enjoyed continued growth in two key categories: testaments for the religious market; and textbooks for the educational market. Consolidates sales for the first quarter were $60 million down 5% from last year. Earnings per share were $0.06 in the quarter compared to $0.11 last year caused by a decrease in earnings in the publishing segment resulting from the large drop in sales.

EBTIDA was $6.7 million in the quarter down 13% from last year. Now, I’ll break these results down between our two business segments. Before I begin, I have to mention that we have begun measuring segment profitability on the basis of operating income rather than pre-tax income which means we no longer allocate interest income or expense for the segment. We believe that this is a better measure for comparing operating results. Prior year numbers have been adjusted to be consistent with this method.

Now, I’ll start by reviewing the results of the specialty publishing segment which is comprised of Dover Publications, Research & Education Association or REA; and Creative Homeowner. Specialty publishing sales were $11.5 million in the first quarter down $3.8 million or 25% from last year with the largest decline at Creative Homeowner where sales were down 41%.

Our biggest business challenge has been Creative Homeowner which publishes and distributes books on home design, decorating and gardening through a variety of channels, the largest being home center chains. Creative’s sales have been under severe pressures since the housing market began its downturn two years ago and as the housing market worsened so did Creative’s results. In response we took a variety of measures at Creative during the second half of 2008 including headcount reductions, inventory write downs and a tightening of editorial focus.

In addition, we announced last quarter that Creative would be exiting the distribution business which serves one customer, a nationwide retailer. Creative provided distribution services for a portion of this customer’s store network managing the warehouse, distribution and placement of its books as well as the books from other publishers. As part of this service, Creative performed weekly in store functions including restocking and display management.

This distribution arrangement was successfully transferred to another distributor in late December without compromising service to our customer. Although we estimate that this change will reduce Creative’s revenues by $7 million on an annual basis starting in January, 2009, it will have a positive impact on earnings. Combined with the other measures taken late in 2008, exiting the distribution business is expected to reduce the 2008 operating loss at Creative by approximately $3 million in 2009.

As we all know, the weakness in the housing market spilled over in to the rest of the economy reducing consumer spending and first quarter sales for both REA and Dover. In addition to reductions in sell through of books as reported by major book sellers, these retailers also took significant steps to reduce their inventories which further reduced our sales to them in the quarter.

REA first quarter sales were down 27% compared to a 19% increase in last year’s first quarter. The market for test preparation books and study guides softened during 2008 and competition for limited shelf space was fierce. REA is responding with new products and new marketing programs this winter in time for the upcoming spring testing season.

Dover sales were down by 13% in the first quarter compared to a year ago reflecting a weak holiday season this year as reported by the major book retailers. In addition, direct-to-consumer sales were down 12% in the quarter despite significant increases in consumer marketing and expanded discounting by Dover.

Gross profit as a percentage of sales for the publishing segment was 32.5% in the quarter compared to last year’s 40.9%. Despite productivity gains and cost reductions, all three publishers experienced a reduction in the gross margin percentage as a result of falling sales volume. Creative’s margin fell to 12% in the quarter as a result of their sharp drop in sales combined with a lower margin distribution business.

We expect that exiting the distribution business will result in an immediate improvement in the gross margin percentage for the segment. Selling and administrative expenses for the segment were $5.7 million, down 2% from last year. This includes approximately $250,000 in severance pay and other costs related to exiting the distribution business. Operating loss in the segment was $1.9 million for the first quarter compared to income of $485,000 last year. Creative’s loss for the quarter was $1.5 million compared to a loss of $283,000 last year.

In our book manufacturing segment, first quarter sales of $50.9 million were up 2%. In this segment we focused on three publishing markets: education; religious; and specialty trade. Sales to the education market in the first quarter were up 4% primarily driven by sales of four-color textbooks. Sales of one and two-color elementary and high school workbooks dropped significant reflecting market softness and intense competitive pressures as a result of excess manufacturing capacity for this type of product.

In the religious market sales were up 1% from last year’s first quarter. Sales to our largest customer were up 2% which is in line with long term historical growth trends and our expectations of low single digit growth. We continue to be pleased with the performance of major equipment upgrades in our Philadelphia plant that were completed last spring and summer.

This is part of a long term plan to both expand capacity and reduce costs through manufacturing efficiencies and material costs savings and then to pass a portion of these savings back to the customer so that they can receive even more testaments for distribution throughout the world. In our third key market specialty trade, first quarter sales were up 10% from last year’s first quarter despite the impact of the slowing economy on most of our customers.

This was possible because of growth in four-color specialty trade books at our [inaudible] plant as well as growth from new customers added in the past year. Gross profit in this segment increased 2% to $10.6 million and as a percentage of sales was 20.9%, the same as last year’s first quarter. Capacity utilization increased modestly over last year with double digit decreases in one and two-color books offset by double digit increases in four-color educational and trade books.

The margin benefit from our sales growth and the higher capacity utilization was reduced by increased depreciation expense this year and industry wide competitive pricing pressures. The softness that we’ve been experiencing in one and two-color work and the resulting drop in capacity utilization at several of our plants led us to announce earlier this week the closing of these smallest of these facilities Book-mart Press in North Bergen New Jersey.

Book-mart produced short run single color books with sales of approximately $7 million annually. We expect to complete this closing during our second quarter incurring severance pay and other closing costs of approximately $2 million. Selling and administrative expenses in this segment were $7 million, down $1 million or 12% in the quarter. Much of the decrease is the result of the reductions in staffing and other cost savings activities implemented in the past year along with a decrease in variable compensation.

Operating income in the book manufacturing segment increased 51% to $3.6 million in the first quarter from $2.4 million last year. On a consolidated basis, interest expense in the first quarter decreased by 23% or $68,000. Average borrowings increased $7 million to $25 million with the average interest rate dropping to 3.1%. Our effective tax rate in the quarter increase slightly from 36.5% last year to 37.5% this year with the increase resulting primarily from increasing state taxes.

Now, I’ll shift gears and talk about cash flow and our financial condition. This quarter cash provided from operating activities was $3.9 million, down from $7.9 million last year in large part due to working capital fluctuations. $3.9 million of cash provided this year or $0.33 per share includes $700,000 of net income and $5.3 million of depreciation and amortization. Working capital increased by $2.9 million in the quarter with a $10 million increase in accounts receivable offset by a buildup in inventory and decreases in accounts payable and accrued taxes.

Investment activities this quarter used $3.6 million of cash. Capital expenditures were $2.5 million. We expect capital expenditures for the year to be between $13 and $16 million. This includes $4 million for the completion of a 150,000 square foot warehouse in Kendallville, Indiana. Publication expenditures in our publishing segment were $1.2 million this quarter, the same as last year. For the year, these costs are expected to be just under last year’s level of $5 million.

We used approximately $2.5 million to pay our quarter dividend which we increased by 5% in November, our 12th straight year of dividend increases. There were no stock repurchases during the quarter and no plans for further repurchases this year. We ended the quarter with $25.8 million of long term debt, up $2.2 million from fiscal year end. We have a committed credit facility of $100 million spread among four leading financial institutions with a maturity in 2013.

To sum up, in our book manufacturing segment, sales were up 2% and operating income increased 51%. Two key markets: religious testaments; and four-color textbooks continue to do well despite the economy. The quarter was helped by last year’s investment in new press and binding equipment for religious testaments as well as our shift in emphasis focusing more on college textbooks and less on elementary school books.

Industry pressures from excess capacity in one and two-color printing continued to intensify. In response, we announced steps to reduce our capacity and lower costs with the closing of Book-mart Press along with other staffing reductions. Specialty publishing sales were down 25% and the segment incurred an operating loss of $1.9 million.

We successfully wound of Creative Homeowners’ distribution in December allowing them to refocus on their core publishing business reducing costs and significantly reduced their losses for the balance of the year. We increased our dividend by 5% this quarter which was possible because of our very strong cash flow even in a year when earnings are under pressure.

We have a healthy balance sheet with minimal debt and $100 million credit facility leaving us well positioned to compete in this challenging economic environment. And, as bad as the economy was in this past quarter, we don’t expect the pressures on our business to abate anytime soon. We will continue to do everything possible to secure our revenue but we will also remain focused on managing costs throughout our business.

Now, I’ll turn the call back over to Jim.

James F. Conway, III

As everybody knows, this past quarter was exceptionally hard not just for Courier but for the whole global economy. Bob has described the steps we have taken to help weather the recession and still position ourselves favorably for opportunities down the road. I am confident these measures will help us do that.

During the 185 years Courier has been in existence, we have lived through dozens of ups and downs in the economy and we’ve had to take extraordinary measures many times. Yet, we’ve survived and succeeded by adhering to a few basic principles: choosing our markets carefully; aligning ourselves with customer needs; managing with discipline; and being willing to anticipate the market with innovations in technology and service.

In today’s economy, our ability to execute in accordance with our principals is more important than ever. That’s why we’re listening harder than ever to our customers, managing our resources extra carefully and focusing our investment on core areas where the returns are most predictable and likely to be the greatest. Equally important, we haven’t stopped innovating in fact, we’ve intensified our pursuit of the emerging opportunity represented by green books.

But, right now the drum beat is very discouraging. Last week we heard that unemployment rate is the highest in 16 years and it was the worse holiday season for retailers since 1969. One result of all this news is a very aggressive pricing environment in book manufacturing as vendors everywhere seek a bigger share of a smaller pie. Fortunately, our past investments in technology have given us both the efficiency and the four-color capacity to compete effectively in such an environment.

Like other companies we are also taking a closer look at where our greatest strengths are and playing to those strengths. In the education market following several years of high growth in elementary and high school textbooks we announced strengthening our focus on college textbooks which are less subject to state and local budget crunches. At the same time we are taking advantage of our four-color capabilities to make additional inroads among both existing and new accounts in specialty trade.

We continue to reap the rewards of our long term focus on the religious market which has historically proved relatively independent of conditions elsewhere in the economy. At the same time we had to deal with the continuing decline in one-color work which, as Bob described, left us with significant over capacity in that area. The decision to close Book-mart press was a painful one with 72 employees involved, some of whom had served us for many years.

We felt closing this one small facility would be the most efficient way to achieve a more realistic cost structure and thereby spare even more employees elsewhere from similar steps. We have been in communication with customers to ensure them that their work remains in good hands at Courier and we are also working closely with Book-mart employees to help them deal with this very difficult situation.

On the publishing side we have felt the downturn everywhere with consumers increasingly cautious retailers have been managing defensively reducing inventories and cutting orders to the bone. But, with the housing sector still front and center in the recession we have felt it most accurately at Creative Homeowner as consumers have simply not been there at major home centers to buy those Creative books.

As a result, while many Creative titles have remained category leaders the overall categories have been hit hard hence, the staff reductions and general belt tightening undertaken throughout the organization as well as our December exit from the distribution business. So, in an environment like this where are the opportunities? The good news is that many of them are still there and still play to some of our strengths.

We have a long track record of service leadership leading to share gains. In today’s economy customers often need more service than ever. Many of them are trying to do more jobs with fewer people because of layoffs in their own organizations and because they are managing inventories so tightly they have shorter lead times and can’t afford to miscalculate. So, they need suppliers with knowledge, capacity and stability that Courier offers which helps us a lot.

There was one factor that helped us last quarter when we reached agreements with a number of textbook publishers to lock in future business for our four-color presses in Kendallville Indiana. We’ve seen share gains at trade customers as well. We’ve even seen signs that some publishers who’ve been shipping their printing to China are having second thoughts about the hidden costs and are starting to bring some of that business back home.

Meanwhile, as a publisher we have become increasingly adapt at targeting new products to proven constituencies. What that means in today’s economy of course is consumers who want maximum value for every dollar they spent. We’ve been working smarter on this across all three of our publishing brands as editorial and marketing collaborate with the help of a unified publishing management team, common information technology systems and not least of all an integrated sales force trained in cross selling.

In the coming quarter we’ll see several examples of how we’re targeting our response to the realities of the 2009 economy. REA is gearing up for the spring test season with better packaging for existing titles as well as some exciting new products including crash courses for students who need to make up a lot of ground in very little time. At Creative Homeowner we’ve already slimmed down the product line to focus on core categories. Now, we’re slimming down the books themselves bringing out lower price versions that offer exceptional value and address a wider range of consumers.

Finally, I would be remise if I didn’t point out the success Dover’s had with this year’s presidential campaign paper doll books. These have been popular in the past but this year is truly over the top. As you can imagine we’ve been shipping a lot of Obama paper doll book and even some McCain doll books to Washington in anticipation of next week’s festivities.

The other noteworthy thing about the presidential doll books is that they’re green editions. This is no accident. It’s a perfect use of a high profile event to publicize both the need to be green and our own leadership in environmental responsibility. As I mentioned in last quarter’s conference call the growing consumer demand for green books has potential benefits for both sides of our business. Courier has been out in front of much of the rest of the industry on this issue. We have now launched our own green editions brand to appeal not only to readers but to other publishers who also want to be seen as environmentally responsible.

With a new administration in Washington there will be a greater national focus on the environment and over time we’re convinced consumers will learn to identify Courier’s green edition seal as a positive factor in their book buying decisions. So, what makes a book green? There are three elements: what it’s made of; how it is made; and where it is made. Courier has everything it takes to be green on all three counts.

From the use of recycled papers to digital work flow, computerized press controls and other technologies that reduce paper and energy consumption and minimize emissions to conveniently located made in the USA plants that conform to the highest environmental standards. All these factors are distilled in to our green edition seal. While we’re still just getting started, we’ve already published 180 green books and brought 350 million pages of printing back home to the US from overseas.

So, I think you’ll be hearing a lot about green editions in the months and years ahead both in the books Courier publishes and in those we print for others. In the meantime, where do we stand today? We are a much leaner company than we were a year ago. We’ve had to make some difficult adjustments due to changes in the business environment and the current recession. With these steps completed, we believe we’re well positioned to withstand the rigors of the current economy while taking advantage of its opportunities.

As we move through 2009 and hopefully to better times, we will continue to do what we have to do to survive and succeed. At the same time, I’m confident that the qualities that have brought us this far will help us stay at the top of our industry in innovation, service and value. Our past investments have made us more efficient than ever and our people, as always, are ready to go the extra mile for customers and shareholders alike.

Now, let’s turn to our outlook for the remainder of our 2009 fiscal year. With the United States economy in recession, our sales environment remains challenging. At the same time, we do not know what affects, if any, the incoming administrations economic stimulus package will have on this situation. As a result, forecasting is unusually difficult. We do however, expect to perform well in book manufacturing with continued sales growth in religious scriptures and four-color books for the education and trade markets.

In specialty publishing we have adjusted our sales outlook to reflect the continuing caution of consumers and retailers and in both segments we believe the difficult organizational steps we have taken will help to bring our cost structure in line with market conditions. For fiscal 2009 overall we project total sales of between $269 million and $281 million. We expect full year earnings per share of $1.10 to $1.25 per share again, excluding the charges related to Book-mart Press.

That is versus $1.22 per share excluding last year’s impairment charge. Factors not incorporated in our guidance include the potential impact of continued weakness in the credit markets on customers, competitors and vendors in both of our business segments and the possibility of future impairment or restructuring charges.

In addition to measuring our performance by generally accepted accounting principles, we also track several non-GAAP measures including EBTIDA. For the first quarter of fiscal 2009 Courier’s EBTIDA was $7 million compared to $8 million for last year’s fourth quarter. For the full year we expect EBITDA to be between $44 million and $47 million. At this point, I’ll turn the call over to questions so therefore, it’s back to you Nancy.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Jamie Clement – Sidoti & Company.

Jamie Clement – Sidoti & Company

Jim, obviously the four-color segment was it sounds like a source of strength for you guys this quarter as it has increasingly become. Can you give us a sense let’s say maybe over the last three years or so how much four-color work you were doing a couple of years ago versus how much with the investments you’ve made over the last few years? In other words, how big of a slice of the pie is it right now for you guys?

James F. Conway, III

You kind of caught me Jamie without a lot of information in front of me where I can go do some digging. But, I can tell you in the past two years we added one [man] rolling press and some binding equipment so the total investment on that side for that equipment would be about $30 million. But, total sales for four-color is in the range of about $70 million. I know there was another [man] rolling press added in but I believe the second man rolling press was added four years ago and that was about a $15 million piece of equipment.

When you’re dealing with those [man] rollings with ancillary equipment you’re at about $15 million apiece.

Jamie Clement – Sidoti & Company

I was just trying to get a sense of how big a piece of the business that had become right now because presumably it sounds like for the next couple of quarters you expect that to really be a strength of the business, right?

James F. Conway, III

Yes, we do. Both higher ed and [inaudible] and we do expect that to be a real strength of the business.

James F. Conway, III

Moving to the cost side, one thing that I just was not 100% clear on with respect to the closing of Book-mart press and kind of how the chargers might flow through but then also how the savings might flow through. Is that fully closed now or is it in the process of being closed? What exactly was the timing?

James F. Conway, III

Well, it’s in the process of being closed but the majority of it has been closed and certainly will be wrapped up within the next few weeks. Now, it will take us to unwind and move some of the product we want to finish in our other plants so there will still be some activity in that operation during the first part of the second quarter.

Jamie Clement – Sidoti & Company

So it sounds like the real savings will be like third quarter or fourth quarter?

James F. Conway, III

Well certainly more savings in the third and fourth quarter.

Operator

Your next question comes from Paul Hogan – Fenimore Asset Management.

Paul Hogan – Fenimore Asset Management

A couple of question for you, can you talk a little bit about the visibility that you have for the remainder of the year on the manufacturing side?

James F. Conway, III

Paul what I can tell you is as I pointed out in the conference call we’ve got a couple of major agreements in place with some of our top customers and they’re anticipating, particularly in the higher ed area to have very good years so we have some visibility of strength in higher ed. As it relates to elementary and high school the visibility is less clear because of the state and local funding issues that surround that particular market segment. It’s suppose to be a pretty good year in elementary and high school but with the economy the way it is Paul, that’s a tough guess.

Paul Hogan – Fenimore Asset Management

So that’s the wild card then?

James F. Conway, III

I would say that’s correct.

Paul Hogan – Fenimore Asset Management

Looking at the past couple of years, the first quarter has normally been the smallest quarter when it comes to manufacturing revenues, so do you think this year will follow those typical patterns?

James F. Conway, III

Absolutely. Again, looking at Courier’s history the third and fourth quarter are always the strongest two.

Paul Hogan – Fenimore Asset Management

It sounds like you’re really pairing the costs on the publishing side. Do you think that business is breakeven for the year?

James F. Conway, III

Tough call Paul, we’re working the cost side as hard as we can but we’re also hoping to get some revenue boost for some of the innovative products we’re coming out with. That’s a tough call on saying whether or not we can do that.

BB

It’s within the range Paul but as you can imagine there’s a fair amount of variability around our ability to predict that.

Paul Hogan – Fenimore Asset Management

Just taking the cost out of Creative, that goes a long way though?

BB

Oh, yes.

James F. Conway, III

Yes, it does.

Paul Hogan – Fenimore Asset Management

It gets you a lot closer?

James F. Conway, III

Bingo.

Paul Hogan – Fenimore Asset Management

If I look at this you had a pretty decent first quarter on the manufacturing side and your margins were up over last year and on the publishing side revenue can certainly be variable with the economy but you’re really taking a lot of steps, cutting costs there and getting that business back to breakeven. It sounds like there is light at the end of the tunnel?

James F. Conway, III

I’d say that’s correct.

Paul Hogan – Fenimore Asset Management

Also, on the inventory side you talked a little bit about the increase and I missed your comments there about why the inventories were up?

BB

A bunch of it Paul is just build up in work in process at the end of the quarter which is product that will ship in January. There is some build up in paper as well in anticipation of orders that we have in backlog. The buildup in inventory we’ll expect to turn fairly quickly. It’s all because we have increasing workloads.

Operator

Your next question comes from Jamie Clement – Sidoti & Company,

Jamie Clement – Sidoti & Company

I actually also have a question about inventories but not your own, more like your publishing customers inventories. Do you have a sense yet of the quality of the sell through during the December quarter? And, what the status of some of your big customer inventories were and weather you actually – maybe they’ve taken inventories before their own fiscal year end is down pretty low? Is it possible that you can see some of that? Their shelves need to be filled up in other words?

BB

Well, our inventories are down with those folks, varying amounts with different retailers Jamie but some have been very aggressive and it shows up in our numbers in terms of where their inventories are. In some cases it’s pretty obvious to us that they went so far that it really did hurt the sell through of our product but as to whether they’re going to build back up or not, it would seem that’s the logical thing to do but on the other hand you’re asking me how they’re running their business?

Jamie Clement – Sidoti & Company

I guess what I sort of meant was, and I think I’ve seen this in a lot of other industries also just kind of throughout this period of time is that at some point you’re selling products, I don’t mean you I mean your customers are selling products and they can only take their inventory so low or they don’t have products on the shelves so I didn’t know how critically low their inventories were at this point in your perspective.

Robert P. Story, Jr.

All I can tell you is that they are pretty much down across the board.

Operator

Your next question comes from Paul Hogan – Fenimore Asset Management.

Paul Hogan – Fenimore Asset Management

Jim, another question for you, on the higher ed business from our comments on the call it seems as though you’ve really been putting a push on getting more of that business since it’s a stronger market right now. So, I presume that you’re getting that business because you’re taking share from somebody else?

James F. Conway, III

I’d just assume not comment on that Paul. You’re probably correct but I don’t want to upset any of my competitors.

Paul Hogan – Fenimore Asset Management

I’m not asking you to name names. I assume that business is not growing that much where there’s not that much extra volume or maybe it is?

Robert P. Story, Jr.

Well, some of the numbers that are being reported by the Publisher Association would imply that the markets growing 3% to 5%.

Paul Hogan – Fenimore Asset Management

Are you getting this business, printing those books for the winter semester? Is there any significance to that versus going in to the beginning of the school year?

James F. Conway, III

Paul, we’re getting books, reprints for this semester but also lining up new titles that will be coming out in the spring and summer as well. It’s the whole list of titles so right now there is a focus on reprints but new title season is starting to kick up as well.

Operator

You have no more questions at this time. I would now like to turn the call over to Mr. Jim Conway.

James F. Conway, III

Folks, thanks for listening in and we look forward to talking to you next quarter. Happy New Year everybody. Good bye.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect.

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