10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 29, 2002

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 No. 1-11427

NEW ENGLAND BUSINESS SERVICE, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-2942374
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification number)

500 Main Street Groton, Massachusetts	01471
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (978) 448-6111

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on         which registered
Common Stock ($1.00 par value)	New York Stock Exchange
Preferred Stock Purchase Rights	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x                No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

The aggregate market value of the Registrant’s Common Stock, par value $1.00 per share, held by stockholders who are not affiliates of the Registrant at August 30, 2002 as computed by reference to the closing price of such stock on that date was approximately $289,732,631.

The number of shares of Registrant’s Common Stock, par value $1.00 per share, outstanding at August 30, 2002 was 13,086,983.

Documents Incorporated By Reference

Portions of the Proxy Statement sent to stockholders in connection with the Annual Meeting to be held on October 25, 2002 are incorporated by reference into Items 10, 11, 12 and 13 (Part III) of this Report. Such Proxy Statement, except for the parts therein which have been specifically incorporated by reference, shall not be deemed “filed” for the purposes of this report on Form 10-K.

New England Business Service, Inc.

2002 ANNUAL REPORT

ON FORM 10-K

TABLE OF CONTENTS

		Page Number
	PART I
Item 1.	Business	1
Item 2.	Properties	7
Item 3.	Legal Proceedings	7
Item 4.	Submission of Matters to a Vote of Security Holders	7
Item 4.1	Executive Officers of the Registrant	7
	PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	9
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 8.	Financial Statements and Supplemental Data	22
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	22
	PART III
Item 10.	Directors and Executive Officers of the Registrant	23
Item 11.	Executive Compensation	23
Item 12.	Security Ownership of Certain Beneficial Owners and Management	23
Item 13.	Certain Relationships and Related Transactions	23
Item 14.	Controls and Procedures	23
	PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	24
Signatures		25
Certifications		26

PART I

ITEM 1.    BUSINESS

New England Business Service, Inc. (the “Company”) was founded in 1952, incorporated in Massachusetts in 1955 and reincorporated in Delaware in 1986. The Company designs, produces and distributes business forms, checks, envelopes, labels, greeting cards, signs, stationery and related printed products, and distributes packaging, shipping and warehouse supplies, software, work and promotional apparel, advertising specialties and other business products through direct mail, direct sales, telesales, dealers and the Internet to small businesses throughout the United States, Canada, the United Kingdom and France. The Company also markets and sells payroll services provided by a payroll services company on a private label basis as well as designs, embroiders and sells specialty apparel products through distributors and independent sales representatives to the promotional products/advertising specialty industry, primarily in the United States. During the past five years the Company has completed several acquisitions which are described below.

In December 1997, the Company acquired all of the outstanding common stock of Rapidforms, Inc. (“Rapidforms”) for consideration of approximately $82.1 million in cash (net of cash acquired). Rapidforms designs, produces and markets business forms, business supplies, holiday greeting cards and promotional products sold principally by direct mail to small businesses across the United States. As part of the Rapidforms acquisition, the Company also acquired Rapidforms’ wholly-owned subsidiary, Russell & Miller, Inc., which primarily sells in-store retail merchandising supplies.

In June 1998, the Company acquired all of the outstanding common stock of McBee Systems, Inc. and all of the assets of McBee Systems of Canada, Inc. (collectively “McBee”) for consideration of approximately $48.5 million in cash (net of cash acquired) and $12.6 million in Company common stock. McBee manufactures and markets checks and related products to small businesses in the United States and Canada through a dedicated field sales force.

In July 2000, the Company acquired all the outstanding shares of PremiumWear, Inc. (“PremiumWear”). The purchase price was $13.50 per share in cash and totaled approximately $39.0 million (net of cash acquired) for the shares plus debt assumed of $3.9 million. PremiumWear designs, embroiders and sells specialty apparel products through distributors and independent sales representatives to the promotional products/advertising specialty industry, primarily in the United States.

In March 2000, the Company invested $12.9 million in the common stock of privately held Advantage Payroll Services, Inc. (“Advantage”). In August 2001, the Company invested an additional $17.7 million in the common stock of Advantage. In July 2002, the Company invested $5.4 million in the common stock of Advantage. As a result of the foregoing investments, the Company owns 2,567,453 shares or approximately 19.6% of the Advantage common shares outstanding on a fully diluted basis. These investments were made in connection with a strategic alliance agreement with Advantage pursuant to which the Company sells Advantage’s payroll and payroll tax filing services to small businesses on a private-label basis. The investment has been classified as a long-term asset on the consolidated balance sheet because of its non-marketable nature.

The Company has identified five reportable segments. The first segment is “Direct Marketing-US” and represents those business operations that sell primarily printed products such as checks and business forms to small businesses through direct marketing in the United States. The second segment, “Direct Sales-US,” also sells primarily checks and business forms to small businesses; however, they sell through a direct sales force to the customer in the United States and, to a lesser extent, through distributors. The third segment, “Apparel”, utilizes independent sales representatives to market its specialty apparel products and to solicit orders from customers in the promotional products/advertising specialty industry. “Packaging and Display Products”, the fourth segment, primarily resells packaging and shipping supplies and retail signage marketed through a combination of direct marketing and direct selling efforts. The fifth segment, “International”, sells primarily

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printed products such as checks and business forms to small businesses in Europe and Canada through direct marketing, distributors or by directly selling to the customer.

Additional financial information regarding the segments, including the net sales and operating profit attributable to each of the Company’s segments for the last three fiscal years, is contained in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Products

The Company’s product lines consist of an extensive range of standardized imprinted manual and computer forms, custom forms, checks and check writing systems, envelopes, labels, greeting cards, signs, stationery and other printed products principally designed and imprinted in-house. Most forms are either specifically designed for individual lines of business or are of a type generally used by small businesses and professional offices. In addition, the Company distributes a variety of other business products commonly used by small businesses, including merchandising displays, presentation folders, promotional products, personalized apparel and software. These products are primarily sold through the Direct Marketing-U.S., Direct Sales-U.S. and International segments. The Company, primarily through its Packaging and Display Products segment, also distributes a variety of industrial shipping and packaging products including corrugated boxes, polyethylene bags, tape, labels and shrink wrap as well as retail packaging supplies such as bags, ribbons, gift wrap and bows. The Company’s full range of products is enhanced by high quality, fast delivery, competitive prices and extensive product guarantees.

The Company’s standard manual forms include billing forms, work orders, job proposals, purchase orders, invoices and personnel forms. Standard manual forms are designed to provide small businesses with the financial and other business records necessary to efficiently manage a business. The Company’s stationery line, including letterhead, envelopes and business cards, is available in a variety of formats and ink colors designed to provide small businesses with a professional image. Checks and check writing systems are designed to facilitate payments, the recording of transactional information and the posting of related bookkeeping entries.

The Company also offers a full line of printed products compatible with most accounting software packages commonly used by small businesses. The Company’s computer forms, including checks, billing forms, work orders, purchase orders and invoices, provide computer compatible records necessary to efficiently manage a business.

Promotional products, including labels, pricing tags, signage, advertising specialties, presentation folders and greeting cards, are designed to fulfill a variety of selling and marketing activities and to provide small businesses with a professional image. Additionally, the Company markets a line of filing systems, accountants’ supplies and appointment products specifically for use in small professional offices.

The majority of the Company’s standard products are imprinted to provide small businesses with a professional image. Standard imprint options include consecutive numbering, logos, customer names, addresses, and phone numbers. The Company also offers a wide range of custom printing alternatives and a custom logo design service.

The Company also sells the Company Colors^TM line of personalized apparel, including an array of jackets, shirts, pants, hats, sweatshirts, and uniforms commonly worn in the workplace. The Company Colors line may be embroidered with business names, logos, and employee names to provide a small business with a coordinated and professional image.

The Company distributes Form Magic^®, a proprietary form-filling software package, third-party accounting software including Peachtree’s One-Write Plus^® and Intuit’s Quickbooks^®, and a line of products designed by MySoftware Company. Software distributed by the Company is designed to perform a variety of the tasks

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required to manage and promote a small business, and is compatible with certain business forms and other printed products offered by the Company.

The Company, primarily through its Packaging and Display Products segment, sells packaging and shipping supplies, including bags and bag closures, bubble and polystyrene fill, wrapping materials, boxes, tapes and mailers, used principally by small wholesalers, manufacturers and distributors to package, distribute and market their products. The Company’s line of retail supplies, including signs, merchandising supplies, bags, ribbons, gift wrap and bows, are used by small retailers to display, market and package their products.

The Company, through its PremiumWear subsidiary, sells knit and woven sport shirts under the Munsingwear^®, Jockey^® and Field & Stream^® labels to promotional products/advertising specialty customers pursuant to licenses from Perry Ellis International, Inc., Jockey International and Field & Stream Licensing, respectively. The Company sells its Page & Tuttle^® brand of knit golf shirts and coordinated apparel to advertising specialty customers and golf course pro shops throughout the U.S. Distribution of PremiumWear products to customers is through a network of independent sales representatives. Also, PremiumWear receives commission income from representing other companies’ products to the promotional products industry.

The Company sells, principally through its Direct Sales-U.S. segment, payroll and payroll tax filing services to small businesses on a private-label basis pursuant to a distribution agreement with a payroll services company. The service is designed to manage payroll processing and compliance by calculating and submitting all payroll tax payments and deposits to the federal, state and local tax jurisdictions, fulfilling regulatory payroll reporting requirements and delivering payroll checks.

For a further discussion of the risks and uncertainties associated with customer preferences and the market for forms and related printed products and apparel, see “Certain Factors That May Affect Future Results” included in Part II, Item 7 to this Annual Report on Form 10-K.

Product Development and Research

Products sold by all of the Company’s segments are designed either by an in-house product development staff or are obtained from third-party sources. The Company relies upon direct field research with customers and prospects, focus groups, mail surveys, feedback from distributors, salespeople and representatives, and unsolicited suggestions to generate new product ideas. Product design efforts are accomplished or directed by Company design personnel who employ manual and computer design methods to create products. Product design efforts range from minor revisions of existing manual business forms to the creation of an entirely new line of products such as the Company Colors line of work and promotional apparel. Throughout the design process, the Company solicits comments and feedback from customers and prospects, and tests market acceptance through a variety of methods.

For a further discussion of the risks and uncertainties associated with the technological changes affecting future demand for the Company’s business forms and related products, see “Certain Factors That May Affect Future Results” included in Part II, Item 7 to this Annual Report on Form 10-K.

Sales and Marketing

The Company has four distinct channels of distribution. The Company’s primary channel, used by all segments except for PremiumWear, is direct mail, through which up to 100 million pieces of promotional advertising offering the Company’s products are delivered by mail to customers and prospective customers each year under the NEBS^®, RapidForms^®, McBee^®, Chiswick^®, Histacount^®, SYCOM^®, R&M Retail Merchandising Products^®, Visual Display Solutions^TM, Bags & Bows^TM, NCS National Clothier Supply^®, Main Street^®, Holiday Expressions^®, Ad Ideas^TM, ASH^®, NAPCO^®, Education Matters^®, Company Colors^TM, Business Envelopes^TM and SFL^TM brand names. The Company’s direct mail efforts are supplemented by the prospecting and account development efforts of an outbound telemarketing group.

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The Company’s success to date has largely been the result of effective direct marketing and the strength of its customer relationships. Targeted direct mail marketing in combination with focused telemarketing allows the Company to identify and penetrate geographically dispersed but, in the aggregate, significant markets. The Company targets small businesses with 100 or fewer employees within these markets with specialized promotions and products specifically designed to meet small business needs. In the direct mail channel, the Company’s promotional materials contain one or more order forms to be completed by the customer and either mailed, faxed or telephoned to the Company’s telesales and customer service group. The Company and its subsidiaries also maintain numerous Internet sites for promotion, customer education and order taking.

The Company’s promotional materials include several catalogs containing a comprehensive display of the Company’s forms and checks, work and promotional apparel, packaging supplies and retail merchandising supplies product offerings. In addition, the Company utilizes smaller catalogs focused on specific products or targeted to a specific small business segment, promotional circulars with samples, flyers, and inserts included with invoices, statements and product shipments. To a lesser extent, the Company relies on advertising space in magazines and post card packages to generate sales leads from prospective customers. The Company utilizes the United States or the local country postal service for distribution of most of its advertising materials.

The Company’s second principal channel of distribution, used primarily by the Direct Sales-U.S. and to a lesser extent by the Packaging and Display Products and International segments, is through a field sales organization of approximately 400 employees, primarily dedicated to marketing McBee brand checks and check writing systems, Chiswick brand packaging and shipping supplies, or Russell & Miller brand retail merchandising and display products. Initial order support, product reorders and routine service in the direct sales channel are provided by a network of customer service representatives located throughout the United States and Canada.

The principal focus of the McBee sales force in the Direct Sales-U.S. segment is to generate first-time buyers for check and check-writing system products. An additional focus for the McBee sales force is selling payroll services. Prospective customer leads are generated for the McBee sales force under referral arrangements with accountants servicing small businesses and commercial banks representing approximately 26,000 geographically dispersed branch offices. The McBee sales effort typically targets small business customers with fewer than 10 employees. The principal focus of the Chiswick and Russell & Miller sales forces in the Packaging and Display Products segment is to develop high-potential customer relationships initially established through the direct mail channel. The Chiswick and Russell & Miller sales efforts typically support businesses with more than 100 employees or retail chains with geographically dispersed store locations.

The Company’s third principal distribution channel is a network of independent dealers used primarily by the Direct Sales-U.S. segment. The Company distributes a full line of private label standard and custom printed products, including manual and computer forms, checks, greeting cards and labels through this dealer network. The Company’s approximately 26,000 independent dealers typically include local printers and print distributors, office supply dealers, ad specialty dealers, computer retailers and computer systems value-added resellers.

The Company’s PremiumWear subsidiary represents the fourth channel of distribution by utilizing independent sales representatives to market its products and to solicit orders from customers. All products are distributed to customers through PremiumWear’s distribution facility in Tennessee.

The Company also has entered into alliance marketing agreements with third-party vendors to offer payroll, accounting, workers compensation and direct marketing services to the Company’s customers. Revenue from these alliances is generated in the form of royalties and commissions received from the third-party vendors.

The Company believes that its sophisticated and extensive marketing databases, customer/prospect lists and referral sources used by most segments constitute a competitive advantage. The Company is able to select names

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and plan promotions based on a variety of attributes including status as a customer or prospect, line of business, product purchase history, purchase frequency or purchase dollar volume. With this data, the Company is able to create and deliver cost-effective marketing programs to small businesses through direct mail, direct sales, outbound telemarketing, the Internet or the dealer channel.

For a further discussion of the risks and uncertainties associated with the small business market and the Company’s various channels see “Certain Factors That May Affect Future Results” included in Part II, Item 7 to this Annual Report on Form 10-K.

Raw Materials, Production and Distribution

The Company’s production and distribution systems for all segments are designed to process a high volume of small dollar value orders on a cost-effective basis. The production and procurement of printed product base stock is driven by forecasts of demand for the Company’s printed products. The Company produces semi-finished base business forms, check stock and related products in long runs on high-speed, roll-fed presses from bond and carbonless papers. The bond and carbonless papers used by the Company to produce base stock are purchased from a limited number of vendors at competitive prices. The Company also purchases printed base stock from a number of industry sources at competitive prices.

In response to a customer order for a printed product, the Company’s base printed products are personalized with a variety of imprint options including customer name, address, phone number, consecutive numbering and logo. The Company operates equipment specifically designed to meet the demands of short-run personalized printing. Typesetting and imprinting of customer headings are accomplished with automated typesetting and layout systems, platemaking systems, letter presses, offset presses and digital presses. In addition, the Company utilizes manual and semi-automatic bindery equipment. A number of the Company’s imprinting presses have been designed internally or substantially modified to meet the short-run demands of small businesses. These specialized presses allow the Company to produce small-order quantities with greater efficiency than would be possible with stock equipment available from typical printing press equipment suppliers.

Due to business primarily from within the Packaging and Display Products segment, the Company has significant revenue generated by the sale of stock business products produced by third parties, but shipped to customers by the Company, including industrial packaging and warehouse supplies, and retail supplies. The Company principally utilizes a “pick and pack” operation to aggregate stock products from warehoused inventory into distinct order groups and to package these order groups for shipment to the customer. The Company’s stock business products are obtained from a large number of suppliers at competitive prices. In addition, the Company relies on a limited number of suppliers to produce and drop-ship products directly to Company customers. The Company believes that alternative sources are generally available for products purchased from third-party vendors, and is continually evaluating its sourcing of these third-party supplied products. PremiumWear, which comprises the Apparel segment, primarily sources its product from “full package” manufacturers outside the United States. There currently is reasonable availability of raw materials, manufacturing and assembly capacity for the product lines in this segment.

The Company has no significant backlog of orders. The Company’s objective is to produce and ship product as expeditiously as possible following receipt of a customer’s order. During fiscal year 2002, approximately 70% of printed products were produced and shipped within one day and approximately 90% within four days of order. The Company’s stock business products are routinely shipped within 24 hours of receipt of a customer order. Approximately 69% of apparel products were produced and shipped within one day and substantially all within five days of order.

To facilitate expeditious production and shipment of product, the Company maintains inventories of unprinted paper and in process apparel ($1.7 million at June 29, 2002), and partially printed business forms, packaging, shipping and retail supplies, work and promotional apparel and related business products ($32.4 million at June 29, 2002).

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The Company ships its products to U.S. customers primarily by United Parcel Service of America, Inc. The Company uses parcel post or overnight delivery services for distribution of the remainder of its products to customers in the U.S. and comparable providers for its international businesses.

For a further discussion of the risks and uncertainties associated with the Company’s reliance on certain individual third-party vendors to provide raw materials and services critical to the Company’s operation, see “Certain Factors That May Affect Future Results” included in Part II, Item 7 to this Annual Report on Form 10-K.

Competition

The small business forms and supplies industry is highly competitive. The Company believes that it is well positioned in the small business marketplace, with a reputation for reasonable prices, high quality and dependable service.

The Company’s primary competitors for printed products are the local printers, business forms dealers, contract stationers and office products superstores located throughout each of its geographic markets. Local printers have an advantage of physical proximity to customers, but generally do not have the capability of producing a broad array of products, particularly those having a complex construction. In addition, most local printers lack the economies of scale to produce a small order for a single customer on a cost-effective basis. General purpose, preprinted business forms offered by stationers and office product superstores are typically price competitive with the Company’s forms, but lack the design and functionality for specific lines of business and the custom printing options available with the Company’s products. The Company’s principal competitors for stock business products and packaging and display supply products are the numerous local and regional business supplies jobbers, distributors and retailers throughout the United States and Canada.

At present, the Company is aware of more than twenty major independent companies or divisions of larger companies in its geographic markets offering printed products and business supplies to small businesses through direct mail, distributors, or a direct sales force. The primary competitive factors influencing a customer’s purchase decision are product guarantees, breadth of product line, speed of delivery, product quality, price and customer service. The Company believes it is the leading direct marketer of business forms, checks and related printed products to the very small business market in the United States, Canada and the United Kingdom. The Company defines the very small business market as businesses with fewer than 20 employees.

The Company’s PremiumWear subsidiary operates in the promotional products/advertising specialty marketplace for apparel which has become increasingly competitive and is characterized by a number of broad-line companies. The principal competitive features are pricing, styling, quality (both in material and production), product availability and customization services such as embroidery and screen printing.

For a further discussion of the risks and uncertainties associated with the competitive landscape for the Company’s products, see “Certain Factors That May Affect Future Results” included in Part II, Item 7 to this Annual Report on Form 10-K.

Employees

The Company had 3,611 full and part-time employees at June 29, 2002. The Company believes its relationship with its employees to be satisfactory.

Environment

To the Company’s knowledge, no material action or liability exists on the date hereof arising from the Company’s compliance with federal, state and local statutes and regulations relating to protection of the environment.

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ITEM 2.    PROPERTIES

The Company’s principal executive offices are located in Groton, Massachusetts. The Company’s principal operating facilities consist of manufacturing, administrative and warehouse facilities and are located in the United States, Canada, the United Kingdom and France. Of all of its operating facilities, the Company owns approximately 801,000 square feet in the aggregate in Flagstaff, Arizona, Groton and Townsend, Massachusetts, Maryville, Missouri, Peterborough, New Hampshire, Thorofare, New Jersey, Midland, Ontario and Chester, England, and leases approximately 747,000 square feet in the aggregate in Santa Fe Springs, California, Sudbury, Massachusetts, Lithia Springs, Georgia, Athens, Ohio, Minnetonka, Minnesota, Clarksville, Tennessee, Chateau-Renault, France and in approximately 51 locations in the United States and Canada for sales offices.

The Company believes its existing production and office facilities are adequate for its present and foreseeable future needs.

ITEM 3.    LEGAL PROCEEDINGS

On June 30, 2000, a lawsuit entitled “Perry Ellis International, Inc. v. PremiumWear, Inc.”, was filed in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida. The case has been removed to federal court and is currently pending in the United States District Court for the Southern District of Florida. On April 11, 2001, the court granted the plaintiff’s motion to amend its complaint to add the Company as a co-defendant. The amended complaint relates to a Right of First Refusal Agreement dated as of May 22, 1996 (the “RFR Agreement”) between the plaintiff and PremiumWear, Inc., and to the Company’s acquisition of all the outstanding shares of PremiumWear in July 2000. In the amended complaint, the plaintiff alleges breach of the RFR Agreement and breach of an implied covenant of good faith and fair dealing against PremiumWear as a result of PremiumWear’s alleged failure to notify the plaintiff of certain discussions between PremiumWear and the Company preceding the Company’s agreement to purchase all of the outstanding shares of PremiumWear. The amended complaint also alleges that the Company tortiously interfered with the plaintiff’s rights under the RFR Agreement by allegedly inducing PremiumWear to breach its obligations to the plaintiff under the RFR Agreement. The plaintiff is seeking damages in an unspecified amount, attorneys’ fees, interest and costs. The Company believes the allegations in the amended complaint are without merit and intends to defend the lawsuit vigorously.

On July 24, 2002, a class action lawsuit entitled “OLDAPG, Inc. v. New England Business Service, Inc.” was filed in the Court of Common Pleas of the Ninth Judicial Circuit in and for Charleston County, South Carolina. The named plaintiff in the lawsuit seeks to represent a class consisting of all persons who allegedly received facsimiles containing unsolicited advertising from the Company in violation of the Telephone Consumer Protection Act of 1991 (the “TCPA”). The plaintiff is seeking statutory damages in the amount of $500.00 per individual violation, which amount can be trebled to $1,500.00 for each violation found to have been “willful and knowing”. The plaintiff is also seeking injunctive relief with respect to further violations of the TCPA and attorneys’ fees and costs. The Company believes that it has valid defenses to the claims asserted in the complaint and intends to defend the lawsuit vigorously.

From time to time the Company is involved in other disputes and/or litigation encountered in the ordinary course of its business. The Company does not believe that the ultimate impact of the resolution of such other outstanding matters will have a material effect on the Company’s business, operating results or financial condition.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of stockholders during the fourth quarter of fiscal 2002.

ITEM 4.1    EXECUTIVE OFFICERS OF THE REGISTRANT

The Company’s executive officers are elected to office by the Board of Directors at the first board meeting following the Annual Meeting of Stockholders or at other board meetings as appropriate, and hold office until the first board meeting following the next Annual Meeting and until a successor is chosen. Information regarding the Company’s executive officers is presented below.

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Robert J. Murray, age 61, joined the Company in 1995, and he has served as Chairman of the Board and Chief Executive Officer of the Company since that date. From 1995 to July 31, 2002 he also served as President of the Company. Mr. Murray retired from The Gillette Company, a diversified consumer products company, in 1995, having been with Gillette for more than 34 years. Mr. Murray served in a variety of capacities during his career at Gillette, and during the four years immediately preceding his retirement, he was Executive Vice-President, North Atlantic Group of Gillette. Mr. Murray has been a director of the Company since 1991 and he is also a director of LoJack Corporation, Allmerica Financial Corporation and the Delhaize Group.

Richard T. Riley, age 46, joined the Company in 1997 in connection with the Company’s acquisition of Rapidforms, Inc., and has served as President and Chief Operating Officer of the Company since August 1, 2002. Prior to that he served as a Senior Vice President of the Company from 1998 to July 31, 2002, and as President—NEBS Direct Marketing from 2001 to July 31, 2002, as President—Integrated Marketing Services from 2000 to 2001, and as President—Rapidforms from 1998 to 2000. He served as President of Rapidforms, Inc. from 1992 to 2001, and during 1998 he held the additional office of Vice President of the Company.

George P. Allman, age 60, joined the Company in 1996, and he has served as Senior Vice President and President—Diversified Operations since 1998. Prior to that he served as Vice President—Diversified Operations from 1996 to 1998, and as Vice President—Retail Sales and Operations during 1996.

Jeffrey W. Angus, age 47, joined the Company in 1995, and he has served as Senior Vice President, Information Systems, since 1998. Prior to that, he served as Vice President, Information Systems from 1996 to 1998.

David E. Berg, age 45, joined the Company in 2000 in connection with the Company’s acquisition of PremiumWear, Inc., and he has served as Senior Vice President and President—PremiumWear since that date. Mr. Berg has served as President of PremiumWear, Inc. since 1997. Prior to that, he served as PremiumWear’s Executive Vice President of Sales and Marketing from 1995 to 1997. Mr. Berg has also served as PremiumWear’s Chief Executive Officer since 1999, and he served as Chief Operating Officer from 1996 to 1999.

John F. Fairbanks, age 41, joined the Company in 1994, and he has served as Senior Vice President and President—Chiswick since 1998. Prior to that, he served as Vice President and Chief Financial Officer from 1996 to 1998, as Vice President and Corporate Controller during 1996, and prior to that in different capacities in corporate administration.

Daniel M. Junius, age 50, joined the Company in 1998, and he has served as Executive Vice President, Chief Financial Officer and Treasurer since August 1, 2002. Prior to that he served as Senior Vice President, Chief Financial Officer and Treasurer from 1998 to July 31, 2002. Prior to joining the Company, he served as Vice President—Finance and Chief Financial Officer of Nashua Corporation, a supplier of specialty imaging products and services, from 1995 to 1998.

Steven G. Schlerf, age 50, joined the Company in 1979, and he has served as Senior Vice President—Manufacturing and Technical Operations since 1998. Prior to that he served as Vice President—Manufacturing and Technical Operations from 1996 to 1998, and prior to that in a variety of capacities in manufacturing and operations.

Robert D. Warren, age 51, joined the Company in 1996, and he has served as Senior Vice President and President-NEBS Direct Marketing since August 1, 2002. Prior to that he served as Senior Vice President and President—International from 2000 to July 31, 2002, as Senior Vice President—Business Management and Development from 1998 to 2000, and as Vice President—Business Management and Development from 1996 to 1998.

Hedwig V. Whitney, age 51, joined the Company in 2002, and she has served as Senior Vice President, Human Resources since that date. Prior to joining the Company, Ms. Whitney served as Senior Vice President and Director Human Resources for Fidelity Investments Retirement Services Company, a provider of 401(k) retirement plan services, from 1997 to 2000, and as Executive Vice President for Human Resources at BayBanks, a regional bank, from 1991 to 1996.

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PART II

ITEM  5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Common Stock

The Company’s Common Stock is listed and traded on the New York Stock Exchange under the symbol “NEB”. For the fiscal periods indicated, the high and low sales prices for shares of the Company’s Common Stock as reported on the New York Stock Exchange—Composite Transactions Reporting System were as follows:

Fiscal 2002	High	Low	Fiscal 2001	High	Low
1st Quarter	21.37	15.87	1st Quarter	22.00	16.19
2nd Quarter	19.99	16.58	2nd Quarter	21.38	14.69
3rd Quarter	26.00	18.51	3rd Quarter	21.87	16.31
4th Quarter	29.30	23.25	4th Quarter	19.45	16.90

As of August 30, 2002, there were 572 stockholders of record, and the Company believes that as of such date there were approximately 6,000 beneficial owners of the Company’s Common Stock, based on information provided by the Company’s transfer agent. Information with respect to dividends paid on the Company’s Common Stock during the past two fiscal years is shown in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

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ITEM  6. SELECTED FINANCIAL DATA

FIVE YEAR SUMMARY

(In thousands, except per share amounts and Other Statistics)

For the fiscal year ended	June 29, 2002(A)		June 30, 2001(B)		June 24, 2000(C)		June 26, 1999(D)		June 27, 1998(E)
Income Statement Statistics
Net sales	$557,539		$586,091		$523,053		$503,933		$380,189
Income before income taxes	40,994		30,726		45,697		43,742		41,405
Percent of sales	7.4	%	5.2	%	8.7	%	8.7	%	10.9	%
Provision for income taxes	15,742		11,983		16,339		17,291		16,471
Percent of income before income taxes	38.4	%	39.0	%	35.8	%	39.5	%	39.8	%
Income before the effect of a change in accounting principle	25,252		18,743		29,358		26,451		24,934
Percent of sales	4.5	%	3.2	%	5.6	%	5.3	%	6.6	%
Percent of beginning stockholders’ equity	22.2	%	14.9	%	24.2	%	23.1	%	30.9	%
Per diluted common share	1.94		1.43		2.12		1.81		1.77
Net income	22,460		18,743		29,358		26,451		24,934
Percent of sales	4.0	%	3.2	%	5.6	%	5.3	%	6.6	%
Percent of beginning stockholders’ equity	19.7	%	14.9	%	24.2	%	23.1	%	30.9	%
Per diluted common share	1.73		1.43		2.12		1.81		1.77
Dividends per common share	.80		.80		.80		.80		.80
Balance Sheet Statistics
Current assets	$122,559		$138,017		$108,216		$  97,903		$100,009
Current liabilities	66,086		68,606		52,254		45,775		50,677
Working capital	56,473		69,411		55,962		52,128		49,332
Current ratio	1.9		2.0		2.1		2.1		2.0
Total assets	368,922		377,684		323,671		300,262		307,577
Long-term debt	147,900		179,168		133,500		128,000		141,000
Obligations under capital lease	1,560		2,873		2,429		0		0
Stockholders’ equity	136,720		113,903		125,729		121,529		114,505
Diluted weighted average shares outstanding	13,006		13,143		13,868		14,640		14,106
Cash Flow Statistics
EBITDA (F)	$81,316		$73,183		$80,043		$77,081		$  61,194
Percent of sales	14.6	%	12.5	%	15.3	%	15.3	%	16.1	%
Free cash flow (G)	55,452		28,735		32,047		28,742		28,203
Net cash provided by operating activities	70,817		55,571		53,104		45,608		41,478
Net cash used by investing activities	(32,985	)	(65,783	)	(33,168	)	(16,125	)	(144,207	)
Net cash provided (used) by financing activities	(38,959	)	13,958		(20,086	)	(35,619	)	105,412
Capital expenditures	(15,365	)	(26,836	)	(21,057	)	(16,866	)	(13,275	)
Depreciation	18,333		16,464		14,168		12,432		9,296
Amortization	8,542		12,515		11,553		12,413		5,922
Other Statistics
Number of employees	3,611		3,819		3,779		3,727		3,738
Number of stockholders	6,000		6,000		6,000		6,200		6,000
Number of 24-month customers	2,511,000		2,650,000		2,602,000		2,526,000		2,507,000
Facilities (in square feet)	1,548,000		1,613,000		1,659,000		1,531,000		1,594,000

(A) Included in the 2002 results are a $2.8 million impairment charge relating to a change in accounting principle, or $.21 per diluted share, to write off goodwill relating to the Company’s European business within its International business segment and a $1.1 million net after tax charge, or $.08 per diluted share, related to restructuring and integration activities.

(B) Included in the 2001 results is a $7.3 million net after tax charge, or $.55 per diluted share, related to restructuring and integration activities.

(C) Included in the 2000 results is a $.9 million tax benefit, or $.07 per diluted share, from a favorable letter ruling effecting prior years’ taxes.

(D) Included in the 1999 results is a $.3 million pretax gain, or $.01 per diluted share, from the settlement of the Company’s Canadian defined benefit pension plan.

(E) Included in the 1998 results is a $.9 million pretax gain, or $.04 per diluted share, from the settlement of the Company’s U.S. defined-benefit pension plan and curtailment of the Company’s Canadian defined-benefit pension plan.

(F) Earnings before interest expense, taxes, depreciation, amortization and change in accounting principle.

(G) Cash provided by operating activities less capital expenditures.

See the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

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ITEM  7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

New England Business Service, Inc. (the “Company”) was founded in 1952, incorporated in Massachusetts in 1955 and reincorporated in Delaware in 1986. The Company designs, produces and distributes business forms, checks, envelopes, labels, greeting cards, signs, stationery and related printed products and distributes packaging, shipping and warehouse supplies, software, work and promotional apparel and other business products through direct mail, direct sales, telesales, dealers and the Internet to small businesses throughout the United States, Canada, the United Kingdom and France. During the past five years the Company has completed several acquisitions, the most recent of which is described below. The Company also markets and sells payroll services provided by a payroll services company on a private label basis to small businesses in the United States as well as designs, embroiders and sells specialty apparel products through distributors and independent sales representatives to the promotional/advertising specialty industry, primarily in the United States.

In July 2000, the Company acquired all the outstanding shares of PremiumWear, Inc. The purchase price was $13.50 per share in cash and totaled approximately $39.0 million (net of cash acquired) for the shares plus debt assumed of $3.9 million. PremiumWear designs, embroiders and sells specialty apparel products through distributors and independent sales representatives to the promotional products/advertising specialty industry, primarily in the United States.

The Company’s fiscal year ends the last Saturday of June. The Company’s results for fiscal years 2000 and 2002 encompassed 52 weeks; fiscal year 2001 encompassed 53 weeks.

The Company has identified five reportable segments. The first segment is “Direct Marketing-US” and represents those business operations that sell primarily printed products such as checks and business forms to small businesses through direct marketing in the United States. The second segment, “Direct Sales-US,” also sells primarily checks and business forms to small businesses; however, they sell through a direct sales force to the customer in the United States and, to a lesser extent, through distributors. The third segment, “Apparel”, utilizes independent sales representatives to market its specialty apparel products and to solicit orders from customers in the promotional products/advertising specialty industry. “Packaging and Display Products”, the fourth segment, primarily resells packaging and shipping supplies and retail signage marketed through a combination of direct marketing and direct selling efforts. The fifth segment, “International”, sells primarily printed products such as checks and business forms to small businesses in Europe and Canada through direct marketing, distributors or by directly selling to the customer.

Any sentence followed by an asterisk (*) in this section constitutes a forward-looking statement which reflects the Company’s current expectations. There can be no assurance the Company’s actual performance will not differ materially from those projected in such forward-looking statements due to the important factors described in the section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations titled “Certain Factors That May Affect Future Results”.

Results of Operations

2002 versus 2001

Net sales decreased $28.6 million or 4.9% to $557.5 million for fiscal year 2002 from $586.1 million in fiscal year 2001. The comparison for all segments is affected by a 52-week fiscal year in 2002 as compared to a 53-week fiscal year in 2001. The sales decrease by segment was comprised of a $17.3 million decrease in Direct Marketing-US, a $6.3 million decrease in Apparel and a $5.5 million decrease in Packaging and Display Products, which management believes are principally attributable to an economic slowdown. The $1.6 million decrease in International is due to the effect of exchange rate changes. These decreases were partially offset by an increase of $2.1 million in the sales of the Company’s Direct Sales-US segment due to expanding sales presence and bank relationships.

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For fiscal year 2002, cost of sales declined to 43.4% of net sales from 43.9% in fiscal year 2001. The Company’s cost management strategies and the effect of actions announced/taken in all segments offset the impact of the decrease in sales on cost of sales. Cost of sales as a percent of sales is expected to remain relatively consistent with fiscal year 2002 during fiscal year 2003.*

Selling and advertising expense decreased to 33.8% of sales in fiscal year 2002 as compared to 34.3% of sales in fiscal year 2001. The Company’s adoption of SFAS 142, which decreased the amortization charge in the current fiscal year, positively impacted selling and advertising expense. This decrease was partially offset by a slight increase in the proportion of sales coming from the Direct Sales-US segment, which has a higher selling and advertising expense as a percentage of sales than in the Company’s other business segments due to its selling structure depending on a direct sales force. Selling and advertising expense as a percentage of sales is expected to be slightly lower during fiscal year 2003.*

General and administrative expense decreased to 12.9% of sales in fiscal year 2002 from 13.1% of sales in fiscal year 2001. General and administrative expenses in fiscal year 2001 included an impairment charge of $1.7 million for the write-off of capitalized internal-use software related to an enterprise resource planning system the Company no longer plans to implement. The Company also recognized an impairment charge in fiscal year 2001 of $.5 million for the write-off of its investment in a privately owned web hosting company. These charges are included in general and administrative expenses. Excluding the asset impairment write-off, general and administrative expense as a percentage of sales for fiscal year 2001 approximated 12.8%, which is consistent with fiscal year 2002. General and administrative expense as a percent of sales is expected to be slightly higher during fiscal year 2003.*

During fiscal year 2001, the Company undertook two separate restructuring actions. The first resulted in a restructuring charge of $3.5 million in fiscal year 2001 and an additional charge of $1.0 million in fiscal year 2002 to provide for costs primarily associated with the Company’s decision to more closely align its direct marketing and direct sales activities. As part of the restructuring program, the McBee US headquarters was relocated from Parsippany, New Jersey to the existing RapidForms facility in Thorofare, New Jersey. In addition, the McBee manufacturing plant in Damascus, Virginia was closed and a portion of leased warehousing space occupied by Chiswick in Sudbury, Massachusetts was vacated. In Canada, the McBee sales and marketing organizations were combined with NEBS Direct Marketing and are operating under the NEBS name. Approximately 140 employees were affected by the restructuring either through elimination of their positions or relocation.

The second restructuring action resulted in the Company recording an additional restructuring charge in fiscal year 2001 of $3.6 million and a credit of $.3 million in fiscal year 2002 to provide for costs associated with the Company’s decision to eliminate excess capacity by closing a manufacturing facility in Ogden, Utah and a leased distribution facility in Sudbury, Massachusetts, along with other actions to reduce the workforce in various locations. Approximately 175 employees were affected by the restructuring, either through elimination of their positions or relocation. The following is a table of the charges incurred and the cash paid pursuant to these actions (in thousands of dollars):

	First Restructuring						Second Restructuring
	Employee termination benefit costs			Facility closure costs			Employee termination benefit costs			Facility closure costs			Total
Balance, June 24, 2000	$	—		$	—		$	—		$	—		$	—
Charge/(credit) for the period		2,185			1,315			2,900			745			7,145
Payments for the period		(1,328	)		(643	)		(509	)		—			(2,480	)
Balance June 30, 2001		857			672			2,391			745			4,665
Charge/(credit) for the period		(272	)		1,295			(369	)		46			700
Payments for the period		(585	)		(929	)		(1,856	)		(340	)		(3,710	)
Balance, June 29, 2002	$	—		$	1,038		$	166		$	451		$	1,655

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The activities related to all restructuring actions identified above are anticipated to be completed by the Company during fiscal year 2003 with the exception of lease payments, which may extend beyond this time frame.*

Interest expense increased to 2.4% of sales in fiscal year 2002 from 2.3% of sales in fiscal year 2001. The increase is the result of additional debt, primarily from an additional investment in Advantage Payroll Services, Inc. in the first quarter 2002 and significant additional treasury share repurchases in the third quarter of fiscal year 2001 both of which increased the Company’s average debt outstanding in fiscal year 2002 as compared to fiscal year 2001.

The provision for income taxes as a percentage of pre-tax income decreased to 38.4% in fiscal year 2002 from 39.0% in fiscal year 2001due to a decrease in the Company’s overall effective state tax rate.

The Company will continue to seek opportunities to acquire companies, businesses and product lines to enhance the Company’s competitive position in the marketplace or to gain access to new markets, products, competencies or technologies.* In addition, the Company will continue to seek opportunities to enhance the cost structure of the Company, to improve operating efficiencies, and to fund investments in support of the Company’s strategies.*

2001 versus 2000

Net sales increased $63.0 million, or 12.1%, to $586.1 million for fiscal year 2001 from $523.1 million in fiscal year 2000. The comparison for all segments is affected by a 53-week fiscal year in 2001 as compared to a 52-week fiscal year in 2000. The sales results included a $7.7 million increase associated with the Direct Sales-US and Packaging and Display segments. Also included in the year-to-year consolidated increase are $56.9 million in sales from the PremiumWear, Inc. operation, which makes up the Apparel segment, purchased in July 2000 and hence not part of the comparable figures for fiscal year 2000. These increases were offset by a slight decline of $1.6 million in sales of the Company’s Direct Marketing-US and International segments.

For fiscal year 2001, cost of sales increased to 43.9% of sales from 40.7% in fiscal year 2000. The increase was due primarily to the addition of PremiumWear, which incurs a higher cost of sales as a percentage of sales than the Company’s other businesses. Excluding PremiumWear, cost of sales was 40.6% of sales, which is consistent with fiscal year 2000. In fiscal 2001, increased handling charges and freight discounts and improvement in plant efficiencies were offset by increases in material costs year-to-year due to a shift in product sales towards outsourced products.

Selling and advertising expense decreased to 34.3% of sales in fiscal year 2001 from 35.5% of sales in fiscal year 2000. The year to year decrease was due primarily to the addition of PremiumWear, which has a significantly lower selling and advertising expense as a percentage of sales than in the Company’s other businesses.

General and administrative expense declined as a percentage of sales from 13.4% of sales in fiscal year 2000 to 13.1% in fiscal year 2001. The decrease was due to the lower general and administrative expense as a percentage of sales incurred by PremiumWear. Additionally, during the year, the Company recognized an impairment charge of $1.7 million for the write-off of capitalized internal-use software related to an enterprise resource planning system the Company no longer plans to implement. The Company also recognized an impairment charge of $.5 million for the write-off of its investment in a privately-owned web hosting company. These charges are included in general and administrative expenses. Excluding the asset impairment write-off and the effect of PremiumWear, general and administrative expense as a percentage of sales for fiscal year 2001 approximated 16.4%. Without considering the effect of PremiumWear, general and administrative expense as a percentage of sales would have climbed due to increased investment in information systems and general corporate expenses.

Interest expense increased to 2.3% of sales in fiscal year 2001 from 1.7% of sales in fiscal year 2000. The increase is the result of additional debt, primarily from the investment in Advantage Payroll Services, Inc. in March 2000, the PremiumWear acquisition in July 2000, additional treasury share repurchases, and higher interest rates in fiscal 2001.

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The provision for income taxes as a percentage of pre-tax income increased to 39.0% in fiscal year 2001 from 35.8% in fiscal year 2000. The lower fiscal year 2000 provision was due to a favorable letter ruling affecting prior years’ state tax rates.

Critical Accounting Policies

The Company’s discussion and analysis of its financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenues and expenses. On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, bad debts, inventories, intangible assets, and incomes taxes. Estimates and judgments are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant estimates and judgments used in preparation of its consolidated financial statements.

Revenue is recognized on product sales at the point in time when persuasive evidence of an arrangement exists, the price is fixed and final, delivery has occurred and there is reasonable assurance of collection of the sales proceeds. The Company generally obtains purchase authorizations from its customers for a specified amount of product at a specified price and considers delivery to have occurred at the point of shipment. While the Company does provide its customers with a right of return, revenue is not deferred. Rather, a reserve for sales returns is provided based on significant historical experience.

Asset valuation includes assessing the recorded value of certain assets, including accounts receivable, inventories, property, plant and equipment, investments, capitalized software, goodwill, deferred mail costs and intangible and other assets. Asset valuation is governed by various accounting principles, including Statement of Financial Accounting Standards (“SFAS”) No. 121, “Accounting for the Impairment of Long-Lived Assets and For Long-Lived Assets to Be Disposed Of” (to be superceded in fiscal year 2003 by SFAS No. 144 “Accounting for the Impairment of Disposal of Long-Lived Assets), SFAS No. 141, “Business Combinations”, SFAS No. 142 “Goodwill and Other Intangible Assets” and Accounting Research Bulletin No. 43, among others. Management uses a variety of factors to assess valuation depending on the asset. For example, accounts receivable are evaluated based upon an aging schedule. The recoverability of inventories is based upon the types and levels of inventory held. Property, plant and equipment, capitalized software and intangible and other assets are evaluated utilizing various factors, including the expected period the asset will be utilized, forecasted cash flows, the cost of capital and customer demand. Investments are evaluated for impairment based upon market conditions and the viability of the investment. Changes in judgments on any of these factors could impact the value of the asset.

As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each jurisdiction in which we operate that imposes a tax on income. This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance, we must include an expense within the tax provision in the consolidated statements of income. In the event that actual results differ from these estimates, our provision for income taxes could be materially impacted.

New Accounting Pronouncements

In the first quarter of fiscal year 2002, the Company adopted SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 141 eliminates the pooling-of-interests

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method of accounting for business combinations and modifies the application of the purchase accounting method. SFAS No. 142 eliminates the requirement to amortize goodwill and indefinite-lived intangible assets, addresses the amortization of intangible assets with a defined life and addresses the impairment testing and recognition for goodwill and intangible assets.

As of July 1, 2001, the Company had identified those intangible assets that remain separable under the provisions of SFAS 141 and those that are to be included in goodwill. In applying SFAS 142, the Company completed the transitional intangible asset impairment test. As a result, the Company recognized an impairment charge to write off goodwill in the amount of $2.8 million relating to its European business within its International business segment.

In July 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supercedes SFAS No. 121 on the same topic and the accounting and certain reporting provisions of Accounting Principles Board (“APB”) Opinion 30, “Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business (as defined in that Opinion). This Statement also amends Accounting Research Bulletin (“ARB”) 51, “Consolidated Financial Statements,” to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. The Company will adopt this Statement in fiscal 2003. Management believes that the impact of this Statement on its consolidated financial statements will not be material.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS 146 addresses the financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues ask Force Consensus No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit and Activity(including Certain Costs Incurred in a Restructuring)”. The Company will adopt this Statement in fiscal 2003. Management believes that the impact of this Statement on its consolidated financial statements will not be material.

In the first quarter of fiscal 2001, the Company adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This adoption resulted in an initial credit of $.4 million (net of tax) to Accumulated Other Comprehensive Loss.

In the fourth quarter of fiscal 2001, the Company adopted Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 101 “Revenue Recognition”. This SAB was intended to clarify certain elements of revenue recognition. It has been supplemented by a “frequently asked questions” document.

In the fourth quarter of fiscal 2001, the Company adopted the Emerging Issues Task Force Consensus No. 00-10, “Accounting for Shipping and Handling Fees and Costs”. The consensus states that a seller of goods should classify fees attributable to shipping and handling in the income statement as revenues. The Company had previously netted such fees against shipping and handling costs in the cost of sales line. In fiscal years 2001 and 2000, approximately $42.0 million and $37.7 million, respectively, which previously would have reduced cost of sales, have been reclassified as revenues. There was no effect on reported net income.

Liquidity and Capital Resources

Cash provided by operating activities amounted to $70.8 million in fiscal year 2002, approximately $15.2 million, or 27.3%, higher than the $55.6 million provided in fiscal year 2001. This increase in cash provided by operating activities was due to working capital changes, primarily inventory reductions, being a source of cash in fiscal 2002 as compared to those changes being a use of cash in fiscal 2001. In fiscal year 2001, cash provided by operating activities increased $2.5 million, or 4.7%, from the $53.1 million dollars provided in fiscal year 2000

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due principally to a $10.6 million decrease in net income and a $5.5 million increase in non-cash depreciation, amortization expense and asset impairments, $7.1 million for exit costs and $.5 million in the amount of cash provided by working capital and other non-cash adjustments to reported net income.

Working capital as of June 29, 2002 amounted to $56.5 million, including $6.1 million of cash and short-term investments. This represents a decrease of $12.9 million from the working capital balance of $69.4 million, including cash and short-term investments of $7.2 million, at the end of fiscal year 2001. The decrease in working capital is primarily the result of inventory reductions in the Apparel segment. The Company does not expect to experience any significant change to the amount of working capital investment required to support its business during fiscal year 2003.* Working capital increased in fiscal year 2001 by $13.5 million, principally due to the effect of the PremiumWear, Inc. acquisition in July 2000.

Capital expenditures of $15.4 million in fiscal year 2002 represented an $11.4 million decrease from the $26.8 million expended in fiscal year 2001 and a $5.7 million decrease from the $21.1 million expended in fiscal year 2000. Capital expenditures over the three-year period have included significant investments in the purchase, development and implementation of information systems infrastructure, operating systems and the Company’s website and manufacturing-related equipment. Capital expenditures in fiscal year 2001 included over $5.0 million of investments in information systems and embroidery and distribution capacity for the Company’s acquired PremiumWear business. The Company expects capital expenditures to approximate $16.0 million in fiscal year 2003, which will include additional planned improvements in information systems capabilities and investments to enhance manufacturing capability.*

In August 2001, the Company acquired 1.1 million shares of common stock of Advantage Payroll Services, Inc. (“Advantage”) for $17.7 million. Combined with the Company’s purchase in March 2000 of 1.1 million Advantage common shares for $12.9 million, the Company had invested a total of $30.6 million for 2.2 million Advantage common shares as of June 29, 2002.

The Company also holds a common stock purchase warrant, pursuant to which it has the right to purchase up to 1.1 million Advantage common shares, at a purchase price of $12.67 per share subject to the terms and conditions set forth in the warrant. In July 2002, the Company exercised the warrant in part and purchased .4 million Advantage common shares for an aggregate purchase price of $5.4 million. As a result of the foregoing investments, the Company owns 2.6 million shares or approximately 19.6% of the Advantage common shares outstanding on a fully diluted basis.

The Company repurchased 1,111,432 shares of the Company’s common stock for $17.6 million in cash during fiscal year 2001 and 595,157 shares of the Company’s common stock for $14.2 million in cash during fiscal year 2000. There were no repurchases of the Company’s common stock during fiscal year 2002. In addition, the Company declared and paid cash dividends totaling $.80 per share during each of the last three fiscal years, amounting to a total of $10.2 million in fiscal 2002, $10.4 million in fiscal 2001 and $11.0 million in fiscal 2000. As of June 29, 2002 the Company has authorization from its Board to purchase up to an additional 1,202,600 shares of its stock.

In addition to its present cash and short-term investment balances, the Company has consistently generated sufficient cash internally to fund its needs for working capital, dividends and capital expenditures. The Company currently has a committed, unsecured, revolving credit agreement for $200 million. The credit agreement contains various restrictive covenants which, among other things, require the Company to maintain certain minimum levels of consolidated net worth and specific consolidated debt and fixed charge ratios. The Company is in compliance with these covenants. At June 29, 2002, the Company had $97.9 million outstanding under this arrangement.

In November 2001, the Company entered into a $50 million Note Purchase Agreement with The Prudential Insurance Company of America. Under this agreement, the Company will borrow at the Eurodollar rate plus a

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spread for one year, after which the interest rate will be fixed at a rate of 7.23%. This agreement contains various restrictive covenants, which, among other things, require the Company to maintain certain minimum levels of consolidated net worth and specific consolidated debt and fixed charge ratios. The Company is in compliance with these covenants. At June 29, 2002, the Company had $50 million outstanding under this arrangement.

The following table summarizes the Company’s contractual obligations and commercial commitments as of June 29, 2002 (in thousands of dollars):

	Total		Less than 1 year		1-3 years		4-5 years		Thereafter
Contractual Obligations (payments due by period):
Long Term Debt	$	147,900	$	—	$	117,900	$	20,000	$	10,000
Capital Lease Obligations		1,560		1,102		458		—		—
Operating Leases		18,362		4,969		7,827		5,479		87
Total Contractual Cash Obligations	$	167,822	$	6,071	$	126,185	$	25,479	$	10,087
Other Commercial Commitments (amount of commitment expiration per period):
Lines of Credit	$	200,000	$	—	$	200,000	$	—	$	—
Standby Letter of Credit		115		115		—		—		—
Commercial Letters of Credit		1,146		405		741		—		—
Total Commercial Commitments	$	201,261	$	520	$	200,741	$	—	$	—

In order to effectively fix the interest rate on a portion of the debt outstanding under the revolving credit agreement, the Company has entered into six interest rate swap agreements with three of the banks party to the credit agreement. These swap agreements contain notional principal amounts and other terms (including rate of interest paid and received and maturity date) determined with respect to the Company’s forecasts of future cash flows and borrowing requirements. At June 29, 2002 the notional principal amount outstanding under the interest rate swap agreements totaled $145.0 million. For the fiscal year ended 2002, a credit of approximately $17 thousand was reclassified from other comprehensive income to earnings related to the ineffective portion of the Company’s swaps. In fiscal year 2001, there were no amounts transferred from other comprehensive income to earnings related to the Company’s swaps as the ineffective portion of the swaps was insignificant.

The Company anticipates that its current cash on hand, cash flow from operations and additional availability under the lines of credit will be sufficient to meet the Company’s liquidity requirements for its operations and capital expenditures during fiscal year 2003.* However, the Company may pursue additional acquisitions from time to time, such as the acquisitions mentioned in the Overview section of Management’s Discussion and Analysis, which would likely be funded through the use of available cash, issuance of stock, obtaining of additional credit, or any combination thereof.*

Certain Factors That May Affect Future Results

References in this section to “we”, “us” and “our” refer to New England Business Service, Inc.

We may make forward-looking statements in this report and in other documents filed with the SEC, in press releases, and in discussions with analysts, investors and others. These statements include:

• descriptions of our operational and strategic plans,

• expectations about our future sales and profits,

• views of conditions and trends in our markets, and

• other statements that include words like “expects”, “estimates”, “anticipates”, “believes” and “intends”, and which describe opinions about future events.

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You should not rely on these forward-looking statements as though they were guarantees. These statements are based on our expectations at the time the statements are made, and we are not required to revise or update these statements based on future developments. Known and unknown risks may cause our actual results, performance or achievements to be materially different from those expressed or implied by these statements.

A majority of our sales and profits come from selling standardized business forms, checks and related products by mail order, telesales and direct sales to a target market consisting mainly of small businesses. We believe that the critical success factors to compete in this market include competitive pricing, breadth of product offering, product quality and the ability to attract and retain a large number of individual customers. These critical success factors are also applicable to the success of our packaging, shipping and warehouse supplies markets as well. Known material risks that may affect those critical success factors are described below.

A majority of the sales in our apparel business come from selling knit and woven sport shirts under labels licensed from third parties to the promotional products/advertising specialty industry. We believe that the critical success factors to compete in this market include product quality, timely fulfillment of customer orders and brand awareness. Known material risks that may affect those success factors are also described below.

Our printed product lines face increased competition from various sources, such as office supply superstores. Increased competition may require us to reduce prices or offer other incentives in order to attract new customers and retain existing customers, which could reduce our profits.

Low-price, high-volume office supply chain stores offer standardized business forms, checks and related products to small businesses. Because of their size, these superstores have the buying power to offer many of these products at competitive prices. These superstores also offer the convenience of “one-stop shopping” for a broad array of office supplies that we do not offer. In addition, national superstore competitors have greater financial strength to reduce prices or increase promotional discounts in order to seek or retain market share.

If any of these new competitors seek to gain or retain market share through price reductions or increased discounting, we may be forced to reduce our prices or match the discounts in order to stay competitive, which could reduce our profits.

Technological improvements may reduce our competitive advantage over our smaller competitors, which could reduce our profits.

Historically, our relatively greater financial strength and size have enabled us to offer a broader array of products, particularly those having a complex construction, at lower prices than the small local and regional dealers, distributors and printers who constitute our primary competition. Improvements in the cost and quality of printing technology are enabling these smaller competitors to gain access to products of complex design and functionality at competitive costs. Increased competition from local and regional competitors could force us to reduce our prices in order to attract and retain customers, which could reduce our profits.

Because our sales growth is dependent on our ability to continually attract new customers in our target small business market, economic events that adversely affect the small business economy may reduce our sales and profits.

Average annual sales per customer of our core products have remained relatively stable over time. As a result, we rely, in part, on continually attracting new customers for these products. Our sales and profits have been adversely affected by economic-related contractions in the small business economy. We expect that our sales and profits will continue to be affected by changes in the levels of small business formations and failures and from other economic events that affect the small business economy generally.

18

Because our sales growth is dependent on our ability to continually attract new customers in our target small business market, changes in the direct marketing industry that reduce our competitive advantage in contacting prospective customers may reduce our sales and profits.

Growth in the total number of our direct mail customers depends on continued access to high-quality lists of newly-formed small businesses. In the past, our ability to compile proprietary prospect lists was a distinct competitive advantage. However, the external list compilation industry has become more sophisticated and comprehensive lists of new small business formations are now commercially available to our competitors. In addition, the Internet has the potential to eliminate our advantage of scale in direct marketing by providing all competitors, regardless of current size, with access to prospective customers.

We currently rely on the speed of our delivery of promotional materials to prospective customers to gain advantage over competitors. We are also expanding our Internet product offerings and capabilities and seeking to increase our visibility on the Internet. Notwithstanding these efforts, a deterioration in our competitive advantage in contacting prospective customers could reduce our sales and profits.

In addition, the enactment of privacy laws could constrain our ability to obtain prospect lists or to telemarket to prospective customers.

Declining response rates to the Company’s catalogs and other direct mail promotional materials could reduce our sales and profits.

Our direct mail-based businesses have recently experienced declines in the response rates to our catalogs and other direct mail promotional materials from both existing customers and prospects. We believe that these declines are attributable to a number of factors, including current economic conditions, the overall increase in direct mail solicitations received by our target customers generally, and the gradual obsolescence of our standardized forms products. To the extent that we cannot compensate for reduced response rates through increases in average order value or improve response rates through new product introductions and improved direct mail contact strategies, our sales and profits may be adversely affected.

Increases in the cost of paper and in postal rates adversely impact our costs, which we may be unable to offset by reducing costs in other areas or by raising prices.

The cost of paper to produce our products, catalogs and advertising materials makes up a significant portion of our total costs. Also, we rely on the U.S. Postal Service to deliver most of our promotional materials. Prices for the various types of paper that we use have been volatile, and we expect them to continue to be so. Third class postal rates have generally increased over the past ten years, at times significantly. We are not sure that we will always be able to reduce costs in other areas or to increase prices for our products sufficiently to offset increases in paper costs and postal rates. If we are unable to offset these cost and expense increases, our profits will be adversely affected.

Disruption in the services provided by certain of our critical vendors may adversely affect our operating performance and profits.

We use a limited number of vendors to provide key services to our business. Examples of this are as follows:

• we use MCI WorldCom and Qwest Communications International to provide a majority of the toll-free telephone lines for our direct marketing business,

• we use United Parcel Service to deliver most of the products that we ship to customers in the United States,

• we rely on the postal services of the countries in which we do business to deliver our catalogs and other advertising material to customers.

19

In the past, we have been adversely affected by disruption of some of these services due to labor actions, system failures, adverse weather conditions and other natural disasters. If there are future interruptions in service from one or more of these vendors, we believe that there could be a significant disruption to our business due to our inability to readily find alternative service providers at comparable rates.

Sales of our standardized forms products face technological obsolescence and changing customer preferences, which could reduce our sales and profits.

Our standardized business forms, checks and related products provide our customers with financial and business records to manage their businesses. Continual technological improvements have provided our target customers in several market segments with alternative means to enact and record business transactions. For example, the price and performance capabilities of personal computers and related printers now provide a cost-competitive means to print low-quality versions of our business forms on plain paper. In addition, electronic transaction systems and off-the-shelf business software applications have been designed to automate several of the functions performed by our business form products.

In response to the gradual obsolescence of our standardized forms business, we continue to develop our capability to provide custom and full-color products. However, we have less of a cost advantage with these products than with standardized forms, due to improvements in the cost and quality of printing technology available to our smaller local and regional competitors. We are also seeking to introduce new products and services that are less susceptible to technological obsolescence. We may develop new products internally, procure them from third party vendors, or obtain them through the acquisition of a new business. We generally realize lower gross margins on outsourced products than on products that we manufacture ourselves. The risks associated with the acquisition of new businesses are described below.

If new printing capabilities and new product introductions do not continue to offset the obsolescence of our standardized business forms products, there is a risk that the number of new customers we attract and existing customers we retain may diminish, which could reduce our sales and profits. Decreases in sales of our historically high margin standardized business forms products due to obsolescence could also reduce our gross margins. This reduction could in turn adversely impact our profits unless we are able to offset the reduction through the introduction of new high margin products and services or realize cost savings in other areas.

We source our apparel products from offshore third party manufacturers. Difficulty in securing reliable sources for these products could adversely affect our ability to maintain inventory levels that are adequate to satisfy customer demand.

We purchase a majority of our apparel products from “full package” manufacturers outside the United States. In most cases, these same manufacturers supply other apparel companies, many of which are significantly larger than our apparel business and are able, when necessary, to secure preferential treatment from the manufacturers. The availability of product from these manufacturers can also be adversely affected by social, political and economic conditions in their respective regions. Any significant disruption in our relationships with our current manufacturers could adversely affect our apparel business to the extent we cannot readily find alternative sources of supply at comparable levels of price and quality.

Inaccurate forecasting of the demand for specific apparel styles and sizes could reduce our sales and profits.

We believe that success in our apparel business depends in part on our ability to immediately ship ordered products, either directly or through our distributors. Given the relatively long lead time in procuring inventory, we must estimate demand for specific styles and sizes well in advance of receiving firm orders from customers in order to ensure the timely availability of these products. Inaccurate forecasting of demand for specific styles and sizes can result in either lost sales due to product unavailability, or reduced margins from liquidating overstocked items.

20

Failure of our apparel licensors to adequately promote our licensed brands and protect those brands from infringement could reduce our sales and profits.

We believe that brand awareness is an important factor to the end-user of our apparel products, and in that regard we market and sell a majority of our apparel products under nationally-recognized brands licensed from third parties. In each case, the licensor is primarily responsible for promoting its brand and protecting its brand from infringement. The failure of one or more of our licensors to adequately promote or defend their brands could diminish the perceived value of those brands to our customers, which could lead to reduced sales and profits.

Reductions in the number of apparel lines carried by wholesalers in the promotional products/advertising specialty industry may adversely impact our sales and profits.

Until recently, a significant portion of the sales in our apparel business have been to a relatively small number of wholesalers serving the promotional products/advertising specialty market. Sales to these wholesalers have been recently decreasing, and have been partially offset by increases in direct sales to our advertising specialty dealers. We believe that the wholesale apparel business serving this market is undergoing fundamental change, with wholesalers increasingly carrying only private label lines and branded lines on an exclusive basis. We believe that these changes, together with current economic conditions, are likely to result in an accelerated decrease in our sales to wholesalers. To the extent that increases in our direct sales to advertising specialty dealers, together with increases in our apparel sales to other markets, cannot keep pace with the erosion in our sales to wholesalers, sales and profits could be adversely impacted.

Our growth strategy depends, in part, on the acquisition of complementary businesses that address our target small business market.

The acquisition of complementary businesses that address our target small business market has been important to our growth strategy. We intend to continue this acquisition activity in the future. The success of this activity depends on the following:

• our ability to identify suitable businesses and to negotiate agreements on acceptable terms,

• our ability to obtain financing through additional borrowings, by issuing additional shares of common stock, or through internally generated cash flow, and

• our ability to achieve anticipated savings and growth and avoid disruption to our existing businesses.

In evaluating a potential acquisition, we conduct a business, financial and legal review of the target. This review is intended to support our assumptions with respect to the projected future performance of the target and to identify the benefits and risks associated with those assumptions. We cannot be certain that our review will identify all potential risks associated with the purchase, integration or operation of acquired businesses. Unanticipated risks may adversely affect the benefits that we expect to obtain from any given acquisition.

Any write-down of our investment in Advantage Payroll Services, Inc. required under generally accepted accounting principles could reduce our reported earnings.

As of the date of this Annual Report on Form 10-K, we have invested a total of $35.9 million for a minority investment in Advantage Payroll Services, Inc., a closely-held payroll processing company. This investment is currently reported on our balance sheet at our cost. If, as a result of Advantage’s performance or other economic factors beyond our control, the value of this investment on our books exceeds the realizable value of the investment in the market, then we may be required under generally accepted accounting principles to write-down the reported value of the investment, which could reduce our reported earnings for the period in which the write-down occurs.

21

ITEM  7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to a number of market risks, primarily due to the effects of changes in foreign currency exchange rates and interest rates. Investments in and loans and advances to foreign subsidiaries and branches, and their resultant operations, since they are denominated in foreign currencies, create exposures to changes in exchange rates. The Company’s utilization of its revolving credit agreement (which carries a variable interest rate) creates an exposure to changes in interest rates. The effect, however, of changes in exchange rates and interest rates on the Company’s earnings generally has been small relative to other factors that also affect earnings, such as business unit sales and operating margins. This is because (i) foreign operations represent a relatively small portion of the Company’s total activity, the magnitude of foreign currency transactions has been minimal and forward foreign currency contracts have been historically entered into to hedge certain foreign exchange rate exposures; (ii) a significant portion of the Company’s borrowings are fixed through interest rate swaps. In order to effectively convert the interest rate on a portion of the Company’s debt from a Eurodollar-based floating rate to a fixed rate, the Company has entered into interest rate swap agreements with major commercial banks. Although the Company is exposed to credit and market risk in the event of future nonperformance by any of the banks, management has no reason to believe that such an event will occur.

The Company does, however, have a component of its borrowings that is not hedged. A 10% upward movement in interest rates would impact earnings and cash flows by approximately $.01 million because of this unhedged position. For more information on these market risks and financial exposures, see the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. The Company does not hold or issue financial instruments for trading, profit or speculative purposes.

Upon reviewing its derivatives and other foreign currency and interest rate instruments, based on historical foreign currency rate movements and the fair value of market-rate sensitive instruments at year-end, the Company does not believe that changes in foreign currency or interest rates will have a material impact on its near-term earnings, fair values or cash flows.

ITEM  8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

The Company’s financial statements, together with the independent auditors’ report thereon, appear beginning on page F-1 of this Annual Report on Form 10-K.

ITEM  9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

22

PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Company will furnish to the Securities and Exchange Commission, not later than 120 days after the close of its fiscal year ended June 29, 2002, a definitive Proxy Statement (the “Proxy Statement”) for the Annual Meeting of Stockholders to be held on October 25, 2002. The information required by this Item concerning the directors of the Company who have been nominated for reelection is incorporated by reference to “Election of Directors” in the Proxy Statement.

The information required by this Item concerning the executive officers of the Company appears in Part I, Item 4.1 to this Annual Report on Form 10-K.

Section 16(a) Beneficial Ownership Reporting Compliance

Information regarding compliance with Section 16(a) beneficial ownership reporting requirements is located in the Proxy Statement under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference.

ITEM 11.    EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to “Election of Directors” and “Executive Compensation” in the Proxy Statement.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is incorporated by reference to “Voting Securities” and “Approval of NEBS 2002 Equity Incentive Plan—Securities Authorized for Issuance Under Equity Compensation Plans” in the Proxy Statement.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to “Certain Relationships and Related Transactions” in the Proxy Statement.

ITEM 14.    CONTROLS AND PROCEDURES

Not applicable.

23

PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

The following documents are filed as part of this report:

	Page
New England Business Service, Inc. and Subsidiaries
Consolidated Balance Sheets as of June 29, 2002 and June 30, 2001	F-2
Statements of Consolidated Income for the fiscal years ended June 29, 2002, June 30, 2001 and June 24, 2000	F-3
Statements of Consolidated Stockholders’ Equity and Comprehensive Income for the fiscal years ended June 29, 2002, June 30, 2001 and June 24, 2000	F-4
Statements of Consolidated Cash Flows for the fiscal years ended June 29, 2002, June 30, 2001 and June 24, 2000	F-5
Notes to Consolidated Financial Statements	F-6
Independent Auditors’ Report	F-25
(a)(2) Financial Statement Schedule
Schedule II — Valuation and Qualifying Accounts	F-26

Schedules I, III, IV and V are omitted as they are not applicable or required under Regulation S-X.

Exhibits required to be filed by Item 601 of Regulation S-K are listed in the exhibit index beginning on page X-1.

(b)  Reports on Form 8-K

None

24

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NEW ENGLAND BUSINESS SERVICE, INC. (Registrant)
BY:	/s/    ROBERT J. MURRAY
	(Robert J. Murray, Chairman and Chief Executive Officer)

Date:    September 6, 2002

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers and directors of New England Business Service, Inc., a Delaware corporation (the “Company”), hereby constitutes and appoints Robert J. Murray and Daniel M. Junius, and each of them, with full power to act without the other, his or her true and lawful attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities (until revoked in writing) to sign the Company’s Annual Report on Form 10-K for the fiscal year ended June 29, 2002, and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Name	Title	Date
/s/    ROBERT J. MURRAY (Robert J. Murray)	Chairman and Chief     Executive Officer and Director	September 6, 2002
	(Principal Executive     Officer)
/s/    WILLIAM T. END (William T. End)	Director	September 6, 2002
/s/    NEIL S. FOX (Neil S. Fox)	Director	September 6, 2002
/s/    ROBERT L. GABLE (Robert L. Gable)	Director	September 6, 2002
/s/    THOMAS J. MAY (Thomas J. May)	Director	September 6, 2002

25

Name	Title	Date
/s/    HERBERT W. MOLLER (Herbert W. Moller)	Director	September 6, 2002
/s/    JOSEPH R. RAMRATH (Joseph R. Ramrath)	Director	September 6, 2002
/s/    BRIAN E. STERN (Brian E. Stern)	Director	September 6, 2002
/s/    M. ANNE SZOSTAK (M. Anne Szostak)	Director	September 6, 2002
/s/    DANIEL M. JUNIUS (Daniel M. Junius)	Executive Vice President, Chief     Financial Officer and Treasurer     (Principal Financial Officer)	September 6, 2002
/s/    DAVID G. FOSTER (David G. Foster)	Vice President and Corporate     Controller (Principal Accounting     Officer)	September 6, 2002

CERTIFICATIONS

I, Robert J. Murray, certify that:

1. I have reviewed this annual report on Form 10-K of New England Business Service, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

Dated: September 6, 2002

/s/    ROBERT J. MURRAY        

(Robert J. Murray)

Chairman and Chief Executive Officer

(Principal Executive Officer)

I, Daniel M. Junius, certify that:

1. I have reviewed this annual report on Form 10-K of New England Business Service, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

Dated: September 6, 2002

/s/    DANIEL M. JUNIUS        

(Daniel M. Junius)

Executive Vice President,  Chief Financial Officer and Treasurer

(Principal Financial Officer)

26

INDEX TO FINANCIAL STATEMENTS

	Page
New England Business Service, Inc. and Subsidiaries
Consolidated Balance Sheets as of June 29, 2002 and June 30, 2001	F-2
Statements of Consolidated Income for the fiscal years ended June 29, 2002, June 30, 2001 and     June 24, 2000	F-3
Statements of Consolidated Stockholders’ Equity and Comprehensive Income for the fiscal years ended     June 29, 2002, June 30, 2001 and June 24, 2000	F-4
Statements of Consolidated Cash Flows for the fiscal years ended June 29, 2002, June 30, 2001 and     June 24, 2000	F-5
Notes to Consolidated Financial Statements	F-6
Independent Auditors’ Report	F-25
Schedule II—Valuation and Qualifying Accounts	F-26

F-1

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 29, 2002 and June 30, 2001

(In thousands of dollars, except share data)

	June 29, 2002			June 30, 2001
ASSETS
Current Assets:
Cash and cash equivalents	$	6,112		$	7,154
Accounts receivable (less allowance for doubtful accounts of $5,141 in 2002 and $5,344 in 2001)		55,738			59,528
Inventories, net		34,095			42,599
Direct mail advertising materials, net and prepaid expenses		13,374			13,603
Deferred income tax benefit		13,240			15,133
Total current assets		122,559			138,017
Property and Equipment:
Land and buildings		48,289			45,884
Equipment		150,149			146,782
Property and equipment		198,438			192,666
Less accumulated depreciation		(124,836	)		(115,598	)
Property and equipment, net		73,602			77,068
Property Held for Sale		328			—
Deferred Income Tax Benefit		18,934			16,986
Goodwill and Other Intangible Assets, net		119,848			129,339
Long-Term Investment		30,521			12,869
Other Assets		3,130			3,405
Total	$	368,922		$	377,684
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	16,858		$	18,314
Federal and state income taxes		3,430			2,868
Accrued bonus distribution		3,562			3,395
Accrued payroll expense		7,780			8,790
Accrued employee benefit expense		12,215			11,168
Accrued exit costs/restructuring charge		1,655			4,665
Derivative contracts at fair value		5,443			4,517
Obligations under capital lease—current portion		1,102			1,323
Current portion of long-term debt		—			120
Deferred income taxes		3,221			3,378
Other accrued expenses		10,820			10,068
Total current liabilities		66,086			68,606
Obligations Under Capital Lease		458			1,550
Long-Term Debt		147,900			179,168
Deferred Income Taxes		17,758			14,457
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock, par value $1 per share—authorized 1,000 shares; 0 shares issued and outstanding in 2002 and 2001
Common stock, par value, $1 per share—authorized, 40,000,000 shares; issued, 15,829,363 shares in 2002 and 15,511,093 shares in 2001; outstanding, 13,035,732 shares in 2002 and 12,499,702 shares in 2001		15,829			15,511
Additional paid-in capital		57,885			52,083
Unamortized value of restricted stock awards		(62	)		(157	)
Accumulated other comprehensive loss		(7,411	)		(7,417	)
Retained earnings		125,905			113,628
Total		192,146			173,648
Less treasury stock, at cost—2,793,631 shares in 2002 and 3,011,391 shares in 2001		(55,426	)		(59,745	)
Total stockholders’ equity		136,720			113,903
Total	$	368,922		$	377,684

See notes to consolidated financial statements.

F-2

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED INCOME

For the Fiscal Years Ended June 29, 2002, June 30, 2001 and June 24, 2000

(In thousands, except per share data)

	2002			2001			2000
Net Sales	$	557,539		$	586,091		$	523,053
Cost of sales including shipping costs		241,908			257,411			213,113
Gross Profit		315,631			328,680			309,940
Operating Expenses:
Selling and advertising		188,487			200,803			185,544
General and administrative		72,188			76,960			70,213
Exit costs		700			7,145			—
Total operating expenses		261,375			284,908			255,757
Income From Operations		54,256			43,772			54,183
Other Income (Expense):
Interest income		185			432			139
Interest expense		(13,447	)		(13,478	)		(8,625	)
Total other income (expense)		(13,262	)		(13,046	)		(8,486	)
Income Before Income Taxes		40,994			30,726			45,697
Provision For Income Taxes		15,742			11,983			16,339
Income Before the Effect of a Change in Accounting Principle		25,252			18,743			29,358
Effect of a Change in Accounting Principle		(2,792	)		—			—
Net Income	$	22,460		$	18,743		$	29,358
Per Share Amounts:
Basic earnings per share before the effect of a change in accounting principle	$	1.99		$	1.44		$	2.14
Effect of a change in accounting principle	$	(.22	)	$	.00		$	.00
Basic earnings per share	$	1.77		$	1.44		$	2.14
Diluted earnings per share before the effect of a change in accounting principle	$	1.94		$	1.43		$	2.12
Effect of a change in accounting principle	$	(.21	)	$	.00		$	.00
Diluted earnings per share	$	1.73		$	1.43		$	2.12
Dividends	$	.80		$	.80		$	.80
Basic Weighted Average Shares Outstanding		12,723			13,015			13,717
Plus incremental shares from assumed conversion of stock options and contingently returnable shares		283			128			151
Diluted Weighted Average Shares Outstanding		13,006			13,143			13,868

See notes to consolidated financial statements.

F-3

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

For the Fiscal Years Ended June 29, 2002, June 30, 2001 and June 24, 2000

(In thousands)

	Common Stock Issued			Additional Paid-in Capital		Unamortized Value of Restricted Stock Awards			Accumulated Other Comprehensive Income/(Loss)			Retained Earnings			Treasury Stock			Total Stockholders’ Equity			Comprehensive Income
	Number of Shares	At Par Value Amount
Balance, June 26, 1999	15,358	$	15,358	$	49,500	$	0		$	(2,654	)	$	86,902		$	(27,577	)	$	121,529
Issuance of common stock to employees pursuant to stock plans including tax benefit	41		41		837		(165	)											713
Dividends paid													(10,982	)					(10,982	)
Amortization of restricted stock awards							50												50
Acquisition of treasury stock																(14,194	)		(14,194	)
Net income													29,358						29,358		$	29,358
Foreign currency translation adjustment										(770	)								(770	)		(770	)
Net unrealized investment gains										25									25			25
Balance, June 24, 2000	15,399		15,399		50,337		(115	)		(3,399	)		105,278			(41,771	)		125,729		$	28,613
Issuance of common stock to employees pursuant to stock plans including tax benefit	112		112		1,746		(188	)								(334	)		1,336
Dividends paid													(10,393	)					(10,393	)
Amortization of restricted stock awards							146												146
Acquisition of treasury stock																(17,640	)		(17,640	)
Net income													18,743						18,743		$	18,743
Foreign currency translation adjustment										(635	)								(635	)		(635	)
Net unrealized investment losses										(213	)								(213	)		(213	)
Net unrealized losses on derivatives held for hedging purposes										(3,019	)								(3,019	)		(3,019	)
Cumulative effect adjustment recorded upon the adoption of SFAS No. 133										391									391			391
Net pension adjustment										(542	)								(542	)		(542	)
Balance, June 30, 2001	15,511		15,511		52,083		(157	)		(7,417	)		113,628			(59,745	)		113,903		$	14,725
Issuance of common stock to employees pursuant to stock options and employee benefit plans including tax benefit	318		318		5,802											4,319			10,439
Dividends paid													(10,183	)					(10,183	)
Amortization of restricted stock awards							95												95
Net income													22,460						22,460		$	22,460
Foreign currency translation adjustment										441									441			441
Net unrealized investment losses										(104	)								(104	)		(104	)
Net unrealized losses on derivatives held for hedging purposes										(568	)								(568	)		(568	)
Net pension adjustment										237									237			237
Balance, June 29, 2002	15,829	$	15,829	$	57,885	$	(62	)	$	(7,411	)	$	125,905		$	(55,426	)	$	136,720		$	22,466

See notes to consolidated financial statements.

F-4

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

For the Fiscal Years Ended June 29, 2002, June 30, 2001 and June 24, 2000

(In thousands of dollars)

	2002			2001			2000
Cash Flows From Operating Activities:
Net income	$	22,460		$	18,743		$	29,358
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		18,333			16,464			14,168
Amortization		8,542			12,515			11,553
Loss/(gain) on disposal of equipment		361			386			(175	)
Change in accounting principle		2,792			—			—
Asset impairment loss		—			2,207			—
Deferred income taxes		3,846			(32	)		1,463
Exit costs		700			7,145			—
Deferred grants		(6	)		—			—
Provision for losses on accounts receivable		4,865			4,659			4,203
Employee benefit charges		3,885			240			121
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		(971	)		2,200			(7,294	)
Inventories and advertising materials		8,782			(2,469	)		(5,542	)
Prepaid expenses and other assets		62			549			(1,165	)
Accounts payable		(1,509	)		(6,087	)		3,457
Income taxes payable		972			2,682			606
Other accrued expenses		(2,297	)		(3,631	)		2,351
Net cash provided by operating activities		70,817			55,571			53,104
Cash Flows From Investing Activities:
Additions to property and equipment		(15,365	)		(26,836	)		(21,057	)
Acquisition of businesses—net of cash acquired		—			(38,976	)		—
Proceeds from sale of facilities and equipment		32			29			1,258
Purchase of long-term investment		(17,652	)		—			(13,369	)
Net cash used by investing activities		(32,985	)		(65,783	)		(33,168	)
Cash Flows From Financing Activities:
Repayment of debt		(122,738	)		(83,968	)		(96,250	)
Proceeds from borrowings—net of issuance costs		89,508			125,900			101,406
Repayment of obligations under capital lease		(1,346	)		(1,007	)		(592	)
Proceeds from issuance of common stock		5,800			1,066			526
Acquisition of treasury stock		—			(17,640	)		(14,194	)
Dividends paid		(10,183	)		(10,393	)		(10,982	)
Net cash provided (used) by financing activities		(38,959	)		13,958			(20,086	)
Effect of Exchange Rate Changes on Cash		85			(61	)		(65	)
Net (Decrease) Increase in Cash and Cash Equivalents		(1,042	)		3,685			(215	)
Cash and Cash Equivalents at Beginning of Year		7,154			3,469			3,684
Cash and Cash Equivalents at End of Year	$	6,112		$	7,154		$	3,469
Supplemental Cash Flow Disclosure:
Interest paid	$	13,408		$	13,331		$	8,417
Income taxes paid	$	12,124		$	10,788		$	14,685
Stock issued pursuant to employee benefit plans	$	3,691		$	—		$	—
Purchase of equipment under capital lease	$	33		$	1,451		$	3,021

See notes to consolidated financial statements.

F-5

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

1.    Summary of Significant Accounting Policies

Description of Business and Basis of Consolidation—The financial statements include the accounts of New England Business Service, Inc. and its wholly-owned subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. The Company sells primarily printed business products such as checks and business forms and work/promotional apparel through a variety of channels, markets and sells payroll services provided by a payroll services company on a private label basis, serves as a reseller of packaging and shipping supplies and retail signage and designs, sources and distributes embroidered and unembroidered apparel for ad specialties applications.

Fiscal Year—The Company’s fiscal year ends the last Saturday of June. The Company’s results for fiscal year 2000 and 2002 contained 52 weeks, whereas fiscal year 2001 contained 53 weeks.

Significant Estimates—In the process of preparing its consolidated financial statements, the Company estimates the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. Actual results may differ from these estimates.

Foreign Currency Translation—The financial statements of the Company’s foreign subsidiaries are measured in the respective subsidiary’s functional currency and then translated into U.S. dollars. All balance sheet accounts have been translated using the year-end rate of exchange, while income statement accounts have been translated using the average rates prevailing throughout the year. Resulting translation gains or losses are accumulated in a separate component of stockholders’ equity entitled “Accumulated other comprehensive loss.” Foreign currency transaction gains and losses, including those related to intercompany transactions that are expected to be settled in the short term are recorded directly in the income statement and are immaterial in all periods presented; intercompany foreign currency transaction gains and losses incurred on balances of a long term investment nature are recorded as translation gains and losses.

Cash and Cash Equivalents—The Company considers its holdings in short-term money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents.

Inventories—Inventories are generally carried at the lower of first-in, first-out cost or market. At year end, inventories consisted of:

	2002		2001
Raw Material	$	1,709	$	1,821
Work in Process		124		1,459
Finished Goods		32,262		39,319
Total	$	34,095	$	42,599

Long-Term Investments—In March 2000, the Company invested $12,869 in the common stock of Advantage Payroll Services, Inc. In August 2001, the Company invested an additional $17,652 in the common stock of Advantage Payroll Services, Inc. and in aggregate represents a voting interest of 17.7%. The securities are not considered to be marketable equity securities under SFAS 115 because the company is currently privately held and, hence, the securities are restricted and have no readily determinable market value. The investment has been carried at cost and will periodically be evaluated to determine whether a decline in fair value below the original cost basis has occurred and is other than temporary. The investment has been classified as a long-term asset on the consolidated balance sheet because of its non-marketable nature.

F-6

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

Direct Mail Advertising—The Company expenses the production costs of advertising at the time the advertising is initiated, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefit; this period is not in excess of six months. Direct-response advertising consists primarily of product catalogs and associated mailing costs. As of June 29, 2002 and June 30, 2001, $7,356 and $7,569, respectively, were reported as direct advertising assets and included in direct mail advertising materials, net and prepaid expenses in the consolidated balance sheets. Advertising expense included in selling and advertising was $59,822 in 2002, $61,119 in 2001, and $59,325 in 2000.

Property and Equipment—Property and equipment are carried at cost. Depreciation is computed over the estimated useful lives (three to twenty years) of the assets using the straight-line method.

Leased Equipment Under Capital Leases—Equipment under capital leases is amortized over the lives of the respective leases or the estimated useful lives of the assets whichever is shorter.

Adoption of Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations”, and No. 142, “Goodwill and Other Intangible Assets—In the first quarter of fiscal 2002, the Company adopted SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 141 eliminates the pooling-of-interests method of accounting for business combinations and modifies the application of the purchase accounting method. SFAS No. 142 eliminates the current requirement to amortize goodwill and indefinite-lived intangible assets, addresses the amortization of intangible assets with a defined life and addresses the impairment testing and recognition for goodwill and intangible assets.

As of July 1, 2001, the Company had identified those intangible assets that remain separable under the provisions of SFAS No. 141 and those that are to be included in goodwill. In applying SFAS No. 142, the Company completed the transitional intangible asset impairment test by determining the carrying amount of its various reporting units and comparing that with their fair value, determined by using a multiple of earnings before interest, taxes, depreciation and amortization. As a result, the Company recognized an impairment charge to write off goodwill in the amount of $2,792 relating to its European business within its International business segment. The impairment loss is recognized in the consolidated statements of income under the caption “Effect of a Change in Accounting Principle”. The Company completed the annual intangible asset impairment test as of April 27, 2002. The Company determined there was no impairment as of the measurement date.

F-7

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

Had the provisions of SFAS Nos. 141 and 142 been applied for fiscal years 2001 and 2000, the Company’s net income and net income per share, calculated using the Company’s annual estimated tax rate, would have been as follows:

	2001			2000
Net income as reported	$	18,743		$	29,358
Add: Goodwill amortization		2,209			1,710
Assembled workforce amortization		817			817
Tradename amortization		818			818
Less: Tax effect		(1,499	)		(1,199	)
Pro forma net income	$	21,088		$	31,504
Per share amounts:
Basic earnings per share as reported	$	1.44		$	2.14
Effect of SFAS No. 141 and 142	$	.18		$	.16
Pro forma basic earnings per share	$	1.62		$	2.30
Diluted earnings per share as reported	$	1.43		$	2.12
Effect of SFAS No. 141 and 142	$	.18		$	.15
Pro forma diluted earnings per share	$	1.61		$	2.27

Intangible Assets—Customer lists and other intangible assets are amortized using the straight-line method over their estimated lives. The ranges of estimated lives and accumulated amortization balances for each category of assets at June 29, 2002 consist of the following:

Description	Lives	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets with defined lives:
Customer lists	2-18 years	$	46,327	$	36,562	$	9,765
Covenant not to compete	2-5 years		1,183		1,183		—
Debt issue costs	1-7 years		2,729		1,209		1,520
Long-term contracts	16 years		5,300		663		4,637
Bank referral agreements	20 years		7,400		1,511		5,889
Intangible assets with indefinite lives:
Tradenames	—		32,800		2,727		30,073
Total intangible assets		$	95,739	$	43,855	$	51,884

F-8

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

Changes in the carrying amount of goodwill (net) for the fiscal year ended June 29, 2002, by segment are as follows:

	June 30, 2001		Adjustments			June 29, 2002
Direct Marketing—US	$	24,237		—		$	24,237
Direct Sales—US		5,119	$	2,382			7,501
Apparel		9,624		—			9,624
Packaging and Display Products		23,246		—			23,246
International		6,148		(2,792	)		3,356
Total	$	68,374	$	(410	)	$	67,964

Adjustments include the reclassification of $2,382 related to an assembled workforce intangible asset in the Direct Sales—US segment and an asset impairment charge in the International segment of $2,792 discussed above. Amortization of intangible assets for the years ended June 29, 2002 and June 30, 2001 was $8,542 and $12,515, respectively. Estimated amortization of intangible assets for fiscal years 2003, 2004, 2005, 2006 and 2007, without consideration of any other increases or decreases in the balance of the assets, is $7,134, $5,434, $759, $752 and $749, respectively.

Revenue Recognition—Revenue is recognized on product sales at the point in time when persuasive evidence of an arrangement exists, the price is fixed and final, delivery has occurred and there is reasonable assurance of collection of the sales proceeds. The Company generally obtains purchase authorizations from its customers for a specified amount of product at a specified price and considers delivery to have occurred at the point of shipment. While the Company does provide its customers with a right of return, revenue is not deferred. Rather, a reserve for sales returns is provided in accordance with SFAS No. 48 based on significant historical experience.

Income Taxes—The provision for income taxes is determined based upon the Company’s computed total income tax obligation for the year and the change in the Company’s deferred tax balances from year to year. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. Such deferred tax assets and liabilities are also adjusted to reflect changes in the U.S. and applicable foreign tax laws when enacted and changes in blended state tax rates. Future tax benefits are recognized to the extent realization of such benefit is more likely than not to occur.

Per Share Amounts—Basic earnings per share amounts are computed based upon the weighted average number of shares of common stock outstanding during each fiscal year less any contingently returnable shares. Diluted earnings per share amounts are computed by also giving consideration to potentially dilutive stock options outstanding and contingently returnable shares. Common stock equivalents totaling approximately 900 outstanding stock options are not included in the computation of earnings per share as they are anti-dilutive. A reconciliation of outstanding shares is shown on the statements of consolidated income.

Concentration of Credit Risk—The Company extends credit annually to approximately 1,700 geographically dispersed customers on an unsecured basis in the normal course of business. No individual industry or industry segment is significant to the Company’s customer base. The Company has in place policies governing the extension of credit and collection of amounts due from customers.

F-9

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

Derivatives—In June 1998, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. The Company adopted this Statement in fiscal year 2001. Such adoption resulted in an initial credit of $391 (net of tax) to Accumulated Other Comprehensive Loss.

The Company is exposed to interest rate risk relating to its variable rate debt. As part of its overall strategy to manage the level of exposure to the risk of interest rate fluctuations, the Company uses interest rate swaps which qualify and are designated as cash flow hedges.

On the date the Company enters into a derivative contract, management designates the derivative as a hedge of the identified cash flow exposure. The Company does not enter into derivative transactions that do not qualify as hedges.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. In this documentation, the Company specifically identifies the asset, liability, firm commitment, or forecasted transaction that has been designated as a hedged item and states how the hedging instrument is expected to hedge the risks related to the hedged item. The Company formally measures effectiveness of its hedging relationships both at the hedge inception and on an ongoing basis in accordance with its risk management policy.

The Company may discontinue hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item; when the derivative expires or is sold, terminated, or exercised; or when the derivative is redesignated to no longer be a hedge instrument.

As discussed above, the Company designates certain derivatives as cash flow hedges. For all qualifying and highly effective cash flow hedges, the changes in the fair value of the derivative are recorded in Other Comprehensive Income (“OCI”). There can be, however, a portion of the hedge that is deemed “ineffective” and which can result in a charge/(credit) to the Company’s income statement. For the fiscal year ending June 29, 2002, a credit of approximately $17 was reclassified from OCI to earnings related to the ineffective portion of the Company’s swaps. In fiscal year 2001, there were no amounts transferred from OCI to earnings related to the Company’s swaps since the amount of the swaps ineffectiveness was insignificant.

Impairment of Long-Lived Assets—The Company evaluates the recoverability of long-lived assets in accordance with SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” In fiscal 2001, the Company recognized impairment charges of $1,707 and $500, respectively, for the write-off of capitalized internal-use software related to an enterprise resource planning system the Company no longer plans to implement and its investment in WebNow, Inc. There were no adjustments to the carrying value of any long-lived assets in 2002.

Accounting for Stock-Based Compensation—SFAS No. 123, “Accounting for Stock-Based Compensation,” encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to continue to account for stock-based compensation using the intrinsic-value method prescribed in Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. When awards are made to consultants or individuals who are other than employees, the Company does apply the precepts of SFAS No. 123 and the Emerging Issue Task Force (“EITF”) Consensus No. 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services.”

F-10

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

New Accounting Pronouncements—As described above, in the first quarter of fiscal year 2002, the Company adopted SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 141 eliminates the pooling-of-interests method of accounting for business combinations and modifies the application of the purchase accounting method. SFAS No. 142 eliminates the requirement to amortize goodwill and indefinite-lived intangible assets, addresses the amortization of intangible assets with a defined life and addresses the impairment testing and recognition for goodwill and intangible assets.

As of July 1, 2001, the Company had identified those intangible assets that remain separable under the provisions of SFAS No. 141 and those that are to be included in goodwill. In applying SFAS No. 142, the Company completed the transitional intangible asset impairment test. As a result, the Company recognized an impairment charge to write off goodwill in the amount of $2,792 relating to its European business within its International business segment.

In July 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supercedes SFAS No. 121 on the same topic and the accounting and certain reporting provisions of APB Opinion 30, “Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business (as defined in that Opinion). This Statement also amends Accounting Research Bulletin (“ARB”) 51, “Consolidated Financial Statements,” to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. The Company will adopt this Statement in fiscal 2003. Management believes that the impact of this Statement on its consolidated financial statements will not be material.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS 146 addresses the financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Consensus No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit and Activity (including Certain Costs Incurred in a Restructuring)”. The Company will adopt this Statement in fiscal 2003. Management believes that the impact of this Statement on its consolidated financial statements will not be material.

As described above, in the first quarter of fiscal 2001, the Company adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. This adoption resulted in an initial credit of $391 (net of tax) to Accumulated Other Comprehensive Loss.

In the fourth quarter of fiscal 2001, the Company adopted Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 101 “Revenue Recognition”. This SAB was intended to clarify certain elements of revenue recognition. It has been supplemented by a “frequently asked questions” document.

In the fourth quarter of fiscal 2001, the Company adopted the EITF Consensus No. 00-10, “Accounting for Shipping and Handling Fees and Costs”. The consensus states that a seller of goods should classify fees attributable to shipping and handling in the income statement as revenues. The Company had previously netted such fees against shipping and handling costs in the cost of sales line. In fiscal years 2001 and 2000, approximately $41,989 and $37,667, respectively, which previously would have reduced cost of sales, have been classified as revenues. There was no effect on reported net income.

Reclassifications—Certain reclassifications have been made to the 2001 and 2000 financial statements to conform with the 2002 presentation.

F-11

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

2.    2000 Acquisition

In July 2000, the Company acquired all the outstanding shares of PremiumWear, Inc. The purchase price was $13.50 per share in cash and totaled approximately $38,976 (net of cash acquired) for the shares plus debt assumed of $3,856. The Company also incurred fees of approximately $602 in connection with the acquisition. The acquisition was accounted for using the purchase method of accounting. Accordingly, PremiumWear’s results from operations are included in the accompanying financial statements from the date of acquisition. The purchase price, including acquisition costs, was allocated to the net tangible assets acquired based on the fair value of such assets and liabilities. The excess cost over fair value of the net tangible assets acquired was $16,013, of which $5,300 and $583 were allocated to long-term contracts and non-compete agreements, respectively, and the balance of $10,130 to goodwill. The long-term contracts and non-compete agreements are being amortized over their respective useful lives. The accounting for goodwill is in accordance with Company’s adoption of SFAS No. 142 discussed in note 1.

The following unaudited pro forma financial information reflects the consolidated results from operations of the Company for the years ended June 30, 2001 and June 24, 2000 as though the acquisition described above had occurred on the first day of the respective fiscal year and the results are prior to the adoption of SFAS 141 and 142. The pro forma operating results are presented for comparative purposes only and do not purport to present the Company’s actual operating results had the acquisition been consummated on June 27, 1999 or results which may occur in the future:

	2001		2000
Net sales	$	588,180	$	575,610
Net income		18,772		28,172
Net income per diluted share		1.43		2.03

In connection with this transaction, a complaint entitled “Perry Ellis International, Inc. v. PremiumWear, Inc.”, was filed. The Company was subsequently named a co-defendant. The amended complaint relates to a Right of First Refusal Agreement dated as of May 22, 1996 (the “RFR Agreement”) between the plaintiff and PremiumWear, Inc., and to the Company’s acquisition of all the outstanding shares of PremiumWear in July 2000. In the amended complaint, the plaintiff alleges breach of the RFR Agreement and breach of an implied covenant of good faith and fair dealing against PremiumWear as a result of PremiumWear’s alleged failure to notify the plaintiff of certain discussions between PremiumWear and the Company preceding the Company’s agreement to purchase all of the outstanding shares of PremiumWear. The amended complaint also alleges that the Company tortiously interfered with the plaintiff’s rights under the RFR Agreement by allegedly inducing PremiumWear to breach its obligations to the plaintiff under the RFR Agreement. The plaintiff is seeking damages in an unspecified amount, attorneys’ fees, interest and costs. The Company believes the allegations in the amended complaint are without merit and intends to defend the lawsuit vigorously.

F-12

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

3.    Restructuring and Impairment of Assets

During fiscal year 2001, the Company undertook two distinct restructuring actions. The first resulted in a restructuring charge of $3,500 in fiscal year 2001 and an additional charge of $1,023 in fiscal year 2002 to provide for costs primarily associated with the Company’s decision to more closely align its direct marketing and direct sales activities. As part of the restructuring program, the McBee US headquarters was relocated from Parsippany, New Jersey to the existing RapidForms facility in Thorofare, New Jersey. In addition, the McBee manufacturing plant in Damascus, Virginia has been closed and a portion of leased warehousing space occupied by Chiswick in Sudbury, Massachusetts was vacated. In Canada, the McBee sales and marketing organizations were combined with NEBS Direct Marketing and are operating under the NEBS name. Approximately 140 employees were affected by the restructuring either through elimination of their positions or relocation. Pursuant to this plan, the following charges and payments have been recorded:

	Employee termination benefit costs			Facility closure costs			Total
Balance June 24, 2000	$	—		$	—		$	—
Charge/(credit) for the period		2,185			1,315			3,500
Payments for the period		(1,328	)		(643	)		(1,971	)
Balance June 30, 2001		857			672			1,529
Charge/(credit) for the period		(272	)		1,295			1,023
Payments for the period		(585	)		(929	)		(1,514	)
Balance June 29, 2002	$	—		$	1,038		$	1,038

The second restructuring action resulted in the Company recording an additional restructuring charge in fiscal year 2001 of $3,645 and a credit of $(323) in fiscal year 2002 to provide for costs associated with the Company’s decision to eliminate excess capacity by closing a manufacturing facility in Ogden, Utah and a leased distribution facility in Sudbury, Massachusetts, along with other actions to reduce the workforce in various locations. Approximately 175 employees were affected by this restructuring, either through elimination of their positions or relocation. Pursuant to this plan, the following charges and payments have been recorded:

	Employee termination benefit costs			Facility closure costs			Total
Balance June 24, 2000	$	—		$	—		$	—
Charge/(credit) for the period		2,900			745			3,645
Payments for the period		(509	)		—			(509	)
Balance June 30, 2001		2,391			745			3,136
Charge/(credit) for the period		(369	)		46			(323	)
Payments for the period		(1,856	)		(340	)		(2,196	)
Balance June 29, 2002	$	166		$	451		$	617

The activities related to all restructuring actions identified above are anticipated to be completed by the Company during fiscal year 2003 with the exception of lease payments, which may extend beyond this time frame.

F-13

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

4.    Debt Obligations and Leases

The Company has maintained a committed credit facility up to $200,000 over the past three years (the “Credit Facility”). In July 2001, the Company amended and restated the Credit Facility to extend the maturity date to July 2004. Under the Credit Facility, the Company has the option to borrow at the Eurodollar rate plus a spread or the agent bank’s base lending rate prevailing from time to time. The effective interest rates as of June 29, 2002 and June 30, 2001 were 2.7% and 4.8%, respectively. The credit agreement contains various restrictive covenants which, among other things, require the Company to maintain certain minimum levels of consolidated net worth and specific consolidated debt and fixed charge ratios. The Company was in compliance with such covenants and as of June 29, 2002, $97,900 was outstanding under this facility. Debt issuance costs incurred in connection with this facility are amortized over the term of the agreement.

In November 2001, the Company entered into a $50,000 Note Purchase Agreement with The Prudential Insurance Company of America. The maturity of long-term debt under this agreement is $10,000 per year beginning November 2004 through November 2008. Under this agreement, the Company will borrow at the Eurodollar rate plus a spread for one year, after which the interest rate will become fixed at 7.23%. This agreement contains various restrictive covenants, which, among other things, require the Company to maintain certain minimum levels of consolidated net worth and specific consolidated debt and fixed charge ratios. The Company was in compliance with such covenants and as of June 29, 2002, $50,000 was outstanding under this agreement. Debt issuance costs incurred in connection with this agreement are amortized over the term of the agreement.

The aggregate maturities of long-term debt for each of the five years subsequent to June 29, 2002, are as follows:

Fiscal Year Ended June
2003	$	—
2004		—
2005		107,900
2006		10,000
2007		10,000
Thereafter		20,000
Total long-term debt	$	147,900

The Company has $1,146 and $115 outstanding at June 29, 2002 under commercial and standby letters of credit, respectively.

The Company leases facilities and equipment under long-term leases with unrelated parties; several of these qualify as capitalized leases. The future minimum rental commitments for leases of certain facilities and equipment are as follows:

Fiscal Year Ended June	Operating Leases		Capitalized Leases
2003	$	4,969	$	1,183
2004		4,137		375
2005		3,690		101
2006		3,411		6
2007		2,068		—
Thereafter		87		—
Total minimum lease payments	$	18,362	$	1,665
Less amount representing interest				105
Present value of net minimum lease payments including current maturities of $1,102			$	1,560

F-14

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

The Company’s investment in equipment under capital leases (net) was $1,389 and $2,676 in 2002 and 2001, respectively.

Total rental expense was $5,898, $7,674 and $6,476 in 2002, 2001 and 2000, respectively. Included in those amounts were payments for properties leased from a former executive officer of $783, $1,174 and $1,035 in 2002, 2001 and 2000, respectively.

5.    Financial Instruments

In order to minimize exposure to fluctuations with respect to foreign currency, the Company may enter into forward exchange rate contracts for the amount of the exposure. At June 29, 2002, the Company had no outstanding forward currency contracts. Gains or losses on those previously closed have been immaterial.

The Company has entered into six interest rate swap agreements with three major commercial banks in order to effectively convert the interest rate of a portion of the Company’s outstanding revolving credit debt from a Eurodollar-based floating rate to a fixed rate. The agreements expire on different dates, and the total notional principal amount decreases over time. Although the Company is exposed to credit and market risk in the event of future non-performance by any of the banks, management has no reason to believe that such an event will occur. Information regarding the agreements as of June 29, 2002 follows:

Notional Principal Amount	Fixed Interest Rate		Fair Value			Agreement Expiration Date
$25,000	6.44	%	$	(394	)	October 19, 2002
25,000	4.69			(354	)	December 8, 2002
25,000	6.95			(935	)	March 7, 2003
25,000	6.91			(1,275	)	July 7, 2003
20,000	5.00			(753	)	June 8, 2004
25,000	6.61			(1,732	)	July 13, 2004

As of June 29, 2002 and June 30, 2001, the carrying value of all other financial instruments approximated fair value. Within the next twelve months approximately $4,200 of net losses are expected to be reclassified from accumulated other comprehensive income to net income.

6.    Equity Transactions

The Company has issued a stock purchase right to stockholders for each outstanding share of common stock of the Company. Each right becomes exercisable upon the occurrence of certain events, as provided in the Rights Agreement, and entitles the registered holder to purchase from the Company a “Unit” consisting of one one-hundredth of a share of preferred stock at a purchase price of $75.00 per Unit, subject to adjustment to prevent dilution. In addition, upon the occurrence of certain events, the registered holder will thereafter have the right to receive, upon payment of the purchase price, additional shares of common stock and/or cash and/or other securities, as provided in the Rights Agreement. The rights will expire on October 20, 2004. The Company may redeem the rights at a price of $.01 per right. The Company also has authorized but not issued 1,000 shares of $1.00 par value preferred stock.

On October 23, 1998, the Company’s Board of Directors authorized the repurchase of up to 2,000 additional shares of the Company’s common stock over a two year period, replacing an earlier authorization. As of October 20, 2000, the expiration of the 1998 authorization, 1,403 shares had been purchased at a cumulative cost of $33,718. On October 20, 2000, the Company’s Board of Directors had authorized the repurchase of up to

F-15

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

2,000 shares, replacing the expiring 1998 authorization. The new authorization expires on October 31, 2003. As of June 29, 2002, 797 shares had been purchased under the October 2000, authorization at a cumulative cost of $12,147.

7.    Stock Options And Awards

At the Company’s October 1997 annual meeting, the stockholders approved the NEBS Key Employee and Eligible Director Stock Option and Stock Appreciation Rights Plan (the “1997 Plan”). The 1997 Plan amended and restated the Company’s 1990 plan and 1994 plan and incorporated the two plans into the 1997 Plan. Under the 1997 Plan, the Company was authorized to issue 1,300 shares of common stock pursuant to the granting of stock options or stock appreciation rights in addition to the shares remaining available for issuance under the 1990 and 1994 option plans (these plans had authorized the issuance of up to 1,200 and 1,000 shares, respectively).

In addition to shares issuable under these plans, the Company approved and adopted the NEBS 2000 Stock Option Plan for PremiumWear Employees (the “2000 Plan”) and the NEBS Stock Option Agreement dated February 2, 1996. Under the 2000 and 1996 Plans, the Company was authorized to issue 105 and 250 shares, respectively, of the Company’s common stock pursuant to the granting of stock options.

Under the terms of the Company’s stock option plans, options are granted to purchase stock at fair market value on the date of the option grant. Options granted have been exercisable in full in terms of up to ten years from the date of grant and the options expire no later than ten years from the date of grant. Generally, the options vest and become exercisable over a four year period. As of June 29, 2002, 2,395 shares of common stock are reserved for issuance under the Company’s stock option plans, of which 2,212 are subject to outstanding options and 183 remain available for future option grants. During fiscal 2000, the Company repurchased outstanding options for 861 shares at a cost of $430 and charged such buyout amount to compensation expense in general and administrative expenses.

Options for 1,396, 1,464 and 1,159 shares were currently exercisable under all option arrangements at June 29, 2002, June 30, 2001 and June 24, 2000, respectively. There were no outstanding stock appreciation rights under any of the plans during 2002, 2001 or 2000.

A summary of activity under the Company’s stock option plans during 2002, 2001, and 2000 follows:

	Number of Shares		Per Share Option Price	Weighted- Average Exercise Price
June 26, 1999	2,191		$14.75 – 33.88	$	24.13
Granted	407		14.13 – 27.69		27.35
Repurchased	(861	)	25.75 – 33.88		28.34
Exercised	(30	)	14.75 – 20.75		17.31
Expired	(98	)	15.38 – 33.88		27.96
June 24, 2000	1,609		14.75 – 33.88		22.60
Granted	1,054		15.00 – 20.88		17.28
Exercised	(96	)	14.75 – 19.75		15.27
Expired	(142	)	15.00 – 30.00		19.74
June 30, 2001	2,425		14.75 – 33.88		20.75
Granted	301		17.50 – 17.89		17.88
Exercised	(343	)	14.75 – 27.69		16.94
Expired	(171	)	15.00 – 33.06		24.59
June 29, 2002	2,212		14.13 – 33.13		20.61

F-16

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

The following table presents information with regard to all stock options outstanding at June 29, 2002:

	Options Outstanding				Options Exercisable
Range of Exercise Price	Number Outstanding	Weighted- Average Remaining Contractual Life (years)	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
$14.13 – 16.63	752	8.16	$	16.08	356	$	15.65
17.50 – 19.75	498	4.59		18.44	405		18.30
20.13 – 21.50	341	7.15		20.59	129		20.63
25.75 – 33.13	621	5.84		27.86	506		27.67
	2,212	6.38	$	20.61	1,396	$	21.24

The Company applies APB Opinion No. 25 to account for its various stock plans. Accordingly, pursuant to the terms of the plans, no compensation cost has been recognized for the stock plans. However, if the Company had determined compensation cost for stock option grants made since 1996 under the provisions of SFAS No. 123 (the 1996 date coinciding with the adoption of SFAS No. 123 for disclosure purposes), the Company’s net income and net income per share would have been reduced to the pro forma amounts shown below:

	2002		2001		2000
Net income:
As reported	$	22,460	$	18,743	$	29,358
Pro forma		21,150		16,307		28,462
Net income per diluted share:
As reported	$	1.73	$	1.43	$	2.12
Pro forma		1.63		1.24		2.05

The pro forma net income reflects the compensation cost only for those options granted since 1996. Compensation cost is reflected over a stock option’s vesting period and compensation cost for options granted prior to June 30, 1995 is not considered. Therefore, the full potential impact of compensation cost for the Company’s stock plans under SFAS No. 123 may not be reflected in the pro forma net income amounts presented above.

The fair value of each stock option granted in 2002, 2001 and 2000 under the Company’s stock option plans was estimated on the date of grant using the Black-Scholes option-pricing model. The following key assumptions were used to value grants issued for each year:

	Weighted- Average Risk Free Rate		Average Expected Life	Volatility		Dividend Yield
2000	6.20	%	5.5 years	21.49	%	2.9	%
2001	4.73	%	5.1 years	33.98	%	4.6	%
2002	4.14	%	5.1 years	33.65	%	4.5	%

F-17

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

The weighted-average fair values per share of stock options granted during 2002, 2001 and 2000 were $4.12, $4.11 and $6.41, respectively. It should be noted that the Black-Scholes option pricing model used in the calculation was designed to value readily tradable stock options with relatively short lives. The options granted to employees are not tradable and have contractual lives of up to ten years. Management believes that the assumptions used and the model applied to value the awards yield a reasonable estimate of the fair value of the grants made under the circumstances.

At the Company’s October 1994 annual meeting, the stockholders approved the New England Business Service, Inc. Stock Compensation Plan (the “Stock Compensation Plan”). Under the Stock Compensation Plan, up to 300 shares of common stock may be issued to the Company’s directors and employees in lieu of cash compensation otherwise payable. At June 29, 2002, 254 shares remain reserved for issuance under the Stock Compensation Plan.

During fiscal years 2001 and 2000, the Company awarded restricted stock to several executive employees under the Stock Compensation Plan. For these awards, which vest after three years, the fair market value of the shares is expensed over the vesting period. The unamortized portion of deferred compensation expense is recorded as a reduction of shareholder’s equity. Recipients of all restricted shares have the right to vote such shares and receive dividends.

8.    Benefit Plans

The Company sponsors several 401(k) plans covering substantially all of the Company’s domestic employees. Contributions to the plans are made by way of participant salary deferrals and Company contributions. Company contributions include combinations of matching, fixed and discretionary contributions, subject to a maximum Company obligation ranging from 4% to 9% of an employee’s eligible pay. The Company’s aggregate contributions to the plans were $7,111 in fiscal 2002, $7,123 in fiscal 2001 and $6,638 in fiscal 2000.

SFAS No. 87, “Employers’ Accounting for Pensions,” requires the accrual of pension benefits during the years an employee provides service to the Company. The Company has a supplemental executive retirement plan which is currently unfunded. Executive employees are eligible to become members of the plan upon designation by the Board of Directors. Benefits under the plan are based on each participant’s annual earnings and years of service. Provision for this benefit is charged to operations over the participant’s term of employment.

F-18

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

The following table sets forth the plan’s funded status and obligations as of June 29, 2002 and June 30, 2001:

	2002			2001
Change in benefit obligation:
Benefit obligation at beginning of year	$	3,075		$	1,350
Service cost		296			185
Interest cost		241			119
Plan amendment		93			—
Actuarial loss (excluding assumptions changes)		254			1,280
Actuarial (gain)/loss due to assumptions changes		(124	)		141
Benefit obligation at end of year	$	3,835		$	3,075
Funded status:
Accumulated benefit obligation (“ABO”) in excess of plan assets	$	3,835		$	3,075
Unrecognized net loss		(1,477	)		(1,481	)
Unrecognized prior service cost		(689	)		(766	)
Net benefit liability	$	1,669		$	828
Amounts recognized in the consolidated balance sheets:
Accrued benefit liability	$	2,896		$	2,526
Intangible asset		(689	)		(766	)
Accumulated other comprehensive income		(538	)		(932	)
Net amount recognized	$	1,669		$	828

The components of net periodic benefit cost for 2002, 2001 and 2000 are as follows:

	2002		2001		2000
Service cost	$	296	$	185	$	144
Interest cost		241		119		81
Amortization of prior service cost		77		77		77
Recognized actuarial loss (gain)		139		5		(5	)
Net periodic benefit cost	$	753	$	386	$	297

For measurement purposes a 4.0% annual rate of increase in compensation cost was assumed in 2002 and 2001.

The weighted average discount rate used in determining the ABO was 7.50% and 7.25% in 2002 and 2001, respectively.

SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” requires the accrual of postretirement benefits other than pensions (such as health care benefits) during the years an employee provides service to the Company. The Company sponsors a defined benefit postretirement plan that provides health and dental care benefits for retired Company officers and health and insurance benefits for certain PremiumWear, Inc. retirees. The plans are contributory, and retirees’ contributions are adjusted annually.

F-19

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

The following table sets forth the plans’ funded status and obligations as of June 29, 2002 and June 30, 2001:

	2002		2001
Accumulated postretirement benefit obligation (“APBO”):
Retirees	$	1,239	$	1,102
Eligible active plan participants		—		—
Other active plan participants		775		499
Total		2,014		1,601
Plan assets at fair value		—		—
Accumulated postretirement benefit obligation in excess of plan assets		2,014		1,601
Unrecognized net gain		218		551
Net postretirement liability (included in accrued employee benefit expense)	$	2,232	$	2,152

The components of net periodic postretirement benefits cost for 2002, 2001 and 2000 are as follows:

	2002			2001			2000
Service cost	$	59		$	71		$	76
Interest on accumulated postretirement benefit obligation		138			62			68
Amortization of gain		(14	)		(41	)		(17	)
Net periodic postretirement cost	$	183		$	92		$	127

For measurement purposes, a 10.0% annual rate of increase in the cost of providing medical benefits was assumed in 2002 with a reduction to a trend rate of 6% for fiscal 2006 and beyond.

The weighted average discount rate used in determining the APBO was 7.5% in 2002 and 2001.

The health care cost trend has an effect on the amounts reported. An increase of 1% in the rate of increase would have had an effect of increasing the APBO by $262 and the net periodic postretirement benefits cost by $31.

F-20

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

9.    Income Taxes

The components of income before income taxes were as follows:

	2002		2001		2000
United States	$	38,801	$	30,312	$	46,166
Foreign		2,193		414		(469	)
Total	$	40,994	$	30,726	$	45,697

Provisions for income taxes under SFAS No. 109 in 2002, 2001 and 2000 consist of:

	2002		2001			2000
Currently payable:
Federal	$	10,227	$	10,884		$	15,270
State		639		726			(126	)
Foreign.		1,030		405			(268	)
Total		11,896		12,015			14,876
Deferred		3,846		(32	)		1,463
Total	$	15,742	$	11,983		$	16,339

The tax effects of significant items comprising the Company’s net deferred tax assets as of June 29, 2002 and June 30, 2001 are as follows:

	2002						2001
	Current			Noncurrent			Current			Noncurrent
Deferred tax assets:
Accrued vacation	$	1,191					$	1,655
Allowance for doubtful accounts		1,804						1,762
Accrued expenses		1,585						3,159
Sales returns and allowances		284						426
Inventory		2,278						2,468
Employee benefit reserves		3,245						3,040
Other comprehensive income		2,694						2,406
Amortization of intangible assets		—		$	10,674			—		$	8,739
Depreciation		—			3,021			—			2,509
Net operating loss carryforward		—			4,134			—			4,730
Business tax credit carryforward		—			607			—			69
Other		159			498			217			939
Deferred tax liabilities:
Amortization		—			(7,424	)		—			(5,153	)
Depreciation		—			(9,981	)		—			(8,635	)
Deferred mail advertising		(1,306	)		—			(1,338	)		—
Other		(1,915	)		(353	)		(2,040	)		(669	)
Net deferred tax assets	$	10,019		$	1,176		$	11,755		$	2,529

F-21

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

Current and non-current amounts have been further segregated on the balance sheet due to the effect of different tax jurisdictions.

As a result of the PremiumWear, Inc. acquisition, the Company has a net operating loss carryforward for regular federal tax purposes of approximately $11,337 which will begin to expire in 2005. The utilization of these losses is subject to an annual limitation as set forth in IRC 382. The maximum amount of net operating losses that may be utilized by the Company in any period is limited to $2,176 per year. In addition, as a result of the acquisition, the Company has general business tax credit carryforwards of $69, which expire between 2002 and 2004.

A reconciliation of the provisions for income taxes to the U.S. Federal income tax statutory rates follows:

	2002		2001		2000
Statutory tax rate	35.0	%	35.0	%	35.0	%
State income taxes (less federal tax benefits)	3.3		2.3		2.3
Letter ruling benefit (less federal tax expense)	—		—		(2.3	)
Other—net	.1		1.7		.8
Effective tax rate	38.4	%	39.0	%	35.8	%

The letter ruling benefit shown above is the result of a one-time tax benefit due to a favorable state tax letter ruling received during fiscal year 2000 affecting prior years.

10.    Segment Information

The Company has identified five reportable segments. The first segment is “Direct Marketing-US” and represents those business operations that sell primarily printed products such as checks and business forms to small businesses through direct marketing in the United States. The second segment, “Direct Sales-US”, also sells primarily checks and business forms to small businesses; however, they sell through a direct sales force to the customer in the United States and, to a lesser extent, through distributors. The third segment, “Apparel”, utilizes independent sales representatives to market its specialty apparel products and to solicit orders from customers in the promotional products/advertising specialty industry. “Packaging and Display Products”, the fourth segment, primarily resells packaging and shipping supplies and retail signage marketed through a combination of direct marketing and direct selling efforts. The fifth segment, “International”, sells primarily printed products such as checks and business forms to small businesses in Europe and Canada through direct marketing, distributors or by directly selling to the customer.

The Company evaluates segment performance and allocates resources based on a profit from operations measure. This measure is similar to income from operations as reported on the statements of consolidated income in that it excludes interest and other income and expense. This measure, however, also excludes certain items that are reported within income from operations. These include management incentive compensation, amortization, integration charges, restructuring charges, impairment charges and corporate expenses. The chief operating decision-maker, in assessing segment results, does not consider these items. In order to reconcile the segment numbers to the Company’s income before income taxes, adjustments representing the items listed above totaling $36,734, $49,579 and $33,470 for the years ended June 29, 2002, June 30, 2001 and June 24, 2000, respectively, need to be made to the reported segment results.

F-22

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

Net sales and profit from operations for each of the Company’s business segments are set forth below:

	Direct Marketing-US		Direct Sales-US		Apparel			Packaging and Display Products		International		Total
2002
Net sales	$	282,595	$	105,958	$	50,592		$	78,907	$	39,487	$	557,539
Profit from operations		63,229		9,237		(1,205	)		2,563		3,904		77,728
Adjustments listed above													(36,734	)
Income before income taxes													40,994
2001
Net sales		299,919		103,817		56,853			84,355		41,147		586,091
Profit from operations		64,712		6,989		2,677			3,082		2,845		80,305
Adjustments listed above													(49,579	)
Income before income taxes													30,726
2000
Net sales		300,667		98,437		—			82,023		41,926		523,053
Profit from operations		66,807		6,616		—			4,097		1,647		79,167
Adjustments listed above													(33,470	)
Income before income taxes													45,697

11.    Accumulated Other Comprehensive Income

The Company’s accumulated other comprehensive income is set forth below:

	Balance			Balance
	June 29, 2002			June 30, 2001
Unrealized gains/losses on investments, net of tax	$	(292	)	$	(188	)
Foreign currency translation adjustments, net		(3,618	)		(4,059	)
Pension adjustments, net of tax		(305	)		(542	)
Unrealized losses on derivatives held for hedging purposes, net of tax		(3,196	)		(2,628	)
Total	$	(7,411	)	$	(7,417	)

F-23

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

12.    Quarterly Financial Information (Unaudited)

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total Year
2002
Net sales	$	133,515	$	157,532	$	132,879	$	133,613	$	557,539
Gross profit		75,427		89,934		74,358		75,912		315,631
Income before income taxes		7,542		15,178		7,541		10,733		40,994
Net income		1,854		9,349		4,646		6,611		22,460
Diluted earnings per share	$	.15	$	.73	$	.35	$	.49	$	1.73
Dividends per share	$	.20	$	.20	$	.20	$	.20	$	.80
2001
Net sales	$	141,118	$	166,475	$	132,857	$	145,641	$	586,091
Gross profit		78,725		94,596		73,999		81,360		328,680
Income before income taxes		4,630		14,429		5,815		5,852		30,726
Net income		2,824		8,802		3,547		3,570		18,743
Diluted earnings per share	$	.21	$	.66	$	.27	$	.28	$	1.43
Dividends per share	$	.20	$	.20	$	.20	$	.20	$	.80

13.    Subsequent Events

In July 2002, the Company exercised a common stock purchase warrant in part and purchased 428 shares of common stock of Advantage Payroll Services, Inc (“Advantage”) for an aggregate purchase price of $5,421. As a result of this additional investment, the Company now owns 2,567 shares or approximately 19.6% of the Advantage common shares outstanding on a fully diluted basis.

On July 24, 2002, a class action lawsuit entitled “OLDAPG, Inc. v. New England Business Service, Inc.” was filed in the Court of Common Pleas of the Ninth Judicial Circuit in and for Charleston County, South Carolina. The named plaintiff in the lawsuit seeks to represent a class consisting of all persons who allegedly received facsimiles containing unsolicited advertising from the Company in violation of the Telephone Consumer Protection Act of 1991 (the “TCPA”). The plaintiff is seeking statutory damages in the amount of $500.00 per individual violation, which amount can be trebled to $1,500.00 for each violation found to have been “willful and knowing”. The plaintiff is also seeking injunctive relief with respect to further violations of the TCPA and attorneys’ fees and costs. The Company believes that it has valid defenses to the claims asserted in the complaint and intends to defend the lawsuit vigorously.

F-24

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of New England Business Service, Inc.:

We have audited the accompanying consolidated balance sheets of New England Business Service, Inc. and subsidiaries as of June 29, 2002 and June 30, 2001 and the related statements of consolidated income, consolidated stockholders’ equity and comprehensive income, and cash flows for each of the three years in the period ended June 29, 2002. Our audits also included the financial statement schedule listed under Item 14(a)(2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of New England Business Service, Inc. and subsidiaries as of June 29, 2002 and June 30, 2001, and the results of their operations and their cash flows for each of the three years in the period ended June 29, 2002 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 1 to the financial statements, in 2002 the Company adopted the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets”, and in 2001 the Company adopted the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activity”.

/s/    DELOITTE & TOUCHE LLP

Boston, Massachusetts

July 31, 2002

F-25

SCHEDULE II

NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

(in thousands of dollars)

	Balance at Beginning Period		Additions					Deductions from Reserves(2)		Balance at End of Period
			Charged to Income		Other
Reserves deducted from assets to which they apply:
For doubtful accounts receivable:
Year ended June 24, 2000	$	4,899	$	4,203	$	0		$	4,065	$	5,037
Year ended June 30, 2001		5,037		4,659		422	(1)		4,774		5,344
Year ended June 29, 2002		5,344		4,865		0			5,068		5,141
For inventory obsolescence:
Year ended June 24, 2000	$	2,733	$	1,008	$	0		$	1,227	$	2,514
Year ended June 30, 2001		2,514		8,736		1,700	(1)		7,355		5,595
Year ended June 29, 2002		5,595		6,749		0			6,711		5,633
Reserves included in liabilities:
For sales returns and allowances:
Year ended June 24, 2000	$	985	$	1,059	$	0		$	985	$	1,059
Year ended June 30, 2001		1,059		1,021		80	(1)		1,059		1,101
Year ended June 29, 2002		1,101		787		0			1,101		787

(1) Acquired in acquisitions.

(2) Accounts written off.

F-26

EXHIBIT INDEX

Exhibit Number	Description
3.1.1	Certificate of Incorporation of the Registrant. (Incorporated by reference to Exhibit 7(a) to the Company’s Current Report on Form 8-K dated October 31, 1986.)
3.1.2	Certificate of Merger of New England Business Service, Inc. (a Massachusetts corporation) and the Company, dated October 24, 1986 amending the Certificate of Incorporation of the Company by adding Articles 14 and 15 thereto. (Incorporated by reference to Exhibit 7(a) to the Company’s Current Report on Form 8-K dated October 31, 1986.)
3.1.3	Certificate of Designations, Preferences and Rights of Series A Participating Preferred Stock of the Company, dated October 27, 1989. (Incorporated by reference to Exhibit (3)(c) to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1995.)
3.2	By-Laws of the Registrant, as amended through August 2, 2002; filed herewith.
4.1	Specimen stock certificate for shares of Common Stock, par value $1.00 per share. (Incorporated by reference to Exhibit (4)(a) to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1995.)
4.2	Amended and Restated Rights Agreement, dated as of October 27, 1989 as amended as of October 20, 1994 (the “Rights Agreement”), between New England Business Service, Inc. and Fleet National Bank (formerly known as BankBoston, N.A.), as rights agent, including as Exhibit B the forms of Rights Certificate and Election to Exercise. (Incorporated by reference to Exhibit 4 of the Company’s Current Report on Form 8-K dated October 20,1994.)
10.1.1	Second Amended and Restated Revolving Credit Agreement dated as of July 13, 2001 by and among the Company, Fleet National Bank, and certain other financial institutions. (Incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001.)
10.1.2	First Amendment to Second Amended and Restated Revolving Credit Agreement dated as of October 24, 2001 by and between the Company, Fleet National Bank, and certain other financial institutions. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 29, 2001.)
10.1.3	Second Amendment to Second Amended and Restated Revolving Credit Agreement dated as of April 26, 2002 by and among the Company, Fleet National Bank, and certain other financial institutions. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2002.)
10.2	Note Purchase Agreement dated as of November 9, 2001 by and between the Company and The Prudential Insurance Company of America. (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 29, 2001.)
10.3.1	Lease Agreement dated as of March 31, 1997, relating to 33 Union Avenue, Sudbury, Massachusetts (“33 Union Avenue Lease”). (Incorporated by reference to Exhibit 10.3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001.)
10.3.2	Amendment No. 1 to 33 Union Avenue Lease dated as of January 28, 1988. (Incorporated by reference to Exhibit 10.3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001.)
10.3.3	Assignment and Assumption Agreement as of September 27, 1999 relating to 33 Union Avenue Lease. (Incorporated by reference to Exhibit 10.3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001.)

X-1

Exhibit Number	Description
10.4	Lease Agreement dated as of June 3, 1998, relating to 1055 East State Street, Athens, Ohio. (Incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001.)
10.5	Agreement and Plan of Merger, dated as of May 26, 2000, among the Company, Penguin Sub, Inc. and PremiumWear, Inc. (Incorporated by reference to Exhibit (d)(1) to the Company’s Schedule TO dated June 9, 2000.)
10.6*	NEBS 1997 Key Employee and Eligible Director Stock Option and Stock Appreciation RightsPlan dated July 25, 1997 (including amendment and restatement of the NEBS 1990 Key Employee Stock Option and Stock Appreciation Rights Plan and the NEBS 1994 Key Employee and Eligible Director Stock Option and Stock Appreciation Rights Plan), amended through October 23, 1998. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 1998.)
10.7*	Stock Option Agreement dated February 2, 1996 between the Company and Robert J. Murray. (Incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 1998.)
10.8*	NEBS Deferred Compensation Plan for Outside Directors. (Incorporated by reference to Exhibit (10)(d) to the Company’s Annual Report on Form 10-K for the fiscal year ended June 25, 1982.)
10.9.1*	New England Business Service, Inc. Deferred Compensation Plan dated June 25, 1994. (Incorporated by reference to Exhibit (10)(g) to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1995.)
10.9.2*	First Restated Trust Agreement for the New England Business Service, Inc. Deferred Compensation Plan, restated effective April 1, 1998. (Incorporated by reference to Exhibit 10.11.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 1998.)
10.10.1*	Supplemental Retirement Plan for Executive Employees of New England Business Service, Inc. (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 1998.)
10.10.2*	First Amendment to the Supplemental Executive Retirement Plan for Executives of New England Business Service, Inc., effective October 26, 2001. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 29, 2001).
10.10.3*	Second Amendment to the Supplemental Executive Retirement Plan for Executives of New England Business Service, Inc. effective August 2, 2002; filed herewith.
10.11*	New England Business Service, Inc. Stock Compensation Plan dated July 25, 1994, amended through October 23, 1998. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 1998.)
10.12*	Form of Restricted Stock Award Agreement issuable under the Company’s Stock Compensation Plan in connection with the Executive Bonus Plan for 2000 (Incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 26, 1999.)
10.13	Form of Restricted Stock Award Agreement issuable under the Company’s Stock Compensation Plan in connection with the Executive Bonus Plan for 2002; filed herewith.
10.14	Form of Restricted Stock Award Agreement issuable under the Company’s Stock Compensation Plan in connection with the FY 2002 NEBS Performance Restricted Stock Plan. (Incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001.)

X-2

Exhibit Number	Description
10.15*	Executive Bonus Plan for 2003; filed herewith.
10.16*	Performance Restricted Stock Bonus Plan for 2003; filed herewith.
10.17*	Change in Control Severance Agreement dated August 2, 2001 between the Company and Robert J. Murray. (Incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001.)
10.18.1*	Form of Change in Control Severance Agreement between the Company and certain executive officers of the Company. (Incorporated by reference to Exhibit 10.15.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001.)
10.18.2*	List of executive officers of the Company who have entered into Change in Control Severance Agreements and the dates thereof; filed herewith.
10.19*	Employment Agreement dated May 26, 2000 between PremiumWear, Inc. and David E. Berg. (Incorporated by reference to Exhibit 99.4 (a) to the Current Report on Form 8-K dated May 26, 2000 of PremiumWear, Inc. (File No. 000-28501)).
10.20.1*	Amended and Restated Change in Control Severance Agreement dated as of May 22, 2000 between PremiumWear, Inc. and David E. Berg. (Incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K dated May 26, 2000 of PremiumWear, Inc. (File No. 000-28501)).
10.20.2*	First Amendment to Amended and Restated Change in Control Severance Agreement dated as of May 26, 2000 between PremiumWear, Inc. and David E. Berg. (Incorporated by reference to Exhibit 99.5 (a) to the Current Report on Form 8-K dated May 26, 2000 of PremiumWear, Inc. (File No. 000-28501)).
10.21*	NEBS 2000 Stock Option Plan for PremiumWear Employees dated July 14, 2000. (Incorporated by reference to Exhibit 99 to the Company’s Registration Statement on Form S-8 (File No. 333-43028), filed on August 4, 2000).
10.22*	Employment Agreement dated June 29, 2001 between the Company and Richard T. Riley. (Incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001.)
10.23*	Form of Promissory Note dated June 22, 2001 between the Company and Richard T. Riley; filed herewith.
21	List of Subsidiaries.
23	Independent Auditors Consent—Deloitte & Touche LLP.
24	Power of Attorney (included in the signature page of this Annual Report on Form 10-K).
99.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
99.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).

* Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of the Company participates.

X-3

EX-3.2

                                                                     Exhibit 3.2

                              AMENDED AND RESTATED
                            (Through August 2, 2002)

                                     BY-LAWS

                                       OF

                       NEW ENGLAND BUSINESS SERVICE, INC.


                                   ARTICLE ONE

                                  Stockholders

     Section 1. Annual Meetings. The annual meeting of the stockholders shall be
held at 10:00 a.m. on the fourth Friday of October in each year (or if that be a
legal holiday in the place where the meeting is to be held, on the next
succeeding full business day), or at such other date and time as shall be
designated from time to time by the Directors and stated in the notice of the
meeting. The purposes for which the annual meeting is to be held, in addition to
those prescribed by law, by the Certificate of Incorporation or by these
By-laws, may be specified by the Directors or the Chairman of the Board or the
President. If no annual meeting is held in accordance with the foregoing
provisions, the Directors shall cause the meeting to be held as soon thereafter
as convenient.

     Section 2. Special Meetings. Special meetings of the stockholder may be
called by the Chairman of the Board, the President or the Directors. No call of
a special meeting of the stockholders shall be required if such notice of the
meeting shall have been waived in writing (including a telegram) by every
stockholder entitled to notice thereof, or by his attorney thereunto authorized.

     Section 3. Place of Meetings. All meetings of stockholders shall be held at
the principal office of the corporation unless a different place (within the
United States) is fixed by the Directors or the Chairman of the Board or the
President and stated in the notice of the meeting.

     Section 4. Notices. Except as otherwise provided by law, notice of all
meetings of stockholders shall be given as follows, to wit: A written notice,
stating the place, day and hour thereof, shall be given by the Secretary (or
person or persons calling the meeting), not less than 10 nor more than sixty
days before the meeting, to each stockholder entitled to vote thereat and to
each stockholder who, by law, the Certificate of Incorporation, or these
By-laws, is entitled to such notice, by leaving such notice with him or at his
residence or usual place of business, or by mailing it postage prepaid, and
addressed to such stockholder at his address as it appears upon the books of the
corporation. Notices of all meetings of stockholders shall state the purposes
for which the meetings are called. No notice need be given to any stockholder if
a written waiver of



notice, executed before or after the meeting by the stockholder or his attorney
thereunto authorized, is filed with the records of the meeting.

     Section 5. Notice of Stockholder Nominations and Business; Annual Meeting
of Stockholders. Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by the stockholders may be made at
an annual meeting of stockholders (a) pursuant to the corporation's notice of
meeting pursuant to Section 4 of this ARTICLE ONE, (b) by or at the direction of
the Board of Directors, or (c) by any stockholder of the corporation who was a
stockholder of record at the time of giving of notice provided for in this
By-law, who is entitled to vote at the meeting and who complies with the notice
procedures set forth in this By-law.

     For nominations or other business to be properly brought before an annual
meeting by a stockholder pursuant to clause (c) of the first paragraph of this
By-law, the stockholder must have given timely notice thereof in writing to the
Secretary at the principal executive offices of the corporation not later than
the close of business on the 90th day nor earlier than the close of business on
the 120th day prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is more than 30 days before or after such anniversary date, notice by
the stockholder to be timely must be so delivered not earlier than the close of
business on the 120th day prior to such annual meeting and not later than the
close of business on the later of the 90th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made by the corporation. In no event will the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election as a Director all information relating to such person that
is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
Director if elected); (b) as to any other business desired to be brought before
the meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; and (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such stockholder, as
they appear on the corporation's books, and of such beneficial owner, and (ii)
the class and number of shares of the corporation which are owned beneficially
and of record by such stockholder and such beneficial owner.

     Anything contained in the second sentence of the second paragraph of this
By-law to the contrary notwithstanding, in the event that the number of persons
to be elected to the Board of Directors is increased and there is no public
announcement naming all of the nominees for Director or specifying the size of
the increased Board of Directors made by

                                       2




the corporation at least 100 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this By-law
will also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the corporation.

     Section 6. Notice of Stockholder Nominations and Business; Special Meetings
of Stockholders. Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
corporation's notice of meeting pursuant to Section 4 of this ARTICLE ONE.
Nominations of persons for election to the Board of Directors may be made at a
special meeting of stockholders at which Directors are to be elected pursuant to
the corporation's notice of meeting (a) by or at the direction of the Board of
Directors, or (b) by any stockholder of the corporation who is a stockholder of
record at the time of giving notice provided by this By-law, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this By-law. In the event the corporation calls a special meeting of
stockholders for the purpose of electing one or more persons to the Board of
Directors, any such stockholder may nominate a person or persons (as the case
may be), for election to such position(s) as specified in the corporation's
notice of meeting, if the stockholder's notice required by the second paragraph
of Section 5 of ARTICLE ONE shall be delivered to the Secretary at the principal
executive offices of the corporation not earlier than the close of business on
the 120th day prior to such special meeting and not later than the close of
business o the later of the 90th day prior to such special meeting or the 10th
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.

     Section 7. Notice of Stockholder Nominations and Business; General. Only
such persons who are nominated in accordance with the procedures set forth in
these By-laws shall be eligible to serve as Directors and only such business
shall be conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in these By-laws.
Except as otherwise provided by law, the Certificate of Incorporation or these
By-laws, the presiding officer of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made or proposed, as the case may be, in accordance with the
procedures set forth in these By-laws and, if any proposed nomination or
business is not in compliance with these By-laws, to declare that such defective
nomination or proposal shall be disregarded.

     For purposes of these By-laws, "public announcement" shall mean disclosure
in a press release reported by the Dow Jones News Service, Associated Press or
comparable national news service or in a document publicly filed by the
corporation with the

                                       3




Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act.

     Anything contained in the foregoing provisions of these By-laws to the
contrary notwithstanding, a stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in these By-laws. Nothing in these By-laws
shall be deemed to affect the rights (a) of stockholders to request the
inclusion of proposals in the corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act, or (b) of the holders of any series of Preferred
Stock to elect directors under specified circumstances.

     Section 8. Quorum. At any meeting of stockholders a quorum for the
transaction of business shall consist of one or more individuals appearing in
person and/or as proxies and owning and/or representing a majority of the shares
of the corporation then outstanding and entitled to vote, provided that in the
absence of a quorum, the stockholders may, by majority vote, adjourn the meeting
from time to time until a quorum shall be present.

     Section 9. Voting and Proxies. Each stockholder shall have one vote for
each share of stock entitled to vote, and a proportionate vote for any
fractional share entitled to vote, held by him of record according to the
records of the corporation, unless otherwise provided by the Certificate of
Incorporation or by resolution or resolutions of the Board of Directors
establishing rights of Preferred Stock as provided for in the Certificate of
Incorporation. Stockholders may vote either in person or by proxy dated not more
than three years before the meeting named therein, unless the proxy provides for
a longer period. A stockholder may grant authority to another person or persons
to act for such stockholder by proxy (a) by the stockholder or such
stockholder's authorized officer, director, employee or agent executing a
writing or causing his or her signature to be affixed to such writing by any
reasonable means, including facsimile signature or (b) by transmitting or
authorizing the transmission of a telegram, cablegram or other means of
electronic transmission to the intended holder of the proxy or to a proxy
solicitation firm, proxy support service or similar agent duly authorized by the
intended proxy holder to receive such transmission; provided, that any such
telegram, cablegram or other electronic transmission must either set forth or be
submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder.
Any copy, facsimile telecommunication or other reliable reproduction of the
writing or transmission by which a stockholder has authorized another person to
act as proxy for such stockholder may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission. A proxy purporting to be executed by or
on behalf of a stockholder shall be deemed valid unless challenged at or prior
to its exercise.

                                       4



     Section 10. Action at Meeting. When a quorum is present, the action of the
stockholders on any matter properly brought before such meeting shall be decided
by the holders of a majority of the stock present or represented and entitled to
vote and voting on such matter, except where a different vote is required by
law, the Certificate of Incorporation or these By-laws. Any election by
stockholders shall be determined by a plurality of the votes cast by the
stockholders entitled to vote at the election. No ballot shall be required for
such election unless requested by a stockholder present or represented at the
meeting and entitled to vote in the election.

     Section 11. Special Action. Any action to be taken by the stockholders may
be taken without a meeting if all stockholders entitled to vote on the matter
consent to the action by a writing filed with the records of the meetings of
stockholders. Such consent shall be treated for all purposes as a vote at a
meeting.

     Section 12. Record Date. The Directors may fix in advance a time which
shall be not more than sixty days prior to (a) the date of any meeting of
stockholders and not less than ten days prior to such meeting, (b) the date for
the payment of any dividend or the making of any distribution to stockholders,
or (c) the last day on which the consent or dissent of stockholders may be
effectively expressed for any purpose, as the record date for determining the
stockholders having the right to notice of and to vote at such meeting and any
adjournment thereof, the right to receive such dividend or distribution, or the
right to give consent or dissent. The Board of Directors may fix a new record
date, or confirm an existing record date, for the purpose of determining the
stockholders entitled to vote at any adjourned or postponed meeting. In each
such case only stockholders of record on such record date shall have such right,
notwithstanding any transfer of stock on the books of the corporation after the
record date.

     Section 13. Stockholder List. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section or the books of the corporation, or to vote at any meeting of
stockholders.

                                       5



                                   ARTICLE TWO

                                    Directors

     Section 1. Powers. The Board of Directors, subject to any action at any
time taken by such stockholders as then have the right to vote, shall have the
entire charge, control and management of the corporation, its property and
business and may exercise all or any of its power.

     Section 2. Election. A Board of Directors of such number, not less than 3,
nor more than 10, as shall be fixed by the stockholders, shall be elected by the
stockholders at the annual meeting.

     Section 3. Vacancies. Any vacancy at any time existing in the Board may be
filled by the Board at any meeting. The stockholders having voting power may, at
a special meeting called at least in part for the purpose, choose a successor to
a Director whose office is vacant, and the person so chosen shall displace any
successor chosen by the Directors.

     Section 4. Enlargement of the Board. The number of the Board of Directors
may be increased and one or more additional Directors elected at any special
meeting of the stockholders, called at least in part for the purpose, or by the
Directors by vote of a majority of the Directors then in office.

     Section 5. Tenure. Except as otherwise provided by law, by the Certificate
of Incorporation or by these By-laws, Directors shall hold office until the next
annual meeting of stockholders and thereafter until their successors are chosen
and qualified. Any Director may resign by delivering his written resignation to
the corporation at its principal office or to the Chairman of the Board, the
President or the Secretary. Such resignation shall be effective upon receipt
unless it is specified to be effective at some other time or upon the happening
of some other event.

     Section 6. Removal. A Director may be removed from office with or without
cause by vote of a majority of the stockholders entitled to vote in the election
of Directors.

     Section 7. Annual Meetings. Immediately after each annual meeting of
stockholders and at the place thereof, if a quorum of the Directors elected at
such meeting is present, there shall be a meeting of the Directors without
notice; but if such a quorum of the Directors elected thereat is not present at
such meeting, or if present does not proceed immediately thereafter to hold a
meeting of the Directors, the annual meeting of the Directors shall be called in
the manner hereinafter provided with respect to the call of special meetings of
Directors.

     Section 8. Regular Meetings. Regular meetings of the Directors may be held
at such times and places as shall from time to time be fixed by resolution of
the Board and

                                       6



no notice need be given of regular meetings held at times and places so fixed,
provided however, that any resolution relating to the holding of regular
meetings shall remain in force only until the next annual meeting of
stockholders, and that if at any meeting of Directors at which a resolution is
adopted fixing the times or place or places for any regular meetings any
Director is absent, no meeting shall be held pursuant to such resolution until
either each such absent Director has in writing or by telegram approved the
resolution or seven days have elapsed after a copy of the resolution certified
by the Secretary has been mailed postage prepaid, addressed to each such absent
Director at his last known home or business address.

     Section 9. Special Meetings. Special meetings of the Directors may be
called by the Chairman of the Board, the President, the Treasurer or any two
Directors and shall be held at the place designated in the call thereof.

     Section 10. Notices. Notices of any special meeting of the Directors shall
be given by the Secretary to each Director, by mailing to him, postage prepaid,
and addressed to him at his address as registered on the books of the
corporation, or if not so registered at his last known home or business address,
a written notice of such meeting at least four days before the meeting or by
delivering such notice to him at least forty-eight hours before the meeting or
by sending to him at least forty-eight hours before the meeting, by prepaid
telegram addressed to him at such address, notice of such meeting. If the
Secretary refuses or neglects for more than twenty-four hours after receipt of
the call to give notice of such special meeting, or if the office of the
Secretary is vacant or the Secretary is incapacitated, such notice may be given
by the officer or one of the Directors calling the meeting. Notice need not be
given to any Director if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any Director
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A notice or waiver of notice of a Directors' meeting
need not specify the purpose of the meeting.

     Section 11. Quorum. At any meeting of the Directors a majority of the
number of Directors required to constitute a full Board, as fixed in or
determined pursuant to these By-laws as then in effect, shall constitute a
quorum for the transaction of business; provided always that any number of
Directors (whether one or more and whether or not constituting a quorum) present
at any meeting or at any adjourned meeting may make any reasonable adjournment
thereof.

     Section 12. Action at Meeting. At any meeting of the Directors at which a
quorum is present, the action of the Directors on any matter brought before the
meeting shall be decided by the vote of a majority of those present and voting,
unless a different vote is required by law, the Certificate of Incorporation, or
these By-laws.

     Section 13. Special Action. Any action by the Directors may be taken
without a meeting if a written consent thereto is signed by all the Directors
and filed with the

                                       7



records of the Directors' meetings. Such consent shall be treated as a vote of
the Directors for all purposes.

     Section 14. Committees. The Directors may, by vote of a majority of the
number of Directors required to constitute a full Board as fixed in or
determined pursuant to these By-laws as then in effect, elect from their number
an executive or other committees and may by like vote delegate thereto some or
all of their powers except those which by law, the Certificate of Incorporation
or these By-laws they are prohibited from delegating. Except as the Directors
may otherwise determine, any such committee may make rules for the conduct of
its business, but unless otherwise provided by the Directors or in such rules,
its business shall be conducted as nearly as may be in the same manner as is
provided by these By-laws for the Directors.

                                  ARTICLE THREE

                                    Officers

     Section 1. Enumeration. The officers of the corporation shall be a
President, a Treasurer, a Secretary, and such Vice Presidents, Assistant
Treasurers, Assistant Secretaries, and other officers as may from time to time
be determined by the Directors.

     Section 2. Election. The President, Treasurer and Secretary shall be
elected annually by the Directors at their first meeting following the annual
meeting of stockholders. Other officers may be chosen by the Directors at such
meeting or at any other meeting.

     Section 3. Qualification. The President may, but need not be, a Director.
No officer need be a stockholder. Any two or more offices may be held by the
same person, provided that the President and the Secretary shall not be the same
person. Any officer may be required by the Directors to give bond for the
faithful performance of his duties to the corporation in such amount and with
such sureties as the Directors may determine.

     Section 4. Tenure. Except as otherwise provided by law, by the Certificate
of Incorporation or by these By-laws, the President, Treasurer and Secretary
shall hold office until the first meeting of the Directors following the annual
meeting of stockholders, and thereafter until his successor is chosen and
qualified. Other officers shall hold office until the first meeting of the
Directors following the annual meeting of stockholders unless a shorter term is
specified in the vote choosing or appointing them. Any officer may resign by
delivering his written resignation to the corporation at its principal office or
to the Chairman of the Board, the President or the Secretary, and such
resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event.

     Section 5. Removal. The Directors may remove any officer with or without
cause by a vote of a majority of the entire number of Directors then in office,
provided, that an


                                       8



officer may be removed for cause only after reasonable notice and opportunity to
be heard by the Board of Directors prior to action thereon.

     Section 6. Chairman of the Board. If the Directors shall appoint a Chairman
of the Board, he shall preside at all meetings of the Board and of the
stockholders at which he shall be present. In the absence or disability of the
President, the powers and duties of the President shall be exercised and
performed by the Chairman of the Board. He shall, subject to the Board of
Directors, be responsible for the long-range planning of the corporation. He
shall perform such duties and have such powers additional to the foregoing as
the Board shall from time to time designate.

     Section 7. President. In the absence or disability of the Chairman of the
Board, the President shall, when present, preside at all meetings of the
stockholders and of the Directors. Except as otherwise expressly provided by
these By-laws or by action of the Board, it shall be the duty of the President,
and he shall have the power, to see that all orders and resolutions of the
Directors are carried into effect. The President, as soon as reasonably possible
after the close of each fiscal year, shall submit to the Directors a report of
the operations of the corporation for such year and a statement of its affairs
and shall from time to time report to the Directors all matters within his
knowledge which the interests of the corporation may require to be brought to
its notice. The President shall perform such duties and have such powers
additional to the foregoing as the Directors shall designate.

     Section 8. Vice Presidents. Each Vice President shall have such powers and
perform such duties as the Directors shall from time to time designate.

     Section 9. Treasurer. The Treasurer shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositaries as shall be designated by the Directors or
in the absence of such designation in such depositaries as he shall from time to
time deem proper. He shall disburse the funds of the corporation as shall be
ordered by the Directors, taking proper vouchers for such disbursements. He
shall promptly render to the President and to the Directors such statements of
his transactions and accounts as the President and Directors respectively may
from time to time require. The Treasurer shall perform such duties and have such
powers additional to the foregoing as the Directors may designate.

     Section 10. Assistant Treasurer. In the absence or disability of the
Treasurer, his powers and duties shall be performed by the Assistant Treasurer,
if only one, or if more than one, by the one designated for the purpose by the
Directors. Each Assistant Treasurer shall have such other powers and perform
such other duties as the Directors shall from time to time designate.

         Section 11. Secretary and Assistant Secretary. The Secretary or an
Assistant Secretary, if one be elected, shall record all proceedings of the
stockholders in a book to be kept therefor and, if there be no Secretary or
Assistant Secretary of the Board


                                       9



of Directors, shall also record all proceedings of the Directors in a book to be
kept therefor. If there be more than one Assistant Secretary, then the one
designated to so record such proceedings by the Directors shall do so, otherwise
a Temporary Secretary designated by the person presiding at a meeting, shall
perform the duties of the Secretary. Unless the Directors shall appoint a
transfer agent and/or registrar or other officer or officers for the purpose,
the Secretary shall be charged with the duties of keeping or causing to be kept,
accurate records of all stock outstanding, stock certificates issued and stock
transfers; and, subject to such other duties or different rules as shall be
adopted from time to time by the Directors, such records may be kept solely in
the stock certificate books. The Secretary and each Assistant Secretary shall
have such other powers and perform such other duties additional to the foregoing
as the Directors may from time to time designate.

                                  ARTICLE FOUR

                      Provisions Relating to Capital Stock

     Section 1. Certificates of Stock. The shares of the corporation shall be
represented by a certificate or shall be uncertificated. Certificates shall be
signed by, or in the name of the corporation by, the Chairman or Vice-Chairman
of the Board of Directors, or the President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the corporation.

     Upon the face or back of each stock certificate issued to represent any
partly paid shares, or upon the books and records of the corporation in the case
of uncertificated partly paid shares, shall be set forth the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.

     If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.

     Within a reasonable time after the issuance or transfer of uncertificated
stock, the corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that
the corporation will furnish without charge to each stockholder who so requests
the powers, designations, preferences and relative


                                       10



participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.

     Any of or all the signatures on a certificate may be facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.

     Section 2. Transfer of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Upon receipt of proper transfer instructions from
the registered owner of uncertificated shares such uncertificated shares shall
be cancelled and issuance of new equivalent uncertificated shares or certificate
shares shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the corporation.

     Section 3. Equitable Interests Not Recognized. The corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person except as may be otherwise expressly provided by law.

     Section 4. Lost or Destroyed Certificates. The Directors of the corporation
may, subject to any contrary provision of law, determine the conditions upon
which a new certificate of stock may be issued in place of any certificate
alleged to have been lost, stolen, destroyed, or mutilated.

                                  ARTICLE FIVE

                           Stock in Other Corporations

     Except as the Directors may otherwise designate, the Chairman of the Board,
President or Treasurer may waive notice of, and appoint any person or persons to
act as proxy or attorney-in-fact for this corporation (with or without power of
substitution) at any meeting of stockholders or shareholders of any other
corporation or organization the securities of which may be held by the
corporation.

                                   ARTICLE SIX

                              Inspection of Records

     Books, accounts, documents and records of the corporation shall be open to
inspection by any Director at all times during the usual hours of business. The
original,

                                       11



or attested copies, of the Certificate of Incorporation, By-laws and records of
all meeting of the incorporators and stockholders, and the stock and transfer
records, which shall contain the names of all stockholders and the record
address and the amount of stock held by each, shall be kept in Massachusetts at
the principal office of the corporation, or at an office of its transfer agent
or of the Secretary. Said copies and records need not be all kept in the same
office. They shall be available at all reasonable times to the inspection of any
stockholder for any proper purpose but not to secure a list of stockholders for
the purpose of selling said list or copies thereof or of using the same for a
purpose other than in the interest of the applicant, as a stockholder, relative
to the affairs of the corporation.

                                  ARTICLE SEVEN

                   Checks, Notes, Drafts and Other Instruments

     Checks, notes, drafts and other instruments for the payment of money drawn
or endorsed in the name of the corporation may be signed by any officer or
officers or person or person authorized by the Directors to sign the same. No
officer or person shall sign any such instrument as aforesaid unless authorized
by the Directors to do so.

                                  ARTICLE EIGHT

                                      Seal

     The seal of the corporation shall be circular in form, bearing its name,
the word "Delaware," and the year of its incorporation. The Treasurer shall have
custody of the seal and may affix it (as may any other officer authorized by the
Directors) to any instrument requiring the corporate seal.

                                  ARTICLE NINE

                                   Fiscal Year

     The fiscal year of the Corporation shall be the year ending with the last
Saturday of June in each year.

                                   ARTICLE TEN

                                   Amendments

     These By-laws may at any time be amended by vote of the stockholders,
provided that notice of the substance of the proposed amendment is stated in the
notice of the meeting. If authorized by the Certificate of Incorporation, the
Directors may also make, amend, or repeal these By-laws in whole or in part,
except with respect to any provisions thereof which by law, the Certificate of
Incorporation, or these By-laws requires action by the stockholders. Not later
than the time of giving notice of the meeting of stockholders next following the
making, amending or repealing by the Directors of any By-law, notice thereof
stating the substance of such change shall be given to all stockholders entitled
to

                                       12



vote on amending the By-laws. Any By-law adopted by the Directors may be amended
or repealed by the stockholders.

                                 ARTICLE ELEVEN

                                 Indemnification

     Section 1. Right to Indemnification. Each person who was or is made a party
to or is otherwise involved (including, without limitation, as a witness) in any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that such person is or was a Director or officer of the corporation or
that, being or having been such a Director or officer of the Corporation, such
person is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to any
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as such a Director or
officer or in any other capacity while serving as such a Director or officer,
shall be indemnified and held harmless by the corporation to the full extent
permitted by the Delaware General Corporation Law (the "DGCL"), as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the corporation to provide broader
indemnification rights than permitted prior thereto), or by other applicable law
as then in effect, against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification shall continue as to an indemnitee
who has ceased to be a Director or officer and shall inure to the benefit of the
indemnitee's heirs, executors and administrators; provided, however, that except
as provided in Section 2 of this ARTICLE ELEVEN with respect to proceedings
seeking to enforce rights to indemnification, the corporation shall indemnify
any such indemnitee in connection with a proceeding (or part thereof) initiated
by any such indemnitee only if such proceeding (or part thereof) was authorized
or ratified by the Board of Directors. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the corporation the expenses incurred in defending (or otherwise appearing in)
any such proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that an advancement of expenses
shall be made only upon delivery to the corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal that such indemnitee is
not entitled to be indemnified for such expenses under this Section or
otherwise.

     Section 2. Right of Indemnitee to Bring Suit. If a claim under Section 1 of
this ARTICLE ELEVEN is not paid in full by the corporation within 60 days after
a written claim has been received by the corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be 20 days, the

                                       13



indemnitee may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. The
indemnitee shall be presumed to be entitled to indemnification under this
ARTICLE ELEVEN upon submission of a written claim (and, in an action brought to
enforce a claim for an advancement of expenses, where the required undertaking
has been tendered to the corporation), and thereafter the corporation shall have
the burden of proof that the indemnitee is not so entitled. Neither the failure
of the corporation (including the Board of Directors, independent legal counsel
or the stockholders) to have made a determination prior to the commencement of
such suit that indemnification of the indemnitee is proper in the circumstances
nor an actual determination by the corporation (including the Board of
Directors, independent legal counsel or the stockholders) that the indemnitee is
not entitled to indemnification shall be a defense to the suit or create a
presumption that the indemnitee is not so entitled.

     Section 3. Non-Exclusivity of Rights. The rights to indemnification and to
the advancement of expenses conferred by this ARTICLE ELEVEN shall not be
exclusive of any other right that any person may have or hereafter acquire under
any statute, agreement, vote of stockholders or disinterested Directors,
provisions of the Certificate of Incorporation or By-laws of the corporation or
otherwise. Notwithstanding any amendment to or repeal of this ARTICLE ELEVEN,
any indemnitee shall be entitled to indemnification in accordance with the
provisions hereof with respect to any acts or omissions of such indemnitee
occurring prior to such amendment or repeal.

     Section 4. Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any Director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the DGCL.

                                 ARTICLE TWELVE

                        Principal and Registered Offices

     Section 1. Principal Office. The corporation's principal office shall be
500 Main Street, Groton, Massachusetts or such other place as the Board of
Directors may designate.


     Section 2. Registered Office. The corporation's registered office shall be
229 South State Street, City of Dover, County of Kent, Delaware, or such other
place as the Board of Directors may designate.

                                       14

EX-10.10(3)

                                                                 Exhibit 10.10.3

                       NEW ENGLAND BUSINESS SERVICE, INC.


           Second Amendment to the New England Business Service, Inc.
                     Supplemental Executive Retirement Plan

     This Second Amendment to the New England Business Service, Inc.
Supplemental Executive Retirement Plan (the "Plan") is hereby adopted by New
England Business Service, Inc. (the "Company") pursuant to Article XII of the
Plan, effective August 2, 2002. The Company hereby amends the Plan by deleting
Section 2.2 and replacing it with the following:

2.2  "Average Final Compensation" shall mean the sum of (a) the Participant's
     highest base salary during his final five Plan Years of Service and (b) the
     average of a Participant's bonuses for the three Plan years in which the
     Participant's greatest bonus is received during his final five plan Years
     of Service.

     Except as amended hereby, the Plan is hereby reaffirmed in all respects.

     Signed as a sealed Massachusetts instrument effective as of the date stated
above.

                                  NEW ENGLAND BUSINESS SERVICE, INC.


                                  By:      /s/ Robert J. Murray
                                      -----------------------------------------

                                  Title:   Chairman and Chief Executive Officer
                                         --------------------------------------

EX-10.13

                                                                   Exhibit 10.13

                       NEW ENGLAND BUSINESS SERVICE, INC.

                        RESTRICTED STOCK AWARD AGREEMENT

          (New England Business Service, Inc. Stock Compensation Plan)

                                    Preamble

         This restricted stock award agreement (the "Agreement") is made and
entered into as of August 6, 2002 (the "Date of Grant") by New England
Business Service, Inc. (the "Issuer") and _____________________ (the
"Executive"), a key employee of the Issuer or a Subsidiary/1/ of the Issuer
(hereunder individually and collectively referred to as the "Company").

1.       Shares Subject to the Restricted Stock Award.

         Pursuant to the provisions of the New England Business Service, Inc.
Stock Compensation Plan (the "Plan"), as in effect on the Date of Grant, the
Issuer hereby grants to the Executive a restricted stock award ("Restricted
Stock Award") of _____________ shares of its Stock (the "Awarded Shares"). The
Awarded Shares are being issued to the Executive in lieu of twenty-five percent
(25%) of the gross bonus awarded to the Executive for the fiscal year ended June
29, 2002 (the "Bonus Award") pursuant to the Annual Executive Bonus Plan of
the Issuer adopted by the Organization and Compensation Committee of the Board
for such fiscal year and are valued for purposes of this Agreement at $22.30
per share, the Fair Market Value of a share of Stock on the Date of Grant, in
accordance with and subject to all the terms and conditions of the Plan and
subject to the terms and conditions hereinafter set forth. The Plan and any
amendments are hereby incorporated by reference and made a part hereof.

2.       Terms and Conditions of the Restricted Stock Award.

         The issuance of Awarded Shares pursuant to the Restricted Stock Award
shall be subject to the following terms and conditions.

         2.1 Withholding Taxes. Notwithstanding anything to the contrary in
Section 2.3(b), the Issuer's obligation to deliver vested Awarded Shares
pursuant to this Restricted Stock Award shall be subject to the Executive's
satisfaction of all applicable federal, state and local income and employment
tax withholding obligations. Without limiting the generality of the foregoing,
the Company shall have the right to deduct from payments of any kind otherwise
due to the Executive any federal, state or local taxes of any kind required by
law to be withheld with respect to any Awarded Shares issued pursuant to this
Restricted Stock Award. The Executive may satisfy such withholding obligations
by having the Company withhold vested and unrestricted Awarded Shares, or by
delivering to the Company already owned unrestricted shares of Stock, having a
Fair Market Value as of the date of delivery of such unrestricted shares equal
to the amount required to be withheld.

         2.2 Vesting, Forfeiture or Early Vesting of Unvested Awarded Shares.

            (a) Unless vested earlier or forfeited as provided in (b) or (c)
below, the Awarded Shares shall become vested in the Executive on the third
anniversary of the Date of Grant, and shall thereon be released from escrow and
delivered to the Executive, subject to the satisfaction of the condition set
forth in Section 2.1 above.

- -------------
/1/ Capitalized terms not otherwise defined herein are defined in Section 8
    below.




            (b) The Awarded Shares shall remain unvested and subject to the
restrictions of this Section 2.2 and Section 2.3 until the third anniversary of
the Date of Grant (the "Vesting Period"). If the Executive's Service terminates
during the Vesting Period, the following shall occur:

                (i) if the Executive ceases to perform Service by reason of
death, Disability or Retirement, all Awarded Shares shall thereupon immediately
vest in the Executive (or in the case of death, in the person or persons to whom
the Awarded Shares pass by will or by the laws of descent and distribution) or
his permitted transferees pursuant to Section 2.3(a) and shall no longer be
subject to the restrictions of this Section 2.2 and Section 2.3 hereof.

                (ii) If the Executive voluntarily terminates Service or his
Service is involuntarily terminated for "cause", as determined in good faith by
the Board or Committee (which determination shall be binding on both the Company
and the Executive and/or his permitted transferee(s) pursuant to Section
2.3(a)), the Awarded Shares shall thereupon be forfeited in their entirety to
the Issuer without any further action by the Issuer or the Executive and for no
consideration.

                (iii) If the Executive's Service is involuntarily terminated
without cause, the Awarded Shares shall thereupon be forfeited in their entirety
to the Issuer without any further action by the Issuer or the Executive and for
no consideration; provided, however, that the Committee may, in its sole
discretion, waive the forfeiture of all or any portion of the Awarded Shares and
such shares shall thereupon immediately vest in the Executive and no longer be
subject to the restrictions of this Section 2.2 and Section 2.3 hereof.

            (c) Notwithstanding any of the foregoing, if a Change in Control
occurs during the Vesting Period and prior to any forfeiture of all or any
portion of the Awarded Shares pursuant to this Section 2.2, all Awarded Shares
that were not forfeited by termination of the Executive's Service prior to the
occurrence of the Change in Control shall thereupon immediately vest in the
Executive and the restrictions of this Section 2.2 and Section 2.3 shall
terminate.

         2.3 Restrictions on Transfer and Escrow of Unvested Awarded Shares;
Delivery of Vested Shares; Stockholder Rights. The Executive hereby agrees to
the following conditions:

            (a) Awarded Shares which are not yet vested may not be sold,
hypothecated or otherwise disposed of by the Executive or anyone claiming
through him; provided, however, that Awarded Shares may be transferred by the
Executive, either directly or in trust, to one or more members of Executive's
Family, or to a family partnership or other entity for the exclusive benefit of
one or more members of Executive's Family if and only to the extent that (i) the
Executive notifies the Committee in writing of his desire to transfer Awarded
Shares and the Committee does not within thirty (30) days of such notification
advise the Executive in writing that such transfer will not be allowed and (ii)
such Family member or trust or family partnership for the benefit thereof
executes an agreement to be subject to all of the terms and conditions of this
Agreement.

            (b) Awarded Shares which are not yet vested shall be held in escrow
by the Issuer. Upon the vesting of any Awarded Shares pursuant to Section 2.2
and the satisfaction of all obligations imposed by Section 2.1, the Issuer shall
promptly cause a certificate to be issued for

                                       2



the Awarded Shares (or portion thereof which has vested) and shall deliver such
certificate to the Executive or his permitted transferee(s) pursuant to Section
2.3(a).

            (c) Subject to the terms hereof, the Executive shall have all the
rights of a stockholder with respect to the Awarded Shares while they are held
in escrow, and prior to their forfeiture pursuant to Section 2.2, including
without limitation, the right to vote the Awarded Shares, except as provided in
(d) below.

            (d) Any dividends declared and paid with respect to the Awarded
Shares while they are held in escrow, and prior to their forfeiture pursuant to
Section 2.2, shall not be paid to the Executive but shall instead be
automatically reinvested in shares of Stock at the Fair Market Value of a share
of Stock on the date of such dividend payment, and such additional shares of
Stock shall be deemed additional Awarded Shares (granted, for purposes of
Section 2.2 only, on the Date of Grant) and shall be subject to the forfeiture
and other provisions of Section 2.2 and this Section 2.3.

         2.4 Investment Representation. The Executive shall hold the Awarded
Shares for investment and not with a view to, or for resale in connection with,
any public distribution of such Shares, and if requested, shall deliver to the
Issuer an appropriate certification to that effect. This restriction shall
terminate upon the registration of such Shares under federal securities laws or
if, in the opinion of counsel for the Issuer, such Shares may be resold without
registration.

         2.5 Provision of Information. The Issuer will furnish upon request of
the Executive copies of the certificate of incorporation of the Issuer, as
amended, and by-laws of the Issuer, as amended, and such publicly available
financial and other information concerning the Issuer and its business and
prospects as may be reasonably requested by the Executive in connection with the
issuance or purchase of Awarded Shares pursuant to this Agreement.

         2.6 Compliance with the Plan. The Executive shall comply with all terms
and conditions of the Plan (a copy of which is attached hereto) and of this
Agreement. All decisions under, and interpretations of, the provisions of the
Plan and of this Agreement by the Board or by the Committee shall be final,
binding and conclusive upon the Company and its successors and assigns and upon
the Executive and anyone claiming through the Executive.

3.       Right to Terminate.

         Nothing contained in the Plan or in this Agreement shall restrict the
right of the Company to terminate the employment of the Executive at any time
and for any reason, with or without notice, or shall otherwise affect the terms
and conditions of the Executive's employment except as specifically provided in
either the Plan or in this Agreement.

4.       Adjustment in Shares.

         Appropriate adjustment shall be made by the Board or by the Committee
in the number and kind of the Awarded Shares issued pursuant to this Restricted
Stock Award to give effect to any stock dividends, stock splits, stock
combinations, recapitalizations and other similar changes in the capital
structure of the Issuer after the Date of Grant. In the event of a change of the
Stock resulting from a merger or similar reorganization as to which the Issuer
is the surviving corporation, or sale of all or substantially all of the assets
of Issuer to a corporation that does not result in a Change in Control, the
number and kind of the Awarded Shares issued pursuant to this

                                       3



Agreement shall be appropriately adjusted in such a manner as the Board or the
Committee shall deem equitable to prevent dilution or enlargement of the rights
granted hereunder.

5.       Restrictions on Transfer of Stock.

         The Awarded Shares shall be subject to any restrictions then in effect
pursuant to the certificate of incorporation or by-laws of the Issuer and to any
other restrictions or provisions attached hereto and made a part hereof or set
forth in any other contract or agreement binding on the Executive.

6.       Notice Concerning Tax Matters.

         The Company makes no representation about the tax treatment to the
Executive with respect to the receipt of the Restricted Stock Award or the
acquisition, holding or disposition of the Awarded Shares. The Executive is
urged to consult a professional tax adviser of his or her own choosing for
advice as to the tax consequences (including the application of Section 83 of
the Code) of receiving a Restricted Stock Award or of holding or selling Awarded
Shares issued pursuant to this Agreement.

7.       Governing Law; Etc.

         This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without giving effect to
principles of conflicts of law, and applicable federal law. This Agreement shall
be binding upon and inure to the benefit of the heirs and legal representatives
of the Executive and the successors and assigns of the Issuer, but shall not be
assigned by the Executive at any time, except as otherwise permitted by Section
2.3(a) hereof, without the prior written permission of the Issuer.

8.       Definitions.


         8.1 "Affiliate" has the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act.


         8.2 "Agreement" has the meaning defined in the Preamble above.


         8.3 "Awarded Shares" has the meaning defined in Section 1 above.


         8.4 "Beneficial Owner" has the meaning set forth in Rule 13d-3 under
the Exchange Act.


         8.5 "Board" means the Board of Directors of the Issuer.


         8.6 "Bonus Award" has the meaning set forth in Section 1 above.


         8.7 "Change in Control" means the occurrence of any of the following
events:


            (a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Issuer representing 35% or more of either the
then outstanding shares of common stock of the Issuer or the combined voting
power of the Issuer's then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
subparagraph (c)(i) below;

                                       4



            (b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Issuer) whose appointment or election by the
Board of Directors or nomination for election by the Issuer's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the directors
then in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended;

            (c) there is consummated a merger or consolidation of the Issuer or
any direct or indirect Subsidiary of the Issuer with another corporation, other
than (i) a merger or consolidation which would result in the voting securities
of the Issuer outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least
60% of the combined voting power of the securities of the Issuer or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Issuer (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Issuer (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Issuer of its Affiliates) representing 35%
or more of the combined voting power of the Issuer's then outstanding
securities; or

            (d) the stockholders of the Issuer approve a plan of complete
liquidation or dissolution of the Issuer or there is consummated an agreement
for the sale or disposition by the Issuer of all or substantially all of the
Issuer's assets, other than a sale or disposition by the Issuer of all or
substantially all of the Issuer's assets to an entity, at least 60% of the
combined voting power of the voting securities of which are owned by
stockholders of the Issuer in substantially the same proportions as their
ownership of the Issuer immediately prior to such sale.

         8.8 "Code" means the Internal Revenue Code of 1986, as heretofore and
hereafter amended, and the regulations promulgated thereunder.

         8.9 "Committee" has the meaning defined in the Plan.


         8.10 "Company" has the meaning defined in the Preamble above.


         8.11 "Date of Grant" has the meaning defined in the Preamble above.


         8.12 "Disability" has the meaning defined in Code Section 22(e)(3).


         8.13 "Exchange Act" means the Securities Exchange Act of 1934, as
heretofore and hereafter amended.


         8.14 "Executive" has the meaning defined in the Preamble above.


         8.15 "Fair Market Value" means the last sales price per share of Stock
as reported on the New York Stock Exchange prior to the Date of Grant (or other
date on which such valuation is made) or if no price has been so reported within
one week prior to the Date of Grant (or other date on which such valuation is
made), fair market value shall be determined by a principal

                                       5



market maker for the Stock designated by the Committee (or if no such market
maker is designated, by the Board in its good faith business judgment).

         8.16 "Family" means the Participant's: (i) spouse and lineal
descendants of such spouse; (ii) lineal descendants and the spouses of such
lineal descendants: (iii) lineal ancestors and the spouses of such lineal
ancestors; and (iv) siblings and the spouses and children of such siblings.


         8.16 "Issuer" has the meaning defined in the Preamble above.


         8.17 "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (a) the Issuer or any of its Subsidiaries, (b)
a trustee or other fiduciary holding securities under an employee benefit plan
of the Issuer or any of its Affiliates, (c) an underwriter temporarily holding
securities pursuant to an offering of such securities and (d) a corporation
owned, directly or indirectly, by the stockholders of the Issuer in
substantially the same proportions as their ownership of stock of the Issuer.

         8.18 "Plan" has the meaning defined in Section 1 above.


         8.19 "Restricted Stock Award" has the meaning defined in Section 1
above.


         8.20 "Retirement" means the actual cessation of the Executive's
Services on or after the date that he attains age 62.


         8.21 "Service" means the performance of work for the Company or a
Subsidiary as an employee.


         8.22 "Stock" has the meaning defined in the Plan.


         8.23 "Subsidiary" has the meaning defined in Code Section 424(f).


         8.24 "Vesting Period" has the meaning defined in Section 2.2 above.


9.       Amendments.

         Any amendment to this Agreement, or waiver of any terms hereof, may be
made only pursuant to a writing executed by the Issuer and the Executive.

                                       6



         IN WITNESS WHEREOF, the undersigned have executed this Agreement under
seal as of the date first appearing above.

                                             EXECUTIVE

                                             -----------------------------------
                                             Signature

                                             Address of Executive:

                                             -----------------------------------

                                             -----------------------------------


                                             NEW ENGLAND BUSINESS SERVICE, INC.


CORPORATE SEAL                               By:________________________________
                                                Name:
                                                Title:


                                       7

EX-10.15

                                                                   Exhibit 10.15

                        FY2003 NEBS EXECUTIVE BONUS PLAN
                         (Effective as of July 1, 2002)

     This Executive Bonus Plan (the "Plan") was adopted by the Board of
Directors of New England Business Service, Inc. (the "Company") on August 2,
2002 upon the recommendation of its Organization and Compensation Committee for
the purpose of providing incentive compensation for the senior executives and
managers of the Company and its subsidiaries. This Plan shall be governed by the
following definitions and calculations.

I.   Participants. The participants in the Plan for the 2003 fiscal year of the
     Company (the "Year") and their respective target bonus percentages shall be
     as follows:

     A.   Officers of the Company.

          Chairman and Chief Executive Officer                              70%

          President and Chief Operating Officer                             70%

          Executive Vice President, Chief Financial Officer and Treasurer   60%

          Senior Vice President and President, Diversified Operations       60%

          Senior Vice President and President, NEBS Direct Marketing        60%

          Senior Vice President and President, Chiswick                     60%

          Senior Vice President and President, PremiumWear                  60%

          Senior Vice President, Information Systems                        60%

          Senior Vice President, Human Resources                            60%

          Senior Vice President, Manufacturing and Technical Operations     60%

          Vice President, Business Management and Development               60%

          Vice President, Controller                                        50%

          Vice President, General Counsel and Secretary                     50%



                                       1



     B.   CEOs of Subsidiaries.

          President and Chief Executive, NEBS Business Products, Ltd.       40%

II.  Target Bonus. The target bonus payable to a participant with respect to the
     Year shall be an amount arrived at by multiplying his base salary at the
     end of the Year by his target bonus percentage.

III. Actual Bonus. The actual bonus of each participant shall be calculated
     based on actual results vs. targeted objectives. No bonus shall be paid if
     the Company's pre-tax, pre-bonus earnings for the Year is less than 80% of
     the targeted pre-tax, pre-bonus earnings objective unless, in the judgement
     of the Organization and Compensation Committee, prevailing business and
     global economic conditions and/or the performance of certain business units
     merit consideration.

     A.   Chairman and Chief Executive Officer; President and Chief Operating
          Officer.

          The actual bonus of these participants shall be the sum of the
          following:

          (a)  14% of his base salary at the attainment of 90% of the targeted
               consolidated net sales for the Year; and

          (b)  Each 1% by which consolidated net sales are more than 90% up to
               110% of the targeted consolidated net sales for the Year equals
               1.4% of his base salary, plus each 1% by which consolidated net
               sales are more than 110% of the targeted consolidated net sales
               for the Year equals 0.7% of his base salary; and

          (c)  14% of his base salary at the attainment of 90% of the targeted
               pre-tax, pre-bonus earnings for the Year; and

          (d)  Each 1% by which targeted pre-tax, pre-bonus earnings is more
               than 90% up to 110% of the targeted pre-tax, pre-bonus earnings
               for the Year equals 1.4% of his base salary, plus each 1% by
               which targeted pre-tax, pre-bonus earnings is more than 110% of
               the targeted pre-tax, pre-bonus earnings for the Year equals 0.7%
               of his base salary; and

          (e)  Up to 14% of his base salary based on his attainment of certain
               personal objectives established by the Organization and
               Compensation Committee, as determined by the latter.


                                       2



     B.   Executive Vice President, Chief Financial Officer and Treasurer;
          Senior Vice President, Human Resources; Senior Vice President,
          Information Systems; Senior Vice President, Manufacturing and
          Technical Operations.

          The actual bonus of these participants shall be the sum of the
          following:

          (a)  12% of his/her base salary at the attainment of 90% of the
               targeted consolidated net sales for the Year; and

          (b)  Each 1% by which consolidated net sales are more than 90% up to
               110% of the targeted consolidated net sales for the Year equals
               1.2% of his/her base salary, plus each 1% by which consolidated
               net sales are more than 110% of the targeted consolidated net
               sales for the Year equals 0.6% of his/her base salary; and

          (c)  12% of his/her base salary at the attainment of 90% of the
               targeted pre-tax, pre-bonus earnings for the Year; and

          (d)  Each 1% by which pre-tax, pre-bonus earnings is more than 90% up
               to 110% of the targeted pre-tax, pre-bonus earnings for the Year
               equals 1.2% of his/her base salary, plus each 1% by which
               pre-tax, pre-bonus earnings is more than 110% of the targeted
               pre-tax, pre-bonus earnings for the Year equals 0.6% of his/her
               base salary; and

          (e)  Up to 12% of the base salary of the Executive Vice President,
               Chief Financial Officer based on the degree of his/her attainment
               of certain personal objectives established by the Chairman and
               Chief Executive Officer, as determined by the latter.

          (f)  Up to 12% of the base salary of the Senior Vice President, Human
               Resources, Senior Vice President, Information Systems and the
               Senior Vice President, Manufacturing and Technical Operations
               based on the degree of his/her attainment of certain personal
               objectives established by the President and Chief Operating
               Officer, as determined by the latter.

     C.   Senior Vice President and President, Diversified Operations; Senior
          Vice President and President, NEBS Direct Marketing; Senior Vice
          President and President, Chiswick; Senior Vice President and
          President, PremiumWear; Vice President, Business Management and
          Development.

          The actual bonus of these participants shall be the sum of the
          following:

          (a)  9.0% of his base salary at the attainment of 90% of the targeted
               pre-tax, pre-bonus earnings for the Year; and


                                       3



          (b)  Each 1% by which pre-tax, pre-bonus earnings is more than 90% up
               to 110% of the targeted pre-tax, pre-bonus earnings for the Year
               equals 0.9% of his base salary, plus each 1% by which pre-tax,
               pre-bonus earnings is more than 110% of the targeted pre-tax,
               pre-bonus earnings for the Year equals 0.45% of his base salary,
               and

          (c)  7.5% of his base salary at the attainment of 90% of the targeted
               channel net sales for the Year; and

          (d)  Each 1% by which channel net sales are more than 90% up to 110%
               of the targeted channel net sales for the Year equals 0.75% of
               his base salary, plus each 1% by which channel net sales are more
               than 110% of the targeted channel net sales for the Year equals
               0.375 of his base salary; and

          (e)  7.5% of his base salary at the attainment of 90% of the targeted
               channel profit from operations for the Year; and

          (f)  Each 1% by which channel profit from operations is more than 90%
               up to 110% of the targeted channel profit from operations for the
               Year equals 0.75% of his base salary, plus each 1% by which
               channel profit from operations is more than 110% of the targeted
               channel profit from operations for the Year equals 0.375% of his
               base salary; and

          (g)  Up to 12% of his base salary based on his attainment of certain
               personal objectives established by the President and Chief
               Operating Officer, as determined by the latter.

          (h)  If channel profit from operations is less than 80% of the
               targeted channel profit from operations for the Year the
               participant will only be eligible for payments under paragraphs
               (a), (b) and (g) above.

     D.   Vice President, Controller; Vice President, General Counsel and
          Secretary.

          The actual bonus of these participants shall be the sum of the
          following:

          (a)  10% of his base salary at the attainment of 90% of the targeted
               pre-tax, pre-bonus earnings for the Year; and

          (b)  Each 1% by which targeted pre-tax, pre-bonus earnings is more
               than 90% up to 110% of the targeted pre-tax, pre-bonus earnings
               for the Year equals 1.0% of his base salary, plus each 1% which
               targeted


                                       4



               pre-tax, pre-bonus earnings is more than 110% of the targeted
               pre-tax, pre-bonus earnings for the Year equals 0.5% of his base
               salary; and

          (c)  10% of his base salary at the attainment of 90% of the targeted
               consolidated net sales for the Year; and

          (d)  Each 1% by which consolidated net sales are more than 90% up to
               110% of the targeted consolidated net sales for the Year equals
               1.0% of his base salary, plus each 1% by which consolidated net
               sales are more than 110% of the targeted consolidated net sales
               for the Year equals 0.5% of his base salary; and

          (e)  Up to 10% of his base salary based on the degree of his
               attainment of certain personal objectives established by the
               Executive Vice President, Chief Financial Officer, as determined
               by the latter.

     E.   President and Chief Executive, NEBS Business Products Ltd.

          The actual bonus of this participant shall be the sum of the
          following:

          (a)  5.0% of his base salary at the attainment of 90% of the targeted
               pre-tax, pre-bonus earnings for the Year; and

          (b)  Each 1% by which pre-tax, pre-bonus earnings is more than 95% up
               to110% of the targeted pre-tax, pre-bonus earnings for the Year
               equals 0.5% of his base salary, plus each 1% by which pre-tax,
               pre-bonus earnings is more than 110% of the targeted pre-tax,
               pre-bonus earnings for the Year equals 0.25% of his base salary;
               and

          (c)  5.0% of his base salary at the attainment of 90% of targeted
               channel net sales for the Year; and

          (d)  Each 1% by which channel net sales are more than 90% up to 110%
               of the targeted channel net sales for the Year equals 0.5% of his
               base salary, plus each 1% by which channel net sales are more
               than 110% of the targeted channel net sales for the Year equals
               0.25% of his base salary; and

          (e)  5.0% of his base salary at the attainment of 90% of the targeted
               channel profit from operations for the Year; and

          (f)  Each 1% by which channel profit from operations is more than 90%
               up to 110% of the targeted channel profit from operations for the
               Year equals 0.5% of his base salary, plus each 1% by which
               channel profit from operations are more than 110% of the targeted
               channel profit from operations for the Year equals 0.25% of his
               base salary; and


                                       5



          (g)  Up to 10% of his base salary based on the degree of his
               attainment of certain personal objectives established by the
               President and Chief Operating Officer, as determined by the
               latter.

          (h)  If channel profit from operations is less than 80% of the
               targeted channel profit from operation for the Year the
               participant will only be eligible for payments under paragraphs
               (a), (b) and (g) above.

     IV.  Bonus Payments

     A.   For participants with 60% or 70% bonus targets, with the exception of
          the Senior Vice President and President, PremiumWear: 75% of the gross
          payment will be in the form of cash; 25% of the gross payment will be
          in the form of NEBS Stock with a share price which is established at
          the close of trading on the New York Stock Exchange on the third
          business day following the issuance of the press release disclosing
          the Company's financial results for the fourth fiscal quarter of the
          Year. Cash payment will be made within 60 days after the close of the
          Year. Stock awarded under the plan will be in the form of Restricted
          Stock with terms and conditions detailed in the form of a Restricted
          Stock Agreement attached hereto. Notwithstanding the foregoing, 100%
          of the bonus of the Senior Vice President and President, PremiumWear
          will be paid in cash.

     B.   For participants with 40% or 50% bonus targets: 75% of the net payment
          will be in the form of cash; 25% of the net payment will be in the
          form of NEBS Stock with a share price which is established at the
          close of trading on the New York Stock Exchange on the third business
          day following the issuance of the press release disclosing the
          Company's financial results for the fourth fiscal quarter of the Year.
          All bonus payments will be made within 60 days after the close of the
          Year.

     C.   At their option and with the authorization of the Chief Executive
          Officer, participants, other than the Chief Executive Officer and the
          four next most highly compensated executive officers, may receive
          their bonus entirely in cash if the payment earned is less than 25% of
          annualized base salary.



                                       6



V.   Certain Definitions and Other Provisions.
     -----------------------------------------

     A.   All references to "net" sales shall refer to consolidated net sales of
          the Company or net sales of the distribution channel or a business
          unit, as the case may be, as reported or used in calculating the
          Company's audited consolidated earnings.

     B.   For purposes of calculating the actual bonuses, pre-tax, pre-bonus
          earnings for the Year shall mean such earnings, before taxes and
          before provision for executive bonuses under this plan, determined in
          accordance with all of the accounting policies employed in the
          preparation of the Company's audited financial statements for the
          Year.

     C.   The percentage awarded for the achievement of certain personal
          objectives will commence when pre-tax, pre-bonus earnings reach 80% of
          targeted pre-tax, pre-bonus earnings, with an award not greater than
          50% of the targeted award. Once 90% of targeted pre-tax, pre-bonus
          earnings is attained, the percentage awarded may not exceed the
          percentage awarded for pre-tax, pre-bonus earnings but in no case may
          exceed 100% of the targeted award for personal objectives.

     D.   Actual or targeted pre-tax, pre-bonus earnings; actual or targeted
          consolidated sales; actual or targeted profit from operations of any
          business unit or distribution channel; or actual or targeted net sales
          of any business unit or distribution channel may, at the discretion of
          the Organization and Compensation Committee, be adjusted to eliminate
          the effect of (a) either the acquisition or the divestiture by the
          Company of any subsidiary or division during the Year, and/or (b) the
          imposition during the Year by Massachusetts or any other state or
          states of sales taxes on services, materials or supplies purchased by
          the Company or any subsidiary of the Company the effect of which is
          not allowed for in the Company's annual budget for the 2002 fiscal
          year or (c) any abatement of taxes or material increase or decrease in
          Federal or State corporate tax rates. It is the intention of the
          Organization and Compensation Committee that any such discretionary
          adjustment shall be made by it, and shall be announced to the affected
          participants, promptly after the occurrence of the motivating event,
          but failure to act promptly shall not deprive the Committee of its
          power to make such an adjustment at a later date.

     E.   Should a participant die, retire, or become totally disabled during
          the Year, he/she or his/her estate shall be entitled to receive a
          bonus prorated in accordance with the percentage of his/her annual
          salary earned from the beginning of the Year up to the date of death,
          retirement or disability. Should a participant's employment by the
          Company or a subsidiary business unit be terminated for any other
          reason, payment of any bonus hereunder for the Year in which such
          termination occurs is at the sole discretion of the Organization and
          Compensation Committee.

     F.   If a participant assumes a new position during the Year, the
          Organization and Compensation Committee may make an appropriate
          adjustment in his target bonus and/or the means of calculating his
          actual bonus, effective from and after that event.


                                       7



     G.   If a Change of Control event (as defined in Paragraph J below) occurs,
          the Company will within sixty (60) days following such event pay each
          participant a prorated bonus through the date thereof as hereinafter
          provided, whereupon this Plan will terminate. The portion of the bonus
          based on factors other than personal objectives shall becalculated
          based on a comparison of (i) actual results of the Company through the
          end of the calendar quarter next preceding the Change in Control event
          to (ii) the targeted quarterly performance criteria set forth on the
          schedules attached hereto. The portion of the bonus based on personal
          objectives will be calculated through the end of the calendar quarter
          next preceding the Change of Control event to the extent equitable and
          reasonably practicable in the judgment of the Organization and
          Compensation Committee. Qualitative measurements for which such
          calculation is not equitable or reasonably practicable will be
          disregarded and the percentage of the bonus otherwise allocated
          thereto under the terms hereof will be reallocated in even percentages
          to the sales and earnings components of the bonus calculation. After
          determining the full year bonus based on the extent to which the
          aforesaid quarterly targets have been achieved, the amount of the full
          year bonus will be prorated by multiplying the same by a fraction the
          numerator of which is the number of days between the beginning of the
          fiscal year and the date of the Change of Control event and the
          denominator of which would be 365. The determination of the amount of
          any bonus payable under this paragraph to the Chairman and Chief
          Executive Officer shall be made by the Organization and Compensation
          Committee and for all other participants the determination of the
          amount of any bonus payable shall be made by the Chairman and Chief
          Executive Officer and in each instance the determination shall be
          final and binding on the Company and all participants.

     H.   In the event of any material, unusual and non-recurring charge to
          income, purchase or sale of any material business unit by the Company,
          or other material event affecting the ability of the participants to
          achieve the performance targets established under this Plan, the
          Organization and Compensation Committee shall review such performance
          targets and make such adjustments with respect thereto as it deems
          reasonable and equitable in light of the purposes of this Plan. Any
          and all adjustments made by the Organization and Compensation
          Committee under this paragraph shall be final and binding on the
          Company and all participants.

     I.   The Organization and Compensation Committee may in its discretion may
          terminate the Plan as of the end of any fiscal quarter. If the Plan is
          so terminated, the Company shall pay out bonuses to the participants
          in such amounts as are appropriate and equitable in light of the
          Company's and participants' performance through the end of such
          quarter and the targets established hereunder. The determination of
          the amount of any bonuses payable under this paragraph shall be made
          by the Organization and Compensation Committee in line with the
          objectives set for each participant, and its determination shall be
          final and binding on the Company and all participants.




                                       8



     J.   The personal objectives referred to herein and the application of
          certain provisions hereof are described in the FY03 Scorecard prepared
          by the Senior Vice President, Human Resources.

     K.   A "Change in Control" shall be deemed to have occurred if any of the
          events set forth in any of the following subparagraphs shall have
          occurred:

          (1)  any Person (as defined below) is or becomes the Beneficial Owner
               (as defined below), directly or indirectly, of securities of the
               Company representing 35% or more of either the then outstanding
               shares of common stock of the Company or the combined voting
               power of the Company's then outstanding securities, excluding any
               Person who becomes such a Beneficial Owner in connection with a
               transaction described in subparagraph (3) (a) below;

          (2)  the following individuals cease for any reason to constitute a
               majority of the number of directors then serving: individuals
               who, on the date hereof, constitute the Board and any new
               director (other than a director whose initial assumption of
               office is in connection with an actual or threatened election
               contest, including but not limited to a consent solicitation,
               relating to the election of directors of the Company) whose
               appointment or election by the Board of Directors or nomination
               for election by the Company's stockholders was approved or
               recommended by a vote of at least two-thirds (2/3) of the
               directors then in office who either were directors on the date
               this Plan was adopted or whose appointment, election or
               nomination for election was previously so approved or
               recommended;

          (3)  there is consummated a merger or consolidation of the Company or
               any direct or indirect subsidiary of the Company with another
               corporation, other than (a) a merger or consolidation which would
               result in the voting securities of the Company outstanding
               immediately prior to such merger or consolidation continuing to
               represent (either by remaining outstanding or by being converted
               into voting securities of the surviving entity or any parent
               thereof) at least 60% of the combined voting power of the
               securities of the Company or such surviving entity or any parent
               thereof outstanding immediately after such merger or
               consolidation, or (b) a merger or consolidation effected to
               implement a recapitalization of the Company (or similar
               transaction) in which no Person is or becomes the Beneficial
               Owner, directly or indirectly, of securities of the Company (not
               including in the securities Beneficially Owned by such Person any
               securities acquired directly from the Company of its Affiliates
               (as defined below)) representing 35% or more of the combined
               voting power of the Company's then outstanding securities; or


                                       9



          (4)  the stockholders of the Company approve a plan of complete
               liquidation or dissolution of the Company or there is consummated
               an agreement for the sale or disposition by the Company of all or
               substantially all of the Company's assets, other than a sale or
               disposition by the Company of all or substantially all of the
               Company's assets to an entity, at least 60% of the combined
               voting power of the voting securities of which are owned by
               stockholders of the Company in substantially the same proportions
               as their ownership of the Company immediately prior to such sale.

          For purposes of the foregoing definition of a Change in Control event,
          the following terms have the meanings indicated below:

          (i)  "Affiliate" shall have the meaning set forth in Rule 12b-2
               promulgated under Section 12 of the Securities Exchange Act of
               11934 (the "Exchange Act");

          (ii) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
               under the Exchange Act; and

          (ii) "Person" shall have the meaning given in Section 3(a)(9) of the
               Exchange Act, as modified and used in Sections 13(d) and 14(d)
               thereof, except that such term shall not include (A) the Company
               or any of its subsidiaries, (B) a trustee or other fiduciary
               holding securities under an employee benefit plan of the Company
               or any its Affiliates, (C) an underwriter temporarily holding
               securities Pursuant to an offering of such securities and (D) a
               corporation owned, directly or indirectly, by the stockholders of
               the Company in substantially the same proportions as their
               ownership of stock of the Company.

     L.   Nothing contained in this Plan shall confer and no grant of a bonus
          hereunder shall be construed as conferring, upon any employee any
          right to continue in the employment of the Company or any subsidiary
          of the Company or to interfere in any way with the right of the
          Company or any subsidiary to terminate the employee's employment at
          any time or increase or decrease his compensation from the rate in
          existence as of the effective date of this Plan or the granting of any
          bonus hereunder.

     M.   This Plan shall be effective commencing July 1, 2002.


                                       10




                       NEW ENGLAND BUSINESS SERVICE, INC.

                        RESTRICTED STOCK AWARD AGREEMENT

          (New England Business Service, Inc. Stock Compensation Plan)

                                    Preamble

         This restricted stock award agreement (the "Agreement") is made and
entered into as of ______________, ______ (the "Date of Grant") by New England
Business Service, Inc. (the "Issuer") and _____________________ (the
"Executive"), a key employee of the Issuer or a Subsidiary/1/ of the Issuer
(hereunder individually and collectively referred to as the "Company").

1.       Shares Subject to the Restricted Stock Award.

         Pursuant to the provisions of the New England Business Service, Inc.
Stock Compensation Plan (the "Plan"), as in effect on the Date of Grant, the
Issuer hereby grants to the Executive a restricted stock award ("Restricted
Stock Award") of _____________ shares of its Stock (the "Awarded Shares"). The
Awarded Shares are being issued to the Executive in lieu of twenty-five percent
(25%) of the gross bonus awarded to the Executive for the fiscal year ended June
___, ______ (the "Bonus Award") pursuant to the Annual Executive Bonus Plan of
the Issuer adopted by the Organization and Compensation Committee of the Board
for such fiscal year and are valued for purposes of this Agreement at $________
per share, the Fair Market Value of a share of Stock on the Date of Grant, in
accordance with and subject to all the terms and conditions of the Plan and
subject to the terms and conditions hereinafter set forth. The Plan and any
amendments are hereby incorporated by reference and made a part hereof.

2.       Terms and Conditions of the Restricted Stock Award.

         The issuance of Awarded Shares pursuant to the Restricted Stock Award
shall be subject to the following terms and conditions.

         2.1 Withholding Taxes. Notwithstanding anything to the contrary in
Section 2.3(b), the Issuer's obligation to deliver vested Awarded Shares
pursuant to this Restricted Stock Award shall be subject to the Executive's
satisfaction of all applicable federal, state and local income and employment
tax withholding obligations. Without limiting the generality of the foregoing,
the Company shall have the right to deduct from payments of any kind otherwise
due to the Executive any federal, state or local taxes of any kind required by
law to be withheld with respect to any Awarded Shares issued pursuant to this
Restricted Stock Award. The Executive may satisfy such withholding obligations
by having the Company withhold vested and unrestricted Awarded Shares, or by
delivering to the Company already owned unrestricted shares of Stock, having a
Fair Market Value as of the date of delivery of such unrestricted shares equal
to the amount required to be withheld.

         2.2 Vesting, Forfeiture or Early Vesting of Unvested Awarded Shares.

            (a) Unless vested earlier or forfeited as provided in (b) or (c)
below, the Awarded Shares shall become vested in the Executive on the third
anniversary of the Date of Grant, and shall thereon be released from escrow and
delivered to the Executive, subject to the satisfaction of the condition set
forth in Section 2.1 above.

- -------------
/1/ Capitalized terms not otherwise defined herein are defined in Section 8
    below.



            (b) The Awarded Shares shall remain unvested and subject to the
restrictions of this Section 2.2 and Section 2.3 until the third anniversary of
the Date of Grant (the "Vesting Period"). If the Executive's Service terminates
during the Vesting Period, the following shall occur:

                (i) if the Executive ceases to perform Service by reason of
death, Disability or Retirement, all Awarded Shares shall thereupon immediately
vest in the Executive (or in the case of death, in the person or persons to whom
the Awarded Shares pass by will or by the laws of descent and distribution) or
his permitted transferees pursuant to Section 2.3(a) and shall no longer be
subject to the restrictions of this Section 2.2 and Section 2.3 hereof.

                (ii) If the Executive voluntarily terminates Service or his
Service is involuntarily terminated for "cause", as determined in good faith by
the Board or Committee (which determination shall be binding on both the Company
and the Executive and/or his permitted transferee(s) pursuant to Section
2.3(a)), the Awarded Shares shall thereupon be forfeited in their entirety to
the Issuer without any further action by the Issuer or the Executive and for no
consideration.

                (iii) If the Executive's Service is involuntarily terminated
without cause, the Awarded Shares shall thereupon be forfeited in their entirety
to the Issuer without any further action by the Issuer or the Executive and for
no consideration; provided, however, that the Committee may, in its sole
discretion, waive the forfeiture of all or any portion of the Awarded Shares and
such shares shall thereupon immediately vest in the Executive and no longer be
subject to the restrictions of this Section 2.2 and Section 2.3 hereof.

            (c) Notwithstanding any of the foregoing, if a Change in Control
occurs during the Vesting Period and prior to any forfeiture of all or any
portion of the Awarded Shares pursuant to this Section 2.2, all Awarded Shares
that were not forfeited by termination of the Executive's Service prior to the
occurrence of the Change in Control shall thereupon immediately vest in the
Executive and the restrictions of this Section 2.2 and Section 2.3 shall
terminate.

         2.3 Restrictions on Transfer and Escrow of Unvested Awarded Shares;
Delivery of Vested Shares; Stockholder Rights. The Executive hereby agrees to
the following conditions:

            (a) Awarded Shares which are not yet vested may not be sold,
hypothecated or otherwise disposed of by the Executive or anyone claiming
through him; provided, however, that Awarded Shares may be transferred by the
Executive, either directly or in trust, to one or more members of Executive's
Family, or to a family partnership or other entity for the exclusive benefit of
one or more members of Executive's Family if and only to the extent that (i) the
Executive notifies the Committee in writing of his desire to transfer Awarded
Shares and the Committee does not within thirty (30) days of such notification
advise the Executive in writing that such transfer will not be allowed and (ii)
such Family member or trust or family partnership for the benefit thereof
executes an agreement to be subject to all of the terms and conditions of this
Agreement.

            (b) Awarded Shares which are not yet vested shall be held in escrow
by the Issuer. Upon the vesting of any Awarded Shares pursuant to Section 2.2
and the satisfaction of all obligations imposed by Section 2.1, the Issuer shall
promptly cause a certificate to be issued for

                                       12



the Awarded Shares (or portion thereof which has vested) and shall deliver such
certificate to the Executive or his permitted transferee(s) pursuant to Section
2.3(a).

            (c) Subject to the terms hereof, the Executive shall have all the
rights of a stockholder with respect to the Awarded Shares while they are held
in escrow, and prior to their forfeiture pursuant to Section 2.2, including
without limitation, the right to vote the Awarded Shares, except as provided in
(d) below.

            (d) Any dividends declared and paid with respect to the Awarded
Shares while they are held in escrow, and prior to their forfeiture pursuant to
Section 2.2, shall not be paid to the Executive but shall instead be
automatically reinvested in shares of Stock at the Fair Market Value of a share
of Stock on the date of such dividend payment, and such additional shares of
Stock shall be deemed additional Awarded Shares (granted, for purposes of
Section 2.2 only, on the Date of Grant) and shall be subject to the forfeiture
and other provisions of Section 2.2 and this Section 2.3.

         2.4 Investment Representation. The Executive shall hold the Awarded
Shares for investment and not with a view to, or for resale in connection with,
any public distribution of such Shares, and if requested, shall deliver to the
Issuer an appropriate certification to that effect. This restriction shall
terminate upon the registration of such Shares under federal securities laws or
if, in the opinion of counsel for the Issuer, such Shares may be resold without
registration.

         2.5 Provision of Information. The Issuer will furnish upon request of
the Executive copies of the certificate of incorporation of the Issuer, as
amended, and by-laws of the Issuer, as amended, and such publicly available
financial and other information concerning the Issuer and its business and
prospects as may be reasonably requested by the Executive in connection with the
issuance or purchase of Awarded Shares pursuant to this Agreement.

         2.6 Compliance with the Plan. The Executive shall comply with all terms
and conditions of the Plan (a copy of which is attached hereto) and of this
Agreement. All decisions under, and interpretations of, the provisions of the
Plan and of this Agreement by the Board or by the Committee shall be final,
binding and conclusive upon the Company and its successors and assigns and upon
the Executive and anyone claiming through the Executive.

3.       Right to Terminate.

         Nothing contained in the Plan or in this Agreement shall restrict the
right of the Company to terminate the employment of the Executive at any time
and for any reason, with or without notice, or shall otherwise affect the terms
and conditions of the Executive's employment except as specifically provided in
either the Plan or in this Agreement.

4.       Adjustment in Shares.

         Appropriate adjustment shall be made by the Board or by the Committee
in the number and kind of the Awarded Shares issued pursuant to this Restricted
Stock Award to give effect to any stock dividends, stock splits, stock
combinations, recapitalizations and other similar changes in the capital
structure of the Issuer after the Date of Grant. In the event of a change of the
Stock resulting from a merger or similar reorganization as to which the Issuer
is the surviving corporation, or sale of all or substantially all of the assets
of Issuer to a corporation that does not result in a Change in Control, the
number and kind of the Awarded Shares issued pursuant to this

                                       13



Agreement shall be appropriately adjusted in such a manner as the Board or the
Committee shall deem equitable to prevent dilution or enlargement of the rights
granted hereunder.

5.       Restrictions on Transfer of Stock.

         The Awarded Shares shall be subject to any restrictions then in effect
pursuant to the certificate of incorporation or by-laws of the Issuer and to any
other restrictions or provisions attached hereto and made a part hereof or set
forth in any other contract or agreement binding on the Executive.

6.       Notice Concerning Tax Matters.

         The Company makes no representation about the tax treatment to the
Executive with respect to the receipt of the Restricted Stock Award or the
acquisition, holding or disposition of the Awarded Shares. The Executive is
urged to consult a professional tax adviser of his or her own choosing for
advice as to the tax consequences (including the application of Section 83 of
the Code) of receiving a Restricted Stock Award or of holding or selling Awarded
Shares issued pursuant to this Agreement.

7.       Governing Law; Etc.

         This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without giving effect to
principles of conflicts of law, and applicable federal law. This Agreement shall
be binding upon and inure to the benefit of the heirs and legal representatives
of the Executive and the successors and assigns of the Issuer, but shall not be
assigned by the Executive at any time, except as otherwise permitted by Section
2.3(a) hereof, without the prior written permission of the Issuer.

8.       Definitions.


         8.1 "Affiliate" has the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act.


         8.2 "Agreement" has the meaning defined in the Preamble above.


         8.3 "Awarded Shares" has the meaning defined in Section 1 above.


         8.4 "Beneficial Owner" has the meaning set forth in Rule 13d-3 under
the Exchange Act.


         8.5 "Board" means the Board of Directors of the Issuer.


         8.6 "Bonus Award" has the meaning set forth in Section 1 above.


         8.7 "Change in Control" means the occurrence of any of the following
events:


            (a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Issuer representing 35% or more of either the
then outstanding shares of common stock of the Issuer or the combined voting
power of the Issuer's then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
subparagraph (c)(i) below;

                                       14



            (b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Issuer) whose appointment or election by the
Board of Directors or nomination for election by the Issuer's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the directors
then in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended;

            (c) there is consummated a merger or consolidation of the Issuer or
any direct or indirect Subsidiary of the Issuer with another corporation, other
than (i) a merger or consolidation which would result in the voting securities
of the Issuer outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least
60% of the combined voting power of the securities of the Issuer or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Issuer (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Issuer (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Issuer of its Affiliates) representing 35%
or more of the combined voting power of the Issuer's then outstanding
securities; or

            (d) the stockholders of the Issuer approve a plan of complete
liquidation or dissolution of the Issuer or there is consummated an agreement
for the sale or disposition by the Issuer of all or substantially all of the
Issuer's assets, other than a sale or disposition by the Issuer of all or
substantially all of the Issuer's assets to an entity, at least 60% of the
combined voting power of the voting securities of which are owned by
stockholders of the Issuer in substantially the same proportions as their
ownership of the Issuer immediately prior to such sale.

         8.8 "Code" means the Internal Revenue Code of 1986, as heretofore and
hereafter amended, and the regulations promulgated thereunder.

         8.9 "Committee" has the meaning defined in the Plan.


         8.10 "Company" has the meaning defined in the Preamble above.


         8.11 "Date of Grant" has the meaning defined in the Preamble above.


         8.12 "Disability" has the meaning defined in Code Section 22(e)(3).


         8.13 "Exchange Act" means the Securities Exchange Act of 1934, as
heretofore and hereafter amended.


         8.14 "Executive" has the meaning defined in the Preamble above.


         8.15 "Fair Market Value" means the last sales price per share of Stock
as reported on the New York Stock Exchange prior to the Date of Grant (or other
date on which such valuation is made) or if no price has been so reported within
one week prior to the Date of Grant (or other date on which such valuation is
made), fair market value shall be determined by a principal

                                       15



market maker for the Stock designated by the Committee (or if no such market
maker is designated, by the Board in its good faith business judgment).

         8.16 "Family" means the Participant's: (i) spouse and lineal
descendants of such spouse; (ii) lineal descendants and the spouses of such
lineal descendants: (iii) lineal ancestors and the spouses of such lineal
ancestors; and (iv) siblings and the spouses and children of such siblings.


         8.16 "Issuer" has the meaning defined in the Preamble above.


         8.17 "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (a) the Issuer or any of its Subsidiaries, (b)
a trustee or other fiduciary holding securities under an employee benefit plan
of the Issuer or any of its Affiliates, (c) an underwriter temporarily holding
securities pursuant to an offering of such securities and (d) a corporation
owned, directly or indirectly, by the stockholders of the Issuer in
substantially the same proportions as their ownership of stock of the Issuer.

         8.18 "Plan" has the meaning defined in Section 1 above.


         8.19 "Restricted Stock Award" has the meaning defined in Section 1
above.


         8.20 "Retirement" means the actual cessation of the Executive's
Services on or after the date that he attains age 62.


         8.21 "Service" means the performance of work for the Company or a
Subsidiary as an employee.


         8.22 "Stock" has the meaning defined in the Plan.


         8.23 "Subsidiary" has the meaning defined in Code Section 424(f).


         8.24 "Vesting Period" has the meaning defined in Section 2.2 above.


9.       Amendments.

         Any amendment to this Agreement, or waiver of any terms hereof, may be
made only pursuant to a writing executed by the Issuer and the Executive.

                                       16



         IN WITNESS WHEREOF, the undersigned have executed this Agreement under
seal as of the date first appearing above.

                                             EXECUTIVE

                                             -----------------------------------
                                             Signature

                                             Address of Executive:

                                             -----------------------------------

                                             -----------------------------------


                                             NEW ENGLAND BUSINESS SERVICE, INC.


CORPORATE SEAL                               By:________________________________
                                                Name:
                                                Title:


                                       17

EX-10.16

                                                                   Exhibit 10.16

                   FY2003 NEBS SPECIAL PERFORMANCE BONUS PLAN
                            (EFFECTIVE JULY 1, 2002)

     This Special Performance Bonus Plan (the "Plan") was adopted by the
Organization and Compensation Committee of the Board of Directors of New England
Business Service, Inc. (the "Company") on August 2, 2002 for the purpose of
providing incentive compensation for senior executives of the Company in lieu of
an annual grant of stock options. This Plan shall be governed by the following
definitions and calculations.

I.   Participants. The participants in the Plan for the 2003 fiscal year of the
     Company (the "Year") and their respective target bonus amounts shall be as
     follows:

     Chairman and Chief Executive Officer                               $300,000

     President and Chief Operating Officer                              $300,000

     Executive Vice President, Chief Financial Officer and Treasurer    $200,000

     Senior Vice President & President, Diversified Operations          $200,000

     Senior Vice President & President, Chiswick                        $200,000

     Senior Vice President & President, PremiumWear                     $200,000

     Senior Vice President & President, NEBS Direct Marketing           $200,000

     Senior Vice President, Manufacturing & Technical Operations        $200,000

     Senior Vice President, Information Systems                         $200,000

     Senior Vice President, Human Resources                             $200,000

     Vice President, Business Management and Development                $200,000

     Vice President, Corporate Controller                               $200,000

     Vice President, General Counsel & Secretary                        $200,000


     Calculation of Actual Bonus. The actual bonus of each participant shall be
     calculated based on the actual earnings per share of the Company's common
     stock for the Year ("EPS") vs. the targeted objective established by the
     Organization and Compensation Committee. No bonus shall be paid if the
     Company's EPS is more than $.20 below targeted EPS.

     A.   Chairman and Chief Executive Officer; President and Chief Operating
          Officer.
          ______________________________________________________________________

          The actual bonus of these participants shall be calculated as follows:

                                       1



          $300,000 will be earned for the achievement of targeted EPS. Each $.01
          per share increase in EPS above target equals $15,000 additional bonus
          pay-out with a maximum payment equal to $450,000. Each $.01 decrease
          in EPS below target equals a reduction in payment of $7,500. No bonus
          shall be paid if earnings per share is more than $.20 below targeted
          EPS.

     B.   Executive Vice President, Chief Financial Officer and Treasurer;
          Senior Vice President & President, Diversified Operations; Senior Vice
          President & President, Chiswick; Senior Vice President & President,
          PremiumWear; Senior Vice President & President, NEBS Direct Marketing;
          Senior Vice President, Manufacturing & Technical Operations; Senior
          Vice President, Information Systems; Senior Vice President, Human
          Resources; Vice President, Business Management & Development; Vice
          President, Corporate Controller; Vice President, General Counsel &
          Secretary.

          ______________________________________________________________________

               The actual bonuses of these participants shall be calculated as
          follows:

          $200,000 will be earned for the achievement of targeted EPS. Each $.01
          per share increase in EPS above target equals $10,000 additional bonus
          pay-out with a maximum payment equal to $300,000. Each $.01 decrease
          in EPS below target equals a reduction in payment of $5,000. No bonus
          shall be paid if earnings per share is more than $.20 below targeted
          EPS.

     C.   Bonus Payments. Bonus payments will be in the form of NEBS Stock with
          a share price which is established at the close of trading on the New
          York Stock Exchange on the third business day following the issuance
          of the press release disclosing the Company's financial results for
          the fourth fiscal quarter of the Year. Stock awarded under the Plan
          will be in the form of restricted stock issued pursuant to the New
          England Business Service, Inc. Stock Compensation Plan, with terms and
          conditions detailed in the form of a Restricted Stock Award Agreement
          attached hereto as Schedule A.

II.  Certain Definitions and Other Provisions.


     A.   For purposes of calculating the actual bonuses, EPS shall mean basic
          earnings per share, determined in accordance with all of the
          accounting policies employed in the preparation of the Company's
          audited financial statements for the Year.

     B.   Actual or targeted EPS may, at the discretion of the Organization and
          Compensation Committee, be adjusted to eliminate the effect of (i)
          either the acquisition or the divestiture by the Company of any
          subsidiary or division during the Year, and/or (b) the imposition
          during the Year by Massachusetts or any other state or states of sales
          taxes on services, materials or supplies purchased by the Company or
          any subsidiary of the

                                       2



          Company the effect of which is not allowed for in the Company's annual
          budget for the 2003 fiscal year or (c) any abatement of taxes or
          material increase or decrease in Federal or State corporate tax rates.
          It is the intention of the Organization and Compensation Committee
          that any such discretionary adjustment shall be made by it, and shall
          be announced to the affected participants, promptly after the
          occurrence of a motivating event, but the failure to act promptly
          shall not deprive the Committee of its power to make such an
          adjustment at a later date.

     C.   Should a participant die, retire, or become totally disabled during
          the Year, he/she or his/her estate shall be entitled to receive a
          bonus pro-rated based on the number of days from the beginning of the
          Year to the date of death, retirement or disability, divided by 365.
          Should a participant's employment by the Company or any subsidiary
          business unit be terminated for any other reason, payment of any bonus
          hereunder for the Year in which such termination occurs is at the sole
          discretion of the Organization and Compensation Committee.

     D.   If a participant assumes a new position during the Year, the
          Organization and Compensation Committee may make an appropriate
          adjustment to his/her target bonus and/or the means of calculating his
          actual bonus, effective from and after that event.

     E.   If a Change in Control event (as defined in Paragraph J below) occurs,
          the Company will within sixty (60) days following such event pay each
          participant a prorated bonus through the date thereof as hereinafter
          provided, whereupon this Plan will terminate. The bonus payment
          hereunder will be the greater of (i) 50% of the targeted bonus or (ii)
          the target bonus amount multiplied by a fraction, the numerator of
          which is the number of days from the beginning of the Year to the date
          of the Change in Control, and the denominator of which is 365.
          Anything contained in this Plan to the contrary notwithstanding, any
          payments under this Plan following the occurrence of a Change in
          Control event shall be made solely in cash.

     F.   In the event of any material, unusual and non-recurring charge to
          income, purchase or sale of any material business unit by the Company,
          or other material event affecting the ability of the Company to
          achieve the targeted EPS established under this Plan, the Organization
          and Compensation Committee shall review such EPS target and make such
          adjustments with respect thereto as it deems reasonable and equitable
          in light of the purposes of this Plan. Any and all adjustments made by
          the Organization and Compensation Committee under this paragraph shall
          be final and binding on the Company and all participants.

     G.   The Organization and Compensation Committee may in its discretion
          terminate the Plan as of the end of any fiscal quarter. If the Plan is
          so

                                       3



          terminated, the Company shall pay out bonuses to the participants in
          such amounts as are appropriate and equitable in light of the
          Company's performance through the end of such quarter and the targets
          established hereunder. The determination of the amount of any bonuses
          payable under this paragraph shall be made by the Organization and
          Compensation Committee, which determination shall be final and binding
          on the Company and all participants.

     H.   Nothing contained in this Plan shall confer, and no grant of a bonus
          hereunder shall be construed as conferring, upon any employee any
          right to continue in the employment of the Company or any subsidiary
          of the Company or to interfere in any way with the right of the
          Company or any subsidiary to terminate the employee's employment at
          any time or increase or decrease his compensation from the rate in
          existence as of the effective date of this Plan or the granting of any
          bonus hereunder.

     I.   This Plan shall be effective commencing July 1, 2002.

     J.   A "Change in Control" shall be deemed to have occurred if any of the
          events set forth in any of the following subparagraphs shall have
          occurred:

          (1)  any Person (as defined below) is or becomes the Beneficial Owner
               (as defined below), directly or indirectly, of securities of the
               Company representing 35% or more of either the then outstanding
               shares of common stock of the Company or the combined voting
               power of the Company's then outstanding securities, excluding any
               Person who becomes such a Beneficial Owner in connection with a
               transaction described in subparagraph (3)(a) below;

          (2)  the following individuals cease for any reason to constitute a
               majority of the number of directors then serving: individuals
               who, on the date this Plan was adopted, constitute the Board and
               any new director (other than a director whose initial assumption
               of office is in connection with an actual or threatened election
               contest, including but not limited to a consent solicitation,
               relating to the election of directors of the Company) whose
               appointment or election by the Board of Directors or nomination
               for election by the Company's stockholders was approved or
               recommended by a vote of at least two-thirds (2/3) of the
               directors then in office who either were directors on the date
               this Plan was adopted or whose appointment, election or
               nomination for election was previously so approved or
               recommended;

          (3)  there is consummated a merger or consolidation of the Company or
               any direct or indirect subsidiary of the Company with another
               corporation, other than (a) a merger or consolidation which would
               result in the voting securities of the Company outstanding
               immediately prior to such merger or consolidation continuing to

                                       4



               represent (either by remaining outstanding or by being converted
               into voting securities of the surviving entity or any parent
               thereof) at least 60% of the combined voting power of the
               securities of the Company or such surviving entity or any parent
               thereof outstanding immediately after such merger or
               consolidation, or (b) a merger or consolidation effected to
               implement a recapitalization of the Company (or similar
               transaction) in which no Person is or becomes the Beneficial
               Owner, directly or indirectly, of securities of the Company (not
               including in the securities Beneficially Owned by such Person any
               securities acquired directly from the Company of its Affiliates
               (as defined below) representing 35% or more of the combined
               voting power of the Company's then outstanding securities; or

          (4)  the stockholders of the Company approve a plan of complete
               liquidation or dissolution of the Company or there is consummated
               an agreement for the sale or disposition by the Company of all or
               substantially all of the Company's assets, other than a sale or
               disposition by the Company of all or substantially all of the
               Company's assets to an entity, at least 60% of the combined
               voting power of the voting securities of which are owned by
               stockholders of the Company in substantially the same proportions
               as their ownership of the Company immediately prior to such sale.

          For purposes of the foregoing definition of a Change in Control event,
          the following terms have the meanings indicated below:

          (i)  "Affiliate" shall have the meaning set forth in Rule 12b-2
               promulgated under Section 12 of the Securities Exchange Act of
               1934 (the "Exchange Act");

          (ii) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
               under the Exchange Act; and

          (iii) "Person" shall have the meaning given in Section 3(a)(9) of the
               Exchange Act, as modified and used in Sections 13(d) and 14(d)
               thereof, except that such term shall not include (A) the Company
               or any of its subsidiaries, (B) a trustee or other fiduciary
               holding securities under an employee benefit plan of the Company
               or any of its Affiliates, (C) an underwriter temporarily holding
               securities pursuant to an offering of such securities and (D) a
               corporation owned, directly or indirectly, by the stockholders of
               the Company in substantially the same proportions as their
               ownership of stock of the Company.

                                       5




                       NEW ENGLAND BUSINESS SERVICE, INC.

                        RESTRICTED STOCK AWARD AGREEMENT

          (New England Business Service, Inc. Stock Compensation Plan)

                                    Preamble

         This restricted stock award agreement (the "Agreement") is made and
entered into as of ______________, 2003 (the "Date of Grant") by New England
Business Service, Inc. (the "Issuer") and _____________________ (the
"Executive"), a key employee of the Issuer or a Subsidiary/1/ of the Issuer
(hereunder individually and collectively referred to as the "Company").

1.       Shares Subject to the Restricted Stock Award.

         Pursuant to the provisions of the New England Business Service, Inc.
Stock Compensation Plan (the "Plan"), as in effect on the Date of Grant, the
Issuer hereby grants to the Executive a restricted stock award ("Restricted
Stock Award") of _____________ shares of its Stock (the "Awarded Shares"). The
Awarded Shares are being issued to the Executive in lieu of one hundred percent
(100%) of the gross bonus awarded to the Executive for the fiscal year ended
June 28, 2003 (the "Bonus Award") pursuant to the FY2003 NEBS Performance
Restricted Stock Plan adopted by the Organization and Compensation Committee of
the Board for such fiscal year and are valued for purposes of this Agreement at
$________ per share, the Fair Market Value of a share of Stock on the Date of
Grant, in accordance with and subject to all the terms and conditions of the
Plan and subject to the terms and conditions hereinafter set forth. The Plan and
any amendments are hereby incorporated by reference and made a part hereof.

2.       Terms and Conditions of the Restricted Stock Award.

         The issuance of Awarded Shares pursuant to the Restricted Stock Award
shall be subject to the following terms and conditions.

         2.1 Withholding Taxes. Notwithstanding anything to the contrary in
Section 2.3(b), the Issuer's obligation to deliver vested Awarded Shares
pursuant to this Restricted Stock Award shall be subject to the Executive's
satisfaction of all applicable federal, state and local income and employment
tax withholding obligations. Without limiting the generality of the foregoing,
the Company shall have the right to deduct from payments of any kind otherwise
due to the Executive any federal, state or local taxes of any kind required by
law to be withheld with respect to any Awarded Shares issued pursuant to this
Restricted Stock Award. The Executive may satisfy such withholding obligations
by having the Company withhold vested and unrestricted Awarded Shares, or by
delivering to the Company already owned unrestricted shares of Stock, having a
Fair Market Value as of the date of delivery of such unrestricted shares equal
to the amount required to be withheld.

         2.2 Vesting, Forfeiture or Early Vesting of Unvested Awarded Shares.

            (a) Except as provided in this Section 2.2, the Awarded Shares shall
remain unvested and subject to the restrictions of this Section 2.2 and Section
2.3 until the third annual meeting of stockholders of the Issuer that follows
the Date of Grant of the Awarded Shares (the "Vesting Period").

- -------------
/1/ Capitalized terms not otherwise defined herein are defined in Section 8
    below.



                (i) So long as the Executive's Service continues, the Awarded
Shares shall vest in the Executive (and shall no longer be subject to the
restrictions of this Section 2.2 and Section 2.3 hereof) in accordance with the
following vesting schedule(rounded up to the nearest whole share):



                                     Vesting Schedule

- -------------------------------- ------------------------- -------------------------


                                 Percentage of Awarded     Cumulative Percentage of

         Vesting Date                Shares Vesting         Awarded Shares Vested

- -------------------------------- ------------------------- -------------------------

                                                      
Date of 1st annual meeting of              15%                        15%
stockholders following Date of
Grant

- -------------------------------- ------------------------- -------------------------

Date of 2nd annual meeting of              35%                        50%
stockholders following Date of
Grant

- -------------------------------- ------------------------- -------------------------

Date of 3rd annual meeting of              50%                       100%
stockholders following Date of
Grant

- -------------------------------- ------------------------- -------------------------


                (ii) If the Executive ceases to perform Service by reason of
death, Disability or Retirement, all Awarded Shares not previously vested
pursuant to this Section 2.2 shall thereupon immediately vest in the Executive
(or in the case of death, in the person or persons to whom the Awarded Shares
pass by will or by the laws of descent and distribution) or his permitted
transferees pursuant to Section 2.3(a) and shall no longer be subject to the
restrictions of this Section 2.2 and Section 2.3 hereof.

                (iii) If the Executive voluntarily terminates Service or his
Service is involuntarily terminated for "cause", as determined in good faith by
the Board or Committee (which determination shall be binding on both the Company
and the Executive and/or his permitted transferee(s) pursuant to Section
2.3(a)), the Awarded Shares not previously vested pursuant to this Section 2.2
shall thereupon be forfeited in their entirety to the Issuer without any further
action by the Issuer or the Executive and for no consideration.

                (iv) If the Executive's Service is involuntarily terminated
without cause, the Awarded Shares not previously vested pursuant to this Section
2.2 shall thereupon be forfeited in their entirety to the Issuer without any
further action by the Issuer or the Executive and for no consideration;
provided, however, that the Committee may, in its sole discretion, waive the
forfeiture of all or any portion of the unvested Awarded Shares and such shares
shall thereupon immediately vest in the Executive and no longer be subject to
the restrictions of this Section 2.2 and Section 2.3 hereof.

            (b) Notwithstanding any of the foregoing, if a Change in Control
occurs during the Vesting Period and prior to any forfeiture of all or any
portion of the Awarded Shares pursuant to this Section 2.2, all Awarded Shares
that were not previously vested pursuant to this Section 2.2 and not forfeited
by termination of the Executive's Service prior to the occurrence of the Change
in Control shall thereupon immediately vest in the Executive and the
restrictions of this Section 2.2 and Section 2.3 shall terminate.

                                       7



         2.3 Restrictions on Transfer and Escrow of Unvested Awarded Shares;
Delivery of Vested Shares; Stockholder Rights. The Executive hereby agrees to
the following conditions:

            (a) Awarded Shares which are not yet vested may not be sold,
hypothecated or otherwise disposed of by the Executive or anyone claiming
through him; provided, however, that Awarded Shares may be transferred by the
Executive, either directly or in trust, to one or more members of Executive's
Family, or to a family partnership or other entity for the exclusive benefit of
one or more members of Executive's Family if and only to the extent that (i) the
Executive notifies the Committee in writing of his desire to transfer Awarded
Shares and the Committee does not within thirty (30) days of such notification
advise the Executive in writing that such transfer will not be allowed and (ii)
such Family member or trust or family partnership for the benefit thereof
executes an agreement to be subject to all of the terms and conditions of this
Agreement.

            (b) Awarded Shares which are not yet vested shall be held in escrow
by the Issuer. Upon the vesting of any Awarded Shares pursuant to Section 2.2
and the satisfaction of all obligations imposed by Section 2.1, the Issuer shall
promptly cause a certificate to be issued for the Awarded Shares (or portion
thereof which has vested) and shall deliver such certificate to the Executive or
his permitted transferee(s) pursuant to Section 2.3(a).

            (c) Subject to the terms hereof, the Executive shall have all the
rights of a stockholder with respect to the Awarded Shares while they are held
in escrow, and prior to their forfeiture pursuant to Section 2.2, including
without limitation, the right to vote the Awarded Shares, except as provided in
(d) below.

            (d) Any dividends declared and paid with respect to the Awarded
Shares while they are held in escrow, and prior to their forfeiture pursuant to
Section 2.2, shall not be paid to the Executive but shall instead be
automatically reinvested in shares of Stock at the Fair Market Value of a share
of Stock on the date of such dividend payment, and such additional shares of
Stock shall be deemed additional Awarded Shares (granted, for purposes of
Section 2.2 only, on the Date of Grant) and shall be subject to the forfeiture
and other provisions of Section 2.2 and this Section 2.3.

         2.4 Investment Representation. The Executive shall hold the Awarded
Shares for investment and not with a view to, or for resale in connection with,
any public distribution of such Shares, and if requested, shall deliver to the
Issuer an appropriate certification to that effect. This restriction shall
terminate upon the registration of such Shares under federal securities laws or
if, in the opinion of counsel for the Issuer, such Shares may be resold without
registration.

         2.5 Provision of Information. The Issuer will furnish upon request of
the Executive copies of the certificate of incorporation of the Issuer, as
amended, and by-laws of the Issuer, as amended, and such publicly available
financial and other information concerning the Issuer and its business and
prospects as may be reasonably requested by the Executive in connection with the
issuance or purchase of Awarded Shares pursuant to this Agreement.

         2.6 Compliance with the Plan. The Executive shall comply with all terms
and conditions of the Plan (a copy of which is attached hereto) and of this
Agreement. All decisions under, and interpretations of, the provisions of the
Plan and of this Agreement by the Board or by

                                       8



the Committee shall be final, binding and conclusive upon the Company and its
successors and assigns and upon the Executive and anyone claiming through the
Executive.

3.       Right to Terminate.


         Nothing contained in the Plan or in this Agreement shall restrict the
right of the Company to terminate the employment of the Executive at any time
and for any reason, with or without notice, or shall otherwise affect the terms
and conditions of the Executive's employment except as specifically provided in
either the Plan or in this Agreement.

4.       Adjustment in Shares.

         Appropriate adjustment shall be made by the Board or by the Committee
in the number and kind of the Awarded Shares issued pursuant to this Restricted
Stock Award to give effect to any stock dividends, stock splits, stock
combinations, recapitalizations and other similar changes in the capital
structure of the Issuer after the Date of Grant. In the event of a change of the
Stock resulting from a merger or similar reorganization as to which the Issuer
is the surviving corporation, or sale of all or substantially all of the assets
of Issuer to a corporation that does not result in a Change in Control, the
number and kind of the Awarded Shares issued pursuant to this Agreement shall be
appropriately adjusted in such a manner as the Board or the Committee shall deem
equitable to prevent dilution or enlargement of the rights granted hereunder.

5.       Restrictions on Transfer of Stock.

         The Awarded Shares shall be subject to any restrictions then in effect
pursuant to the certificate of incorporation or by-laws of the Issuer and to any
other restrictions or provisions attached hereto and made a part hereof or set
forth in any other contract or agreement binding on the Executive.

6.       Notice Concerning Tax Matters.

         The Company makes no representation about the tax treatment to the
Executive with respect to the receipt of the Restricted Stock Award or the
acquisition, holding or disposition of the Awarded Shares. The Executive is
urged to consult a professional tax adviser of his or her own choosing for
advice as to the tax consequences (including the application of Section 83 of
the Code) of receiving a Restricted Stock Award or of holding or selling Awarded
Shares issued pursuant to this Agreement.

7.       Governing Law; Etc.

         This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without giving effect to
principles of conflicts of law, and applicable federal law. This Agreement shall
be binding upon and inure to the benefit of the heirs and legal representatives
of the Executive and the successors and assigns of the Issuer, but shall not be
assigned by the Executive at any time, except as otherwise permitted by Section
2.3(a) hereof, without the prior written permission of the Issuer.

                                       9



8.       Definitions.


         8.1 "Affiliate" has the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act.


         8.2 "Agreement" has the meaning defined in the Preamble above.


         8.3 "Awarded Shares" has the meaning defined in Section 1 above.


         8.4 "Beneficial Owner" has the meaning set forth in Rule 13d-3 under
the Exchange Act.


         8.5 "Board" means the Board of Directors of the Issuer.


         8.6 "Bonus Award" has the meaning set forth in Section 1 above.


         8.7 "Change in Control" means the occurrence of any of the following
events:

            (a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Issuer representing 35% or more of either the
then outstanding shares of common stock of the Issuer or the combined voting
power of the Issuer's then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
subparagraph (c)(i) below;

            (b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Issuer) whose appointment or election by the
Board of Directors or nomination for election by the Issuer's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the directors
then in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended;

            (c) there is consummated a merger or consolidation of the Issuer or
any direct or indirect Subsidiary of the Issuer with another corporation, other
than (i) a merger or consolidation which would result in the voting securities
of the Issuer outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least
60% of the combined voting power of the securities of the Issuer or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Issuer (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Issuer (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Issuer of its Affiliates) representing 35%
or more of the combined voting power of the Issuer's then outstanding
securities; or

            (d) the stockholders of the Issuer approve a plan of complete
liquidation or dissolution of the Issuer or there is consummated an agreement
for the sale or disposition by the Issuer of all or substantially all of the
Issuer's assets, other than a sale or disposition by the Issuer

                                       10



of all or substantially all of the Issuer's assets to an entity, at least 60% of
the combined voting power of the voting securities of which are owned by
stockholders of the Issuer in substantially the same proportions as their
ownership of the Issuer immediately prior to such sale.

         8.8 "Code" means the Internal Revenue Code of 1986, as heretofore and
hereafter amended, and the regulations promulgated thereunder.

         8.9 "Committee" has the meaning defined in the Plan.


         8.10 "Company" has the meaning defined in the Preamble above.


         8.11 "Date of Grant" has the meaning defined in the Preamble above.


         8.12 "Disability" has the meaning defined in Code Section 22(e)(3).


         8.13 "Exchange Act" means the Securities Exchange Act of 1934, as
heretofore and hereafter amended.


         8.14 "Executive" has the meaning defined in the Preamble above.


         8.15 "Fair Market Value" means the last sales price per share of Stock
as reported on the New York Stock Exchange prior to the Date of Grant (or other
date on which such valuation is made) or if no price has been so reported within
one week prior to the Date of Grant (or other date on which such valuation is
made), fair market value shall be determined by a principal market maker for the
Stock designated by the Committee (or if no such market maker is designated, by
the Board in its good faith business judgment).

         8.16 "Family" means the Participant's: (i) spouse and lineal
descendants of such spouse; (ii) lineal descendants and the spouses of such
lineal descendants: (iii) lineal ancestors and the spouses of such lineal
ancestors; and (iv) siblings and the spouses and children of such siblings.


         8.16 "Issuer" has the meaning defined in the Preamble above.


         8.17 "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (a) the Issuer or any of its Subsidiaries, (b)
a trustee or other fiduciary holding securities under an employee benefit plan
of the Issuer or any of its Affiliates, (c) an underwriter temporarily holding
securities pursuant to an offering of such securities and (d) a corporation
owned, directly or indirectly, by the stockholders of the Issuer in
substantially the same proportions as their ownership of stock of the Issuer.

         8.18 "Plan" has the meaning defined in Section 1 above.


         8.19 "Restricted Stock Award" has the meaning defined in Section 1
above.


         8.20 "Retirement" means the actual cessation of the Executive's
Services on or after the date that he attains age 62.


         8.21 "Service" means the performance of work for the Company or a
Subsidiary as an employee.


                                       11



         8.22 "Stock" has the meaning defined in the Plan.


         8.23 "Subsidiary" has the meaning defined in Code Section 424(f).


         8.24 "Vesting Period" has the meaning defined in Section 2.2 above.


9.       Amendments.

         Any amendment to this Agreement, or waiver of any terms hereof, may be
made only pursuant to a writing executed by the Issuer and the Executive.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement under
seal as of the date first appearing above.

                                            EXECUTIVE

                                            ------------------------------------
                                            Signature

                                            Address of Executive:

                                            ------------------------------------

                                            ------------------------------------


                                            NEW ENGLAND BUSINESS SERVICE, INC.


CORPORATE SEAL                              By:_________________________________
                                               Name:
                                               Title:


                                       12

EX-10.18.2

                                                                 Exhibit 10.18.2


List of Executive Officers of New England Business Service, Inc. (the "Company")
who have entered into the Change in Control Severance Agreement filed as Exhibit
10.18.1 to the Company's Annual Report on Form 10-K for the fiscal year ended
June 29, 2002, and dates thereof:



Name                           Title                                          Date of Agreement
- ----                           -----                                          -----------------
                                                                      
George P. Allman               Senior Vice President and                      August 2, 2001
                               President - Diversified Operations

Jeffrey W. Angus               Senior Vice President, Information             August 2, 2001
                               Systems


John F. Fairbanks              Senior Vice President and                      August 2, 2001
                               President - Chiswick

Daniel M. Junius               Executive Vice President, Chief                August 2, 2001
                               Financial Officer & Treasurer

Richard T. Riley               President and Chief                            August 2, 2001
                               Operating Officer

Steven G. Schlerf              Senior Vice President, Manufacturing           August 2, 2001
                               and Technical Operations

Robert D. Warren               Senior Vice President and                      August 2, 2001
                               President - NEBS Direct Marketing

Hedwig V. Whitney              Senior Vice President, Human                   July 1, 2002
                               Resources

EX-10.23

                                                                   Exhibit 10.23

                                 PROMISSORY NOTE

$300,000.00                                                        June 22, 2001


         FOR VALUE RECEIVED, the undersigned, Richard T. Riley (the "Maker")
hereby promises to pay to the order of New England Business Service, Inc., a
Delaware corporation ("NEBS", and together with its assigns, the "Holder"), with
offices at 500 Main Street, Groton, Massachusetts 01471, the principal amount of
Three Hundred Thousand and No/100 Dollars ($300,000.00) in lawful money of the
United States of America, on or before June 22, 2006 (the "Maturity Date"), with
no interest accruing on the principal amount except as provided below.

I.       Principal.

         (a) The principal owed to the Holder under this Note shall be forgiven
at the rate of $60,000.00 per year on each anniversary date of this Note,
subject to the provisions of Section 1(b).

         (b) If at any time before the Maturity Date,

             (i) the Maker's employment with NEBS is terminated by NEBS for
cause (as defined herein), or is voluntarily terminated by the Maker (unless
such voluntary termination follows (A) a reduction in the Maker's base salary or
a significant diminution of the Maker's position or responsibilities with NEBS
or (B) any other event constituting grounds for "termination for good reason"
under any separate written employment or severance agreement between you and the
Company then in effect); or

             (ii) the Maker becomes insolvent, or unable to pay his debts as
they become due, or initiates or becomes the subject of any proceedings for the
reorganization or relief of debtors; or

             (iii) the Maker fails to comply with or perform any of the terms of
this Note;


then, in any such case, the Holder may at its option declare this Note,
including the entire unpaid and theretofore unforgiven principal amount then
outstanding, to become due and payable immediately.

         (c) For purposes of this Note, "termination for cause" shall mean
termination of the Maker's employment with NEBS by reason of (i) any
significant, deliberate misuse or misappropriation by the Maker of money or
property of NEBS, (ii) any flagrant act of dishonesty or disloyalty by the Maker
that is injurious to NEBS or its reputation, monetarily or otherwise, (iii) any
wrongful or negligent act of the Maker which materially adversely affects the
business of NEBS, (iv) any material violation of NEBS' written policies,
standards and guidelines and, if such violation is susceptible to cure, the
Maker has failed to substantially cure such violation within twenty (20) days
after written notice thereof is delivered to the Maker, or (v) any material
breach by the Maker of the terms of any employment or other agreement between
the Maker and NEBS.

         (d) If the principal outstanding under this Note becomes due and
payable under the terms of Section I(b), then all amounts not paid when due
hereunder shall bear interest from the due date until payment at a rate per
annum equal to the prime rate as published from time to time in

                                       1



The Wall Street Journal, any change in said prime rate to take effect as of the
opening of business on the date of publication; provided that if The Wall Street
Journal ceases to publish such prime rate, or if such information is not
otherwise available, the applicable interest rate will be the rate designated
from time to time by Fleet National Bank (or any successor bank) as its "prime
rate".

         (e) The Maker acknowledges and agrees that he will be solely
responsible for all income tax obligations incurred by the Maker as a result of
the terms of this Note, including without limitation obligations based on the
value of foregone interest and forgiven principal.

II.      No Guarantee of Employment.

         Nothing in this Note shall be construed to be a guarantee of
employment, nor shall in any way affect the terms of any employment or other
agreement between the Maker and the Holder.

III.     Miscellaneous.

         (a) The parties hereto, including the Maker and all endorsers and
guarantors of this Note, hereby waive presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance or enforcement of this Note.

         (b) The failure of any party to insist, on any one or more occasions,
upon performance of any of the terms or conditions of this Note, shall not be
construed as a waiver or relinquishment of any rights granted hereunder or the
future performance of any such term or condition.

         (c) The Maker will pay to the Holder upon demand all legal and other
costs and expenses of every kind, including reasonable attorneys' fees and
disbursements, relating to the collection and/or enforcement of this Note or of
any rights hereunder.

         (d) Any notice given hereunder shall be in writing and shall be deemed
effective when actually received in hand or by telecopy or other electronic
transmission or when sent by certified or registered mail, return receipt
requested, addressed to the Maker at his address last known to the Holder.

         (e) This Note may not be amended except in writing signed by the party
against whom such amendment is sought to be enforced. This Note shall be
interpreted under and governed by the laws of Massachusetts.

         IN WITNESS WHEREOF, the undersigned has duly executed this Note as an
instrument under seal as of the day and year first above written.

                                                     /s/ Richard T. Riley
                                               ---------------------------------
                                                 Richard T. Riley (the "Maker")


Witnessed by:


     /s/ Craig Barrows
- ---------------------------

                                        2

EX-21

                                                                      Exhibit 21
                              LIST OF SUBSIDIARIES

Name of Subsidiary                                 Jurisdiction of Incorporation
- ------------------                                 -----------------------------
NEBS Business Products Limited                     (Canada)
Standard Forms, Ltd.                               (United Kingdom)
McBee Systems, Inc.                                (Colorado)
Rapidforms, Inc.                                   (New Jersey)
Russell & Miller, Inc.                             (Delaware)
PremiumWear, Inc.                                  (Delaware)
Chiswick, Inc.                                     (Massachusetts)
VeriPack.com, Inc.                                 (Delaware)

EX-23

                                                                      Exhibit 23
                          INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement Nos.
33-38925, 33-56227, 333-44825, 333-44819, 333-43028, 333-43804 and 333-83196 of
New England Business Service, Inc. on Form S-8 of our report dated July 31, 2002
(which expresses an unqualified opinion and includes an explanatory paragraph
relating to the adoption of Statement of Financial Accounting Standards ("SFAS")
No. 142, "Business Combinations" in 2002 and SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activity" in 2001), appearing in this Annual
Report on Form 10-K of New England Business Service, Inc. for the year ended
June 29, 2002.

/s/ Deloitte & Touche LLP

Boston, Massachusetts
September 6, 2002

EX-99.1

                                                                    Exhibit 99.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report on Form 10-K of New England Business
Service, Inc. (the "Company") for the fiscal year ended June 29, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Robert J. Murray, Chairman and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and


2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.



Dated: September 6, 2002



/s/ Robert J. Murray
- ------------------------------------
Robert J. Murray
Chairman and Chief Executive Officer

EX-99.2

                                                                    Exhibit 99.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report on Form 10-K of New England Business
Service, Inc. (the "Company") for the fiscal year ended June 29, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Daniel M. Junius, Executive Vice President, Chief Financial Officer and
Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my
knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and


2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.



Dated: September 6, 2002



/s/ Daniel M. Junius
- -------------------------------------
Daniel M. Junius
Executive Vice President,
Chief Financial Officer and Treasurer