-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NMWWBO3B4HiTBVBdWMwDeVETDE25MogKx6u/sFXyuzML0LRZpOlXZK/tIXoUc/Cz SLP8X7WIn1khBUDIct5u+Q== 0000205700-98-000011.txt : 19981228 0000205700-98-000011.hdr.sgml : 19981228 ACCESSION NUMBER: 0000205700-98-000011 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980627 FILED AS OF DATE: 19981223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND BUSINESS SERVICE INC CENTRAL INDEX KEY: 0000205700 STANDARD INDUSTRIAL CLASSIFICATION: MANIFOLD BUSINESS FORMS [2761] IRS NUMBER: 042942374 STATE OF INCORPORATION: DE FISCAL YEAR END: 0627 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-11427 FILM NUMBER: 98774961 BUSINESS ADDRESS: STREET 1: 500 MAIN ST CITY: GROTON STATE: MA ZIP: 01471 BUSINESS PHONE: 5084486111 11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 27, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ---------- Commission File No. 001-11427 401K PLAN FOR EMPLOYEES OF NEW ENGLAND BUSINESS SERVICE, INC. AND PAYROLL STOCK OWNERSHIP PLAN (Full Title of Plan) NEW ENGLAND BUSINESS SERVICE, INC. 500 Main Street Groton, Massachusetts 01471 (Name of Issuer of Securities held pursuant to the Plan and address of its principal executive office) (978) 448-6111 (Telephone Number) The following exhibits are being filed as part of this Form 11-K: INDEX TO EXHIBITS Exhibit Number 1 401K Plan for Employees of New England Business Service, Inc. Financial Statements for the Years Ended June 27, 1998 and June 28, 1997, Supplemental Schedules for the Year Ended June 27, 1998 and Independent Auditors' Report 2 New England Business Service, Inc. Payroll Stock Ownership Plan Financial Statements for the Years Ended June 27, 1998 and June 28, 1997, Supplemental Schedules for the Year Ended June 27, 1998 and Independent Auditors' Report 3 Consent of Deloitte & Touche SIGNATURES Pursuant to the requirements of Section 15(d) of the Securities exchange act of 1934, the Committee administering the Plans has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. 401K Plan for Employees of New England Business Service, Inc. and Payroll Stock Ownership Plan Date: December 23, 1998 ----------------- By: /S/Robert J. Murray ----------------------------- Robert J. Murray /S/Robert H. Glaudel ----------------------------- Robert H. Glaudel /S/Daniel M. Junius ----------------------------- Daniel M. Junius EX-1 2 ------------------------------------------ 401(k) Plan for Employees of New England Business Service, Inc. Financial Statements for the Years Ended June 27, 1998 and June 28, 1997, and Supplemental Schedules as of and for the Year Ended June 27, 1998 and Independent Auditors' Report 401(k) PLAN FOR EMPLOYEES OF NEW ENGLAND BUSINESS SERVICE, INC. TABLE OF CONTENTS - ------------------------------------------------------------------------------- Page INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS AS OF JUNE 27, 1998 AND JUNE 28, 1997 AND FOR THE YEARS THEN ENDED: Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4-9 SUPPLEMENTAL SCHEDULES AS OF JUNE 27, 1998 AND FOR THE YEAR THEN ENDED: Item 27a - Schedule of Assets Held for Investment Purposes 10 Item 27d - Schedule of Reportable Transactions 11 Schedules required under the Employee Retirement Income Security Act of 1974, other than the schedules listed above, are omitted because of the absence of the conditions under which the schedules are required. INDEPENDENT AUDITORS' REPORT 401(k) Plan for Employees of New England Business Service, Inc. We have audited the accompanying statements of net assets available for benefits of the 401(k) Plan for the Employees of New England Business Service, Inc. (the "Plan") as of June 27, 1998, and June 28, 1997, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at June 27, 1998 and June 28, 1997, and the changes in its net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules, listed in the Table of Contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These schedules are the responsibility of the Plan's management. Such supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic 1998 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. /S/Deloitte & Touche LLP, - ------------------------------ December 18, 1998 401(k) PLAN FOR EMPLOYEES OF NEW ENGLAND BUSINESS SERVICE, INC. STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS JUNE 27, 1998 AND JUNE 28, 1997 - ---------------------------------------------------------------------------------------------------
1998 1997 ASSETS: Investments, at fair value: Norwest Stable Return GIC Fund (common/collective trust) $ 7,646,763 $ 5,304,654 New England Business Service, Inc. common stock (389,701 shares in 1998 and 180,543 shares in 1997) 12,567,847 4,750,191 Equity mutual funds 34,271,207 12,996,220 Bond mutual funds 2,340,342 1,111,058 Norwest money market fund 371,725 1,973,023 Loans to participants 1,662,157 664,284 ------------ ----------- Total investments 58,860,041 26,799,430 Cash 97,349 5,811,095 Receivables - accrued income 1,605 950 ------------ ----------- NET ASSETS AVAILABLE FOR BENEFITS $ 58,958,995 $ 32,611,475 ============= ============
See notes to financial statements. -2- 401(k) PLAN FOR EMPLOYEES OF NEW ENGLAND BUSINESS SERVICE, INC. STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED JUNE 27, 1998 AND JUNE 28, 1997 - ----------------------------------------------------------------------------------------------------
1998 1997 ADDITIONS: Employee contributions $ 6,608,078 $ 2,886,980 Rollover contributions 11,395,278 210,260 Employer contributions 3,836,351 1,065,005 Net appreciation in fair value of investments 6,933,780 5,683,030 Interest and dividend income 811,639 691,990 ------------ ------------ Total additions 29,585,126 10,537,265 ------------ ------------ DEDUCTIONS: Benefits paid to participants 3,195,351 2,237,320 Administrative fees 42,255 24,541 ------------ ------------ Total deductions 3,237,606 2,261,861 ------------ ------------ NET INCREASE 26,347,520 8,275,404 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 32,611,475 24,336,071 ------------ ------------ End of year $ 58,958,995 $ 32,611,475 ============ ============
See notes to financial statements. -3- 401(k) PLAN FOR EMPLOYEES OF NEW ENGLAND BUSINESS SERVICE, INC. NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN The following brief description of the 401(k) Plan for Employees of New England Business Service, Inc. (the "Plan") provides general information only. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. General Information - On October 26, 1984, New England Business Service, Inc. ("NEBS" or the "Company") adopted a deferred profit-sharing and stock ownership plan. The Plan became effective as of June 30, 1984. On July 1, 1993, the Plan was amended to incorporate provisions of Section 401(k) of the Internal Revenue Code. The Plan is designed to allow eligible employees to accumulate savings for retirement in the Plan without paying income taxes until the monies are actually received. Employees may elect to defer receipt of a portion of their eligible pay by having such amounts paid into the Plan. If an employee chooses to defer payment of this eligible pay, the Company will make an additional contribution to the Plan on the employee's behalf. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The plan was last amended effective as of July 1, 1997. Eligibility - Regular Employees are eligible to participate in the Plan the first day of the month following the date of hire. For Non-Regular Employees (temporary or limited term employees) the employee must complete one year of eligibility service (1,000 hours of service). Officers and directors of the Company who are full-time employees and meet the foregoing eligibility requirements are eligible for participation. Administration of the Plan - The Plan is administered by the NEBS Retirement Committee (the "Plan Committee"), whose members are appointed by the Board of Directors of the Company. The Trustee of the Plan is Norwest Bank Minnesota, N.A. ("Norwest"). Certain administrative costs of the Plan have been assumed by the Company. Company Contributions - When an employee makes a deferral, the Company will make a matching contribution of cash or shares of its common stock. If the employee has less than five years of service, the matching contribution is equal in value to one-half of the amount of the deferral but not to exceed 6% of the employee's eligible pay. If the employee has greater than five years of service, the matching contribution is equal in value to 100% of the amount of the deferral but not to exceed 6% of the employee's eligible pay. In addition, the Company contributes 3% of an employee's eligible salary, even if the employee does not contribute to the Plan. Employee Contributions - Eligible employees must complete a notice of election to become participants and may elect to defer receipt of a portion (in multiples of 1%) of their eligible pay as defined by the Plan. The deferral may not exceed 15% of a participant's eligible pay. A participant may change the rate of future deferrals through the Norwest Benefits Helpline. The change is effective the first of the following month. -4- 1. DESCRIPTION OF THE PLAN (CONTINUED) Loans to Participants - Eligible participants may apply for and obtain a loan in an amount as defined in the Plan (not less than $1,000 and not to exceed the lessor of $50,000 or 50% of their vested balance). Loans bear a market rate of interest equal to the prime lending rate plus 2 percentage points, as published in The Wall Street Journal. The loan must be for a nonrenewable term of no more than five years and repaid by regular payroll deductions. Payments of principal and interest are credited to the participant's account. Only one loan will be allowed to a participant at any given time. The loans are collateralized by 50% of the participant's vested account balance. Investment of Contributions - Company contributions are invested in Company common stock. Employee contributions are invested at the direction of the employee in any combination of the following: (1) Company common stock; (2) six mutual funds; (3) fixed income investments such as investment contracts providing a guaranteed interest rate; or (4) any other investments subsequently authorized by the Plan Committee. Employees have the option to move the Company contribution from Company common stock to any of the six mutual funds. Dividends, interest and other distributions received in any fund with respect to any type of contribution are reinvested in the same fund. In the absence of directions by the employee concerning investment of employee contributions, they are invested in the fixed income fund. Vesting - Participants are fully vested with respect to employee contributions. Company contributions made pursuant to the Plan subsequent to July 1, 1997 are vested 20% after completing one year of service, 50% after completing two years of service and 100% vested after completing three years of service. All Company contributions prior to July 1, 1997 are 100% vested. All forfeitures are used to reduce future employer contributions. Withdrawals and Distributions - Contributions to the Plan from all sources, and earnings thereon, are generally payable at termination of employment due to retirement, disability, death or any other reason. Distribution payments may be made in cash in a lump sum, in whole shares of Company common stock held in the employee's account in the Plan with the value of fractional shares paid in cash, or in installments for a period not exceeding the employee's life expectancy or the joint life expectancies of the employee and beneficiary, up to a maximum of fifteen years. The form of distribution is elected in writing by the employee. Withdrawals prior to termination of employment are subject to certain limitations and restrictions. Participants' Accounts - An account is set up in the name of each participant to record employee and Company matching contributions made on the participant's behalf and other transactions that occur in connection with the employee's participation in the Plan. Each fiscal quarter, participants receive a statement of account, listing contributions, number of shares of Company common stock in the account and the market value of the funds in the account. Plan Amendment and Termination - The Company has the right to amend, suspend or terminate the Plan, but may not do so in a way which would divest a participant of accrued benefits. If the Plan is terminated, the Trustee will distribute the assets held in the Trust, after payment of expenses, in such a manner as the Plan Committee shall determine and as may be required by law. -5- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Accounting - The financial statements of the Plan are prepared on the accrual basis of accounting. Purchases and sales of securities are recorded on the trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. Investments - Investments are stated at fair value based on quoted market prices. Distributions to Participants - Distributions to participants are recorded when paid. 3. INVESTMENTS Investments that represent 5% or more of net assets available for benefits as of June 27, 1998 and June 28, 1997 are as follows: 1998 1997 Norwest Stable Return GIC Fund (common/collective Trust) $7,646,763 5,304,654 Fidelity Balanced Fund - 5,246,614 Fidelity Contrafund 11,450,790 7,749,606 New England Business Service, Inc. common stock 12,567,847 4,750,191 Dodge and Cox Balanced Fund 7,644,785 - Vanguard Index Trust 500 Fund 8,863,846 - Norwest Small Cap Opportunies Fund 3,953,796 - -6- 3. INVESTMENTS (CONTINUED) The Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $6,933,780 and $5,683,030, respectively, as follows: 1998 1997 At fair value based on quoted market prices: Norwest Stable Return GIC Fund $ 440,233 $ 316,224 Fidelity Intermediate Bond Fund 3,343 5,075 Fidelity Balanced Fund 84,347 760,087 Fidelity Contrafund 2,371,456 1,400,290 New England Business Service, Inc. common stock 1,333,761 3,201,354 Strategic Income Fund 153,782 - Dodge & Cox Balanced Fund 600,490 - Vanguard Index Trust 500 Fund 1,548,529 - Norwest Small-Cap Opportunities Fund 302,610 - Euro-Pacific Growth Fund 95,229 - ---------- ---------- Total $6,933,780 $5,683,030 ========== ========== The Plan's principal investments include the following: Norwest Stable Return GIC Fund - A collective investment trust whose underlying investments include guaranteed investment contracts. Dodge & Cox Balanced Fund - Fund invests in both equity securities and convertible bonds. Vanguard Index Trust 500 Fund - Fund invests in equity securities of large domestic companies that comprise the Standard & Poor's 500 Index. Norwest Small-Cap Opportunities Fund - Fund invests solely in investment assets of smaller companies. Fidelity Balanced Fund - Fund invests in foreign and domestic equity and fixed income securities. Fidelity Contrafund - Fund invests in equity securities of U.S. and foreign issuers, including those in emerging markets. New England Business Service, Inc. Common Stock - Invests solely in common stock of New England Business Service, Inc. -7- 4. TAX STATUS OF THE PLAN The Plan obtained its latest determination letter on February 12, 1996 in which the Internal Revenue Service stated that Plan, as then designed, was in compliance with applicable requirements of the Internal Revenue Code (the "Code"). The Plan has subsequently been amended, however the plan administrator believes that the Plan is currently designed and being operated in compliance with applicable requirements of the Code. Accordingly, no provision for income taxes has been included in these financial statements. -8- 5. BY-FUND INFORMATION Interest and dividend income, contributions, benefits paid and net appreciation for the years ended June 27, 1998 and June 28,1997 are as follows:
Net Interest Benefits Appreciation and Paid in Fair Value Dividend Employer Participant Rollover to of Income Contributions Contributions Contributions Participants Investments 1998 Norwest Stable Return Fund $ - $ - $ 540,022 $ 2,056,134 $ 479,929 $ 440,233 Fidelity Intermediate Bond Fund 6,264 - - - - 3,343 Fidelity Balanced Fund - - - - - 84,347 Fidelity Contrafund 59,856 - 897,442 2,016,450 495,804 2,371,456 Stock Fund (a) 282,822 3,836,351 1,056,096 841,276 648,673 1,333,761 Strategic Income Fund 87,924 - 182,483 754,503 118,616 153,782 Dodge & Cox Balanced Fund 174,191 - 571,845 2,026,607 454,237 600,490 Vanguard Index Trust 500 Fund 75,962 - 908,535 2,060,189 222,972 1,548,529 Norwest Small-Cap Opportunities Fund 83,658 - 501,216 973,562 139,624 302,610 Euro-Pacific Growth Fund 40,962 - 378,767 666,557 61,696 95,229 Other Investments - - 1,571,672 - 573,800 - ---------- ---------- ---------- ---------- ---------- ----------- $ 811,639 $3,836,351 $6,608,078 $11,395,278 $3,195,351 $ 6,933,780 ========== ========== ========== ========== ========== =========== 1997 Norwest Stable Return Fund $ - $ - $ 614,472 $ 70,570 $ 342,861 $ 316,224 Fidelity Intermediate Bond Fund 62,609 - 192,739 224 23,330 5,075 Fidelity Balanced Fund 208,455 - 688,915 62,091 260,798 760,087 Fidelity Contrafund 58,113 - 1,151,653 60,295 477,331 1,400,290 Stock Fund (a) 362,813 1,065,005 239,201 17,080 693,716 3,201,354 Other Investments - - - - 439,284 - ---------- ---------- ---------- ---------- ---------- ----------- $ 691,990 $1,065,005 $2,886,980 $ 210,260 $2,237,320 $ 5,683,030 ========== ========== ========== ========== ========== ===========
(a) Includes NEBS common stock, money market fund and interest receivable. -9- 401(k) PLAN FOR EMPLOYEES OF NEW ENGLAND BUSINESS SERVICE, INC. ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES JUNE 27, 1998 - ------------------------------------------------------------------------------------------------------------------
c)Description of Investment, Including b)Identity of Issue, Borrower, Maturity Date, Interest Rate, e)Current a) Lessor, or Similar Party Collateral and Par or Maturity Value d)Cost Value * Norwest Stable Return GIC Fund Collective Trust, 295,116 shares $ 6,756,690 $ 7,646,763 Fidelity Contrafund Equity Mutual Fund, 209,683 shares 8,563,194 11,450,790 * Participant loans Maturity dates ranging from 1,662,157 1,662,157 1 - 5 years at varying interest rates (prime plus 2%) * New England Business Service, Inc. Common Stock, 389,701 shares 9,742,715 12,567,847 * Norwest Short-Term Money market fund, 371,725 shares 371,725 371,725 Investment Fund Strategic Income Fund Bond Mutual Fund, 117,842 shares 2,253,583 2,340,342 Dodge & Cox Balanced Fund Equity Mutual Fund, 110,171 shares 7,457,397 7,644,785 Vanguard Index Trust 500 Fund Equity Mutual Fund, 84,177 shares 7,456,248 8,863,846 * Norwest Small-Cap Opportunities Fund Equity Mutual Fund, 167,251 shares 3,712,362 3,953,796 Euro-Pacific Growth Fund Equity Mutual Fund, 81,748 shares 2,335,672 2,357,990 ---------- ---------- TOTAL $ 50,311,743 $58,860,041 ============ ===========
* Represents party-in-interest to the Plan. - 10 - 401(k) PLAN FOR EMPLOYEES OF NEW ENGLAND BUSINESS SERVICE, INC. ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED JUNE 27, 1998 - -----------------------------------------------------------------------------------------------------------------------------------
b) Description of Asset f) Expense h) Current (Including Interest Incurred Value of i) Net a) Identity of Rate and Maturity in c) Purchase d) Selling e) Lease With g) Cost of Asset on Gain Party Involved Case of a Loan) Price Price Rental Transaction Asset Transaction (Loss) Date Single Transaction Norwest Stable Equity Income Mutual $ 1,883,220 - - - $ 1,883,220 $ 1,883,220 - Return Fund Funds Fidelity Balanced Equity Income Mutual - $ 5,330,950 - - 4,402,323 5,330,950 $928,627 Fund Funds NEBS Common Stock 3,194,683 - - - 3,194,683 3,194,683 - NEBS Common Stock - 3,823,984 - - 3,823,984 3,823,984 - Dodge & Cox Equity Income Mutual 4,817,839 - - - 4,817,839 4,817,839 - Balanced Fund Funds Dodge & Cox Equity Income Mutual 1,877,194 - - - 1,877,194 1,877,194 - Balanced Fund Funds Vanguard Index Equity Income Mutual 3,974,764 - - - 3,974,764 3,974,764 - Trust 500 Fund Funds Vanguard Index Equity Income Mutual 1,714,932 - - - 1,714,932 1,714,932 - Trust 500 Fund Funds Norwest Small-Cap Equity Income Mutual 2,170,698 2,170,698 2,170,698 - Opportunities Fund Funds Series of Transactions Norwest Stable Equity Income Mutual 4,685,872 - - - 4,685,872 4,685,872 - Return Fund Funds Norwest Stable Equity Income Mutual - 2,708,177 - - 2,387,433 2,708,177 320,744 Return Fund Funds Fidelity Equity Income Mutual 4,160,996 - - - 4,160,996 4,160,996 - Contrafund Funds Fidelity Equity Income Mutual - 2,029,694 - - 1,574,549 2,029,694 455,145 Contrafund Funds NEBS Common Stock 7,564,724 - - - 7,564,724 7,564,724 - NEBS Common Stock 2,346,855 - - - 2,346,855 2,346,855 - NEBS Common Stock - 9,166,022 - - 9,166,022 9,166,022 - Strategic Income Equity Income Mutual 2,713,290 - - - 2,713,290 2,713,290 - Fund Funds Dodge & Cox Equity Income Mutual 8,250,801 - - - 8,250,801 8,250,801 - Balanced Fund Funds Vanguard Index Equity Income Mutual 8,869,307 - - - 8,869,307 8,869,307 - Trust 500 Fund Funds Norwest Small-Cap Equity Income Mutual 4,794,561 - - - 4,794,561 4,794,561 - Opportunities Fund Funds Euro-Pacific Equity Income Mutual 3,406,115 - - - 3,406,115 3,406,115 - Growth Fund Funds
- 11 - EX-2 3 ------------------------------------------ NEW ENGLAND BUSINESS SERVICE, INC. PAYROLL STOCK OWNERSHIP PLAN Financial Statements for the Years Ended June 27, 1998 and June 28, 1997 and Supplemental Schedule as of June 27, 1998 and Independent Auditors' Report NEW ENGLAND BUSINESS SERVICE, INC. PAYROLL STOCK OWNERSHIP PLAN TABLE OF CONTENTS - ------------------------------------------------------------------------------- Page INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS AS OF JUNE 27, 1998 AND JUNE 28, 1997 AND FOR THE YEARS THEN ENDED: Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4-7 SUPPLEMENTAL SCHEDULE AS OF JUNE 27, 1998 - Item 27a - Schedule of Assets Held for Investment Purposes 8 Schedules required under the Employee Retirement Income Security Act of 1974, other than the schedule listed above, are omitted because of the absence of the conditions under which the schedules are required. INDEPENDENT AUDITORS' REPORT New England Business Service, Inc. Payroll Stock Ownership Plan: We have audited the accompanying statements of net assets available for benefits of the New England Business Service, Inc. Payroll Stock Ownership Plan as of June 27, 1998 and June 28, 1997, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the New England Business Service, Inc. Payroll Stock Ownership Plan as of June 27, 1998 and June 28, 1997, and the changes in its net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes as of June 27, 1998 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This schedule is the responsibility of the Plan's management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 1998 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. /S/Deloitte & Touche, LLP. - ---------------------------------- December 18, 1998 NEW ENGLAND BUSINESS SERVICE, INC. PAYROLL STOCK OWNERSHIP PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS JUNE 27, 1998 AND JUNE 28, 1997 - ---------------------------------------------------------------------------
1998 1997 ASSETS: Investments, at fair value: New England Business Service, Inc. ("NEBS") common stock, (5,768 shares in 1998 and 18,015 shares in 1997) $186,027 $474,466 Equity Mutual Funds 271,733 - Bond Mutual Funds 20,797 - Norwest Stable Return GIC Fund (common/collective trust) 67,284 - -------- -------- NET ASSETS AVAILABLE FOR BENEFITS $545,841 $474,466 ======== ========
See notes to financial statements. - 2 - NEW ENGLAND BUSINESS SERVICE, INC. PAYROLL STOCK OWNERSHIP PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED JUNE 27, 1998 AND JUNE 28, 1997 - -------------------------------------------------------------------------------
1998 1997 ADDITIONS: Interest and dividend income $ 19,700 $ 14,393 Net appreciation in fair value of investments 68,526 120,940 -------- -------- Total additions 88,226 135,333 DEDUCTIONS: Benefits paid to participants 16,851 13,624 -------- -------- Total deductions 16,851 13,624 -------- -------- NET INCREASE 71,375 121,709 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 474,466 352,757 -------- -------- End of year $545,841 $474,466 ======== ========
See notes to financial statements. - 3 - NEW ENGLAND BUSINESS SERVICE, INC. PAYROLL STOCK OWNERSHIP PLAN NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN The following brief description of the New England Business Service, Inc. Payroll Stock Ownership Plan (the "Plan") provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan's provisions. General Information - On October 26, 1984, New England Business Service, Inc. ("NEBS" or the "Company") adopted a payroll stock ownership plan. The Plan became effective as of June 25, 1983. An employee automatically becomes eligible for participation in the Plan after completing one year of defined service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan was last amended effective July 1, 1997. Administration of the Plan - The Plan is administered by the NEBS Retirement Committee (the "Plan Committee"), whose members are appointed by the Board of Directors of the Company. The Trustee of the assets of the plan is Norwest Bank Minnesota, N.A. ("Norwest"). Administrative costs of the Plan have been assumed by the Company. Company Contributions - Prior to December 31, 1986, the Company made a contribution to the Plan on behalf of each eligible employee. The amount of the contribution was 0.5% of the aggregate eligible pay of employees eligible to participate in the Plan. The contribution consisted of either common stock of the Company or cash which was then converted into shares of common stock of the Company. The Company made contributions in quarterly installments for eligible earnings through December 31, 1986, at which time the Company's contribution requirements under the Plan stopped. Investment of Contributions - Company contributions are invested in Company common stock. Prior to July 1, 1997, Company contributions could not be transferred to another investment option. In the current year, participants in the plan have the option to move existing investment balances from the Company common stock to any of the following: (1) six mutual funds; (2) fixed income investments such as investment contracts providing a guaranteed interest rate; or (3) any other investments subsequently authorized by the Plan Committee. Dividends, interest and other distributions received in any fund are reinvested in the same Fund. Vesting - Participants are fully vested with respect to Company contributions made pursuant to the Plan. All forfeitures are used to reduce future employee contributions. Withdrawals and Distributions - Contributions to the Plan, and earnings thereon, are generally payable at termination of employment due to retirement, disability, death or any other reason. Distribution payments may be made in a cash lump sum, in whole shares of Company common stock held in the employee's account in the Plan with the value of any fractional shares paid in cash, or in installments for a period not to exceed the employee's life expectancy or the joint life expectancies of the employee and beneficiary, up to a maximum of fifteen years. The form of distribution is elected in writing by the employee. Withdrawals prior to termination of employment are subject to certain limitations and restrictions. - 4 - 1. DESCRIPTION OF THE PLAN (CONTINUED) Participants' Accounts - An account is set up in the name of each participant to record Company contributions made on the participant's behalf and other transactions that occur in connection with the employee's participation in the Plan. Each fiscal quarter the participants receive a statement of account listing contributions and the number of shares of Company common stock in the account. Plan Amendment and Termination - The Company has the right to amend, suspend, or terminate the Plan, but may not do so in a way which would divest a participant of accrued benefits. If the Plan is terminated, the Trustee will distribute all assets held in the Trust, after payment of expenses, in such a manner as the Plan Committee shall determine and as may be required by law, provided, however, that Company common stock held in a participant's account will not be distributed because of termination of the Plan until eighty-four months after the date at which the stock was allocated to the account, unless the participant's employment is terminated sooner, in which case the stock will be distributed without regard to the time elapsed since its allocation. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Accounting - The financial statements of the Plan are prepared on the accrual basis of accounting. Purchases and sales of securities are recorded on the trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Investments - Investments are stated at fair value based on quoted market prices. Distributions to Participants - Distributions to participants are recorded when paid. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. 3. INVESTMENTS Investments that represent 5% or more of net assets available for benefits as of June 27, 1998 and June 28, 1997 are as follows: 1998 1997 Norwest Stable Return GIC Fund (common/collective trust) $ 67,284 $ - Fidelity Contra fund 78,496 - New England Business Service, Inc. common stock 186,027 474,466 Dodge & Cox Balance Fund 56,796 - Vanguard Index Trust 500 Fund 80,591 - Norwest Small-Cap Opportunities Fund 33,411 - -5- 3. INVESTMENTS (CONTINUED) The Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $68,526 and $120,940, respectively, as follows: 1998 1997 At fair value based on quoted market prices: Norwest Stable Return GIC Fund (common/collective trust) $ 3,930 $ - Fidelity Contrafund 10,962 - New England Business Service, Inc. common stock 32,022 120,940 Strategic Income Fund 998 - Dodge & Cox Balanced Fund 2,215 - Vanguard Index Trust 500 14,921 - Norwest Small-Cap Opportunities 3,628 - Euro-Pacific Growth Fund (150) - -------- -------- Total $ 68,526 $120,940 ======== ======== The Plan's principal investments include the following: Norwest Stable Return GIC Fund - A collective investment trust whose underlying investments include guaranteed investment contracts. Dodge & Cox Balanced Fund - Fund invests in both equity securities and convertible bonds. Vanguard Index Trust 500 Fund - Fund invests in equity securities of large domestic companies that comprise the Standard & Poor's 500 Index. Norwest Small-Cap Opportunities Fund - Fund invests solely in investment assets of smaller companies. Fidelity Contrafund - Fund invests in equity securities of U.S. and foreign issuers, including those in emerging markets. New England Business Service, Inc. Common Stock - Invests solely in common stock of New England Business Service, Inc. 4. TAX STATUS OF THE PLAN The Plan obtained its latest determination letter, dated October 25, 1985, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code (the "Code"). The Plan has been amended since receiving that letter. The plan -6- administrator believes that the Plan is currently designed and being operated in compliance with applicable requirements of the Code. Accordingly, no provision for income taxes has been included in these financial statements. * * * * * * - 7 - 5. BY-FUND INFORMATION Interest and dividend income, contributions, benefits paid and net appreciation for the years ended June 27, 1998 and June 28, 1997 are as follows:
Net Interest Appreciation Benefits and in Fair Value Paid Dividend of to Income Investments Participants 1998 Norwest Stable Return GIC Fund $ - $ 3,930 $ 1,701 Fidelity Contrafund 5,584 10,962 225 Stock Fund (a) 4,639 32,022 12,775 Strategic Income Fund 1,417 998 1,095 Dodge & Cox Balanced Fund 4,341 2,215 363 Vanguard Index Trust 500 Fund 1,416 14,921 304 Norwest Small-Cap Opportunities Fund 743 3,628 201 Euro-Pacific Growth Fund 1,560 (150) 187 ------- ------- ------- $19,700 $68,526 $16,851 ======= ======= ======= 1997 Stock Fund (a) 14,393 120,940 13,624 ======= ======== =======
(a) Includes NEBS common stock, money market fund and interest receivable. -8- NEW ENGLAND BUSINESS SERVICE, INC. PAYROLL STOCK OWNERSHIP PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES JUNE 27, 1998 - ---------------------------------------------------------------------------------------------------
b) Identity of Issue, c) Description of Investment, Including Borrower, Lessor Maturity Date, Interest Rate, e) Current a) or Similar Party Collateral and Par or Maturity Value d) Cost Value * Norwest Stable Return GIC Fund Collective Trust, 2,597 shares $ 59,458 $ 67,284 Fidelity Contrafund Equity Income Mutual Fund, 1,437 shares 58,684 78,496 * New England Business Service, Inc. Common stock - 5,768 shares 144,208 186,028 Strategic Income Fund Bond Income Mutual Fund, 1,047 shares 20,022 20,797 Dodge & Cox Balanced Fund Equity Income Mutual Fund, 819 shares 55,437 56,795 Vanguard Index Trust 500 Fund Equity Income Mutual Fund, 765 shares 67,761 80,591 * Norwest Small-Cap Opportunities Fund Equity Income Mutual Fund, 1,413 shares 31,363 33,411 Euro-Pacific Growth Fund Equity Income Mutual Fund, 848 shares 24,228 22,439 -------- -------- $461,161 $545,841 ======== ========
* Represents party-in-interest to the Plan. - 9 - EX-3 4 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 333-32719 of New England Business Service, Inc. on Form S-8 of our report dated December 18, 1998 appearing in this Annual Report on Form 11-K of the 401(k) Plan for Employees of New England Business Service, Inc. for the year ended June 27 1998. /S/Deloitte & Touche LLP Boston, Massachusetts December 22, 1998 -----END PRIVACY-ENHANCED MESSAGE-----