-----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, IpAkiJiY3jk2G7JT9Sboh6x/SqRBLDaxQp+h/cTMk8CZvt3C20dgbUQmVXkDpe7+ Li6H06Tvf2Wurqp0GFVeNQ== 0000205700-99-000024.txt : 19991110 0000205700-99-000024.hdr.sgml : 19991110 ACCESSION NUMBER: 0000205700-99-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990925 FILED AS OF DATE: 19991109 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-11427 FILM NUMBER: 99743804 BUSINESS ADDRESS: STREET 1: 500 MAIN ST CITY: GROTON STATE: MA ZIP: 01471 BUSINESS PHONE: 5084486111 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended September 25, 1999. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 1-11427 NEW ENGLAND BUSINESS SERVICE, INC. ---------------------------------- (Exact name of the registrant as specified in its charter) Delaware 04-2942374 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 500 Main Street Groton, Massachusetts, 01471 ---------------------------- (Address of principal executive offices) (Zip Code) (978) 448-6111 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 and 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 --- --- The number of common shares of the Registrant outstanding on November 4, 1999 was 13,855,212. PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements - ---------------------------- NEW ENGLAND BUSINESS SERVICE, INC. CONDENSED CONSOLIDATED BALANCE SHEET (In Thousands)
(unaudited) Sept. 25, June 26, 1999 1999 -------- -------- ASSETS Current Assets Cash and cash equivalents $ 4,070 $ 5,484 Accounts receivable - net 53,796 52,546 Inventories 21,506 21,538 Direct mail advertising and prepaid expenses 16,368 12,946 Deferred income tax benefit 7,271 7,189 -------- -------- Total current assets 103,011 99,703 Property and equipment - net 56,998 55,172 Property held for sale 847 839 Deferred income tax benefit 6,271 6,353 Goodwill - net 62,311 62,626 Customer Lists - net 29,767 31,590 Tradenames - net 31,405 31,610 Other assets - net 12,015 12,369 -------- -------- TOTAL ASSETS $302,625 $ 300,262 ======== ======== LIABILITIES AND STOCKHOLDERS'EQUITY Current Liabilities Accounts payable $ 16,527 $ 15,478 Accrued expenses 30,253 30,297 -------- -------- Total current liabilities 46,780 45,775 Revolving line of credit 130,000 128,000 Deferred income taxes 5,068 4,958 STOCKHOLDERS'EQUITY Common stock 15,372 15,358 Additional paid-in capital 49,812 49,500 Accumulated other comprehensive loss (2,425) (2,654) Retained earnings 90,081 86,902 -------- -------- Total 152,840 149,106 Less: Treasury stock (32,063) (27,577) -------- -------- Stockholders' Equity 120,777 121,529 -------- -------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $302,625 $300,262 ======== ========
See Notes to Unaudited Consolidated Financial Statements NEW ENGLAND BUSINESS SERVICE, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited)
Three Months Ended Sept. 25, Sept. 26, 1999 1998 --------- --------- NET SALES $113,424 $112,686 OPERATING EXPENSES: Cost of sales 39,949 41,555 Selling and advertising 43,202 42,307 General and administrative 18,525 17,545 -------- -------- Total operating expenses 101,676 101,407 INCOME FROM OPERATIONS 11,748 11,279 OTHER INCOME/(EXPENSE): Interest income 15 27 Interest expense (1,984) (2,179) -------- -------- INCOME BEFORE TAXES 9,779 9,127 PROVISION FOR INCOME TAXES 3,802 3,649 -------- -------- NET INCOME 5,977 5,478 -------- -------- OTHER COMPREHENSIVE INCOME (LOSS) 229 (206) -------- -------- COMPREHENSIVE INCOME $ 6,206 $ 5,272 ======== ======== PER SHARE AMOUNTS: Basic Earnings Per Share $ .43 $ .38 ======== ======== Diluted Earnings Per Share $ .42 $ .37 ======== ======== Dividends $ .20 $ .20 ======== ======== BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 13,988 14,327 Plus incremental shares from assumed conversion of stock options 296 480 -------- -------- DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 14,284 14,807 ======== ========
See Notes to Unaudited Consolidated Financial Statements NEW ENGLAND BUSINESS SERVICE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (unaudited)
Three Months Ended Sept. 25 Sept. 26 1999 1998 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 5,977 $ 5,478 Adjustments to reconcile net income to cash: Depreciation 3,618 3,412 Amortization 2,818 3,050 Loss on disposal of asset 24 31 Deferred income taxes 32 38 Exit costs (411) (740) Other non-cash items 1,084 2,218 Changes in assets and liabilities: Accounts receivable (2,284) (3,152) Inventories and prepaid expenses (3,442) (5,479) Accounts payable 1,133 2,461 Income taxes payable 2,615 708 Accrued expenses (2,180) (1,004) --------- --------- Net cash provided by operating activities 8,984 7,021 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (5,364) (6,383) Acquisition of business - (164) Other Assets - (32) --------- --------- Net cash used in investing activities (5,364) (6,579) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of debt (27,000) (17,000) Proceeds from borrowings under credit line 29,000 10,500 Proceeds from issuance of common stock 223 257 Acquisition of treasury stock (4,486) (58) Dividends paid (2,798) (2,864) --------- --------- Net cash provided by (used in)financing (5,061) (9,165) activities EFFECT OF EXCHANGE RATE CHANGES ON CASH 27 (27) --------- --------- NET DECREASE IN CASH AND CASH EQUIVALENTS (1,414) (8,750) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,484 10,823 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,070 $ 2,073 ========= =========
See Notes to Unaudited Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation/Accounting Policies - -------------------------------------------- The consolidated financial statements contained in this report are unaudited (except for June 26, 1999 amounts) but reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods reflected. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to applicable rules and regulations of the Securities and Exchange Commission. The consolidated financial statements included herein should be read in conjunction with the financial statements and notes thereto, and the Independent Auditors' Report in the Company's Annual Report on Form 10-K for the fiscal year ended June 26, 1999. Reference is made to the accounting policies of the Company described in the notes to the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended June 26, 1999. The Company has consistently followed those policies in preparing this report. The results of operations for the interim period reported herein are not necessarily indicative of results to be expected for the full year. 2. Acquisitions - ---------------- In fiscal 1998 the Company acquired both Rapidforms, Inc. and McBee Systems, Inc. As part of the purchase accounting for the both acquisitions, and included in the allocation of the acquisition cost, were liabilities recorded to cover the anticipated costs related to plans to close redundant facilities and reduce personnel. Approximately $5,552,000 was accrued. The liability associated with the integration plans remaining as of September 25, 1999 was $721,000 ($414,000 having been spent in the first quarter to reduce this liability. The Company anticipates that the remaining liabilities will be resolved by the end of fiscal year 2000. Should the integration liabilities for McBee and Rapidforms be settled at amounts less than their original estimates, the excess will reduce the amount of recorded goodwill. 3. Inventories - -------------- Inventories are carried at the lower of first-in, first-out cost or market. Inventories at September 25, 1999 and June 26, 1999 consisted of:
(unaudited) Sept. 25, June 26, 1999 1999 ----------- ----------- Raw paper $ 1,394,000 $ 1,692,000 Business forms and related office products 20,112,000 19,846,000 ---------- ----------- Total $21,506,000 $21,538,000 =========== ===========
Printed Products ------------------------------ Packaging and Direct Marketing Direct Sales Display Products Total ---------------- ------------ ---------------- ----- (unaudited) Three months ended Sept. 25, 1999 Net sales 72,416,000 $23,495,000 $17,513,000 $113,424,000 Profit from operations 16,881,000 1,575,000 1,078,000 19,534,000 Capital expenditures 3,708,000 1,007,000 649,000 5,364,000
(unaudited) Three months ended Sept. 26, 1998 Net sales $73,526,000 $22,531,000 $16,629,000 $112,686,000 Profit from operations 16,599,000 2,427,000 595,000 19,621,000 Capital Expenditures 5,433,000 793,000 157,000 6,383,000
The amounts shown reflect a shift of the allocation of centralized information systems costs to the Printed Products-Direct Sales segment in the first quarter of fiscal year 2000 from the Printed Products- Direct Marketing segment due to conversion of McBee's order-taking system to NEBS Direct Marketing order entry system in August 1999.
Geographic net sales are identified as follows: (unaudited) Three Months Ended Sept. 25, Sept. 26, 1999 1998 ------------ ------------ U.S.-based $104,094,000 $103,526,000 International 9,330,000 9,160,000 ------------ ------------ Total $113,424,000 $112,686,000 ============ ============
(unaudited) Sept. 25, June 26, 1999 1999 ----------- ----------- U.S.-based $48,827,000 $47,000,000 International 8,171,000 8,172,000 ----------- ----------- Total $56,998,000 $55,172,000 =========== =========== 5. New Accounting Pronouncements - ------------------------------- In June, 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The Company will adopt this standard in fiscal 2001. The Company is currently evaluating the impact this standard will have on its consolidated financial statements. Item 2. 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 clothing 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 has identified three reportable segments. The first is titled "Printed Products-Direct Marketing" and represents those business operations that sell primarily printed products such as checks and business forms to small businesses through direct marketing. The second segment, "Printed Products-Direct Sales," also sells checks and business forms to small businesses; however, they sell through either distributors or by directly selling to the customer. "Packaging and Display Products" is the third segment and primarily sells items that require limited value-adding work. These items include packaging and shipping supplies and retail signage and are marketed through a combination of direct marketing and direct selling efforts. 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 that projected in such forward-looking statements due to the important factors described in the section to this Management's Discussion and Analysis of Financial Condition and Results of Operations titled "Certain Factors That May Affect Future Results." Results of Operations - --------------------- Net sales increased $.7 million or less than 1% to $113.4 million in the first quarter of fiscal year 2000 from $112.7 million in last year's first quarter. The sales increase was composed of approximately a $.8 million increase associated with the Printed Products-Direct Sales and Packaging and Display segments offset by a slight decline in sales of the Company's other segment, Printed Products-Direct Marketing. Sales were temporarily affected at McBee, the prime contributor to the Printed Products-Direct Sales Segment, as a result of the conversion of their order entry system to the one used by the NEBS channel during the quarter. Demand for core products was also impacted by the highly disruptive east coast hurricane in September. For the first quarter of fiscal year 2000, cost of sales decreased to 35.2% of sales from 36.9% in last year's comparable period. The decrease was the result of improved efficiencies and increased handling charges which offset normal transportation charges. Cost of sales as a percent of sales is anticipated to remain consistent with the first quarter's results for the remainder of the fiscal year.* Selling and advertising expense increased to 38.1% of sales in the first quarter of fiscal year 2000 from 37.5% of sales in last year's comparable quarter. The increase was due primarily to commissions paid to the direct sales force employed by McBee which generates a higher selling and advertising expense as a percentage of sales than in the Company's other businesses. The Company also incurred overtime costs related to the Company's conversion of the McBee order-taking system to the NEBS Direct Marketing order entry system. Selling and advertising expense as a percentage of sales is expected to be slightly lower than the first quarter for the remainder of the fiscal year.* General and administrative expense increased to 16.3% of sales in the first quarter of fiscal year 2000 from 15.6% in last year's comparable quarter. The increase was principally the result of increased spending levels associated with the Company's program to reengineer its financial and operational information systems. General and administrative expense as a percent of sales is expected to be slightly lower than the first quarter throughout the remainder of the fiscal year.* Interest expense decreased to 1.7% of sales in the first quarter of fiscal year 2000 as compared to 1.9% of sales in last years comparable quarter. The decrease is the result of repayment of debt attributable to the acquisitions of Rapidforms and McBee during fiscal year 1998. The provision for income taxes as a percentage of pre-tax income decreased to 38.9% in the first quarter of fiscal year 2000 from 39.9% in the comparable quarter in fiscal year 1998 due to a reduction in the Company's effective state tax rate. In June, 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This standard does have a direct impact on the consolidated financial statements and will be adopted by the Company in fiscal year 2001. The Company is currently evaluating the impact this standard will have on its consolidated financial statements. YEAR 2000 - --------- During fiscal year 1996, the Company established a five year plan to upgrade the majority of its critical operational information systems. This information systems reengineering plan was developed to enhance system performance and to address Year 2000 issues. The Company experienced delays in certain facets of the reengineering effort, and as a result modified its Year 2000 plan to focus on system remediation rather than system replacement. The Company's operational information systems have been inventoried and assessed for Year 2000 compliance, and recommended remediation efforts with respect to all of the Company's mission critical systems have been completed. The Company has conducted extensive testing to ensure the efficacy of its remediation efforts, and based on currently available information derived from such testing, the Company is not aware of any Year 2000 compliance problems affecting its internal systems that would have a material adverse effect on its business operations or financial prospects as a result of the Year 2000 transition. In addition, the Company has communicated with key vendors in order to assess their ability to maintain normal operations in the Year 2000. Such key vendors include, but are not limited to, MCI Worldcom, R.R. Donnelley and Sons, Appleton Papers, and United Parcel Service of America, Inc. The Company has also monitored the Year 2000 compliance activities of the U.S., Canadian and U.K. postal services and pertinent local and regional utilities. Relying on public announcements and other information provided by these key vendors, the Company is currently not aware of any Year 2000 compliance problems with any of them that could have a material adverse effect on the Company's business operations or financial prospects. Based on its assessment of the Year 2000 readiness of its key vendors, the Company has not developed contingency plans to contract on a standby basis with alternative sources of the products and services supplied by these vendors. Moreover, the Company believes that there are no reasonable or cost effective contingency plans that can be developed to fully address disruptions in telephone, postal, electrical or similar services. In the event of regional disruptions in telephone service, the Company has developed contingency plans to re-route incoming customer calls to alternate facilities. In addition, the Company has back-up generators at some of its facilities which can provide electrical power for administrative functions for a limited period in the event of power outages. Although the Company should be able to take customer orders during the period of a limited power outage, it will be unable to fulfill orders during any such period. As a result, the Company can make no assurances that Year 2000-related disruptions in telephone, postal, electrical or similar services would not have a material adverse effect on the Company's business operations or financial prospects. The Company has also inventoried and assessed the majority of the systems associated with the functioning of its plant, property and equipment. The date-related issues associated with the proper functioning of such assets are insignificant and are not expected to represent a material risk to the Company. Further, the Company has approximately 2.5 million active customers, and the failure of any one customer due to a Year 2000 issue would not have a material adverse impact on the Company's financial performance or long-term prospects. The Company's cash outlays for capital improvements and period expenses associated with the information systems reengineering project and for Year 2000 compliance were projected to cumulatively total $21 million during fiscal years 1997 through 2000, almost all of which has been spent as of September 25, 1999. Due to the modification of the Company's plans to focus on remediation rather than replacement, $3 million has been allocated in the Company plans for remediation in fiscal year 2000. Liquidity and Capital Resources - ------------------------------- Cash provided by operating activities for the three months ended September 25, 1999 was $ 9.0 million and represented an increase of $2.0 million from the $7.0 million provided in the comparable period last year. The increase in operating cash flow was the result of an increase in net income and decreased investment in working capital offset by a decrease in non-cash items between the comparable periods. Working capital at September 25, 1999 amounted to $56.2 million, including $4.0 million of cash and short term investments. At June 26, 1999, working capital amounted to $53.9 million, including cash and short term investments of $5.5 million. The $2.3 million increase in working capital during the period is principally due to higher mail inventory due to the seasonal nature of the greeting card and workwear businesses. During the three months ended September 25, 1999, $4.5 million was spent to repurchase 158,457 shares of the Company's common stock. Capital expenditures for the three months ended September 25, 1999 were $5.4 million versus the $6.4 million expended during last year's comparable period. Capital expenditures in the first quarter of fiscal year 1999 included expenditures for information systems infrastructure and manufacturing related equipment. In the first quarter of fiscal year 1999 the Company constructed a $1.7 million addition to their facility in Midland, Ontario. Significant upgrades to workspaces and furniture in the Groton, Massachusetts facility also took place during the first quarter of fiscal year 1999 in order to accommodate more employees at that location. The Company anticipates that total capital outlays will approximate $18 to $20 million in fiscal year 2000.* 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. In anticipation of the acquisitions in 1998, the Company amended on several occasions the terms of its committed, unsecured, revolving line of credit agreement. The total committed line currently stands at $165 million. At September 25, 1999, the Company had $130 million of outstanding debt under this credit facility. 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 currently in compliance with these covenants. In order to effectively fix the interest rate on a portion of the debt outstanding under the revolving line of credit, the Company has entered into interest rate swap agreements with several of the banks party to the credit agreement. These swap agreements contain notional principal amounts and other terms determined with respect to the Company's forecasts of future cash flows and borrowing requirements. At September 25, 1999, the notional principal amount outstanding of the interest rate swap agreements totaled $85 million. In order to minimize the Company's exposure to foreign currency fluctuations with respect to an intercompany loan to a foreign subsidiary, the Company has entered into a short-term forward exchange rate contract with a major commercial bank in a currency amount directly corresponding to the short-term intercompany loan amount. At September 25, 1999, the Company had an outstanding forward exchange rate contract for $ 1.6 million worth of Pound Sterling. The Company anticipates that its current cash on hand, cash flow from operations and additional availability under the line of credit will be sufficient to meet the Company's liquidity requirements for its operations and capital expenditures during fiscal year 2000.* However, the Company may pursue additional acquisitions from time to time which would likely be funded through the use of available cash, the issuance of stock, the 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. 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 and telesales 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, and the ability to attract and retain a large number of individual customers. Known material risks that may affect those critical success factors are described below. Our core business faces increased competition from new sources, such as office supply superstores and Internet-based vendors. 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 have entered our core business of selling standardized business forms, checks and related products to small businesses. Because of their size, these superstores have the buying power to offer 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, these national superstore competitors have greater financial strength to reduce prices or increase promotional discounts in order to seek or retain market share. Recently, Internet-based vendors have begun to compete in our core business. These vendors include both start-up ventures as well as the online stores of the office supply national chains. We believe that the favored business model for many Internet-based vendors is to seek market share as rapidly as possible through significantly reduced prices and deep discounting. 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 has 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 long-term 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 mature products. Our sales and profits have been adversely affected in the past by recession-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. Because our long-term 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 grown 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 telemarket to prospective customers. Increases in the cost of paper and in postal rates increase 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. We also 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 increase prices for our products sufficiently to offset increases in paper costs and postal rates. If we are unable to offset these cost 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. In order to obtain favorable pricing, we have selected a limited number of vendors to provide key services to our business. Examples of this are as follows: - MCI WorldCom provides most of the toll-free telephone lines that we use in connection with our mail order business, - we use United Parcel Service to deliver most of the products that we ship to customers, - we use R.R. Donnelley and Sons for the printing and processing of most of the catalogs that we mail each year, - we rely on the postal services of the countries in which we do business to deliver our catalogs and other advertising to customers. 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 the 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 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 out-sourced 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. 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 borrowing, 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 confirm 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk - ------------------------------------------------------------------ The Company is exposed to a number of market risks, primarily 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, denominated in foreign currencies, create exposures to changes in exchange rates. The Company's utilization of its revolving line of credit creates an exposure to changes in interest rates. The effect 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. For more information on these market risks and financial exposures, see the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended June 26, 1999. The Company does not hold or issue financial instruments for trading, profit or speculative purposes. In order to minimize the Company's exposure to foreign currency fluctuations with respect to the short-term intercompany loans created to fund the operating cash requirements of the Company's European operations (see the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended June 26, 1999), the Company has entered into forward exchange rate contracts for the amount of the loans and associated interest. The currency hedged is the British pound. While there are no specified repayment dates for the loans, the forward exchange rate contracts are of limited duration and are replaced periodically as they mature. In order to effectively convert the interest rate of 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. 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 near term changes in foreign currency or interest rates will have a material impact on its future earnings, fair values or cash flows. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NEW ENGLAND BUSINESS SERVICE, INC. ---------------------------------- (Registrant) November 9, 1999 /s/Daniel M. Junius - ----------------- -------------------- Date Daniel M. Junius Senior Vice President-Chief Financial Officer (Principal Financial and Accounting Officer) EX-10.A 2 FOURTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT NEW ENGLAND BUSINESS SERVICE, INC. FOURTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated as of September 24, 1999 (this "Amendment"), by and among NEW ENGLAND BUSINESS SERVICE, INC. (the "Borrower"), a Delaware corporation having its principal place of business at 500 Main Street, Groton, Massachusetts 01471, and the Subsidiaries of the Borrower listed on the signature pages hereto (the "Guarantors"), BANKBOSTON, N.A., a national banking association ("BKB"), and the other lending institutions listed on Schedule 1 to the Credit Agreement referred to below (together with BKB, the "Banks"), BANKBOSTON, N.A., as agent for itself and such other lending institutions (the "Agent"), and FLEET NATIONAL BANK, as documentation agent for itself and such other lending institutions (the "Documentation Agent"). WHEREAS, the Borrower wishes to enter into certain corporate restructuring transactions pursuant to which Chiswick, Inc., a Massachusetts corporation ("Chiswick"), will become a wholly-owned subsidiary of the Borrower (such transaction being hereinafter referred to as the "Chiswick Restructuring Transaction"); WHEREAS, the Borrower wishes to contribute certain of its assets consisting of its Chiswick business division (which division consists of the Chiswick- brand industrial products business and the Bags & Bows-brand retail products business) to Chiswick; WHEREAS, Chiswick will contribute, on an ongoing basis from time to time, excess cash flow to Chiswick Trust, a voluntary association with transferable shares organized under and by virtue of the laws of the Commonwealth of Massachusetts (commonly referred to as a Massachusetts business trust) ("Chiswick Trust"); WHEREAS, Chiswick Trust intends to loan substantially all of its cash assets to the Borrower, which loans shall be evidenced by an Unsecured Subordinated Promissory Note (as hereinafter defined); WHEREAS, the Borrower, the Banks, the Agent and the Documentation Agent are parties to an Amended and Restated Revolving Credit Agreement dated as of December 18, 1997 (as amended and in effect from time to time, the "Credit Agreement," capitalized terms defined therein having the same meanings herein as therein), pursuant to which the Banks have extended credit to the Borrower on the terms and subject to the conditions set forth therein; WHEREAS, the Borrower has requested that the Agent and the Banks amend the Credit Agreement so as to permit, to the extent required, the Chiswick Restructuring Transaction and the other transactions described in the foregoing recitals; WHEREAS, subject to the terms and conditions set forth herein, the Borrower, the Banks, the Agent and the Documentation Agent have agreed to amend the Credit Agreement as set forth herein; NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend the Credit Agreement as follows: 1. Amendments to Definitions. Section 1.1 of the Credit Agreement is hereby amended by: (a) adding the following new definitions to section1.1 of the Credit Agreement in the proper alphabetical order: "Chiswick". Chiswick, Inc., a Massachusetts corporation. "Chiswick Contribution Agreement. The agreement pursuant to which Chiswick will contribute cash generated from its operations to Chiswick Trust, in form and substance (including any modifications thereof) satisfactory to the Agent." "Chiswick Restructuring Transaction. The contribution by the Borrower to Chiswick of those assets of the Borrower's Chiswick business division, which division consists of the Chiswick-brand industrial products business and the Bags & Bows-brand retail products business." "Chiswick Trust. Chiswick Trust, a voluntary association with transferable shares organized under and by virtue of the laws of the Commonwealth of Massachusetts (commonly referred to as a Massachusetts business trust)." "Chiswick Trust Intercompany Subordination Agreement. The Intercompany Subordination Agreement after the date hereof among the Agent, the Borrower and Chiswick Trust, and in form and substance satisfactory to the Agent." (b) amending the definition of "Loan Documents" by inserting the text "the Chiswick Intercompany Subordination Agreement and any other subordination arrangements entered into pursuant to section7.1(j) or (p)" immediately after the text "the Fee Letters" and immediately before the text "the Intercompany Subordination Agreement". (c) amending the definition of "Unsecured Subordinated Promissory Note" by deleting the text of such definition in its entirety and restating it as follows: Unsecured Subordinated Promissory Note. Collectively, the promissory notes evidencing the Indebtedness permitted by section7.1(p)(i) and (ii), in each case in form and substance (including modifications thereto) satisfactory to the Agent. 2. Amendment of section5.1.1 of the Credit Agreement. Section 5.1.1 of the Credit Agreement is hereby deleted in its entirety, and the following new section5.1.1 is hereby substituted in lieu thereof: "5.1.1. Organization; Good Standing. Each of the Borrower and its Subsidiaries (i) is a corporation or, in the case of R&M Trust and Chiswick Trust, a Massachusetts business trust, duly organized, validly existing and, except in the case of R&M Trust and Chiswick Trust (with respect to which no such concept is applicable), in good standing under the laws of its jurisdiction of organization, (ii) has all requisite power to own its property and conduct its business as now conducted and as presently contemplated and (iii) is in good standing as a foreign corporation or other entity and is duly authorized to do business in each jurisdiction where such qualification is necessary except where a failure to be so qualified would not have a materially adverse effect on the business, assets or financial condition of the Borrower or such Subsidiary." 3. Amendment of section6.6 of the Credit Agreement. Section 6.6 of the Credit Agreement is hereby amended by inserting in the first sentence thereof, immediately after the text "Subsidiaries (and, in the case of R&M Trust" and immediately before the text "its existence, rights and franchises" the words "and Chiswick Trust, as the case may be". 4. Amendment of section6.14 of the Credit Agreement. Section 6.14 of the Credit Agreement is hereby amended by deleting section6.14 in its entirety and restating section6.14 as follows: "6.14. Certain Intercompany Payments. The Borrower will, and will, as applicable, cause each of Russell & Miller, Chiswick Trust and R&M Trust to, (a) promptly upon Russell & Miller's receipt thereof, cause all royalty payments received by Russell & Miller pursuant to any of the Trademark License Agreements (net of reasonable expenses incurred by Russell & Miller in connection with the maintenance, protection and enforcement of its related trademark intellectual property rights and the performance of its obligations under the Trademark License Agreements) to be paid to R&M Trust as capital contributions, (b) promptly upon R&M Trust's receipt thereof, cause R&M Trust to lend to the Borrower pursuant to an Unsecured Subordinated Promissory Note all amounts (net of reasonable, ordinary course operating expenses) received by it pursuant to clause (a) of this section6.14 or otherwise, and (c) promptly upon Chiswick Trust's receipt thereof, cause Chiswick Trust to lend to the Borrower pursuant to an Unsecured Subordinated Promissory Note all amounts (net of reasonable, ordinary course operating expenses) received by it from time to time from Chiswick." 5. Amendment of section7.1 of the Credit Agreement. Section 7.1 of the Credit Agreement is hereby amended by: (a) deleting, in subsections (b), (f), (g), (i), (j), (k), (r) and (s) thereof, the parenthetical "(other than Russell & Miller and R&M Trust)" or "(other than Russell & Miller or R&M Trust)", as applicable from sectionsection7.1(b), (f), (g), (i), (j), (k), (r) and (s) thereof and substituting in place thereof the parenthetical "(other than Russell & Miller, Chiswick Trust and R&M Trust)" or "(other than Russell & Miller, Chiswick Trust or R&M Trust)", as applicable; (b) deleting subsection (p) thereof in its entirety and substituting in lieu thereof the following the new subsection (p): (p) Indebtedness of the Borrower to (i) R&M Trust under and pursuant to an Unsecured Subordinated Promissory Note from the Borrower to R&M Trust, which such Indebtedness is subordinated to the Obligations on terms and conditions satisfactory to the Agent, which shall include the Intercompany Subordination Agreement and (ii) Chiswick Trust under and pursuant to an Unsecured Subordinated Promissory Note from the Borrower to Chiswick Trust, which such Indebtedness is subordinated to the Obligations on terms and conditions satisfactory to the Agent, which shall include the Chiswick Trust Intercompany Subordination Agreement; and" (c) (i) deleting the word "and" which appears at the end of section7.1(r); (ii) deleting the period which appears at the end of section7.1(s) and substituting in place thereof a semicolon and the word "and"; and (iii) inserting, immediately after subsection (s) the new following subsection: (t) Indebtedness of the Borrower to any landlord of Chiswick consisting of (i) a guaranty by the Borrower of payment under any real estate lease initially entered into by the Borrower and assigned to Chiswick pursuant to the Chiswick Restructuring Transaction, or (ii) a continuation of the Borrower's obligations as tenant under such lease following the assignment to Chiswick. 6. Amendment of section7.3 of the Credit Agreement. Section 7.3 of the Credit Agreement is hereby amended by: (a) deleting clause (ii) from subsection (j) thereof in its entirety and substituting in lieu thereof the following clause (ii): "(ii) made following the Closing Date in Subsidiaries of the Borrower (other than R&M Trust and Chiswick Trust) in an aggregate amount (other than Investments permitted by section7.3(n), section7.3(o) or section7.3(p)) for all such Subsidiaries (other than R&M Trust and Chiswick Trust) not to exceed $7,500,000;". (b) deleting subsection (p) thereof in its entirety and substituting in lieu there the following new subsection (p): (p) without limiting the Investments permitted by section7.3(j), (i) Investments in R&M Trust by Rapidforms, McBee & Russell & Miller pursuant to the R&M Contribution Agreement and (ii) Investments in Chiswick Trust by Chiswick pursuant to the Chiswick Contribution Agreement." (c) deleting the word "and" at the end of subsection (q) thereof; (d) inserting, immediately following subsection (q) thereof and immediately before existing subsection (r) thereof, new subsection (r) with the following text: "(r) in connection with the Chiswick Restructuring Transaction, Investments consisting of the capital contribution by the Borrower to Chiswick of those assets of the Borrower's Chiswick business division, which division consists of the Chiswick-brand industrial products business and the Bags & Bows-brand retail products business; and" (e) deleting existing subsection (r) at the end thereof and substituting in lieu thereof the following new subsection (s): "(s) Investments not otherwise expressly permitted under subsections (a)-(r) of this section7.3, in an aggregate amount not to exceed $5,000,000." 7. Amendment to section7.5.2 of the Credit Agreement. Section 7.5.2 of the Credit Agreement is hereby amended by: (a) deleting the word "and" immediately before clause (g) thereof; (b) inserting, immediately before the period (".") at the end thereof the following new subsection (h): " and (h) in connection with the Chiswick Restructuring Transaction, the transfer by the Borrower of those assets of the Borrower's Chiswick business division, which division consists of the Chiswick-brand industrial products business and the Bags & Bows-brand retail products business." 8. Amendment of section7.12 of the Credit Agreement. Section 7.12 of the Credit Agreement is hereby amended by deleting section7.12 in its entirety and restating it as follows: 7.12. Conduct of Business; Agreements Regarding Certain Subsidiaries. 7.12.1. General. Neither the Borrower nor any of its Subsidiaries will, without the prior written consent of the Agent and the Majority Banks, conduct any business or operations materially different from those conducted by it on the Closing Date or on the date any such Subsidiary is acquired in compliance with the terms of section7.5.1. 7.12.2. R&M Trust and Chiswick Trust. Neither R&M Trust nor Chiswick Trust shall not conduct any business or activities other than the lending to the Borrower pursuant to an Unsecured Subordinated Promissory Note of all amounts (net of reasonable, ordinary course operating expenses) received by it, whether by way of capital contributions pursuant to the R&M Contribution Agreement, the Chiswick Contribution Agreement or otherwise, and shall have no assets other than cash (which shall be loaned to the Borrower in accordance with section6.14) and Indebtedness owed by the Borrower to it as permitted by section7.1(p). Without limiting the foregoing and notwithstanding any of the carve-outs contained in section7.2 (other than section7.2(a)), section7.3 (other than section7.3(b) (with respect to Investments by R&M Trust or Chiswick Trust, as the case may be, in deposit accounts maintained with BKB until amounts held therein are loaned to the Borrower pursuant to section6.14), section7.3(f) and section7.3(p)) or section7.11, the Borrower shall not permit R&M Trust or Chiswick Trust, as the case may be, to encumber their respective assets in any manner described in section7.2, to make or permit to exist or remain outstanding any Investments, or to create or acquire any Subsidiaries. 9. Replacement of Schedule 5.19 to the Credit Agreement. Schedule 5.19 to the Credit Agreement is hereby deleted in its entirety, and Schedule 5.19 attached hereto is hereby substituted in lieu thereof. 10. Representations and Warranties. The Borrower and each of the Guarantors hereby represents and warrants to the Agent and the Banks as of the date hereof, and as of any date on which the conditions set forth in section12 below are met, as follows: (a) The execution and delivery by each of the Borrower and the Guarantors of this Amendment and all other instruments and agreements required to be executed and delivered by the Borrower or any of the Guarantors in connection with the transactions contemplated hereby or referred to herein (collectively, the "Amendment Documents"), and the performance by each of the Borrower and the Guarantors of any of their obligations and agreements under the Amendment Documents and the Credit Agreement and the other Loan Documents, as amended hereby, are within the corporate or other authority of each of the Borrower and the Guarantors, have been authorized by all necessary corporate proceedings on behalf of each of the Borrower and the Guarantors, and do not and will not contravene any provision of law or the Borrower's charter or any of the Guarantors' charters, other incorporation or organizational papers, by- laws or any stock provision or any amendment thereof or of any indenture, agreement, instrument or undertaking binding upon the Borrower or any of the Guarantors. (b) Each of the Amendment Documents and the Credit Agreement and other Loan Documents, as amended hereby, to which the Borrower or any of the Guarantors is a party constitute legal, valid and binding obligations of such Person, enforceable in accordance with their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting generally the enforcement of creditors' rights. (c) No approval or consent of, or filing with, any governmental agency or authority is required to make valid and legally binding the execution, delivery or performance by the Borrower or any of the Guarantors of the Amendment Documents or the Credit Agreement or other Loan Documents, as amended hereby, or the consummation by the Borrower or any of the Guarantors of the transactions among the parties contemplated hereby and thereby or referred to herein. (d) The representations and warranties contained in section5 of the Credit Agreement and in the other Loan Documents were true and correct at and as of the date made. Except to the extent of changes resulting from transactions contemplated or permitted by the Credit Agreement and the other Loan Documents, changes occurring in the ordinary course of business (which changes, either singly or in the aggregate, have not been materially adverse) and to the extent that such representations and warranties relate expressly to an earlier date and after giving effect to the provisions hereof, such representations and warranties, after giving effect to this Amendment and the other Amendment Documents, also are correct at and as of the date hereof and will be correct as of the respective dates of the consummation of the Chiswick Restructuring Transaction and of the effectiveness of the Chiswick Trust Contribution Agreement (as each such capitalized term is defined in the Credit Agreement, as amended hereby). (e) Each of the Borrower and the Guarantors has performed and complied in all material respects with all terms and conditions herein required to be performed or complied with by it prior to or at the time hereof, and as of the date hereof, after giving effect to the provisions of this Amendment and the other Amendment Documents, there exists no Event of Default or Default. (f) Each of the Borrower and the Guarantors acknowledges and agrees that the representations and warranties contained in this Amendment shall constitute representations and warranties referred to in section11.1(e) of the Credit Agreement, a breach of which shall constitute an Event of Default. 11. Effectiveness. This Amendment shall become effective as of September __, 1999 (the "Effective Date") upon the satisfaction of each of the following conditions, in each case in a manner satisfactory in form and substance to the Agent and the Banks: (a) Each of this Amendment and the Guaranty by each of Chiswick and Chiswick Trust shall have been duly executed and delivered by each of the parties thereto and shall be in full force and effect; (b) The Borrower and the Guarantors shall have delivered to the Agent (i) copies of any amendments to their charter documents, other organizational papers and by-laws effective since the dates on which such charter documents, other organizational papers and by-laws were last delivered to the Agent, with all such amendments being duly certified as true and correct by an officer of each such Person and without other amendment thereto, (ii) an incumbency certificate for each person authorized to sign this Amendment and (iii) authorizing resolutions authorizing this Amendment and the transactions contemplated hereby; and (c) Such other items, documents, agreements, items or actions as the Agent may reasonably request in order to effectuate the transactions contemplated hereby. 12. Miscellaneous Provisions. (a) Each of the Borrower and the Guarantors hereby ratifies and confirms all of its Obligations to the Agent and the Banks under the Credit Agreement, as amended hereby, and the other Loan Documents, including, without limitation, the Loans, and each of the Borrower and the Guarantors hereby affirms its absolute and unconditional promise to pay to the Banks and the Agent the Loans, reimbursement obligations and all other amounts due or to become due and payable to the Banks and the Agent under the Credit Agreement and the other Loan Documents, as amended hereby. Except as expressly amended hereby, each of the Credit Agreement and the other Loan Documents shall continue in full force and effect. This Amendment and the Credit Agreement shall hereafter be read and construed together as a single document, and all references in the Credit Agreement, any other Loan Document or any agreement or instrument related to the Credit Agreement shall hereafter refer to the Credit Agreement as amended by this Amendment. (b) Without limiting the expense reimbursement requirements set forth in section14 of the Credit Agreement, the Borrower agrees to pay on demand all costs and expenses, including reasonable attorneys' fees, of the Agent incurred in connection with this Amendment. (c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS) AND SHALL TAKE EFFECT AS A SEALED INSTRUMENT IN ACCORDANCE WITH SUCH LAWS. (d) This Amendment may be executed in any number of counterparts, and all such counterparts shall together constitute but one instrument. In making proof of this Amendment it shall not be necessary to produce or account for more than one counterpart signed by each party hereto by and against which enforcement hereof is sought. [Signature Pages Follow] IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned has caused this Amendment to be executed on its behalf by its officer thereunto duly authorized, as of the date first above written. NEW ENGLAND BUSINESS SERVICE,INC. By:/s/ Daniel M. Junius ----------------------- Name: Daniel M. Junius Title:Senior Vice President, Chief Financial Officer, Treasurer BANKBOSTON, N.A., individually and as Agent By:/s/ Harvey H. Thayer, Jr. --------------------------- Name: Harvey H. Thayer, Jr. Title: Managing Director FLEET NATIONAL BANK, individually and as Documentation Agent By:/s/ T.H. Brennen ------------------- Name: T.H. Brennen Title: VP FIRST UNION NATIONAL BANK, N.A., successor to CoreStates Bank,N.A. By:/s/ Mark B. Felker --------------------- Name: Mark B. Felker Title: Senior Vice President KEY BANK N.A. By:/s/ Noel B. Grayson ---------------------- Name: Noel B. Grayson Title: Senior Vice President USTRUST By:/s/ Anthony Wilson --------------------- Name: Anthony Wilson Title: Senior Vice President SUNTRUST BANK, ATLANTA By:/s/ W. David Wisdom ---------------------- Name: W. David Wisdom Title: Vice President SUNTRUST BANK, ATLANTA By: --- Name: Title: THE BANK OF NOVA SCOTIA By:/s/ T.M. Pitcher ------------------ Name: T.M. Pitcher Title: Authorized Signatory WACHOVIA BANK, N.A. By:/s/ Jeffrey S. Nurkiewicz ---------------------------- Name: Jeffrey S. Nurkiewicz Title: Vice President KBC Bank N.V., formerly known as Kredietbank N.V. By: --- Name: Title: KBC Bank N.V., formerly known as Kredietbank N.V. By: --- Name: Title: SUMMIT BANK By: --- Name: Title: Signature page to the Fourth Amendment The undersigned hereby acknowledges the foregoing Fourth Amendment as of the Effective Date and agrees that its obligations under the Guaranty will extend to the Credit Agreement, as so amended, and the other Loan Documents. RAPIDFORMS, INC. By:/s/ Daniel M. Junius ----------------------- Name: Daniel M. Junius Title: Treasurer MCBEE SYSTEMS, INC. By:/s/ Daniel M. Junius ----------------------- Name: Daniel M. Junius Title: Treasurer RUSSELL & MILLER, INC. By:/s/ Daniel M. Junius ----------------------- Name: Daniel M. Junius Title: Treasurer NEBS INTERACTIVE, INC. By:/s/ Daniel M. Junius ----------------------- Name: Daniel M. Junius Title: Treasurer CHISWICK, INC. By:/s/ Daniel M. Junius ----------------------- Name: Daniel M. Junius Title: Treasurer R & M TRUST By: Daniel M. Junius,as Trustee under Declaration of Trust of R&M Trust dated July 20, 1998 and filed with the Secretary of the Commonwealth of Massachusetts on July 27, 1998,and not individually By:/s/ Daniel M. Junius ----------------------- Daniel M. Junius, as Trustee under said Declaration of Trust and not individually CHISWICK TRUST Daniel M. Junius, as Trustee under Declaration of Trust of Chiswick Trust dated September 15, 1999 and Filed with the Secretary of the Commonwealth of Massachusetts on September __, 1999, and not individually By:/s/ Daniel M. Junius ----------------------- Daniel M. Junius, as Trustee under said Declaration of Trust and not individually EX-27 3
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET OF NEW ENGLAND BUSINESS SERVICE, INC. AND ITS SUBSIDIARIES AS OF SEPTEMBER 25, 1999 AND THE RELATED STATEMENTS OF CONSOLIDATED INCOME AND CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-24-2000 JUN-27-1999 SEP-25-1999 4,070 0 58,778 4,982 21,506 103,011 151,078 94,080 302,625 46,780 0 0 0 15,372 105,405 302,625 113,424 113,424 39,949 39,949 0 1,076 1,984 9,779 3,802 5,977 0 0 0 5,977 .43 .42
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