<PAGE>
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 1-11427
----------------
NEW ENGLAND BUSINESS SERVICE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-2942374
(IRS EMPLOYER IDENTIFICATION NUMBER)
(STATE OR OTHER JURISDICTION
OFINCORPORATION OR ORGANIZATION)
500 MAIN STREET 01471
GROTON, MASSACHUSETTS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (508) 448-6111
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock ($1.00 par value) New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the Registrant's Common Stock, par value $1.00
per share, held by stockholders who are not affiliates of the Registrant at
September 1, 1995 as computed by reference to the closing price of such stock
on that date was approximately $233,534,000.
The number of shares of Registrant's Common Stock, par value $1.00 per
share, outstanding at September 1, 1995 was 14,879,949.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for the fiscal year ended
June 30, 1995 are incorporated by reference into Item 1 (Part I), Items 5, 6,
7 and 8 (Part II) and Item 14 (Part IV) of this Report. Such Annual report,
except for the parts therein which have been specifically incorporated by
reference, shall not be deemed "filed" for the purposes of this report on Form
10-K.
2. Portions of the Proxy Statement sent to stockholders in connection with
the Annual Meeting to be held on October 27, 1995 are incorporated by
reference into Items 10, 11, 12 and 13 (Part III) of this Report. Such Proxy
Statement, except for the parts therein which have been specifically
incorporated by reference, shall not be deemed "filed" for the purposes of
this report on Form 10-K.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
Founded in 1952, New England Business Service, Inc. (which, with its branch,
NEBS Business Stationery located in the United Kingdom, and its wholly-owned
subsidiaries, SYCOM Inc. of Madison, Wisconsin, Shirlite, Ltd. of the United
Kingdom and NEBS Business Forms Limited of Midland, Ontario, shall be referred
to as the "Company") is a Delaware corporation with principal executive
offices located at 500 Main Street, Groton, Massachusetts 01471. The Company's
main telephone number is (508) 448-6111.
The Company supplies business forms and other printed products to small
businesses in the United States, Canada and the United Kingdom. The Company's
primary channel to the small business customer is direct mail order. During
1995, the Company served more than 1,292,000 small business customers.
The Company's base product line consists of a wide range of standardized
business forms, custom forms and related printed products specifically
designed to facilitate the management of a small business. In addition, the
Company markets stationery, promotional materials and software to enable a
small business to create a consistent and professional image.
Reference is made to the information contained in Note 13, Financial
Information by Geographic Area, in the Notes to the Consolidated Financial
Statements on page 24 of the Company's Annual Report to Stockholders for the
fiscal year ended June 30, 1995.
PRODUCTS
The Company's product line consists of well over 1,000 standardized
imprinted manual and computer business forms, check writing systems,
stationery, color-coordinated papers, forms and stationery, custom forms,
other printed products and a line of software designed to meet small business
needs. Products are either specifically designed for different lines of
business or are generally usable by all small businesses and professional
offices. The Company's full range of products are enhanced by high quality,
fast delivery, competitive prices and extensive product guarantees.
The Company's standardized manual business forms include billing forms, work
orders, job proposals, purchase orders and invoices. Standardized manual
business forms are designed to provide small businesses with the financial and
other business records necessary to properly manage a business. The Company's
stationery line, including letterhead, envelopes and business cards, is
available in a variety of formats and ink colors designed to provide small
businesses with a professional image. Checks and check writing systems are
designed to facilitate payments, the recording of transactional information
and the posting of related bookkeeping entries. Marketing products, such as
labels, pricing tags, signage and seasonal greeting cards, are designed to
facilitate a customer's selling and marketing efforts. Additionally, a line of
filing system products has been designed specifically for use in small
professional offices.
The Company also offers a full line of continuous and laser printer
compatible business forms and papers. The Company's computer business forms,
including checks, billing forms, work orders, purchase orders and invoices,
are designed to provide automated small businesses with the records necessary
to properly manage a business. Computer business forms are compatible with the
Company's proprietary software and over 3,500 third party computer software
packages commonly used by small businesses. The Company's line of color-
coordinated laser printer papers, including letterhead, envelopes, brochures,
flyers and business cards, are designed to provide an automated small business
with a unified, professional image.
Additionally, the Company offers the Company Colors(TM) line of printed
products. Company Colors offers a select line of two-color stationery,
marketing products and business forms imprinted on the customer's choice of
high quality papers. The Company also offers Company Colors customers a custom
logo design service. The Company Colors line is designed to provide small
businesses with a single source for affordable, coordinated and professional
image-building materials.
2
<PAGE>
The Company's line of NEBS(R) proprietary software consists of checkwriting,
billing and mailing application packages, easy-to-use forms-filling packages,
and the One-Write Plus(R) line of accounting software. The Company also
distributes and supports the Page Magic(TM) line of desktop marketing
software. The Company's software is designed to perform a variety of tasks
required to manage and promote a small business, and is compatible with the
full range of business forms and laser papers offered by the Company. The
Company offers fee-based technical support services for the full line of
software.
The One-Write Plus line of accounting and payroll software is modeled on the
manual one-write accounting system used by more than five million small
businesses. One-Write Plus offers the automated small business a familiar
record-keeping format and reliable functionality. Over the past ten years,
more than 350,000 small businesses have installed One-Write Plus. The Page
Magic software line enables a small business to use pre-set templates to
design and print distinctive sales and marketing materials including
brochures, letterhead, envelopes and business cards. NEBS proprietary software
is fully compatible with and designed to consume a wide range of the Company's
business forms, checks, labels, letterhead and laser papers.
PRODUCT DEVELOPMENT AND RESEARCH
The Company's products are primarily designed by an in-house product
development staff. The Company relies upon direct field research with
customers and prospects, focus groups, mail surveys, feedback from retail
distributors, retailers and representatives and unsolicited suggestions to
generate new product ideas. Product design efforts are accomplished or
directed by Company design personnel who employ manual and CAD methods to
create products. Product redesign efforts range from minor revisions to
existing manual business forms to the creation and design of a consistent and
coordinated line of products such as the Company Colors (TM) line of printed
products. Throughout the design process, the Company solicits comments and
feedback from customers and prospects.
The Company employs an internal software development group to develop the
majority of the program code for new proprietary software products and
upgrades to existing packages. The internal software development personnel
will employ external contractors or license sub-routines as required to
develop all or part of a software product. The Company has North American
distribution rights to the Page Magic line of software which has been
primarily developed by GST Technologies, Ltd. of the United Kingdom.
SALES AND MARKETING
The Company relies primarily on promotional materials delivered by mail to
over 1,292,000 customers and over 6,500,000 prospective customers to market
its products. The Company's promotional materials contain one or more order
forms to be completed by the customer and either telephoned, mailed or faxed
to the Company. Over 80% of customer orders are received over the Company's
network of toll-free telephone and data lines.
The Company has established three distinct retail distribution channels for
selected product lines. During the fiscal year ended June 30, 1995, the
Company commenced distribution of the Company Colors line and other Company
products through custom print desks located in selected Kinko's, Inc. retail
stores. By the end of fiscal 1995, NEBS custom print desks in Kinko's, Inc.
stores numbered twenty-two. The Company distributes a private label version of
its full line of manual and computer forms through a dealer network comprised
of local printers, business forms dealers, stationers and computer stores
numbering in excess of 22,000. The Company also employs a small internal sales
force to facilitate distribution of its software products through software and
computer distributors and retailers. The Company's software is distributed at
more than 3,000 retail sites in the United States and Canada.
The primary factor contributing to the Company's success is effective direct
marketing. Mail order marketing in combination with focused telemarketing
allows the Company to identify and penetrate numerically and geographically
dispersed but, in the aggregate, significant markets. The Company targets
small businesses with 20 or fewer employees within these markets with
specialized promotions and products specifically designed to meet small
business needs.
3
<PAGE>
The Company's sophisticated marketing database and customer/prospect lists
are a principal competitive advantage. The Company is able to select names and
plan promotional mailings based on a variety of customer/prospect attributes
including status as customer or prospect, line of business, product purchase
history, purchase frequency, or purchase dollar volume. The Company compiles
prospect names from a variety of sources including telephone directories and
small business associations. In addition, the Company rents prospect lists
from third party sources.
The Company's promotional materials include catalogs focused on specific
products or targeted to a specific small business segment, promotional
circulars with samples, flyers, and inserts included with invoices, statements
and product shipments. The Company relies to a lesser extent on space
advertising in magazines and post card packages to generate sales leads from
prospective customers. The Company relies on the U.S. Postal Service for
distribution of most of its advertising materials.
Coated paper costs for promotional materials and postal rates for third
class mail have increased significantly over the past five years. The Company
has been able to counteract the impact of postal and paper cost increases with
cost reduction programs and selective product price increases.
RAW MATERIALS, PRODUCTION AND DISTRIBUTION
The Company produces semi-finished business forms on high speed roll fed
presses from raw paper. The Company also purchases partially printed forms
from a number of industry sources at competitive prices. The Company has a
three year fixed price contract for carbonless paper. The Company has no other
long-term contracts with any of its suppliers and has not experienced a
shortage of paper for its products, catalogs or advertising materials in over
20 years. The cost of paper used for products and promotional materials
constitutes, directly or indirectly, less than 20% of sales.
The Company operates printing equipment specifically designed to meet the
demands of short-run printing. Typesetting and imprinting of customer headings
are accomplished with computerized typesetters, platemaking systems, letter
presses and offset presses. In addition, the Company operates manual and semi-
automatic bindery equipment. A number of the Company's presses have been
designed or substantially modified to meet the short-run demands of small
businesses. These specialized presses allow the Company to produce small order
quantities with greater efficiency than possible with the stock equipment
available from typical printing press equipment suppliers.
The Company has invested recently in electronic prepress equipment and
digital imaging presses to meet the growing demand for short-run color
printing. The Company's software products are duplicated and packaged by
outside vendors.
The Company has no significant backlog of orders. The Company's objective is
to produce and ship product within two days from receipt of a customer's
order. During fiscal 1995, over 50% of products were produced and shipped
within two days and 90% within five days of order.
To facilitate expedient production and shipment of product, the Company
maintains significant inventories of raw paper ($1,130,000 at June 30, 1995),
and partially printed business forms and related office products ($8,750,000
at June 30, 1995).
The Company ships its products to customers by United Parcel Service (UPS)
and Parcel Post. The Company bills the customer for all direct shipping and
handling charges except for customers in good standing who remit payment in
full upon order. Approximately ten percent of the Company's customers pay in
advance and qualify for free shipping. The Company's software products do not
qualify for free shipping.
COMPETITION
The Company's primary competitors for printed products and stationery are
the more than 35,000 local job shop printers in the United States, Canada and
the United Kingdom. The company also competes with several
4
<PAGE>
other companies of varying size marketing business forms by mail order. In
addition, approximately 20,000 retail stationers and national chains offer a
variety of preprinted business forms to businesses in their immediate trading
area. Local printers have an advantage of physical proximity to customers, but
generally do not offer continuous forms for desktop computers or other
products of complex construction. Additionally, local printers lack the
economy of scale to produce a small order for a single customer on a cost
effective basis. General purpose, preprinted business forms offered by
stationers are typically price competitive with the Company's forms, but lack
the design and functionality for specific lines of business and the customized
customer information options available with the Company's products.
At present, approximately 10 to 15 major independent companies or divisions
of larger companies market business forms, stationery and supplies by mail
order. The primary competitive factors influencing a customer's purchase
decision are printing accuracy, product guarantees, speed of delivery, breadth
of product line, price and customer service. The Company believes that it is
the leading mail order marketer of business forms to the small business market
in the United States and Canada.
The Company's One-Write Plus(R) line of accounting software competes with
five to ten other software products designed for and marketed to meet small
business needs. The One-Write Plus software's competitive advantage is its
ease of use, strong accounting controls, reputation with small business public
accountants, and the Company's general reputation. The Company's Page
Magic(TM) line of software products competes with desktop marketing,
publishing and illustration products marketed by approximately ten companies
to businesses and the home office market. Page Magic software's competitive
advantage is its specific design to meet small business needs, value pricing,
ease of use and compatibility with the Company's laser papers. The Company's
form-filling line of software competes with two to three form-filling
products. The Company's form-filling products' competitive advantage is its
ease of use, compatibility with Company forms, report writing feature and
integration capability with One Write Plus.
EMPLOYEES
The Company had 2,055 full and part-time employees at June 30, 1995. The
Company sponsors a number of employee benefit plans including medical and
hospitalization insurance plans, a cash profit sharing plan, a 401(k) salary
deferral plan and a defined benefit pension plan.
ENVIRONMENT
There have been no material effects on the Company or any of its
subsidiaries arising from their compliance with federal, state and local
statutes and regulations relating to the protection of the environment.
EXECUTIVE OFFICERS OF THE COMPANY
The Company's executive officers are traditionally elected to office at the
first meeting of the Board of Directors following the Annual Meeting of
Stockholders. Edward M. Bolesky, Robert S. Brown, Russell V. Corsini, Jr.,
Gerald G. Kokos and William C. Lowe were elected to office on October 28,
1994. Michael F. Dowd and Linda A. Jacobs were elected to office on January
20, 1995. Each officer holds office until the first meeting of the Board
following the next Annual Meeting and until a successor is chosen. For
biographical information regarding William C. Lowe, refer to the Company's
Proxy Statement incorporated by Item 10 herein by reference. Biographical
information for the other executive officers follows:
Edward M. Bolesky, age 49, joined the Company in 1981 and has served in
numerous capacities in operations and administration. In 1990, Mr. Bolesky was
elected Vice President--Director, Administration and Composition. In 1991, he
was elected Vice President, Sales. In 1993, he was elected Vice President--
General Manager, Administration & Customer Relations. In 1994 he was elected
Vice President--General Manager, Operations. In June, 1995, he assumed his
present position as Vice President--General Manager, Business Solutions &
Operations.
5
<PAGE>
Robert S. Brown, age 48, joined the Company in 1971 and has served in
numerous capacities in operations and marketing in the United States and
Canada. In 1989, Mr. Brown was elected Vice President, NEBS Business Forms
Marketing and Product Development. In 1991, he was elected Vice President--
General Manager, Marketing. In April, 1994, he was elected Vice President--
General Manager, Subsidiaries.
Russell V. Corsini, Jr., age 52, joined the Company in 1982 as Corporate
Controller and was elected Vice President, Finance in October, 1983. In 1994,
Mr. Corsini was elected Vice President, Chief Financial Officer.
Michael F. Dowd, age 37, joined the Company in 1986 and has served in
numerous capacities in finance and marketing. In 1990, Mr. Dowd served as
Manager of Special Projects. In 1991, he was named Staff Attorney. In 1994, he
was named General Manager, Manual Business Forms & Direct Marketing. In
January, 1995, he was elected Vice President--General Manager, Corporate
Marketing & Strategy.
Linda A. Jacobs, age 50, joined the Company in 1990 as Product Development &
Management Director--NBF. In 1991, Ms. Jacobs was named Marketing Products
Director. In 1994, she was named General Manager, Image Products. In January,
1995, she was elected Vice President--General Manager, Image Products.
Gerald G. Kokos, age 46, joined the Company in 1994 and was elected Vice
President--General Manager, Computer Forms and Software. He assumed his
current position of Vice President--General Manager, Computer Software and
Services in June, 1995. Prior to joining the Company, Mr. Kokos held a variety
of officer-level general management positions in the computer software and
hardware industry. From 1989 to 1993, he served as Vice President and General
Manager of three business units of Computervision Corporation. From 1993 to
1994, he served First Data Corporation as Senior Vice President and General
Manager of the Remote and Imaging Services Business.
ITEM 2. PROPERTIES
The Company owns land and buildings in Massachusetts, New Hampshire,
Arizona, Missouri, Wisconsin, Ontario and the United Kingdom. The Company
leases office facilities in New Hampshire, Texas, California and Arizona. The
Company owns land in Georgia.
In Groton, Massachusetts, the Company owns a 125,000 square foot office
building situated on 36 acres of land. The building was constructed in 1978
and expanded in 1982. The Groton property provides office space for marketing,
administrative, information resource, purchasing, finance and executive
personnel.
In Townsend, Massachusetts, the Company owns a 130,000 square foot
manufacturing and administrative facility situated on 15 acres of land. The
building was originally constructed in 1959 and expanded from time to time
through 1989. The Townsend facility housed all of the Company's operations
during the 1960s.
In Peterborough, New Hampshire, the Company owns a 125,000 square foot
manufacturing and administrative facility situated on 48 acres of land. The
building was originally constructed in 1975 and expanded in 1978.
In Maryville, Missouri, the Company owns a 95,000 square foot manufacturing
facility situated on 50 acres of land. The building was constructed in 1980.
In Flagstaff, Arizona, the Company owns a 90,000 square foot manufacturing
and administrative facility situated on 24 acres of land. The building was
originally constructed in 1985 and expanded in 1994.
In Midland, Ontario, the Company owns a 97,000 square foot administrative
and manufacturing facility situated on 8 acres of land. The facility was
originally constructed in 1985 and expanded in 1989.
In Chester, England, the Company owns a 38,000 square foot office and
production facility situated on 4 acres of land. The facility was originally
constructed in 1989.
6
<PAGE>
The Company also leases 28,000 square feet of office space in Nashua, New
Hampshire and 14,000 square feet of office space in Phoenix, Arizona and 1,000
square feet in Long Beach, California for administrative purposes.
The Company holds available for sale a 56,000 square foot facility on 5
acres of land in Madison, Wisconsin, a 10,000 square foot facility in Groton,
Massachusetts on 2 acres of land, and 17 acres of unimproved land in
Douglasville, Georgia.
The Company holds available for sublease 5,000 square feet of office space
in a multi-tenant office building in Dallas, Texas.
The Company believes its existing production and office facilities are
adequate for its present and foreseeable future needs.
ITEM 3. LEGAL PROCEEDINGS
To the Company's knowledge, no material legal proceedings are pending on the
date hereof to which the Company is a party or to which any property of the
Company is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The section entitled "Common Stock" located on page 26, and footnotes 4, 5,
6 and 14 to the Consolidated Financial Statements on pages 20 to 21 and page
24 of the Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1995 are incorporated herein by reference. The number of record
holders of the Company's Common stock at September 1, 1995 was 835. The
Company estimates the number of beneficial owners of the Company's Common
stock to be 5,600 at September 1, 1995.
ITEM 6. SELECTED FINANCIAL DATA
The section entitled "Eleven Year Summary" located on pages 12 and 13 of the
Company's Annual Report to Stockholders for the fiscal year ended June 30,
1995 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The section entitled "Management Discussion and Analysis" located on pages
25 and 26 of the Company's Annual Report to Stockholders for the fiscal year
ended June 30, 1995 is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and notes thereto located on pages 14
to 24 of the Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1995 are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
7
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The section entitled "Nominees for Election as Directors" located on pages 3
and 4, of the Company's Proxy Statement for the Annual Meeting of Stockholders
to be held October 27, 1995 is incorporated herein by reference. See also
"Executive Officers of the Company" in Item 1 above in this Report.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Compensation of Officers and Directors" located on
pages 5 to 7 of the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held October 27, 1995 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Voting Securities" located on pages 1 and 2 of the
Company's Proxy Statement for the Annual Meeting of Stockholders to be held
October 27, 1995 is incorporated herein by reference.
ITEM 13. CERTAIN BUSINESS RELATIONSHIPS--COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION.
The section entitled "Certain Business Relationships--Compensation Committee
Interlocks and Insider Participation" located on page 4 of the Company's Proxy
Statement for the Annual Meeting of Stockholders to be held October 27, 1995
is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) The following financial statements which are located on the following
pages of the Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1995 are incorporated herein by reference.
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Independent Auditors' Report........................................... 27
Consolidated Balance Sheets as of June 30, 1995 and June 24, 1994...... 14-15
Statements of Consolidated Income for the fiscal years ended June 30,
1995, June 24, 1994 and June 25, 1993................................. 16
Statements of Consolidated Stockholders' Equity for the fiscal years
ended June 30, 1995, June 24, 1994 and June 25, 1993.................. 17
Statements of Consolidated Cash Flows for the fiscal years ended June
30, 1995, June 24, 1994 and June 25, 1993............................. 18
Notes to Consolidated Financial Statements............................. 19-24
(a)(2) The following financial statement schedules are filed as part of this
report and are located on the following pages herein:
<CAPTION>
PAGE(S)
-------
<S> <C>
Independent Auditors' Report........................................... 12
Schedule II Valuation and Qualifying Accounts.......................... 13
</TABLE>
Schedules III, IV, and V are omitted as not applicable or not required under
Regulation S-X.
8
<PAGE>
(a)(3) Exhibits required to be filed by Item 601 of Regulation S-K:
(2) Not applicable.
(3)(a) Certificate of Incorporation of the Registrant. (Incorporated by
reference to the Company's Current Report on Form 8-K dated October
31, 1986.)
(3)(b) Certificate of Merger of New England Business Service, Inc. (a
Massachusetts corporation) and the Company, dated October 24, 1986
amending the Certificate of Incorporation of the Company by adding
Articles 14 and 15 thereto. (Incorporated by reference to the
Company's Current Report on Form 8-K dated October 31, 1986.)
(3)(c) Certificate of Designations, Preferences and Rights of Series A
Participating Preferred Stock of the Company, dated October 27,
1989.
(3)(d) By-Laws of the Registrant, as amended.
(4)(a) Specimen stock certificate for shares of Common Stock, par value
$1.00 per share.
(4)(b) Amended and Restated Rights Agreement, dated as of October 27, 1989
as amended as of October 20, 1994 (the "Rights Agreement"), between
New England Business Service, Inc. and The First National Bank of
Boston, National Association, as rights agent, including as Exhibit
B the forms of Rights Certificate Election to Exercise (Incorporated
by reference to Exhibit 4 of the Company's current report on Form 8-
K dated October 25, 1994).
(9) Not applicable.
(10)(a) NEBS 1990 Key Employee Stock Option and Stock Appreciation Rights
Plan dated July 27, 1990. (Incorporated by reference to Exhibit
(10)(a) to the Company's Annual Report on Form 10-K for the fiscal
year ended June 29, 1990, filed September 14, 1990.)
(10)(b) Line of Credit Agreement, dated November 1, 1994, between the
Company and The First National Bank of Boston.
(10)(c) NEBS Deferred Compensation Plan for Outside Directors. (Incorporated
by reference to Exhibit (10)(d) to the Company's Annual Report on
Form 10-K for the fiscal year ended June 25, 1982, filed September
23, 1982.)
(10)(d) NEBS 1994 Key Employee and Eligible Director Stock Option and Stock
Appreciation Rights Plan dated July 22, 1994. (Incorporated by
reference to Exhibit (10)(f) to the Company's Annual Report on Form
10-K for the fiscal year ended June 24, 1994, filed September 16,
1994.)
(10)(e) New England Business Service, Inc. Stock Compensation Plan dated
July 25, 1994. (Incorporated by reference to Exhibit (10)(g) to the
Company's Annual Report on Form 10-K for the fiscal year ended June
24, 1994, filed September 16, 1994.)
(10)(f) Key Employee Non-Incentive Stock Option Agreement between the
Company and William C. Lowe granted as of November 12, 1993.
(Incorporated by reference to Exhibit (10)(i) to the Company's
Annual Report on Form 10-K for the fiscal year ended June 24, 1994,
filed September 16, 1994.)
(10)(g) New England Business Service, Inc. Deferred Compensation Plan dated
June 25, 1994.
(10)(h) Supplemental Retirement Plan for Executive Employees of New England
Business Service, Inc. dated July 1, 1991, as amended June 24, 1994.
(11) Statement re Computation of Per Share Earnings.
(12) Not applicable.
(13) The Annual Report to Stockholders for the fiscal year ended June 30,
1995.
9
<PAGE>
(16) Not applicable.
(18) Not applicable.
(21) List of Subsidiaries.
(22) Not applicable.
(23) Consent of Deloitte & Touche LLP.
(24) Not applicable.
(27) Article 5 Financial Data Schedule.
(28) Not applicable.
(99) Not applicable.
(b)Reports on Form 8-K:
No reports on Form 8-K were filed during the Company's fourth quarter.
10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
New England Business Service, Inc.
(Registrant)
/s/ William C. Lowe
By __________________________________
(WILLIAM C. LOWE, PRESIDENT AND
CHIEF EXECUTIVE OFFICER)
Date: September 15, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT IN THE CAPACITIES AND ON THE DATES INDICATED.
NAME TITLE DATE
---- ----- ----
/s/ Richard H. Rhoads Chairman and September 15,
------------------------------------- Director 1995
(RICHARD H. RHOADS)
/s/ William C. Lowe President, Chief September 15,
------------------------------------- Executive Officer 1995
(WILLIAM C. LOWE) and Director
/s/ Peter A. Brooke Director September 15,
------------------------------------- 1995
(PETER A. BROOKE)
/s/ Benjamin H. Lacy Director September 15,
------------------------------------- 1995
(BENJAMIN H. LACY)
/s/ Robert J. Murray Director September 15,
------------------------------------- 1995
(ROBERT J. MURRAY)
/s/ Frank L. Randall, Jr. Director September 15,
------------------------------------- 1995
(FRANK L. RANDALL, JR.)
/s/ Jay R. Rhoads, Jr. Director September 15,
------------------------------------- 1995
(JAY R. RHOADS, JR.)
/s/ Brian E. Stern Director September 15,
------------------------------------- 1995
(BRIAN E. STERN)
/s/ Russell V. Corsini, Jr. Principal Financial September 15,
------------------------------------- and Accounting 1995
(RUSSELL V. CORSINI, JR.) Officer
11
<PAGE>
INDEPENDENT AUDITORS' REPORT
New England Business Service, Inc.
We have audited the consolidated balance sheets of New England Business
Service, Inc. and its subsidiaries as of June 30, 1995, and June 24, 1994, and
the related statements of consolidated income, consolidated stockholders'
equity and consolidated cash flows for each of the three years in the period
ended June 30, 1995, and have issued our report thereon dated July 28, 1995;
such financial statements and report are included in your 1995 Annual Report
to Stockholders and are incorporated herein by reference. Our audits also
included the consolidated financial statement schedule of New England Business
Service, Inc. and its subsidiaries, listed in Item 14. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
July 28, 1995
12
<PAGE>
SCHEDULE II
NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(000'S OMITTED)
<TABLE>
<CAPTION>
ADDITIONS
----------------------
BALANCE AT CHARGED DEDUCTIONS BALANCE AT
BEGINNING CHARGED TO OTHER FROM END OF
PERIOD TO INCOME ACCOUNTS (1) RESERVES (2) PERIOD
---------- --------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Reserves deducted from
assets to which they
apply:
For doubtful accounts
receivable:
Year ended June 25,
1993................. $3,136 $2,815 $ 30 $3,037 $2,944
Year ended June 24,
1994................. 2,944 2,799 0 2,731 3,012
Year ended June 30,
1995................. 3,012 3,177 0 2,885 3,304
For sales returns and
allowances:
Year ended June 25,
1993................. 593 779 -- 593 779
Year ended June 24,
1994................. 779 1,078 -- 779 1,078
Year ended June 30,
1995................. 1,078 990 -- 1,078 990
</TABLE>
--------
(1) Recovery of accounts previously written off.
(2) Accounts written off.
13
<PAGE>
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF SERIES A
PARTICIPATING PREFERRED STOCK
NEW ENGLAND BUSINESS SERVICE, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Richard H. Rhoads, Chairman of the Board, and Paul F. Robinson,
Secretary of New England Business Service, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the said Corporation, the said Board of
Directors on October 27, 1989, adopted the following resolution creating a
series of 400,000 share of Preferred Stock designed as Series A Participating
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Series A Participating Preferred Stock of the
Corporation of the par value of one dollar ($1.00) per share be and it hereby is
created, and that the amount thereof and the designation, powers, preferences
and rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
Section 1. Designation and Amount. The share of such series shall be
----------------------
designated as "Series A Participating Preferred Stock" and the initial number of
shares constituting such series shall be 400,000.
Section 2. Dividends and Distributions.
---------------------------
(A) The "quarterly dividend periods" for purposes of accrual and
payment of dividends upon Series A Participating Preferred Stock shall commence
on the 28th day following the fourth Friday of January, April, July and October
in each year (each such date being referred to herein as a "Quarterly Dividend"
"Payment Date"), or in the case of original issuance, on the date of original
issuance, and shall end on and include the day next preceding the first date of
the next quarterly dividend period. The dividend rate per share on the shares of
Series A Participating Preferred Stock for each quarterly dividend period shall
be equal to the greater of (a) $5.00 or (b) subject to adjustment as hereinafter
provided, 100 times the aggregate amount per share of all cash dividends and 100
times the aggregate per share amount (payable in cash based upon the fair market
value as of the time of payment of distribution) of all non-cash dividends or
other distributions (other than stock dividends or stock splits) declared on the
common stock, par value $1.00 per share, of this Corporation (the "Common
Stock") during the
<PAGE>
immediately preceding quarterly dividend period, or, with respect to the first
quarterly dividend period, since the first issuance of any share or fraction of
a share of Series A Participating Preferred Stock. In the event the Corporation
shall at any time after October 27, 1989 (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of shares of Series A
Participating Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue or such shares of Series
A Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series A Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 45 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
-------------
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the number
of votes per share to which holders of shares of Series A Participating
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of
-2-
<PAGE>
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation, as from time to time amended, in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Participating Preferred and the
holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class
on all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth in Section 11 below or as otherwise
provided by law, holders of Series A Participating Stock shall have no
special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of Common Stock or other stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Participating Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Participating Preferred, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all such shares are then entitled; or
(iii) purchase or otherwise acquire for consideration any shares of
Series A Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series A Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after
-3-
<PAGE>
consideration of the respective annual dividend rates and other
relative rights and preferences of such shares, shall determine in
good faith will result in fair and equitable treatment among them.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Participating
-----------------
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as shares of Series A
Participating Preferred Stock or as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth in any other
Certificate of Designation creating a series of Preferred Stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of Common Stock or other stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A
Participating Preferred Stock shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation Preference,
no additional distributions shall be made to the holders of shares of Series A
Participating Preferred Stock unless, prior thereto, the holders of share of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in Subparagraph C
below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock), hereinafter referred to as
the "Adjustment Number". Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Participating Preferred Stock and Common Stock, respectively,
holders of Series A Participating Preferred Stock and holders of share of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with respect
to such Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Participating Preferred Stock, then
such remaining assets shall be distributed
-4-
<PAGE>
ratably to the holders of the Series A Participating Preferred Stock and such
parity shares in proportion to their respective liquidation preferences. In the
event that there are sufficient assets to pay in full the Series A Liquidation
Preference and all liquidation preferences ranking on a parity with it, but not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of Common
Stock.
(C) In the event the Corporation shall at any time after the
October 27, 1989, (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
---------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or other property, then in any such case each share of
Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed into such other stock or securities, cash and/or other
property having value equal to 100 times the aggregate value of stock,
securities, cash and/or any other property into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision, combination, consolidation or reclassification
of the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, then in each such case the exchange ratio of 100:1
provided for in the preceding sentence with respect to the exchange or change of
shares of Series A Participating Preferred Stock shall be adjusted by
multiplying such amount by a ratio, the numerator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Participating
-------------
Preferred Stock shall not be redeemable.
Section 9. Designation of Additional Preferred Stock. Nothing herein
-----------------------------------------
shall preclude the Board of Directors from increasing the number of authorized
shares of Preferred Stock of the Corporation designated as Series A
Participating Preferred Stock and having the voting powers, preferences and
relative, participating and other rights provided herein for such series.
Nothing herein shall preclude the Board of Directors from designating other
authorized shares of Preferred Stock as one of more other series ranking on a
parity with or prior to the Series A Participating Preferred Stock as to the
payment of dividends or the distribution of assets or otherwise.
-5-
<PAGE>
Section 10. Fractional Shares. Series A Participating Preferred
-----------------
Stock may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Participating Preferred Stock.
Section 11. Amendment. The Certificate of Incorporation of the
---------
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the holders of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Series A Participating Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury as of the 27th day
of October, 1989.
/s/ Richard H. Rhoads
-----------------------------------
Richard H. Rhoads
Chairman of the Board
Attest:
/s/ Paul F. Robinson
------------------------------
Paul F. Robinson
Secretary
-6-
<PAGE>
AMENDED AND RESTATED
(Through April 28, 1995)
BY-LAWS
OF
NEW ENGLAND BUSINESS SERVICE, INC.
ARTICLE ONE
Stockholders
Section 1. Annual Meeting. The annual meeting of the stockholders
shall be held on the last Friday of October in each year (or if that be a legal
holiday in the place where the meeting is to be held, on the next succeeding
full business day), or on such later date to which the Directors or the Chairman
of the Board or the President shall postpone such meeting, at the hour fixed by
the Directors or the Chairman of the Board or the President and stated in the
notice of the meeting. The purposes for which the annual meeting is to be held,
in addition to those prescribed by law, by the Certificate of Incorporation or
by these By-laws, may be specified by the Directors or the Chairman of the Board
or the President. If no annual meeting is held in accordance with the foregoing
provisions, the Directors shall cause the meeting to be held as soon thereafter
as convenient.
Section 2. Special Meetings. Special meetings of the stockholder may
be called by the Chairman of the Board, the President or the Directors. No call
of a special meeting of the stockholders shall be required if such notice of the
meeting shall have been waived in writing (including a telegram) by every
stockholder entitled to notice thereof, or by his attorney thereunto authorized.
Section 3. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the corporation unless a different place (within
the United States) is fixed by the Directors or the Chairman of the Board or the
President and stated in the notice of the meeting.
Section 4. Notices. Except as otherwise provided by law, notice of
all meetings of stockholders shall be given as follows, to wit: A written
notice, stating the place, day and hour thereof, shall be given by the Secretary
(or person or persons calling the meeting), not less than 10 nor more than sixty
days before the meeting, to each stockholder entitled to vote thereat and to
each stockholder who, by law, the Certificate of Incorporation, or these By-
laws, is entitled to such notice, by leaving such notice with him or at his
residence or usual place of business, or by mailing it postage prepaid, and
addressed to such stockholder at his address as it appears upon the books of the
corporation. Notices of all meetings of stockholders shall state the purposes
for which the meetings are called. No notice need be given to any stockholder if
a written waiver of notice, executed before or after the meeting by the
stockholder or his attorney thereunto authorized, is filed with the records of
the meeting.
<PAGE>
Section 5. Quorum. At any meeting of stockholders a quorum for the
transaction of business shall consist of one or more individuals appearing in
person and/or as proxies and owning and/or representing a majority of the shares
of the corporation then outstanding and entitled to vote, provided that in the
absence of a quorum, the stockholders may, by majority vote, adjourn the meeting
from time to time until a quorum shall be present.
Section 6. Voting and Proxies. Each stockholder shall have one vote
for each share of stock entitled to vote, and a proportionate vote for any
fractional share entitled to vote, held by him of record according to the
records of the corporation, unless otherwise provided by the Certificate of
Incorporation or by resolution or resolutions of the Board of Directors
establishing rights of Preferred Stock as provided for in the Certificate of
Incorporation. Stockholders may vote either in person or by written proxy dated
not more than three years before the meeting named therein, unless the proxy
provides for a longer period. Proxies shall be filed with the Secretary before
being voted at any meeting or any adjournment thereof. Every proxy must be
signed by the stockholder or by his attorney-in-fact. A proxy purporting to be
executed by or on behalf of a stockholder shall be deemed valid unless
challenged at or prior to its exercise.
Section 7. Action at Meeting. When a quorum is present, the action
of the stockholders on any matter properly brought before such meeting shall be
decided by the holders of a majority of the stock present or represented and
entitled to vote and voting on such matter, except where a different vote is
required by law, the Certificate of Incorporation or these By-laws. Any
election by stockholders shall be determined by a majority of the votes cast by
the stockholders entitled to vote at the election. No ballot shall be required
for such election unless requested by a stockholder present or represented at
the meeting and entitled to vote in the election.
Section 8. Special Action. Any action to be taken by the
stockholders may be taken without a meeting if all stockholders entitled to vote
on the matter consent to the action by a writing filed with the records of the
meetings of stockholders. Such consent shall be treated for all purposes as a
vote at a meeting.
Section 9. Record Date. The Directors may fix in advance a time
which shall be not more than sixty days prior to (a) the date of any meeting of
stockholders and not less than ten days prior to such meeting, (b) the date for
the payment of any dividend or the making of any distribution to stockholders,
or (c) the last day on which the consent or dissent of stockholders may be
effectively expressed for any purpose, as the record date for determining the
stockholders having the right to notice of and to vote at such meeting and any
adjournment thereof, the right to receive such dividend or distribution, or the
right to give consent or dissent. The Board of Directors may fix a new record
date, or confirm an existing record date, for the purpose of determining the
stockholders entitled to vote at any adjourned or postponed meeting. In each
such case only stockholders of record on such record date shall have such right,
notwithstanding any transfer of stock on the books of the corporation after the
record date..
Section 10. Stockholder List. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of
- 2 -
<PAGE>
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city or
other municipality or community where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this Section or the books of the corporation, or to vote at
any meeting of stockholders.
ARTICLE TWO
Directors
Section 1. Powers. The Board of Directors, subject to any action at
any time taken by such stockholders as then have the right to vote, shall have
the entire charge, control and management of the corporation, its property and
business and may exercise all or any of its power.
Section 2. Election. A Board of Directors of such number, not less
than 3, nor more than 9, as shall be fixed by the stockholders, shall be elected
by the stockholders at the annual meeting.
Section 3. Vacancies. Any vacancy at any time existing in the Board
may be filled by the Board at any meeting. The stockholders having voting power
may, at a special meeting called at least in part for the purpose, choose a
successor to a Director whose office is vacant, and the person so chosen shall
displace any successor chosen by the Directors.
Section 4. Enlargement of the Board. The number of the Board of
Directors may be increased and one or more additional Directors elected at any
special meeting of the stockholders, called at least in part for the purpose, or
by the Directors by vote of a majority of the Directors then in office.
Section 5. Tenure. Except as otherwise provided by law, by the
Certificate of Incorporation or by these By-laws, Directors shall hold office
until the next annual meeting of stockholders and thereafter until their
successors are chosen and qualified. Any Director may resign by delivering his
written resignation to the corporation at its principal office or to the
Chairman of the Board, the President or the Secretary. Such resignation shall
be effective upon receipt unless it is specified to be effective at some other
time or upon the happening of some other event.
Section 6. Removal. A Director may be removed from office with or
without cause by vote of a majority of the stockholders entitled to vote in the
election of Directors.
- 3 -
<PAGE>
Section 7. Annual Meetings. Immediately after each annual meeting of
stockholders and at the place thereof, if a quorum of the Directors elected at
such meeting is present, there shall be a meeting of the Directors without
notice; but if such a quorum of the Directors elected thereat is not present at
such meeting, or if present does not proceed immediately thereafter to hold a
meeting of the Directors, the annual meeting of the Directors shall be called in
the manner hereinafter provided with respect to the call of special meetings of
Directors.
Section 8. Regular Meetings. Regular meetings of the Directors may
be held at such times and places as shall from time to time be fixed by
resolution of the Board and no notice need be given of regular meetings held at
times and places so fixed, provided however, that any resolution relating to the
holding of regular meetings shall remain in force only until the next annual
meeting of stockholders, and that if at any meeting of Directors at which a
resolution is adopted fixing the times or place or places for any regular
meetings any Director is absent, no meeting shall be held pursuant to such
resolution until either each such absent Director has in writing or by telegram
approved the resolution or seven days have elapsed after a copy of the
resolution certified by the Secretary has been mailed postage prepaid, addressed
to each such absent Director at his last known home or business address.
Section 9. Special Meetings. Special meetings of the Directors may
be called by the Chairman of the Board, the President, the Treasurer or any two
Directors and shall be held at the place designated in the call thereof.
Section 10. Notices. Notices of any special meeting of the Directors
shall be given by the Secretary to each Director, by mailing to him, postage
prepaid, and addressed to him at his address as registered on the books of the
corporation, or if not so registered at his last known home or business address,
a written notice of such meeting at least four days before the meeting or by
delivering such notice to him at least forty-eight hours before the meeting or
by sending to him at least forty-eight hours before the meeting, by prepaid
telegram addressed to him at such address, notice of such meeting. If the
Secretary refuses or neglects for more than twenty-four hours after receipt of
the call to give notice of such special meeting, or if the office of the
Secretary is vacant or the Secretary is incapacitated, such notice may be given
by the officer or one of the Directors calling the meeting. Notice need not be
given to any Director if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any Director
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A notice or waiver of notice of a Directors' meeting
need not specify the purpose of the meeting.
Section 11. Quorum. At any meeting of the Directors a majority of
the number of Directors required to constitute a full Board, as fixed in or
determined pursuant to these By-laws as then in effect, shall constitute a
quorum for the transaction of business; provided always that any number of
Directors (whether one or more and whether or not constituting a quorum) present
at any meeting or at any adjourned meeting may make any reasonable adjournment
thereof.
- 4 -
<PAGE>
Section 12. Action at Meeting. At any meeting of the Directors at
which a quorum is present, the action of the Directors on any matter brought
before the meeting shall be decided by the vote of a majority of those present
and voting, unless a different vote is required by law, the Certificate of
Incorporation, or these By-laws.
Section 13. Special Action. Any action by the Directors may be taken
without a meeting if a written consent thereto is signed by all the Directors
and filed with the records of the Directors' meetings. Such consent shall be
treated as a vote of the Directors for all purposes.
Section 14. Committees. The Directors may, by vote of a majority of
the number of Directors required to constitute a full Board as fixed in or
determined pursuant to these By-laws as then in effect, elect from their number
an executive or other committees and may by like vote delegate thereto some or
all of their powers except those which by law, the Certificate of Incorporation
or these By-laws they are prohibited from delegating. Except as the Directors
may otherwise determine, any such committee may make rules for the conduct of
its business, but unless otherwise provided by the Directors or in such rules,
its business shall be conducted as nearly as may be in the same manner as is
provided by these By-laws for the Directors.
ARTICLE THREE
Officers
Section 1. Enumeration. The officers of the corporation shall be a
President, a Treasurer, a Secretary, and such Vice Presidents, Assistant
Treasurers, Assistant Secretaries, and other officers as may from time to time
be determined by the Directors.
Section 2. Election. The President, Treasurer and Secretary shall be
elected annually by the Directors at their first meeting following the annual
meeting of stockholders. Other officers may be chosen by the Directors at such
meeting or at any other meeting.
Section 3. Qualification. The President may, but need not be, a
Director. No officer need be a stockholder. Any two or more offices may be
held by the same person, provided that the President and the Secretary shall not
be the same person. Any officer may be required by the Directors to give bond
for the faithful performance of his duties to the corporation in such amount and
with such sureties as the Directors may determine.
Section 4. Tenure. Except as otherwise provided by law, by the
Certificate of Incorporation or by these By-laws, the President, Treasurer and
Secretary shall hold office until the first meeting of the Directors following
the annual meeting of stockholders, and thereafter until his successor is chosen
and qualified. Other officers shall hold office until the first meeting of the
Directors following the annual meeting of stockholders unless a shorter term is
specified in the vote choosing or appointing them. Any officer may resign by
delivering his written resignation to the corporation at its principal office or
to the Chairman of the Board, the President or the Secretary, and such
resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event.
- 5 -
<PAGE>
Section 5. Removal. The Directors may remove any officer with or
without cause by a vote of a majority of the entire number of Directors then in
office, provided, that an officer may be removed for cause only after reasonable
notice and opportunity to be heard by the Board of Directors prior to action
thereon.
Section 6. Chairman of the Board. If the Directors shall appoint a
Chairman of the Board, he shall preside at all meetings of the Board and of the
stockholders at which he shall be present. In the absence or disability of the
President, the powers and duties of the President shall be exercised and
performed by the Chairman of the Board. He shall, subject to the Board of
Directors, be responsible for the long-range planning of the corporation. He
shall perform such duties and have such powers additional to the foregoing as
the Board shall from time to time designate.
Section 7. President. In the absence or disability of the Chairman
of the Board, the President shall, when present, preside at all meetings of the
stockholders and of the Directors. Except as otherwise expressly provided by
these By-laws or by action of the Board, it shall be the duty of the President,
and he shall have the power, to see that all orders and resolutions of the
Directors are carried into effect. The President, as soon as reasonably
possible after the close of each fiscal year, shall submit to the Directors a
report of the operations of the corporation for such year and a statement of its
affairs and shall from time to time report to the Directors all matters within
his knowledge which the interests of the corporation may require to be brought
to its notice. The President shall perform such duties and have such powers
additional to the foregoing as the Directors shall designate.
Section 8. Vice Presidents. Each Vice President shall have such
powers and perform such duties as the Directors shall from time to time
designate.
Section 9. Treasurer. The Treasurer shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the corporation in such depositaries as shall be designated by the
Directors or in the absence of such designation in such depositaries as he shall
from time to time deem proper. He shall disburse the funds of the corporation
as shall be ordered by the Directors, taking proper vouchers for such
disbursements. He shall promptly render to the President and to the Directors
such statements of his transactions and accounts as the President and Directors
respectively may from time to time require. The Treasurer shall perform such
duties and have such powers additional to the foregoing as the Directors may
designate.
Section 10. Assistant Treasurer. In the absence or disability of the
Treasurer, his powers and duties shall be performed by the Assistant Treasurer,
if only one, or if more than one, by the one designated for the purpose by the
Directors. Each Assistant Treasurer shall have such other powers and perform
such other duties as the Directors shall from time to time designate.
- 6 -
<PAGE>
Section 11. Secretary and Assistant Secretary. The Secretary or an
Assistant Secretary, if one be elected, shall record all proceedings of the
stockholders in a book to be kept therefor and, if there be no Secretary or
Assistant Secretary of the Board of Directors, shall also record all proceedings
of the Directors in a book to be kept therefor. If there be more than one
Assistant Secretary, then the one designated to so record such proceedings by
the Directors shall do so, otherwise a Temporary Secretary designated by the
person presiding at a meeting, shall perform the duties of the Secretary.
Unless the Directors shall appoint a transfer agent and/or registrar or other
officer or officers for the purpose, the Secretary shall be charged with the
duties of keeping or causing to be kept, accurate records of all stock
outstanding, stock certificates issued and stock transfers; and, subject to such
other duties or different rules as shall be adopted from time to time by the
Directors, such records may be kept solely in the stock certificate books. The
Secretary and each Assistant Secretary shall have such other powers and perform
such other duties additional to the foregoing as the Directors may from time to
time designate.
ARTICLE FOUR
Provisions Relating to Capital Stock
Section 1. Certificates of Stock. The shares of the corporation
shall be represented by a certificate or shall be uncertificated. Certificates
shall be signed by, or in the name of the corporation by, the Chairman or Vice-
Chairman of the Board of Directors, or the President or a Vice-President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the corporation.
Upon the face or back of each stock certificate issued to represent
any partly paid shares, or upon the books and records of the corporation in the
case of uncertificated partly paid shares, shall be set forth the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement
that the corporation will furnish without charge to each
- 7 -
<PAGE>
stockholder who so requests the powers, designations, preferences and relative
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Any of or all the signatures on a certificate may be facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 2. Transfer of Stock. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Upon receipt of proper transfer instructions from
the registered owner of uncertificated shares such uncertificated shares shall
be cancelled and issuance of new equivalent uncertificated shares or certificate
shares shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the corporation.
Section 3. Equitable Interests Not Recognized. The corporation shall
be entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person except as may be otherwise expressly provided by law.
Section 4. Lost or Destroyed Certificates. The Directors of the
corporation may, subject to any contrary provision of law, determine the
conditions upon which a new certificate of stock may be issued in place of any
certificate alleged to have been lost, stolen, destroyed, or mutilated.
ARTICLE FIVE
Stock in Other Corporations
Except as the Directors may otherwise designate, the Chairman of the
Board, President or Treasurer may waive notice of, and appoint any person or
persons to act as proxy or attorney-in-fact for this corporation (with or
without power of substitution) at any meeting of stockholders or shareholders of
any other corporation or organization the securities of which may be held by the
corporation.
ARTICLE SIX
Inspection of Records
Books, accounts, documents and records of the corporation shall be
open to inspection by any Director at all times during the usual hours of
business. The original, or attested copies, of the Certificate of
Incorporation, By-laws and records of all meeting of the incorporators and
stockholders, and the stock and transfer records, which shall contain the names
of all
- 8 -
<PAGE>
stockholders and the record address and the amount of stock held by each, shall
be kept in Massachusetts at the principal office of the corporation, or at an
office of its transfer agent or of the Secretary. Said copies and records need
not be all kept in the same office. They shall be available at all reasonable
times to the inspection of any stockholder for any proper purpose but not to
secure a list of stockholders for the purpose of selling said list or copies
thereof or of using the same for a purpose other than in the interest of the
applicant, as a stockholder, relative to the affairs of the corporation.
ARTICLE SEVEN
Checks, Notes, Drafts and Other Instruments
Checks, notes, drafts and other instruments for the payment of money
drawn or endorsed in the name of the corporation may be signed by any officer or
officers or person or person authorized by the Directors to sign the same. No
officer or person shall sign any such instrument as aforesaid unless authorized
by the Directors to do so.
ARTICLE EIGHT
Seal
The seal of the corporation shall be circular in form, bearing its
name, the word "Delaware," and the year of its incorporation. The Treasurer
shall have custody of the seal and may affix it (as may any other officer
authorized by the Directors) to any instrument requiring the corporate seal.
ARTICLE NINE
Fiscal Year
The fiscal year of the corporation shall be the year ending on June 30
in each year.
ARTICLE TEN
Amendments
These By-laws may at any time be amended by vote of the stockholders,
provided that notice of the substance of the proposed amendment is stated in the
notice of the meeting. If authorized by the Certificate of Incorporation, the
Directors may also make, amend, or repeal these By-laws in whole or in part,
except with respect to any provisions thereof which by law, the Certificate of
Incorporation, or these By-laws requires action by the stockholders. Not later
than the time of giving notice of the meeting of stockholders next following the
making, amending or repealing by the Directors of any By-law, notice thereof
stating the substance of such change shall be given to all stockholders entitled
to vote on amending the By-laws. Any By-law adopted by the Directors may be
amended or repealed by the stockholders.
- 9 -
<PAGE>
ARTICLE ELEVEN
Indemnification
The corporation shall indemnify its officers and directors to the
extent permitted by the General Corporation Law of the State of Delaware.
ARTICLE TWELVE
Principal and Registered Offices
Section 1. Principal Office. The corporation's principal office
shall be 500 Main Street, Groton, Massachusetts or such other place as the Board
of Directors may designate.
Section 2. Registered Office. The corporation's registered office
shall be 229 South State Street, City of Dover, County of Kent, Delaware, or
such other place as the Board of Directors may designate.
- 10 -
<PAGE>
--------------------------------------------------------------------------------
NEBS(R)
-------------------- --------------------
NUMBER SHARES
FBU
-------------------- --------------------
COMMON STOCK COMMON STOCK
INCORPORATED UNDER THE LAWS THIS CERTIFICATE IS TRANSFERABLE
OF THE STATE OF DELAWARE IN BOSTON, MASSACHUSETTS
AND NEW YORK, NEW YORK
NEW ENGLAND BUSINESS SERVICE, INC.
------------------------------------------------------------
This Certifies that CUSIP 643872 10 4
SEE REVERSE FOR
CERTAIN DEFINITIONS
AND FOR A STATEMENT
CONCERNING CERTAIN
RIGHTS EVIDENCED BY
THIS CERTIFICATE
is the owner of
------------------------------------------------------------
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE
PAR VALUE OF $1. EACH OF
New England Business Service, Inc. transferable, so as to affect the rights of
the corporation, only by transfer recorded on the books of the corporation, in
person or by duly authorized attorney, upon surrender of this certificate
properly endorsed or assigned. This certificate and the shares represented
hereby are received and held subject to the laws of the State of Delaware, the
Certificate of Incorporation, and the By-laws of the corporation, all as from
time to time amended, and the owner of this certificate by accepting the same
expressly assents thereto. This certificate is not valid until countersigned and
registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the corporation and the facsimile
signatures of its duly authorized officers.
Dated
/s/ John F. Fairbanks /s/ William C. Lowe
Treasurer President
---------------------------------
NEW ENGLAND BUSINESS SERVICE, INC.
CORPORATE
DELAWARE
1986
SEAL
---------------------------------
COUNTERSIGNED AND REGISTERED:
THE FIRST NATIONAL BANK OF BOSTON
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
--------------------------------------------------------------------------------
<PAGE>
The Authorized Capital Stock of the Corporation consists of a class of
Preferred Stock, one dollar ($1.00) par value, which may be issued in one or
more series, and a class of Common Stock, one dollar ($1.00) par value. The
Corporation will furnish without charge to each stockholder, upon request to the
Secretary of the Corporation, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
This certificate also evidences and entitles the holder to certain Rights
as set forth in the Rights Agreement between New England Business Service, Inc.
(the "Company") and The First National Bank of Boston (the "Rights Agent") dated
as of October 27, 1989, as amended from time to time, (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may be exchanged for other securities, may expire of may be evidenced
by separate certificates and may no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain circumstances set forth in
the Right's Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) or a transferee of the foregoing
may become null and void.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be considered as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ______ Custodian _______
TEN ENT -- as tenants by the entireties (Cust.) (Minor)
JT TEN -- as joint tenants with right of Under Uniform Gifts to Minors
survivorship and not as tenants Act ______________________,
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _______________________________ hereby sell, assign
and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
--------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shares
-------------------------------------------------------------------------
of the Common Stock represented by this Certificate, and do hereby
irrevocably constitute and appoint
--------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the Corporation with full
power of substitution in the premises.
Dated,
---------------------
Signature(s)
---------------------------------------
(The signature to this assignment must
correspond with the names as written
under the issue of this Certificate in
every particular, without alteration or
enlargement or any change whatsoever.
If more than one owner, all must sign).
Signature Guaranteed:
--------------------------------------------
ALL GUARANTEES MUST BE MADE BY A FINANCIAL
INSTITUTION (SUCH AS A BANK OR BROKER) WHICH
IS A PARTICIPANT IN THE SECURITIES TRANSFER
AGENTS MEDALLION PROGRAM ("STAMP"), THE
NEW YORK STOCK EXCHANGE, INC. MEDALLION
SIGNATURE PROGRAM ("MSP") OR THE STOCK
EXCHANGES MEDALLION PROGRAM ("SEMP") AND
MUST NOT BE DATED. GUARANTEES BY A NOTARY
PUBLIC ARE NOT ACCEPTABLE.
<PAGE>
[LOGO APPEARS HERE] BANK OF BOSTON
--------------
November 1, 1994
Mr. John F. Fairbanks
Treasurer
New England Business Service, Inc.
500 Main Street
Groton, MA 01471
Dear John:
This letter will serve to confirm that The First National Bank of Boston (the
"Bank") holds available for New England Business Service, Inc. a $10,000,000
unsecured line of credit to extend through October 31, 1995. All borrowings
under this line will be payable on demand. This line shall be available for
general corporate purposes.
As compensation for this line of credit, you agree to pay a fee of 1/4%
percent per annum (calculated on the basis of a 360-day year) on the full amount
of the facility. This will be payable quarterly in arrears on the last banking
day of each calendar quarter ending in March, June, September, and December.
At your option, borrowings will be priced at the rates we quote you as:
our Alternate Base Rate [the higher of the Bank's announced Base Rate or
overnight Federal Funds rate plus 1/2%], or
--
our 1, 2, or 3-month reserve-adjusted Eurodollar Rate plus 3/8%,
the Eurodollar Rate being determined by the Bank at 10:00 a.m. Boston time on
the day (which shall be a business day) two business days prior to the date of
the requested borrowing. Requests for borrowings at these pricing options must
be received by 11:00 a.m. Boston time on the date of the requested borrowing,
(in the case of Base Rate Loans) and at least one business day before the time
for determining the relevant rate (in the case of Eurodollar Rate Loans).
Eurodollar Rate Loans may be requested for interest periods of one, two, or
three months; and no loan shall have an interest period that extends beyond the
expiration of this line of credit. All loans will be made by crediting the
proceeds thereof to your demand deposit account maintained at the Bank.
Each Alternate Base Rate loan made under this line of credit must be in a
minimum amount of $500,000, or any larger amount which is an integral multiple
of $100,000.
All Eurodollar Rates will be adjusted for reserves, if any. Borrowings under
the Eurodollar pricing option must be in minimum increments of $1,000,000 or
greater multiples of $100,000. If any Eurodollar Rate Loans are paid on a date
other than the last day of the applicable interest period (whether by reason of
voluntary prepayment, acceleration or otherwise), you
<PAGE>
-2-
shall compensate us for any funding losses and other costs (including lost
profits) incurred as a result of such prepayment. Our willingness to offer
Eurodollar Rates is subject to the availability of funding sources and the
continued legality of our offering such pricing options. You agree to reimburse
us for any increased costs (taxes, regulatory reserves or assessments, etc.)
incurred by us in connection with borrowings at such pricing options.
We may also quote you "money market" rates (it being understood that we are
under no obligation to do so), establishing the fixed rate of interest at which
we are willing to make money market loans to you in the amount and for the
interest period requested. Money market loans may be requested for interest
periods of up to 60 days. We will require that money market loans be in minimum
increments of $1,000,000 or greater multiples of $100,000. No voluntary
prepayment of money market loans will be permitted.
All borrowings shall be evidenced by, and all principal and interest shall be
payable in accordance with the terms of a promissory note in the form attached
hereto. You authorize us to record each borrowing and the corresponding
information on the schedule forming a part of such promissory note, and this
schedule, together with our corresponding records of debit and credit, shall
constitute the official record of all borrowings under this facility. You agree
that this record shall be prima facie evidence of the amounts of the borrowings
under this facility.
The availability of loans under this facility is subject to our usual
condition that we continue to be satisfied with the affairs of New England
Business Service, Inc. and to any substantive changes in governmental
regulations or monetary policies.
If the foregoing satisfactorily sets forth the terms and conditions of this
line of credit, please execute and return the enclosed copy of this letter and
the attached promissory note. We are pleased to provide this line and look
forward to the ongoing development of our relationship.
Sincerely,
/s/ Thomas F. Farley /s/ Chris D. Francis
Thomas F. Farley Chris D. Francis
Vice President Assistant Vice President
Accepted:
New England Business Service, Inc.
By: /s/ John F. Fairbanks
-----------------------------
Title: Treasurer and Secretary
--------------------------
Date: November 1, 1994
---------------------------
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
COMMERCIAL PROMISSORY NOTE
$10,000,000 November 1, 1994
Boston, Massachusetts
FOR VALUE RECEIVED, the undersigned (jointly and severally if more than one)
promise(s) to pay to the order of THE FIRST NATIONAL BANK OF BOSTON (together
with any successors or assigns, the "Bank"), a national banking association with
its Head Office at 100 Federal Street, Boston, Massachusetts 02110, the
aggregate principal amount of all loans made by the Bank to the undersigned
pursuant to the letter agreement between the Bank and the undersigned dated
November 1, 1994, as shown in the schedule attached hereto (the "Note
Schedule"), together with interest on each loan from the date such loan is made
until the maturity thereof at the applicable rate set forth in the Note
Schedule. The principal amount of each loan shall be payable on demand or, if
demand is not earlier made, on the last day of the applicable interest period,
if any, indicated in the Note Schedule. Interest on the principal amount of each
loan shall be payable in arrears on the same day as the principal amount is due,
provided that (i) interest on each loan bearing interest at the Base Rate shall
be payable on the last day of each quarter, beginning on the first of such dates
occurring after the date of such loan and when such loan is due, and (ii) if the
maturity of any loan is more than three months from the date of such loan, then
interest shall be payable at intervals of three months and when such loan is
due. Loans which are shown as bearing interest at the Base Rate shall bear
interest at a rate per annum equal to the greater of (i) the rate of interest
announced from time to time by the Bank at its head office as its "Base Rate",
and (ii) the rate equal to the weighted average of the published rates on
overnight Federal Funds transactions with members of the Federal Reserve System
plus 1/2%. The applicable floating rate shall change as and when the Base Rate
changes, and changes in the Base Rate shall take effect on the day announced
unless otherwise specified in the announcement. Interest shall be calculated on
the basis of a 360-day year for the actual number of days elapsed including
holidays and days on which the Bank is not open for the conduct of banking
business.
SECTION 1. PAYMENT TERMS.
1.1 PAYMENTS; PREPAYMENTS. All payments hereunder shall be made by the
undersigned to the Bank in United States currency at the Bank's address
specified above (or at such other address as the Bank may specify), in
immediately available funds, on or before 2:00 p.m. (Boston, Massachusetts time)
on the due date thereof. Payments received by the Bank prior to the occurrence
of an Event of Default (as defined in Section 2) will be applied first to fees,
-----
expenses and other amounts due hereunder (excluding principal and interest);
second, to accrued interest; and third to outstanding principal; after the
------ -----
occurrence of an Event of Default, payments will be applied to the Obligations
under this Note as the Bank determines in its sole discretion. Subject to
Section 1.2, the undersigned may pay all or a portion of the amount owed earlier
than it is due without premium or other charge.
<PAGE>
2
1.2 PREPAYMENT CHARGE. If any loan made under this Note bears interest at a
fixed rate and any payment of principal is made for any reason on any day other
than the date scheduled therefor, whether voluntarily or as a result of
acceleration or otherwise, the undersigned shall reimburse the Bank for the
loss, if any, including any lost profits, resulting from such prepayment, as
reasonably determined by the Bank. The undersigned shall pay such loss upon
presentation by the Bank of a statement of the amount of such loss, setting
forth the Bank's calculation thereof, which notice and calculation (including
the method of calculation) shall be deemed true and correct absent manifest
error.
1.3 DEFAULT RATE. To the extent permitted by applicable law, upon and after
the occurrence of an Event of Default (whether or not the Bank has accelerated
payment of this Note), interest on principal and overdue interest shall, at the
option of the Bank, be payable on demand at a rate per annum equal to 2.00%
above the greater of the rate of interest otherwise payable hereunder or the
Base Rate.
(check if 1.4 DEPOSIT ACCOUNT. The undersigned shall
applicable) [ ] maintain with the Bank a commercial demand deposit
account. The undersigned requests and authorizes
the Bank to debit such account for amounts due
hereunder on each date such amounts become due.
The undersigned shall maintain sufficient collected
balances in this account to pay any such amounts as
they become due.
SECTION 2. DEFAULTS AND REMEDIES.
2.1 DEFAULT. The occurrence of any of the following events or conditions
shall constitute an "Event of Default" hereunder:
(a) (i) default in the payment when due of the principal of or interest
on this Note or (ii) any other default in the payment or performance of this
Note or of any other Obligation or (iii) default in the payment or
performance of any obligation of any Obligor to others for borrowed money or
in respect of any extension of credit or accommodation or under any lease;
(b) failure of any representation or warranty herein or in any agreement,
instrument, document or financial statement delivered to the Bank in
connection herewith to be true and correct in any material respect;
(c) default or breach of any condition under any mortgage, security
agreement, assignment of lease, or other agreement securing, constituting or
otherwise relating to any collateral for the Obligations;
(d) failure to furnish the Bank promptly on request with financial
information about, or to permit inspection by the Bank of any books, records
and properties of, any Obligor;
(e) merger, consolidation, sale of all or substantially all of the assets
or change in control of any Obligor; or
(f) any Obligor generally not paying its debts as they become due; the
death, dissolution, termination of existence or insolvency of any Obligor;
the appointment of a trustee, receiver, custodian, liquidator or other
similar official for such Obligor or any substantial part of its property or
the assignment for the benefit of creditors by any Obligor; or the
commencement of any proceedings under any bankruptcy or insolvency laws by or
against any Obligor.
<PAGE>
3
As used herein, "Obligation" means any obligation hereunder or otherwise of
any Obligor to the Bank or to any of its affiliates, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising;
and "Obligor" means the undersigned, any guarantor or any other person primarily
or secondarily liable hereunder or in respect hereof, including any person or
entity who has pledged or granted to the Bank a security interest in, or other
lien on, property on behalf of the undersigned as collateral for the
Obligations.
2.2 REMEDIES. Upon an Event of Default described in Section 2.1(f)
immediately and automatically, and upon or after the occurrence of any other
Event of Default at the option of the Bank, all Obligations of the undersigned
shall become immediately due and payable without notice or demand, and the Bank
shall then have in any jurisdiction where enforcement hereof is sought, the
rights and remedies of a secured party under the Uniform Commercial Code of
Massachusetts. All rights and remedies of the Bank are cumulative and are
exclusive of any rights or remedies provided by law or in equity or any other
agreement, and may be exercised separately or concurrently.
SECTION 3. MISCELLANEOUS.
3.1 WAIVER; AMENDMENT. No delay or omission on the part of the Bank in
exercising any right hereunder shall operate as a waiver of such right or of any
other right under this Note. No waiver of any right or any amendment hereto
shall be effective unless in writing and signed by the Bank, nor shall a waiver
on one occasion bar or waive the exercise of any such right on any future
occasion. Without limiting the generality of the foregoing, the acceptance by
the Bank of any late payment shall not be deemed to be a waiver of the Event of
Default arising as a consequence thereof. Each Obligor waives presentment,
demand, notice, protest, and all other demands and notices in connection with
the delivery, acceptance, performance, default or enforcement of this Note or of
any collateral for the Obligations, and assents to any extensions or
postponements of the time of payment and to any other indulgences under this
Note or with respect to any such collateral, to any substitutions, exchanges or
releases of any such collateral, and to any additions or releases of any other
parties or persons primarily or secondarily liable hereunder, that from time to
time may be granted by the Bank in connection herewith.
3.2 TAXES. The undersigned agrees to indemnify the Bank and hold it harmless
from and against any transfer taxes, documentary taxes, assessments or charges
made by any governmental authority by reason of the execution, delivery, and
performance of this Note or any collateral for the Obligations.
3.3 EXPENSES. The undersigned will pay on demand all reasonable expenses of
the Bank in connection with the preparation, administration, default,
collection, waiver or amendment of the Obligations or in connection with the
Bank's exercise, preservation or enforcement of any of its rights, remedies or
options thereunder, including, without limitation, fees of outside legal counsel
or the allocation costs of in-house legal counsel, accounting, consulting,
brokerage or other similar professional fees or expenses, and any fees or
expenses associated with any travel or other costs relating to any appraisals or
examinations conducted in connection with the Obligations or any collateral
therefor, and the amount of all such expenses shall, until paid, bear interest
at the rate applicable to principal hereunder (including any default rate) and
be an Obligation secured by any such collateral.
3.4 BANK RECORDS. The entries on the records of the Bank (including any
appearing on this Note) shall be prima facie evidence of the aggregate principal
amount outstanding under this Note and interest accrued thereon.
<PAGE>
4
3.5 INFORMATION. The undersigned shall furnish the Bank from time to time
with such financial statements and other information relating to any Obligor or
any collateral securing this Note as the Bank may require. All such information
shall be true and correct and fairly represent the financial condition and the
operating results of such Obligor as of the date and for the periods for which
the same are furnished. The undersigned shall permit representatives of the Bank
to inspect its properties and its books and records, and to make copies or
abstracts thereof. Each Obligor authorizes the Bank to release and disclose to
its affiliates, agents and contractors any financial statements and other
information relating to said Obligor provided to or prepared by or for the Bank
in connection with any Obligation. The undersigned will notify the Bank promptly
of the existence or upon the occurrence of any Event of Default or event which,
with the giving of notice or the passage of time or both, would become an Event
of Default.
3.6 GOVERNING LAW; CONSENT TO JURISDICTION. This Note is intended to take
effect as a sealed instrument and shall be governed by, and construed in
accordance with, the laws of The Commonwealth of Massachusetts, without regard
to its conflicts of law rules. The undersigned agrees that any suit for the
enforcement of this Note may be brought in the courts of such state or any
Federal Court sitting in such state and consents to the non-exclusive
jurisdiction of each such court and to service of process in any such suit being
made upon the undersigned by mail at the address specified below. The
undersigned hereby waives any objection that it may now or hereafter have to the
venue of any such suit or any such court or that such suit was brought in an
inconvenient court.
3.7 SEVERABILITY; AUTHORIZATION TO COMPLETE; PARAGRAPH HEADINGS. If any
provision of this Note shall be invalid, illegal or unenforceable, such
provisions shall be severable from the remainder of this Note and the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby. The Bank is hereby authorized, without further
notice, to fill in any blank spaces on this Note, and to date this Note as of
the date funds are first advanced hereunder. Paragraph headings are for the
convenience of reference only and are not a part of this Note and shall not
affect its interpretation.
3.8 JURY WAIVER. THE BANK (BY ITS ACCEPTANCE OF THIS NOTE) AND THE
UNDERSIGNED AGREE THAT NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A)
SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION
BASED UPON, OR ARISING OUT OF, THIS NOTE, ANY RELATED INSTRUMENTS, ANY
COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR
(B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH SHALL
BE SUBJECT TO NO EXCEPTIONS. NEITHER THE BANK NOR THE UNDERSIGNED HAS AGREED
WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT
BE FULLY ENFORCED IN ALL INSTANCES.
Address:
New England Business Service, Inc.
500 Main Street
--------------------------------------
(Number) (Street) By: /s/ John F. Fairbanks
--------------------------------
Groton, MA 01471 (Type Name) John F. Fairbanks
-------------------------------------- ------------------------
(City, State) (Zip Code)
Title: Treasurer and Secretary
-----------------------------
<PAGE>
SCHEDULE
$10,000,000 Note dated November 1, 1994 of New England Business Service, Inc.,
payable to the order of THE FIRST NATIONAL BANK OF BOSTON.
<TABLE>
<CAPTION>
Principal Last day Date & Amount
Date of Amount of Interest Interest of Payment Notation
Loan of Loan Period Rate* Received Made by
---------- ------------- -------------- ------------ ---------------- ----------
<S> <C> <C> <C> <C> <C>
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
__________:_____________:______________:____________:________________:__________
</TABLE>
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
DEFERRED COMPENSATION PLAN
EFFECTIVE JUNE 25, 1994
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
SECTION 1. ADOPTION AND GENERAL MATTERS...................................1
1.1 ADOPTION.............................................................1
1.2 PURPOSE OF THE PLAN..................................................1
1.3 NATURE OF THE PLAN...................................................1
1.4 APPLICABILITY OF ERISA TO THE PLAN...................................1
SECTION 2. DEFINITIONS....................................................1
2.1 BENEFICIARY..........................................................1
2.2 BOARD................................................................1
2.3 CHANGE OF CONTROL....................................................2
2.4 CODE.................................................................2
2.5 COMPANY..............................................................2
2.6 COMPENSATION.........................................................2
2.7 DEFERRAL.............................................................2
2.8 EARLY RETIREMENT AGE.................................................2
2.9 EFFECTIVE DATE.......................................................2
2.10 ELIGIBLE EMPLOYEE...................................................2
2.11 HARDSHIP............................................................3
2.12 NORMAL RETIREMENT AGE...............................................3
2.13 PARTICIPANT.........................................................3
2.14 PARTICIPATING EMPLOYER..............................................3
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
2.15 PLAN............................................................3
2.16 PLAN YEAR.......................................................3
2.17 RETIREMENT COMMITTEE............................................3
2.18 SEPARATION FROM SERVICE.........................................3
2.19 TRUST AGREEMENT.................................................3
2.20 TRUSTEE.........................................................3
2.21 TRUST FUND......................................................3
SECTION 3. PARTICIPATION.............................................4
3.1 ELIGIBILITY......................................................4
3.2 TERMINATION OF ELIGIBILITY.......................................4
SECTION 4. DEFERRAL OF COMPENSATION..................................4
4.1 ELECTION AND CREDITING OF DEFERRALS..............................4
4.2 CONDITIONS AND LIMITATIONS ON DEFERRALS..
(a) Commencement of Deferrals......................................4
(i) General Rule...............................................4
(ii) Special Rule for Initial Eligibility.......................5
(b) Continuation, Modification and Termination of Deferrals........5
(i) General Rule................................................5
(c) Maximum Permitted Deferral.....................................5
SECTION 5. TIME OF BENEFIT PAYMENT...................................6
5.1 ELIGIBILITY FOR PAYMENT..........................................6
5.2 BENEFIT COMMENCEMENT DATE.......................................6
(a) Time of Commencement...........................................6
(b) Benefit Commencement Election..................................7
5.3 HARDSHIP WITHDRAWALS.............................................7
(a) Definition.....................................................7
(b) Procedure......................................................7
(c) Applicability to Benefits in Pay Status........................8
SECTION 6. AMOUNT AND FORMS OF BENEFIT PAYMENT.......................8
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
6.1 AMOUNT OF BENEFITS.................................................... 8
6.2 BENEFIT FORMS AVAILABLE............................................... 8
(a) Forms of Benefit for Participants.................................. 8
(i) Normal Form of Benefits......................................... 8
(ii) Installment Benefit Election.................................... 8
(b) Forms of Benefit for Surviving Spouse Beneficiaries................ 9
(i) Normal Form of Benefit.......................................... 9
(ii) Installment Benefit Election.................................... 9
(c) Form of Benefit for Other Beneficiaries............................ 9
SECTION 7. BENEFICIARIES..................................................10
7.1 DESIGNATION..........................................................10
7.2 FAILURE TO DESIGNATE A BENEFICIARY....................................10
SECTION 8. PLAN ADMINISTRATION............................................10
8.1 RETIREMENT COMMITTEE..................................................10
8.2 INDEMNIFICATION.......................................................11
8.3 OWNERSHIP OF ASSETS...................................................11
8.4 ACCOUNTS AND EXPENSES.................................................12
8.5 INVESTMENTS...........................................................12
(a) In General.........................................................12
(b) Investments in Company Stock.......................................12
SECTION 9. TRUST AGREEMENT................................................13
9.1 TRUST FUND............................................................13
9.2 PRIORITY OF CLAIMS ON ASSETS OF THE FUND..............................13
9.3 DEPOSIT OF DEFERRALS IN THE FUND......................................13
SECTION 10. AMENDMENT AND TERMINATION.....................................14
10.1 AMENDMENT............................................................14
10.2 TERMINATION..........................................................14
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
SECTION 11. MISCELLANEOUS..................................................14
11.1 LIMITATIONS OF RIGHTS; EMPLOYMENT RELATIONSHIP........................14
11.2 DETERMINATION OF BENEFITS, CLAIMS, PROCEDURE AND ADMINISTRATION.......15
(a) Claim................................................................15
(b) Decision on Claim....................................................15
(c) Request for Review...................................................16
(d) Review of Decisions..................................................16
11.3 ARBITRATION...........................................................16
11.4 NON-ASSIGNABILITY OF BENEFITS.........................................17
11.5 FACILITY OF PAYMENTS..................................................17
11.6 OBLIGATIONS TO WITHHOLD AND PAY TAXES.................................17
11.7 REPRESENTATIONS.......................................................17
11.8 SEVERABILITY..........................................................18
11.9 APPLICABLE LAW........................................................18
</TABLE>
iv
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
DEFERRED COMPENSATION PLAN
Section 1. Adoption and General Matters
1.1 Adoption. This Deferred Compensation Plan is hereby
--------
adopted as set forth in the following pages, effective June 25, 1994, by New
England Business Service, Inc.
1.2 Purpose of the Plan. The purpose of the Plan is to enable employees
-------------------
who become covered under the Plan to enhance their retirement security by
providing tax-deferred benefits which will be payable on account of retirement,
death or other termination from employment, and financial hardships due to
unforeseeable emergencies.
1.3 Nature of the Plan. The Plan shall be maintained for the exclusive
------------------
benefit of covered employees of Participating Employers and is intended to
comply with the requirements of the Internal Revenue Code of 1986, as amended,
and regulations thereunder, and other applicable laws, as such laws apply to
deferred compensation plans that are not intended to be "qualified plans"
pursuant to Section 401(a) of the Code and are maintained by employers which are
not "eligible employers" within the meaning of Section 457(e)(1) of the Code.
1.4 Applicability of ERISA to the Plan. For purposes of the Employee
----------------------------------
Retirement Income Security Act of 1974, as amended, the Participating Employers
and each Participant intend that this Plan be considered an "unfunded"
arrangement (within the meaning of Sections 201, 301 and 401 of such Act) that
is maintained primarily to provide deferred compensation benefits for the
Participants, each of whom is a member of a select group of management or highly
compensated employees of a Participating Employer.
Section 2. Definitions
For purposes of the Plan, the following terms shall have the following
meanings:
2.1 "Beneficiary" means the individual(s), trust(s), or estate entitled
-----------
to receive benefits under this Plan after the death of a Participant or another
Beneficiary.
2.2 "Board" means the board of directors of the Company.
-----
<PAGE>
2.3 "Change of Control" means the occurrence of a "Business
-----------------
Combination" (as such term is defined in Article 14 of the Company's Certificate
of Incorporation as in effect on the Effective Date of this Plan) in
circumstances requiring the affirmative vote of the holders of at least eighty
percent (80%) of the Company's issued and outstanding common stock pursuant to
the provisions of Article 14 of the Company's Certificate of Incorporation as in
effect on the Effective Date of this Plan.
2.4 "Code" means the Internal Revenue Code of 1986, as amended, and
----
including all regulations thereunder.
2.5 "Company" means New England Business Service, Inc.
-------
2.6 "Compensation" means the total remuneration earned by a Participant
------------
for personal services rendered to a Participating Employer for any Plan Year,
regardless of when such remuneration is actually paid (or would be paid if not
deferred pursuant to this Plan). Compensation shall include (a) amounts deferred
under this Plan, (b) amounts deferred under any other deferred compensation plan
and (c) amounts contributed from the Participant's remuneration under any plan
maintained by a Participating Employer pursuant to Code Sections 125 or 401(k).
Compensation shall not include employer contributions to any employee benefit
plan and all benefits provided under any such plan.
2.7 "Deferral" means the annual amount of Compensation the
--------
Participating Employer and a Participant have agreed to defer on behalf of the
Participant.
2.8 "Early Retirement Age" has the meaning given such term from time to
--------------------
time in the Pension Plan for Employees of New England Business Service, Inc.
2.9 "Effective Date" means June 25, 1994.
--------------
2.10 "Eligible Employee" means any employee of a Participating Employer
-----------------
designated by the Participating Employer as eligible to participate in this
Plan, provided that no such designation shall be made of any employee unless the
board of directors or the chief executive officer of the Participating Employer
(with the concurrence of the Company's Corporate Compensation and Benefits
Director or Vice President of Human Resources) has determined that
-2-
<PAGE>
such employee is a member of a select group of management or highly compensated
employees of the Participating Employer.
2.11 "Hardship" means a financial need that results from an
--------
unforeseeable emergency as further defined in Subsection 5.3 of the Plan.
2.12 "Normal Retirement Age" means age 65.
---------------------
2.13 "Participant" means a present or former Eligible Employee who is or
-----------
has been enrolled in the Plan and who retains the right to receive any benefits
under the Plan.
2.14 "Participating Employer" means the Company and any present or
----------------------
future direct or indirect subsidiary of the Company, provided that (a) the
Retirement Committee approves the subsidiary's participation and (b) the board
of directors of such subsidiary accepts this Plan for its Eligible Employees.
For this purpose, the term "subsidiary" shall include (a) any corporation if
more than 50% of its capital stock is owned by the Company (either directly or
through any one or more such subsidiaries) and (b) any other corporation
designated as such by the Board.
2.15 "Plan" means this New England Business Service, Inc. Deferred
----
Compensation Plan, as amended from time to time.
2.16 "Plan Year" means the Company's fiscal year.
---------
2.17 "Retirement Committee" means the committee appointed pursuant to
--------------------
Subsection 8.1 of this Plan.
2.18 "Separation from Service" means the termination of a Participant's
-----------------------
employment with the Participating Employer for any reason, including the death
of the Participant.
2.19 "Trust Agreement" means the agreement between the Company and the
---------------
Trustee providing for the Trust Fund.
2.20 "Trustee" means The First National Bank of Boston or any successor
-------
appointed by the Company to administer the Trust Fund.
2.21 "Trust Fund" means the cash, securities and other property held by
----------
the Trustee for purposes of paying any or all of the benefits under the Plan.
-3-
<PAGE>
Section 3. Participation
3.1 Eligibility. Each Eligible Employee may become a Participant either
-----------
(a) on the later of the Effective Date and the first day of the first month
following his or her designation as an Eligible Employee, or (b) on the first
day of any subsequent Plan Year while he or she remains an Eligible Employee.
3.2 Termination of Eligibility. A Participant whose employment with his
--------------------------
or her Participating Employer is terminated for any reason or who otherwise
ceases for any reason to be an Eligible Employee shall remain a Participant in
the Plan so long as he or she retains the right to receive any benefits under
the Plan, but shall immediately stop making further Deferrals under the Plan. An
Eligible Employee who has not already become a Participant shall no longer be
eligible to participate in the Plan upon ceasing for any reason to be an
Eligible Employee.
Section 4. Deferral of Compensation
4.1 Election and Crediting of Deferrals. Subject to the conditions and
-----------------------------------
limitations of Subsection 4.2, each Participating Employer shall credit on
account of each Plan Year for each Participant employed by it a Deferral equal
to the amount for the Plan Year elected by the Participant. Each Participant
shall make, modify or terminate any such Deferral election on the election
agreement form prescribed by the Retirement Committee. The amount of each
Deferral hereunder shall be credited to the Deferral account maintained for the
Participant pursuant to Subsection 8.4 as of the date that such Deferral amount
would have otherwise been paid to the Participant as Compensation.
4.2 Conditions and Limitations on Deferrals.
---------------------------------------
(a) Commencement of Deferrals.
-------------------------
(i) General Rule. Except as allowed pursuant to subparagraph (ii)
------------
below, no deferral shall be made pursuant to any Deferral election agreement
until the start of the Plan Year after the Plan Year in which the signed
election agreement has been received by the Retirement Committee.
-4-
<PAGE>
(ii) Special Rule for Initial Eligibility. Notwithstanding anything to
------------------------------------
the contrary in subparagraph (i) above, any person who is an Eligible Employee
on the Effective Date may file a Deferral election agreement with the Retirement
Committee within 30 days after the Effective Date and any person who becomes an
Eligible Employee subsequent to the Effective Date may file a Deferral election
agreement with the Retirement Committee within 30 days after his or her
designation as an Eligible Employee, and Deferrals pursuant to any such election
agreement shall thereafter begin with the first pay date as is administratively
feasible following receipt of the agreement by the Retirement Committee and/or
shall apply to any bonus payable on account of the Plan Year in which such
election agreement was received by the Retirement Committee.
(b) Continuation, Modification and Termination of Deferrals.
-------------------------------------------------------
(i) General Rule. Deferrals shall be made pursuant to any Deferral
------------
election agreement until the agreement is terminated or superseded by a new
election agreement that is executed and filed in accordance with Subsection 4.1
of the Plan. Furthermore, except as required pursuant to subparagraph (ii)
below, no Deferral election may be terminated or modified except effective at
the start of the next Plan Year after the Plan Year in which the new election
agreement has been received by the Retirement Committee.
(ii) Special Rules for Termination or Reduction of Deferrals.
-------------------------------------------------------
Notwithstanding anything to the contrary in subparagraph (i) above: (I) No
Deferral shall be made on behalf of any Participant who has ceased to be an
Eligible Employee for any reason and (II) upon determination by the Retirement
Committee pursuant to paragraph (b) of Subsection 5.3 of the Plan that a
Hardship exists with respect to any Participant, effective with the first pay
date as is administratively feasible following such determination, the
Participant's rate of Deferrals shall be reduced or suspended to the extent
necessary to alleviate the Hardship before any distribution is made to the
Participant pursuant to Subsection 5.3, and such reduction or suspension shall
continue at least until the start of the following Plan Year.
(c) Maximum Permitted Deferral. The Retirement Committee may determine
--------------------------
a maximum limit on the annual Deferral that any Participant may elect from time
to time. The
-5-
<PAGE>
Committee shall not be obligated to set any such limits at any time and, even if
it does so, it may in its absolute discretion (i) set a different limit for each
Participant and (ii) change any such limit prospectively prior to the start of
any Plan Year. No Participant may elect a Deferral for any Plan Year that
exceeds the limit (if any) set by the Committee for such Plan Year with respect
to such Participant.
Section 5. Time of Benefit Payment
5.1 Eligibility for Payment. Benefits shall be paid from the Plan only
-----------------------
upon one or both of the following events: (a) Separation from Service and (b)
Hardship. Payments on account of Separation from Service shall be made in
accordance with Subsection 5.2 of the Plan and payments on account of Hardship
shall be made in accordance with Subsection 5.3 of the Plan.
5.2 Benefit Commencement Date.
-------------------------
(a) Time of Commencement. Unless a Participant or Beneficiary (as the
--------------------
case may be) has made a timely election to defer benefits with the approval of
the Retirement Committee pursuant to paragraph (b) of this Subsection 5.2, the
Participant's benefits under this Plan shall be paid or begin 60 days after the
date of the Participant's Separation from Service. Notwithstanding the foregoing
and any provision of the Trust Agreement, at any time after a Participant's
Separation from Service and prior to the earlier of (a) payment or commencement
of the Participant's benefits pursuant to this Subsection 5.2 and (b) the date
on which a Change of Control occurs, the Company may elect unilaterally to defer
payment or commencement of all or any portion of the Participant's benefits
until the next July following the Participant's Separation from Service if the
Participant was a "covered employee" within the meaning of Code Section 162(m)
at the time of his or her Separation from Service. Any such election by the
Company may be made by either the Board, the Retirement Committee or the
Company's chief executive officer, and shall be evidenced in writing and sent to
the Participant (at his or her last known address) and to the Trustee.
-6-
<PAGE>
(b) Benefit Commencement Election. Subject to the Retirement
-----------------------------
Committee's approval, a Participant or Beneficiary may make a one-time
irrevocable election to defer payment of benefits to any determinable date
beyond 60 days after the Participant's Separation from Service, provided that
such election is made on the form prescribed by the Retirement Committee and is
received by the Retirement Committee within 30 days after the Participant's
Separation from Service. The Retirement Committee shall have absolute discretion
to approve, disapprove or modify before approving any such election to defer
benefits.
5.3 Hardship Withdrawals
--------------------
(a) Definition. A Hardship exists when a Participant has suffered a
----------
severe financial setback resulting from any of the following: (i) a sudden and
unexpected illness or accident of the Participant or of a dependent (within the
meaning of Code Section 152(a)) of the Participant, (ii) loss of or to the
Participant's property due to casualty, or (iii) other similar extraordinary and
unforeseeable circumstances, arising in each case from events beyond the
Participant's control. Whether circumstances constitute an unforeseeable
emergency depends upon the facts of each case. Moreover, in any event, no amount
may be paid to a Participant pursuant to this Subsection 5.3 to the extent that
any claimed Hardship is or may be relieved (i) through reimbursement or
compensation by insurance or otherwise, (ii) by liquidation of the Participant's
assets, to the extent that such liquidation would not itself cause severe
financial hardship, or (iii) by cessation of Deferrals under this Plan. Hardship
shall not include payment of college expenses or the purchase of a home.
(b) Procedure. A Participant may request withdrawal of a necessary
---------
portion of his or her benefits under the Plan on account of Hardship by
submitting a written request to the Retirement Committee, accompanied by
evidence of the existence of all applicable Hardship conditions specified in
paragraph (a) of this Subsection 5.3. The Retirement Committee shall review each
such request and determine whether payment of any amount is justified. If
payment is justified, the amount shall be limited to an amount reasonably needed
to meet the demonstrated financial Hardship. The Retirement Committee shall also
determine the form of
-7-
<PAGE>
any payment to be made to a Participant on account of a demonstrated Hardship.
Any amount remaining in the Participant's account after any such Hardship
withdrawal shall continue to be held subject to the Plan for later distribution
in accordance with the provisions of this Section 5 and of Section 6 of the
Plan.
(c) Applicability to Benefits in Pay Status. The provisions of this
---------------------------------------
Subsection 5.3 shall be applicable to benefits in pay status pursuant to Section
6 of this Plan if the Participant or Beneficiary receiving or awaiting such
benefit payments suffers a Hardship and makes an application for a Hardship
withdrawal pursuant to paragraph (b) of this Subsection 5.3 and such application
is approved by the Retirement Committee.
Section 6. Amount and Forms of Benefit Payment
6.1 Amount of Benefits. A Participant's benefits under the Plan (and
------------------
the benefits of anyone claiming through the Participant, including without
limitation any Beneficiary) shall equal at any time the balance at that time in
the Deferral account maintained for the Participant pursuant to Subsection 8.4
of the Plan.
6.2 Benefit Forms Available.
-----------------------
(a) Forms of Benefit for Participants.
---------------------------------
(i) Normal Form of Benefits. Unless a Participant has made a timely
-----------------------
election to receive installment benefits with the approval of the Retirement
Committee pursuant to subparagraph (ii) below, the benefits of a Participant who
has a Separation from Service at any time and for any reason other than death
shall be paid in one lump sum.
(ii) Installment Benefit Election. Subject to the Retirement Committee's
----------------------------
approval, a Participant who has had no Separation from Service before attaining
the earlier of his or her Early Retirement Age or Normal Retirement Age may make
a one-time irrevocable election to receive his or her benefits in substantially
equal annual installments over a period of years not to exceed the Participant's
life expectancy or the joint life expectancies of the Participant and his or her
spouse, in each case determined as of the date that the installment payments
begin. Any such
-8-
<PAGE>
election shall be made on the form prescribed by the Retirement Committee and
must be received by the Retirement Committee no later than 30 days before the
benefit is to be paid pursuant to Subsection 5.2 of the Plan (after taking into
account any election made by the Participant under paragraph (b) of Subsection
5.2). The Retirement Committee shall have absolute discretion to approve,
disapprove or modify (including but not limited to changing the number of
installments) before approving any such election to receive installment
benefits.
(b) Forms of Benefit for Surviving Spouse Beneficiaries.
---------------------------------------------------
(i) Normal Form of Benefit. Unless a surviving spouse Beneficiary of a
----------------------
deceased Participant has made a timely election to receive installment benefits
with the approval of the Retirement Committee pursuant to subparagraph (ii)
below, the benefits of such surviving spouse Beneficiary shall be paid in one
lump sum.
(ii) Installment Benefit Election. Subject to the Retirement Committee's
----------------------------
approval, a surviving spouse Beneficiary may make a one-time irrevocable
election to receive his or her benefits in substantially equal annual
installments over a period of years not to exceed the surviving spouse's life
expectancy, as determined on the date that the installment payments begin. Any
such election shall be made on the applicable form prescribed by the Retirement
Committee and must be received by the Retirement Committee no later than 30 days
before the benefit is to be paid pursuant to Subsection 5.2 of the Plan (after
taking into account any election made by the surviving spouse Beneficiary under
paragraph (b) of Subsection 5.2). The Retirement Committee shall have absolute
discretion to approve, disapprove or modify (including but not limited to
changing the number of installments) before approving any such election to
receive installment benefits.
(c) Form of Benefit for Other Beneficiaries. Death benefits to any
---------------------------------------
Beneficiary who is not the surviving spouse of the Participant shall be paid in
one lump sum.
-9-
<PAGE>
Section 7. Beneficiaries
7.1 Designation. Each Participant (and each surviving Beneficiary who
-----------
is awaiting or receiving payment of benefits under the Plan) shall have the
right to designate a Beneficiary, and to amend or revoke such designation at any
time. Each such designation, amendment or revocation shall be made on the form
prescribed by the Retirement Committee, and shall be effective only upon receipt
by the Retirement Committee.
7.2 Failure to Designate a Beneficiary. If no designated Beneficiary
----------------------------------
survives the Participant (or a surviving Beneficiary) and benefits are payable
following the Participant's (or surviving Beneficiary's) death, the Retirement
Committee shall direct that payment of benefits be made to the person or persons
in the first of the following classes of successive preference Beneficiaries:
(a) Spouse
(b) descendants, Per Stirpes
(c) Parents
(d) Siblings
(e) Estate
Section 8. Plan Administration
8.1 Retirement Committee. The Plan shall be administered by a
--------------------
Retirement Committee of one or more members appointed by the Board, and shall be
the committee serving from time to time as the Retirement Committee of the
Pension Plan for Employees of New England Business Service, Inc. unless a
different appointment is then in effect under this Plan. Each member shall serve
at the pleasure of the Board of Directors. The Retirement Committee shall act by
majority decision of its members. The Committee shall have responsibility for
the operation and administration of the Plan and shall have the power and
authority to adopt, interpret, alter, amend or revoke all forms, rules and
regulations necessary to administer the Plan, to interpret all provisions of the
Plan and determine all questions of eligibility for participation in
-10-
<PAGE>
and benefits under the Plan and all other issues of administration, and to
delegate ministerial duties and employ such outside professionals as may be
required for prudent administration of the Plan. The Retirement Committee shall
also have the authority to enter into agreements on behalf of any Participating
Employer as necessary to implement this Plan. The members of the Retirement
Committee, if otherwise Eligible Employees, may participate in the Plan, but
shall not make decisions of the Committee solely with respect to their own
benefits or Hardship withdrawals.
8.2 Indemnification. Each Participating Employer shall jointly and
---------------
severally indemnify and save harmless any individual acting as a member of the
Retirement Committee or in any other fiduciary capacity from, against, for and
in respect of any and all damages, losses, obligations, liabilities, liens,
deficiencies, attorneys' fees, costs and expenses incident to the performance of
such person's duties unless resulting from the gross negligence, willful
misconduct, or lack of good faith of such individual. Such indemnification shall
apply to any such individual even though at the time liability is imposed the
individual was no longer acting in a fiduciary capacity or as a member of the
Retirement Committee.
8.3 Ownership of Assets. All amounts deferred under this Plan, all
-------------------
property and rights purchased with such amounts, and all income attributable to
such amounts, property or rights shall remain (until either paid over to the
Trustee or made available to the Participant or Beneficiary) solely the property
and rights of the relevant Participating Employer (without being restricted to
the provision of benefits under this Plan) and shall be subject to the claims of
the general creditors of the Company and of the Participating Employer.
Notwithstanding the foregoing, nothing in this Plan shall be construed to
prohibit any one or more Participants or Beneficiaries from purchasing insurance
to protect against loss on account of the provisions of this Subsection 8.3, and
the Participating Employers shall cooperate in any effort to obtain such
insurance; provided that any such insurance shall be obtained, owned and paid
for solely by the insured persons and not by any Participating Employer.
-11-
<PAGE>
8.4 Accounts and Expenses. The Retirement Committee shall establish and
---------------------
maintain an unfunded bookkeeping account on behalf of each Participant and
surviving Beneficiary who is awaiting or receiving payment of benefits under the
Plan. Accounts shall be valued at least once each Plan Year and each Participant
(or surviving Beneficiary) shall receive written notice of his or her account
balance following such valuation. Account balances shall reflect the Deferral
amounts and any earnings or losses attributable to the investment of such
amounts, and shall be reduced by (a) administrative, investment and other fees,
in such amounts and at such times as the Retirement Committee deems appropriate
for the maintenance of this Plan and (b) benefits paid to or on behalf of the
Participant and/or anyone claiming through the Participant (including without
limitation any Beneficiary). Notwithstanding the foregoing, to the extent
provided for in the Trust Agreement, each Participating Employer shall pay its
share of all fees and expenses incurred in administering the Plan, including
those necessary for the administration of the Trust Fund, and all taxes imposed
on the Trust Fund. The Participating Employers otherwise shall have the
discretion, but not the obligation, to pay any fees, expenses or taxes that
could be paid from the Trust Fund pursuant to the Trust Agreement.
8.5 Investments.
-----------
(a) In General. Except as otherwise provided in the Trust Agreement, a
----------
Participant or Beneficiary may request that Deferrals be allocated among
available investment options established from time to time by the Retirement
Committee. The initial allocation request may be made at the time of enrollment
in the Plan. Investment allocation requests shall remain effective with regard
to all subsequent Deferrals, until changed in accordance with the provisions of
this Subsection 8.5. A Participant or Beneficiary may make or change his or her
allocation request on the form prescribed by the Retirement Committee. No such
request shall be effective until actually received by the Retirement Committee
and shall thereafter become effective as soon as administratively feasible.
(b) Investments in Company Stock. Notwithstanding the foregoing, if at
----------------------------
any time the Retirement Committee permits Participants or Beneficiaries to
request that investments of
-12-
<PAGE>
Deferrals or Deferral accounts be made in securities issued by the Company or by
any Participating Employer, such investments shall be restricted as follows: (i)
immediately after the making of each such investment, not more than 20% in value
of the assets of the Trust Fund shall consist of such securities and (ii) no
such security shall be purchased pursuant to a Participant's request until the
next January 2 (or the first business day following such date) which falls at
least 6 months after the date that such request is received by the Retirement
Committee on the prescribed form.
Section 9. Trust Agreement
9.1 Trust Fund. As a part of this Plan, the Company will enter into a
----------
Trust Agreement with a trustee under which the Trustee shall receive the
contributions of the Participating Employers to the Trust Fund. The Trustee
shall hold, invest and distribute the Trust Fund in accordance with the terms
and provisions of the Plan and of the Trust Agreement. Subject to the terms of
the Trust Agreement, the Company shall have the right to replace the Trustee
(and any successor Trustee) with a successor Trustee. All rights associated with
assets of the Trust Fund shall be exercised by the Trustee or the person
designated by the Trustee, and in no event shall be exercised by or rest with
Plan Participants. Notwithstanding the foregoing, the Trustee in its sole
discretion may solicit the views of any one or more Participants on any matter
(and shall do so concerning the voting of any shares of the Company's common
stock held in the Trust Fund), provided that the Trustee shall retain the sole
power to exercise all rights conferred on the Trustee pursuant to this
Subsection 9.1 and the Trust Agreement.
9.2 Priority of Claims on Assets of the Fund. The contributions of the
----------------------------------------
Participating Employers to the Trust Fund shall be for the benefit of
Participants and their Beneficiaries and no part of the Trust Fund shall revert
to the Participating Employers except as provided in the Trust Agreement from
time to time.
9.3 Deposit of Deferrals in the Fund. As soon as is administratively
--------------------------------
feasible after any Deferral amount is withheld from a Participant's
Compensation, the relevant Participating
-13-
<PAGE>
Employer shall transfer the full amount of such Deferral to the Trustee, to be
held in the Trust Fund pursuant to the Trust Agreement. Any such transfer may be
made in cash or in kind (including but not limited to shares of the Company's
common stock), at the sole option of the relevant Participating Employer. Each
Participating Employer shall have the right at any time and from time to time,
in its sole discretion, to substitute assets of equal fair market value for any
asset held in the Trust Fund that is attributable to Deferral amounts
transferred by that Participating Employer. This right is exercisable by a
Participating Employer in a non-fiduciary capacity without the approval or
consent of any person in a fiduciary capacity.
Section 10. Amendment and Termination
10.1 Amendment. The Company shall have the right to amend this Plan, at
---------
any time and from time to time, in whole or in part; provided, however, that no
amendment may reduce the balance in any Participant's Deferral account as of the
date of such amendment.
10.2 Termination. Although the Company has established this Plan with a
-----------
bona fide intention and an expectation to maintain the Plan indefinitely, the
Company may terminate or discontinue this Plan in whole or in part at any time
without any liability for such termination or discontinuance; provided, however,
that no such termination or discontinuance may reduce the balance in any
Participant's Deferral account as of the date of such termination or
discontinuance. Upon termination or discontinuance of the Plan, all Deferrals
shall cease. At the Retirement Committee's sole discretion, all Deferral
accounts shall be either distributed immediately as benefits or retained in the
Trust Fund until each Participant has a Separation from Service or a Hardship
and benefits thereafter commence pursuant to Sections 5 and 6 of the Plan, as
then in effect.
Section 11. Miscellaneous
11.1 Limitations of Rights; Employment Relationship. Neither the
----------------------------------------------
establishment of this Plan nor any modification thereof, nor the creation of any
fund or account, nor the payment
-14-
<PAGE>
of any benefits, shall be construed as giving a Participant or any other person
any legal or equitable right against any Participating Employer except as
provided in this Plan. In no event shall the terms of employment of any employee
be modified or in any way be affected by the Plan.
11.2 Determination of Benefits, Claims, Procedure and Administration.
---------------------------------------------------------------
(a) Claim. A person who believes that he or she is being denied a
-----
benefit to which he or she is entitled under the Plan (hereinafter referred to
as a "Claimant") may file a written request for such benefit with the Company,
setting forth his or her claim. The request must be addressed to the Retirement
Committee in care of the Company at its then principal place of business.
(b) Decision on Claim. Upon receipt of a claim, the Retirement
-----------------
Committee shall advise the Claimant that a reply will be forthcoming within 90
days and shall, in fact, deliver such reply within such period. The Retirement
Committee may, however, extend the reply period for an additional 90 days for a
reasonable cause.
If the claim is denied in whole or in part, the Retirement Committee
shall adopt a written opinion, using language calculated to be understood by the
Claimant, setting forth:
(i) The specific reason or reasons for such denial
(ii) The specific reference to pertinent provisions of the Plan on which
such denial is based
(iii) A description of any additional material or information necessary
for the Claimant to perfect his or her claim and an explanation of why such
material or such information is necessary
(iv) Appropriate information as to the steps to be taken if the Claimant
wishes to submit the claim for review
(v) The time limits for requesting a review and for completing any such
review.
-15-
<PAGE>
(c) Request for Review. Within 60 days after the receipt by the
------------------
Claimant of the written opinion described above, the Claimant may request in
writing that the chief executive officer of the Company (or his designee)
review the determination of the Retirement Committee. Such request must be
addressed to the chief executive officer of the Company, at the Company's then
principal place of business. The Claimant or his or her duly authorized
representative may, but need not, review the pertinent documents and submit
issues and comments in writing for consideration by the chief executive officer
or his designee. If the Claimant does not request a review of the Retirement
Committee's determination by the chief executive officer of the Company within
such 60-day period, he or she shall be barred and estopped from challenging the
Retirement Committee's determination.
(d) Review of Decisions. Within 60 days after receipt of a request for
-------------------
review, the chief executive officer of the Company or his designee shall review
the Retirement Committee's determination. After considering all materials
presented by the Claimant the chief executive officer or his designee shall
render a written opinion, written in a manner calculated to be understood by the
Claimant, setting forth the specific reasons for a decision and containing
specific references to the pertinent provisions of the Plan on which the
decision is based. If special circumstances require that the 60-day time period
be extended, the chief executive officer or his designee shall so notify the
Claimant and shall render the decision as soon as possible, but not later than
120 days after receipt of the request for review.
11.3 Arbitration. Any dispute between any person claiming benefits or
-----------
any other rights under the Plan and the relevant Participating Employer as to
the interpretation or application of the provisions of the Plan and amounts
payable hereunder that is not finally resolved under the claims procedure in
Subsection 11.2 of the Plan shall be determined exclusively by binding
arbitration in the Commonwealth of Massachusetts in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court of competent jurisdiction. All fees and
expenses of such arbitration shall be paid as determined by the arbitrator.
-16-
<PAGE>
11.4 Non-Assignability of Benefits. Neither the Participant nor his or
-----------------------------
her Beneficiary nor any other beneficiary under the Plan shall have any power or
right to transfer, assign, anticipate, hypothecate or otherwise encumber any
part or all of the amounts payable hereunder, which are expressly declared to be
nonassignable and non-transferrable. Any such attempted assignment or transfer
shall be void. No amount payable under the Plan shall, prior to actual payment
thereof, be subject to seizure by any creditor of any such person for the
payment of any debt, judgment or other obligation, by a proceeding at law or in
equity, or be transferrable by operation of law in the event of the bankruptcy,
insolvency, divorce or death of the Participant, his or her designated
Beneficiary or any other beneficiary under this Plan.
11.5 Facility of Payments. In the event is payable under the Plan is
--------------------
unable to care for his or her affairs because of illness or accident, or is
otherwise mentally or physically incompetent, or unable to give a valid receipt,
the Committee may cause the payment becoming due to be paid to the persons's
spouse, child, grandchild, parent, brother or sister, or to any appropriate
individual appointed by a court of competent jurisdiction, or to any person
deemed by the Committee to have incurred expense for such person otherwis e
entitled to payment.
11.6 Obligations to Withhold and Pay TaxesTaxes . Each Participant or
------------------------------------------
other recipient of benefits under the Plan shall be liable for all tax
obligations, if any, with respect to any sum received pursuant to the Plan and
for accurately reporting and paying in full all such taxes to the appropriate
federal, state and local authorities. The Trustee and the relevant Participating
Employer shall have the right to deduct and withhold from any payment due under
the Trust Fund or the Plan or from other amounts owed to or with respect to the
Participant all withholding taxes and other amounts required by law or as
necessary to set off amounts owed by the Participant to such Participating
Employer.
11.7 Representations. No Participating Employer hereby represents or
---------------
guarantees that any particular federal or state income, payroll, personal
property or other tax consequence will result from participation in this Plan. A
Participant should consult with professional tax advisors
-17-
<PAGE>
to determine the tax consequences of his or her participation. Furthermore, no
Participating Employer hereby represents or guarantees successful investment of
Deferrals, nor shall any Participating Employer be required to repay any loss
which may result from such investment or lack of investment.
11.8 Severability. If a court of competent jurisdiction holds any
------------
provision of this Plan to be invalid or unenforceable, the remaining provisions
of the Plan shall continue to be fully effective.
11.9 Applicable Law. This Plan shall be governed by and construed in
--------------
accordance with applicable federal law and, to the extent not preempted by such
federal law, the laws of the Commonwealth of Massachusetts applicable to
contracts that are made and to be wholly performed in such Commonwealth.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed under
seal by its duly authorized representative this 24th day of June, 1994.
NEW ENGLAND BUSINESS SERVICE, INC.
By: /s/ William C. Lowe
-----------------
Title: President
-18-
<PAGE>
SUPPLEMENTAL RETIREMENT PLAN
FOR EXECUTIVE EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
Effective as of July 1, 1991
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
------- ----- ----
<C> <S> <C>
1 ESTABLISHMENT OF PLAN....................... 1
2 DEFINITIONS................................. 3
3 SERVICE..................................... 8
4 ELIGIBILITY................................. 11
5 RETIREMENT DATES............................ 12
6 AMOUNT OF RETIREMENT BENEFITS............... 13
7 FORM OF BENEFITS............................ 18
8 DEATH BENEFITS.............................. 20
9 ACTUARIALLY EQUIVALENT BENEFITS............. 24
10 TERMINATION OF SERVICE...................... 26
11 PAYMENT OF BENEFITS......................... 30
12 CONTRIBUTIONS............................... 33
13 TRUST AGREEMENT............................. 34
14 ADMINISTRATION OF THE PLAN.................. 35
15 ADMENDMENTS TO OR TERMINATION OF THE PLAN... 41
16 MISCELLANEOUS............................... 43
SCHEDULE 4.01 MEMBERS..................................... 44
SCHEDULE 6.01 ANNUAL EARNINGS............................. 45
</TABLE>
<PAGE>
ARTICLE 1
---------
ESTABLISHMENT OF PLAN
---------------------
1.01 Name of Plan. The Plan shall be known as the Supplemental Retirement Plan
------------
for Executive Employees of New England Business Service, Inc.
1.02 Effective Date. The Effective Date of the Plan is July 1, 1991.
--------------
1.03 Purpose. The Employer intends this Plan to provide certain retirement
-------
income benefits (as defined herein) to certain Executive Employees (as
identified from time to time on Schedule 4.01 to the Plan) of the Employer or an
Affiliated Employer. Such benefits are intended to supplement a designated
Member's retirement income benefits under the Employer's regular pension plan
(the "Employee Plan"), by providing the Member with total retirement income
based on the Member's total Service and Annual Earnings (as determined under
this Plan) and without regard to the limits placed on the Member's benefits
under the Employee Plan pursuant to Sections 401(a)(17) or 415 of the Code, or
any comparable successor legislation.
1.04 Restricted Coverage. Participation in this Plan shall be limited to
-------------------
Executive Employees, so that for purposes of Title I of ERISA the Plan will at
all times cover only employees who make up a
-1-
<PAGE>
select group of management or highly compensated employees whose positions with
the Employer or an Affiliated Employer allow them to have a significant effect
on the Employer's results of operations by the performance of services of major
importance in the management, operation and development of the Employer's or of
an Affiliated Employer's business.
1.05 Plan Unfunded. This Plan is intended to be unfunded
-------------
for purposes of (i) Title I of ERISA and (ii) taxation of vested, accrued
benefits pursuant to the Code.
1.06 Reference Guide. Wherever used in this instrument, a masculine pronoun
---------------
shall be deemed to include the masculine and feminine genders, and a singular
word shall be deemed to include the singular and plural, in all cases where the
context requires.
-2-
<PAGE>
ARTICLE 2
---------
DEFINITIONS
-----------
Unless otherwise defined herein or the context otherwise requires, all defined
terms used in this Plan shall have the same meaning as such term is given in the
Employee Plan, as from time to time amended. The following terms shall have the
meanings specified below unless the context otherwise requires:
2.01 "Actuarial Equivalent" is defined in the Employee Plan as in effect on the
Effective Date of this Plan.
If this Section or the relevant definition in the Employee Plan is amended at
any time, the Actuarial Equivalent of a Member's accrued benefits on or after
the date of change shall be determined as the greater of (1) the actuarial
equivalent of the accrued benefit as of the date of change computed on the old
basis, or (2) the actuarial equivalent of the total accrued benefit computed on
the new basis.
2.02 "Actuary" means the actuarial consultant designated from time to time to
make all actuarial computations required in connection with the Plan, and shall
be the "Actuary" designated from time to time under the Employee Plan unless a
different designation is then in effect under this Plan.
2.03 "Adjustment Factor" is defined in the Employee Plan.
-3-
<PAGE>
2.04 "Affiliated Employer" is defined in the Employee Plan.
2.05 "Anniversary Date" is defined in the Employee Plan.
2.06 "Annual Earnings" means the greater of the amount, if any, specified for a
Member for a calendar year in Schedule 6.01 to the Plan and the amount
determined for such Member for such year pursuant to Section 2.06 of the
Employee Plan without regard to the limitation imposed in the Employee Plan
pursuant to Section 401(a)(17) of the Code, or any comparable successor
legislation.
2.07 "Annuity Starting Date" is defined in the Employee Plan.
2.08 "Beneficiary" means any person designated by a Member to receive any
benefits payable at the death of the Member, other than a Provisional Payee, and
shall be the "Beneficiary" designated from time to time pursuant to the Employee
Plan.
2.09 "Board of Directors" is defined in the Employee Plan.
2.10 "Change of Control" means the occurrence of a "Business Combination" (as
such term is defined in Article 14 of the Employer's Certificate of
Incorporation as in effect on the Effective Date of this Plan) in circumstances
requiring the affirmative vote of the holders of at least eighty percent (80%)
of the Employer's issued and outstanding common stock pursuant to the
-4-
<PAGE>
provisions of Article 14 of the Employer's Certificate of Incorporation as in
effect on the Effective Date of this Plan.
2.11 "Covered Compensation" is defined in the Employee Plan.
2.12 "Credited Service" means the most recent period of Service with the
Employer, credited as set forth in Article 3.
2.13 "Early Retirement Age" is defined in the Employee Plan.
2.14 "Employee" is defined in the Employee Plan.
2.15 "Employee Plan" means the Pension Plan for Employees of New England
Business Service, Inc., as amended from time to time.
2.16 "ERISA" is defined in the Employee Plan.
2.17 "Employer" is defined in the Employee Plan.
2.18 "Executive Employee" means an Employee who has been designated by his or
her Employer as an officer with senior management responsibilities.
2.19 "Final Average Earnings" means the average of a Member's five (5) highest
consecutive Annual Earnings as defined in this Plan
-5-
<PAGE>
during the last ten (10) years of Credited Service preceding Normal Retirement
Date or other date of termination of employment.
2.20 "Internal Revenue Code" or "Code" is defined in the Employee Plan.
2.21 "Member" means a person who is an Executive Employee and who is included
in the Plan in accordance with the provisions of Article 4.
2.22 "Normal Retirement Age" is defined in the Employee Plan.
2.23 "Plan" means the Supplemental Retirement Plan for Executive Employees of
New England Business Service, Inc., as stated herein and as amended from time to
time.
2.24 "Plan Administrator" means the Retirement Committee.
2.25 "Plan Year" is defined in the Employee Plan.
2.26 "Retirement Committee" or "Committee" means the Committee or any successor
designee or committee appointed by the Board of Directors to administer the Plan
in accordance with Article 14.
2.27 "Retired Member" means a former Member who has retired and become eligible
to receive retirement benefits under this Plan.
-6-
<PAGE>
2.28 "Service" is determined in Article 3.
2.29 "Specified Form" means a form of retirement or survivor benefit (different
from the forms provided for in Article 7) specified by the Retirement Committee
pursuant to Article 9.
2.30 "Terminated Member" means a former Member who has ceased to be an Employee
for any reason other than retirement under the Plan or death and who is eligible
for a vested benefit under Article 10.
2.31 "Trust Agreement" means the agreement between the Employer and the Trustee
providing for the Trust Fund.
2.32 "Trustee" means the Boston Safe Deposit and Trust Company or any successor
appointed by the Employer to administer the Trust Fund.
2.33 "Trust Fund" means the cash, securities and other property held by the
Trustee for purposes of paying any or all of the benefits under the Plan.
-7-
<PAGE>
ARTICLE 3
---------
SERVICE
-------
3.01 Service. Service means an Employee's period of Service with the Employer.
-------
Service shall not be deemed broken in the event of:
(a) Leave of Absence as defined in the Employee Plan;
(b) Absence in Military Service as defined in the Employee Plan;
(c) Absence during which an Employee is receiving benefits under a Long-
Term Disability Program sponsored by the Employer, or absence during which
a part-time employee would qualify for long-term disability status but for
his part-time status; provided, however, that the Employee also must be
receiving disability under Title II of The Social Security Act for any
period of such absence which is in excess of twenty-four (24) months; and
(d) Layoff which does not exceed one (1) year.
3.02 Credited Service. Credited Service means an Executive Employee's period
----------------
of Service with the Employer, credited as set
-8-
<PAGE>
forth in the Employee Plan; provided that from and after the start of the
calendar year in which an Executive Employee becomes a Member of this Plan, for
purposes of this Plan (i) he shall receive one full year of Credited Service if
he remains in continuous Service throughout a calendar year and (ii) he shall
receive a partial year of Credited Service if he remains in Service for a
portion of a calendar year (the partial year being determined by dividing the
Executive Employee's number of completed months of Service during such year by
12), regardless of whether he would receive any Credited Service during such
year pursuant to the Employee Plan.
3.03 Other Rules Governing Credited Service. The rules and definitions of
--------------------------------------
the Employee Plan for counting Service and Credited Service in case of a Break-
in-Service and for reinstatement of Service and Credited Service following a
Break-in-Service shall apply to a Member's Service and Credited Service under
this Plan; provided that from and after the date an Executive Employee becomes a
Member of this Plan, he shall not forfeit any Credited Service for purposes of
this Plan so long as he remains in continuous service.
3.04 Special Service Provisions. An Executive Employee who is a former
--------------------------
Employee of Sycom and who became an Employee for purposes of the Employee Plan
on May 31, 1987 shall be credited with Service and Credited Service for all
purposes under this Plan for his employment with Sycom prior to such date,
calculated under the provisions of this Article 3 based on the employment
records of Sycom, provided
-9-
<PAGE>
that in no case shall Service or Credited Service credited under this Section be
greater than that which would have been credited if the Service had been
performed for the Employer.
-10-
<PAGE>
ARTICLE 4
---------
ELIGIBILITY
-----------
4.01 Eligibility Requirements. Only Executive Employees shall be eligible to
------------------------
become and remain Members of the Plan. An Executive Employee shall become a
Member only upon designation as a Member on Schedule 4.01 to the Plan by the
Board of Directors after recommendation by the individual's Employer. A Member
shall continue as a Member for the purpose of accruing additional benefits under
the Plan only so long as he remains in Service as an Executive Employee.
4.02 Entry and Re-entry Into the Plan. An Executive Employee shall become a
--------------------------------
Member on the effective date of his designation as a Member on Schedule 4.01. If
a Member's Service is subsequently broken and he is later reemployed as an
Executive Employee, he shall resume his membership in the Plan only if he is
again designated as a Member by the Employer on an amended Schedule 4.01 and
only on the effective date of such new designation.
-11-
<PAGE>
ARTICLE 5
---------
RETIREMENT DATES
----------------
5.01 Normal Retirement Date. The Normal Retirement Date of a Member shall be
----------------------
the first day of the month coincident with or next following the attainment of
Normal Retirement Age.
5.02 Early Retirement Date. A Member who has reached his sixtieth (60th)
---------------------
birthday and completed at least fifteen (15) years of Service may elect an Early
Retirement Date, which may be the first day of any month subsequent to such
election but prior to his Normal Retirement Date.
5.03 Deferred Retirement Date. Each Member may retire on his Normal Retirement
------------------------
Date. If a Member remains in the employ of the Employer after his Normal
Retirement Date, his Deferred Retirement Date shall be the first day of the
month coincident with or next following the date of his actual retirement. For
clarity, even if benefit payments to the Member commence from the Employee Plan,
no benefits shall be paid under this Plan prior to the Member's actual
retirement.
-12-
<PAGE>
ARTICLE 6
----------
AMOUNT OF RETIREMENT BENEFITS
-----------------------------
6.01 Normal Retirement Benefit. The annual Normal Retirement Benefit payable
-------------------------
to a Member who retires under the Plan on his Normal Retirement Date shall be
equal to the excess, if any, of (1) the benefit he would have received pursuant
----------------------
to the Normal Retirement Benefit formula of Article 6 of the Employee Plan
determined (a) as if such formula took into account (i) his Final Average
Earnings and his Annual Earnings as determined pursuant to Article 2 of this
Plan (including his minimum Annual Earnings, if any, specified in Schedule 6.01
of the Plan) and (ii) his Credited Service as determined pursuant to Article 3
of this Plan and (b) as if such Benefit were not subject to the limits and
restrictions of Sections 6.02 through 6.07 of the Employee Plan (or any
comparable successor provisions of such Plan), as amended from time to time,
over (2) the benefit he is actually entitled to receive from the Employee Plan.
----
6.02 Early Retirement Benefit. The amount of Early Retirement Benefit payable
------------------------
to a Member who retires on an Early Retirement Date shall be either (a) or (b)
below, as determined by the Retirement Committee in its sole discretion after
taking into account whatever factors it deems appropriate:
-13-
<PAGE>
(a) a deferred retirement benefit, commencing on the Retired Member's
Normal Retirement Date, which benefit shall be the amount of Normal
Retirement Benefit accrued up to the date his employment terminated,
computed in accordance with the provisions of Section 6.03; or
(b) an immediate retirement benefit, which shall be the amount of Normal
Retirement Benefit accrued up to the date that the Retired Member's
employment terminated, computed in accordance with the provisions of
Section 6.03, and then reduced by two-thirds (2/3) of one percent (2/3%)
for each of the first thirty-six (36) months that commencement of his
benefit precedes Normal Retirement Age and one-third (1/3) of one percent
(1/3%) for each of the next twenty-four (24) months that commencement of
this benefit precedes his Normal Retirement Date.
6.03 Determination of Accrued Normal Retirement Benefit. The Normal
--------------------------------------------------
Retirement Benefit accrued under Section 6.01 at a Member's Early Retirement
Date will be determined by first computing the Normal Retirement Benefit the
Retired Member would have received under Section 6.01 if he had remained in the
Service of the Employer until his Normal Retirement Date, but based on his Final
Average Earnings at his Early Retirement Date, and without applying any offset
for his accrued benefit under the Employee Plan. The Normal Retirement Benefit
so determined then shall be multiplied by a fraction in which the numerator is
the number of years of Credited Service the Retired Member completed at his
Early Retirement Date and the denominator is the number of years of Credited
-14-
<PAGE>
Service he would have completed if he had remained in the Service of the
Employer until his Normal Retirement Date. Finally, the Normal Retirement
Benefit so determined then shall be reduced by the amount of the Retired
Member's accrued benefit under the Employee Plan.
6.04 Monthly Benefit. A Retired Member's monthly retirement benefit shall be
---------------
one-twelfth of his annual retirement benefit.
6.05 Deferred Retirement Benefit. A Member will accrue additional benefits if
---------------------------
he remains in the employ of the Employer beyond his Normal Retirement Date. His
annual Deferred Retirement Benefit shall be the annual amount computed in
accordance with Section 6.01 but based on the Member's Credited Service, Final
Average Earnings and Covered Compensation as of his Deferred Retirement Date.
6.06 Reemployment of a Retired Member or Terminated Member. In the event a
-----------------------------------------------------
Terminated or Retired Member is reemployed by the Employer at any time, such
Member will be notified that any benefits otherwise payable to him during his
period of reemployment will be suspended effective from the last payment due him
before his reemployment, and shall commence only upon the first day of the month
coinciding with or next following the date on which he again retires.
-15-
<PAGE>
Upon subsequent retirement, if he was again designated as a Member of the Plan,
his benefit shall be recomputed under the foregoing provisions of this Article
6, but based upon his Credited Service, Final Average Earnings, and Covered
Compensation in effect at the time he subsequently retires; provided, that such
benefit shall not be greater than it would have been had all his Service been
continuous nor shall such benefit be less than the amount to which he was
entitled on the date his Service first terminated, and further provided that
upon such subsequent retirement, the benefit shall be offset by the Actuarial
Equivalent of benefits previously provided.
6.07 Ad Hoc Post-Retirement Benefit Increases. Ad hoc post-retirement benefit
----------------------------------------
increases granted under the Employee Plan to a Retired or Terminated Member in
pay status shall not decrease benefits payable under this Plan except to the
extent provided in the following sentence. Benefits payable under this Plan to
such a former Member in pay status shall be increased (i) at the same time and
by the same percentage as any ad hoc benefit increases that are made effective
for the former Member under the Employee Plan and (ii) at the same time and by
twice the percentage of any ad hoc benefit increases that would have been made
effective for the former Member under the Employee Plan but which could not be
so provided to the former Member because of the limitations and restrictions of
Sections 6.02 through 6.07 of the Employee Plan (or any comparable successor
provisions of such Plan), provided that the doubled-
-16-
<PAGE>
percentage portion of any such benefit increase pursuant to clause (ii) shall
continue in effect only so long as and only to the extent that the basic
increase continues to be prohibited under the Employee Plan.
-17-
<PAGE>
ARTICLE 7
---------
FORM OF BENEFITS
----------------
7.01 Form of Retirement Benefit. Subject to Article 9 and Sections 7.03 and
--------------------------
10.07 and except as provided in Section 7.02, a Member's form of retirement
benefit shall be an income payable on the first day of each calendar month for
life, commencing in the month coincident with or next following his retirement
date and terminating with the payment preceding his death.
7.02 Spouse Joint and Survivor Annuity. Subject to Article 9, in lieu of the
---------------------------------
life annuity payable under Section 7.01, a Terminated or Retired Member who is
married on the date his benefits commence shall receive his retirement benefit
in the form of a Spouse Joint and Survivor Annuity as described in Section
7.021.
7.021 The Spouse Joint and Survivor Annuity shall be a reduced benefit
payable to the Terminated or Retired Member during his lifetime with provision
for one hundred percent (100%) of such reduced benefit to be continued to his
spouse for the duration of the spouse's lifetime after the death of the former
Member. The reduced benefit payable to the former Member under the Spouse Joint
and Survivor Annuity shall be equal to the Actuarial Equivalent of the form of
retirement benefit otherwise payable to him pursuant to Section 7.01.
-18-
<PAGE>
7.03 Lump Sum Benefit upon Change of Control. A Member whose employment with
---------------------------------------
the Employer terminates at or after the occurrence of a Change of Control shall
receive the Actuarial Equivalent of his entire accrued benefit under this Plan
in one lump sum within one month after his employment terminates. Each Retired
or Terminated Member and the surviving spouse of any deceased Member who has any
vested accrued benefit under this Plan at the time that a Change of Control
occurs shall receive the Actuarial Equivalent of his entire vested accrued
benefit in one lump sum within one month after the occurrence of the Change of
Control.
-19-
<PAGE>
ARTICLE 8
---------
DEATH BENEFITS
--------------
8.01 Death Before Annuity Starting Date. There are no benefits payable under
----------------------------------
the Plan in the event of the death of a Member before his Annuity Starting Date
unless the Member dies after satisfying all of the requirements of either
Section 8.02 or Section 8.04. The surviving spouse of a deceased Member who
satisfied the requirements of Section 8.02 (but not of Section 8.04) shall
receive the benefit specified in Section 8.03. The surviving spouse of a
deceased Member who satisfied the requirements of Section 8.04 shall receive the
benefit specified in that Section. Any survivor benefit paid pursuant to
Sections 8.03 or 8.04 shall be in the form of the survivor portion of the
benefit provided for in Section 7.02, subject to Article 9.
8.02 Eligibility Requirements for Surviving Spouse Benefit in Case of Death
----------------------------------------------------------------------
Before Normal Retirement Age. The surviving spouse of a Member who dies before
----------------------------
attaining his Normal Retirement Age and before his Annuity Starting Date shall
receive the benefit specified in Section 8.03 if the Member has fulfilled the
following requirements on or before the date of his death:
(a) he must have been legally married to such spouse throughout the
twelve-month period ending on the date of his death and
-20-
<PAGE>
(b) unless a Change of Control has occurred on or before the date of his
death, he must have completed at least five (5) years of Service.
8.03 Amount of Surviving Spouse Benefit in Case of Death Before Normal
-----------------------------------------------------------------
Retirement Age. If a Member dies before his Annuity Starting Date, but after
--------------
satisfying the requirements of Section 8.02 (but not of Section 8.04), his
surviving spouse shall receive a surviving spouse benefit equal to (a) or (b),
whichever is applicable:
(a) If the Member dies on or after his sixtieth (60th) birthday but before
attaining his Normal Retirement Age, and he had completed the Service
requirement for early retirement under Section 5.02, the benefit payable to
the spouse shall be the amount which would have been payable if the Member
had retired on the first day of the month in which he died (if not already
retired), and been eligible to receive a Spouse Joint and Survivor Annuity
under Section 7.02, but reduced as described in Sections 6.02 and 6.03 to
reflect commencement of the benefit before his Normal Retirement Date. Such
benefit shall be payable monthly for the life of the spouse commencing with
the first day of the month following the Member's death. If he had not met
the Service requirement under Section 5.02, the benefit shall be calculated
as described above (but without any reduction under Sections 6.02 and 6.03
for early commencement)
-21-
<PAGE>
and shall commence on what would have been the Member's Normal Retirement
Date.
(b) If the Member dies before his sixtieth (60th) birthday and he had
completed the Service requirement under Section 5.02, the benefit payable
to the spouse shall be the amount which would have been payable if the
Member had terminated his employment on the day he died (if not already
terminated), and been eligible to receive a Spouse Joint and Survivor
Annuity under Section 7.02 commencing on the first day of the month after
his sixtieth (60th) birthday and died immediately thereafter, but reduced
as described in Section 10.04 to reflect commencement of the benefit before
his Normal Retirement Date. Such Benefit shall be payable monthly for the
life of the spouse commencing with the first day of the month following the
date which would have been the Member's sixtieth (60th) birthday. If he
had not met the Service requirement under Section 5.02, the benefit shall
be calculated as described above (but without any reduction under Section
10.04 for early commencement) and shall commence on what would have been
the Member's Normal Retirement Date.
8.04 Surviving Spouse Benefit in Case of Death At or After Normal Retirement
-----------------------------------------------------------------------
Age. The surviving spouse of a Member who dies upon or after attaining his
---
Normal Retirement Age but before his Annuity Starting Date shall receive the
amount of benefit the spouse would
-22-
<PAGE>
have received if the Member had commenced to receive his benefits in the form of
a Spouse Joint and Survivor Annuity under Section 7.02. Such benefit shall be
payable monthly for the life of the spouse commencing with the first day of the
month following the Member's death.
8.05 Death After Annuity Starting Date. If a Terminated or Retired Member
---------------------------------
dies after benefit payments have commenced, no death benefits shall be paid
other than as the survivor portion of a Spouse Joint and Survivor Annuity or, if
the Committee has specified an Actuarial Equivalent benefit in lieu of the
benefit payable under Article 7, any death benefits payable in accordance with
such form of benefit.
-23-
<PAGE>
ARTICLE 9
---------
ACTUARIALLY EQUIVALENT BENEFITS
-------------------------------
9.01 Committee's Authority to Specify Form of Benefit. Notwithstanding the
------------------------------------------------
provisions of Articles 7, 8 or 10, the Retirement Committee shall have the
authority (but not the duty) to specify a different form of benefit for a Member
or for a deceased Member's surviving spouse in lieu of the applicable form
provided for in Sections 7.01 or 7.02. Any such exercise of authority and any
such Specified Form shall be subject to the provisions of this Article.
9.02 Actuarial Equivalency Requirement. Any Specified Form must be the
---------------------------------
Actuarial Equivalent of the applicable form provided for in Sections 7.01 or
7.02.
9.03 Permitted Forms of Benefits. Any Specified Form must be a form of
---------------------------
benefits permitted to the Member or his surviving spouse (as the case may be)
for payment of the applicable benefit from the Employee Plan at the time that
the benefit commences under this Plan; provided that (except as required
pursuant to Sections 7.03 or 11.02 of this Plan) no Specified Form may be paid
in a lump sum.
9.04 Latest Date for Specifying Form of Benefits. The Committee may specify a
-------------------------------------------
Specified Form (and may revoke such a Specified Form,
-24-
<PAGE>
with or without specifying a new Specified Form) at any time and from time to
time before the Annuity Starting Date.
9.05 Discretionary Authority. The Committee's discretion to specify or not
-----------------------
specify a Specified Form or to revoke or not revoke a Specified Form (with or
without specifying a new Specified Form) shall be absolute. In exercising its
discretion to consider specifying or revoking a Specified Form, the Committee is
authorized to take into account whatever factors the Committee deems
appropriate.
-25-
<PAGE>
ARTICLE 10
----------
TERMINATION OF SERVICE
----------------------
10.01 No Vesting. A Member whose Service terminates before the Member attains
----------
Normal Retirement Age shall be entitled to no benefits under this Plan except as
provided for in Sections 5.02 and 6.02 (in case of early retirement), Sections
8.02 and 8.03 (in case of death) or Section 10.02 (in case of other termination
of Service).
10.02 Vested Benefits. If a Member's Service terminates for any reason other
---------------
than death or retirement and at the time his Service terminates the Member is
entitled to a vested, accrued benefit under the Employee Plan or at or prior to
--
such time a Change of Control has occurred, then subject to Sections 7.03, 10.04
and 10.07 he shall be entitled to a deferred vested benefit under this Plan,
commencing at his Normal Retirement Date. Such benefit shall be equal to his
accrued Normal Retirement Benefit at the date his Service terminates and shall
be payable in the form provided for in Sections 7.01 or 7.02, as applicable,
subject to Article 9.
10.03 Determination of Accrued Normal Retirement Benefits. The Normal
---------------------------------------------------
Retirement Benefit accrued under Section 6.01 at the date a Member's Service
terminates will be determined by first computing the Normal Retirement Benefit
the Terminated Member would have received under Section 6.01 if he had remained
in the Service of the
-26-
<PAGE>
Employer until his Normal Retirement Date, but based on his Final Average
Earnings at the date his Service terminated, and without applying any offset for
his accrued benefit under the Employee Plan. The Normal Retirement Benefit so
determined then shall be multiplied by a fraction in which the numerator is the
number of years of Credited Service the Terminated Member completed as of the
date his Service terminated and the denominator is the number of years of
Credited Service he would have completed if he had remained in the Service of
the Employer until his Normal Retirement Date. Finally, the Normal Retirement
Benefit so determined then shall be reduced by the amount of the Terminated
Member's accrued benefit under the Employee Plan.
10.04 Early Commencement of Vested Benefit. A Terminated Member who is
------------------------------------
entitled to receive a retirement benefit under the provisions of this Article 10
may request to have his benefit commence at any time after he reaches his
sixtieth (60th) birthday, provided that he had completed at least fifteen (15)
years of Service as of the date his Service terminated. Any such request shall
be made to the Retirement Committee in accordance with Section 10.05 and shall
be approved by the Committee only if the Committee determines that such an early
commencement of benefits is essential to the welfare of the Terminated Member
and his dependents, if any. If the Committee approves the Member's request, his
benefit shall be an amount equal to the benefit he would have received at his
Normal Retirement Date, reduced by 2/3 of one percent (2/3%) for each of the
first thirty-
-27-
<PAGE>
six (36) months that commencement of his benefit precedes his Normal Retirement
Date and 1/3 of one percent (1/3%) for each of the next twenty-four (24) months
that commencement of this benefit precedes his Normal Retirement Date.
10.05 Application for Benefit. In order to receive an early commencement of
-----------------------
benefits under this Article 10, a Terminated Member must make written
application therefor to the Retirement Committee. Such application shall state
in detail the financial circumstances of the Terminated Member and his
dependents, if any, which make early commencement of benefits under this Plan
essential to the welfare of the Terminated Member and any such dependents. The
application shall also comply with any rules established by the Committee. No
benefits shall be payable for any period prior to the first day of the month
next following the month the Retirement Committee receives such application.
10.06 Amendment of Vesting Provisions. No amendment made to the Plan shall
-------------------------------
reduce a Member's vested, accrued benefit under the Plan. However, an amendment
may increase the Service required and impose or change any other requirements or
conditions that a Member must meet in order to become vested or further vested
in any accrued benefit not already fully vested as of the date the amendment is
adopted.
-28-
<PAGE>
10.07 Forfeiture of Vested Benefits. Notwithstanding any other provisions of
-----------------------------
this Plan, any Member or Retired, Terminated or deceased Member shall forfeit
all accrued benefits under this Plan (whether or not such benefits were
previously vested or are in pay status), and any such benefits in pay status
shall immediately and permanently cease (and the Employer shall have no further
obligation under this Plan to such individual or to his spouse or dependents or
anyone claiming through him or them) if prior to the occurrence of any Change of
Control the Employer reasonably determines that the individual is violating or
has violated in a material manner any non-competition or confidentiality
agreement to which the individual is or was subject, and the Employer so
notifies the Retirement Committee.
-29-
<PAGE>
ARTICLE 11
----------
PAYMENT OF BENEFITS
-------------------
11.01 Commencement, Suspension and Termination of Benefit Payments.
------------------------------------------------------------
(a) Payment of retirement benefits shall commence as provided in Sections
6.02 or 7.01, as applicable, subject to acceleration as provided in Section
7.03.
(b) Payment of death benefits shall commence as provided in Sections 8.03
or 8.04, as applicable, subject to acceleration as provided in Section
7.03.
(c) Payment of termination benefits shall commence as provided in Sections
10.02 or 10.04, as applicable, subject to acceleration as provided in
Section 7.03.
(d) Subject to suspension as provided in Section 6.06 or forfeiture as
provided in Section 10.07, all benefits shall continue in pay status until
the Retired, Terminated or deceased Member's vested, accrued benefit under
this Plan has been paid in full.
11.02 Actuarially Equivalent Payment of Small Amounts. In the event that the
-----------------------------------------------
present value of a Terminated or Retired Member's Normal Retirement Benefit
which is in pay status pursuant to
-30-
<PAGE>
Articles 7, 8 or 10 does not exceed $3,500 (as determined in accordance with
Section 2.01), the Plan Administrator shall distribute such benefit in one lump
sum as soon as is administratively feasible.
11.03 Facility of Payments. In the event that the Committee shall determine
--------------------
that any person to whom a benefit is payable under the Plan is unable to care
for his affairs because of illness or accident, or is otherwise mentally or
physically incompetent, or unable to give a valid receipt, the Committee may
cause the payment becoming due to be paid to the Member's spouse, child,
grandchild, parent, brother or sister, or any appropriate individual appointed
by the Court, or to any person deemed by the Committee to have incurred expense
for such person otherwise entitled to payment.
11.04 Spendthrift. Subject to applicable law, no benefit payable under the
-----------
Plan shall be subject in any manner to alienation, anticipation, sale, transfer,
assignment (either at law or in equity), pledge, attachment, garnishment, levy,
execution, encumbrance of any kind, or other legal or equitable process, and no
benefit and no Trust established in connection with the Plan shall be subject in
any manner to the debts or liabilities of any person entitled to such benefit.
11.05 Obligations to Withhold and Pay Taxes. Each Member or other recipient
-------------------------------------
of benefits under the Plan shall be liable for all tax
-31-
<PAGE>
obligations, if any, with respect to any sum received pursuant to the Plan and
for accurately reporting and paying in full all such taxes to the appropriate
federal, state and local authorities. The Employer shall have the right to
deduct and withhold from any payment due under the Plan or from other amounts
owed to the Member all withholding taxes and other amounts required by law or as
necessary to set off amounts owed by the Member to the Employer.
-32-
<PAGE>
ARTICLE 12
----------
CONTRIBUTIONS
-------------
12.01 Employer Contributions. The Employer may contribute (and, after the
----------------------
occurrence of a Change of Control, the Employer shall contribute) from time to
time such amounts as will effectuate and maintain the Plan on a sound actuarial
basis. While the Employer has every intention to fund the benefits under the
Plan, the Employer shall have no legal obligation to do so unless and until a
Change of Control occurs.
12.02 Member's Contributions. No contributions will be permitted by a Member.
----------------------
12.03 Forfeitures. Any amounts forfeited by a Member or former Member shall
-----------
be used to reduce the Employer's cost of the Plan and not to increase the
benefits of other Members. To the extent provided in the Trust Agreement, all
forfeited amounts held in the Trust Fund shall be returned to the Employer.
-33-
<PAGE>
ARTICLE 13
----------
TRUST AGREEMENT
---------------
13.01 Trust Fund. As a part of this Plan, the Employer will enter into a Trust
----------
Agreement with a trustee under which the Trustee shall receive the contributions
of the Employer to the Trust Fund. The Trustee shall hold, invest and distribute
the Trust Fund in accordance with the terms and provisions of the Plan and of
the Trust Agreement. Subject to the terms of the Trust Agreement, the Employer
shall have the right to replace the Trustee (and any successor Trustee) with a
successor Trustee.
13.02 Priority of Claims on Assets of the Fund. The contributions of the
----------------------------------------
Employer to the Trust Fund shall be for the benefit of Members and former
Members and their surviving spouses and no part of the Trust Fund shall revert
to the Employer except as provided in the Trust Agreement from time to time.
-34-
<PAGE>
ARTICLE 14
----------
ADMINISTRATION OF THE PLAN
--------------------------
14.01 Plan Administrator. The Plan shall be administered by a Committee of at
------------------
least three (3) members appointed by the Board of Directors to act as Plan
Administrator, and shall be the committee serving from time to time as the
Retirement Committee of the Pension Plan for Employees of New England Business
Service, Inc. unless a different appointment is then in effect under this Plan.
Each member shall serve at the pleasure of the Board of Directors. No Member of
the Plan shall become (or remain) a member of the Committee.
14.02 Rules. The Committee from time to time may establish rules for the
-----
administration of the Plan and the transaction of the Plan's business. The
Committee shall make all determinations of fact arising under the Plan,
including all determinations relating to eligibility and benefits. The Committee
shall have exclusive responsibility and discretion to interpret all provisions
of the Plan. In making any such rule, determination of fact or interpretation,
the Committee shall pursue uniform policies and shall not discriminate in favor
of, or against, any Executive Employee or Member.
14.03 Delegation of Ministerial Duties. The Committee by a writing signed by a
--------------------------------
majority of its members, may delegate to any member or
-35-
<PAGE>
members of the Committee or to any Employee or Employees of the Employer or to
any agents or independent contractors, severally or jointly, the authority to
perform any ministerial or routine act in connection with the administration of
the Plan.
14.04 Notice to Employees. The Committee may cause to be furnished to each
-------------------
Employee a written summary of the Plan and any amendment thereto. Such summary
may include the names of the members of the Committee, and the Trustee, and may
set forth the Employee's rights and duties with respect to the benefits
available to him under the Plan. Any decisions of the Committee respecting an
Employee's right to become a Member of the Plan or the right of a Member to
benefits shall be delivered to the Employee or Member in writing.
14.05 Consultations and Reliance. The Committee shall engage a qualified
--------------------------
Actuary who shall perform such duties as may from time to time be requested by
the Committee. The Committee, upon advice of the Actuary, shall recommend the
rates of contribution payable under the Plan. The Committee may retain or employ
such legal, medical, accounting and clerical assistance as it deems expedient in
carrying out the provisions of the Plan.
14.06 Claims Procedure. If any person claiming benefits under the Plan is
----------------
denied benefits by the Committee, no later than ninety (90) days after the
receipt of his claim by the Committee, he shall be furnished with a written
notification from the Committee stating:
-36-
<PAGE>
(a) the specific reason(s) for the denial;
(b) specific references to pertinent Plan provisions on which the denial
is based ;
(c) a description of any additional material or information necessary for
the claimant to perfect his claim and the reason why such material or
information is necessary; and
(d) the procedure for submitting his claim for review.
After denial of his claim, a claimant shall be entitled to review pertinent
documents and to submit to the Committee in writing any issues or comments he
may have regarding his claim for benefits under the Plan. If the claimant
cannot settle his dispute with a representative of the Committee, he may request
a review of his claim by the Committee. Such request must be made by the
claimant in writing within sixty (60) days after receipt of notice that his
claim has been rejected by the Committee. Within sixty (60) days after filing
such request the claimant, at the discretion of the Committee, may be granted a
hearing before the full Committee. The Committee shall advise the claimant in
writing of the disposition of his appeal within sixty (60) days (or one-hundred-
twenty days (120) in the event a hearing is granted) after the request for a
review of the claim is first received by the Committee, and shall give
-37-
<PAGE>
specific reasons for its decision and specific references to the pertinent Plan
provisions on which the decision is based.
14.07 Arbitration. Any dispute between any person claiming benefits or any
-----------
other rights under the Plan and the Employer as to the interpretation or
application of the provisions of the Plan and amounts payable hereunder that is
not finally resolved under the claims procedure in Section 14.06 shall be
determined exclusively by binding arbitration in the Commonwealth of
Massachusetts in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court of competent jurisdiction. All fees and expenses of such arbitration
shall be paid as determined by the arbitrator.
14.08 Reports to Board of Directors. The Committee shall submit annually to
-----------------------------
the Board of Directors of the Employer a Report showing in reasonable summary
the financial condition of the Trust Fund and giving a brief account of the
operation of the Plan for the past year and any further information which the
Board of Directors may require.
14.09 Government Reports. The Committee shall submit in a timely manner to the
------------------
proper agency any reports and statements required by applicable law for the
Plan.
-38-
<PAGE>
14.10 Conclusiveness of Reports. The members of the Committee and the Employer
-------------------------
and its officers and directors shall be entitled to rely upon all tables,
valuations, certificates and reports furnished by the Actuary, upon all
certificates and reports made by an accountant selected by the Committee and
upon all opinions given by legal counsel selected by the Committee and reports
provided by investment advisors.
14.11 Expenses of the Plan. To the extent provided for in the Trust Agreement,
--------------------
the Employer shall pay all fees and expenses incurred in administering the Plan,
including those necessary for the administration of the Trust Fund, and all
taxes imposed on the Trust Fund. The Employer otherwise shall have the
discretion, but not the obligation, to pay any fees, expenses or taxes that
could be paid from the Trust Fund pursuant to the Trust Agreement.
14.12 Indemnification. The Employer shall indemnify and save harmless each
---------------
Committee member from, against, for and in respect of any and all damages,
losses, obligations, liabilities, liens, deficiencies, attorney's fees, costs
and expenses incident to the performance of such person's duties as a Committee
member unless resulting from the gross negligence, willful misconduct, or lack
of
-39-
<PAGE>
good faith of such individual. Such indemnification shall apply to any such
individual even though at the time liability is imposed on the individual he is
no longer a Committee member.
-40-
<PAGE>
ARTICLE 15
----------
AMENDMENTS TO OR TERMINATION OF THE PLAN
----------------------------------------
15.01 Rights of Employer to Amend or Terminate. The Employer reserves the
----------------------------------------
right to terminate its contributions or to modify, amend or terminate the Plan
in whole or in part at any time and from time to time by an instrument in
writing pursuant to authority of a vote of the Board of Directors; provided,
however, that the Plan shall not be amended in such manner as would reduce any
Member's or former or deceased Member's vested, accrued benefit as of the date
the amendment is adopted or would divert any part of the Trust Fund attributable
to such Member's or former or deceased Member's benefit in a manner inconsistent
with the provisions of the Trust Agreement, prior to the satisfaction of all
vested, accrued liabilities under the Plan with respect to such Member or former
or deceased Member; and provided further that on or after the date a Change of
Control has occurred the Employer shall not terminate the Plan or the Employer's
contributions to the Trust Fund or modify or amend the Plan in any manner with
respect to any Member or former Member (or the surviving spouse of any deceased
Member) who was a Member at any time on or prior to such date without the
express written consent of the person who would be affected by such termination
or change.
15.02 Termination of Plan. In the event that the Employer shall terminate the
-------------------
Plan, in whole or in part, the rights of nonvested Members to benefits accrued
under the Plan as of the date of such
-41-
<PAGE>
termination shall remain unvested unless the Plan is specifically amended to
provide for additional partial or full vesting. In no event shall any person
have recourse against the Employer for any reason upon termination of the Plan
other than for non-payment of vested, accrued benefits from the Trust Fund.
15.03 Distribution Media. If the Plan is terminated, distribution of vested,
------------------
accrued benefits may be accomplished through:
(a) the continuance of the Trust Fund or Trust Funds; or
(b) group contracts or individual annuity contracts; or
(c) cash; or
(d) any combination of the foregoing.
-42-
<PAGE>
ARTICLE 16
----------
MISCELLANEOUS
-------------
16.01 Applicable Law. Except to the extent pre-empted by federal law, this
--------------
Plan and the Trust Agreement shall be governed by and construed in accordance
with the internal substantive law of the Commonwealth of Massachusetts, without
application of its conflicts-of-laws rules.
16.02 Non-Duplication of Benefits. No benefits shall be payable under this
---------------------------
Plan for any period of Service for which an Employee is receiving benefits under
any other supplemental defined-benefit type of retirement plan to which the
Employer contributes on his behalf.
16.03 Authority of the Board of Directors. Notwithstanding any other provision
-----------------------------------
of this Plan, the Board of Directors shall have the authority (but not the duty)
in its sole discretion to establish special provisions, rights or requirements
regarding the Service, Credited Service, Compensation, benefits and like matters
for any one or more Executive Employees. No such special provisions, rights or
requirements established by the Board of Directors need be uniform among
Executive Employees or apply to more than one or all Executive Employees.
16.04 Headings. The headings of the Plan are inserted for convenience of
--------
reference only and shall have no effect upon the meaning of the provisions
hereof.
-43-
<PAGE>
SCHEDULE 4.01
TO THE SUPPLEMENTAL RETIREMENT PLAN
FOR EXECUTIVE EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
(Schedule Effective as of July 1, 1991)
---------------------------------------
<TABLE>
<CAPTION>
EFFECTIVE DATE
MEMBERS OF MEMBERSHIP
------- --------------
<S> <C>
Richard H. Rhoads July 1, 1991
</TABLE>
-44-
<PAGE>
SCHEDULE 6.01
TO THE SUPPLEMENTAL RETIREMENT PLAN
FOR EXECUTIVE EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
(Schedule Effective as of July 1, 1991)
---------------------------------------
<TABLE>
<CAPTION>
DEEMED MINIMUM
MEMBER ANNUAL EARNINGS
------ ---------------
Calendar
Year Amount
-------- ------
<S> <C> <C>
Richard H. Rhoads 1988 $265,000
1989 275,000
1990 294,000
1991 294,000
1992 and
thereafter 250,000
</TABLE>
-45-
<PAGE>
SUPPLEMENTAL RETIREMENT PLAN FOR EXECUTIVE EMPLOYEES
OF NEW ENGLAND BUSINESS SERVICE, INC.
Adoption Agreement
------------------
Effective as of July 1, 1991
This Adoption Agreement, executed on July 24, 1992, pursuant to resolutions
adopted by the Board of Directors of New England Business Service, Inc., a
Delaware corporation (the "Company").
WITNESSETH THAT:
WHEREAS, the Company is adopting the Supplemental Retirement Plan for
Executive Employees of New England Business Service, Inc. (the "Plan") effective
July 1, 1991,
NOW, THEREFORE, the Company hereby adopts the Plan and embodies it in the
instrument attached hereto as Exhibit A.
IN WITNESS WHEREOF, the Company has adopted the Plan and has caused this
instrument to be executed by its duly authorized officer as of the above date.
NEW ENGLAND BUSINESS
SERVICE, INC.
By:/s/[signature illegible]
------------------------
Title: President, CEO
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
FIRST AMENDMENT TO THE SUPPLEMENTAL RETIREMENT PLAN
FOR EXECUTIVE EMPLOYEES OF NEW ENGLAND BUSINESS SERVICE, INC.
This First Amendment to the Supplemental Retirement Plan for Executive
Employees of New England Business Service, Inc. (the "Plan") is made effective
as of June 24, 1994, by New England Business Service, Inc. (the "Employer"). In
accordance with Article 15, the Employer hereby amends the Plan as follows:
1. Section 10.07 of Article 10 is amended by designating all of the
existing Section 10.07 (except the existing caption thereto) as subsection
10.071 to Section 10.7 and inserting the following caption on subsection 10.071:
"10.071 Mandatory Forfeitures."
---------------------
2. Section 10.07 of Article 10 is further amended by adding a new
subsection 10.072 after the existing subsection 10.071:
10.072 Discretionary Forfeitures. Notwithstanding any other provisions of
-------------------------
this Plan, at any time while all of the following conditions are met with
---
respect to any Member or Terminated Member, the Employer shall have the
right in its sole discretion to reduce or eliminate the Member's or
Terminated Member's accrued benefits under this Plan for any reason
whatsoever:
(a) The Member or Terminated Member was designated to participate in the
Plan at any time after December 31, 1993 and
(b) no Change of Control has occurred at any time prior to or
simultaneously with the benefit reduction or elimination and
(c) at the time of the benefit reduction or elimination, the Member either
(i) is still in Service to the Employer or (ii) has terminated Service (for
any reason other than retirement at or after attaining Normal Retirement
Age or death) and is not actually receiving benefits under the Plan.
Except as specifically amended hereby, the Plan is hereby reaffirmed in all
respects.
Signed as a sealed Massachusetts instrument effective as of the date stated
above.
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
BY: /s/ William C. Lowe
--------------------------------
TITLE: President
--------------------------------
DATE: July 22, 1994
---------------------------------
-2-
<PAGE>
New England Business Service, Inc.
Statement Re Computation of Per Share Earnings
(In Thousands Except Per Share Data)
Exhibit 11
----------
<TABLE>
<CAPTION>
Year Ended
June 30, 1995
------------------------------
Fully
Primary Diluted
---------- -------------
<S> <C> <C>
Shares
------
Weighted Average Shares
of Common Stock 15,245 15,245
Add:
Common Stock Equivalents
in the form of Stock Options 118 (1) 155(1)
---------- -------------
Weighted Average Common Stock
and Common Stock Equivalents 15,363 15,400
========== =============
Earnings
--------
Earnings per Consolidated
Statement of Income $ 16,298 $ 16,298
========== =============
Earnings per Share $ 1.06 $ 1.06
========== =============
</TABLE>
(1) Amount considered immaterial for inclusion in earnings per share calculation
as defined in Accounting Principles Board Opinion No. 15.
<PAGE>
NEBS
The Small Business Resource
1995 Annual Report
Outside Front Cover Graphic of NEBS logo and four photographs of various
NEBS customers and employees
<PAGE>
NEBS Profile
NEBS is the leading supplier of business forms and other printed products
to small businesses in the United States and Canada. The Company's primary
channel to the small business customer is direct mail order. During 1995, NEBS
served more than 1,292,000 small business customers.
NEBS base product line consists of a wide range of standardized business forms,
custom forms, software and related printed products specifically designed to
facilitate the management of a small business. In addition, the Company markets
stationery, promotional materials and software to enable a small business to
create a consistent and professional image.
During a typical week, the Company's six production facilities located in the
US, Canada and the UK receive and process in excess of 50,000 orders with an
average order value of approximately $100.
NEBS established and has retained its market leadership by providing the high-
quality products a small business needs at affordable prices and with
outstanding customer service.
Inside Front Cover Graphic of various NEBS product
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
(In thousands of dollars except per share amounts)
For the Fiscal Year Ended June 30, 1995 (A) June 24, 1994 (B)
<S> <C> <C>
Net Sales $263,724 $251,253
Income Before Income Taxes 28,492 27,599
Net Income 16,298 15,563
Earnings Per Share 1.07 1.01
Dividends Per Share .80 .80
Operating Statistics
Return on Stockholders' Equity 17.8% 15.6%
Income Before Income Taxes as a Percent
of Sales 10.8% 11.0%
Net Income as a Percent of Sales 6.2% 6.2%
Working Capital $ 45,340 $ 54,870
Stockholders' Equity 91,523 99,479
Book Value Per Share 6.16 6.43
</TABLE>
(A) Included in the 1995 results is a $1.96 million pretax charge, or $.07 per
share, related to integration of the Company's SYCOM subsidiary.
(B) Included in the 1994 results is a $5.45 million pretax charge, or $.21 per
share, related to a restructuring program.
Meeting Small Business Needs - A Strategy for Growth
Small businesses are changing the way they conduct business. They are installing
computers and software for operational efficiency. They are taking advantage of
new printing technology for more professional looking sales and marketing
materials. They are focusing on image, recognizing the value of color and
consistent design across all printed products. They are searching for a supplier
who understands their needs, a company to help them manage and promote their
business. Meeting small business needs is one of the largest business
opportunities of this decade. There are an estimated 10 million small businesses
and 20 million in-home offices in the United States, Canada and the United
Kingdom, the three countries where NEBS operates. Their numbers and the volume
of products and services they purchase are expected to grow substantially over
the next few years. NEBS is in a unique position to serve the changing needs of
the small business marketplace and to capitalize on this exceptional growth
opportunity. We understand the market. In-home offices and businesses with
20 or fewer employees have been our focus for 43 years. In 1995 alone, we served
more than 1,292,000 small business customers. We have direct access to the
market. We contact more than 8,000,000 small businesses each year through the
mail and maintain a proprietary data base of their buying preferences. Most
importantly, we sustain a solid reputation in the market as a high quality
supplier who understands and responds to small businesses.
In 1995, we broadened our vision. We looked beyond our strength as the nation's
leading supplier of business forms for small business, and focused on small
business needs. We determined how best to build on our strengths to meet those
needs. And we set out to become the source of printed products, software and
services for managing and promoting a small business.
We invite you to review the early results of our efforts and to follow our
progress in the years ahead -- as NEBS fulfills its mission to be "The Small
Business Resource."
-1-
<PAGE>
To Our Stockholders
Overview
The Company achieved record sales during fiscal 1995 and set the foundation
for future growth. The Company's small business image-building products were
enhanced with the Company Colors(TM) line of forms and stationery and the Page
Magic(TM) software line. Continued investment in color printing, telephone and
database technology strengthened the Company's product and service capabilities.
Retail distribution was expanded significantly by means of an alliance with
Kinko's, Inc. The year's efforts improved the Company's ability to meet the ever
changing needs of the small business marketplace.
Financial Performance
Sales for the year grew 5% to $263,724,000 and the number of customers
served grew to a record 1,292,000. This performance reflected strong growth in
the Company's retail and Canadian businesses and continued growth in computer
forms, custom forms and image products. Reflecting the slowing economy, sales of
standardized manual business forms contracted during the latter half of the year
and growth rates across all lines weakened.
Earnings amounted to $16,298,000 versus last year's $15,563,000. Earnings per
share were $1.07 versus last year's $1.01. This year's earnings reflected an
exit charge and period expense of $.13 per share related to the integration of
the Company's SYCOM subsidiary. Last year's earnings included a $.21 per share
restructuring charge for an organizational realignment and cost reduction
measures. Dividends were paid for the 32nd consecutive year and amounted to $.80
per share. We are pleased to have maintained the Company's strong profitability
during 1995 in light of the on-going investment required by product, channel and
marketing initiatives.
Financial Condition
The Company's operating cash flow and financial condition remained strong.
During the year, the Company repurchased $16,998,000 of common stock and paid
out $12,192,000 in dividends to stockholders. In spite of these significant cash
outflows, the Company had cash and short-term investments of $22,964,000 at
year-end and maintained a current ratio of 2.4 and a balance sheet free of debt.
Business Highlights
We are encouraged by the progress made by the Company during 1995. The
Company's accomplishments and initiatives to accelerate future growth are
highlighted below.
Kinko's Alliance One of the more promising developments during the year was
the formation of an alliance with Kinko's, Inc. Through the alliance, the
Company's design and printing services were made available to small businesses
at select sites within Kinko's network of more than 750 retail stores. At fiscal
year-end, the Company had established 22 custom print desks in Kinko's stores
and announced a joint commitment with Kinko's to grow the number to a minimum of
50 stores by December, 1995.
The alliance provides Kinko's with access by mail to millions of small
businesses, while the Company gains direct access to the $10 billion retail
market for small business printing services.
Company Colors The Company's new image-building line was created in response
to customer demand for printed products combining functionality with coordinated
color and design. Company Colors offers a full range of manual and computer
forms, business cards, stationery and related products in five popular two-color
combinations with consistent design elements. Company Colors provides the
Company with the product breadth required to meet customer needs in both the
retail and mail order channels.
Software Products Page Magic desktop publishing software and its companion
line of laser printer papers were introduced through direct mail and retail in
the second fiscal quarter. The Company's market-leading One-Write Plus(R)
accounting package continued to exhibit strong sales through mail order.
Development of a Windows(TM) version of One-Write Plus progressed throughout the
year with introduction expected during fiscal 1996. The Company has continued to
invest heavily in the development of One-Write Plus for Windows and to establish
cost-effective technical support.
International Operations The Company's Canadian subsidiary exhibited renewed
strength and posted its best performance in several years. The improvement was
led by new products, improved marketing programs and the improving Canadian
economy. In a promising venture, the Canadian subsidiary arranged to display the
Company's products in self-service kiosks in selected Mail Boxes, Etc. of Canada
stores. Revenues generated by the Company's U.K. branch also exhibited renewed
growth driven by product and market initiatives.
Investment in the Future Investment during 1995 was focused on technology,
systems and skills necessary to meet the new and emerging needs of the small
business marketplace. The Company added key personnel with expertise in software
development and distribution, information systems technology, channel marketing
and color printing technology. NEBSnet(TM), the Company's proprietary design and
composition system, was developed to facilitate the sales and order process in
the retail channel. The Company modernized its telemarketing and technical
support systems and added significantly to its full-color printing capability.
We anticipate the need to continue to invest in technology to keep pace with
increasingly demanding customer requirements.
-2-
<PAGE>
Page 3 Photographs of Richard H. Rhoads, Chairman and William C. Lowe,
President, Chief Executive Officer
Future Outlook
The sales growth weakness in the latter half of fiscal 1995 underscores two
forces prevalent in the small business marketplace. The sale of forms and
related products by mail order remains closely tied to the economic health of
the small business market. In addition, advancements in retail point-of-sale
systems and desktop computers continue to negatively impact demand for
standardized manual forms. Future opportunity is emerging from related trends in
the small business market. Small businesses consume over $11 billion of printed
products annually, are increasingly computerized, demand a distinctive image and
prefer to make initial purchases through retail. To take advantage of these
trends, the Company is expanding retail distribution, developing software
products, and introducing printed products with coordinated color and design.
These initiatives will enable the Company to serve a significantly larger
portion of the total market, and more importantly, to become the premier
supplier to these small businesses.
Goals for 1996
During 1996, the Company will introduce One-Write Plus(R) for Windows(TM)
and continue to refine and expand the Company Colors line. The Company will also
seek opportunities to form additional alliances to fill the full range of
service and product needs of our small business customers. Finally, we will
continue to focus on the alliance with Kinko's. Our goal is to make this
important venture an unqualified success. The Company's financial goal for 1996
is to achieve double-digit revenue growth during the latter half of the year
while maintaining profitability ratios. In light of the sales growth weakness
experienced during the latter half of fiscal 1995, continued pressure on the
standardized manual forms business and the investment demands of channel and
product initiatives, achieving this financial objective will be a challenge. The
Company will continue to seek opportunities to reduce costs and to increase
operational efficiency to support our goals.
Board of Directors
At its April meeting, the Board elected Brian E. Stern, President of the
Personal Document Products Division of Xerox Corporation, to its membership.
Brian brings strong experience with technology-based business to the Board, and
will help ensure the Company competes successfully in its new channels and lines
of business. We're delighted that Brian has joined us and we're looking forward
to working with him in the future. At the April meeting, the Board of Directors
also accepted the resignation of Robert Ripp as a Director of the Company. Bob
had ably served the Company for three years and we wish him well in his future
endeavors.
Words of Thanks
We would like to draw attention to the talent, dedication and commitment of
each of our 2,055 employees. The Company's employees are the source of its
strength and we commend them for their efforts and accomplishments during the
year. We remain indebted to our diverse and loyal customer base for their
business and thank them for their help in defining the NEBS of the future.
Finally, we thank you, our stockholders, for the strength of your interest and
support. Serving your best long term interest remains our highest priority.
/s/ Richard H. Rhoads
Richard H. Rhoads, Chairman
/s/ William C. Lowe
William C. Lowe, President and Chief Executive Officer
September 15, 1995
-3-
<PAGE>
Page 4 Photograph of NEBS customer Ed Jones and Graphic of NEBS
One-Write Plus software package
Making Business Easier for Small Business --
A NEBS Tradition
In 1995 and for more than 43 years, small business has relied on NEBS
business forms. More than a record, our forms offer a blueprint for any type of
transaction with customers or suppliers, making business easier and more
efficient for new and established small businesses. NEBS manual business forms,
the Company's foundation, remain as important to NEBS today as to the millions
of customers who rely on them. Sold primarily through the mail, our manual
business forms serve as an introduction to the full range of NEBS products and
services. In 1995, we continued to refine this vital product line, adapting it
to the changing needs and preferences of small businesses. In response to
customer requests, our most popular manual forms were redesigned with a more
contemporary look. We expanded our collection of value-priced "starter kits,"
sets of imprinted forms tailored to specific lines of business. We introduced
easier-to-use catalogs with tips on managing a small business, to make ordering
less time-consuming and more informative. And we saved customer time with new
database technology that links catalog mailings to customer purchase histories.
Customers receive less mail, and it is focused on the products and services they
need.
NEBS computer forms and software products continued to make managing and
promoting an automated small business easier. One-Write Plus(R), NEBS
proprietary accounting software, remains the nation's best selling DOS
accounting and payroll package. Through 1995, small businesses have installed
more than 350,000 copies. With the pending release of the Microsoft(R)
Windows(TM) version, the popularity of One-Write Plus will spread to those small
businesses using and converting to Windows. For small businesses who want to
create promotional materials with desktop systems, we introduced the Page
Magic(TM) software line in 1995. Featuring easy-to-use templates, Page Magic
enables a customer to design and print distinctive flyers, business cards,
brochures and newsletters -- in-house on a laser printer. At our founding in
1952, we provided the products small businesses depend on, and grew to be their
leading supplier of manual business forms. As small businesses installed
computers, we developed a full line of continuous forms, software and related
technical support. Today, as the needs of small business continue to change,
NEBS remains committed to providing the required products and services. Through
internal initiatives and external alliances, we are poised to respond in the
future as we have for the past 43 years.
Listening to Our Customers
Suggestions from small business owners like Ed Jones, a NEBS customer for 14
years, prompted the redesign of our contractor catalog. With less copy, larger
product photos, easy-to-find color-coded sections and tips on managing a small
business, ordering by mail became less time-consuming and more informative in
1995.
A Perfect Partner
Certified Public Accountant Richard Goldman of Providence, RI estimates that he
introduces at least 200 small business owners to One Write Plus each year
through seminars he conducts at software retail outlets in the Northeast.
Richard is a member of NEBS Perfect Partner Program, a group of CPAs who serve
as consultants to NEBS customers across the US. "One Write Plus is an excellent
program," Richard said. "It's flexible and easy to use for small businesses, and
powerful enough for the larger corporation."
-4-
<PAGE>
Leveraging our Strengths:
Bringing New Services to Small Business
Many companies have products and services of value to small business, but
lack the distribution channels to deliver them to market. With our direct access
to small businesses and our extensive customer support organization, NEBS is
actively seeking alliances with these companies to better serve our customers.
In the years ahead, we envision small businesses turning to NEBS not only for
our forms, promotional products and software, but for a broad array of third
party products and services specifically tailored to their needs.
Page 5 Photograph of NEBS Perfect Partner: Richard Goldman at training
session
-5-
<PAGE>
Page 6 Graphic of NEBS Page Magic software package and products and
photo of various items of the NEBS product line
Offering Small Businesses a Professional Image
An increasing number of small businesses want more than functional printed
products; they want printed products that project an image. During 1995, NEBS
responded by establishing a division dedicated to the creation of image-building
products and services. Our efforts in the NEBS Image Division will bolster our
ability to meet this emerging small business need. We introduced Company
Colors(TM) -- a multi-level program offering image-building products for any
small business budget. For the do-it-yourself marketer, Company Colors provides
a line of colorful desktop publishing papers. Compatible with our Page Magic(TM)
software and other page design and word processing programs, these desktop
papers allow small businesses to produce attractive, multi-colored stationery,
business cards, flyers and other image-oriented promotional products -- without
the cost and hassle of commercial printing.
Next, Company Colors gives a small business the opportunity to achieve a
consistent look across all its printed materials -- with the Company Colors
palette, five of the most popular, two color combinations used on stationery and
business cards. When ordering our most popular standard NEBS products, a
customer may now designate a preferred palette. Business cards, stationery and
envelopes may also be ordered in this color scheme, professionally printed by
NEBS on a wide range of paper stock. In short, Company Colors offers fully
color-coordinated printed products -- from manual and computer forms to business
cards and stationery -- without the time and expense associated with local
designers, advertising agencies and printers. For the small business with a need
for more extensive custom design and printing services, we introduced an
industry first in 1995. We call it NEBSnet(TM) -- a proprietary, interactive
graphic design workstation developed by NEBS software engineers. Operated by a
NEBS representative, it enables a customer to order competitively priced custom
forms, business cards, stationery, envelopes, even full-color brochures from
NEBS -- typically printed and shipped in less than a week. A growing number of
small businesses are searching for an affordable way to create a professional
image. In 1995, NEBS developed Company Colors and NEBSnet to meet their needs.
Page Magic -- For the Do-It-Yourself Marketer
Introduced in 1995, Page Magic software's easy-to-use templates enable NEBS
customers to create a variety of promotional materials in-house on desktop
systems. In the near future, customers will be able to mail their Page Magic
designs on diskette to a NEBS manufacturing facility for affordable, fast
turnaround, spot color and full-color printing.
Company Colors: The Affordable Route
to a Professional Image
With Company Colors, NEBS provides customers like Yolanda Hill, owner of Body
Heat in Phoenix, Arizona, a complete line of color-coordinated image products:
from attractive laser papers for creating promotional materials in-house, to
fully customized stationery, business cards, and brochures. A multi-level
program, Company Colors makes NEBS a one-stop image development service for any
small business budget.
-6-
<PAGE>
Leveraging our Strengths:
Short-Run
Efficiency and Image Conscious Customers
The demand for economical, short-run, full-color printing among small
businesses will rise dramatically in the next few years. We're ready to meet
that demand. In 1995, we leveraged our 43 years of experience in small order,
one and two-color printing by introducing full-color printing services. As more
small businesses choose color to create and promote an image, NEBS design and
printing services will be there to meet the need.
Page 7 Photograph of NEBS Customer: Yolanda Hill
-7-
<PAGE>
Page 8 Graphic of map of various NEBS and Kinko's sights and picture
of major metropolitan area
Retailing NEBS to the Small Business Customer
Over the last several years, NEBS retail efforts have focused primarily on
expanding the distribution network for our software and private label forms. In
1995, we broke new ground. Through a unique alliance with Kinko's, Inc., NEBS
design and printing services will be available in local markets across the US --
where small businesses spend in excess of $10 billion annually on custom
printing services. Kinko's, founded in 1970, is among the top service companies
in the US. A recognized leader in providing convenient, economical retail
services for small businesses and in-home offices, Kinko's offers copying, fax,
video-teleconferencing and computer-related services at more than 750 locations,
24 hours a day. Through the NEBS-Kinko's alliance, Kinko's gains access by mail
to millions of small businesses, adds NEBS small-order, custom printing
capabilities to its service menu and becomes a true one-stop shop for virtually
any copy or print service. The value of this alliance for NEBS is equally clear.
Through Kinko's established network of service centers, NEBS gains direct retail
access to local markets, where the majority of small business owners purchase
printed, image-building materials. With the aid of NEBSnet(TM) workstations,
NEBS representatives can deliver design and printing services at the customer's
convenience, often at hours other printers aren't working -- and at a price that
will be difficult to match.
At the end of fiscal 1995, NEBS custom print desks were operating in 22 Kinko's
stores, providing a new level of personalized service to small business. A very
promising venture, the number of Kinko's-based custom print desks has the
potential to grow into the hundreds in the years ahead. NEBS also continued to
make progress in our established retail networks in 1995. Our DFS unit, which
markets a specially designed version of our forms and printed promotional
materials, now works closely with more than 22,000 local printers, business
forms dealers and computer stores. Our network of software distributors and
retailers grew to include virtually every major computer and software retailer
in the United States. And in another alliance, our Canadian division arranged
with Mail Boxes, Etc. of Canada to display a variety of NEBS products and
catalogs in attractive, self-service centers -- further promoting product sales
and name recognition at the retail level. We made significant strides at retail
during 1995, for one reason: NEBS is committed to providing the products and
services a small business needs -- wherever small businesses prefer to do
business.
NEBS & Kinko's: A Promising Venture
With more than 750 service centers, Kinko's offers an established retail network
to promote NEBS products and services. Now NEBS Custom Printing Consultants like
Steve Soler (right) in Manhattan can design promotional products for NEBS
customers like Brigitte V. Rocher, President, and Clayton Anderson of Daytime
Running Lights, Inc. while they wait - and send approved designs by modem
directly to a NEBS facility for printing.
Opening New Markets
The NEBS-Kinko's alliance expands NEBS reach in major metropolitan areas,
greatly increasing the number of potential customers for our products and
services.
-8-
<PAGE>
Page 9 Photograph of NEBS Custom Printing Consultant: Steve Soler and
NEBS Customers Brigitte V. Rocher and Clayton Anderson
Leveraging our Strengths:
Turning
Technology into Promotional Products
Small businesses have a growing need for economical, custom-designed, full-
color promotional products. Now they can get them from NEBS -- with NEBSnet(TM).
With this new graphic design workstation, NEBSnet enables customers to work side
by side with NEBS representatives to design promotional materials -- from
stationery to brochures -- while they wait. At the touch of a button, approved
designs are sent by modem to a NEBS manufacturing facility, where product is
printed and shipped back to the customer in less than a week -- in the case of
business cards, in 24 hours. Exclusively from NEBS, it's the future of print and
design service for small business, available today.
-9-
<PAGE>
Page 10 Graphic of NEBS Company Colors chameleon logo and NEBS
Company Colors advertising piece
Looking Back, Looking Ahead
Small businesses want more than a collection of products and services. They
need a resource, a company able to respond to the full range of business needs.
At NEBS, becoming this resource became our mission in 1995. We continued to
improve our customer service and enhance our traditional product line, the many
business forms that have helped customers transact business for 43 years. We
added new software to further help automated customers manage and promote their
business. We responded to the growing sophistication among small business owners
by creating the Image Division, dedicated to offering affordable ways to create
and project an image. We introduced Company Colors(TM) and NEBSnet(TM) to enable
a small business to develop an image easily, faster and at costs below those
normally charged by local printers. Through the alliance with Kinko's, we took
our custom design and short-run printing capabilities to the retail
marketplace --a market eight times as large as the direct mail market we have
served since our inception.
We took our first major step beyond the $11 billion market for printed products
by focusing on the full range of small business needs, and how to best leverage
our internal strengths to address them efficiently and affordably . In 1995, by
preserving and building upon our heritage, we chose to be more than the nation's
leading supplier of business forms for small business. We expanded the vision of
what NEBS will be, and set out to become "The Small Business Resource."
New Look, Proven Strategy
Like the chameleon in our Company Colors logo, NEBS has been responding to the
changing needs of small business for 43 years. Our new Image Division, combined
with new products, services and alliances mark a renewed commitment to this
proven strategy for growth.
Responding to Customer Needs
During 1995, the Image Division's design team created the Company Colors line of
printed products. Company Colors provides a small business with a convenient and
affordable means to project the professional image required to compete in
today's marketplace.
-10-
<PAGE>
Leveraging our Strengths:
A Snapshot of
the Future
Our future is driven by only one criteria: small business needs. Whether
the need is forms, brochures, software or a full array of business services,
small businesses will be able to turn to NEBS for the help they need. That's the
vision at NEBS today, and it's what our customers should expect from "The Small
Business Resource."
Page 11 Photograph of NEBS Image Division's design team
-11-
<PAGE>
Eleven Year Summary
<TABLE>
<CAPTION>
(In thousands of dollars
except per share amounts
and other statistics)
For the Fiscal Year Ended June 30, June 24, June 25, June 26, June 28,
1995 (A) 1994 (B) 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Income Statistics (C)
Net Sales $ 263,724 $ 251,253 $ 237,144 $ 232,435 $ 231,838
Income before income taxes
and accounting changes 28,492 27,599 24,090 24,862 34,095
Percent of sales 10.8% 11.0% 10.2% 10.7% 14.7%
Taxes on income 11,818 12,036 9,873 8,925 13,765
Percent of sales 4.5% 4.8% 4.2% 3.8% 5.9%
Net income before equity in
losses of investment and
accounting changes 16,674 15,563 14,217 15,937 20,330
Percent of sales 6.3% 6.2% 6.0% 6.9% 8.8%
Percent of stockholders'
equity 18.2% 15.6% 15.0% 16.9% 18.9%
Per common share 1.09 1.01 0.93 1.02 1.24
Net Income 16,298 15,563 14,217 15,471 20,330
Percent of sales 6.2% 6.2% 6.0% 6.7% 8.8%
Percent of stockholders'
equity 17.8% 15.6% 15.0% 16.4% 18.9%
Per common share 1.07 1.01 0.93 0.99 1.24
Dividends per common share 0.80 0.80 0.80 0.80 0.80
Balance Sheet Statistics
Current assets 77,509 85,288 68,966 74,784 87,468
Current liabilities 32,169 30,418 25,293 25,649 24,094
Working capital 45,340 54,870 43,673 49,135 63,374
Current ratio 2.4 2.8 2.7 2.9 3.6
Total assets 124,546 131,691 120,624 121,056 133,602
Long-term debt 0 0 0 0 0
Stockholders' equity 91,523 99,479 94,668 94,124 107,802
Average common shares
outstanding 15,245 15,364 15,269 15,664 16,342
Book value per common share 6.16 6.43 6.19 6.18 6.61
Other Financial Statistics
Capital expenditures 10,804 6,054 6,475 9,669 9,166
Depreciation and
amortization 12,676 11,623 9,953 9,531 9,001
Profit sharing contribution 3,620 3,133 2,891 3,296 4,273
Other Statistics (C)
Number of employees 2,055 2,083 2,217 2,180 2,045
Number of stockholders 5,600 5,700 5,400 4,100 3,700
Number of active customers 1,292,000 1,285,000 1,210,000 1,195,000 1,173,000
Facilities (in square feet) 743,000 794,000 793,000 768,000 765,000
</TABLE>
Average common shares outstanding have been retroactively adjusted for stock
split of 2-for-1 in November 1986.
(A) Included in the 1995 results is a $1.96 million pretax charge, or $.07 per
share, related to integration of the Company's SYCOM subsidiary.
(B) Included in the 1994 results is a $5.45 million pretax charge, or $.21 per
share, related to a restructuring program.
(C) Years from 1985 through 1989 have been restated to eliminate a discontinued
operation.
-12-
<PAGE>
<TABLE>
<CAPTION>
(In thousands of dollars
except per share amounts
and other statistics)
For the Fiscal Year Ended June 29, June 30, June 24, June 26, June 27, June 28,
1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C>
Income Statistics (C)
Net Sales $ 233,113 $ 225,931 $ 202,423 $172,574 $158,927 $142,765
Income before income taxes
and accounting changes 33,415 39,109 36,804 36,852 32,009 22,782
Percent of sales 14.3% 17.3% 18.2% 21.4% 20.1% 16.0%
Taxes on income 12,792 15,074 14,500 17,936 15,654 10,630
Percent of sales 5.5% 6.7% 7.2% 10.4% 9.8% 7.4%
Net income before equity in
losses of investment and
accounting changes 20,623 24,035 22,304 18,916 16,355 12,152
Percent of sales 8.8% 10.6% 11.0% 11.0% 10.3% 8.5%
Percent of stockholders'
equity 19.9% 23.6% 22.8% 22.7% 23.7% 21.6%
Per common share 1.23 1.40 1.29 1.10 0.96 0.72
Net Income 21,148 22,189 22,431 19,130 16,893 12,979
Percent of sales 9.1% 9.8% 11.1% 11.1% 10.6% 9.1%
Percent of stockholders'
equity 20.4% 21.8% 22.9% 23.0% 24.5% 23.1%
Per common share 1.26 1.29 1.30 1.12 0.99 0.76
Dividends per common share 0.76 0.66 0.54 0.44 0.29 0.25
Balance Sheet Statistics
Current assets 84,311 84,398 80,256 69,956 62,321 48,141
Current liabilities 21,596 20,020 17,949 18,718 17,524 14,175
Working capital 62,715 64,378 62,307 51,238 44,797 33,966
Current ratio 3.9 4.2 4.5 3.7 3.6 3.4
Total assets 130,280 130,238 123,566 111,009 94,057 81,723
Long-term debt 3,319 6,688 5,720 6,938 6,099 9,879
Stockholders' equity 103,858 101,897 97,995 83,340 68,900 56,163
Average common shares
outstanding 16,835 17,193 17,265 17,138 17,056 16,996
Book value per common share 6.17 5.93 5.67 4.84 4.04 3.30
Other Financial Statistics
Capital expenditures 8,818 11,123 9,366 3,699 2,876 10,085
Depreciation and
amortization 8,689 8,195 7,109 5,233 4,722 3,514
Profit sharing contribution 4,271 4,792 4,245 3,618 3,236 2,395
Other Statistics (C)
Number of employees 2,154 2,002 1,928 1,797 1,632 1,745
Number of stockholders 3,600 3,600 2,700 2,600 2,500 2,200
Number of active customers 1,179,000 1,125,000 1,064,000 977,000 916,000 909,000
Facilities (in square feet) 765,000 748,000 689,000 79,000 623,000 623,000
</TABLE>
-13-
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, 1995 and June 24, 1994 (In thousands of dollars except share data)
Assets Notes June 30, 1995 June 24, 1994
<S> <C> <C>
Current Assets:
Cash and cash equivalents 1 $ 11,604 $ 3,456
Short-term investments 1 11,360 37,532
Accounts receivable (less allowance for doubtful
accounts of $3,304 in 1995 and $3,012 in 1994) 1 29,332 27,963
Inventories 1 9,880 7,740
Direct mail advertising 1 2,939 1,698
Prepaid expenses 2,716 1,439
Deferred income tax benefit 1, 12 9,678 5,460
Total current assets 77,509 85,288
Property and Equipment: 1, 3
Land and buildings 35,796 38,417
Less accumulated depreciation 18,833 18,849
Net land and buildings 16,963 19,568
Equipment 70,890 66,648
Less accumulated depreciation 51,818 48,525
Net equipment 19,072 18,123
Net property and equipment 36,035 37,691
Property Held for Sale 1 2,587
Other Assets (less accumulated amortization of
$11,683 in 1995 and $9,057 in 1994) 1, 2, 11 8,415 8,712
Total $124,546 $131,691
</TABLE>
See notes to consolidated financial statements.
-14-
<PAGE>
<TABLE>
<CAPTION>
June 30, 1995 and June 24, 1994 (In thousands of dollars except share data)
Liabilities and Stockholders' Equity Notes June 30, 1995 June 24, 1994
<S> <C> <C>
Current Liabilities:
Accounts payable $ 7,158 $ 6,702
Federal and state income taxes 1, 12 2,506 2,519
Accrued profit-sharing distribution 6 2,408 2,627
Accrued payroll expense 5,731 5,466
Accrued employee benefit expense 7, 8 6,005 5,637
Deferred revenue 1 1,691 1,233
Accrued exit costs/restructuring charge 9, 10 2,020 1,887
Other accrued expenses 4,650 4,347
Total current liabilities 32,169 30,418
Deferred Income Taxes 1, 12 854 1,794
Commitments and Contingencies 3
Stockholders' Equity:
Preferred stock 4
Common stock, par value, $1 per share -
authorized, 40,000,000 shares; issued,
15,769,501 shares in 1995 and 15,571,803
shares in 1994; outstanding 14,856,541
shares in 1995 and 15,466,219 shares in 1994 4, 5 15,770 15,572
Additional paid-in capital 12,450 9,480
Cumulative foreign currency translation
adjustment 1 (1,683) (2,152)
Retained earnings 82,412 78,306
Total 108,949 101,206
Less treasury stock, at cost - 912,960 shares in
1995 and 105,584 shares in 1994 4 17,426 1,727
Total stockholders' equity 91,523 99,479
Total $124,546 $131,691
</TABLE>
See notes to consolidated financial statements.
-15-
<PAGE>
Statements of Consolidated Income
<TABLE>
<CAPTION>
For the Fiscal Years Ended June 30, 1995, June 24, 1994 and June 25, 1993 (In
thousands of dollars except per share data)
Notes 1995 1994 1993
<S> <C> <C> <C>
Net Sales 1 $263,724 $251,253 $237,144
Operating Expenses:
Cost of sales including shipping costs 94,502 92,166 90,370
Selling and advertising 1 71,002 67,685 70,957
General and administrative 6, 7, 8 69,069 59,607 53,016
Exit costs 9 1,964
Restructuring charge 10 5,450
Total operating expenses 236,537 224,908 214,343
Income From Operations 27,187 26,345 22,801
Other Income (Expense):
Investment income 1,305 1,254 1,307
Interest expense (18)
Total other income 1,305 1,254 1,289
Income Before Income Taxes 28,492 27,599 24,090
Provision for Income Taxes 1, 12 11,818 12,036 9,873
Net Income Before Equity in
Losses of Investment 16,674 15,563 14,217
Equity in Losses of Investment 2 (376)
Net Income $ 16,298 $ 15,563 $ 14,217
Per Share Amounts: 1
Net Income $1.07 $1.01 $.93
Dividends $.80 $.80 $.80
Weighted Average Number of
Shares Outstanding 1 15,245 15,364 15,269
</TABLE>
See notes to consolidated financial statements.
-16-
<PAGE>
Statements of Consolidated Stockholders' Equity
For the Fiscal Years Ended June 30, 1995, June 24, 1994 and June 25, 1993 (In
thousands)
<TABLE>
<CAPTION>
Cumulative
Common Stock Issued Foreign
Number At Par Additional Currency
of Value Paid-In Treasury Translation Retained
Notes Shares Amount Capital Stock Adjustment Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 26, 1992 15,397 $ 15,397 $6,908 $ (2,399) $ 1,185 $73,033 $ 94,124
Issuance of common stock
to employees pursuant to
stock plans 5, 6 12 12 182 592 786
Dividends paid (12,217) (12,217)
Foreign currency
translation adjustment 1 (2,242) (2,242)
Net income 14,217 14,217
Balance, June 25, 1993 15,409 15,409 7,090 (1,807) (1,057) 75,033 94,668
Issuance of common stock
to employees pursuant to
stock plans 5, 6 163 163 2,390 80 2,633
Dividends paid (12,290) (12,290)
Foreign currency
translation adjustment 1 (1,095) (1,095)
Net income 15,563 15,563
Balance, June 24, 1994 15,572 15,572 9,480 (1,727) (2,152) 78,306 99,479
Issuance of common stock
to employees pursuant to
stock plans 5, 6 198 198 2,970 1,299 4,467
Dividends paid (12,192) (12,192)
Acquisition of treasury
stock 4 (16,998) (16,998)
Foreign currency
translation adjustment 1 469 469
Net income 16,298 16,298
Balance, June 30, 1995 15,770 $ 15,770 $ 12,450 $(17,426) $(1,683) $82,412 $ 91,523
</TABLE>
See notes to consolidated financial statements.
-17-
<PAGE>
Statements of Consolidated Cash Flows
<TABLE>
<CAPTION>
For the Fiscal Years Ended June 30, 1995, June 24, 1994 and June 25, 1993 (In
thousands of dollars)
1995 1994 1993
<S> <C> <C> <C>
Cash Flows From Operating
Activities:
Net income $ 16,298 $ 15,563 $ 14,217
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation and amortization 12,676 11,623 9,953
Deferred income taxes (5,062) (1,946) (540)
Exit cost or restructuring charge 1,651 1,887
Provision for losses on accounts
receivable 3,177 2,793 2,742
Employee benefit charges 692 465 370
Changes in assets and liabilities:
Accounts receivable (4,500) (4,630) (3,207)
Inventories and advertising
material (3,346) 462 2,293
Prepaid expenses (1,267) 376 535
Accounts payable 485 (277) (223)
Income taxes payable (12) 928 (845)
Other accrued expenses (881) 2,417 (375)
Net cash provided by operating
activities 19,911 29,661 24,920
Cash Flows From Investing
Activities:
Additions to property and
equipment (10,804) (6,054) (6,475)
Acquisition of product line (334) (9,750)
Investment in unconsolidated
subsidiary (1,800)
Other assets (843)
Purchases of investments (28,438) (36,556) (10,875)
Proceeds from sale of investments 54,649 16,463 13,016
Net cash provided (used) by
investing activities 12,764 (26,481) (14,084)
Cash Flows From Financing
Activities:
Repayment of debt (36) (41) (123)
Proceeds from issuing common stock 3,168 2,633 786
Net treasury stock transactions (15,699)
Dividends paid (12,192) (12,290) (12,217)
Net cash used by financing
activities (24,759) (9,698) (11,554)
Effect of Exchange Rate on Cash 232 (87) (157)
Net Increase (Decrease) in Cash
and Cash Equivalents 8,148 (6,605) (875)
Cash and Cash Equivalents at
Beginning of Year 3,456 10,061 10,936
Cash and Cash Equivalents at End
of Year $ 11,604 $ 3,456 $ 10,061
Supplemental Cash Flow Disclosure:
Income taxes paid $ 13,031 $ 13,425 $ 10,995
Interest paid $ 0 $ 0 $ 118
</TABLE>
See notes to consolidated financial statements.
-18-
<PAGE>
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Basis of Consolidation The financial statements are consolidated to
include the accounts of New England Business Service, Inc. (the "Company") and
its wholly-owned subsidiaries. The Company and its subsidiaries operate
primarily in a single industry segment consisting of the sale of business forms
and related software, other types of printed business products and related
office products. The accounts of the Company's foreign entities have been
translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards No. 52. All significant intercompany accounts and
transactions have been eliminated in consolidation. Cash, Cash Equivalents and
Short-Term Investments The Company considers its holdings in short-term money
market accounts and certificates of deposit with an original maturity to the
Company of three months or less to be cash equivalents. Short-term investments
are classified as available for sale securities and reported at amortized cost,
which approximates fair market value as required by Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Short-term investments are primarily tax-exempt municipal
debt instruments which have a fixed maturity beyond three months. In addition,
the Company holds other tax-exempt municipal debt instruments redeemable at par
value through a put option which can be exercised by the Company at time periods
of one week to one year.
Inventories Inventories are carried at the lower of first-in, first-out cost
or market. At year end, inventories consisted of:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Raw paper $1,130,000 $ 721,000
Business forms and
related office products 8,750,000 7,019,000
Total $9,880,000 $7,740,000
</TABLE>
Direct Mail Advertising The Company adopted the provisions of Statement of
Position 93-7 "Reporting on Advertising Costs" in fiscal 1995. The adoption of
this statement was not material to the Company's financial statements as it
simply amended a previous deferral policy which produced similar results. The
Company expenses the production costs of advertising the first time the
advertising takes place, except for direct-response advertising, which is
capitalized and amortized over its expected period of future benefit. Direct-
response advertising consists primarily of product catalogs and associated
mailing costs. Advertising expense included in selling and advertising was
approximately $39,997,000 in 1995.
Property and Equipment Property and equipment are carried at cost.
Depreciation is computed over the estimated useful lives (three to twenty years)
of the assets using the straight-line method. Property held for sale is stated
at the lower of cost or estimated net realizable value and includes certain
facilities and land no longer used in the Company's operations or held for
future expansion.
Other Assets Other assets consisted principally of purchased customer lists,
acquired software, trade name, a covenant not to compete, goodwill, and customer
and other contracts and are amortized on a straight-line basis over their
estimated lives ranging from five to twenty years.
Revenue Recognition Revenue is recognized from sales other than software
support contracts when a product is shipped. Revenue on software support
contracts is recognized ratably over the contract period, generally twelve
months. Insignificant vendor and post contract support obligations, if any, are
recognized upon shipment.
Capitalized Software Development Costs and Purchased Software The Company
follows Statement of Financial Accounting Standards No. 86, "Accounting for the
Cost of Computer Software to be Sold, Leased, or Otherwise Marketed" ("SFAS No.
86"). Costs incurred prior to the establishment of technological feasibility, as
defined in SFAS No. 86, are charged to research and development expense.
Software development costs are capitalized from the establishment of
technological feasibility until the product is available for general release.
Development costs associated with product enhancements that extend the original
product's life or significantly improve the original product's marketability are
also capitalized if technological feasibility of the enhancement has been
established. Software purchased as part of a business acquisition is recorded at
its estimated fair value. Amortization of capitalized software development costs
is provided on a product-by-product basis at the greater of the amount computed
using (a) the ratio of current gross revenues for a product to the total of
current and anticipated future gross revenues or (b) the straight-line method
over the remaining estimated economic life of the product.
Software development costs of $519,000 were capitalized in 1995. No software
development costs were capitalized in 1994 or 1993. Purchased software costs
acquired in connection with the acquisition of the One-Write Plus product line
are being amortized in accordance with the provisions of SFAS No. 86.
Amortization expense of $1,450,000, $1,383,000 and $553,000 was charged to
operations in fiscal 1995, 1994 and 1993, respectively. Unamortized costs of
$3,827,000 and $4,849,000 are included in other assets at June 30, 1995 and June
24, 1994, respectively.
-19-
<PAGE>
Income Taxes Effective June 26, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). This statement supersedes Statement of Financial Accounting Standards No.
96, "Accounting for Income Taxes," which was previously followed by the Company.
The cumulative effect of adopting SFAS No. 109 was not significant to the
Company's financial statements. The adoption did result in certain
reclassifications of deferred tax assets and liabilities.
Per Share Amounts Net income per share amounts are computed based upon the
weighted average number of shares of common stock outstanding during each fiscal
year. Shares issuable under common stock options have been excluded from the
computations since their inclusion would have no significant dilutive effect.
Concentration of Credit Risk The Company extends credit to approximately 1.3
million geographically dispersed customers on an unsecured basis in the normal
course of business. No individual industry or industry segment is significant to
the Company's customer base. The Company has, in place, policies governing the
extension of credit and collection of amounts due from customers.
Fair Value of Financial Instruments The Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments" which requires the disclosure of fair value
of most financial instruments, both assets and liabilities, for which it is
practical to estimate fair value. The statement is required to be adopted no
later than fiscal 1996. The Company plans to adopt this statement in the first
quarter of fiscal 1996.
Impairment of Long-Lived Assets The Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and
is required to be adopted by the Company no later than fiscal year 1997. This
statement establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those assets
to be held and used and for long-lived assets and certain identifiable
intangibles to be disposed of. The impact of this new standard has not been
fully determined, but is not expected to be material. The date of adoption has
not been determined.
Postemployment Benefits Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" was adopted in the first quarter of
fiscal year 1995. The impact of this adoption was not material to the Company's
financial statements.
Reclassifications Certain reclassifications have been made to the 1994 and
1993 financial statements to conform with the 1995 presentation.
2. Investment in Unconsolidated Subsidiary
On July 8, 1994, the Company acquired a 19 percent equity interest in GST
Software, plc (GST) for $1,800,000 together with an option to acquire the
balance of GST shares. In addition, the Company has advanced GST approximately
$250,000 in the form of a note. GST is a privately held company based in the
United Kingdom which develops and markets desktop publishing graphic design
software which the Company will market under an exclusive distribution agreement
in North America. The Company has elected to treat its investment under the
equity method of accounting due to the degree of control it can exercise over
GST's operations. Accordingly, it is recording a share of GST's losses for the
period. The difference between the Company's underlying equity in the net
tangible assets of GST and its investment is being amortized over 10 years.
3. Debt Obligations and Leases
A line of credit agreement with a major commercial bank allows the Company
to borrow up to $10,000,000 at the bank's base lending rate or 3/8% above the
Eurodollar rate at the Company's option (6.4% at June 30, 1995). This line is
unsecured and may be terminated at any time by either party. At June 30, 1995
and at June 24, 1994, no amounts were outstanding. The minimum rental
commitments for operating leases of certain facilities and equipment total
$1,110,000 in the aggregate, and are payable over the next five years. Total
rental expense was $774,000, $605,000 and $300,000, in 1995, 1994, and 1993,
respectively.
4. Equity Transactions
The Company has issued a stock purchase right to stockholders for each
outstanding share of common stock of the Company. Each right becomes exercisable
upon the occurrence of certain events, as provided in the Rights Agreement, and
entitles the registered holder to purchase from the Company a "Unit" consisting
of one one-hundredth of a share of "Preferred Stock" at a Purchase Price of
$75.00 per Unit, subject to adjustment to prevent dilution. In addition, upon
the occurrence of certain events, the registered holder will thereafter have the
right to receive, upon payment of the Purchase Price, additional shares of
common stock and/or cash
-20-
<PAGE>
and/or other securities, as provided in the Rights Agreement. The rights will
expire on October 20, 2004. The Company may redeem the rights at a price of $.01
per right. On October 20, 1994, the Company announced a plan to repurchase up to
$22,000,000 of its common stock in the open market. The repurchase plan
terminated on June 30, 1995. As of June 30, 1995, the Company had purchased
881,750 shares at a cumulative cost of approximately $16,998,000. There are
1,000,000 authorized and unissued shares of $1.00 par value preferred stock.
5. Stock Options
At the October 1994 annual meeting, the stockholders ratified the NEBS 1994
Key Employee and Eligible Director Stock Option and Stock Appreciation Rights
Plan (the "1994 Plan") and the New England Business Service, Inc. Stock
Compensation Plan (the "Stock Compensation Plan"). Under the 1994 Plan, options
or stock appreciation rights for up to 1,200,000 shares of common stock may be
granted. At June 30, 1995, 971,739 shares are reserved under this plan for
granting of future options. Stock options are granted to purchase stock at fair
market value as of the date the option is granted. Each option is exercisable in
full in terms ranging from one to four years from the date of grant and the
options expire no later than ten years from the date of grant. In addition, the
plan permits the holder of a stock option to make payment for optioned shares by
surrendering shares of the Company's common stock valued at their fair market
value on the date of surrender. Under the Stock Compensation Plan, up to 300,000
shares of common stock may be issued. At June 30, 1995, 300,000 shares are
reserved under this plan for future issuance.
At the October 1990 annual meeting, the stockholders ratified the NEBS 1990 Key
Employee Stock Option and Stock Appreciation Rights Plan (the "1990 Plan").
Under the 1990 Plan, options or stock appreciation rights for up to 1,000,000
shares of common stock may be granted. At June 30, 1995, 30,267 shares are
reserved under this plan for granting of future options. The Company had an
incentive stock option and stock appreciation rights plan ratified by the
stockholders at the October 1980 annual meeting ("the 1980 Plan") under which
key employees could be granted stock options or stock options and stock
appreciation rights for up to 900,000 shares of common stock. The 1980 Plan
expired in 1990, although outstanding options are still exercisable. There were
no outstanding stock appreciation rights under any of the plans during 1995,
1994 or 1993.
A summary of stock option activity under the plans and other arrangements during
1995, 1994, and 1993 is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Number of shares:
Subject to option at
beginning of year 1,140,743 918,214 641,843
Granted during the year 373,976 512,073 312,441
Exercised at $14.50
to $20.25 per share (197,333) (162,836) (11,657)
Expired (92,874) (126,708) (24,413)
Subject to option at
end of year 1,224,512 1,140,743 918,214
Grant price per share $17.50-18.75 $15.88-16.25 $ 14.75
Options outstanding
at end of year:
Aggregate option price $ 21,390,000 $ 19,526,000 $ 16,414,000
Expiration dates 1995 to 2004 1994 to 2003 1993 to 2002
Shares as to which
options are exercisable 781,264 691,443 592,560
Price range of
outstanding options $14.50-25.25 $14.50-25.25 $14.50-25.25
</TABLE>
6. Profit-Sharing Plans
The Company and its subsidiaries have profit-sharing plans for substantially
all of their employees who have completed one year of service. Distributions are
based on net income and payments are made five times a year and for 1995, 1994,
and 1993, distributions under the plans (which were charged to general and
administrative expense) aggregated $3,620,000, $3,133,000, and $2,891,000,
respectively. The Company also has a 401(k) plan covering substantially all
domestic employees eligible to participate in the Company's profit-sharing plan.
Contributions to the plan are made by way of participant salary deferrals and
Company contributions of shares of common stock equal to one-half of participant
deferrals subject to a maximum of 3% of eligible pay. The Company's
contributions (generally from treasury shares) totaled 76,286 shares in 1995,
41,427 shares in 1994, and 27,943 shares in 1993 with a fair market value of
approximately $1,337,000, $650,000, and $450,000, respectively (which were
charged to general and administrative expense). At June 30, 1995, 111,668 shares
are reserved for issuance under this plan.
-21-
<PAGE>
7. Pension Plans
The Company has a defined-benefit, trusteed pension plan which provides
retirement benefits for substantially all of its domestic employees. Benefits
under the plan are primarily based on the employee's compensation during the
five years before retirement and the number of years of service. The Company
funds current pension cost up to the maximum deductible amount allowed by the
Internal Revenue Code.
The components of net pension cost for 1995, 1994, and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost-benefits earned
during the period $ 1,481,000 $ 1,431,000 $ 1,241,000
Interest cost on projected
benefit obligation 1,886,000 1,694,000 1,521,000
Actual return on
plan assets (3,753,000) (188,000) (2,728,000)
Net amortization
and deferral 1,008,000 (2,534,000) 266,000
Net pension cost $ 622,000 $ 403,000 $ 300,000
</TABLE>
The following table sets forth the plan's funded status and obligations as of
June 30, 1995 and June 24, 1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Actuarial present value of
benefit obligations:
Accumulated benefit obligation,
including vested benefits of
$18,259,000 in 1995 and
$14,649,000 in 1994 $ 18,826,000 $ 15,399,000
Projected benefit obligation $(26,939,000) $(23,643,000)
Plan assets at fair value,
primarily stocks and bonds 27,224,000 24,193,000
Plan assets in excess of
projected benefit obligation 285,000 550,000
Add prior service cost 1,923,000 2,508,000
Less:
Unamortized net asset at
transition 1,640,000 1,903,000
Unrecognized net gain 4,516,000 4,480,000
Net pension liability (included in
accrued employee benefit expense) $ (3,948,000) $ (3,325,000)
</TABLE>
Assumptions used in calculating the obligations as of June 30, 1995 and June 24,
1994 were:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Discount rate 7.8% 8.3%
Rate of increase in compensation
levels 5.0 5.5
Expected long-term rate of
return on assets 9.0 9.0
</TABLE>
The Company's Canadian subsidiary has a similar plan for its employees. The
amounts are not significant. In addition, during fiscal 1993 the Company
established a supplemental executive retirement plan which is currently
unfunded. Executive employees are eligible to become members of the plan upon
designation by the Board of Directors. Benefits under the plan are based on the
employees' annual earnings and years of service. Provision for this benefit is
charged to operations over the employees' term of employment. The amounts are
not significant.
8. Postretirement Benefits Other Than Pensions
Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" ("SFAS No. 106")
requires the accrual of postretirement benefits other than pensions (such as
health care benefits) during the years an employee provides service to the
Company. The Company sponsors a defined benefit postretirement plan that
provides health and dental care benefits for retired Corporate Officers. The
plan is contributory and retirees' contributions are adjusted annually. The
following table sets forth the plan's funded status and obligations as of June
30, 1995 and June 24, 1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Retirees $ 401,000 $ 372,000
Eligible active plan participants 69,000 59,000
Other active plan participants 361,000 278,000
APBO 831,000 709,000
Plan assets at fair value 0 0
Accumulated postretirement benefit obligation in
excess of plan assets 831,000 709,000
Unrecognized net gain 106,000 174,000
Net postretirement liability (included in accrued
employee benefit expense) $ 937,000 $ 883,000
</TABLE>
The components of postretirement benefits cost for 1995, 1994 and 1993 are
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost $ 27,000 $ 23,000 $ 23,000
Interest on accumulated postretirement
benefit obligation 58,000 53,000 56,000
Amortization of gain (15,000) (14,000) (9,000)
Net periodic postretirement cost $ 70,000 $ 62,000 $ 70,000
</TABLE>
For measurement purposes, a 12% annual rate of increase in the cost of
providing medical benefits was assumed in 1995, reducing by 1% per year to a
trend rate of 6% for fiscal 2001.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.8% in 1995 and 8.3% in 1994. The health
care cost trend has a significant effect on the amounts reported. An increase of
1% in the rate of increase would have had an effect of increasing the APBO by
$133,000 and the net periodic postretirement benefits cost by $13,000.
-22-
<PAGE>
9. Exit Costs
During the third quarter of fiscal 1995, the Company made the decision to
close its Wisconsin based SYCOM subsidiary and to integrate SYCOM's activities
into other of the Company's operations. As such, the Company recorded a
$1,964,000 pretax charge for exit costs associated with the SYCOM closure. The
charge consisted of facilities and equipment write-offs of approximately
$792,000 and termination benefits of approximately $1,172,000. Approximately 100
employees were terminated as a result of the facility closing. As of June 30,
1995 approximately $313,000 has been expended related to termination benefits
with substantially all of the remaining $859,000 to be expended during fiscal
year 1996. The closure of the facility is expected to be substantially completed
over the next two quarters.
10. Restructuring Charge
During fiscal 1994, the Company recorded a $5,450,000 pretax charge
related to a restructuring program. The objectives of this program were to
increase the Company's competitiveness, permit investments in new business
development, and to strengthen margins. The restructuring program included the
realignment of the Company's marketing and manufacturing organizations. The
restructuring charge consisted of approximately $4,700,000 of anticipated cash
payments related to employee termination and other postemployment benefits. In
addition, approximately $150,000 was related to the noncash write-down of
operating assets, and approximately $600,000 was related to the anticipated cash
outflows for facility closing and relocation costs associated with the closing
of two small administrative facilities. Approximately $4,481,000 of the total
anticipated cash outflows were made as of June 30, 1995 with substantially all
of the remaining $219,000 of cash outflows to be made pursuant to severance and
other agreements during fiscal 1996.
11. Acquisition of Product Line
On January 15, 1993, the Company acquired the One-Write Plus ("OWP")
product line from MECA Software, Inc. ("MECA"). The total purchase price
amounted to $10,282,000. The acquisition was accounted for under the purchase
method of accounting and, accordingly, OWP's results of operations are included
in the accompanying financial statements from the date of acquisition. The
purchase price was allocated to the net assets acquired based on the fair value
of such assets and liabilities. A large portion of the purchase price was
allocated to specifically identifiable intangibles.
12. Income Taxes
The components of income before income taxes were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
United States $26,900,000 $25,238,000 $20,815,000
Canadian 1,592,000 2,361,000 3,275,000
Total $28,492,000 $27,599,000 $24,090,000
</TABLE>
Provisions for income taxes under SFAS No. 109 in 1995 and 1994 and SFAS No. 96
in 1993 consisted of:
Currently payable:
<TABLE>
<S> <C> <C> <C>
Canadian 1,592,000 2,361,000 3,275,000
Federal $11,931,000 $ 9,837,000 $ 6,706,000
State 4,232,000 3,145,000 2,400,000
Canadian 684,000 978,000 1,320,000
Total 16,847,000 13,960,000 10,426,000
Deferred (5,029,000) (1,924,000) (553,000)
Total $11,818,000 $12,036,000 $ 9,873,000
</TABLE>
Cumulative earnings of the Company's Canadian subsidiary are subject to
withholding taxes of approximately $1,806,000 in the event such earnings are
distributed to the U.S. No tax provision has been made as the Company's intent
is to reinvest all earnings.
The tax effects of significant items comprising the Company's net deferred
tax asset (liability) as of June 30, 1995 are as follows:
<TABLE>
<CAPTION>
Current Noncurrent
<S> <C> <C>
Deferred tax assets:
Amortization of intangible assets $2,542,000
Pension plans 1,758,000
Accrued vacation 1,265,000
Allowance for doubtful accounts 1,237,000
Accrued expenses 936,000
Accrued exit costs 693,000
Sales returns and allowances 459,000
Inventory 397,000
Postretirement benefits 391,000
Deferred tax liabilities:
Depreciation $ (689,000)
Other (165,000)
Net deferred tax asset (liability) $9,678,000 $ (854,000)
</TABLE>
The tax effects of significant items comprising the Company's net deferred
tax asset (liability) as of June 24, 1994 are as follows:
<TABLE>
<CAPTION>
Current Noncurrent
<S> <C> <C>
Deferred tax assets:
Pension plans $ 1,486,000
Allowance for doubtful accounts 1,120,000
Accrued restructuring charge 678,000
Accrued vacation 642,000
Inventory 572,000
Sales returns and allowances 405,000
Postretirement benefits 397,000
Accrued expenses 160,000
Other $ 100,000
Deferred tax liabilities:
Depreciation $(1,603,000)
Other (191,000)
Net deferred tax asset (liability) $5,460,000 $(1,694,000)
</TABLE>
-23-
<PAGE>
A reconciliation of the provisions for income taxes to the U. S. Federal income
tax statutory rates follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 34.0%
State income taxes (less federal tax benefits) 6.5 6.4 6.2
Other - net 2.2 (0.8)
Effective tax rate 41.5% 43.6% 41.0%
</TABLE>
13. Financial Information by Geographic Area
The Company markets its products directly to very small businesses and
professional offices in the United States, Canada and the United Kingdom.
Profit from operations represents all identifiable operating expenses.
Investment income, interest expense and income taxes are excluded from
geographic area operating data. Sales or transfers between geographic areas
were not material. General corporate expenses are included under the Company's
domestic operations.
<TABLE>
<CAPTION>
(In Thousands)
1995 Domestic International Consolidated
<S> <C> <C> <C>
Net sales $241,844 $21,880 $263,724
Income from operations 26,511 676 27,187
Identifiable assets 103,868 20,678 124,546
<CAPTION>
1994
<S> <C> <C> <C>
Net sales $230,543 $20,710 $251,253
Income from operations 24,795 1,550 26,345
Identifiable assets 108,998 22,693 131,691
<CAPTION>
1993
<S> <C> <C> <C>
Net sales $215,184 $21,960 $237,144
Income from operations 20,561 2,240 22,801
Identifiable assets 98,814 21,810 120,624
</TABLE>
14. Quarterly Financial Information (Unaudited)
The following financial information is in thousands of dollars except per
share amounts.
<TABLE>
<CAPTION>
First Second Third Fourth Total
1995 Quarter Quarter Quarter Quarter Year
<S> <C> <C> <C> <C> <C>
Net sales $62,079 $69,479 $68,832 $63,334 $263,724
Gross profit 40,038 44,989 44,212 39,983 169,222
Income before income taxes 8,239 9,202 4,387 6,664 28,492
Net income 4,633 5,259 2,570 3,836 16,298
Earnings per share $ .30 $ .34 $ .17 $ .26 $ 1.07
Dividends per share $ .20 $ .20 $ .20 $ .20 $ .80
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
1994
<S> <C> <C> <C> <C> <C>
Net sales $59,820 $65,550 $63,424 $62,459 $251,253
Gross profit 36,769 42,685 40,112 39,521 159,087
Income before income taxes 1,305 8,891 8,609 8,794 27,599
Net income 762 4,967 4,919 4,915 15,563
Earnings per share $ .05 $ .32 $ .32 $ .32 $ 1.01
Dividends per share $ .20 $ .20 $ .20 $ .20 $ .80
</TABLE>
-24-
<PAGE>
Management Discussion and Analysis
Liquidity and Capital Resources
Cash provided by operating activities was $19.9 million in 1995
representing a 33.0% decrease from the $29.7 million provided in 1994. This
decrease was primarily the result of a payment of additional taxes resulting
from the Company's most recent Federal audit and increased inventory investment.
In 1994, cash from operations increased $4.7 million from 1993 due to higher
operating earnings as well as the effects of depreciation, amortization and the
unexpended restructuring reserve.
Working capital at June 30, 1995 amounted to $45.3 million including $23.0
million of cash and short-term investments. This compares to $54.9 million of
working capital including cash and short-term investments of $41.0 million at
the end of fiscal 1994. The decrease in working capital was due primarily to the
repurchase of $17.0 million of the Company's common stock on the open market in
accordance with the authorization to purchase up to $22.0 million of the
Company's common stock announced in October, 1994. The decrease in working
capital was also due in part to the Company's expenditure of $1.8 million
related to the acquisition of a 19 percent equity interest in GST Software, plc
(GST) together with an option to purchase the balance of GST shares.
Capital expenditures of $10.8 million in 1995 represented a significant
increase over the $6.1 million and $6.5 million expended during 1994 and 1993,
respectively. The capital expenditures in fiscal 1995 included investment in
electronic prepress equipment and digital imaging presses to meet the growing
demand for short-run color printing. In addition, the Company upgraded its
customer service and order handling systems. Expenditures in fiscal 1994 and
1993 were lower due to cost containment activities. In addition to its present
cash and investment balances, the Company has consistently generated sufficient
cash internally to fund its needs for working capital, dividends and capital
expenditures. However, should the Company need additional funds, it has an
unsecured line of credit with a major bank for $10 million.
At present, there are no outstanding balances against this line.
Results of Operations
1995 versus 1994 Net sales increased 5.0% from $251.3 million in 1994 to
$263.7 million in 1995. This sales increase was composed of price increases of
2.1% or $5.3 million, volume growth of approximately 1.8% or $4.5 million and
the impact of the additional week in fiscal year 1995 of 1.1% or $2.7 million.
The primary source of growth for the year was from increased sales of
computer forms and image products. These products accounted for approximately
57% and 34% of the net sales growth, respectively.
Cost of sales decreased from 36.7% of sales in 1994 to 35.8% of sales in
1995. This decrease was the result of product price increases, stable material
costs and reduced spoilage. It is expected that the cost of paper will
increase in the foreseeable future due to strong demand and limited capacity in
the paper industry. The Company has taken steps necessary to mitigate the
impact including the acceleration of paper purchases. The Company anticipates
being able to offset the potential impact of a paper cost increase with product
price actions and cost reduction initiatives during fiscal year 1996.
Selling and advertising expenses remained stable at 26.9% of sales in 1994
and 1995. More effective promotional programs, better targeted mailings to
customers and the impact of last year's restructuring program were primarily
responsible for the stability in these costs. The United States Postal Service
increased third class postage rates by approximately 14% in January, 1995. The
Company has reduced the size and weight of some mail pieces and eliminated
marginal mailings to compensate for a portion of the postage increase. The
Company anticipates being able to offset similar cost increases with product
price increases in the future.
General and administrative expenses increased from 23.7% of sales in 1994
to 26.2% of sales in 1995. This increase was the result of costs associated with
servicing the Company's expanded software product line, capital improvements to
the Company's order processing system, and costs associated with the Company's
retail channel initiatives.
During fiscal 1994 the Company recorded a $5.45 million pretax charge
related to a restructuring program. As of June 30, 1995 approximately $.4
million remains in the reserve. The remaining amounts will be expended pursuant
to severance and other agreements during fiscal 1996.
During the third quarter, the Company recorded a $2.0 million pretax charge
or $.07 per share, for exit costs related to the closure of the Company's
Wisconsin based SYCOM facility. The $2.0 million pretax charge for exit costs
consisted of (i) approximately $1.2 million of anticipated cash payments for
postemployment benefits in conjunction with the termination of approximately 100
employees, and (ii) approximately $.8 million for anticipated non-cash
facilities and equipment write-offs. As of June 30, 1995, approximately $.3
million has been expended related to the termination of approximately 100
employees, with the remainder expected to be expended during fiscal 1996.
The Company also incurred pretax integration expense of approximately $.9
million during fiscal 1995. The integration expense included systems conversion,
personnel and equipment relocation and related transition expenditures and was
included in
-25-
<PAGE>
other operating expenses. When fully completed, the integration is expected to
save the Company about $1.8 million annually.
The Company will continue to seek opportunities to enhance the cost
structure of the Company, to improve operating efficiencies, and to fund
investments in support of the Company's strategy. The provision for income taxes
as a percentage of pretax income decreased from 1994 to 1995 due primarily to
higher tax free interest yields on the Company's tax-free marketable securities
portfolio.
In fiscal year 1995, the Company's adoption of Statement of Financial
Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment
Benefits" and SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" were not significant to the financial statements.
1994 versus 1993 Net sales in 1994 increased 6.0% to $251.3 million from $237.1
million in 1993. This sales increase was composed of price increases of
approximately 1.8% or $4.3 million and unit volume growth of 4.2% or $9.9
million. Computer forms, One-Write Plus software, image products and custom
forms contributed to the growth.
Cost of sales decreased from 38.1% of sales in 1993 to 36.7% in 1994. This
decrease was the result of product mix changes, price increases, stable material
costs, improved productivity and effective production cost management. Selling
and advertising expenses decreased from 29.9% of sales in 1993 to 26.9% in 1994.
This decrease reflected cost reduction actions implemented in the first quarter
of 1994 and more effective marketing and advertising programs. General and
administrative costs increased from 22.4% of sales in 1993 to 23.7% in 1994.
This increase was due primarily to costs associated with the Company's expanded
software product line.
During 1994, the Company recorded a $5.45 million pretax charge related to
a restructuring program. The restructuring charge consisted of approximately
$4.7 million of anticipated cash payments related to employee termination and
other employment benefits. In addition, approximately $.2 million was related to
the noncash write-down of operating assets and approximately $.6 million was
related to the anticipated cash outflows for facility closings and relocation
costs. Approximately $4.5 million of the total anticipated cash outflows were
made as of June 30, 1995 with substantially all of the remaining $.2 million of
cash outflows to be made pursuant to severance and other agreements.
The provision for income taxes as a percentage of pre-tax income increased
from 1993 to 1994 due to a smaller proportion of tax-exempt income resulting
from lower interest rates and changes in Federal tax laws creating a higher
corporate tax rate and less favorable treatment of certain foreign source
income.
In 1994, the Company's adoption of SFAS No. 109, "Accounting for Income
Taxes" was not significant to the financial statements. The adoption did result
in certain reclassifications of deferred tax assets and liabilities.
Other
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" was issued in March, 1995 and must be
adopted no later than fiscal year 1997. SFAS No. 107, "Disclosures about Fair
Value of Financial Instruments" was issued in December, 1991 and must be adopted
no later than fiscal 1996. The Company plans to adopt these Statements within
the required period and does not expect that either of them will have a material
effect on its financial position or results of operations.
Common Stock
The Company's Common Stock was traded in the over-the-counter market and
quoted on the NASDAQ National Market System until February 24, 1995 when the
Company transferred the listing and trading of the Company's Common Stock to the
New York Stock Exchange ("NYSE"). High and low bid prices of the Company's
Common Stock for each quarter by NASDAQ and the NYSE were as follows:
<TABLE>
<CAPTION>
Fiscal 1995 High Low Fiscal 1994 High Low
<S> <C> <C> <C> <C> <C>
1st Quarter 19 1/2 17 1/4 1st Quarter 17 1/4 15 1/2
2nd Quarter 19 1/4 16 1/4 2nd Quarter 19 3/4 14 3/4
3rd Quarter 20 17 3/4 3rd Quarter 21 3/4 18 1/4
4th Quarter 22 3/8 16 3/4 4th Quarter 21 3/4 17 3/4
</TABLE>
-26-
<PAGE>
Independent Auditors' Report
To the Board of Directors and Stockholders of New England Business Service,
Inc.:
We have audited the accompanying consolidated balance sheets of New England
Business Service, Inc. and its subsidiaries as of June 30, 1995 and June 24,
1994, and the related statements of consolidated income, consolidated
stockholders' equity, and consolidated cash flows for each of the three years in
the period ended June 30, 1995. These financial statements are the
responsibility of the Company'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 consolidated financial statements present fairly, in
all material respects, the financial position of the Company at June 30, 1995
and June 24, 1994 and the results of their operations and their cash flows for
each of the three years in the period ended June 30, 1995 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
July 28, 1995
-27-
<PAGE>
Corporate Officers
Richard H. Rhoads
William C. Lowe
Edward M. Bolesky,
Timothy D. Althof,
Sally C. Davis,
Robert S. Brown, Jr.
Gerald G. Kokos,
Russell V. Corsini, Jr.,
Kenneth R. Kaisen,
Michael F. Dowd
John F. Fairbanks,
Peter J. Zarrilla
Linda A. Jacobs,
Thomas W. Freeze,
Steven G. Schlerf (Not Pictured)
Page 28 Photographs of NEBS Corporate Officers: Richard H. Rhoads,
William C. Lowe, Edward M. Bolesky, Timothy D. Althof,
Sally C. Davis, Robert S. Brown, Jr., Gerald G. Kokos,
Russell V. Corsini, Jr., Kenneth R. Kaisen, Michael F. Dowd,
John F. Fairbanks, Peter J. Zarrilla, Linda A. Jacobs, and
Thomas W. Freeze
-28-
<PAGE>
Corporate Information
Board of Directors
Richard H. Rhoads
Chairman of the Board,
New England Business Service, Inc.
Peter A. Brooke
Chairman and
Chief Executive Officer, Advent International Corporation
Benjamin H. Lacy
President,
Clipper Ship Foundation, Inc.
William C. Lowe
President,
Chief Executive Officer,
New England Business Service, Inc.
Robert J. Murray
Executive Vice President,
North Atlantic Group,
The Gillette Company
Frank L. Randall, Jr.
Vice Chairman (retired),
North American Phillips Corporation
Jay R. Rhoads, Jr.
Chairman of the Board (retired), New England Business Service, Inc.
Brian E. Stern
President,
Personal Document Products Division,
Xerox Corporation
Board Committees
Executive Committee
Benjamin H. Lacy
William C. Lowe
Richard H. Rhoads
Audit Committee
Peter A. Brooke
Benjamin H. Lacy
Robert J. Murray
Nominating Committee
Frank L. Randall, Jr.
Jay R. Rhoads, Jr.
Organization and
Compensation Committee
Peter A. Brooke
Benjamin H. Lacy
Robert J. Murray
Stock Option Committee
Peter A. Brooke
Robert J. Murray
NEBS Foundation Directors
Peter A. Brooke
Benjamin H. Lacy
Jay R. Rhoads, Jr.
Corporate Officers
William C. Lowe
President,
Chief Executive Officer
Timothy D. Althof
Vice President,
Corporate Controller
Edward M. Bolesky
Vice President-
General Manager,
Business Solutions
and Operations
Robert S. Brown, Jr.
Vice President-
General Manager, Subsidiaries
Russell V. Corsini, Jr.
Vice President,
Chief Financial Officer
Sally C. Davis
Vice President-
Business Planning
and Development
Michael F. Dowd, Esq.
Vice President-
General Manager, Corporate Marketing
and Strategy
John F. Fairbanks
Treasurer and Secretary
Thomas W. Freeze
Vice President- Finance and Administration,
Image Products
Linda A. Jacobs
Vice President-
General Manager,
Image Products
Kenneth R. Kaisen
Vice President- General Manager, Business Solutions Marketing
and Information Systems
Gerald G. Kokos
Vice President-
General Manager,
Software and Services
Steven G. Schlerf
Vice President- Image Manufacturing and Product Development
Peter J. Zarrilla
Vice President-
Human Resources
Corporate Office
NEBS
500 Main Street
Groton, MA 01471
Telephone:
508-448-6111
Annual Meeting
The annual meeting of
stockholders will be held
on Friday, October 27, 1995 at 10:00 am. at the Company's
offices in Groton, Massachusetts.
Form 1O-K Available
A copy of the annual report filed with the Securities and
Exchange Commission on Form
10-K is available to
shareholders, without charge, upon written request to:
John F. Fairbanks
Treasurer and Secretary
NEBS
500 Main Street
Groton, MA 01471
Legal Counsel
Hill & Barlow, a Professional Corporation,
One International Place
Boston, Massachusetts
Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts
Transfer Agent and Registrar
The First National
Bank of Boston
100 Federal Street
Boston, Massachusetts
<PAGE>
New England Business Service, Inc.
500 Main Street, Groton, Massachusetts 01471
Printed on Recycled Paper
40% Pre-Consumer Content
10% Post-Consumer Content
Outside Back Cover Graphics of NEBS logo
<PAGE>
LIST OF SUBSIDIARIES
SYCOM, INC.
NEBS Business Forms Limited
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in Registration Statement Nos.
2-69422, 2-72662, 33-38925, 33-43900 and 33-56227 of New England Business
Service, Inc. on Form S-8 of our reports dated July, 28, 1995, appearing and
incorporated by reference in this Annual Report on Form 10-K of New England
Business Service, Inc. for the year ended June 30, 1995.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
September 15, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF NEW ENGLAND BUSINESS SERVICE, INC. AND ITS
SUBSIDIARIES AS OF JUNE 30, 1995 AND THE RELATED STATEMENTS OF CONSOLIDATED
INCOME, STOCKHOLDERS' EQUITY, AND CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 11,604
<SECURITIES> 11,360
<RECEIVABLES> 32,636
<ALLOWANCES> (3,304)
<INVENTORY> 9,880
<CURRENT-ASSETS> 77,509
<PP&E> 106,686
<DEPRECIATION> 70,651
<TOTAL-ASSETS> 124,546
<CURRENT-LIABILITIES> 32,169
<BONDS> 0
<COMMON> 15,770
0
0
<OTHER-SE> 75,753
<TOTAL-LIABILITY-AND-EQUITY> 124,546
<SALES> 263,724
<TOTAL-REVENUES> 263,724
<CGS> 94,502
<TOTAL-COSTS> 142,035
<OTHER-EXPENSES> (929)
<LOSS-PROVISION> 3,177
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 28,492
<INCOME-TAX> 11,818
<INCOME-CONTINUING> 16,298
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,298
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
