SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 26, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
Commission File No. 001-11427
401K PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
AND
PAYROLL STOCK OWNERSHIP PLAN
(Full Title of Plan)
NEW ENGLAND BUSINESS SERVICE, INC.
500 Main Street
Groton, Massachusetts 01471
(Name of Issuer of Securities held pursuant to the Plan
and address of its principal executive office)
(978) 448-6111
(Telephone Number)
<PAGE>
The following exhibits are being filed as part of this Form 11-K:
INDEX TO EXHIBITS
Exhibit
Number
1 401K Plan for Employees of New England Business Service,
Inc. Financial Statements for the Years Ended June 26, 1999
and June 27, 1998, Supplemental Schedules for the Year Ended
June 26, 1999 and Independent Auditors' Report
2 New England Business Service, Inc. Payroll Stock Ownership
Plan Financial Statements for the Years Ended June 26, 1999
and June 27, 1998, Supplemental Schedules for the Year
Ended June 26, 1999 and Independent Auditors' Report
3 Consent of Deloitte & Touche, LLP.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 15(d) of the Securities exchange
act of 1934, the Committee administering the Plans has duly caused this annual
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
401K Plan for Employees of New
England Business Service, Inc.
and Payroll Stock Ownership Plan
Date: December 23, 1999
-----------------
By: /S/Robert J. Murray
-----------------------------
Robert J. Murray
/S/Robert H. Glaudel
-----------------------------
Robert H. Glaudel
/S/Daniel M. Junius
-----------------------------
Daniel M. Junius
------------------------------------------
401(k) Plan for Employees
of New England Business
Service, Inc.
Financial Statements for the
Years Ended June 26, 1999 and
June 27, 1998, and Supplemental Schedules
as of and for the Year Ended June 26, 1999
and Independent Auditors' Report
<PAGE>
401(k) PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF JUNE 26, 1999 AND JUNE 27, 1998 AND FOR
THE YEARS THEN ENDED:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-9
SUPPLEMENTAL SCHEDULES AS OF JUNE 26, 1999 AND FOR THE YEAR THEN ENDED:
Item 27a - Schedule of Assets Held for Investment Purposes 10
Item 27d - Schedule of Reportable Transactions 11
Schedules required under the Employee Retirement Income Security Act of 1974,
other than the schedules listed above, are omitted because of the absence of
the conditions under which the schedules are required.
<PAGE>
INDEPENDENT AUDITORS' REPORT
401(k) Plan for Employees of
New England Business Service, Inc.
We have audited the accompanying statements of net assets available for
benefits of the 401(k) Plan for Employees of New England Business Service,
Inc. (the "Plan") as of June 26, 1999, and June 27, 1998, and the related
statements of changes in net assets available for benefits for the years then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at June 26, 1999
and June 27, 1998, and the changes in its net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental
schedules listed in the Table of Contents are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements, but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These schedules are the
responsibility of the Plan's management. Such supplemental schedules have
been subjected to the auditing procedures applied in our audit of the basic
1999 financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic financial
statements taken as a whole.
/S/Deloitte & Touche, LLP.
- ------------------------------
November 30, 1999
<PAGE>
<TABLE>
401(k) PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 26, 1999 AND JUNE 27, 1998
- ---------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments, at fair value:
Norwest Stable Return GIC Fund (common/collective trust) $ 8,947,651 $ 7,646,763
New England Business Service, Inc. common stock
(511,073 shares in 1999 and 389,701 shares in 1998) 15,779,379 12,567,847
Equity mutual funds 43,396,095 34,271,207
Bond mutual funds 3,076,246 2,340,342
Norwest money market fund 372,589 371,725
Loans to participants 1,935,555 1,662,157
------------ -----------
Total investments 73,507,515 58,860,041
Cash 310,057 97,349
Receivables - accrued income 44,190 1,605
------------ -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 73,861,762 $ 58,958,995
============= ============
</TABLE>
See notes to financial statements.
-2-
<PAGE>
<TABLE>
401(k) PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED JUNE 26, 1999 AND JUNE 27, 1998
- ----------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS:
Employee contributions $ 5,990,439 $ 6,608,078
Rollover contributions 722,722 11,395,278
Employer contributions 4,637,496 3,836,351
Net appreciation in fair value of investments 6,479,436 6,933,780
Interest and dividend income 872,666 811,639
Transfer in from NEBS PAYSOP (Note 1) 545,841 -
------------ ------------
Total additions 19,248,600 29,585,126
------------ ------------
DEDUCTIONS:
Benefits paid to participants 4,302,482 3,195,351
Administrative fees 43,351 42,255
------------ ------------
Total deductions 4,345,833 3,237,606
------------ ------------
NET INCREASE 14,902,767 26,347,520
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 58,958,995 32,611,475
------------ ------------
End of year $ 73,861,762 $ 58,958,995
============ ============
</TABLE>
See notes to financial statements.
-3-
<PAGE>
401(k) PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following brief description of the 401(k) Plan for Employees of New
England Business Service, Inc. (the "Plan") provides general information only.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
General Information - On October 26, 1984, New England Business Service, Inc.
("NEBS" or the "Company") adopted a deferred profit-sharing and stock
ownership plan. The Plan became effective as of June 30, 1984. On July 1,
1993, the Plan was amended to incorporate provisions of Section 401(k) of the
Internal Revenue Code. The Plan is designed to allow eligible employees to
accumulate savings for retirement in the Plan without paying income taxes
until the monies are actually received. Employees may elect to defer receipt
of a portion of their eligible pay by having such amounts paid into the Plan.
If an employee chooses to defer payment of this eligible pay, the Company will
make an additional contribution to the Plan on the employee's behalf. The
Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"). The Plan was last amended effective as of June 28,
1998. On June 28, 1998, the plan assets of NEBS Payroll Stock Ownership Plan
were transferred to the Plan.
Eligibility - Regular Employees are eligible to participate in the Plan the
first of the month following the date of hire. For Non-Regular Employees
(temporary employees), the employee must complete one year of eligibility
service (1,000 hours of service). Officers and directors of the Company who
are full-time employees and meet the foregoing eligibility requirements are
eligible for participation.
Administration of the Plan - The Plan is administered by the NEBS Retirement
Committee (the "Plan Committee"), whose members are appointed by the Board of
Directors of the Company. The Trustee of the Plan is Norwest Bank Minnesota,
N.A. ("Norwest"). Certain administrative costs of the Plan have been assumed
by the Company.
Company Contributions - When an employee makes a deferral, the Company will
make a matching contribution of cash or shares of its common stock. If the
employee has less than five years of service, the matching contribution is
equal in value to one-half of the amount of the deferral, but not to exceed 6%
of the employee's eligible pay. If the employee has greater than five years
of service, the matching contribution is equal in value to 100% of the amount
of the deferral, but not to exceed 6% of the employee's eligible pay. In
addition, the Company contributes 3% of an employee's eligible pay, even if
the employee does not contribute to the Plan.
Employee Contributions - Eligible employees must complete a notice of election
to defer receipt of a portion (in multiples of 1%) of their eligible pay as
defined by the Plan. The deferral may not exceed 15% of a participant's
eligible pay. A participant may change the rate of future deferrals through
the Norwest Benefits Helpline. If the change is requested by the 22nd, the
change is effective the 1st of the following month.
-4-
<PAGE>
1. DESCRIPTION OF THE PLAN (CONTINUED)
Loans to Participants - Eligible participants may apply for and obtain a loan
in an amount as defined in the Plan (not less than $1,000 and not to exceed
the lessor of $50,000 or 50% of their vested balance). Loans bear a market
rate of interest equal to the prime lending rate plus two percentage points,
as published in The Wall Street Journal. The loan must be for a nonrenewable
term of no more than five years and repaid by regular payroll deductions.
Payments of principal and interest are credited to the participant's account.
Only one loan will be allowed to a participant at any given time. The loans
are collateralized by 50% of the participant's vested account balance.
Investment of Contributions - Company contributions are invested in Company
common stock. Employee contributions are invested at the direction of the
employee in any combination of the following: (1) Company common stock;
(2) six mutual funds; (3) fixed income investments such as investment
contracts providing a guaranteed interest rate; or (4) any other investments
subsequently authorized by the Plan Committee. Employees have the option to
move the Company contribution from Company common stock to any of the six
mutual funds or fixed income investments. Dividends, interest and other
distributions received in any fund with respect to any type of contribution
are reinvested in the same fund. In the absence of directions by the employee
concerning investment of employee contributions, they are invested in the
fixed income fund.
Vesting - Participants are fully vested with respect to employee
contributions. Company contributions made pursuant to the Plan subsequent to
July 1, 1997 are vested 20% after completing one year of service, 50% after
completing two years of service and 100% vested after completing three years
of service. All Company contributions prior to July 1, 1997 are 100% vested.
Forfeitures - All forfeitures are used to reduce future Company contributions.
Withdrawals and Distributions - Contributions to the Plan from all sources,
and earnings thereon, are generally payable at termination of employment due
to retirement, disability, death or any other reason. Distribution payments
may be made in cash in a lump sum, in whole shares of Company common stock
held in the employee's account in the Plan with the value of fractional shares
paid in cash, or in installments for a period not exceeding the employee's
life expectancy or the joint life expectancies of the employee and
beneficiary,up
to a maximum of fifteen years. The form of distribution is elected in writing
by the employee.
Withdrawals prior to termination of employment are subject to certain
limitations and restrictions.
Participants' Accounts - An account is set up in the name of each participant
to record employee and Company matching contributions made on the
participant's behalf and other transactions that occur in connection with the
employee's participation in the Plan. Each fiscal quarter, participants
receive a statement of account, listing contributions, equivalent number of
shares of Company common stock in the account and the market value of the
funds in the account.
Plan Amendment and Termination - The Company has the right to amend, suspend
or terminate the Plan, but may not do so in a way which would divest a
participant of accrued benefits. If the Plan is terminated, the Trustee will
distribute the assets held in the Trust, after payment of expenses, in such a
manner as the Plan Committee shall determine and as may be required by law.
-5-
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting - The financial statements of the Plan are prepared on
the accrual basis of accounting. Purchases and sales of securities are
recorded on the trade-date basis. Interest income is recorded on the accrual
basis. Dividends are recorded on the ex-dividend date.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan administrator to
make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those estimates.
Investments - Investments are stated at fair value based on quoted market
prices.
Distributions to Participants - Distributions to participants are recorded
when paid.
3. INVESTMENTS
Investments that represent 5% or more of net assets available for benefits as
of June 26, 1999 and June 27, 1998 are as follows:
1999 1998
Norwest Stable Return GIC Fund
(common/collective Trust) $8,947,651 $7,646,763
Fidelity Contrafund 15,638,223 11,450,790
New England Business Service, Inc. common stock 15,779,379 12,567,847
Dodge and Cox Balanced Fund 8,643,966 7,644,785
Vanguard Index Trust 500 Fund 12,310,795 8,863,846
Norwest Small Cap Opportunities Fund 3,721,579 3,953,796
-6-
<PAGE>
3. INVESTMENTS (CONTINUED)
The Plan's investments (including gains and losses on investments bought and
sold, as well as held during the year) appreciated in value by $6,479,436 and
$6,933,780, respectively, as follows:
1999 1998
At fair value based on quoted market prices:
Norwest Stable Return GIC Fund $ 511,640 $ 440,233
Fidelity Intermediate Bond Fund - 3,343
Fidelity Balanced Fund - 84,347
Fidelity Contrafund 2,958,362 2,371,456
New England Business Service, Inc. common stock (345,639) 1,333,761
Norwest Strategic Income Fund 205,936 153,782
Dodge & Cox Balanced Fund 949,552 600,490
Vanguard Index Trust 500 Fund 2,062,349 1,548,529
Norwest Small-Cap Opportunities Fund (281,489) 302,610
American Euro-Pacific Growth Fund 418,725 95,229
---------- ----------
Total $6,479,436 $6,933,780
========== ==========
The Plan's principal investments include the following:
Norwest Stable Return GIC Fund - A collective investment trust whose
underlying investments include guaranteed investment contracts.
Dodge & Cox Balanced Fund - Fund invests in both equity securities and
convertible bonds.
Vanguard Index Trust 500 Fund - Fund invests in equity securities of large
domestic companies that comprise the Standard & Poor's 500 Index.
Norwest Small-Cap Opportunities Fund - Fund invests solely in investment
assets of smaller companies.
Fidelity Contrafund - Fund invests in equity securities of U.S. and foreign
issuers, including those in emerging markets.
New England Business Service, Inc. Common Stock - Invests in common stock
of New England Business Service, Inc.
Norwest Strategic Income Fund - Fund invests in both stocks and bonds.
American Euro-Pacific Growth Fund - Fund invests in stock of companies based
outside the U.S.
-7-
<PAGE>
4. TAX STATUS OF THE PLAN
The Plan obtained its latest determination letter on February 12, 1996 in
which the Internal Revenue Service stated that the Plan, as then designed, was
in compliance with applicable requirements of the Internal Revenue Code (the
"Code"). The Plan has subsequently been amended; however,the plan
administrator believes that the Plan is currently designed and being operated
in compliance with applicable requirements of the Code. Accordingly, no
provision for income taxes has been included in these financial statements.
-8-
<PAGE>
<TABLE>
5. BY-FUND INFORMATION
Interest and dividend income, employer, participant and rollover contributions, benefits paid to participants and net appreciation
(depreciation) in fair value of investments for the years ended June 26, 1999 and June 27,1998 are as follows:
<CAPTION>
Net
Appreciation
Interest Benefits (Depreciation)
and Paid in Fair Value
Dividend Employer Participant Rollover to of
Income Contributions Contributions Contributions Participants Investments
<S> <C> <C> <C> <C> <C> <C>
1999
Norwest Stable Return GIC Fund $ - $ - $ 517,963 $ 47,424 $1,065,983 $ 511,640
Fidelity Contrafund 65,660 - 967,855 95,490 524,817 2,958,362
Stock Fund (a) 381,491 4,637,496 629,415 29,109 637,068 (345,639)
Norwest Strategic Income Fund - - 208,052 61,457 89,277 205,936
Dodge & Cox Balanced Fund 61,152 - 594,777 176,919 319,847 949,552
Vanguard Index Trust 500 Fund 164,080 - 1,042,929 211,072 394,125 2,062,349
Norwest Small-Cap Opportunities Fund - - 486,450 40,003 74,942 (281,489)
American Euro-Pacific Growth Fund 22,603 - 353,466 61,248 104,041 418,725
Other Investments 177,680 - 1,189,532 - 1,092,382 -
---------- ---------- ---------- ---------- ---------- -----------
$ 872,666 $4,637,496 $5,990,439 $ 722,722 $4,302,482 $ 6,479,436
========== ========== ========== ========== ========== ===========
1998
Norwest Stable Return GIC Fund $ - $ - $ 540,022 $2,056,134 $ 479,929 $ 440,233
Fidelity Intermediate Bond Fund 6,264 - - - - 3,343
Fidelity Balanced Fund - - - - - 84,347
Fidelity Contrafund 59,856 - 897,442 2,016,450 495,804 2,371,456
Stock Fund (a) 282,822 3,836,351 1,056,096 841,276 648,673 1,333,761
Norwest Strategic Income Fund 87,924 - 182,483 754,503 118,616 153,782
Dodge & Cox Balanced Fund 174,191 - 571,845 2,026,607 454,237 600,490
Vanguard Index Trust 500 Fund 75,962 - 908,535 2,060,189 222,972 1,548,529
Norwest Small-Cap Opportunities Fund 83,658 - 501,216 973,562 139,624 302,610
American Euro-Pacific Growth Fund 40,962 - 378,767 666,557 61,696 95,229
Other Investments - - 1,571,672 - 573,800 -
---------- ---------- ---------- ---------- ---------- -----------
$ 811,639 $3,836,351 $6,608,078 $11,395,278 $3,195,351 $ 6,933,780
========== ========== ========== =========== ========== ===========
</TABLE>
(a) Includes NEBS common stock, money market fund and interest receivable.
-9-
<PAGE>
<TABLE>
401(k) PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
JUNE 26, 1999
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
c)Description of Investment, Including
b)Identity of Issue, Borrower, Maturity Date, Interest Rate, e)Current
a) Lessor, or Similar Party Collateral and Par or Maturity Value d)Cost Value
<S> <C> <C> <C> <C>
* Norwest Stable Return GIC Fund Collective Trust, 324,790 shares $ 7,989,839 $ 8,947,651
Fidelity Contrafund Equity Mutual Fund, 248,897 shares 11,074,036 15,638,223
* Participant loans Maturity dates ranging from 1,935,555 1,935,555
1 - 5 years at varying interest rates
(prime plus 2%)
* New England Business Service, Inc. Common Stock, 511,073 shares 13,445,647 15,779,379
* Norwest Short-Term Money market fund, 372,589 shares 372,589 372,589
Investment Fund
Norwest Strategic Income Fund Bond Mutual Fund, 152,440 shares 2,958,623 3,076,246
Dodge & Cox Balanced Fund Equity Mutual Fund, 120,390 shares 8,121,319 8,643,966
Vanguard Index Trust 500 Fund Equity Mutual Fund, 98,024 shares 11,428,948 12,310,795
* Norwest Small-Cap Opportunities Fund Equity Mutual Fund, 170,246 shares 3,635,169 3,721,579
American Euro-Pacific Growth Fund Equity Mutual Fund, 95,138 shares 2,733,837 3,081,532
---------- ----------
TOTAL $ 63,695,562 $73,507,515
============ ===========
</TABLE>
* Represents party-in-interest to the Plan.
- 10 -
<PAGE>
<TABLE>
401(k) PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED JUNE 26, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
b) Description of Asset f) Expense h) Current
(Including Interest Incurred Value of i) Net
a) Identity of Rate and Maturity in c) Purchase d) Selling e) Lease With g) Cost of Asset on Gain
Party Involved Case of a Loan) Price Price Rental Transaction Asset Transaction (Loss)
Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Series of Transactions
Norwest Stable Equity Income Mutual $4,791,305 $ - $ - $ - $4,791,305 $4,791,305 $ -
Return GIC Fund Funds
Norwest Stable Equity Income Mutual - 4,069,342 - - 3,617,615 4,069,342 451,727
Return GIC Fund Funds
Fidelity Equity Income Mutual 3,294,761 - - - 3,294,761 3,294,761 -
Contrafund Funds
NEBS Common Stock 8,042,002 - - - 8,042,002 8,042,002 -
NEBS Common Stock - 8,041,137 - - 8,041,137 8,041,137 -
</TABLE>
- 11 -
<PAGE>
------------------------------------------
NEW ENGLAND BUSINESS
SERVICE, INC. PAYROLL STOCK
OWNERSHIP PLAN
Financial Statements for the Years
Ended June 26, 1999 and June 27, 1998 and
and Independent Auditors' Report
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
PAYROLL STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF JUNE 26, 1999 AND JUNE 27, 1998 AND FOR
THE YEARS THEN ENDED:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-7
Schedules required under the Employee Retirement Income Security Act of 1974
are omitted because of the absence of the conditions under which the schedules
are required.
<PAGE>
INDEPENDENT AUDITORS' REPORT
New England Business Service, Inc.
Payroll Stock Ownership Plan:
We have audited the accompanying statements of net assets available for
benefits of the New England Business Service, Inc. Payroll Stock Ownership
Plan (the "Plan") as of June 26, 1999 and June 27, 1998, and the related
statements of changes in net assets available for benefits for the years then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the New England Business
Service, Inc. Payroll Stock Ownership Plan as of June 26, 1999 and June 27,
1998, and the changes in its net assets available for benefits for the years
then ended in conformity with generally accepted accounting principles.
As described in Note 1, during 1999, the Plan's assets were transferred to an
affiliated plan, the 401(K) Plan for Employees of New England Business Service,
Inc.
/S/Deloitte & Touche, LLP.
- ----------------------------------
November 30, 1999
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
PAYROLL STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 26, 1999 AND JUNE 27, 1998
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments, at fair value:
New England Business Service, Inc.
common stock, (5,768 shares in 1998) $ - $186,027
Equity Mutual Funds - 271,733
Bond Mutual Funds - 20,797
Norwest Stable Return GIC Fund (common/collective trust) - 67,284
-------- --------
NET ASSETS AVAILABLE FOR BENEFITS $ - $545,841
======== ========
</TABLE>
See notes to financial statements.
- 2 -
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
PAYROLL STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED JUNE 26, 1999 AND JUNE 27, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS:
Interest and dividend income $ - $ 19,700
Net appreciation in fair value of investments - 68,526
-------- --------
Total additions - 88,226
DEDUCTIONS:
Distributions to participants - 16,851
Transfer of assets to the NEBS 401(k) Plan (Note 1) 545,841 -
-------- --------
NET (DECREASE) INCREASE (545,841) 71,375
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 545,841 474,466
-------- --------
End of year $ - $545,841
======== ========
</TABLE>
See notes to financial statements.
- 3 -
<PAGE>
NEW ENGLAND BUSINESS SERVICE, INC.
PAYROLL STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following brief description of the New England Business Service, Inc.
Payroll Stock Ownership Plan (the "Plan") provides only general information.
Participants should refer to the plan agreement for a more complete description
of the Plan's provisions.
General Information - On October 26, 1984, New England Business Service, Inc.
("NEBS" or the "Company") adopted a payroll stock ownership plan. The Plan
became effective as of June 25, 1983. An employee automatically became
eligible for participation in the Plan after completing one year of defined
service. The Plan was subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"). The Plan was last amended effective
June 28, 1998. On June 28, 1998, the Plan's assets were transferred to the
NEBS 401(k) Plan.
Administration of the Plan - The Plan was administered by the NEBS Retirement
Committee (the "Plan Committee"), whose members were appointed by the Board of
Directors of the Company. The Trustee of the assets of the plan was Norwest
Bank Minnesota, N.A. ("Norwest"). Administrative costs of the Plan had been
assumed by the Company.
Company Contributions - Prior to December 31, 1986, the Company made a
contribution to the Plan on behalf of each eligible employee. The amount of
the contribution was 0.5% of the aggregate eligible pay of employees eligible
to participate in the Plan. The contribution consisted of either common stock
of the Company or cash, which was then converted into shares of common stock of
the Company. The Company made contributions in quarterly installments for
eligible earnings through December 31, 1986, at which time the Company's
contribution requirements under the Plan stopped.
Investment of Contributions - Company contributions were invested in Company
common stock. Prior to July 1, 1997, Company contributions could not be
transferred to another investment option. In fiscal year 1998, participants in
the plan had the option to move existing investment balances from the Company
common stock to any of the following: (1) six mutual funds; (2) fixed income
investments, such as investment contracts providing a guaranteed interest rate;
or (3) any other investments subsequently authorized by the Plan Committee
(the "Committee"). Dividends, interest and other distributions received in
any fund were reinvested in the same Fund.
Vesting - Participants are fully vested with respect to Company contributions
made pursuant to the Plan.
Withdrawals and Distributions - Contributions to the Plan, and earnings
thereon, were generally payable at termination of employment due to retirement,
disability, death or any other reason. Distribution payments may be made in a
cash lump sum, in whole shares of Company common stock held in the employee's
account in the Plan with the value of any fractional shares paid in cash, or in
installments for a period not to exceed the employee's life expectancy or the
joint life expectancies of the employee and beneficiary, up to a maximum of
fifteen years. The form of distribution was elected in writing by the employee
Withdrawals prior to termination of employment were subject to certain
limitations and restrictions.
- 4 -
<PAGE>
1. DESCRIPTION OF THE PLAN (CONTINUED)
Participants' Accounts - An account was set up in the name of each participant
to record Company contributions made on the participant's behalf and other
transactions that occur in connection with the employee's participation in the
Plan. Each fiscal quarter the participants received a statement of account
listing contributions and the number of shares of Company common stock in the
account.
Plan Amendment and Termination - The Company had the right to amend, suspend,
or terminate the Plan, but may not do so in a way which would divest a
participant of accrued benefits. If the Plan was terminated, the Trustee would
distribute all assets held in the Trust, after payment of expenses, in such a
manner as the Plan Committee should determine and as may be required by law
provided, however, that Company common stock held in a participant's account
would not be distributed because of termination of the Plan until eighty-four
months after the date at which the stock was allocated to the account, unless
the participant's employment were terminated sooner, in which case the stock
would be distributed without regard to the time elapsed since its allocation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting - The financial statements of the Plan are prepared on the
accrual basis of accounting. Purchases and sales of securities are recorded on
the trade-date basis. Interest income is recorded on the accrual basis.
Dividends are received on the ex-dividend date.
Investments - Investments are stated at fair value based on quoted market
prices.
Distributions to Participants - Distributions to participants are recorded when
paid.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan administrator to
make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those estimates.
3. INVESTMENTS
Investments that represent 5% or more of net assets available for benefits
as of June 26, 1999 and June 27, 1998 are as follows:
1999 1998
Norwest Stable Return GIC Fund (common/collective trust) $ - $ 67,284
Fidelity Contrafund - 78,496
New England Business Service, Inc. common stock - 186,027
Dodge & Cox Balance Fund - 56,796
Vanguard Index Trust 500 Fund - 80,591
Norwest Small-Cap Opportunities Fund - 33,411
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<PAGE>
3. INVESTMENTS (CONTINUED)
The Plan's investments (including gains and losses on investments bought and
sold, as well as held during the year) appreciated in value by $0 and $68,526,
respectively, as follows:
1999 1998
At fair value based on quoted market prices:
Norwest Stable Return GIC Fund $ - $ 3,930
Fidelity Contrafund - 10,962
New England Business Service, Inc. common stock - 32,022
Norwest Strategic Income Fund - 998
Dodge & Cox Balanced Fund - 2,215
Vanguard Index Trust 500 Fund - 14,921
Norwest Small-Cap Opportunities Fund - 3,628
American Euro-Pacific Growth Fund - (150)
-------- --------
Total $ - $68,526
======== =======
The Plan's principal investments include the following:
Norwest Stable Return GIC Fund - A collective investment trust whose
underlying investments include guaranteed investment contracts, GIC
alternatives, marketable securities and money market instruments.
Dodge & Cox Balanced Fund - Fund invests in both equity securities and
convertible bonds.
Vanguard Index Trust 500 Fund - Fund invests in equity securities of large
domestic companies that comprise the Standard & Poor's 500 Index.
Norwest Small-Cap Opportunities Fund - Fund invests in investment assets of
small companies.
Fidelity Contrafund - Fund invests in equity securities of U.S. and foreign
issuers, including those in emerging markets.
New England Business Service, Inc. Common Stock - Invests in common stock of
New England Business Service, Inc.
Norwest Strategic Income Fund - Fund invests in both stocks and bonds.
American Euro-Pacific Growth Fund - Fund invests in stock of companies based
outside the United States.
4. TAX STATUS OF THE PLAN
The Plan obtained its latest determination letter, dated October 25, 1985, in
which the Internal Revenue Service stated that the Plan, as then designed, was
in compliance with the applicable requirements of the Internal Revenue Code
(the "Code"). The Plan has been amended since receiving that letter. The
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<PAGE>
plan administrator believes that the Plan is currently designed and being
operated in compliance with applicable requirements of the Code. Accordingly,
no provision for income taxes has been included in these financial statements.
<TABLE>
5. BY-FUND INFORMATION
Interest and dividend income, contributions, benefits paid and net appreciation
for the year ended June 27, 1998 is as follows:
<CAPTION>
Net
Interest Appreciation Benefits
and (Depreciation) Paid
Dividend in Fair Value to
Income of Investments Participants
<S> <C> <C> <C>
Norwest Stable Return GIC Fund $ - $ 3,930 $ 1,701
Fidelity Contrafund 5,584 10,962 225
Stock Fund (a) 4,639 32,022 12,775
Norwest Strategic Income Fund 1,417 998 1,095
Dodge & Cox Balanced Fund 4,341 2,215 363
Vanguard Index Trust 500 Fund 1,416 14,921 304
Norwest Small-Cap Opportunities Fund 743 3,628 201
American Euro-Pacific Growth Fund 1,560 (150) 187
------- ------- -------
$19,700 $68,526 $16,851
======= ======= =======
</TABLE>
(a) Includes NEBS common stock, money market fund and interest receivable.
-7-
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 333-32719 of New England Business Service, Inc.
on Form S-8 of our report dated November 30, 1999 appearing in
this Annual Report on Form 11-K of the 401(k) Plan for
Employees of New England Business Service, Inc. for the year
ended June 26, 1999.
/S/Deloitte & Touche, LLP.
Boston, Massachusetts
December 23, 1999
