401(k) Plan for Employees of New England
Business Service, Inc.
Independent Auditors' Report
Financial Statements
Years Ended June 24, 2000 and June 26, 1999
Supplemental Schedule
As of June 24, 2000
<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 24, 2000 AND JUNE 26, 1999 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 4-11
SUPPLEMENTAL SCHEDULE AS OF JUNE 24, 2000:
Schedule H, Line 4i Schedule of Assets Held for Investment
Purposes at End of Year 12
Schedules required under the Employee Retirement Income Security
Act of 1974, other than the schedule listed above, are omitted
because of the absence of the conditions under which the schedules
are required.
<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 24, 2000
and June 26, 1999, 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 auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in
all material respects, the net assets available for benefits of
the Plan at June 24, 2000 and June 26, 1999, and the changes in
its net assets available for benefits for the years then ended
in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
accompanying supplemental schedule listed in the Table of
Contents is presented for the purpose of additional analysis
and is not a required part of the basic financial statements,
but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974.
<PAGE>
This schedule is the responsibility of the Plan's management.
Such supplemental schedule has been subjected to the auditing
procedures applied in our audit of the basic 2000 financial
statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic
financial statements taken as a whole.
/s/ Deloitte & Touche LLP
December 1, 2000
<PAGE>
401(k) PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
<TABLE>
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 24, 2000 AND JUNE 26, 1999
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<CAPTION>
2000 1999
<S> <C> <C>
ASSETS:
Investments, at fair value:
Common/collective trust $ 8,201,940 $ 8,947,651
New England Business Service, Inc.
common stock
(708,883 shares in 2000 and
511,073 shares in 1999) 11,519,349 15,779,379
Mutual funds 54,770,294 46,472,341
Money market fund 235,991 372,589
Loans to participants 2,223,846 1,935,555
-------------- --------------
Total investments 76,951,420 73,507,515
Cash 670 310,057
Receivables:
Accrued income 2,099 44,190
Employer contributions 89,122 -
Employee contributions 85,758 -
-------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 77,129,069 $ 73,861,762
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
<PAGE>
401(k) PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED JUNE 24, 2000 AND JUNE 26, 1999
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<CAPTION>
2000 1999
<S> <C> <C>
ADDITIONS:
Employee contributions $ 4,883,562 $ 5,990,439
Rollover contributions 678,515 722,722
Employer contributions 5,165,555 4,637,496
Net (depreciation) appreciation
in fair value of investments (3,801,511) 6,479,436
Interest and dividend income 1,456,832 872,666
Transfer in from NEBS PAYSOP (Note 1) - 545,841
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Total additions 8,382,953 19,248,600
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DEDUCTIONS:
Benefits paid to participants 5,070,186 4,302,482
Administrative fees 45,460 43,351
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Total deductions 5,115,646 4,345,833
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NET INCREASE 3,267,307 14,902,767
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 73,861,762 58,958,995
-------------- --------------
End of year $ 77,129,069 $ 73,861,762
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
<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, the Plan Sponsor, New
England Business Service, Inc. ("NEBS" or the "Company"),
adopted a deferred profit-sharing and stock ownership plan. The
Plan became effective as of June 30, 1984. On July 1, 1993, the
Plan was amended to incorporate provisions of Section 401(k) of
the Internal Revenue Code. The Plan is designed to allow
eligible employees to accumulate savings for retirement in the
Plan without paying income taxes until the monies are actually
received. Employees may elect to defer receipt of a portion of
their eligible pay by having such amounts paid into the Plan.
If an employee chooses to defer payment of this eligible pay,
the Company will make an additional contribution to the Plan on
the employee's behalf. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").
The Plan was last amended effective as of July 1, 1999. On June
28, 1998, the plan assets of NEBS Payroll Stock Ownership Plan
("PAYSOP") 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
nonregular employees (temporary employees), the employee must
complete one year of eligible 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 Wells Fargo Bank Minnesota, N.A. ("Wells
Fargo"), acquiror of the former trustee, Norwest Bank Minnesota,
N.A. 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 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
<PAGE>
of the amount of the deferral, but not to exceed 6% of the
employee's eligible pay. If the employee has five years or more
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 in shares of common stock, to
all employees who meet the minimum eligibility requirements.
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
Wells Fargo Benefits Helpline.
<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 lesser of $50,000 or 50% of their
vested balance). Effective as of July 1, 1999 the loans will
bear an interest rate as determined, from time to time, by the
Plan Committee as published in the Plan's loan policy statement.
Prior to this, the loans had 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) mutual and money
market funds selected by the Plan Committee; (3) common
collective trust 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 other investment options at
any time subsequent to the initial contributions. Dividends,
interest and other distributions received in any fund with
respect to any type of contribution are reinvested in the same
fund. Employee contributions that have not been designated for
a particular investment will be invested in the Norwest Stable
Return common collective trust.
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% after completing three years of service. All Company
contributions prior to July 1, 1997 are 100% vested.
Forfeitures Participants who withdraw from the Plan due to
termination of employment will forfeit unvested Company
contributions and related earnings. These forfeitures will be
used to reduce future Company contributions. If within five
years the participant is re-employed by the Company, the
forfeitures will be reinstated to the participant.
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
<PAGE>
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
15 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 investments 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.
<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 accounting principles generally accepted in the United
States of America 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 in Company common stock, mutual and
money market funds and common collective trusts are stated at
fair value based on quoted market prices. Participant loans are
recorded at cost which approximates fair value.
Reclassification and Adoption of SOP 99-3 The Plan has adopted
Statement of Position ("SOP") 99-3, "Accounting for and
Reporting of Certain Defined Contribution Plan Investments and
Other Disclosure Matters," issued by the American Institute of
Certified Public Accountants. As a result, a reclassification
has been made to eliminate the by-fund reporting for participant-
directed investments in 1999.
Reclassifications Certain amounts included within the 1999
financial statements have been reclassified to conform to the
current year presentation.
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 24, 2000 and June 26, 1999 are as
follows:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Norwest Stable Return Fund
(common /collective trust) $ 8,201,940 $ 8,947,651
Fidelity Contrafund 17,661,899 15,638,223
New England Business Service, Inc.
common stock 11,519,349 15,779,379
Dodge & Cox Balanced Fund 8,541,649 8,643,966
Vanguard Institutional Index Fund 14,409,608 12,310,795
Wells Fargo Small-Cap
Opportunities Fund 5,767,850 3,721,579
Euro-Pacific Growth Fund 5,425,120 -
</TABLE>
<PAGE>
3. INVESTMENTS (CONTINUED)
The Plan's investments (including gains and losses on
investments bought and sold, as well as held, during the year)
depreciated in value by $3,801,511 for the year ended June 24,
2000 and appreciated by $6,479,436 for the year ended June 26,
1999 as follows:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
At fair value based on quoted
market prices:
Norwest Stable Return Fund $ 539,287 $ 511,640
Fidelity Contrafund 1,572,387 2,958,362
New England Business Service, Inc.
common stock (8,571,551) (345,639)
Wells Fargo Strategic Income Fund 61,874 205,936
Dodge & Cox Balanced Fund (377,341) 949,552
Vanguard Institutional Index Fund 815,666 2,062,349
Wells Fargo Small-Cap
Opportunities Fund 1,124,975 (281,489)
Euro-Pacific Growth Fund 1,033,192 418,725
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Total $(3,801,511) $ 6,479,436
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</TABLE>
The Plan's principal investments include the following:
Norwest Stable Return Fund A collective investment trust whose
underlying investments include shorter maturity instruments.
Vanguard Institutional Index Fund Fund invests in equity
securities of large domestic companies that comprise the
Standard & Poor's 500 Index.
Wells Fargo 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.
Euro-Pacific Growth Fund Fund invests in stock of companies
based outside the U.S.
Wells Fargo Strategic Income Fund Fund invests in bonds, other
fixed-income investments, and stocks.
<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.
RELATED-PARTY TRANSACTIONS
Certain plan investments are shares of mutual funds managed by
Wells Fargo and Norwest (a subsidiary of Wells Fargo). Wells
Fargo is the Trustee as defined by the Plan, and therefore,
these transactions qualify as party-in-interest transactions.
Fees paid to Wells Fargo for the investment management services
amounted to $45,464 for the year ended June 24, 2000.
NONPARTICIPANT-DIRECTED INVESTMENTS
In 2000 and 1999, the Plan had nonparticipant-directed
investments representing loans to participants in the amount of
$2,223,846 and $1,935,555, respectively. The amount of interest
income on loans for the years ended June 24, 2000 and June 26,
1999 was $204,840 and $191,052, respectively. Additionally, the
Plan requires Company contributions to be initially invested
within the Company's common stock. The activity within the
Company's common stock investment for the years ended June 24,
2000 and June 26, 1999 was as follows:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Contributions $ 5,467,698 $ 5,266,911
Net depreciation in fair value
of investments (8,571,551) (345,639)
Interest and dividend income 508,276 381,491
Benefits paid to participants 704,194 637,068
</TABLE>
<PAGE>
401(k) PLAN FOR EMPLOYEES OF
NEW ENGLAND BUSINESS SERVICE, INC.
<TABLE>
Schedule H, Line 4I - Schedule of Assets Held For Investment Purposes At End of
Year June 24, 2000
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<CAPTION>
<S> <C> <C> <C> <C>
a) b)Identity of Issue c)Description of Investment d)Cost e)Value
* Norwest Stable Return Fund $ - $ 8,201,940
Fidelity Contrafund - 17,661,899
* Participant loans Maturity dates ranging from
one to five years at
varying interest rates - 2,223,846
* New England Business
Service, Inc. Common Stock, 708,883 shares - 11,519,349
* Wells Fargo Strategic Income Fund - 2,964,168
Dodge & Cox Balanced Fund - 8,541,649
Vanguard Institutional Index Fund - 14,409,608
* Wells Fargo Small-Cap Opportunities Fund - 5,767,850
* Wells Fargo Money Market Fund 235,991
* Wells Fargo Euro-Pacific Growth Fund - 5,425,120
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TOTAL $ - $76,951,420
--------- -----------
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</TABLE>
* Represents party-in-interest to the Plan.
<PAGE>
