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NEW ENGLAND BUSINESS
SERVICE, INC. PAYROLL STOCK
OWNERSHIP PLAN
Financial Statements for the Years
Ended June 27, 1998 and June 28, 1997 and
Supplemental Schedule as of June 27, 1998
and Independent Auditors' Report
NEW ENGLAND BUSINESS SERVICE, INC.
PAYROLL STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF JUNE 27, 1998 AND JUNE 28, 1997 AND FOR
THE YEARS THEN ENDED:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULE AS OF JUNE 27, 1998 -
Item 27a - Schedule of Assets Held for Investment Purposes 8
Schedules required under the Employee Retirement Income Security Act of 1974,
other than the schedule listed above, are omitted because of the absence of the
conditions under which the schedules are required.
INDEPENDENT AUDITORS' REPORT
New England Business Service, Inc.
Payroll Stock Ownership Plan:
We have audited the accompanying statements of net assets available for
benefits of the New England Business Service, Inc. Payroll Stock Ownership
Plan as of June 27, 1998 and June 28, 1997, and the related statements of
changes in net assets available for benefits for the years then ended.
These financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the New England Business
Service, Inc. Payroll Stock Ownership Plan as of June 27, 1998 and June 28,
1997, and the changes in its net assets available for benefits for the
years then ended in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The accompanying supplemental
schedule of assets held for investment purposes as of June 27, 1998 is
presented for the purpose of additional analysis and is not a required part
of the basic financial statements, but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974.
This schedule is the responsibility of the Plan's management. Such
schedule has been subjected to the auditing procedures applied in our audit
of the basic 1998 financial statements and, in our opinion, is fairly
stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
/S/Deloitte & Touche, LLP.
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December 18, 1998
NEW ENGLAND BUSINESS SERVICE, INC.
PAYROLL STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 27, 1998 AND JUNE 28, 1997
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1998 1997
ASSETS:
Investments, at fair value:
New England Business Service, Inc. ("NEBS")
common stock, (5,768 shares in 1998
and 18,015 shares in 1997) $186,027 $474,466
Equity Mutual Funds 271,733 -
Bond Mutual Funds 20,797 -
Norwest Stable Return GIC Fund (common/collective trust) 67,284 -
-------- --------
NET ASSETS AVAILABLE FOR BENEFITS $545,841 $474,466
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See notes to financial statements.
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NEW ENGLAND BUSINESS SERVICE, INC.
PAYROLL STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED JUNE 27, 1998 AND JUNE 28, 1997
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1998 1997
ADDITIONS:
Interest and dividend income $ 19,700 $ 14,393
Net appreciation in fair value of investments 68,526 120,940
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Total additions 88,226 135,333
DEDUCTIONS:
Benefits paid to participants 16,851 13,624
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Total deductions 16,851 13,624
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NET INCREASE 71,375 121,709
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 474,466 352,757
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End of year $545,841 $474,466
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See notes to financial statements.
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NEW ENGLAND BUSINESS SERVICE, INC.
PAYROLL STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
The following brief description of the New England Business Service, Inc.
Payroll Stock Ownership Plan (the "Plan") provides only general information.
Participants should refer to the plan agreement for a more complete description
of the Plan's provisions.
General Information - On October 26, 1984, New England Business Service, Inc.
("NEBS" or the "Company") adopted a payroll stock ownership plan. The Plan
became effective as of June 25, 1983. An employee automatically becomes
eligible for participation in the Plan after completing one year of defined
service. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"). The Plan was last amended effective
July 1, 1997.
Administration of the Plan - The Plan is administered by the NEBS Retirement
Committee (the "Plan Committee"), whose members are appointed by the Board of
Directors of the Company. The Trustee of the assets of the plan is Norwest
Bank Minnesota, N.A. ("Norwest"). Administrative costs of the Plan have been
assumed by the Company.
Company Contributions - Prior to December 31, 1986, the Company made a
contribution to the Plan on behalf of each eligible employee. The amount of
the contribution was 0.5% of the aggregate eligible pay of employees eligible
to participate in the Plan. The contribution consisted of either common stock
of the Company or cash which was then converted into shares of common stock of
the Company. The Company made contributions in quarterly installments for
eligible earnings through December 31, 1986, at which time the Company's
contribution requirements under the Plan stopped.
Investment of Contributions - Company contributions are invested in Company
common stock. Prior to July 1, 1997, Company contributions could not be
transferred to another investment option. In the current year, participants in
the plan have the option to move existing investment balances from the Company
common stock to any of the following: (1) six mutual funds; (2) fixed income
investments such as investment contracts providing a guaranteed interest rate;
or (3) any other investments subsequently authorized by the Plan Committee.
Dividends, interest and other distributions received in any fund are reinvested
in the same Fund.
Vesting - Participants are fully vested with respect to Company contributions
made pursuant to the Plan. All forfeitures are used to reduce future employee
contributions.
Withdrawals and Distributions - Contributions to the Plan, and earnings
thereon, are generally payable at termination of employment due to retirement,
disability, death or any other reason. Distribution payments may be made in a
cash lump sum, in whole shares of Company common stock held in the employee's
account in the Plan with the value of any fractional shares paid in cash, or in
installments for a period not to exceed the employee's life expectancy or the
joint life expectancies of the employee and beneficiary, up to a maximum of
fifteen years. The form of distribution is elected in writing by the employee.
Withdrawals prior to termination of employment are subject to certain
limitations and restrictions.
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1. DESCRIPTION OF THE PLAN (CONTINUED)
Participants' Accounts - An account is set up in the name of each participant
to record Company contributions made on the participant's behalf and other
transactions that occur in connection with the employee's participation in the
Plan. Each fiscal quarter the participants receive a statement of account
listing contributions and the number of shares of Company common stock in the
account.
Plan Amendment and Termination - The Company has the right to amend, suspend,
or terminate the Plan, but may not do so in a way which would divest a
participant of accrued benefits. If the Plan is terminated, the Trustee will
distribute all assets held in the Trust, after payment of expenses, in such a
manner as the Plan Committee shall determine and as may be required by law,
provided, however, that Company common stock held in a participant's account
will not be distributed because of termination of the Plan until eighty-four
months after the date at which the stock was allocated to the account, unless
the participant's employment is terminated sooner, in which case the stock will
be distributed without regard to the time elapsed since its allocation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting - The financial statements of the Plan are prepared on the
accrual basis of accounting. Purchases and sales of securities are recorded on
the trade-date basis. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date.
Investments - Investments are stated at fair value based on quoted market
prices.
Distributions to Participants - Distributions to participants are recorded when
paid.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan administrator to
make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those estimates.
3. INVESTMENTS
Investments that represent 5% or more of net assets available for benefits
as of June 27, 1998 and June 28, 1997 are as follows:
1998 1997
Norwest Stable Return GIC Fund (common/collective trust) $ 67,284 $ -
Fidelity Contra fund 78,496 -
New England Business Service, Inc. common stock 186,027 474,466
Dodge & Cox Balance Fund 56,796 -
Vanguard Index Trust 500 Fund 80,591 -
Norwest Small-Cap Opportunities Fund 33,411 -
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3. INVESTMENTS (CONTINUED)
The Plan's investments (including gains and losses on investments bought and
sold, as well as held during the year) appreciated in value by $68,526 and
$120,940, respectively, as follows:
1998 1997
At fair value based on quoted market prices:
Norwest Stable Return GIC Fund (common/collective trust) $ 3,930 $ -
Fidelity Contrafund 10,962 -
New England Business Service, Inc. common stock 32,022 120,940
Strategic Income Fund 998 -
Dodge & Cox Balanced Fund 2,215 -
Vanguard Index Trust 500 14,921 -
Norwest Small-Cap Opportunities 3,628 -
Euro-Pacific Growth Fund (150) -
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Total $ 68,526 $120,940
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The Plan's principal investments include the following:
Norwest Stable Return GIC Fund - A collective investment trust whose underlying
investments include guaranteed investment contracts.
Dodge & Cox Balanced Fund - Fund invests in both equity securities and
convertible bonds.
Vanguard Index Trust 500 Fund - Fund invests in equity securities of large
domestic companies that comprise the Standard & Poor's 500 Index.
Norwest Small-Cap Opportunities Fund - Fund invests solely in investment assets
of smaller companies.
Fidelity Contrafund - Fund invests in equity securities of U.S. and foreign
issuers, including those in emerging markets.
New England Business Service, Inc. Common Stock - Invests solely in common
stock of New England Business Service, Inc.
4. TAX STATUS OF THE PLAN
The Plan obtained its latest determination letter, dated October 25, 1985, in
which the Internal Revenue Service stated that the Plan, as then designed, was
in compliance with the applicable requirements of the Internal Revenue Code
(the "Code"). The Plan has been amended since receiving that letter. The plan
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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.
* * * * * *
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5. BY-FUND INFORMATION
Interest and dividend income, contributions, benefits paid and net appreciation for the
years ended June 27, 1998 and June 28, 1997 are as follows:
Net
Interest Appreciation Benefits
and in Fair Value Paid
Dividend of to
Income Investments Participants
1998
Norwest Stable Return GIC Fund $ - $ 3,930 $ 1,701
Fidelity Contrafund 5,584 10,962 225
Stock Fund (a) 4,639 32,022 12,775
Strategic Income Fund 1,417 998 1,095
Dodge & Cox Balanced Fund 4,341 2,215 363
Vanguard Index Trust 500 Fund 1,416 14,921 304
Norwest Small-Cap Opportunities Fund 743 3,628 201
Euro-Pacific Growth Fund 1,560 (150) 187
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$19,700 $68,526 $16,851
======= ======= =======
1997
Stock Fund (a) 14,393 120,940 13,624
======= ======== =======
(a) Includes NEBS common stock, money market fund and interest receivable.
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NEW ENGLAND BUSINESS SERVICE, INC.
PAYROLL STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
JUNE 27, 1998
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b) Identity of Issue, c) Description of Investment, Including
Borrower, Lessor Maturity Date, Interest Rate, e) Current
a) or Similar Party Collateral and Par or Maturity Value d) Cost Value
* Norwest Stable Return GIC Fund Collective Trust, 2,597 shares $ 59,458 $ 67,284
Fidelity Contrafund Equity Income Mutual Fund, 1,437 shares 58,684 78,496
* New England Business
Service, Inc. Common stock - 5,768 shares 144,208 186,028
Strategic Income Fund Bond Income Mutual Fund, 1,047 shares 20,022 20,797
Dodge & Cox Balanced Fund Equity Income Mutual Fund, 819 shares 55,437 56,795
Vanguard Index Trust 500 Fund Equity Income Mutual Fund, 765 shares 67,761 80,591
* Norwest Small-Cap Opportunities Fund Equity Income Mutual Fund, 1,413 shares 31,363 33,411
Euro-Pacific Growth Fund Equity Income Mutual Fund, 848 shares 24,228 22,439
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$461,161 $545,841
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* Represents party-in-interest to the Plan.
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