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NEW ENGLAND BUSINESS SERVICE, INC.
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Reaching Out to Small Business
Providing products and services for small business is one of the most exciting
business opportunities of the decade. Today, there are more than 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. Corporate
downsizing and the desire to be "your own boss" are prompting even more people
to start their own business. Each year since 1985, nearly a quarter of a million
new small businesses were started in the United States alone. This trend
continued in 1995 with the United States reporting a record-high 266,784 small
business start-ups, a 10 percent increase over 1994.
NEBS is in a unique position to serve the special needs of small business. We
understand the market. Small businesses and in-home offices with 20 or fewer
employees have been our focus for 44 years. We have direct access to the market.
Each year, we contact more than 8,000,000 small businesses through the mail and
maintain a proprietary data base of our customers' buying preferences. We supply
private-label products to a network of independent dealers and operate retail
print desks in several key markets throughout the United States.
Technologically, we are on the forefront of design and printing services, which
ensures quality products and fast turnaround at prices a small business can
afford. Importantly, NEBS also has a solid reputation as a supplier who
understands and responds to small business needs.
Since 1952, NEBS has continually responded to the changing needs and
preferences of small business. In 1996, we continued that tradition with new
products, expanded services, enhanced manufacturing capabilities, and
technological initiatives that will enable customers and prospects to do
business with NEBS electronically. It was another year of reaching out, a year
of fulfilling our mission to be The Small Business Resource.
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Today, thereare more than 10 million small businesses and 20 million in-home
offices in the United States, Canada, and the United Kingdom...
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[GRAPHIC OF NEBS CUSTOMERS APPEARS HERE]
1
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NEW ENGLAND BUSINESS SERVICE, INC.
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To Our Stockholders
Overview
The Company took action on a number of fronts during 1996 in order to position
itself strongly for the future. A change in management took place in December,
1995 with my appointment as Chairman and Chief Executive Officer. An entirely
new organizational structure was put in place during the third quarter, some key
executives were brought into the Company, and most senior operating personnel
had new management assignments.
From a strategic product and initiative focus, a number of important moves
were made. To enhance our competitive position and improve profitability, the
Company sold the assets of its One-Write Plus(R) software product while
retaining mail order distribution rights and securing an exclusive forms
agreement. We recommitted resources to the Company's principal business in the
direct marketing of forms and related products to small businesses. Direct
marketing remains the Company's primary source of revenue and profits, and we
are committed to keeping this core business as healthy as possible. We have
suspended the expansion of the retail initiative with Kinko's into additional
areas in order to improve existing store operations and to determine the best
method for moving forward.
To improve operating efficiency and cost-effectiveness, we implemented a cost
reduction program, including a manufacturing consolidation. In addition, we
invested in a new enterprise wide server platform and took our initial steps in
a business process reengineering effort.
Financial Performance
For the year, revenues were $254,954,000 reflecting a decline of 3.3% from the
prior year. Approximately one-half of the decline was the result of an extra
week in fiscal year 1995 together with the divestiture of One-Write Plus and the
repositioning of the Company's software product line. The revenue decline also
reflects some underperformance in the direct marketing channel resulting largely
from reduced investment in "prospecting" mail volume late in 1995 and the early
months of 1996. Retail channel volume continued its growth in dealer-generated
sales and through the NEBS custom print desks in Kinko's stores; these revenue
sources were not large enough to provide overall Company growth.
Earnings amounted to $11,929,000 versus last year's $16,298,000. Earnings per
share this year were $.81 and included $.43 in exit and period costs related to
a cost reduction program. Earnings per share last year were $1.07 and included
$.13 of cost relating to the integration of the Company's SYCOM subsidiary.
Excluding nonrecurring expenses in both years, earnings per share increased from
$1.20 in fiscal year 1995 to $1.24 in fiscal year 1996.
Dividends were paid for the 33rd consecutive year and amounted to $.80 per
share.
Financial Condition
The Company's operating cash flow and financial condition remained
exceptionally strong. During the year, the Company repurchased 994,900 shares of
common stock for $17,882,000 as part of the two-million-share repurchase program
authorized by the Board at its April meeting. In addition, dividends of
$11,907,000 were paid. In spite of these significant cash outflows, the Company
had cash and short-term investments of $17,376,000 at year-end and maintained a
current ratio of 2.6 and a balance sheet free of long-term debt.
Business Highlights
There were a number of important achievements during 1996. The more
significant are highlighted below.
Direct Marketing Channel During the second half of 1996, a decision was made to
reinvest in the Company's principal line of business--the direct marketing of
business forms and related products. We began to increase the level of
"prospecting" mail in order to accelerate the inflow of new customers. In
response to customer requests, the Company began to mail a new, larger catalog
which is a comprehensive source for all our products. Early results for the
catalog have exceeded expectations. We have also initiated the development of an
electronic catalog which can be used in the direct marketing side of our
business as well as in other business channels.
The improvement in performance of this principal area of business for the
Company will continue to be our primary focus in moving the business forward.
Retail Channels The Company continued efforts to offer its product line to
small businesses preferring to buy through retail outlets.
- Dealer Forms Sales (DFS) continued to experience solid sales and profit
growth through its private label catalog operation offering a broad line of
standard and custom business forms and printed promotional materials for
resale by local printers, business forms dealers, and computer stores.
- The Company's retail initiative, consisting of custom print desks installed
in a limited number of Kinko's stores, continues to represent both a
challenge and an opportunity for the Company. Significant funds have been
invested in support of this program with current efforts being focused on
improving store operations and sales performance. We are working with
Kinko's to find a mutually profitable way to capitalize on this retail
opportunity.
Technology The Company has effectively utilized technology for many years in the
efficient running of its operations. Technology will play an even more important
role as we move forward. The Company's Information Systems organization has been
realigned to report directly into the Chairman's office and is focusing on three
major initiatives:
- A technology-based marketing initiative will build on the successful NEBSnet
proprietary graphic design workstation to develop an electronic catalog for
our products. This electronic catalog will further improve our NEBSnet
technology, will be the basis for taking our product line into new areas of
distribution, and eventually will allow our mail order customers to order
using computer technology.
2
- We have invested in a new enterprisewide server platform which is state-of-
the-art in hardware technology. As part of this initiative, we will install
an entirely new database technology and will re-engineer many of our basic
business functions and accompanying systems.
- We are moving aggressively to develop alliances with third-party software
developers to have our products included as the recommended selection for
forms and other printed matter. The first such agreement should be reached
early in fiscal 1997.
Business Management An important change in the Company's organization was made
with the establishment of a Business Management function. This new group is
responsible for the strategic direction of the Company's product lines with a
strong focus on new product development, strategic program initiatives, and
strategic planning. This organization will allow our two channels of
distribution to focus on the effective operation of their sales responsibilities
while leaving the strategic management of product lines the responsibility of
Business Management. This new function reports to the Chairman's office.
Future Outlook
We will continue to be challenged by the technological forces which have
negatively affected the manual business forms market. In addition, the sale of
forms and related products by mail order remains closely tied to the economic
health of the small business market.
On the positive side, we maintain a strong relationship with over 1.2 million
small businesses. We believe we can serve our customers more effectively and
grow our direct marketing business through a number of initiatives:
- Increased direct mail advertising support
- Improved cost efficiencies in product and catalog distribution
- Improved list management and mail strategies
- Enhanced product merchandising and promotional offerings
- Accelerated new product development efforts
- Increased selling emphasis developed in our Telesales operations
In our retail channels, we will continue to work to successfully resolve
how best to proceed with the Kinko's alliance and to focus on growing the Dealer
Forms Sales business.
Goals For 1997
There are a great many goals which the Company will be working on during 1997.
The five principal goals we must achieve to be better positioned for aggressive
sales and profit growth are:
- Develop a new level of operating effectiveness across the entire
organization.
- Develop an aggressive selling effort supported by new and effective
marketing programs.
- Develop a strategic business plan and planning process.
- Enhance shareholder value by establishing financial measures, such as
Economic Value Analysis (EVA), which will be the yardstick for measuring
all that we do.
- Explore additional avenues for growth for the Company--both internal
initiatives as well as an evaluation of growth through acquisitions.
Board of Directors
During 1996, Richard H. Rhoads retired as Chairman of the Board after 9
dedicated years in that capacity and over 30 years of service with the Company.
Richard has represented the fine human and business qualities that all people
associated with the Company came to expect when they heard the name "Rhoads."
Richard, and his brother Jay before him, have between them chaired the Company's
Board of Directors for more than 25 years. Richard will continue as a Board
member.
As announced at its July meeting, the Board elected Robert L. Gable and
Herbert W. Moller to its membership. Mr. Gable is the Chairman and Chief
Executive Officer of Unitrode Corporation, and Mr. Moller is Vice President,
Finance and Strategic Planning of The Gillette Company, North Atlantic Group.
Frank L. Randall, Jr. will retire from the Board at the end of his term in
October, 1996. Frank has served as a Board member for 17 years and has
contributed greatly to the Company during his service.
Word of Thanks
I would like to draw attention to the talent, dedication, and commitment of
each of our 2,014 employees. The Company's employees are the source of its
strength, and I 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.
[PHOTOGRAPH OF ROBERT J. MURRAY, CHAIRMAN
AND CHIEF EXECUTIVE OFFICER APPEARS HERE]
/s/ Robert J. Murray
Robert J. Murray,
Chairman, President and
Chief Executive Officer
September 9, 1996
3
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NEW ENGLAND BUSINESS SERVICE, INC.
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NEBS by Mail:
Reinvesting in a Successful Small Business Tradition
Small business has relied on NEBS manual and computer business forms for 44
years. Sold primarily through the mail, our forms provide more than a record,
they offer a blueprint for transactions with customers and suppliers -- and
serve as an introduction to the full range of NEBS products and services.
In 1996, to ensure the continued vitality of this important core business, we
reached out to new customers, introduced new products, and refined product
development strategies to meet the changing needs and preferences of small
business.
NEBS Colors, one of the most successful product introductions in NEBS history,
was unveiled in 1996. Unique in the direct mail industry, NEBS Colors offers
small business a choice of color, type style, and contemporary design across a
variety of manual and computer business forms. In response to today's more
image-conscious consumer, NEBS Colors enables a small business to achieve
a consistent, color-coordinated look across printed products without the expense
of custom printing.
Success Reference Guides/TM/. NEBS customers asked for a comprehensive
catalog, a compendium of NEBS products and services that would serve as a
lasting desktop reference. We responded with Success Reference Guides, our first
series of full-line catalogs, tailored to different lines of business.
Displaying all NEBS products in one catalog facilitates ordering and reduces the
mail our customers receive. Promotional incentives reward customers who retain
and continue to order from the catalog.
[GRAPHIC DEPICTING NEBS
CUSTOMERS AND PRODUCTS
APPEARS HERE]
NEBS Colors,
one of the most
successful product introductions in
NEBS history, was
unveiled in 1996.
4
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NEBS BY MAIL
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[PHOTOGRAPH OF NEBS CUSTOMERS: PHIL AND LEE HARRIS APPEARS HERE]
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"I've been working with NEBS for five years. I read the catalog every time it
comes in. I chose NEBS because it's easy to do business with them. All you have
to do is pick up the phone and call. I have also found them very prompt in
delivery. Basically, they have the service and products we need."
Phil and Lee Harris, The Silver Skillet, Del Mar, California
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NEBS by Mail
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[PHOTOGRAPH OF NEBS CUSTOMER, SCOTT KING APPEARS HERE.]
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"When I started the business three years ago, NEBS helped me design my
repair order forms, very professionally and quickly. When you start
out, you're awfully confused and they seemed to be able to give me the
direction that I needed. That's why I continue to do business with
them. Today, we purchase a wide variety of products from NEBS, from
invoices to checks. They're very good for small business, very
responsive."
Scott King, Del Amo Motorsports, Redondo Beach, California
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1996 ANNUAL REPORT
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[PHOTOGRAPHS OF NEBS CUSTOMER AND NEBS SOFTWARE PRODUCT APPEAR HERE.]
Industrial Communications, a full-service tower and electrical contractor, is
one of the leading customers of NEBS products in the US. It owns and operates
New England's largest 800MHz trunked radio network, and is an authorized
Motorola two-way radio dealer and service center. To make ordering even easier
for Industrial Communications and other valued customers, NEBS introduced
Success Reference Guides/TM/ in 1996, the first full-line catalog of NEBS
products and services.
Each Success Reference Guide includes "The Resource Center," a menu of services
available to small businesses. NEBS Direct Credit Check/TM/ delivers credit
reports on potential customers. NEBS Fast Facts provides more than 100 articles
about managing a small business -- by fax. NEBS Custom Printing Service offers
custom forms and checks by mail, a cost-saving alternative to local print shops.
A new computer forms strategy was established with the sale of our One-Write
Plus(R) accounting software. We will continue to distribute One-Write Plus and
compatible forms by mail order. However, by divesting software development and
technical support, we eliminated competitive barriers to the formation of
alliances with third-party software developers to promote the sale of NEBS
computer forms. These alliances will enable us to introduce NEBS products and
services to a wider range of small businesses.
NEBS by mail maintains a strong reputation among small businesses. To ensure
growth in the mail order channel in the years ahead, we remain committed to
continually respond to the ever-changing needs and preferences of small
business.
New alliances with third-party software developers will increase computer form
sales and introduce new customers to the full range of NEBS products and
services.
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NEW ENGLAND BUSINESS SERVICE, INC.
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NEBS at Retail:
Delivering Products to Help Customers Promote Their Business
In local markets across the United States, small businesses spend in excess of
$11 billion annually on printed products. In 1996, we continued our initiative
to become an important resource for these small businesses who prefer to buy
printing through retail outlets.
NEBS Dealer Form Sales Unit. DFS markets a broad line of forms and printed
promotional materials for resale by local printers, business-forms dealers, and
computer stores. DFS represents an attractive growth opportunity for NEBS.
Currently, we work with over 25,000 retail dealers -- approximately 10 percent
of the private label resellers of business forms and promotional materials in
North America.
[GRAPHIC OF CUSTOMER VIEWING NEBS CATALOG APPEARS HERE]
Consistently
profitable, DFS
represents an
attractive growth
opportunity for
NEBS.
In 1996, we initiated actions to accelerate the growth of our DFS unit. We
began a dealer registration drive, which will intensify in 1997. We've also
adopted a strategy of supplementing our traditional direct mail approach to this
business with direct sales calls. Recognizing the diverse nature of these
thousands of dealers, we have begun to create programs responding to the
individual needs of the many segments of our dealer base.
The NEBS-Kinko's Alliance. We have installed NEBS Custom Print Desks at Kinko's
stores in key markets in the United States to test the optimum way for Kinko's
and NEBS to provide custom printing services nationwide to small businesses.
Using NEBSnet(TM), our proprietary graphic design workstation, our Custom Print
Representatives have provided competitively priced, image-building printed
6
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DEALER FORM SALES
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[PHOTOGRAPH OF NEBS CUSTOMER, RHONDA AMER, APPEARS HERE]
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"Two things stand out in my mind concerning NEBS DFS unit: their work is
accurate, and if there is ever an error, they're willing to correct it speedily
at no charge. They're also on the ball. You get the order in a matter of days.
We have been a DFS dealer for about five years, and it's been a very positive
experience."
Rhonda Amer, General Manager, Empire Printing, Springfield, Missouri
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DEALER FORM SALES
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[PHOTOGRAPH OF NEBS CUSTOMER, HECTOR DEL RIO, APPEARS HERE]
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"I've been a DFS dealer for a little more than two years, and I want to pursue
it more. We give the catalog to our customers -- everyone can at least use the
checks -- and NEBS does all the printing. Response time is fast, and
satisfaction is guaranteed. I'm happy with the relationship. NEBS takes good
care of us."
Hector del Rio, Proprietor, Selectronic, San Diego, California
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1996 ANNUAL REPORT
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[PHOTOGRAPH OF NEBS CUSTOMERS, DUDLEY AND PATRICIA MOORE APPEARS HERE]
Dudley Moore and his wife, Patricia, have purchased their business forms from
NEBS since 1993, when they opened their shop. This year, they took advantage of
NEBS Retail Custom Print Desks for stationery and business cards. "The service
is good, turnaround is quick, prices are competitive, and it's very convenient,"
Dudley said. "When you get good service for so many years, there's no need to
go anywhere else."
products to more than 25,000 first-time NEBS customers. Most new retail
customers are white-collar service businesses, a relatively untrapped market
segment for NEBS. In response to the increased demand for stationery products at
retail, we implemented a number of programs designed to improve stationery
manufacturing efficiency, to reduce costs and to improve delivery to our west
Coast customers.
At each NEBS Custom Print Desk, we also introduced full-service custom
printing. Customers may bring in artwork for virtually any standard-size,
spot-color, or full-color job. The order is printed and delivered to the
customer within five business days. This new service is attracting retail
customers whose average dollar order is over twice that of our traditional mail
order customers.
NEBSnet/TM/, our proprietary design system, combined with full-color printing
technology offers a significant competitive advantage at retail. In 1996, we
continued to invest in the printing technology required to capitalize on this
advantage.
7
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NEW ENGLAND BUSINESS SERVICE, INC.
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NEBS and Technology:
Building a New Channel to the Small Business Marketplace
Today, a growing number of small businesses are turning to modems, E-Mail, and
the Internet to access information and communicate with customers and suppliers.
To reach out to this expanding segment of the marketplace, NEBS established the
Technology Based Marketing Group, which began its outreach by capitalizing on
NEBS technological strengths.
NEBSnet(TM), our first venture into technology-based services at retail, is an
unqualified success. Introduced in 1995, NEBSnet is an interactive graphic
design workstation developed internally by NEBS. It enables customers to work
side by side with NEBS representatives to design and order custom, competitively
priced forms, business cards, stationery, envelopes, even full-color brochures
- -- typically printed and shipped in less than a week.
[GRAPHIC OF NEBS RETAIL CUSTOMER APPEARS HERE]
NEBSnet(TM), our first venture
into technology-
based services
at retail, is an
unqualified success.
Building on success. The Technology Based Marketing Group will take NEBSnet one
step further. Building on NEBSnet technology, the group began development of the
NEBSkiosk, an electronic workstation that will enable retail customers to
customize and order NEBS most popular printed products -- without the assistance
of a salesperson. Interacting with an easy-to-use, touch-screen display, a
customer will choose from a variety of form and check styles; indicate color,
type, and logo preferences; and view the completed design in color on screen.
Then, with a keystroke, the customer will send the file electronically to a NEBS
manufacturing facility for printing.
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NEBSnet(TM)
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[PHOTOGRAPH OF NEBS CUSTOMER, JUAN HAYGOOD APPEARS HERE]
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"My local printer couldn't compose (the business card) on site. He farms it
out to someone else. At NEBS Custom Print Desk, they do it right there; you
see the proof immediately. The product is good, and you save time. I'm very
satisfied with NEBS."
Juan Haygood, Proprietor, Peter's True Value Hardware, Detroit, Michigan
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NEBSnet/TM/
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[PHOTOGRAPH OF NEBS CUSTOMER'S PETE AND PHIL STENGER APPEARS HERE]
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"The NEBS representative was very helpful. The price was very competitive.
Production went quickly and easily. And we got a high quality look. As a small
company you're always trying to put your best impression forward. We're in a
highly competitive marketplace, so the extra touches on business cards and
stationery say a lot. They're getting peoples' attention."
Pete Stenger (and his brother Phil), Owners, August Brewery, Detroit, Michigan
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1996 ANNUAL REPORT
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[GRAPHIC DEPICTING NEBS INTERNET ACCESS APPEARS HERE]
Fashioning a new channel to the small business marketplace, NEBS made its debut
on the Internet in 1996. Customers and prospects can now request information
about NEBS, our products and services. In the near future, with a PC and a
modem, they will be able to place orders, anytime, day or night at
http://www.nebs.com.
On the Web. NEBS made its debut on the World Wide Web in 1996. Our Website is
organized around five business fundamentals -- Getting Paid, Growing the
Business, Running the Business, Paying Bills, and Managing Employees -- and a
special category, Starting Your Business. It offers small businesses a
convenient way to review and request information about NEBS, our products, and
services. In the near future, customers will be able to view and order NEBS
products on-line, any time, day or night. Visit our Website at
http://www.nebs.com.
Software. NEBS distributes software that enhances our customers' productivity,
and, importantly, works with NEBS compatible forms and other printed matter.
This year, NEBS introduced a suite of CD-ROM software products that are
interactive, multimedia "active books" helping customers to start, finance, and
advertise their business. We will continue to offer exciting titles like these,
as well as selected productivity and accounting software and software developed
by our new forms partners.
In summary, through the mail, at retail, and through technology, NEBS
remains committed to delivering high quality, affordable products and services
that make doing business easier for small business.
9
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NEW ENGLAND BUSINESS SERVICE, INC.
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Helping Customers Create an Image - Electronically:
How NEBSnet/TM/ Works
NEBSnet, our proprietary graphic design workstation, is meeting a strong and
growing demand among small businesses for image-oriented products at retail.
Here's a typical example of how a NEBS representative works with a retail
customer to custom design those products.
6. Pricing the order. [GRAPHIC DEPICTING
Based on selections the customer makes, CUSTOM DESIGN PROCESS
NEBSnet instantly prepares a price APPEAR HERE]
quotation for the business card.
5. Specifying a type style.
By seeing various fonts on screen,
the customer can determine which
typeface best fits his/her business.
7. Customizing.
Through an easy-to-use interface, NEBSnet
enables the NEBS representative to edit
and position text, select typefaces, and
choose colors that meet a customer's needs.
8. Adding the final touch.
The customer's logo is scanned into the
layout, final colors are chosen, and a
proof is printed for customer approval
before the order is sent electronically
to a NEBS manufacturing facility for printing.
10
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1996 ANNUAL REPORT
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1. Browsing the electronic catalog.
Working side by side with a NEBS
representative, the customer selects
a product line from NEBSnet's main menu.
[GRAPHICS DEPICTING
2. Choosing a layout. CUSTOM DESIGN PROCESS
The customer selects "Business Cards" APPEAR HERE]
from the options on the stationery
menu, and instantly views a variety
of thumbnail layouts.
4. Selecting ink and paper.
Using the "Stationery Sales Assistant"
menu, a customer can view a variety of
ink and paper combinations on screen
before selecting actual paper samples.
3. Narrowing the choice.
Thumbnails of each business card may
be enlarged to full-size for easy viewing.
9. The finished product.
In about five business days, the customer
receives his custom-designed, printed product
by mail -- competitively priced, satisfaction
guaranteed.
11
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NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES
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Eleven Year Summary
(In thousands of dollars except per share amounts and other statistics)
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For the Fiscal Year Ended June 29, 1996 (A) June 30, 1995 (B) June 24, 1994 (C) June 25, 1993 June 26, 1992
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Income Statistics (D)
Net Sales $254,954 $263,724 $251,253 $237,144 $232,435
Income before income taxes
and accounting changes 21,055 28,492 27,599 24,090 24,862
Percent of sales 8.3% 10.8% 11.0% 10.2% 10.7%
Taxes on income 8,306 11,818 12,036 9,873 8,925
Percent of sales 3.3% 4.5% 4.8% 4.2% 3.8%
Net income before equity in losses of
investment and accounting changes 12,749 16,674 15,563 14,217 15,937
Percent of sales 5.0% 6.3% 6.2% 6.0% 6.9%
Percent of stockholders' equity 16.8% 18.2% 15.6% 15.0% 16.9%
Per common share 0.86 1.09 1.01 0.93 1.02
Net Income 11,929 16,298 15,563 14,217 15,471
Percent of sales 4.7% 6.2% 6.2% 6.0% 6.7%
Percent of stockholders' equity 15.7% 17.8% 15.6% 15.0% 16.4%
Per common share 0.81 1.07 1.01 0.93 0.99
Dividends per common share 0.80 0.80 0.80 0.80 0.80
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Balance Sheet Statistics
Current assets 71,334 77,509 85,288 68,966 74,784
Current liabilities 27,273 32,169 30,418 25,293 25,649
Working capital 44,061 45,340 54,870 43,673 49,135
Current ratio 2.6 2.4 2.8 2.7 2.9
Total assets 103,542 124,546 131,691 120,624 121,056
Long-term debt 0 0 0 0 0
Stockholders' equity 75,916 91,523 99,479 94,668 94,124
Average common shares outstanding 14,773 15,245 15,364 15,269 15,664
Book value per common share 5.42 6.16 6.43 6.19 6.18
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Other Financial Statistics
Capital expenditures 9,388 10,804 6,054 6,475 9,669
Depreciation and amortization 10,329 12,676 11,623 9,953 9,531
Profit sharing contribution 3,489 3,620 3,133 2,891 3,296
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Other Statistics (D)
Number of employees 2,014 2,055 2,083 2,217 2,180
Number of stockholders 5,800 5,600 5,700 5,400 4,100
Number of active customers 1,238,000 1,292,000 1,285,000 1,210,000 1,195,000
Facilities (in square feet) 708,000 743,000 794,000 793,000 768,000
Average common shares outstanding have been retroactively adjusted for stock
split of 2-for-1 in November 1986.
(A) Included in the 1996 results is a $3.04 million pretax charge, or $.12 per
share, related to the closure of the Company's Flagstaff, Arizona
manufacturing facility.
(B) 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.
(C) Included in the 1994 results is a $5.45 million pretax charge, or $.21 per
share, related to a restructuring program.
(D) Years from 1986 through 1989 have been restated to eliminate a discontinued
operation.
See notes to consolidated financial statements.
12
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1996 ANNUAL REPORT
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June 28, 1991 June 29, 1990 June 30, 1989 June 24, 1988 June 26, 1987 June 27, 1986
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$231,838 $233,113 $225,931 $202,423 $172,574 $158,927
34,095 33,415 39,109 36,804 36,852 32,009
14.7% 14.3% 17.3% 18.2% 21.4% 20.1%
13,765 12,792 15,074 14,500 17,936 15,654
5.9% 5.5% 6.7% 7.2% 10.4% 9.8%
20,330 20,623 24,035 22,304 18,916 16,355
8.8% 8.8% 10.6% 11.0% 11.0% 10.3%
18.9% 19.9% 23.6% 22.8% 22.7% 23.7%
1.24 1.23 1.40 1.29 1.10 0.96
20,330 21,148 22,189 22,431 19,130 16,893
8.8% 9.1% 9.8% 11.1% 11.1% 10.6%
18.9% 20.4% 21.8% 22.9% 23.0% 24.5%
1.24 1.26 1.29 1.30 1.12 0.99
0.80 0.76 0.66 0.54 0.44 0.29
- ------------------------------------------------------------------------------------------------------------------------------------
87,468 84,311 84,398 80,256 69,956 62,321
24,094 21,596 20,020 17,949 18,718 17,524
63,374 62,715 64,378 62,307 51,238 44,797
3.6 3.9 4.2 4.5 3.7 3.6
133,602 130,280 130,238 123,566 111,009 94,057
0 3,319 6,688 5,720 6,938 6,099
107,802 103,858 101,897 97,995 83,340 68,900
16,342 16,835 17,193 17,265 17,138 17,056
6.61 6.17 5.93 5.67 4.84 4.04
- ------------------------------------------------------------------------------------------------------------------------------------
9,166 8,818 11,123 9,366 3,699 2,876
9,001 8,689 8,195 7,109 5,233 4,722
4,273 4,271 4,792 4,245 3,618 3,236
- ------------------------------------------------------------------------------------------------------------------------------------
2,045 2,154 2,002 1,928 1,797 1,632
3,700 3,600 3,600 2,700 2,600 2,500
1,173,000 1,179,000 1,125,000 1,064,000 977,000 916,000
765,000 765,000 748,000 689,000 679,000 623,000
13
- --------------------------------------------------------------------------------
NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Consolidated Balance Sheets
June 29, 1996 and June 30, 1995 (In thousands of dollars except share data)
- --------------------------------------------------------------------------------
Assets Notes June 29, 1996 June 30, 1995
- --------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1 $ 6,508 $ 11,604
Short-term investments 1 10,868 11,360
Accounts receivable (less allowance for
doubtful accounts of $3,343 in 1996 and
$3,304 in 1995) 1 30,636 29,332
Inventories 1 8,675 9,880
Direct mail advertising materials and
prepaid expenses 1 5,176 5,655
Deferred income tax benefit 1, 12 9,471 9,678
-------------------------
Total current assets 71,334 77,509
Property and Equipment: 1, 3
Land and buildings 29,761 35,796
Equipment 72,517 70,890
-------------------------
Property and equipment 102,278 106,686
Less accumulated depreciation (71,266) (70,651)
-------------------------
Property and equipment - net 31,012 36,035
Property Held for Sale 1 631 2,587
Other Assets (less accumulated
amortization of $6,635 in 1996 and
$11,683 in 1995) 1, 2, 11 565 8,415
-------------------------
Total $103,542 $124,546
=========================
See notes to consolidated financial statements.
14
- --------------------------------------------------------------------------------
1996 ANNUAL REPORT
- --------------------------------------------------------------------------------
June 29, 1996 and June 30, 1995 (In thousands of dollars except share data)
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity Notes June 29, 1996 June 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 8,575 $ 7,158
Federal and state income taxes 1, 12 - 2,506
Accrued profit-sharing distribution 6 1,474 2,408
Accrued payroll expense 5,303 5,731
Accrued employee benefit expense 7, 8 6,096 6,005
Accrued exit costs/restructuring charge 9, 10 1,387 2,020
Other accrued expenses 4,438 6,341
-----------------------------------
Total current liabilities 27,273 32,169
Deferred Income Taxes 1, 12 353 854
Commitments and Contingencies 3
Stockholders' Equity:
Preferred stock 4
Common stock, par value, $1 per share -
authorized, 40,000,000 shares; issued,
14,004,720 shares in 1996 and 15,769,501
shares in 1995; outstanding 14,004,720
shares in 1996 and 14,856,541 shares in 1995 4, 5 14,005 15,770
Additional paid-in capital 13,603 12,450
Cumulative foreign currency translation adjustment 1 (1,761) (1,683)
Retained earnings 50,069 82,412
-----------------------------------
Total 75,916 108,949
Less treasury stock, at cost -
912,960 shares in 1995 4 - (17,426)
-----------------------------------
Stockholders' equity 75,916 91,523
-----------------------------------
Total $103,542 $124,546
===================================
See notes to consolidated financial statements.
15
- --------------------------------------------------------------------------------
NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Statements of Consolidated Income
For the Fiscal Years Ended June 29, 1996, June 30, 1995 and June 24, 1994
(In thousands) of dollars except per share data)
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Notes 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
Net Sales 1 $ 254,954 $ 263,724 $ 251,253
Operating Expenses:
Cost of sales including shipping costs 95,598 94,502 92,166
Selling and advertising 1 93,179 90,241 85,793
General and administrative 6, 7, 8 43,713 49,830 41,499
Exit costs 9 3,044 1,964 -
Restructuring charge 10 - - 5,450
==============================================
Total operating expenses 235,534 236,537 224,908
Income From Operations 19,420 27,187 26,345
Other Income:
Investment income 1,140 1,305 1,254
Gain on sale of product line 11 495 - -
==============================================
Total other income 1,635 1,305 1,254
Income Before Income Taxes 21,055 28,492 27,599
Provision for Income Taxes 1, 12 8,306 11,818 12,036
==============================================
Net Income Before Equity in
Losses of Investment 12,749 16,674 15,563
Equity in Losses of
Investment 2 (820) (376) -
==============================================
Net income $ 11,929 $ 16,298 $ 15,563
==============================================
Per Share Amounts: 1
Net income $ 0.81 $ 1.07 $ 1.01
==============================================
Dividends $ .80 $ .80 $ .80
==============================================
Weighted Average Number of
Shares Outstanding 1 14,773 15,245 15,364
==============================================
See notes to consolidated financial statements.
16
- --------------------------------------------------------------------------------
1996 ANNUAL REPORT
- --------------------------------------------------------------------------------
Statements of Consolidated Stockholders' Equity
For the Fiscal Years Ended June 29, 1996, June 30, 1995, and June 24, 1994
(In thousands)
- -------------------------------------------------------------------------------
Common Stock Issued Cumulative
------------------- Foreign
Number At Par Additional Currency
of Value Paid-In Treasury Translation Retained
Notes Shares Amount Capital Stock Adjustment Earnings Total
- -----------------------------------------------------------------------------------------------------------------------------------
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
Issuance of common stock to employees
pursuant to stock plans 5, 6 75 75 1,153 1,102 2,330
Dividends paid (11,906) (11,906)
Acquisition of treasury stock 4 (17,882) (17,882)
Retirement of treasury stock 4 (1,840) (1,840) 34,206 (32,366)
Foreign currency translation adjustment 1 (78) (78)
Net income 11,929 11,929
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, June 29, 1996 14,005 $14,005 $13,603 $ 0 $(1,761) $ 50,069 $ 75,916
===================================================================================================================================
See notes to consolidated financial statements.
17
- --------------------------------------------------------------------------------
NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Statements of Consolidated Cash Flows
For the Fiscal Years Ended June 29, 1996, June 30, 1995 and June 24, 1994 (In thousands of dollars)
- ------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Flows From Operating Activities:
Net income $ 11,929 $ 16,298 $ 15,563
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,329 12,676 11,623
Gain on sale of product line (495) - -
Loss on disposal of equipment 302 - -
Loss on equity investment 1,355 - -
Deferred income taxes (290) (5,062) (1,946)
Exit cost or restructuring charge 633 1,651 1,887
Provision for losses on accounts receivable 3,033 3,177 2,793
Employee benefit charges 1,142 692 465
Changes in assets and liabilities:
Accounts receivable (4,360) (4,500) (4,630)
Inventories and advertising material 61 (3,346) 462
Prepaid expenses 1,225 (1,267) 376
Accounts payable 1,405 485 (277)
Income taxes payable (2,545) (12) 928
Other accrued expenses (1,573) (881) 2,417
-----------------------------------------
Net cash provided by operating activities 22,151 19,911 29,661
Cash Flows From Investing Activities:
Additions to property and equipment (9,388) (10,804) (6,054)
Acquisition of product line - - (334)
Investment in unconsolidated subsidiary - (1,800) -
Proceeds from sale of product line 4,500 - -
Proceeds from sale of facilities and equipment 4,985 - -
Proceeds from sale of other assets 300 - -
Investment in other assets, primarily software development costs (812) (843) -
Purchases of investments (30,751) (28,438) (36,556)
Proceeds from sale and maturities of investments 31,222 54,649 16,463
-----------------------------------------
Net cash provided (used) by investing activities 56 12,764 (26,481)
Cash Flows From Financing Activities:
Repayment of debt (8,000) (36) (41)
Proceeds from credit line 8,000 - -
Proceeds from issuing common stock 2,330 4,467 2,633
Acquisition of treasury stock (17,882) (16,998) -
Dividends paid (11,907) (12,192) (12,290)
-----------------------------------------
Net cash used by financing activities (27,459) (24,759) (9,698)
Effect of Exchange Rate on Cash 156 232 (87)
-----------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (5,096) 8,148 (6,605)
Cash and Cash Equivalents at Beginning of Year 11,604 3,456 10,061
-----------------------------------------
Cash and Cash Equivalents at End of Year $ 6,508 $ 11,604 $ 3,456
=========================================
Supplemental Cash Flow Disclosure:
Income taxes paid $ 10,289 $ 13,031 $ 13,425
=========================================
See notes to consolidated financial statements.
18
- --------------------------------------------------------------------------------
1996 ANNUAL REPORT
- --------------------------------------------------------------------------------
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. and its wholly-owned subsidiaries
(the "Company"). The Company operates 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:
1996 1995
- -------------------------------------------------------------------------
Raw paper $ 434,000 $ 1,130,000
Business forms and related office products 8,241,000 8,750,000
- -------------------------------------------------------------------------
Total $ 8,675,000 $ 9,880,000
- -------------------------------------------------------------------------
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 $34,007,000 in 1996, $39,997,000 in 1995 and $40,681,000 in 1994.
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 consist principally of purchased customer lists,
acquired software, tradename, 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").
Software development costs of $812,000 were capitalized in 1996 and
$519,000 in 1995. No software development costs were capitalized in 1994.
Purchased software costs acquired in connection with the acquisition of the
One-Write Plus(R) product line are being amortized in accordance with the
provisions of SFAS No. 86. Amortization expense of $1,199,000, $1,450,000 and
$1,383,000 was charged to operations in fiscal 1996, 1995 and 1994,
respectively. In connection with the sale of the OWP product line in 1996, the
Company expensed the balance of these accounts remaining at the time of the
sale. Unamortized costs of $0, and $3,827,000 are included in other assets at
June 29, 1996, and June 30, 1995, respectively.
Income Taxes The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS No. 109"). Income taxes are determined based on income reported in
the financial statements, regardless of when such taxes are payable. In
addition, tax assets and liabilities are adjusted to reflect changes in the U.S.
and applicable foreign tax laws when enacted. Future tax benefits are recognized
to the extent realization of such benefit is more likely to occur than not.
Significant Estimates In the process of preparing its consolidated financial
statements, the Company estimates the appropriate carrying value of certain
assets and liabilities which are not readily apparent from other sources. The
primary estimates underlying the Company's consolidated financial statements
include allowances for doubtful accounts, inventory obsolescence, deferrals of
mail advertising costs, accruals for profit sharing, recoverability of deferred
tax assets and other matters. Management bases its estimates on certain
assumptions, which are believed to be reasonable given the circumstances, and
does not believe that any change in those assumptions in the near term would
19
- --------------------------------------------------------------------------------
NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
have a material effect on the consolidated financial position or the results of
operations.
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 1.2
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 Effective July 1, 1995, the Company adopted
Statement of Financial Accounting Standards No. 107, "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. As of June 29, 1996, the carrying value of all financial
instruments approximates fair value.
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 Company plans to adopt
this statement in the first quarter of fiscal 1997.
Accounting for Stock-Based Compensation The Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 123, "Accounting
for Stock Based Compensation," which requires expanded disclosures of stock-
based compensation arrangements with employees and encourages, but does not
mandate, that compensation cost be measured based on the fair value of the
equity instrument awarded. Companies are permitted, however, to continue to
apply APB Opinion No. 25, which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. The statement is required to
be adopted no later than fiscal 1997. The Company will continue to apply APB
Opinion No. 25 to its stock based compensation awards to employees and will
disclose the required pro forma effect on net income and earnings per share in
its fiscal 1997 consolidated financial statements.
Reclassifications Certain reclassifications have been made to the 1995 and 1994
financial statements to conform with the 1996 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 advanced GST approximately
$250,000 in the form of a note.
During the first quarter of fiscal year 1996, the Company revalued its 19
percent equity interest in GST. Accordingly, the Company's investment in GST
was written down to $0 as of September 30, 1995. In January, 1996, the Company
sold its 19 percent equity interest in GST for $300,000. The revaluation and
subsequent sale resulted in a $820,000 loss, net of related income tax benefit
of $535,000, and is included in the consolidated statements of income as equity
in losses of investment.
3. Debt Obligations and Leases
A committed 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 1/4%
above the Eurodollar rate at the Company's option (5.9% at June 29, 1996). At
June 29, 1996 and at June 30, 1995, no amounts were outstanding under the line.
The minimum rental commitments for operating leases of certain facilities
and equipment total $1,923,000 in the aggregate, and are payable over the next
five years. Total rental expense was $860,000, $774,000 and $605,000, in 1996,
1995, and 1994, 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 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
20
- --------------------------------------------------------------------------------
1996 ANNUAL REPORT
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
approximately $16,998,000. On April 29, 1996, the Company announced a plan to
repurchase up to two million additional shares of the Company's stock over a two
year period. As of June 29, 1996, 984,900 shares at a cumulative cost of
approximately $17,882,000 had been repurchased. The Company subsequently retired
all of the repurchased shares.
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 29, 1996, 470,340 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, options for
up to 300,000 shares of common stock may be issued. At June 29, 1996, 294,934
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 29, 1996, 367,034 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 1996, 1995 or 1994.
A summary of stock option activity under the plans and other arrangements
during 1996, 1995, and 1994 is as follows:
1996 1995 1994
- --------------------------------------------------------------------------------
Number of shares:
Subject to option at
beginning of year 1,224,512 1,140,743 918,214
Granted during the year 615,194 373,976 512,073
Exercised at $14.50 to
$20.75 per share (70,579) (197,333) (162,836)
Expired (469,418) (92,874) (126,708)
- --------------------------------------------------------------------------------
Subject to option at
end of year 1,299,709 1,224,512 1,140,743
================================================================================
Grant price per share $18.38-20.75 $17.50-18.75 $15.88-16.25
================================================================================
Options outstanding
at end of year:
Aggregate option price $ 23,994,000 $ 21,390,000 $ 19,526,000
Expiration dates 1996 to 2005 1995 to 2004 1994 to 2003
Shares as to which
options are exercisable 744,271 781,264 691,443
Price range of
outstanding options $14.75-25.25 $14.50-25.25 $14.50-25.25
6. Profit-Sharing and 401(k)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.
For 1996, 1995, and 1994, distributions under the plans (which were charged to
general and administrative expense) aggregated $3,489,000, $3,620,000, and
$3,133,000, respectively.
The Company also has a 401(k) plan covering substantially all domestic
employees who have completed one year of service. Contributions to the plan are
made by way of participant salary deferrals and Company contributions of shares
of common stock equal, in the case of non-retail employees, to one-half of
participant deferrals subject to a maximum of 3% of eligible pay, and in the
case of retail employees, to 100% of participant deferrals subject to a maximum
of 5% of eligible pay. The Company's contributions (generally from treasury
shares) totaled 57,966 shares in 1996, 76,286 shares in 1995, and 41,427 shares
in 1994 with a fair market value of approximately $1,103,000, $1,337,000, and
$650,000, respectively (which were charged to general and administrative
expense). At June 29, 1996, 53,702 shares are reserved for issuance under this
plan.
21
- --------------------------------------------------------------------------------
NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
7. Pension Plans
The Company has a defined-benefit, trusteed pension plan which provides
retirement benefits for the majority of its domestic employees. Benefits under
the plan are primarily based on an employee's compensation during the five years
before retirement and 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 1996, 1995, and 1994 are as follows:
1996 1995 1994
- --------------------------------------------------------------------------------
Service cost-benefits earned
during the period $ 1,564,000 $ 1,481,000 $ 1,431,000
Interest cost on projected
benefit obligation 2,169,000 1,886,000 1,694,000
Actual return on
plan assets (4,557,000) (3,753,000) (188,000)
Net amortization
and deferral 1,834,000 1,008,000 (2,534,000)
- --------------------------------------------------------------------------------
Net pension cost $ 1,010,000 $ 622,000 $ 403,000
================================================================================
The following table sets forth the plan's funded status and obligations as
of June 29, 1996 and June 30, 1995:
1996 1995
- --------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Accumulated benefit obligation,
including vested benefits of
$21,042,000 in 1996 and
$18,259,000 in 1995 $ 21,450,000 $ 18,826,000
================================================================================
Projected benefit obligation $(29,925,000) $(26,939,000)
Plan assets at fair value,
primarily stocks and bonds 31,997,000 27,224,000
- --------------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 2,072,000 285,000
Add prior service cost 1,797,000 1,923,000
Less:
Unamortized net asset at transition 1,377,000 1,640,000
Unrecognized net gain 6,369,000 4,516,000
- --------------------------------------------------------------------------------
Net pension liability (included in
accrued employee benefit expense) $(3,877,000) $(3,948,000)
================================================================================
Assumptions used in the accounting as of June 29, 1996 and June 30, 1995
were as follows:
1996 1995
- --------------------------------------------------------------------------------
Discount rate 8.0% 7.8%
Rate of increase in compensation levels 5.0% 5.0%
Expected long-term rate of return on assets 9.0% 9.0%
The Company's Canadian subsidiary has a similar plan for its employees. The
amounts are not significant.
In addition, the Company has 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 29, 1996 and June 30, 1995:
1996 1995
- --------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $ 461,000 $401,000
Eligible active plan participants 79,000 69,000
Other active plan participants 414,000 361,000
- --------------------------------------------------------------------------------
954,000 831,000
Plan assets at fair value 0 0
Accumulated postretirement benefit
obligation in excess of plan assets 954,000 831,000
Unrecognized net gain 48,000 106,000
- --------------------------------------------------------------------------------
Net postretirement liability (included in
accrued employee benefit expense) $1,002,000 $937,000
================================================================================
The components of postretirement benefits cost for 1996, 1995 and 1994 are
as follows:
1996 1995 1994
- --------------------------------------------------------------------------------
Service cost $ 40,000 $ 27,000 $ 23,000
Interest on accumulated
postretirement benefit obligation 64,000 58,000 53,000
Amortization of gain (9,000) (15,000) (14,000)
- --------------------------------------------------------------------------------
Net periodic postretirement cost $ 95,000 $ 70,000 $ 62,000
================================================================================
For measurement purposes, an 11% annual rate of increase in the cost of
providing medical benefits was assumed in 1996, reducing by 1% per year to a
trend rate of 6% for fiscal 2001.
22
- --------------------------------------------------------------------------------
1996 ANNUAL REPORT
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.8% in 1996 and 1995.
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 $153,000 and the net periodic postretirement benefits cost by
$17,000.
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 103
employees were terminated as a result of the facility closing. As of June 29,
1996, approximately $1,075,000 has been expended related to termination benefits
and the closure of the facility is substantially complete.
During the first quarter of fiscal year 1996, the Company implemented a plan
to restructure operations, including the closure of the company's Flagstaff,
Arizona manufacturing facility. The accompanying consolidated statements of
income include a $3,044,000 pretax charge for exit costs associated with this
plan. The charge consists of costs related to the closure of the Flagstaff
facility of $1,224,000 and termination benefits of $1,820,000. Approximately 110
employees were terminated as a result of the facility closing. As of June 29,
1996, approximately $1,495,000 has been expended related to termination benefits
with substantially all of the remaining $325,000 to be expended in fiscal year
1997. As of June 29, 1996, the closure of the manufacturing operations has been
completed.
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. As of June 29, 1996, substantially all of the
anticipated cash payments related to employee termination and other
postemployment benefits have been made and the restructuring program is
complete.
11. Sale of Product Line
During the third quarter of fiscal 1996, the Company completed the sale of
selected assets of its Software and Services Division for $4,500,000 resulting
in a gain of approximately $495,000. The asset sale included the rights to the
Company's One-Write Plus accounting package and the Company's software
development and technical support organizations.
12. Income Taxes
The components of income before income taxes were as follows:
1996 1995 1994
- --------------------------------------------------------------------------------
United States $19,735,000 $26,900,000 $25,238,000
Canadian 1,320,000 1,592,000 2,361,000
- --------------------------------------------------------------------------------
Total $21,055,000 $28,492,000 $27,599,000
================================================================================
Provisions for income taxes under SFAS No. 109 in 1996, 1995 and 1994
consist of:
Currently payable:
Federal $ 5,217,000 $11,931,000 $ 9,837,000
State 2,353,000 4,232,000 3,145,000
Canadian 1,019,000 684,000 978,000
- --------------------------------------------------------------------------------
Total 8,589,000 16,847,000 13,960,000
Deferred (283,000) (5,029,000) (1,924,000)
- --------------------------------------------------------------------------------
Total $ 8,306,000 $11,818,000 $12,036,000
================================================================================
The tax effects of significant items comprising the Company's net deferred
tax asset (liability) as of June 29, 1996 are as follows:
1996 1995
- --------------------------------------------------------------------------------
Current Noncurrent Current Noncurrent
- --------------------------------------------------------------------------------
Deferred tax assets:
Amortization of
intangible assets $1,535,000 $2,542,000
Pension plans 1,778,000 1,758,000
Accrued vacation 1,200,000 1,265,000
Allowance for
doubtful accounts 1,257,000 1,237,000
Accrued expenses 855,000 936,000
Accrued exit costs 809,000 693,000
Sales returns and
allowances 450,000 459,000
Inventory 611,000 397,000
Postretirement benefits 418,000 391,000
Other 558,000
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Depreciation $ (27,000) $(689,000)
Other (326,000) (165,000)
- --------------------------------------------------------------------------------
Net deferred tax asset
(liability) $9,471,000 $(353,000) $9,678,000 $(854,000)
================================================================================
- --------------------------------------------------------------------------------
NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Note to Consolidated Financial Statements
A reconciliation of the provisions for income taxes to the U. S. Federal
income tax statutory rates follows:
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
Statutory tax rate 35.0% 35.0% 35.0%
State income taxes (less federal tax benefits) 6.3 6.5 6.4
Other - net (1.9) 0.0 2.2
- -----------------------------------------------------------------------------------------------------------------------------
Effective tax rate 39.4% 41.5% 43.6%
=============================================================================================================================
13. Financial Information by Geographic Area
The Company markets its products directly to very small businesses and pro-
fessional 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.
(In Thousands)
1996 Domestic International Consolidated
- -----------------------------------------------------------------------------------------------------------------------------
Net sales $233,462 $21,492 $254,954
Income from operations 18,754 666 19,420
Identifiable assets 82,921 20,621 103,542
1995
- -----------------------------------------------------------------------------------------------------------------------------
Net sales $241,844 $21,880 $263,724
Income from operations 26,511 676 27,187
Identifiable assets 103,868 20,678 124,546
1994
- -----------------------------------------------------------------------------------------------------------------------------
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
14. Quarterly Financial Information (Unaudited)
The following financial information is in thousands of dollars except per
share amounts.
First Second Third Fourth Total
1996 Quarter Quarter Quarter Quarter Year
- ------------------------------------------------------------------------------------------------------------------------------------
Net sales $ 63,788 $67,158 $ 63,100 $60,908 $254,954
Gross profit 40,404 43,157 38,112 37,683 159,356
Income before income taxes 1,868 6,612 5,739 6,836 21,055
Net income 541 3,912 3,708 3,768 11,929
Earnings per share $ .04 $ .26 $ .25 $ .26 $ .81
====================================================================================================================================
Dividends per share $ .20 $ .20 $ .20 $ .20 $ .80
====================================================================================================================================
1995
- ------------------------------------------------------------------------------------------------------------------------------------
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
====================================================================================================================================
================================================================================
1996 ANNUAL REPORT
================================================================================
Management Discussion and Analysis
Liquidity and Capital Resources
Cash provided by operating activities amounted to $22.2 million in fiscal
year 1996, approximately 11.3% higher than the $19.9 million provided in 1995.
This favorable change in cash is attributable to a reduction in inventory and
prepaid expense investment and a reduction in taxes paid. In 1995, cash from
operations decreased $9.8 million from 1994 primarily due to tax payments
related to the completion of a Federal audit and an increase in inventory
investment.
Working capital as of June 30, 1996, amounted to $44.1 million including
$17.4 million of cash and short-term investments. This balance compares to $45.3
million of working capital including cash and short-term investments of $23.0
million at the end of fiscal 1995. The decrease in working capital was due
primarily to the repurchase of 994,900 shares of the Company's common stock for
$17.9 million during fiscal 1996. This repurchase was effected in accordance
with the authorization to purchase up to two million shares announced in April,
1996. Partially offsetting the repurchase related cash outflows were proceeds of
$4.5 million from the divestiture of the assets of the One-Write Plus(R)
software line and $5.0 million related to the sale of facilities.
Capital expenditures of $9.4 million in 1996 represented a decline from the
$10.8 million expended during 1995 but an increase from the $6.1 million
expended during 1994. Capital expenditures in fiscal 1996 included investments
in information systems, equipment to support an expanded number of Kinko's
retail sites, and stationery printing equipment to meet product demand for the
retail channel. Expenditures in fiscal 1995 included investment in prepress
equipment and digital imaging presses for color printing. Expenditures during
fiscal 1994 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. Should the Company require
additional funds, it has a line of credit with a major bank for $10 million. On
June 29, 1996, there was no outstanding balance against this line.
Results of Operations
1996 versus 1995 Net sales declined 3.3% to $255.0 million for fiscal year 1996
from $263.7 million in 1995. Approximately 1% of the decline or $2.6 million was
the result of an additional week in fiscal year 1995, while 0.8% of the decline
or $2.1 million resulted from the divestiture of One-Write Plus(R) software
during the third fiscal quarter of 1996 and the repositioning of the Company's
software product line. The remaining sales decline consisted of a unit volume
decrease of approximately 5.7% or $15.2 million offset in part by price
increases of 4.2% or $11.1 million. The unit volume decline occurred principally
in the direct mail forms business.
Cost of sales increased from 35.8% of sales in 1995 to 37.5% of sales in
1996. This increase was the result of under-absorbed overhead due to the unit
volume decline and to the impact of a shift in product mix to lower margin
stationery products. In addition, cost of sales in 1996 included $1.4 million of
period expense pertaining to product and equipment moves associated with the
closure of the Company's Flagstaff manufacturing facility. Paper prices remained
relatively stable during fiscal year 1996 due to longer term agreements with key
suppliers and are not expected to have a detrimental impact in the foreseeable
future. In general, the Company anticipates being able to offset inflationary
cost increases with cost reduction initiatives and price increases during fiscal
year 1997.
Selling and advertising expenses increased from 34.2% in 1995 to 36.5% of
sales in 1996. This increase was the result of increased selling and advertising
expense to support an increased number of NEBS custom print desks in Kinko's
retail locations, partially offset by a reduction in direct mail advertising
expense, principally during the first half of the year. Direct mail advertising
expense, largely targeted to prospective customers, was increased from the first
half to the second half of fiscal 1996. The Company expects to maintain this
increased level of direct mail advertising expenditure during fiscal year 1997.
General and administrative expenses decreased from 18.9% of sales in 1995 to
17.1% of sales in 1996. This decrease was primarily the result of reduced
expense for product development and service for the Company's software product
line resulting from the divestiture of One-Write Plus(R) software, partially
offset by additional expense to support the expansion of the NEBS custom print
desks at Kinko's retail locations. The divestiture of One-Write Plus(R) is
expected to have a continued positive impact on general and administrative
expenses during fiscal year 1997.
During fiscal year1996, the Company recorded pretax exit costs of $3.0
million or approximately $0.12 per share related to a cost reduction program.
The exit costs were associated with closure of the Flagstaff manufacturing
facility and consisted of (1) approximately $1.8 million of cash payments for
post-employment benefits in conjunction with the termination of approximately
110 employees, and (2) approximately $1.2 million for anticipated non-cash
facilities and equipment write-offs. As of June 30, 1996, approximately $1.5
million has been expended related to the termination of approximately 101
employees, with the remainder expected to be expended during fiscal 1997. The
Company also incurred a pretax exit cost of approximately $2.0 million during
fiscal 1995 related to the integration of the Company's SYCOM subsidiary. As of
June 29, 1996, the integration had been completed and no amounts remained
unexpended. The combined cost savings of the programs were fully offset in the
fiscal year 1996 by increased expense associated with the Company's product and
channel initiatives.
During 1996, the Company incurred $ 1.0 million in after-tax costs associated
with the write down of its investment in GST Software, plc. It also incurred
additional after-tax costs of $2.2 million for the revaluation of certain of its
software assets as well as the divestiture of One-Write Plus software.
The Company will continue to seek opportunities to enhance the
25
- --------------------------------------------------------------------------------
NEW ENGLAND BUSINESS SERVICE, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Management Discussion
and Analysis (continued)
cost structure of the Company, to improve operating efficiencies, and to fund
investments in support of the Company's strategy.
In fiscal 1996 the Company's adoption of Statement Financial Accounting
Standards (SFAS) No. 107, "Fair Value of Financial Instruments", was not
significant to the consolidated financial statements. 1995 versus 1994 Net sales
increased 5.0% from $251.3 million in 1994 to $263.7 million in 1995. This sales
increase was comprised 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. The Company was able to offset the impact of paper
cost increases with product price actions and cost reduction initiatives during
fiscal year 1995.
Selling and advertising expenses remained essentially stable increasing
only slightly from 34.1% of sales in fiscal 1994 to 34.2% of sales in fiscal
1995.
General and administrative expenses increased from 16.5% of sales in fiscal
1994 to 18.9% of sales in fiscal 1995. This increase was the result of costs
associated with servicing an expanded line of software products, improvements to
the Company's order processing system, and costs associated with retail channel
initiatives.
During fiscal 1995, the Company recorded a $2.0 million pretax charge
related to the closure of its SYCOM facility and an additional $1.4 million of
pretax expense to integrate SYCOM into existing NEBS facilities. During 1994,
the Company recorded a $5.45 million pretax charge relating to a restructuring
program.
In fiscal 1995, the Company's adoption of 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
consolidated financial statements.
Common Stock
High and low bid prices of the Company's Common Stock for each quarter on
the NYSE were as follows:
Fiscal 1996 High Low Fiscal 1995 High Low
- ------------------------------------------------------------------------
1st Quarter 21 1/2 18 1st Quarter 19 1/2 17 1/4
2nd Quarter 23 3/4 19 2nd Quarter 19 1/4 16 1/4
3rd Quarter 22 1/8 16 1/2 3rd Quarter 20 17 3/4
4th Quarter 19 5/8 14 1/2 4th Quarter 22 3/8 16 3/4
Independent Auditor's Report
To the Board of Directors and Stockholders of New England Business Services,
Inc.:
We have audited the accompanying consolidated balance sheets of New
England Business Service, Inc. and its subsidiaries as of June 29, 1996 and
June 30, 1995, 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 29, 1996. These financial statements are the respon-
sibility 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 companies at June 29, 1996
and June 30, 1995 and the results of their operations and their cash flows for
each of the three years in the period ended June 29, 1996 in conformity with
generally accepted accounting principles.
[SIGNATURE OF DELOITTE & TOUCHE LLP]
Boston, Massachusetts
July 26, 1996
Corporate Information
Board of Directors
Robert J. Murray
Chairman of the Board,
President and Chief Executive Officer,
New England Business Service, Inc.
Peter A. Brooke
Chairman, Advent International Corporation
Robert L. Gable
Chairman of the Board and Chief Executive
Officer, Unitrode Corporation
Benjamin H. Lacy
President, Clipper Ship Foundation, Inc.
Herbert W. Moller
Vice President - Finance and Strategic
Planning, 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.
Richard H. Rhoads
Chairman of the Board (retired),
New England Business Service, Inc.
Brian E. Stern
President, Office Document Products Group,
Xerox Corporation
Board Committees
Executive Committee
Benjamin H. Lacy
Robert J. Murray
Richard H. Rhoads
Audit Committee
Peter A. Brooke
Benjamin H. Lacy
Herbert W. Moller
Brian E. Stern
Nominating Committee
Frank L. Randall, Jr.
Jay R. Rhoads, Jr.
Organization and Compensation Committee
Peter A. Brooke
Benjamin H. Lacy
Richard H. Rhoads
Stock Option Committee
Peter A. Brooke
Benjamin H. Lacy
Richard H. Rhoads
NEBS Foundation Directors
Peter A. Brooke
Benjamin H. Lacy
Jay R. Rhoads, Jr.
Corporate Officers
Robert J. Murray
Chairman, President &
Chief Executive Officer
George P. Allman
VP, Retail Sales & Operations
Timothy D. Althof
Treasurer and Secretary
Edward M. Bolesky
VP, Direct Marketing,Telesales & Service
Robert S. Brown, Jr.
VP, Circulation & International
Russell V. Corsini, Jr.
VP, Chief Financial Officer
Michael F. Dowd, Esq.
VP, Strategic Planning and Legal Officer
John F. Fairbanks
VP, Corporate Controller
Thomas W. Freeze
VP, Finance & Administration - Retail
Linda A. Jacobs
VP, Business Management - Image Products
Kenneth R. Kaisen
VP, Information Systems & Technology Based
Marketing
Steven G. Schlerf
VP, Manufacturing & Technical Operations
Robert D. Warren
VP, Business Management - Business
Solutions
Peter J. Zarrilla
VP, 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 25, 1996 at 10:00 a.m. at the
Company's offices in Groton, Massachusetts.
Form 10-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:
Timothy D. Althof
Treasurer and Secretary
NEBS
500 Main Street
Groton, MA 01471
Legal Counsel
Hill & Barlow, a Professional
Corporation,
One International Place
Boston, Massachusetts 02110
Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts 02110
Transfer Agent and Registrar
The First National
Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Internet Address
http://www.nebs.com
[LOGO OF NEW ENGLAND BUSINESS SERVICE APPEARS HERE]
New England [GRAPHIC OF NEBS LOGO AND GRAPHIC
Business Service, Inc. DEPICTING NEBS CUSTOMERS ACROSS
500 Main Street THE UNITED STATES, CANADA AND THE
Groton, Massachusetts 01471 U.K., APPEARS HERE]
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