UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 1999
TRANSITION REPORT PURSUANT TO 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the transition period from ________ to_______.
Commission file number 0-12126
Farmers and Merchants Trust Company
Profit-Sharing Plan
(Full title of the plan)
Franklin Financial Services Corporation
20 South Main Street
P.O. Box 6010
Chambersburg, PA 17201-0819
(Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office.)
Registrant's telephone number, including area code (717) 264-6116
Notices and communications from the Securities and Exchange
Commission relating to this report should be forwarded to:
Franklin Financial Services Corporation
20 South Main Street
P.O. Box 6010
Chambersburg, PA 17201-0819
Attention: Elaine G. Meyers
Item 1. Financial Statements and Exhibits
a. Financial Statements
1. Statements of Net Assets Available for Plan Benefits as of
December 31, 1999 and 1998.
2. Statement of Changes in Net Assets Available for Plan
Benefits for the year ended December 31, 1999.
b. Exhibits
1. Consent of Beard & Company, Inc.
2. Consent of Arthur Andersen LLP
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Administrative Committee of the Farmers and
Merchants Trust Company Profit Sharing Plan has duly caused this
annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
FARMERS AND MERCHANTS TRUST
COMPANY PROFIT SHARING PLAN
Date: June 28, 2000 By /s/ Elaine G.Meyers
-------------------------
Elaine G. Meyers
Chief Financial Officer
FARMERS AND MERCHANTS TRUST COMPANY
PROFIT-SHARING PLAN
FINANCIAL REPORT
DECEMBER 31, 1999
C O N T E N T S
Page
INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENTS AND
SCHEDULES 1 and 2
FINANCIAL STATEMENTS
Statements of net assets available for plan benefits 3-6
Statements of changes in net assets available for
plan benefits 7-10
Notes to financial statements 11-16
SCHEDULES
Schedule of assets held for investment purposes 17-22
Schedule of reportable transactions 23
INDEPENDENT AUDITOR'S REPORT
To the Plan Administrator
Farmers and Merchants Trust Company
Profit-Sharing Plan
Chambersburg, Pennsylvania
We have audited the accompanying statement of net
assets available for plan benefits of the Farmers and
Merchants Trust Company Profit-Sharing Plan (the "Plan")
as of December 31, 1999, and related statement of changes
in net assets available for plan benefits for the year
then ended. These financial statements and schedules
referred to below are the responsibility of the Plan's
administrator. Our responsibility is to express an
opinion on these financial statements and schedules based
on our audit. The financial statements of the Farmers and
Merchants Trust Company Profit-Sharing Plan for the year
ended December 31, 1998 were audited by other auditors
whose report, dated April 19, 1999, expressed an
unqualified opinion on those statements.
We conducted our audit 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 the Plan's administrator, as
well as evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the 1999 financial statements
referred to above present fairly, in all material
respects, the net assets available for plan benefits as of
December 31, 1999, and the changes in net assets available
for plan benefits for the year then ended, in conformity
with generally accepted accounting principles.
Our audit was performed for the purpose of forming
an opinion on the basic financial statements taken as a
whole. The supplemental schedules of assets held for
investment purposes and reportable transactions are
presented for purposes of additional analysis and are not
a required part of the basic financial statements but are
supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974.
The Fund information in the statement of net assets
available for plan benefits and the statement of changes
in net assets available for plan benefits is presented for
purposes of additional analysis rather than to present the
net assets available for plan benefits and changes in net
assets available for plan benefits of each fund. The
supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
Harrisburg, Pennsylvania
May 24, 2000
<TABLE>
<CAPTION>
Farmers and Merchants Trust Company Profit-Sharing Plan
Statements of Net Assets Available for Plan Benefits
December 31, 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Non
Participant
Participant Directed Directed
----------------------------------------------------- ------
Equities and Fixed Equities Money Aggressive FFSC Stock
Fixed Income Income Mutual Market Global and Fixed
Fund Fund Fund Fund Fund Income Fund Total
------ ------ ------ ------ ------ ------ ------
ASSETS
Investments, at market value:
Franklin Financial Services
Corporation common stock (FFSC) $0 $0 $0 $0 $0 $385,102 $385,102
Corporate debt and equity securities 2,127,095 29,325 0 0 0 90,197 2,246,617
Mutual funds 189,987 0 2,192,353 0 568,707 0 2,951,047
Dreyfus Treasury Prime Cash
Management Fund 68,612 12,554 8,767 79,664 0 9,201 178,798
SEI- Institutional Cash 0 0 0 0 5,508 0 5,508
Government securities 555,632 81,590 0 0 0 173,804 811,026
Certificates of deposit 20,000 4,000 0 0 0 0 24,000
------ ------ ------ ------ ------ ------ ------
Total Investments 2,961,326 127,469 2,201,120 79,664 574,215 658,304 6,602,098
Employer's contribuiton receivable 13,066 203 11,251 98 4,062 5,155 33,835
Employee's contribuiton receivable 4,957 82 4,955 7 1,591 2,040 13,632
Income receivable 16,379 1,415 155 339 51 7,966 26,305
------ ------ ------ ------ ------ ------ ------
NET ASSEST AVAILABLE FOR
PLAN BENEFITS $2,995,728 $129,169 $2,217,481 $80,108 $579,919 $673,465 $6,675,870
====== ====== ====== ====== ====== ====== ======
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Farmers and Merchants Trust Company Profit-Sharing Plan
Statements of Net Assets Available for Plan Benefits
December 31, 1998
<S> <C> <C> <C> <C> <C> <C> <C>
Non
Participant
Participant Directed Directed
---------------------------------------------------- ------
Equities and Fixed Equities Money Aggressive FFSC Stock
Fixed Income Income Mutual Market Global and Fixed
Fund Fund Fund Fund Fund Income Fund Total
------ ------ ------ ------ ------ ------ ------
ASSETS
Investments, at market value:
Franklin Financial Services
Corporation common stock (FFSC) $0 $0 $0 $0 $0 $501,840 $501,840
Corporate debt and equity securities 1,587,587 0 0 0 0 28,611 1,616,198
Mutual funds 143,463 0 2,235,387 0 337,233 0 2,716,083
Dreyfus Treasury Prime Cash
Management Fund 107,950 13,770 16,452 87,939 0 33,629 259,740
SEI- Institutional Cash 0 0 0 0 10,351 0 10,351
Government securities 545,697 42,144 0 0 0 223,292 811,133
Certificates of deposit 44,599 4,000 0 0 0 5,000 53,599
------ ------ ------ ------ ------ ------ ------
Total Investments 2,429,296 59,914 2,251,839 87,939 347,584 792,372 5,968,944
Employer's contribuiton receivable 32,375 433 37,448 530 9,542 19,982 100,310
Employee's contribuiton receivable 3,122 41 5,244 134 1,606 2,274 12,421
Income receivable 12,647 690 6 340 27 6,594 20,304
------ ------ ------ ------ ------ ------ ------
NET ASSEST AVAILABLE FOR
PLAN BENEFITS $2,477,440 $61,078 $2,294,537 $88,943 $358,759 $821,222 $6,101,979
====== ====== ====== ====== ====== ====== ======
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Farmers and Merchants Trust Company Profit-Sharing Plan
Statements of Changes in Net Assets Available for Plan Benefits
December 31, 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Non
Participant
Participant Directed Directed
---------------------------------------------------- ------
Equities and Fixed Equities Money Aggressive FFSC Stock
Fixed Income Income Mutual Market Global and Fixed
Fund Fund Fund Fund Fund Income Fund Total
------ ------ ------ ------ ------ ------ ------
Additions to net assets:
Net realized and unrealized appreciation
(depreciation) in value of investments$398,622 ($3,471) ($382,829) $0 $79,811 ($179,068) ($86,935)
Interest and dividends income 78,129 6,659 246,879 4,040 20,768 37,344 393,819
Contribution from employer 77,058 1,246 73,831 379 23,228 34,620 210,362
Contribution from employee 143,084 2,135 146,342 761 54,660 55,977 402,959
Rollover contribution 0 1,423 0 1,422 0 0 2,845
------ ------ ------ ------ ------ ------ ------
Total Additions 696,893 7,992 84,223 6,602 178,467 (51,127) 923,050
Deductions from net assets
Benefit payments (113,922) (12,788) (151,469) 0 (8,208) (39,192) (325,579)
Administrative expenses (9,509) (290) (8,754) (343) (1,491) (3,193) (23,580)
------ ------ ------ ------ ------ ------ ------
Total Deductions (123,431) (13,078) (160,223) (343) (9,699) (42,385) (349,159)
------ ------ ------ ------ ------ ------ ------
Net interfund transfers (55,174) 73,177 (1,056) (15,094) 52,392 (54,245) 0
------ ------ ------ ------ ------ ------ ------
Net increase (decrease) 518,288 68,091 (77,056) (8,835) 221,160 (147,757) 573,891
Net assets available for plan benefits:
Beginning of year 2,477,440 61,078 2,294,537 88,943 358,759 821,222 6,101,979
------ ------ ------ ------ ------ ------ ------
End of year $2,995,728 $129,169 $2,217,481 $80,108 $579,919 $673,465 $6,675,870
====== ====== ====== ====== ====== ====== ======
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Farmers and Merchants Trust Company Profit-Sharing Plan
Statements of Changes in Net Assets Available for Plan Benefits
December 31, 1998
<S> <C> <C> <C> <C> <C> <C> <C>
Non
Participant
Participant Directed Directed
---------------------------------------------------- ------
Equities and Fixed Equities Money Aggressive FFSC Stock
Fixed Income Income Mutual Market Global and Fixed
Fund Fund Fund Fund Fund Income Fund Total
------ ------ ------ ------ ------ ------ ------
Additions to net assets:
Net realized and unrealized appreciation
(depreciation) in value of investments $440,378 $1,170 $87,739 $0 $47,011 ($62,212) $514,086
Interest and dividends income 56,502 4,896 222,989 2,712 12,127 38,507 337,733
Contribution from employer 77,525 690 97,731 924 25,344 64,780 266,994
Contribution from employee 103,413 2,738 159,238 1,480 42,485 58,617 367,971
Rollover contribution 37,873 0 0 0 0 85,065 122,938
------ ------ ------ ------ ------ ------ ------
Total Additions 715,691 9,494 567,697 5,116 126,967 184,757 1,609,722
Deductions from net assets
Benefit payments (102,542) (6,948) (80,659) (307) (3,831) (30,394) (224,681)
Administrative expenses (7,493) (382) (7,352) (144) (1,080) (3,066) (19,517)
------ ------ ------ ------ ------ ------ ------
Total Deductions (110,035) (7,330) (88,011) (451) (4,911) (33,460) (244,198)
------ ------ ------ ------ ------ ------ ------
Net interfund transfers 135,221 (54,706) (44,528) 52,550 (52,119) (36,418) 0
------ ------ ------ ------ ------ ------ ------
Net increase (decrease) 740,877 (52,542) 435,158 57,215 69,937 114,879 1,365,524
Net assets available for plan benefits:
Beginning of year 1,736,563 113,620 1,859,379 31,728 288,822 706,343 4,736,455
------ ------ ------ ------ ------ ------ ------
End of year $2,477,440 $61,078 $2,294,537 $88,943 $358,759 $821,222 $6,101,979
====== ====== ====== ====== ====== ====== ======
See Notes to Financial Statements
</TABLE>
FARMERS AND MERCHANTS TRUST COMPANY PROFIT-SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1
DESCRIPTION OF PLAN
The following description of the Farmers and Merchants Trust
Company Profit-Sharing Plan (the "Plan") provides only general
information. Participants should refer to the Plan document for
more complete information.
General:
The Plan is a defined contribution plan established by
Farmers and Merchants Trust Company (the "Company") under
the provisions of Section 401(a) of the Internal Revenue
Code ("Code"), which includes a qualified deferred
arrangement as described in Section 401(k) of the Code for
the benefit of eligible employees of the Company. All
employees who have completed one year of service, as
defined, are eligible to participate. The Plan is subject
to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"), as amended.
Contributions:
As of July 1, 1998, eligible employees can contribute
an amount up to 19% of compensation as defined by the Plan,
limited by requirements of the IRC. Prior to July 1, 1998,
eligible employees could contribute 15% of compensation.
The Company, at its discretion, may match a percentage of
each Plan participant's deferrals up to a maximum of 5% of
compensation. The percentage of such discretionary matching
contributions are determined annually by the Company. In
1999 and 1998, the Company matched 100% of Plan
participants' first 3% deferral and 50% of the next 2%
deferral.
In addition, the Company may elect to contribute an
additional percentage of Plan participants' compensation.
In 1999 and 1998, the Company made a 2% discretionary
contribution.
The Plan may refund any excess deferrals in order to
bring the plan in compliance with code limitations.
Vesting:
A participant is immediately vested in his or her
entire account balance, including Company contributions.
Payment of benefits:
Upon retirement, death, disability or termination, a
participant may elect to receive distributions in the form
of an annuity or lump-sum amount, as defined.
Benefits due to terminated participants, which are
included in net assets for plan benefits in the accompanying
statements, totaled $ -0- at December 31, 1999 and 1998,
respectively.
Participant accounts:
Individual accounts are maintained for each of the
Plan's participants to reflect the participant's share of
the Plan's income, the Company's contribution and the
participant's contribution. Allocations are based on
participant account balances, as defined.
Investment options:
All funds are participant directed except for the FFSC
Stock and Fixed Income Fund. As of July 1998, election
changes could be made quarterly. Prior to July 1998,
participants could change elections semi-annually. The
Company administers the Plan and makes decisions related to
its investments.
The investment options available under the Plan are:
Equities and fixed income fund:
This fund invests primarily in cash
equivalents and money markets, government agency notes
and bonds, common stocks and domestic equity mutual
funds.
FFSC stock and fixed income fund:
This fund invests primarily in
government agency notes and bonds and in employer
common stock.
Fixed income fund:
This fund invests primarily in cash
equivalents, money markets and government agency notes
and bonds.
Equities mutual fund:
This fund invests primarily in cash
equivalents, money markets and domestic equity mutual
funds.
Money market fund:
This fund invests solely in the
Dreyfus Treasury Prime Cash Management Fund.
Aggressive global fund:
This fund invests primarily in
diversified global equity mutual funds.
Participant loans:
Under the terms of the Plan, participants may request
loans not to exceed the lesser of $ 50,000 or 50% of their
vested account balance for payment of post-secondary
education for the participant, spouse, children or
dependents, or the purchase of a principal residence for the
participant. Loans will have a market rate of interest, as
defined. Education loans and principal residence loans must
be repaid over a period of not longer than five years and in
installments not less frequently than quarterly.
Additionally, no loan may be less than $ 1,000 and no more
than one loan may be issued to a participant during the
year. As of December 31, 1999 and 1998, there were no
outstanding loans.
Note 2
SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting:
The accompanying financial statements are prepared on the
accrual basis of accounting.
Income recognition:
Interest income is recorded as earned on the accrual basis.
Dividend income is recorded when declared.
Investment valuation:
Investments of the Plan are stated at fair market value.
All securities are traded in public markets and are valued at
their quoted market prices. Purchases and sales of securities
are reflected on a trade-date basis. Realized gains and
losses are based on securities sold.
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of net assets available for plan benefits and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of changes
in net assets available for plan benefits during the reporting
period. Actual results could differ from those estimates.
Administrative expenses:
All expenses are paid out of the Plan's assets.
Note 3
INVESTMENTS
The Trust Department of the Company, trustee of the
Plan, maintains all of the Plan's investments and
executes transactions therein.
The fair market values of individual assets that
represent 5% or more of the Plan's net assets as of
December 31, 1999 and 1998 are as follows:
1999 1998
---- ----
Franklin Financial Services Corporation $ 385,102 $ 501,840
Common Stock
Vanguard Windsor II Mutual Fund 2,192,353 2,235,387
Note 4
INCOME TAX STATUS
Although the Plan has received a favorable
determination letter dated January 20, 1993, from the
Internal Revenue Service, it has not been updated for
the latest plan amendments. However, the Plan
administrator and the Plan's tax counsel believe that
the Plan is currently designed and being operated in
compliance with the applicable requirements of the IRC.
Therefore, they believe that the Plan was qualified and
the related trust was tax-exempt through the year ended
December 31, 1999.
Note 5
PLAN TERMINATION
Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
Note 6
RELATED PARTY TRANSACTIONS
During the years ended December 31, 1999 and 1998, the
Plan engaged in transactions with the Company's parent,
Franklin Financial Services Corporation. During 1999 and
1998, the transactions included the purchase of the parent's
stock in the amount of $ 50,063 and $ 123,963, respectively.
Also, the Plan held investments in Farmers and Merchants
Trust Company (F&M) certificates of deposits totaling
$ 24,000 and $ 34,599 as of December 31, 1999 and 1998,
respectively.
Note 7
RECONCILIATION OF FINANCIAL STATEMENTS TO 5500 FOR 1999
Investments:
Corporate debt and equity securities $2,246,617
========
Form 5500, Schedule H, Part I:
Item c(3)(B) $319,191
Item c(4)(B) 1,927,426
$2,246,617
========
Realized/unrealized gain and interest/dividend income:
Net realized and unrealized appreciation in value
of investments (86,935)
Interest and dividend income 393,819
-------
$306,884
========
Form 5500, Schedule H, Part II:
Item b(1)(G) $73,557
Item b(2)(C) 48,072
Item b(4)(C) 58,324
Item b(5)(c) 149,082
Item b(10) (22,151)
-------
$306,884
========
Cash and short-term investments:
Dreyfus Treasury Prime Cash Management Fund $178,798
SEI - Institutional Cash 5,508
Certificates of deposit 24,000
---------
$208,306
========
Form 5500, Schedule H, Part I, Item c(1) $208,306
========
<TABLE>
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Note 8
RECONCILIATION OF FINANCIAL STATEMENTS TO 5500 FOR 1998
Investments:
Corporate debt and equity securities $1,616,198
======
Form 5500:
Item 31c(4)(B) $76,958
Item 31c(5)(B) 1,539,240
--------
$1,616,198
======
Realized/unrealized gain and interest/dividend income:
Net realized and unrealized appreciation in value
of investments $514,086
Interest and dividend income 337,733
$851,819
======
Form 5500:
Item 32b(1)(H) $87,380
Item 32b(2)(C) 13,626
Item 32b(4)(C) (4,788)
Item 32b(5) 383,164
Item 32b(10) 372,437
--------
$851,819
======
Cash and short-term investments:
Dreyfus Treasury Prime Cash Management F $259,740
SEI - Institutional Cash 10,351
--------
$270,091
======
Form 5500, Item 31c(1) $270,091
======
</TABLE>
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<S> <C> <C> <C> <C> <C>
FARMERS AND MERCHANTS TRUST COMPANY PROFIT-SHARING PLAN
SCHEDULE H, PART IV, LINE 4 - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES
EIN: 23-0570230
PN: 002
December 31, 1999
Shares/ Cost Fair Value
Description Par Value -------- --------
-------- --------
Equities and Fixed Income Fund,
Dreyfus Treasury Prime Cash Management Fu $68,612 $68,612
====== ======
Certificates of deposit,
F&M Trust, 5.95%, due 11/05/02 20,000 20,000
Government securities:
U.S. Treasury note, 7.750%, due 1/31/00 4,000 3,993 4,009
U.S. Treasury note, 5.500%, due 2/29/00 8,000 7,995 8,002
U.S. Treasury note, 6.000%, due 8/15/00 40,000 40,024 40,037
U.S. Treasury note, 6.125%, due 9/30/00 5,000 4,997 5,005
U.S. Treasury note, 6.375%, due 3/31/01 5,000 4,992 5,011
U.S. Treasury note, 6.625%, due 7/31/01 10,000 10,001 10,066
U.S. Treasury note, 5.875%, due 11/30/01 25,000 24,875 24,844
U.S. Treasury note, 6.250%, due 1/31/02 50,000 50,000 50,000
U.S. Treasury note, 6.500%, due 5/31/02 25,000 24,879 25,125
U.S. Treasury note, 6.250%, due 6/30/02 10,000 9,980 9,994
U.S. Treasury note, 6.000%, due 7/31/02 10,000 9,990 9,941
U.S. Treasury note, 6.250%, due 8/31/02 20,000 19,997 19,987
U.S. Treasury note, 5.500%, due 5/31/03 20,000 19,936 19,462
U.S. Treasury note, 5.375%, due 6/30/03 90,000 89,777 87,244
U.S. Treasury note, 5.750%, due 8/15/03 25,000 24,602 24,476
U.S. Treasury note, 5.250%, due 5/15/04 50,000 49,753 47,891
U.S. Treasury note, 6.500%, due 10/15/06 50,000 49,922 49,859
Federal Home Loan Bank, 5.440%,
due 10/15/03 70,000 69,606 66,762
Federal Home Loan Bank, 7.140%,
due 6/06/01 5,000 5,223 5,041
Federal Home Loan Bank, 7.400%,
due 9/21/06 25,000 25,000 24,664
FNMA, 6.340%, due 6/08/04 10,000 10,000 9,747
Federal Home Loan Mortgage, 6.500%,
due 1/15/23 9,188 9,159 8,465
-------- --------
564,701 555,632
Corporate debt and equity securities:
Sears Roebuck, 6.125%, due 1/15/06 $15,000 $15,061 $13,730
Ford Global, 6.250%, due 11/08/00 12,000 12,000 11,959
Nationsbank Corp., 6.500%, due 8/15/03 10,000 10,060 9,816
Philip Morris, 7.625%, due 5/15/02 10,000 9,950 9,959
Bank of America, 6.625%, due 6/15/04 20,000 20,000 19,544
First Chicago NBD BankOne, 7.000%,
due 10/16/06 10,000 9,891 9,712
G.E. Corp., 6.500%, due 11/01/06 20,000 20,000 19,144
GMAC, 6.750%, due 6/15/06 25,000 25,000 24,164
JP Morgan & Co., Inc., 5.750%, due 2/25/0 10,000 10,000 9,494
Phillip Morris, 7.000%, due 7/15/05 40,000 40,000 37,912
Wells Fargo & Co., 6.625%, due 7/15/04 35,000 34,913 34,234
America On-line 400 31,105 30,350
Amoco Corp. 554 6,617 32,859
Associates First Cap Corp. 660 25,446 18,109
Automatic Data Processing, Inc. 1,000 23,797 53,875
BankAmerica Corp. New Com 505 15,490 25,345
Bell Atlantic Corp. 1,000 26,236 61,563
Bristol Myers Squibb Co. 1,616 13,286 103,727
Cisco Systems 1,200 14,477 128,550
Compaq Computer Corp. 1,500 11,891 40,594
Delphi Automotive Systems Corp. 174 2,922 2,741
Duke Power 175 11,230 8,772
EMC Corp. 385 27,856 42,061
E.I. Dupont DeNemours & Co. 900 23,924 59,287
Exxon 650 22,568 52,366
General Electric Co. 1,500 28,597 232,125
General Motors Corp. 250 17,693 18,172
H. J. Heinz Co. 500 23,332 19,906
Home Depot, Inc. 300 17,380 20,625
Intel Corp. 1,800 6,660 148,162
Keystone Financial, Inc. 993 16,306 20,915
Lowe's Companies, Inc. 300 10,005 17,925
Lucent Technologies, Inc. 800 4,294 60,000
Marriott Intl Inc. New Common Stock 250 6,453 7,891
MBNA Corp. 900 21,104 24,525
MCI Worldcom, Inc. 350 28,949 28,153
Merck & Co., Inc. 1,200 10,673 80,625
Microsoft Corp. 1,500 14,370 175,125
Morgan Stanley, Dean Witter & Co. 1,000 18,249 142,750
Nokia Corporation 330 28,297 63,051
Oracle Corp. 300 32,355 33,619
Procter and Gamble Co. 320 11,211 35,060
SBC Communications, Inc. 600 7,542 29,250
Schlumberger LTD 200 14,073 11,225
Walt Disney Co. 550 16,135 16,087
Wells Fargo & Co. New Com 695 25,590 28,104
Xerox Corp. 640 26,678 14,520
Unilever N.V. 724 17,564 39,413
-------- --------
867,320 2,127,095
-------- --------
Mutual funds:
Brandywine Fund, Inc. 985 33,063 42,218
Eaton Vance Institutional Floating Rate 3,695 36,879 36,658
SEI International Equity 2,119 30,000 30,318
Vanguard International Growth Portfolio 3,592 48,723 80,793
-------- --------
148,665 189,987
-------- --------
Total equities and fixed income fund 1,669,298 2,961,326
-------- --------
FFSC Stock and Fixed Income Fund:
Dreyfus Treasury Prime Cash Management Fu 9,201 9,201
-------- --------
Government securities:
U.S. Treasury note, 6.000%, due 8/15/00 $6,000 $5,991 $6,006
U.S. Treasury note, 5.625%, due 5/15/01 15,000 14,999 14,887
U.S. Treasury note, 6.625%, due 7/31/01 8,000 8,000 8,052
U.S. Treasury note, 6.500%, due 5/31/02 10,000 9,952 10,050
U.S. Treasury note, 6.250%, due 6/30/02 5,000 4,990 4,997
U.S. Treasury note, 6.000%, due 7/31/02 5,000 4,995 4,970
U.S. Treasury note, 6.250%, due 8/31/02 10,000 9,999 9,994
U.S. Treasury note, 5.750%, due 10/30/02 5,000 4,983 4,930
U.S. Treasury note, 5.500%, due 5/31/03 20,000 19,936 19,463
U.S. Treasury note, 5.375%, due 6/30/03 10,000 9,967 9,694
Federal Home Loan Bank, 6.670%,
due 4/06/01 5,000 4,825 5,009
Federal Home Loan Bank, 5.710%,
due 10/01/03 10,000 10,000 9,600
Federal Home Loan Bank, 5.440%,
due 10/15/03 10,000 9,944 9,537
Federal Home Loan Mortgage, 6.000%,
due 3/09/04 10,000 9,975 9,628
Federal Home Loan Bank, 5,625%,
due 5/10/04 25,000 25,000 23,758
Federal Home Loan Bank, 6.000%,
due 2/03/06 10,000 10,000 9,413
Federal Home Loan Bank, 7.400%,
due 9/21/06 10,000 10,000 9,866
Federal Home Loan Mortgage, 6.500%,
due 1/15/23 4,288 4,274 3,950
-------- --------
177,830 173,804
-------- --------
FFSC Stock and Fixed Income Fund (Continued):
Corporate debt and equity securities:
Sears Roebuck, 6.125%, due 1/15/06 $10,000 $10,041 $9,153
Ford Global, 6.250%, due 11/08/00 8,000 8,000 7,972
Nationsbank Corp., 6.500%, due 8/18/03 10,000 10,060 9,816
Bank of America, 6.625%, due 6/15/04 20,000 20,000 19,544
Phillip Morris Global, 7.000%, due 7/15/0 10,000 10,000 9,478
Wells Fargo & Co., 6.625%, due 7/15/04 35,000 34,912 34,234
-------- --------
93,013 90,197
Common stock,
Franklin Financial Services Corp. 18,448 350,191 385,102
-------- --------
Total FFSC stock and fixed income fund 630,235 658,304
-------- --------
Fixed Income Fund:
Dreyfus Treasury Prime Cash Management Fund 12,554 12,554
-------- --------
Certificate of deposit,
F&M Trust, 5.950%, due 11/05/02 4,000 4,000 *
-------- --------
Government securities:
U.S. Treasury note, 5.625%, due 11/30/00 5,000 5,000 4,981
U.S. Treasury note, 6.375%, due 3/31/01 5,000 4,992 5,011
U.S. Treasury note, 6.625%, due 7/31/01 9,000 9,000 9,059
U.S. Treasury note, 6.000%, due 7/31/02 5,000 4,995 4,970
U.S. Treasury note, 6.500%, due 5/31/02 5,000 4,976 5,025
U.S. Treasury note, 5.000%, due 4/30/01 25,000 25,000 24,633
U.S. Treasury note, 5.250%, due 5/15/04 25,000 24,876 23,946
Federal Home Loan Mortgage, 6.50%,
due 1/15/23 4,288 4,274 3,950
Federated U.S. Government securities,
2 - 5 years 1,435 16 15
-------- --------
83,129 81,590
-------- --------
Corporate debt and equity securities:
Bank of America, 6.625%, due 6/15/04 $20,000 $19,950 $19,544
Wells Fargo & Co., 6.625%, due 7/15/04 10,000 9,975 9,781
-------- --------
29,925 29,325
-------- --------
Total fixed income fund 129,608 127,469
Equities Mutual Fund:
Dreyfus Treasury Prime Cash Management Fund 8,767 8,767
Vanguard Windsor II Mutual Fund 87,799 2,089,608 2,192,353
-------- --------
Total equities mutual fund 2,098,375 2,201,120
Money Market Fund,
Dreyfus Treasury Prime Cash Management Fund 79,664 79,664
-------- --------
Aggressive Global Fund:
SEI - Prime Obligation 5,508 5,508
-------- --------
Equity mutual funds:
SEI - Large Capital Growth 6,461 147,656 225,730
SEI - Large Capital Value 9,322 184,119 175,629
SEI - Small Capital Growth 1,071 17,239 30,585
SEI - Small Capital Value 1,213 17,354 17,115
SEI - Core International Equity 8,361 87,487 119,648
-------- --------
453,855 568,707
-------- --------
Total aggressive global fund 459,363 574,215
-------- --------
Total investments $5,066,543 $6,602,098
======= =======
* Represents parties-in-interest.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Schedule H, Part IV, Line 4j - Schedule of Reportable Transactions
Description Cost Of
Of Asset Or Number Of Purchase Selling Assets Net
Identity Of Party Security Transactions Price Price Sold Gain
Series of Transactions in
Excess of 5%:
Dreyfus Treasury Prime Money Market 449 $1,278,910 $ - $ - $ -
Cash Management Fund 147 - 1,359,852 1,359,852 -
Vanguard Windsor II Mutual Mutual Fund 12 437,795 - - -
Fund 8 - 98,000 54,405 25,705
</TABLE>
EXHIBIT INDEX
The following exhibits are filed as part of this report:
1. Consent of Beard & Company, Inc.
2. Consent of Arthur Andersen LLP
EXHIBIT 23.1
CONSENT OF BEARD & COMPANY, INC., INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement (Form S-8, No. 0-12126) pertaining to the
Farmers and Merchants Trust Company of Chambersburg Profit-
Sharing Plan of the financial statements of the Farmers and
Merchants Trust Company Profit-Sharing Plan included in this
Annual Report (Form 11-K) for the year ended December 31, 1999.
BEARD & COMPANY, INC.
Harrisburg, Pennsylvania
June 28, 2000
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated April 19, 1999 on the December
31, 1998 Farmers and Merchants Trust Company Profit Sharing Plan
financial statements in this Form 11-K, into the Corporation's
previously filed Registration Statements File No. 0-12126. It
should be noted that we have not audited any financial statements
of Franklin Financial Services Corporation subsequent to December
31, 1998 or performed any procedures subsequent to the date of
our report.
ARTHUR ANDERSEN LLP
Lancaster, PA
June 28, 2000
