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FORM 10-KSB-A
(AMENDMENT #1)
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
ANNUAL REPORT UNDER SECTION 13 or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 1998
COMMISSION FILE NUMBER 33-45240
HERITAGE FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Tennessee 62-1484807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 Jefferson Street, Clarksville, Tennessee 37040
(Address of Principal Executive Office) (Zip Code)
(615) 553-0500
(Issuer's telephone number including area code)
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $2.00 par value per share
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X NO
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Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB X
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State issuer's revenues for its most recent fiscal year:
$20,764,993
As of December 31, 1998, 579,645 shares of the registrant's Common Stock
were outstanding with an aggregate market value of $35,342,185, using the
average sale price over the last 60 days.
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Heritage Financial Services, Inc.
Amendment #1 to 1998 Form 10-KSB
The Registrant hereby amends Part II, Item 7, Financial Statements, of its
1998 Form 10-KSB to reflect a change in the Report of Independent Public
Accountants to include the name and address of the independent accounting firm
which opined on the financial statements (which was inadvertently omitted from
the original filing) as well as a revised footnote #18 dealing with Year 2000
issues. The original footnote #18 did not include historical and estimated
costs as of the balance sheet date for Year 2000 issues. In addition, the
original footnote #18 did not include a description of the Registrant's most
reasonably likely worse case Year 2000 scenario and the measures taken by the
Registrant to prepare for such a scenario.
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ITEM 7. FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Heritage Financial Services, Inc.
We have audited the consolidated balance sheets of Heritage Financial Services,
Inc. and Subsidiary as of December 31, 1998 and 1997, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility 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 audits 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, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Heritage Financial
Services, Inc. and Subsidiary as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
Heathcott & Mullaly, P.C.
Brentwood, Tennessee
January 15, 1999
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HERITAGE FINANCIAL SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(18) YEAR 2000 ISSUES
The approach of the year 2000 presents problems to computer users such
as the Company. Many computer systems in use today, particularly older
computers and computer programs, may not be able to properly interpret
dates after December 31, 1999 because they use only two digits to
indicate the year in a date. For example, the year 2000 could be
interpreted as the year 1900 by such systems. As a result, the systems
could produce inaccurate data, or not function at all.
The Company depends upon a significant number of computer software
programs and operating systems to conduct its business, many of which
are provided by third-party private and public vendors, including our
primary software vendor and service bureau, Fiserv Solutions, Inc.
("Fiserv"). We can receive information from the FDIC regarding Fiserv's
year 2000 readiness based on its examinations. However, for vendors
which are not examined by the FDIC or other regulators, we must rely
on those vendors' representations regarding year 2000 readiness and
the validation testing that we are able to perform.
Accordingly, the Company has developed a comprehensive plan to ensure
that all of its mission critical systems are able to properly deal
with the year 2000. The Company has tested each system's ability to
properly perform and corrective measures have been implemented. A
contingency and business resumption plan has been formulated in the
event that primary systems are unable to operate. The Company has also
made arrangements for additional liquidity in the event that customers
choose to withdraw extra funds. At this point, the Company anticipates
no difficulty in achieving full year 2000 capability or meeting
customer demands and does not expect the related costs to be material.
As a financial institution, the Company is also exposed to potential
risks if borrowers and depositors suffer year 2000 related difficulties
and are unable to repay their loans or maintain their deposit balances.
The Company has performed an assessment of the year 2000 readiness of
significant borrowers and depositors. At this time, the Company is
unable to determine what impact, if any, the year 2000 will have on
either the loan payment performance of borrowers or the balances of key
depositors.
We believe that our most reasonably possible worst-case scenario would
occur if we experienced a complete loss of Fiserv services and its
contingency plans failed to work properly. This could potentially
affect our ability to handle daily banking business for our customers
in the first two quarters of 2000. If we determined that Fiserv was
unable to meet processing requirements on a timely basis, we would
utilize alternative back-up processing systems. This could result in
lost revenue, increased operating costs, the loss of customers, or
other business interruptions, any of which could adversely affect
results of operations and financial condition.
During 1998 the Company expended approximately $43,000 in connection
with identifying, evaluating and addressing year 2000 compliance
issues. Most of these costs were to replace or upgrade noncompliant
equipment and software. The Company expects to incur approximately
$82,000 in additional costs during 1999.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Heritage Financial Services, Inc.
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(Registrant)
By Earl O. Bradley, III
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Earl O. Bradley, III
President and Chief Executive Officer
Date December 16, 1999
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By Jack L. Graham
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Jack L. Graham
Chief Financial Officer
Date December 16, 1999
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In accordance with the Exchange Act, this amendment has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By David R. Farris By James W. Russell
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Director Director
Date December 16, 1999 Date December 16, 1999
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By W. Lawson Mabry By George R. Fleming, Sr.
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Director Director
Date December 16, 1999 Date December 16, 1999
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By John T. Halliburton By Ted R. McCurdy
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Director Director
Date December 16, 1999 Date December 16, 1999
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