Exhibit 99.1
PRIOR YEAR 2000 READINESS DISCLOSURES
Each of the following statements previously made by the Corporation is
being designated as a "Year 2000 Readiness Disclosure" under the Year 2000
Information and Readiness Disclosure Act. These prior Year 2000 Readiness
Disclosures were based in part upon and repeated information provided by
the Corporation's customers, suppliers and other third parties without
independent verification by the Corporation. These prior Year 2000
Readiness Disclosures are superseded by the Year 2000 Readiness Disclosure
in the Quarterly Report on Form 10-Q for the period ended September 30,
1998.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1998
YEAR 2000 COMPLIANCE
The Corporation has completed an analysis of its hardware and software
systems to determine whether those systems will properly recognize and
account for the year 2000. As described in greater detail in the
Corporation's 1997 Annual Report to Shareholders, the Corporation has now
completed the conversion of its core operating system to a new system that
has been certified by the vendor to be year 2000 compliant. The
Corporation also purchased a new mainframe computer in 1997, which was
capitalized. Management currently anticipates that the remaining costs of
analysis, conversion, hardware and software purchases, associated
reprogramming and other remedial actions will not exceed $750,000 for the
remaining eighteen-month period ending December 31, 1999, and that a
majority of these costs will relate to hardware purchases and will be
capitalized. Management believes that, as of June 30, 1998 (i) the
conversion of the core operating system software had been completed, but
that additional testing will be required; (ii) the core operating system
represents approximately 85% of the Corporation's "mission critical"
systems; and (iii) all "mission critical" systems and software are
scheduled to be renovated by December 31, 1998.
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997
The Corporation is currently in the process of addressing an issue that is
facing all users of automated information systems. The issue is that many
computer systems that process transactions based on two digits representing
the year of the transaction may recognize a date using "00" as the year 1900
rather than the Year 2000. The inability to correctly recognize "00" as
the Year 2000 could affect a wide variety of automated information systems,
such as mainframe applications, personal computers and communication systems,
in the form of software failure, errors or miscalculations.
The Corporation began developing its plan to prepare for the Year 2000 in
1996. This plan began with the performance of an inventory of software
applications, communicating with third party vendors and suppliers, and
obtaining certifications of compliance from third party providers. During
the early planning process, the Corporation was notified by the vendor of
its core operating system that the core operating system used by the
Corporation was not Year 2000 Compliant and that it would not be modified
to become Year 2000 Compliant. The Corporation performed an extensive
evaluation of replacement operating systems and in July 1997 chose to
convert its core operating system to a new system offered by its existing
vendor. The vendor of the core operating system has certified to the
Corporation that its system is Year 2000 Compliant. The Corporation is
scheduled to convert to the new operating system during the first quarter
of 1998. The Corporation's conversion to the new core operating system is
anticipated to enhance customer service and operating efficiencies. The
cost of converting to the new operating system is approximately $300,000.
In conjunction with the conversion to the new operating system, the
Corporation purchased a new mainframe computer in 1997 at a cost of
approximately $1 million, which was capitalized. The existing mainframe
computer and core operating system software were fully depreciated prior to
1997.
The Corporation will continue to assess the impact of the Year 2000 issue
on the remainder of its computer-based systems and applications throughout
1998. The Corporation's goal is to perform
tests of its systems and applications during 1998 and to have all systems
and applications compliant with the century change by December 31, 1998.
In addition to reviewing its own computer operating systems and
applications, the Corporation has initiated formal communications with its
significant suppliers and large customers to determine the extent to which
the Corporation's interface systems are vulnerable to those third parties'
failures to resolve their own Year 2000 issues. The Corporation is
continuing to seek assurances that the systems of other companies on which
the Corporation's systems rely will be timely converted or modified. If
such modifications and conversions are not completed timely, their
inability to correctly recognize the Year 2000 could have an adverse impact
on the operations of the Corporation.
The Corporation believes that with modifications to existing software and
conversions to new software, the Year 2000 issue will not pose significant
operational problems for its computer systems and that additional costs to
be incurred are not expected to be material to the Corporation's results of
operations, liquidity or capital resources.
The costs of the project and the date on which the Corporation projects it
will complete the Year 2000 modifications were based on management's best
estimates. There can be no guarantee that these estimates will be achieved
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and actual results could differ from those anticipated. Specific factors that
might cause differences include, but are not limited to, the ability of
other companies on which the Corporation's systems rely to modify or convert
their systems to be Year 2000 Compliant, the ability to locate and correct
all relevant computer codes, and similar uncertainties.
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