Hope this isn't too redundant:
Year 2000 Wire/Securities Filings Research
Reveals 60% of Largest U.S. Corporations Are Only in First Phase of
Year 2000 Project
Business Editors/Technology & Legal Writers
MISSOULA, Mont.--(BUSINESS WIRE)--April 21, 1998--
Triaxsys Study Shows 45% of Nation's 250 Largest Companies
Admit They May Experience Adverse Material Impact From
Incomplete Y2K Projects
According to a recent analysis of federal securities filings of
the nation's 250 largest corporations, 60% of the companies that
supplied pertinent information have still not completed their Year
2000 computer assessment -- one of the first phases of any Year 2000
project.
This surprising lack of progress was discovered through a study
performed by Triaxsys(TM) Research LLC, a research and analysis
company founded by Ian Hayes, William Ulrich and Steve Hock. Triaxsys
researchers reviewed the 250 largest (ranked by revenue) U.S.
companies' federal securities filings on the U.S. Securities and
Exchange commission's EDGAR database, including Form 10K filings for
companies with fiscal years ending in December 1997. The Year 2000
disclosure data was then compiled and analyzed for individual company
and industry progress. Complete results will be published in the April
issue of Triaxsys Research Reports, available later this month.
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*T
Key findings included:
-- The majority of surveyed companies started their Year 2000
conversion efforts late and have made very little progress
-- These largest 250 companies will have total Year 2000 projected
expenditures of at least $33 billion; only 20% of the total has
been spent to date
-- 45% of companies that discuss risk factors state they may suffer
adverse material impacts due to incomplete Year 2000 projects
-- Nearly half of the surveyed companies either did not disclose
their Year 2000 program status or supplied meaningless
boilerplate information, giving investors very little on which to
base Year 2000 investment judgments
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Steve Hock, president of Triaxsys commented, "For quite some
time, the 'common wisdom' among IT analysts, the media and other
commentators has been that the largest U.S. companies have the Year
2000 problem under control. However, our analysis of what the
companies have disclosed in their securities filings goes contrary to
this widespread anecdotal information. Even among the 250 largest
companies, the average corporation is still in the preliminary stages
of its project. Given that the end of the century is drawing near, and
that many systems will hit their time horizons of failure well in
advance of the end of 1999, these statistics are sobering."
The majority of the nation's 250 largest companies have started
their Year 2000 conversion efforts late. Despite the forseeability of
the Year 2000 problem and time estimated to complete the effort, even
the largest corporations have been slow to start work on it. Of the
companies reporting the year in which they began work on the Year 2000
problem, 2% began before 1995, 28% in 1995, 35% in 1996 and 34% in
1997.
The majority of companies that have disclosed project status have
made very little progress. Of the companies that disclosed the status
of their Year 2000 projects, 58% are in the first phase -- the
assessment of their internal systems. Some 36% stated that they are in
the process of converting at least some systems and only 6% stated
that they are in the process of testing at least some systems.
The largest 250 companies will have total Y2K projected
expenditures of at least $33 billion; only 20% of the total has been
spent to date. Another way to gauge Year 2000 project status is
through cost expenditures. The average company among the largest 250
will spend $131 million each, for a total of at least $33 billion by
the 250. For the companies disclosing both costs incurred through the
end of 1997 and total estimated costs through project completion, the
statistics show remarkably little progress. Measuring project progress
by the percentage of estimated total project costs expended through
the end of 1997, the statistics show a range of only 7% to 45%
progress toward completion. These companies on average will spend $146
million on Year 2000, with an average of only $30 million of this
total being spent to date. Results are shown in the following chart:
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Year 2000 Progress Measured by Percentage of Total
Estimated Costs Expended Through Year End 1997
($000,000)
Costs Percentage of Company
Incurred Total Estimated Total
Through Estimated Costs Incurred
1997 Costs Through 1997
Least
progress $42 $565 7% General Motors
Most
progress $45 $100 45% First Chicago
NBD
Average
progress $30 $146 21% Largest 250
Average
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"This information highlights two important investment issues,"
said Ian Hayes, executive vice president, Triaxsys Research. "It's
good news for investors in Year 2000 vendor stocks because the
majority of the projected Year 2000 expenditures, at least $27
billion, is still waiting to be spent. It's bad news for those heavily
invested in the Fortune 250 companies and should warn investors that
increased pressure on corporate management is needed to safeguard
their investments."
The largest companies state they may suffer material impacts due
to incomplete Year 2000 projects or failures of third parties. Some
38% of the companies that commented on Year 2000 risk factors, stated
that they could suffer adverse material impacts if they do not
complete their projects on time. 45% of the companies that commented
on Year 2000 risk factors stated that they could suffer adverse
material impacts if third parties (partners, suppliers, customers,
government agencies and/or others) do not achieve Year 2000
compliance.
According to William Ulrich, executive vice president, Triaxsys
Research, "The 10K filings that we studied state that 80% of the work
is yet to be done. This indicates that companies have back-loaded Year
2000 risks into 1998 and 1999. Ultimately, this means that companies
will miss conversion deadlines and force project teams to put untested
code back into production where the material costs of business
disruption will skyrocket. Very few companies understand what these
costs mean to their long-term viability."
"Another problem," added Ulrich, "is that while numerous
companies have stated in their filings that supplier and customer
failures present an unknown challenge, they do not state the potential
material impact in terms of bottom line losses. This is one of the
most dangerous unknowns surrounding the Year 2000 dilemma."
Many of the largest 250 companies either did not disclose Year
2000 status or supplied meaningless boilerplate information. Some 15%
of the 250 companies surveyed did not provide any information on their
Year 2000 status. An additional 32% disclosed meaningless boilerplate
language in their securities filings to the effect that "based on
current information" or "assumptions" they do not believe the Year
2000 problem will have a material effect on their businesses.
Hock commented, "This group of companies has either made no
progress with regard to Year 2000 conversion or their status is
unknown to the Securities and Exchange Commission and the public at
large. This lack of information gives investors very little upon which
to base Year 2000 investment judgments."
For More Information
For the fully detailed report on SEC filings of the 250 largest
companies, contact Triaxsys directly at 1-888-320-8882. The annual
subscription rate for Triaxsys Research Reports is $995.
About Triaxsys and Its Founders
Triaxsys Research LLC was founded by Ian S. Hayes, William M.
Ulrich and Steven L. Hock. Their combined 60 plus years of experience
in the Information Technology industry caused them to recognize the
pressing need for corporate managers and investors to understand the
inextricable interrelationship between technology, law and economics.
Ian Hayes, founder and President of Clarity Consulting, Inc.,
specializes in strategic consulting on issues surrounding the
management and support of corporate business systems and regularly
advises Fortune 500 companies. William M. Ulrich, President of
Tactical Strategy Group, serves as a strategic Year 2000 advisor for
major corporations and government agencies. Ulrich and Hayes
co-authored the best-selling "The Year 2000 Software Crisis, Challenge
of the Century," currently in its third printing. Steven L. Hock,
formerly managing partner of a national law firm, is recognized as an
expert on the legal ramifications of the Year 2000 crisis and has
provided legal advice to corporate clients on technology issues for
over 20 years.
Until now the business community has lacked a single source of
reliable research and analysis on the combined technical, legal and
economic aspects of major technology challenges, including the Year
2000 problem. To fill that void, the founders of Triaxsys have joined
forces, assembled a team of leading independent research consultants,
and are preparing truly interdisciplinary research reports. |
