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Technology Stocks : Discuss Year 2000 Issues
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To: John Mansfield who wrote (1894)5/23/1998 1:03:00 PM
From: Stewart V. Nelson  Read Replies (1) of 9818
 
Phillip Morris reconsiders cost of remediation.....to a rather large number!!

Phillip Morris
From 10K 3/6/98
The Company has evaluated the costs to implement century date change compliant systems conversions and is in the process of executing a planned conversion of its systems prior to the year 2000. Although such costs may be a factor in describing changes in operating profit for one or more of the Company's business segments in any given reporting period, the Company currently does not believe that the anticipated costs of year 2000 systems conversions will have a material impact on its future consolidated results of operations. However, due to the interdependent nature of computer systems, the Company maybe adversely impacted in the year 2000 depending on whether it or entities not affiliated with the Company have addressed this issue successfully.

..year 2000 systems conversion costs of $38 million and the above mentioned additional marketing expense for new product initiatives.

From 10Q 5/15/98
Because many computer systems and other equipment with embedded chips or processors use only two digits to represent the year, they are unable to distinguish between the years 2000 and 1900. As a result, business and governmental entities are at risk for possible miscalculations or systems failures causing disruptions in their business operations. This is commonly known as the Year 2000 issue or Century Date Change ("CDC") problem.

The Company and its operating subsidiaries are implementing plans so that their business systems and processes will function properly with respect to the CDC. Based on the Company's current assessment of the CDC problem, it estimates that the aggregate cost for its CDC efforts will be approximately $400 million to $500 million, of which approximately $300 million to $400 million remains to be spent.

Due to the interdependent nature of computer systems, the Company and its operating subsidiaries could be materially adversely affected if private and governmental entities with which they do business or which provide essential services are not CDC compliant. Key business partners and governmental entities are being identified and their level of preparedness for dealing with the CDC is being assessed and contingency plans are being developed. The Company currently
believes that the greatest risk of disruption to its businesses exists in international markets.
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