Year 2000 Wire/Final Y2K Review Shows 94 Large U.S. Corporations May be
Ill-Prepared for the Millennium
PALM BEACH GARDENS, Fla., Dec 20, 1999 (BUSINESS WIRE) -- Ninety-four
of America's largest corporations received unsatisfactory Y2K ratings
indicating they may not be ready for the millennium, based on their
publicly disclosed Y2K budgets and expenditures, according to Weiss
Ratings, Inc., the only publisher of Y2K ratings on the nation's
Fortune 1000 companies.
Among the 496 companies disclosing sufficient data in their third
quarter 1999 filings, 25 companies, or 5%, received a Weiss Y2K rating
of "Low," while 69 firms, or 13.9%, received a grade of "Below
Average."1 Meanwhile, 175 companies, or 35.3%, received a Y2K rating of
"Average," and 227 companies, or 45.8%, were rated "High."
"This late in the game, it was widely expected that virtually all large
companies would be ready for Y2K, but the data is telling us that may
be far from the case," commented Martin D. Weiss, Ph.D., chairman of
Weiss Ratings, Inc. "If many of America's largest firms aren't ready,
what about the hundreds of thousands of small- and medium-sized
companies that were widely expected to be lagging in their Y2K
readiness?"
The Weiss Y2K Ratings, based largely on each company's Y2K budget and
expenditures, identify those that are believed most likely to be
lagging or advanced in the remediation process. Companies rated "Low"
include:
- Northwest Airlines, based in St. Paul, Minn., which reported a
total Y2K budget of $55 million, but had spent only $37 million,
or 67%, as of September 30, 1999.2
- Lear Corporation, a supplier of automotive interiors based in
Southfield, Mich., which reported Y2K expenditures of $7 million,
or less than half (47%), of its $15 million Y2K budget.
- Schering-Plough Corp., based in Madison, N.J., which reported
spending only $62 million, or 65%, of its $95 million Y2K budget.
- Consolidated Natural Gas Co., based in Pittsburgh, Penn., which
had spent only $9.9 million, or 62%, of its total Y2K budget of
$16 million.
- 3Com Corp., based in Santa Clara, Calif., which had spent only
$8.6 million, or 53%, of its $16.3 million Y2K allocation.
- Ameren Corp., based in St. Louis, Mo., which had spent $8
million, or 64%, of its total Y2K budget of $12.5 million.
- Whitman Corp., based in Rolling Meadows, Ill., which reported
spending $19.2 million, or 62%, of its $31 million Y2K budget.
Companies receiving a Y2K grade of "Below Average" include
pharmaceutical giant American Home Products Corp., The Kroger Co.,
PacifiCare Health Systems, Inc., Dynegy Inc., Georgia-Pacific Corp.,
Sun Microsystems, Inc., and Ingram Micro Inc.
"Some of the companies receiving poor Y2K ratings state in their SEC
filings that they have either completed, or are substantially complete
with, remediation and testing. However, they have failed to account for
the large unspent portions of their Y2K budgets. Either these companies
have not actually completed remediation and testing, or they have
failed to accurately report their Y2K budgets and expenditures, as
requested by the SEC," added Dr. Weiss.
On the other end of the spectrum, many large companies reported
significant progress in allocation of budgeted Y2K resources. Those
receiving a grade of "High" include: Exxon Mobil Corp., Philip Morris
Co., AT&T Corp., Sears, Roebuck & Co., The Proctor & Gamble Company,
Merrill Lynch & Co., Motorola Inc., Compaq Computer Corp., The Home
Depot, Inc., and AMR Corporation.
The Weiss Y2K ratings are based on a proprietary model that compares
publicly disclosed data on Y2K budgets and expenditures, over time and
in relation to industry peer groups. "Low" and "Below Average" are
considered unfavorable ratings, implying a warning to investors, while
ratings of "Average" and "High" are considered favorable.
Weiss Ratings also publishes financial safety ratings and Y2K readiness
ratings on insurers, banks, and S&Ls. The accuracy of its financial
safety ratings has been favorably reviewed by the U.S. General
Accounting Office (GAO) as well as national consumer organizations. For
more information, contact Weiss Ratings at (800) 289-9222 or visit the
Weiss Ratings web site at www.weissratings.com.
1 The survey population is composed of the Fortune 1000 companies.
Companies with sufficient data have disclosed material historical and
estimated costs of remediation through the third quarter of 1999.
2 In its August 10, 1999 10-Q filing, Northwest Airlines stated: "The
company now estimates that the total project costs will be less than
the originally estimated $55 million." No updated total project costs
are provided in the November 12, 1999 10-Q statement.
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