Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Hills Stores (HDS)- 7th largest retail chain -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Jens Tingleff who wrote (135)	10/29/1998 4:18:00 PM
From: Bosco	Respond to of 201

G'day all - dear Jens, well, it is my own fault for sleeping at the wheel <sg>. While it was practicing ostrich's technique during the course of the market decline of the past 3 three months, HDS did detail its system [and other] developments in the most recent 10Q www4.edgar-online.com Regarding the system developments, it seems that it has run into a few problems. Without any detail, it is hard to say if there was any mgt lapse; however, some of the causes were unavoidable, as HDS was competing with systems talents in a tight labor mkt. Unfortunately, mgt has not be proactive enough [or they may not be systems personnels to understand the pitfalls of system developments to anticipate them.] The upshot is that it appears that the system has eaten up more resources than allocated The following is the excerpt: The Company's systems replacement program was initiated at the end of fiscal year 1996, following a planning engagement by a major systems consulting organization. The consultants initially informed the Company that there was a high probability that substantial completion could be achieved in 1998 as a result of the plan to install a specific collection of unmodified, slightly or moderately modified third-party package systems. However, during late 1997 and early 1998, the Company experienced difficulty in acquiring the contractors and staff needed to install portions of the new systems, and there were delays in the integration, testing and installation of certain elements of the new systems. The Company has taken corrective action, including obtaining an 11 HILLS STORES COMPANY AND SUBSIDIARIES -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) independent assessment of steps that can be implemented to further assure the program's timely success. As of early September 1998, the Company has: * installed and is increasing its use of most of its new systems infrastructure, including most office processors, office and store servers, networks, client workstations, data storage and backup devices, and operating systems and systems management software, * previously deployed or during the fall of 1998 will deploy most of its new support systems, primarily its finance-related and payroll/human resource systems, * begun deployment of the first merchandise system component, and * finalized or is nearing completion of modifications and interfaces for the remaining systems components (primarily merchandise-related). For these remaining systems, data conversion has begun, a portion of initial testing remains to be completed in the fall of 1998, which is to be followed in the fall/winter of 1998 by systems integration testing, completion of data conversion, and pilot testing. The Company currently anticipates deployment of these remaining new system components and the completion of the training of impacted Company personnel in their use not later than mid-1999. The systems replacement program investment to date through August 1, 1998, and projected remaining spending for the systems replacement program, is as follows (in millions): Additional To Date Projected Total ------- ---------- ------- Hardware capital expenditures $ 11.7 $ 1.0 $ 12.7 Deferred software expenditures 36.6 29.6 66.2 ------- ------- ------- Subtotal 48.3 30.6 78.9 Less - expenditures financed by 3.1 1.0 4.1 capital leases ------- ------- ------- Net cash program expenditures $ 45.2 $ 29.6 $ 74.8 ======= ======= ======= Expenditures to complete the information systems replacement program are estimated at approximately $20 million for the balance of fiscal year 1998, and approximately $10 million in fiscal year 1999. In addition, the Company has acquired certain additional computer equipment for this program (with an initial value if purchased of approximately $6.2 million) through operating lease transactions for periods less than the economic lives of of the equipment. Following the period of systems duplication that continues into mid-1999, rents for this equipment will supplant rents for the replaced equipment. well, at least the problem was clearly identified, so HDS mgt is definitely out of the floundering phase <SG> best, Bosco

To: Mr. Jens Tingleff who wrote (135)	10/30/1998 2:59:00 PM
From: Bosco	Read Replies (1) \| Respond to of 201

G'day all - dear Jens, ok, I ve reread the 10Q [was in a hurry yesterday,] it seems that FBOFW [for better or for worse,] except for a time overrun, the merchandise system is the only remaining piece [but also the most significant piece to fight the COGS problem.] Right now, I feel actually better about the situation that HDS did not rush the project. Historical precedents, like SUNW's inventory system back in 89, Stride Rite's distribution system and Addidas's system, reveal that the rushing of system projects have caused more damage than taking a step back to reassess the situation. Even if HDS has wasted some valuable time and resources, it would be a preferred choice to causing deep rooted infrastructure problems in the future if the system were to rush into production. Alluded to the things I said in my prior reply to you, such as the case that a shortage in system professionals is not company specific - even though there may be a short term impact, I feel better about HDS as it seems to be on top of the situation with a credible timeline. best, Bosco [p.s. not sure if I did the right thing, but bought more today at 1 3/8]