'Assess by Howard Belasco January 12, 1999
In order to make intelligent decisions you need intelligent input. One of the best pieces of information you will have will be the 10-Q reports that are filed quarterly by all those companies that are listed on the stock exchange. Here you will find important information about their Y2K work, such as what has happened to date, when they plan on being completed, what was budgeted, how much of that budget has been spent, what impact that budget has had or will have on their earnings, and other information about contingencies. As you look through this or any other information, here are some things to be looking for.
--When did the project begin? Most successful projects will have been started prior to 1997, although this is not an absolute. It is possible to have begun in 1995 and not be finished, as it is possible to have begun in late 1997 and be done now.
--Has a full assessment been done, with triage and contingency planning in place?
--Have the third party dependencies been dealt with?
--How much is being spent? Be careful here. Sometimes there is no correlation between monies budgeted and spent. In the report for the UNH (United HealthCare), there is a clear note that the bulk of the Y2K budget will be "costed" in 2000, 2001 and 2002. Notes are included as to why they are doing that under CPA guidelines.
--What is the set timetable?
--Does the completion date seem reasonable?
--Can you get a good idea of what level of production capacity they will be able to generate come the rollover? This is what you REALLY need to know in order to plan yet this is the least talked about piece of information. Companies are not yet in a position to give us this information. As we see more and more companies becoming compliant and as more and more utilities become complaint, our ability to predict the level of production will increase.
Robert Egan has performed the Herculean task of extracting relevant information from those 10-Qs and has created a web page for everyone to use. Find it at flybyday.com
As an example of the depth of his information, here is his latest update, posted on the comp.software.year-2000 newsgroup.
A month has elapsed since the Fortune 500 survey. During that month some companies have slipped, some have finished early, some have added dates and a few have removed dates.
For those of you who missed the survey last time around, it deals with anticipated remediation of internal systems, both IT and embedded. It does not cover testing, which is assumed to continue right up until 12/31/99 for all companies. The data is extracted from the SEC 10K/10Q disclosure reports available at the yahoo or Edgar sites.
The entire list is at flybyday.com although it will probably not be updated until this weekend. Here is the summary:
Announcing completion:
#120 May Department Stores
#135 McDonald's
#167 The Limited
#245 Venatar (was Woolworths)
#367 Consolidated Stores
Joining Chevron [will miss 12/31/99]:
#338 Nash Finch
#491 US Office Products
Actually "moved up" their dates:
# 70 AMR 98/12/31 (was 99/03/31)
#251 TransAmerica 99/03/31 (was 99/06/30)
#377 Inacom 99/03/31 (was 99/06/30)
Slipped their dates:
# 4 WalMart 99/03/31 (was 98/12/31)
# 9 Phillip Morris 99/09/30 (was 99/06/30)
# 62 MCI Communications 99/06/30 (was 99/03/31)
# 74 JP Morgan 99/06/30 (was 98/12/31)
# 75 UAL 99/06/30 (was 99/04/30)
# 86 Fleming 99/06/30 (was 99/03/31)
#177 Halliburton 99/09/30 (was 99/06/30)
#197 Humana 99/03/31 (was 98/12/31)
#262 Gateway 2000 99/09/30 (was 99/06/30)
Giving dates for the first time:
# 44 Home Depot 99/06/30
# 51 Walt Disney 99/07/31
# 57 Enron 99/09/30
# 65 American Stores 99/06/30
# 73 American Express 98/12/31
# 78 Bristol-Meyers 99/06/30
# 79 Ingram Micro 99/06/30
# 97 Fluor 98/12/31
# 98 American Home Prod 99/06/30
#103 Viacom 99/06/30
#111 Tosco 99/06/30
#125 Dell Computer 98/12/31
#143 Toys 'R Us 99/03/31
#159 CBS 99/12/31
#178 ITT Industries 99/03/31
#188 Burlington Northern 99/06/30
#189 General Re 98/12/31
#208 TJX 99/06/30
#224 Tech Data 99/11/30
#263 St Paul Companies 99/03/31
#276 AMP 99/03/31
#290 Avnet 99/06/30
#316 Nordstrom 99/03/31
#360 Barnett Banks 99/09/30
#372 Niagara Mohawk 99/12/31
#386 Office Max 99/06/30
#392 Supermarket General 99/08/31
#420 Rich Food Holdings 99/06/30
#476 Longs Drug Stores 99/03/31
#496 Barnes and Noble 99/09/30
Removed their dates [why?]:
#259 Tyson foods (was 98/12/31)
#447 Corporate Express (was 99/01/31)
#472 Westvaco (was 99/06/30)
The rest remained unchanged.
Larry Sanger handles another excellent source of information. You can find the Sanger's Review of Y2K News Reports at y2kreview.com. These are collected News Reports about the Year 2000 Problem that he has linked, summarized, and archived daily. Larry demonstrates very little bias in his reporting and there is a lot of well-balanced information at this sight. For a complete listing of all Y2K related stories on a day-by-day basis, www.year2000.com is the place to go to. Just remember that this site posts ALL the Y2K press clippings for the day with just the headline, making it a more difficult site to use.
It is helpful to understand the potential impact of the unfolding events. Bruce Webster, of the Washington D.C. Year 2000 Group has developed a scale from 1-10 that is widely used in Year 2000 assessment.
00 No real impact
01 Local impact for some enterprises
02 Significant impact for many enterprises
03 Significant market adjustment (20%+ drop); some bankruptcies
04 Economic slowdown; rise in unemployment; isolated social incidents
05 Mild recession; isolated supply/infrastructure problems; runs on banks
06 Strong recession; local social disruptions; many bankruptcies
07 Political crises; regional supply/infrastructure problems, disruptions
08 Depression; infrastructure crippled; markets collapse; local martial law
09 Supply/infrastructure collapse; widespread disruptions, martial law
10 Collapse of US government; possible famine
Note: (6)"Social incidents" and "disruptions" have to do with demonstrations, work stoppages, strikes, organized vandalism, looting, and riots. (5) "Supply/infrastructure problems" have to do with food shortages, fuel/heating oil shortages, disruptions in public utilities (power, gas, telecom), disruptions in transportation (airlines, trucking), and so on.
Bruce surveyed members of the Washington D.C. Group. Partial results of the survey were published in Newsweek May 4, 1998, p. 62. Full results are available at bfwa.com. It makes for very interesting reading.
Then, contrast what was being said last May with what is being said today.
Y2K glitch likely will disrupt life in many ways, experts say (original article)
By George Avalos
Knight Ridder Newspapers
"About 35 percent of the nation's large companies will be able to completely replace and test their affected computer systems, estimates Waverly Deutsch, a group director with Forrester Research in Cambridge, Mass. About 50 percent of the big companies will fix their major systems but still suffer some disruptions, and about 15 percent won't even be able to fix their major systems, Deutsch said."
Editors Note: Forrester is a leading business research firm, and that's quite a projection on their part.
Even the best-case scenario, in which 95 percent of the Y2K defects are successfully repaired, significant disruptions could occur, Capers Jones says.
"Rebuilding the economy," Jones wrote in a study released this year, "would require only a few months."In the 95 percent scenario, power failures, water supplies, transportation disruptions and shipments of goods would last about three days. Roughly 333,000 people could be laid off, at least temporarily. The cost to repair and replace systems and deal with lawsuits would be about $90.4 billion in the United States.
Remember to balance what people say and keep in mind the real fact that no one really knows what will happen and people will be giving you their best "guestimates" of the situation. You must still be planning and preparing to maintain your own comfort level.
The river is rising and we are running out of sandbags.
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