Y2K news from IOWA

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Please note the little remark by the lawyer below "The companies don't have to guarantee results".

Cost expected at $73 million

By JOHN McCORMICK Register Staff Writer 09/13/1999

Iowa's largest companies are making good progress in their preparations to ward off the Year 2000 computer bug, according to a Des Moines Register review of recent filings with the federal Securities and Exchange Commission.

Disclosure reports filed by 12 of Iowa's largest publicly traded companies show that those companies expect to have spent a collective $73 million testing computer systems for Y2K problems and fixing the bugs they find.

The so-called Y2K bug could cause older computers and chips to malfunction on Jan. 1 because they were programmed to recognize only two digits for the year. They could interpret 2000 as 1900.

Nationwide, 94 percent of companies in the Standard & Poor's 500 index are expected to have their computer systems ready for 2000 by the end of this month, according to an analyst's review of SEC filings published this summer in The Dallas Morning News.

Overall, the total bill for S&P 500 companies is expected to reach between $34 billion and $35 billion, according to the report.

In Iowa, the biggest spender will probably be MidAmerican Energy. Iowa's largest provider of natural gas and electricity says it expects to shell out $22.3 million to test and fix Y2K problems, with about $14.8 million already spent by the end of June.

MidAmerican said it had made 98 percent of its fixes by June 30, with the expectation that all will be done by October. The company says it's developing a contingency plan based on worst-case scenarios that will be completed by the end of September.

The next biggest spender among Iowa companies reviewed is Newton-based Maytag Corp.

The appliance maker estimates that it has spent $17 million so far on Y2K fixes, with plans calling for no more than $3 million in additional expenses.

Maytag faces uncertainty about how a potential lack of Y2K preparations in China will affect Rongshida-Maytag, a joint venture it operates there.

"There are major uncertainties as to the Year 2000 readiness of enterprises in China, including third-party suppliers of such basic services as utilities," the company wrote in its most recent quarterly filing. "Accordingly, Maytag is unable to assess the likelihood of such an occurrence or the potential impact to this joint venture."

Des Moines-based AmerUs Life says it expects to have spent $9 million on Y2K modifications and conversions, with $8 million of that spent as of June 30.

AmerUs reports that it expects to have contingency plans in place by the end of September for how to keep business rolling in the event of a systems failure.

The Securities and Exchange Commission has encouraged companies to report their progress on fixing Y2K problems as a way to keep investors from being surprised.

Howard Hagen, a Des Moines attorney who specializes in banking and business law, said companies should disclose as much as possible about their Y2K preparations.

"The companies don't have to guarantee results, but they do have to indicate cost to date and future costs," he said. "They are best off to disclose any material problems."

McLeodUSA, a telecommunications company based in Cedar Rapids, said it had spent $4.6 million on Y2K fixes as of July 31. The company expects total costs will not exceed $7 million.

McLeodUSA is keeping an eye on the Y2K preparations of its primary suppliers of local central office switching systems and local telephone lines, including US West, Ameritech and Southwestern Bell.

Meredith Corp., a media company based in Des Moines, says it had spent $1.8 million on Y2K as of March 31, with total costs not expected to exceed $5 million.

Like most companies, Meredith says it's trying to monitor the progress of third-party vendors. The company is keeping an eye on its magazine and book printers, paper suppliers, magazine fulfillment providers, the U.S. Postal Service, television networks, other television programming suppliers, mainframe computer services suppliers, financial institutions and utilities.

Johnston-based Pioneer Hi-Bred International says its Y2K preparations are on schedule and total costs are expected to be between $3 million and $5 million.

The company also offered this rather positive prediction in its July quarterly filing:

"Pioneer believes that the Year 2000 challenge will not materially impact the company's ability to produce seed products or the ability to sell and distribute these products to customers for planting in the spring of 2000."

-- y2k dave (xsdaa111@hotmail.com), September 14, 1999


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