TI's Year 2000 disclosure on our last 10Q SEC filing

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SEC Disclosure
The following information is a
Year 2000 Readiness Disclosure.

The following is an excerpt from the Form 10-Q filed by Texas Instruments Incorporated (TI) with the Securities and Exchange Commission for the quarter ended September 30, 1999.
From "Management's Discussion and Analysis of Financial Condition and Results of Operations"
YEAR 2000
Since 1995, TI has been actively engaged in addressing Year 2000 (Y2K) issues. These result from the use of two-digit, rather than four-digit, year dates in software, a practice which could cause date-sensitive systems to malfunction or fail because they may not recognize or process date information correctly.
State of Readiness: To manage its Y2K program, TI has divided its efforts into four program areas:

Information Technology (computer hardware, software and electronic data interchange (EDI) interfaces);

Physical Plant (manufacturing equipment and facilities);

Products (including product development); and

Extended Enterprise (suppliers and customers).

For each of these program areas, TI has used a four-step approach:

Ownership (creating awareness, assigning tasks);

Inventory (listing items to be assessed for Y2K readiness);

Assessment (prioritizing the inventoried items, assessing their Y2K readiness, planning corrective actions, making initial contingency plans); and

Corrective Action Deployment (implementing corrective actions, verifying implementation, finalizing contingency plans).

At June 30, 1999, the Ownership, Inventory, Assessment and Corrective Action Deployment steps were essentially complete for priority items in each of the four program areas. TI considers priority items to be those that could significantly disrupt TI's business operations.
Discussion of the status as of September 30, 1999, for each program area follows:
Information Technology: Corrective actions have been deployed for substantially all of TI's legacy business strategic information systems (manufacturing, marketing, financial and human resources). In the ordinary course of business, TI continues to install new business systems as appropriate. Verification of Y2K readiness is incorporated into the process of implementing these new systems. Corrective action deployment of infrastructure hardware and software that support TI's enterprise-wide networks and servers is essentially complete. TI has also deployed an assessment tool and corrective action process for desktop computers. TI's EDI interfaces have been tested with major customers and suppliers, and TI believes that those interfaces are Y2K ready.
Physical Plant: Corrective action deployment for manufacturing equipment and facilities is essentially complete.
Products: TI has completed its Y2K readiness assessment of its products and continues to provide product status information on its company web site. Divested product lines were not part of this assessment. The effort has included semiconductor devices sold within the past five years. TI's assessment indicates that the majority of semiconductor products either have no date logic or are programmable devices that require customer assessment of any software and firmware or other elements added by or at the request of TI's customers. The likelihood and extent of Y2K problems relating to devices that require customer assessment are unknown. TI has identified date-related issues with certain of TI's semiconductor application software development tools and continues to provide corrective software patches. The company believes these development tool issues are unlikely to cause significant problems for TI customers. Assessment of products of the Materials & Controls, Educational & Productivity Solutions, and Digital Light Processing businesses indicated they are either Y2K ready or have no date logic.
Extended Enterprise: TI's Y2K supplier program has attempted to assess the readiness of TI suppliers, focusing on those that could significantly disrupt TI's business operations. TI began contacting its suppliers in 1997 to assess their readiness. This effort has included sending Y2K surveys and conducting onsite Y2K reviews with selected suppliers. TI's assessment of its critical suppliers is essentially complete, and contingency plans have been developed for those suppliers that were not assessed Y2K ready by June 30. TI continues to monitor the readiness status of those suppliers and refine those contingency plans. TI will implement the plans as needed in response to further information gathered through the end of this year. TI also has discussed Y2K status with selected strategic customers.
Other Activities: TI continues to review Y2K issues relating to its information technology, physical plant, products, suppliers and customers. TI developed a set of contingency plans on the basis of information available as of June 30, 1999. It continues to refine those plans and will implement them as needed in response to further information gathered through the end of the year. In addition, TI has been taking and will continue to take actions to verify and maintain its Y2K readiness and finalize its year-end operating plan (for example, its plan for staffing to address Y2K issues that arise during the transition to 2000).
Costs to Address Y2K Issues: TI's estimated aggregate costs for its Y2K activities from 1995 through 2000 are expected to range from $65 million to $75 million. Through September 30, 1999, TI has spent approximately $63 million.
Risks of Y2K Issues and Contingency Plans: TI's contingency planning process is intended to mitigate worst-case business disruptions. TI believes that its most reasonably likely worst-case Y2K scenario would relate to disruption of supply from third parties as a result of Y2K problems experienced by those parties or their suppliers. TI's manufacturing, sales and service operations are dependent on an ongoing supply of infrastructure services (such as electricity, water and telecommunication services), materials and equipment spare parts from third parties as well as third-party transportation services. In many cases, TI depends on a limited number of suppliers for those services and materials. A disruption in supply could interrupt manufacturing operations and result in damage to work in process as well as delays in product deliveries to customers. These results could affect TI revenues and lead to claims by customers against the company. As part of contingency planning to address these risks, TI has identified alternative suppliers where available.
TI customers may experience Y2K disruptions that affect the quantity or timing of their orders to TI or their ability to make timely payment. If these disruptions occur, TI revenues and cash flow may be affected. TI cannot predict the likelihood of these disruptions or the extent of their impact on TI. It is unknown whether customers will change their spending patterns in preparation for the Year 2000 (for example, by accelerating or delaying orders).
As part of its Y2K program, TI is evaluating the Y2K status of recently acquired businesses. TI does not expect that any of the acquired businesses present Y2K issues that will have a material impact on TI's results of operations.
Certain discontinued products and divested product lines present Y2K issues. In the event of product failure, these issues could expose TI to product liability or other types of claims. It is difficult to predict the extent of potential liability. However, for several reasons, TI does not expect these issues to result in any claim that will have a material effect on its results of operations. The reasons include the age of the products (resulting in many being retired from service or upgraded before the Year 2000), expiration of applicable warranty periods, widespread customer awareness of Y2K risks, and the efforts of TI and the acquirers of its divested product lines to alert customers to Y2K issues affecting the products.
The preceding Year 2000 disclosure is designated a "Year 2000 Readiness Disclosure" under the Year 2000 Information and Readiness Disclosure Act.
This statement is made as of September 30, 1999. It is quoted here for the convenience of readers of this web site. The posting of this excerpt shall not be interpreted as a continuous statement or representation as to the matters discussed in the excerpt or in the Form 10-Q, including the "Safe Harbor" statement in the Form 10-Q (which also addressed Y2K).
TI disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of the filing of the Form 10-Q for the quarter ended September 30, 1999.