Companies have complained about the high cost of Y2K compliance. Now there's data to show just how expensive getting ready for 2000 is proving to be.
Nine companies are planning to spend more than $500 million preparing their computer systems for next year, according to statistics released by Institutional Shareholder Services, Bethesda, Md., a leading proxy and corporate governance advisory firm.
The big spenders are: Citigroup Inc., $900 million; General Motors Corp., $780 million; Bell Atlantic Corp., $674 million; AT&T Corp., $640 million; General Electric Co., $575 million; Philip Morris Co. and BankAmerica Corp., $550 million each; American Express Co., $543 million; and Lucent Technologies Corp., $535 million.
The average total Y2K budget for companies in the Standard & Poor's 500 index is $77 million, compared with $29 million for firms in the Russell 3000 index. However, on a per-share basis, S&P 500 companies expect to spend 35 cents, while Russell 3000 companies expect to spend 37 cents.
"Communications companies appear to have the largest task in preparing for Y2K," said Mark Brockway, assistant director of product development at ISS. "Three of the nine companies reporting project costs in excess of $500 million are in the communications industry, and the communications industry has the highest average Y2K project costs of any of the peer groups tracked by ISS."
Most U.S. companies have spent between 42% and 54% of their Y2K budgets as of March 31, the study found, with insurance companies having spent the largest chunk -- 73% on average -- of their budgets.
Approximately 8% of companies that file with the Securities and Exchange Commission made no reference whatsoever to the Y2K issue, ISS found.