SEC Issues Guidance on Year 2000 Disclosure Obligations, January 1998

Washington, DC, January 13, 1998 - The Securities and Exchange Commission recently revised and reissued Staff Legal Bulletin No. 5, the legal bulletin that reminds public operating companies, investment advisers, and investment companies to consider their disclosure obligations relating to anticipated costs, problems, and uncertainties associated with the Year 2000 issue. (The SEC testified on this issue last October.) The bulletin was revised to provide more specific guidance under existing SEC rules and regulations in recognition of the importance of the Year 2000 issue and related uncertainty regarding disclosure requirements.

Among other things, Revised Bulletin No. 5 requires companies to assess the extent to which they have material Year 2000 issues. If a company determines that it has material Year 2000 issues, based on the materiality of such issues with respect to its business, operations, or financial condition, without regard to related countervailing circumstances (such as Year 2000 remediation programs or contingency plans), then the impact of such issues, as well as the counter- vailing circumstances, should be disclosed. (Revised Bulletin No. 5 also notes that if a company has not made an assessment of its Year 2000 issues or has not determined whether it has material Year 2000 issues, that fact should be disclosed.)

The Revised Bulletin states that, at a minimum, such disclosure should address the following topics in reasonably specific, meaningful, and nonboilerplate language:

the company's general plans to address Year 2000 issues relating to its business, its operations (including operating systems) and, if material, its relationships with customers, suppliers, and other constituents;
its timetable for carrying out those plans; and
the total dollar amount that the company estimates will be spent to remediate its Year 2000 issues, if such amount is expected to be material to the company's business, operations or financial condition, and any material impact these expenditures are expected to have on the company's results of operations, liquidity, and capital resources.