Bonnie I read your last post about Alliant. I was wondering if you have heard anything more recent. Or could tell me where to find something that I could understand. Last week an Alliant Executive came to our small Iowa town of 10,000 and spoke to a very small, select, members only group. I was not there personally but from what I understand, he made everyone feel very comfortable with Alliant's progress. The major problem he saw was Alliant's suppliers. Now this attitude was projected through our local paper to our town and now everyone feels even more "no big deal" A small number of us are feeling more upset that now even those who were thinking of preparing, are now relaxed again. I wish he would have said more what his counterpart in Wisc. said about safe havens. I think that would have been more true and decent. Any comment?

-- Anonymous, November 22, 1998

Answers

Lisa, part of the problem with information from Alliant is that what is now called "Alliant" is a corporation formed by a recent merger in April, 1998. The merger formed is called IEC, or Interstate Energy Corporation BUT they currently do business as Alliant Corporation. (Makes a lot of sense, huh?) To continue, if you do an Edgar search for "Alliant" you get Alliant Techsystems, another company entirely. You have to look for either Interstate Energy Corporation, IESU (which was Iowa Electric Light and Power), or Wisconsin Power and Light. These are the three "filers" listed on the 10Q together. Before I go any farther, I'll repost the URL for the Edgar search site:

http://www.sec.gov/edaux/formlynx.htm

Unfortunately, while the estimated costs for Y2K remediation are broken down for each of the filers, "Alliant" chose to give their other Year 2000 information in the generic whole. So when they say, for instance,

"Excluding the financial and customer information systems, there are 434 applications in the information technology (I/T) inventory; 223 have been remediated, tested and are in production; 183 are currently being remediated or tested; the remaining 28 are being analyzed to determine final action plans."

we don't know which systems have been fixed where. To further complicate matters, there are several generating facilities in each of the three merger areas. Is Iowa farther along than Wisconsin? Or vice-versa? We can't tell from the way the information is presented.

Here is the most recent breakdown of costs in the latest 10Q (I hope this translates to the forum post correctly. If not you'll have to access the 10Q through the Edgar site and read it there):

Costs to Address Year 2000 Compliance - IEC's historical Year 2000 project expenditures as well as CURRENT BEST ESTIMATES for the remaining costs to be incurred on the project are as follows (incremental costs, in millions):

Description Total IESU WP&L Other ----------- ----- ---- ---- ----- Costs from 1/1/98 - 9/30/98

$4.3 $2.6 $1.2 $0.5 Remaining modifications for financial and customer information systems $5.3 $2.3 $2.1 $0.9

Remaining modifications for other I/T systems and embedded systems $32 $10 $14 $8

I will say that I've seen other utility 10Q's which don't indicate as much progress as that for Alliant. However, if you compare the Year 2000 statements in the 8/14/1998 10Q and the 11/16/1998 10Q, you will notice that there has been *amazing* progress in three months. They went from "essentially completed inventory of these embedded systems" to "80% of this remediation work [embedded systems] has been completed as of the end of October, 1998."

I'm sorry I couldn't find more definitive answers for you. All best wishes!

-- Anonymous, November 22, 1998

I read parts of the Alliant report. I'd very much like to see if you can "reality check" me--if I've come to some untoward conclusions.

Here's my take on the Alliant disclosure: CURRENT BEST ESTIMATES for the remaining costs to be incurred on the project are as follows (incremental costs, in millions): Description Total IESU WP&L Other Costs incurred from 1/1/98 - 9/30/98 $4.3 $2.6 $1.2 $0.5 Remaining modifications for financial and customer information systems $5.3 $2.3 $2.1 $0.9 Remaining modifications for other I/T systems and embedded systems $32 $10 $14 $8

MY REPLY: So, here we see that 64 million is going to be spent, but only 8.6 million have been spent in nine months. That's about 13% of the budget has been spent and yet they say 80% of the remediation work has been completed. This math looks off, tweaked, "spun" or whatever. At least Alliant gives some facts to chew on, but WHERE IS THE OUTSIDE AGENCY THAT VERIFIES THIS?

---------- The goal is to complete remediation work for the embedded systems by March 1999; approximately 80% of this remediation work has been completed as of the end of October 1998. MY REPLY: Anyone can have a goal. Why do they have confidence that they'll meet the goals? Show us schedules that have been planned and kept! Show us the employees workloads and past performances. Show us more details.

---------- The goal is to complete the I/T remediation work by March 1999; approximately 40% has been completed as of the end of October 1998. IEC intends these efforts to be 90% complete by the end of the first quarter of 1999 with work completed by mid-year.

MY REPLY: What am I missing here? First they say 80% remediation work is NOW done, and then they say 40%, and again, only 13% of the budget has been spent! Please, someone, explain this to me. Has Alliant been so stupid as to make this kind of reporting error? I can't believe it! So please explain this someone. They couldn't have made this glaring of an error. If I do misunderstand, fine, educate me, but meanwhile, if Alliant does step forward to explain this paradox of numbers, be sure, Alliant, to explain why this report is so at odds with your last report when your estimations of time and money required were SO DIFFERENT. How has Alliant made all this "amazing progress" so suddenly? Did some accountant forget a zero somewhere? I'm sure they'll have an answer to this, but here's the pisser, they won't even bother to answer a small voice like me (us).

------ In some cases IEC's ability to meet its target date for remediation is dependent upon the timely provision of necessary upgrades and modifications by its software vendors. Should these upgrades be delayed it would impact IEC's ability to meet its target date.

MY REPLY: In other words, "We can always blame this on some outside software fix-it company's inability to squeeze Alliant into their schedules because the whole frickin world is begging them for help too. And by the way, yes, we openly admit that we don't have the internal geek power to pull this off."

I need more details. I'm talking pages and pages. And I want an outside agency that is allowed to access Alliant's computers and actually test them. This has been done at many other companies, and the outside agencies are finding, sometimes, 30% or more of the systems were in fact NOT COMPLIANT even though the company had said it had been fixed. With so much at stake, financially, for Alliant, we just can't accept their figures and plans as valid without an outside agency's "seal of approval". And, if Alliant says, "We'll do that later." well, that's too late. I want to sleep TONIGHT. Get someone I believe in there NOW who can tell me NOW that it looks like it will be okay. And don't let me catch anyone in the oversight agency "sleeping with the enemy". The electric companies long ago learned how to set up fake agencies to put out a glowing report.

-- Anonymous, November 23, 1998