Tyson Foods 1999 Annual Report Download - page 34

In addition to the testing that has been done, the Company has been in contact with the providers of packaged soft-
ware applications to ensure that these packages are also Year 2000 ready. To this point, all suppliers of software have
provided some approach for the Company to ensure readiness, either through upgrades or new products. Most of these
solutions already have been implemented.
In certain instances, software has been purchased to provide new functionality for the Company replacing software
that was not compliant. These purchases were not predicated by the Year 2000 issue; however, the result is that the new
systems are compliant and non-compliant systems were ultimately retired. Two examples of this are the implementation
of new accounting software from SAP that the Company installed at the beginning of the 1999 fiscal year, and the new
payroll and human resource software also from SAP installed at the beginning of the 2000 fiscal year.
Because many of the systems were already compliant, did not require significant modifications to make them
compliant, or were replaced for other business reasons, the costs incurred specifically to address Year 2000 readiness
are not material to the Company. Since 1996, the expenses that resulted from Year 2000 readiness activities have been
absorbed through the annual Management Information Systems operational budget and funded from internally
generated funds. These specifically identifiable costs can be described primarily as personnel costs and have increased
each year since 1996 because of increased activity from testing. Identifiable costs incurred in fiscal 1999 totaled approx-
imately $0.4 million and since 1996 are approximately $1.9 million. No projects under consideration by the Company
have been deferred because of Year 2000 efforts.
Because of the rapid pace of change in technology, especially in the area of hardware, the Company regularly upgrades
and replaces hardware platforms such as database and application servers. Consequently, all of the servers are Year 2000
ready. In addition, all personal computers in use by the Company are currently Year 2000 ready.
The telephone systems in use by the Company have also been surveyed. There are more than 170 of these systems
currently in use. All systems are currently Year 2000 ready.
The embedded technology in the production environment, such as programmable logic controllers, computer-controlled
valves and other equipment, has been inventoried, and the Company has contacted the vendors who supplied this
technology with respect to their Year 2000 readiness. The Company is confident that all production related technology is
Year 2000 ready.
The Company has initiated formal communications with all of its significant suppliers and large customers to deter-
mine the extent to which the Company’s interface systems are vulnerable to those third parties’ failure to remediate their
own Year 2000 issues. Through written and verbal communications with all suppliers and vendors, all of the issues that
have previously been identified with Year 2000 readiness have been addressed.
The Company’s total Year 2000 project cost, which is not expected to have a material effect on the Company’s results
of operations, includes the estimated costs and time associated with the impact of third party Year 2000 issues based
upon presently available information. However, there can be no guarantee that the systems of other companies on
which the Company’s systems rely will be converted in a timely manner or would not have an adverse effect on the
Company’s systems.
Management’s discussion and analysis
TYSON FOODS, INC. 1999 ANNUAL REPORT
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