eTrade 1999 Annual Report Download - page 35

computer systems and equipment that may be at risk due to the use of two-digit year dates. Once identified, the systems and equipment
are rated for risk and are prioritized for conversion or replacement according to their impact on core business operations. The
Company's year 2000 project follows a structured approach in analyzing and mitigating year 2000 issues. This approach consists of six
phases: awareness, assessment, remediation, validation, implementation and industry-wide testing. The work associated with each
phase may be performed simultaneously with other phases of the project, depending on the nature of the work to be performed and the
technology and business requirements of the specific business unit. For example, awareness is an ongoing effort and occurs in each
phase. As part of this project, the Company reviews its vendor relationships (suppliers, alliances and third-party providers) in an
attempt to assess their ability to meet the year 2000 challenge. This plan seeks to ensure that all of the Company's business partners
and service providers are also year 2000 ready. In addition, written contingency plans are being developed for all mission critical
systems to address any unexpected year 2000 failures.
Status of Year 2000 Efforts
The Company believes it has substantially completed each of these phases originally planned for year 2000 readiness. The Company
continues to engage in re-validation of its mission-critical systems. The Company believes that all material year 2000 problems with
internally-managed hardware and software revealed as a result of its evaluation have been remedied; however, there can be no
assurances that our efforts have solved all possible year 2000 issues, and there is a risk that other problems, not presently known to the
Company, will be discovered which could present a material risk of disruption to the Company's operations and result in material
adverse consequences to the Company. Furthermore, there can be no assurance that the Company will not experience unexpected
delays in remediation of any year 2000 issues that may be discovered. Any inability to remediate such issues in a timely manner could
cause a material disruption of the Company's business.
All mission-critical vendors have been contacted and have indicated that their hardware and software is year 2000 ready. The
Company has relied upon representations by vendors as to their year 2000 readiness and generally has not attempted to perform
independent verification of the accuracy of those representations. There can be no assurance that all third parties will provide accurate
and complete information or that all their systems
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will be fully year 2000 capable. If these vendors fail to adequately address year 2000 issues for the products and services they provide
to the Company, this could have a material adverse impact on the Company's operations and financial results. The Company is
dependent on systems, such as the Internet, telecommunications and electrical systems, which are not within its control, and as to
which it has not sought or obtained assurances of continued operation. The failure by such systems could also prevent the Company
from delivering its services to its customers, which could have a material adverse effect on the Company's business, results of
operations and financial condition.
In addition, other third parties' year 2000 processing failures, not currently identified by the Company as mission-critical, could have
an unexpectedly severe material adverse impact on the Company's systems and operations.
Continuing focus will be placed on all non-mission critical systems and written contingency plans through the remainder of calendar
year 1999. The Company anticipates that work on the awareness, contingency planning, and vendor management phases of the project
will continue through the century change. However, there can be no assurance that contingency plans will adequately address all year
2000 failures.
As the year 2000 project continues, the Company may discover additional year 2000 issues, may not be able to develop, implement, or
test remediation or contingency plans, or may find that the costs of these activities exceed current expectations and become material. In
many cases, the Company is relying on assurances from suppliers that new and upgraded information systems and other products will
be year 2000 capable. The Company cannot be sure that its tests will be adequate or that, if problems are identified, they will be
addressed by the supplier in a timely and satisfactory way.
Because the Company uses a variety of information systems and has additional systems embedded in its operations and infrastructure,
the Company cannot be sure that all of its systems will work together in a year 2000 capable fashion. Furthermore, the Company
cannot be sure that it will not suffer business interruptions, either because of its own year 2000 issues or those of its customers or
suppliers whose year 2000 issues may make it difficult or impossible for them to fulfill their commitments to the Company. If the
Company fails to satisfactorily resolve year 2000 issues related to its products in a timely manner, it could be exposed to liability by
third parties.
The Company is continuing to evaluate year 2000-related risks and corrective actions. However, the risks associated with the year
2000 may be pervasive and complex; they can be difficult to identify and to address, and can result in material adverse consequences
to the Company. Even if the Company, in a timely manner, completes all of its assessments, identifies and tests remediation plans
2002. EDGAR Online, Inc.