In addition, as we periodically replace computer equipment and software in the ordinary course of business, we seek to acquire only Year 2000-compliant software and hardware.

Project

Our plan includes four major areas of focus: information technology, or “IT” systems; non-IT systems; third-party considerations; and products.

The tasks common to each of these areas of focus are:

• the identification and assessment of Year 2000 issues
• prioritization of the identified issues
• assessment of compliance
• remediation
• testing
• design and implementation of contingency and business continuation plans.

We utilized, and will continue to utilize, both internal and external resources to ensure that we are Year 2000-compliant prior to any impact of the new millennium that is currently anticipated. We have completed all the tasks we have identified to date relating to the areas of focus and goals described below. Through these efforts, we have sought not only to avoid any Year 2000-related disruption of our operations but also to ensure that our products, and those of our third-party suppliers, are Year 2000-compliant.

Year 2000 Areas of Focus and Goals

IT Systems
We have reviewed our computer equipment and software to ensure that it is Year 2000-compliant, and as necessary, we have modified or replaced this equipment and software. In addition we have established contingency and business continuation plans in the event of disruption in our IT systems.

Non-IT Systems
We have sought to ensure that the hardware, software and associated embedded computer technologies that are used to operate our facilities and equipment, as well as other activities that are not related to IT systems, are Year 2000-compliant. We believe we have undertaken and completed all reasonable initiatives that are necessary or prudent to address potential Year 2000 issues affecting our non-IT systems. We have also completed contingency and business continuation planning to ensure that products and services will continue with a minimum of disruption if a problem arises that cannot be directly controlled or predicted.

Third-Party Considerations
We have identified, prioritized and communicated with critical suppliers, distributors and customers to determine the extent to which we may be vulnerable in the event those parties fail to properly identify and remediate their own Year 2000 issues. Detailed evaluations of the most critical third parties have been completed through questionnaires, interviews, on-site visits and other available means. We monitor the progress made by those parties, and we have tested critical system interfaces. We have identified alternative vendors, if available, to provide Year 2000-compliant products and services if needed. Where vendors provide services or products for which few or no alternatives are available, we have formulated contingency and business continuation plans to address potential third-party issues identified through its evaluations and assessments.

Products
Most of our products do not contain date-sensitive embedded technology. For those that do, we have performed remediation and testing efforts and will continue testing through the balance of the year, as appropriate. In addition, we have identified some of our products that are already in use by customers and that contain date-sensitive technology. For these products, we have undertaken the additional step of distributing and installing any requisite remediating product upgrades and/or replacements. We believe we have deployed approximately 100% of these customer product upgrades. Each segment of the Company has developed contingency and business continuation planning with respect to its products.

Costs
The estimated total cost of the plan is approximately $18 million, which has been, and will continue to be, funded through operating cash flows. As of September 30, 1999, we had incurred approximately $14 million in costs related to our Year 2000 project. We anticipate that the remaining costs of the plan include $2 million allocated to unanticipated contingencies and $2 million for internal and external project-related costs. Of the total remaining costs of the plan, $1 million represents the redeployment of existing resources. None of our other information technology projects has been delayed or deferred as a result of the implementation of the plan.

Risks
We believe we have an effective plan in place to anticipate and resolve any potential Year 2000 issues affecting us and our products, as well as those of third-party suppliers, in a timely manner. We cannot assure you, however, that Year 2000 issues will not materially and adversely affect our results of operations, cash flows or relationships with third parties in the event that

• we have not properly identified our Year 2000 issues or the potential business disruption among third parties with whom we conduct significant business, or
• our compliance assessment, remediation and testing activities, and our deployment of product upgrades, have not effectively addressed all relevant Year 2000 issues affecting us and our products.

In addition, disruptions in the economy generally resulting from Year 2000 issues could materially and adversely affect us. At this time we cannot reasonably estimate the amount of potential liability and lost revenue that would be reasonably likely to result from the failure by us and certain key third parties to achieve Year 2000 compliance on a timely basis.