In January, the SEC issued guidance on how a public reporting company might want to provide disclosure about climate change. The SEC’s press release can be read here.
Like some of you, my first thought was “what if you don’t believe in climate change?” The SEC addressed this by saying:
“We are not opining on whether the world’s climate is changing, at what pace it might be changing, or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics,” said SEC Chairman Mary Schapiro. “Today’s guidance will help to ensure that our disclosure rules are consistently applied.”
All of this reminded me of the extensive disclosure we used to put in our client’s SEC filings regarding Y2K. For laughs, I went back and found some of it:
[Our Operations May Be Disrupted If We or Our Vendors Experience Systems Failure or Data Corruption From the Year 2000 Issue
Any failure of our material systems, our vendors' material systems or the Internet to be year 2000 compliant would have material adverse consequences for us. Such consequences would include difficulties in operating our Web site effectively, taking product orders, making product deliveries or conducting other fundamental parts of our business. We are currently assessing the year 2000 readiness of the software, computer technology and other services that we use which may not be year 2000 compliant. At this time, we have not yet developed a contingency plan to address situations that may result if our vendors or we are unable to achieve year 2000 compliance. The cost of developing and implementing such a plan, if necessary, could be significant. We also understand that at least one of our distributors, XXXXXX, has not yet completed its assessment of the year 2000 readiness of its software, computer technology and other services or finalized any contingency plan to address year 2000 problems that may arise.
We also depend on the year 2000 compliance of the computer systems and financial services used by consumers. A significant disruption in the ability of consumers to reliably access the Internet or portions of it or to use their credit cards would have an adverse effect on demand for our products and services. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Year 2000" for a further description of the issues we face with regard to the year 2000.]
[Year 2000 Many existing computer programs use only two digits to identify a year. These programs were designed and developed without addressing the impact of the upcoming change in the century. If not corrected, many computer software applications could fail or create erroneous results by, at or beyond the year 2000. We use software, computer technology and other services internally developed and provided by third-party vendors that may fail due to the year 2000 phenomenon. For example, we are dependent on the financial institutions involved in processing our customers' credit card payments for Internet services and a third party that hosts our servers. We are also dependent on telecommunications vendors to maintain our network and the United States Postal Service and other third-party carriers to deliver products to customers. We are in the process of reviewing the year 2000 compliance of our internally developed proprietary software. This review has included testing to determine how our systems will function at and beyond the year 2000. We expect to complete these tests during the summer of 1999. Since inception, we have internally developed substantially all of the systems for the operation of our Web site. These systems include the software used to provide our Web site's search, customer interaction, and transaction-processing and distribution functions, as well as monitoring and back-up capabilities. Based upon our assessment to date, we believe that our internally developed proprietary software is year 2000 compliant. We are currently assessing the year 2000 readiness of our third-party supplied software, computer technology and other services, which include software for use in our accounting, database and security systems. As part of the assessment of the year 2000 compliance of these systems, we have sought assurances from these vendors that their software, computer technology and other services are year 2000 compliant. We have expensed amounts incurred in connection with year 2000 assessment since our inception through April 4, 1999. Such amounts have not been material. We expect this assessment process to be completed during the summer of 1999. Based upon the results of this assessment, we will develop and implement, if necessary, a corrective action plan with respect to third-party software, third-party vendors and computer technology and services that may fail to be year 2000 compliant. We expect to complete any required actions during the summer of 1999. At this time, the expenses associated with this assessment and potential corrective action plan that may be incurred in the future cannot be determined. The failure of our software and computer systems or those of our third-party suppliers to be year 2000 compliant could have a material adverse effect on us. The year 2000 readiness of the general infrastructure necessary to support our operations is difficult to assess. For example, we depend on the integrity and stability of the Internet to provide our services. We also depend on the year 2000 compliance of the computer systems and financial services used by consumers. Thus, the infrastructure necessary to support our operations consists of a network of computers and telecommunications systems located throughout the world and operated by numerous unrelated entities and individuals, none of which
has the ability to control or manage the potential year 2000 issues that may impact the entire infrastructure. Our ability to assess the reliability of this infrastructure is limited and relies solely on generally available news reports, surveys and comparable industry data. Based on these sources, we believe most entities and individuals that rely significantly on the Internet are reviewing and attempting to remediate issues relating to year 2000 compliance, but it is not possible to predict whether these efforts will be successful in reducing or eliminating the potential negative impact of year 2000 issues. A significant disruption in the ability of consumers to reliably access the Internet or portions of it or to use their credit cards would have an adverse effect on demand for our products and services. We rely to a large extent on rapid distribution by third parties. We currently purchase all of our pharmaceutical products from one vendor, RxAmerica, and Walsh Distribution accounted for 78% of our nonpharmaceutical costs of sales from launch of our Web store to July 4, 1999. We will also depend on Rite Aid and GNC pursuant to recent agreements whereby, among other things, certain of our systems will be integrated with Rite Aid's and we will be the exclusive online provider of GNC-branded products. The year 2000 readiness of these third parties has not been thoroughly assessed. We have inquired at a general level as to the year 2000 readiness of these third parties, and expect to complete a more comprehensive assessment by the end of our third fiscal quarter. However, we have not used any independent verification or validation processes to analyze these parties' year 2000 risk, cost estimates or readiness. The failure of these third parties to be year 2000 compliant could significantly disrupt our business. At this time, we have not yet developed a contingency plan to address situations that may result if we or our vendors are unable to achieve year 2000 compliance. Such contingency plan is currently expected to be developed in the fall of 1999 and will depend on a number of factors, including (1) the results of our Year 2000 review and assessment, (2) the extent of the corrective actions that have been implemented and (3) the status of our distribution facilities that we currently intend to establish. The cost of developing and implementing such a plan, if necessary, could be significant. Any failure of our material systems, our vendors' material systems, our customers' computers, or the Internet to be year 2000 compliant could have negative consequences for us. Such consequences could include difficulties in operating our Web site effectively, taking customer orders, making product deliveries or conducting other fundamental parts of our business.]
