Mail stop 3561
July 25, 2005
Mr. James Nicol
Chief Executive Officer
Tomkins plc
East Putney House
84 Upper Richmond Road
London, SW15 2ST
United Kingdom
Re: Tomkins plc
Form 20-F for the year ended January 1, 2005
File No. 001-13634
Filed June 28, 2005
Dear Mr. Nicol:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 20-F for the year ended January 1, 2005
Consolidated Statements of Changes in Shareholders` Equity, page
F-5
1. We note that the amount of comprehensive income differs
materially
from net income in each period, as significant amounts are
recognized
for the minimum pension liability and exchange translation
adjustments. In accordance with the guidance in paragraph 14 of
FAS
130, please disclose a total amount of comprehensive income in the
consolidated statement of changes in stockholders` equity.
Note 2 - Summary of Significant Accounting Policies, page F-7
Revenue Recognition, page F-7
2. We note your use of the percentage of completion method of
accounting for long term contracts. Please tell us how
significant
the revenues are under this method of accounting. In addition,
tell
us why you have not provided the additional disclosures required
for
long term contract accounting under SOP 81-1. Examples of such
disclosures might include the method of measuring the extent or
progress toward completion, the criteria used to determine
substantial completion, and the effect of significant revisions in
contract estimates. For additional guidance, you may also refer
to
Accounting Research Bulletin 45 (ARB 45). In addition, please
provide the disclosures required by Rule 5-02(3)(c) of Regulation
S-X
for receivables due under long term contracts.
Product Warranties, page F-9
3. Your accounting policy solely describes product warranties with
no
policy or discussion on product recalls and its associated
liability.
Along with original equipment automotive manufacturers and others,
it
would appear that the company may also incur liability on product
recalls. In this regard, we note that some companies accrue a
liability for product recalls at the date of sale, while others
accrue a liability when the recall is announced. It is presumed
that
these two alternatives arise as the guidance in paragraph 26 of
FAS 5
provides views on whether it is probable claims will arise and
such
amount is reasonably estimable (e.g. depending on a company`s
experience or other information that enables one to make a
reasonable
estimate before a recall is announced). Please provide
appropriate
disclosure and tell us your accounting treatment in this area.
Minority Interests, page F-8
4. It is not clear from your disclosure of minority interests why
your 60% ownership interest in Ideal International SA is
considered a
minority interest in your financial statements. Please explain
your
accounting treatment for Ideal International SA.
Note 4 - Acquisitions and Disposals, page F-11
5. Please disclose the facts and circumstances that led to your
decision not to discontinue / sell the Dearborn Mid-West Conveyor
Company. In addition, you should disclose the effect on the
results
of operations for the current and prior periods presented. For
guidance, refer to FAS 144, paragraph 48.
6. Please provide additional explanation of the reasons underlying
your reversal in fiscal 2003 of $55.4 million related to fiscal
year
2002/01 provisions for disposal of operations and related
warranties.
In addition, confirm that the reversal was recorded in "Gain /
(loss)
on disposal of discontinued operations" in the consolidated
statements of income.
Note 6 - Income Taxes, page F-18
7. In view of the materiality on your results of operations,
please
provide significant expanded disclosure and explain the nature of
amounts included in "Release of contingency" for fiscal 2004
($27.4
million) and fiscal 2003 ($147.9 million) in your reconciliation
of
income taxes at the U.K. statutory rates to the provision /
(benefit)
for income taxes in the consolidated statement of operations. You
should discuss why management believed these tax provisions were
appropriately recognized in prior periods for financial statement
purposes and are now recognized (reversed) as a tax benefit.
Note 13 - Stock Based Compensation, page F-22
8. Please disclose in future filings whether certain performance
conditions have been met for the Tomkins Executive Share Option
Schemes No. 2, No. 3 and No 4 and the Ongoing Option for James
Nichol.
* * * * *
Please file your response to our comments via EDGAR within 10
business days from the date of this letter. Please understand
that
we may have additional comments after reviewing your response.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed decision. Since the company and
its management are in possession of all facts relating to a
company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Tracie Northan at 202-551-3311 or me at 202-
551-3812 if you have questions regarding comments on the financial
statements and related matters.
Sincerely,
Michael Fay
Branch Chief Accountant
Via facsimile: Kenneth Lever, CFO
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Mr. James Nicol
Tomkins plc
July 25, 2005
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