Mail Stop 0510
April 11, 2005
By U.S. Mail and facsimile to 44 1276 807652
Ms. Amanda Sumner
The BOC Group plc
Chertsey Road, Windlesham
Surrey, GU20 6HJ United Kingdom
Re: The BOC Group plc
Form 20-F for the year ended September 30, 2004
File No. 0-10906
Dear Ms. Sumner:
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
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not 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 on 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 SEPTEMBER 30, 2004
Item 3.A. - Key Information - Selected Financial Data
1. We note the sections of your Annual Report that are
incorporated
by reference. While you have provided the information required
under
Item 3.A.2. of Form 20-F under UK GAAP, you do not appear to have
provided the US GAAP equivalent for any of these measures, except
for
net income and shareholders` funds in Note 30. As indicated in
the
minutes to the AICPA International Practices Task Force July 15,
2003
meeting, specifically Agenda Item 12, the SEC staff confirmed that
if
any amount required to be presented in selected financial data on
a
primary GAAP basis is different on a US GAAP basis, then the
corresponding amount under US GAAP should also be shown. Please
revise future filings accordingly.
Item 5 - Operating and Financial Review and Prospects
Item 5.A. - Operating Results
2. We note your operating review, beginning on page 34 of your
Annual
Report. In future filings, when you discuss the reasons for the
changes in your results from year to year, please quantify the
impact
of each reason that you provide, if possible. For those segments
where you discuss the results by geographic region, please
quantify
the results contributed by each geographic region to provide your
readers with insight into the relative importance of each region
to
your results.
Item 5.B. - Liquidity and Capital Resources
3. Please revise future filings to provide an analysis of the
sources
and uses of your cash flows in accordance with Item 5.B.1(b) of
Form
20-F. Also refer to Release 33-8350.
4. We note that your tabular debt maturity profile does not
include
the interest commitments related to your debt. In future filings,
include the interest commitments under your interest-bearing debt
in
this table, or provide textual discussion of this obligation in
the
footnotes to the table. If you provide a textual discussion, the
discussion should quantify the interest payments using the same
time
frames stipulated in the table. Refer to footnote 46 to Release
33-
8350.
Critical Accounting Policies - Retirement Benefits
5. Notwithstanding your belief that it would be impracticable and
potentially misleading to give any approximate impact on annual
Group
operating profit of a change in any one assumption in isolation,
we
believe that this information is necessary for a reader`s
understanding of this critical accounting policy. Please provide
such information in future filings. We believe your discussion of
the fact that there are a number of elements used in the
assumptions,
that they vary for the different countries in which the Group
operates, and that there may be an inter-dependency between some
assumptions is a helpful reminder to readers that they should not
view the impact of a change in individual assumptions in
isolation.
Item 18 - Financial Statements for the Year Ended September 30,
2004
Accounting Policies - Revenue Recognition
6. On page 18 of your Annual Report you indicate that tonnage
customers are usually supplied on the basis of long-term
contracts,
typically containing a fixed facility charge together with a
variable
charge for product supplied in excess of a set minimum. Tell us
supplementally and, to the extent revenue recognized from these
customers is material, disclose in future filings your revenue
recognition policy related to these long-term contracts. Tell us
the
US GAAP authoritative literature you relied on.
7. On page 18 of your Annual Report you indicate that product in
liquid form are delivered into special storage vessels installed
at
customer premises and that the vessels are often owned by the
company. Tell us supplementally and, to the extent revenue
recognized from product delivered in liquid form is material,
disclose in future filings your revenue recognition policy related
to
these products, including the rental of the storage tanks. For US
GAAP purposes, refer to EITF 01-8 and EITF 00-21. Tell us what
accounting literature you were relying on before the effective
dates
of EITF 01-8 and 00-21.
8. Tell us the nature of your long-term contracts that are
accounted
for under the percentage of completion. Confirm supplementally
that
for US GAAP purposes, the nature of such contracts is consistent
with
those covered by SOP 81-1. In addition, for US GAAP purposes,
disclose the method of measuring progress toward completion and
confirm that "foreseeable" losses are the same as "anticipated`
losses under SOP 81-1.
Accounting Policies - Provisions
9. You indicate that provisions are made when an obligation exists
for a future liability in respect of a past event and where the
obligation can be reliably estimated. Confirm supplementally and
clarify in future filings that this policy is substantially the
same
as the requirement under paragraph 8 of SFAS 5 for US GAAP
purposes
(i.e. probable that an asset has been impaired or a liability has
been incurred and that the amount of loss can be reasonably
estimated).
Note 8(a) - Pensions and Other Retirement Benefits - UK GAAP Group
10. You indicate that surpluses in the South African plans have
been
written off in the statement of total recognized gains and losses
in
accordance with FRS 17. Disclose the amounts written off in
future
filings. In addition, we do not see mention of this write off in
the
discussion of UK GAAP and US GAAP differences under pension
accounting in Note 30. Tell us how these surpluses are accounted
for
under US GAAP. Provide us the specific authoritative literature
you
relied on.
Note 13 - Fixed Assets - Investments
11. Tell us supplementally and clarify in future filings what is
meant by "directors` valuation" with regard to the book value of
your
unlisted securities. Address whether this valuation results in a
US
GAAP reconciling item.
Note 22 - Provisions for Liabilities and Charges
12. We note your disclosures and have the following comments:
* We note from elsewhere in the filing that your environmental
provisions primarily relate to your businesses in the US and that
the
US Environmental Protection Agency has named you as a potentially
responsible party for clean-up costs. You also indicate that
based
on the information available management believes that it is
unlikely
that any costs incurred will have a material impact on the
financial
position of the Group. Please note that if it is reasonably
possible
that a loss exceeding amounts already recognized may have been
incurred and the amount of that additional loss would be material
to
a decision to buy or sell your securities, you must either (a)
disclose the estimated additional loss, or range of loss, that is
reasonably possible or (b) state that such an estimate cannot be
made. Refer to SAB Topic 5Y for additional disclosure
requirements
for US GAAP purposes.
* We read that your other provisions principally relate to
warranty
and legal obligations. In future filings please provide the
warranty
disclosures required by paragraph 14 of FIN 45 for each period
presented.
Note 25(b) - Financial Commitments - Other Commitments
13. Please tell us, and revise future filings to briefly explain,
what you have committed to purchase under take-or-pay contracts.
Also tell us, based on the contract terms of these take-or-pay
contracts, whether they meet SFAS 133`s definition of a derivative
instrument. If so, also provide the disclosures required by SFAS
133.
Note 26(b) - Contingent Liabilities and Legal Proceedings - Legal
Proceedings
14. We note your reference to insurance as a mitigating factor in
the
effect that these lawsuits could have on your financial
statements.
In future filings, please disclose your accounting policy for
recording recoveries from insurance. Address any differences
between
US and UK GAAP. Additionally, if you recover settlements for
unfavorable verdicts from your insurance, please disclose that
fact.
Note 30 - US Accounting Information
Note 30(a) - Summary of Differences between UK and US Generally
Accepted Accounting Principles and Other US Accounting Information
Goodwill and Other Intangible Assets
15. We note that for UK GAAP purposes, negative goodwill is
capitalized and amortized on a straight line basis. We also note
negative goodwill of joint ventures reflected in Note 13 - Fixed
Assets - Investments. Clarify for us supplementally and revise
future filing to indicate why no US GAAP reconciling information
is
required for this apparent difference in GAAP. Refer to
paragraphs
44 and 45 of SFAS 141.
Financial Instruments
16. We note your disclosures concerning financial instruments here
and in Note 21. Please revise future filings to clarify if all of
your hedges seen in Note 21 qualify for hedge accounting under US
GAAP.
Note 30(c) - Reconciliation of Net Profit
17. We note that in Note 28(c) - Acquisitions and Disposals -
Exchange of Business, your determination of the unrealized profit
on
disposal of a subsidiary took into consideration negative goodwill
credited on disposal of a subsidiary. We also note the 8.2
million
unrealized profit that was reflected in the statement of total
recognized gains and losses for UK GAAP purposes and net income
for
US GAAP purposes. Given the difference in accounting for negative
goodwill under UK and US GAAP, help us to understand the
appropriateness of the gain recognized for US GAAP purposes.
18. Please revise future filings to more clearly explain any
reconciling items related to the disposal of your businesses.
Specifically, tell us supplementally and revise future filings to
clarify why you show a (20.7) million reconciling item related to
the disposal of a subsidiary in 2003 and a 39.9 million
reconciling
item related to the disposal of the US packaged gas business in
2004.
Note 30(g) - Stock-Based Compensation
19. We read your discussion of employee share schemes here and in
Note 7(a). If stock or stock options have been granted to these
schemes at a discount, please revise future filings to disclose
the
discount for each year for which you present financial statements.
Address for us supplementally whether such discount would require
compensation recognition under US GAAP. Refer to SFAS 123.
Note 30(j) - Recently Issued Accounting Pronouncements not yet
Implemented
20. Please revise future filings to provide all disclosures
required
by SAB Topic 11M.
* * *
Closing Comments
Please respond to these comments within 10 business
days,
or tell us when you will provide us with a response. Please
provide
us with a supplemental response letter that keys your responses to
our comments and provides any requested supplemental information.
Detailed letters greatly facilitate our review. Please file your
supplemental response on EDGAR as a correspondence file. Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain 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 their filings;
* 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.
If you have any questions regarding these comments, please
direct them to Jennifer Thompson, Staff Accountant, at (202) 824-
5259
or, in her absence, to Jeanne Baker, Assistant Chief Accountant,
at
(202) 942-1835 or the undersigned at (202) 824-5373.
Sincerely,
John Cash
Accounting Branch Chief
Ms. Amanda Sumner
April 11, 2005
Page 1 of 6
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0510
DIVISION OF
CORPORATION FINANCE