April 17, 2000

U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609
Attention: Mr. Jonathan G. Katz
Secretary

Re: File S7-03-00

Ladies and Gentlemen:

Thank you for allowing The Business Roundtable (BRT) the opportunity to respond to the proposed rules that are designed to improve disclosures about certain supplementary financial information. We recognize that these proposed rules result from the SEC's mission to address issues related to earnings management as well as from the desire to respond to the needs of financial statement users. We support the principles for both of these efforts.

While we support the goal of the SEC to provide investors with more transparent, better-detailed disclosures and do not object to many of the additional disclosures called for in the proposed rules, we cannot support disclosures that will ultimately harm the competitive business position of a company, but that provide little or no benefit to shareholders. As a result, we cannot support some of the proposed disclosures. The rules would require a company to set forth the beginning and ending account balances of loss accruals as well as additions and deductions, including any deductions during the year and to provide explanations of the changes. We believe these disclosures could ultimately harm the competitive business practices of a company.

The reason for our objection lies in the underlying nature of many loss accruals and the damage to a company and its shareholders if competitors and others outside of the company obtain the information. For example, in regard to loss accruals related to probable losses from pending litigation, requiring a company to disclose this information could severely limit its ability to manage effectively its litigation, allowing litigation opponents to know that a company has a loss accrual recorded-which could be interpreted as an admission of liability. Public disclosure of the amount recorded for a loss accrual, and the basis for and changes in the accrual, could sabotage a company's settlement posture. Such disclosure would mean that what a
company considered the end point of settlement negotiations would become the starting point. Under the proposed rule, there is a strong incentive for a company to accrue the lowest possible number. As a result, under this rule, we think accruals could actually become less accurate.

In regard to tax accruals, requiring a company to disclose loss accruals related to tax matters could "raise a red flag" to the governing tax body, limiting a company's ability to pursue perfectly lawful tax minimization strategies. A company could also be disclosing its tax strategies to competitors.

The same concerns apply to the proposal for more detailed disclosure about the balances and movements of certain environmental, product liability and other loss accruals. Detailed disclosure of such information could result in competitors and opposing litigants learning proprietary and highly confidential information about a company and its business plans and could significantly impair the ability of a company to compete effectively, defend itself appropriately in litigation and achieve optimal settlements of disputes.

In addition, the proposed disclosure about loss accruals from pending litigation and, in certain cases, from environmental, tax and other contingencies would be inconsistent with the attorney-client privilege. The policy behind that privilege - to facilitate the full development of facts essential to proper legal representation and to encourage clients to seek early legal assistance - also serves to ensure accurate financial reporting. Statement of Financial Accounting Standards No. 5, Accounting for Contingencies, (SFAS 5) specifically refers to the opinions or view of legal counsel among the factors to be considered in determining whether loss accruals are necessary. By undermining the attorney-client privilege and the expectation of confidentiality of client confidences, the proposed disclosure would also reduce the incentive for registrant to obtain the informed views of counsel. This would benefit neither investors nor registrants.

We believe the current disclosure rules, provided primarily through SFAS 5, Accounting for Contingencies, are, and have been, sufficient in these highly sensitive areas.

Finally, we are also concerned about the cost of compliance. Even accepting the SEC's estimate of the compliance burden, we believe that the cost of compliance is great when considered in the context of the value to be obtained.

We support the same goals as the SEC-maintaining and strengthening the integrity, quality and transparency of financial statements-even as we challenge the appropriateness of some of the SEC's proposals.

We would be happy to discuss our views with your staff.

The Business Roundtable is an association of chief executive officers of leading U.S. corporations, representing over 10 million employees, who examine public issues that affect the economy and develop positions which seek to reflect sound economic and social principles. We have a single objective-to promote policies that will lead to sustainable, non-inflationary, long-term growth in the U.S. economy.

Respectfully,

William C.Steere
Chairman & Chief Executive Officer, Pfizer Inc
Chairman, Corporate Governance Task Force

Enclosure


The Business Roundtable

Response to the U. S. Securities and Exchange Commission
Proposed Rules on Supplementary Financial Information

Following are our responses to the specific questions raised in the proposal:

1. Are there other specific loss accrual or valuation accounts that should be added to the list of accounts identified within proposed Item 302(c)?

No. As stated in the proposal, the list is meant to be "suggestive rather than all-inclusive," and we believe that the SEC's overall message is clear. The list is comprehensive and, in fact, contains items we believe should not be required as discussed in Questions 2 and 6 below.

2. Should specific percentage tests be used to trigger specific account disclosures within the proposed rules? For example, should disclosure of loss accrual account activity be required only when the balance sheet item and change during the period exceeds a certain pre-established numerical threshold (for example, 5% of total assets or 3% of pretax income)? If so, what is an appropriate threshold?

No. Specific quantitative tests would be inconsistent with the philosophy presented in Staff Accounting Bulletin No. 99, Materiality, that "exclusive reliance on certain quantitative benchmarks to assess materiality in preparing financial statements ... is inappropriate." The SEC should indicate that the provisions of the rules need not be applied to immaterial items, without providing a quantitative test. This approach would parallel the guidance used by the Financial Accounting Standards Board. We believe that management, with review by the independent auditors, is in the best position to assess the meaningfulness and relevance of items for disclosure.

However, notwithstanding the above, we believe that disclosures concerning individual account balances and movements should not be required due to the significant competitive harm that could result from such disclosures. Similarly, we are very concerned about the requirement to disclose in detail the nature of any changes in the assumptions that are used in estimating the amount of a valuation or loss accrual account. For example, if a company is in the middle of a product warranty dispute and, based on court developments, believes that an additional accrual is warranted under SFAS 5- - the requirement to provide more detailed disclosures (about the accrual and the changes in the assumptions that led to the adjustment) could cripple the company's defense and severely impact its ability to negotiate a more favorable settlement. Ultimately, such excessive detail could chill innovation.

We believe that additional, detailed information concerning other legal, environmental, tax and other loss accruals should not be required as much of that information could interfere with the competitive business practices of the company. We believe that the current disclosure rules, provided primarily through Statement on Financial Accounting Standards No. 5, Accounting for Contingencies, are, and have been, sufficient in these highly sensitive areas. Detailed public disclosure in these areas will likely compromise proprietary and highly confidential information of a company and could significantly impair the ability of the company to compete and negotiate settlements.

Finally, we believe that the proposed requirements related to long-lived assets are simply not meaningful in technology-driven businesses where investors place emphasis on research and development rather than on "bricks and mortar." We believe that management could deem this information as not material regardless of the book value of the long-lived assets.

3. Should the placement of the proposed data be moved within MD&A or to some other section of the filing to enhance the prominence of the disclosures?

In the interest of facilitating investor understanding of the information to be presented, we believe that the importance of the disclosure and its natural links, if any, to other disclosures should dictate the placement of the proposed data. For example, for exit and employee termination costs: if the information concerning the balance and movement of these accruals facilitates an understanding of management's actions described in MD&A, then the tables should appear in MD&A.

Further, in addition to streamlining reporting, the flexibility to place the data in its most meaningful context should also help to eliminate redundancies. For example, GAAP requires that information about tax valuation accounts be reported in a footnote to the financial statements. If the SEC required this same information to be provided in a 10K schedule, there would be redundancy that would not provide any offsetting benefits, and could confuse shareholders that are not tax-oriented.

4. Should presentation of the proposed data be limited to the Form 10-K?

As stated in the answer to Question 3, we believe that the relative importance of the disclosure and its natural links, if any, to other disclosures should dictate the placement of the proposed data. The information may be most appropriately disclosed in MD&A; as part of the basic financial statements; in the front part of the Form 10K; or as supplemental information to the Form 10K.

However, as stated in the answer to Question 7, we believe that the information should not be required in the interim financial statements unless necessary to comply with Rule 10-01 of Regulation S-X.

5. Should the disclosure requirements be restricted to those registrants that exceed a certain size or meet some other threshold? If so, what would be the appropriate threshold?

No. We believe that the disclosure requirements should be guided by what is meaningful and relevant to the users of the financial statements and not by an arbitrary threshold applied to the size of a registrant. However, as noted in the answer to Questions 2 and 6, we strongly object to the requirement to provide additional, detailed information concerning legal, environmental, tax and other loss accruals and are very concerned about the requirement to disclose in detail the nature of any changes in the assumptions that are used in estimating the amount of a valuation or loss accrual account.

6. Are there circumstances where registrants may appropriately exclude disclosure about loss accruals related to litigation because of concerns about confidentiality while still conforming with GAAP? If so, please describe such circumstances in detail.

Yes. We believe that the current disclosure rules, provided primarily through Statement on Financial Accounting Standards No. 5, Accounting for Contingencies, are, and have been, sufficient in these highly sensitive areas:

- SFAS 5 requires a registrant to communicate the nature of an accrual and, in some circumstances, the amount accrued.

- And, if no accrual is recorded or if an exposure to loss exists in excess of the amount accrued, SFAS 5 requires disclosure be made when there is at least a reasonable possibility that a loss or an additional loss may have been incurred.

Greater or more detailed disclosure concerning legal, environmental, tax and other loss accruals should not be required as much of that information could interfere with the competitive business practices of the company. Disclosure of certain balances and movements in these highly sensitive areas will likely compromise proprietary and highly confidential information of the company, could permit competitors and others to obtain access to such information and to business strategies, and could significantly impair the ability of the company to defend itself in litigation and to negotiate settlements. The amount recorded for a loss accrual could sabotage a company's litigation strategy and settlement posture. Such a disclosure would mean that what a company considered the end point of settlement negotiation would become the starting point. Under the proposed rule, there is a strong incentive for a company to accrue the lowest possible number. Under this rule, we think accruals could actually become less accurate.

In addition, the proposed disclosure about loss accruals from pending litigation and, in certain cases from environmental, tax and other contingencies would be inconsistent with the attorney-client privilege. The policy behind that privilege - to facilitate the full development of facts essential to proper legal representation and to encourage clients to seek early legal assistance - also serves to ensure accurate financial reporting. Statement of Financial Accounting Standards No. 5, Accounting for Contingencies, (SFAS 5) specifically refers to the opinions or view of legal counsel among the factors to be considered in determining whether loss accruals are necessary. By undermining the attorney-client privilege and the expectation of confidentiality of client confidences, the proposed disclosure would also reduce the incentive for registrant to obtain the views of counsel. This would benefit neither investors nor registrants.

7. Should the disclosures concerning valuation and loss accrual account activity be required when interim financial statements are presented?

No. We believe that the guidance provided in Rule 10-01 of Regulation S-X is still appropriate and is still sufficient- - specifically,

- That the interim financial information include disclosures so as to make the interim information presented not misleading;

- That the registrants may presume that users of the interim financial information have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context; and

- That notwithstanding the above, where material contingencies exist, disclosure of such matters shall be provided even though a significant change since year end may not have occurred.

8. Should the disclosures concerning changes in property, plant, equipment, and intangible assets and related accumulated depreciation, depletion, and amortization be required when interim financial statements are presented?

No. See our response to Question 7. Further, although we agree generally that the information needed for preparation of these disclosures should be readily available from the registrant's books and records, there is still considerable compilation, communication and review efforts that will be required to prepare such schedules and disclosures. For interim financial statements that are otherwise not misleading, we do not support the additional effort for an unquantifiable benefit.

Also, we believe that the requirements related to long-lived assets are simply not meaningful in technology-driven businesses where investors place emphasis on research and development rather than on "bricks and mortar."