12 April 2000

U.S. Securities and Exchange Commission
450 Fifth Street N. W.
Washington, D. C. 20549-0609

Attention: Mr. Jonathan G. Katz

Re: File S7-03-00

Ladies and Gentlemen:

We appreciate the opportunity to comment on the proposed rules intended to provide investors with more detailed disclosures concerning (1) valuation and loss accounts and (2) long-lived assets. Air Products is a multi-national major supplier of chemicals, industrial gases and related equipment with annual sales exceeding $5 billion.

We believe full and effective disclosure is a benefit to our investors. We also support the Commission's goals of providing more transparent and useful disclosure, the elimination of abusive earnings management, and supporting the needs of analysts and other users of financial statements.

However, upon reviewing the proposed rules in detail, we believe there are some potentially harmful aspects to these disclosures. The disclosure of balances, changes, and explanations of the changes of certain loss accruals could have a negative impact on competitive practices. Particularly, the expanded tax and litigation disclosures could have a negative impact on our investors if the company's tax and litigation strategies are compromised. We believe the existing disclosure requirements of: (1) Statement of Financial Accounting Standards (SFAS) No. 5, Accounting for Contingencies and (2) SFAS No. 109, Accounting for Income Taxes, provides full and effective disclosure without revealing information that could hurt Air Products competitively or in a litigation situation.

The proposal has a list of suggested ( but not all-inclusive ) accounts that would be expected to be included in the expanded disclosure. Many of these topics, such as inventories, environmental costs, restructuring costs, and deferred taxes already have extensive disclosure requirements. While there may be some diversity in existing reporting practice, we are concerned the proposed solution adds to fragmented and redundant disclosure. The investor may not benefit from disclosure overload.

The Commission also proposes to reinstate the analysis of long-lived assets eliminated as of 1995 reporting. Analysts contend they are hindered in their ability to evaluate management's capital allocation decisions without this roll-forward schedule. The information is provided in the accounting policy footnote, the property footnote, and the statement of cash flows. This seems like a request by the analysts to recast data for their convenience. Fortunately, if provided for the Form 10K only, this is not a significant additional effort.

We support the goals of the Commission, however, we believe there is potential to have a negative impact on Air Products and its shareholders from some of this disclosure, particularly tax and litigation accruals. There is also a trend towards supplemental disclosure creating fragmented and redundant information which may have a negative impact on providing investors with both full and effective reporting.

We thank you for the opportunity to express our views on this reporting issue and would be available to discuss this with the staff. Attached are specific responses and recommendations to the questions provided in the proposal.


Leo J. Daley
Vice President-Finance and
Chief Financial Officer
Air Products and Chemicals, Inc.


Response to Proposed Rules on Supplemental Financial Information
by the U. S. Securities and Exchange Commission
File S7-03-00

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

No. The list is very inclusive. Many of the accounts listed currently have extensive disclosure requirements. Fragmented and redundant disclosure would result from some of the accounts proposed. Specifically, doubtful accounts, restructuring costs, environmental costs, and deferred taxes are covered in existing disclosure rules. The tax and litigation accounts should be excluded due to the disclosure of competitive information.

2. Should specific percentage tests be used to trigger specific account disclosures within the proposed rules?

Guidance on materiality as recently provided by the Commission in Staff Accounting Bulletin 99, Materiality, was very helpful. The basic rules of SFAS No. 5, Accounting for Contingencies, is adequate. We believe quantitative triggers would generate unnecessary work to test the triggers.

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

Disclosures should be made with the least fragmentation and redundancy possible. The disclosures should be included in the relevant footnote, MD&A, or Form 10K schedule as appropriate to existing GAAP requirements. In particular, tax and environmental disclosure should be in the footnotes. Restructuring should be in the MD&A.

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

The response to Question 3 addresses the location of the disclosure. The frequency of the disclosure should only be annual unless required for interim reporting by existing GAAP.

5. No comments.

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

The current disclosure rules for significant contingencies as provided in SFAS No. 5, Accounting of Contingencies, provide for appropriate disclosure. Expanded disclosure is not required. The proposed rules would compromise competitive positions and interfere with the litigation process. The disclosure of a basis for a change in an accrual provides a litigant with the company's settlement position. A similar disclosure of tax accruals would give strategic data to taxing authorities.

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

Existing GAAP requires disclosure of material changes in trends as well as significant contingencies. Increased disclosure is not required. The cycle is shorter for interim reporting. Large multi-national companies expend significant resources to gather data for annual reporting disclosures. This additional interim work would be a significant effort. We are concerned about the additional costs related to the increase in interim disclosure. Our foreign entities are required to do an increasing level of peak period disclosure, reducing the time spent on control and analysis.

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

No. The effort to produce this information for annual reporting requires extensive data gathering, compilation and review for a large multi-national filer. Our year-end processes are designed to support the audit more than disclosure, but the work permits us to do the asset related disclosure in the proposed rules. Replicating this process for interim reporting would be a significant increase in effort and add to the peak accounting demand, particularly in small foreign entities. For example, the collection of details about Currency Translation for annual reporting would be very difficult for the interim reporting cycle.