Maverick Capital
MCL Corporation
767 Fifth Avenue
11th floor
New York, NY 10153
(212) 418-6900
(212) 418-6901 Fax

July 19, 2002

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

File No. S7-16-02

Dear Mr. Katz:

Maverick Capital is a manager of private investment funds with over $20 billion of gross assets under management. Our goal is to preserve as well as to grow our investors' capital. Maverick's investment style requires in-depth, fundamental research into every current and potential investment in our portfolio. Therefore, timely, accurate, relevant, and complete financial reporting is of the utmost importance to us, and we appreciate the opportunity to respond to the proposed changes in reporting requirements.

We support, in general, the Commission's proposal to enhance the disclosures that public companies provide about the material estimates made in application of companies' critical accounting policies. We believe that it is useful for investors to understand the susceptibility of financial statement items to change due to variations in estimates. We also support the requirement that companies disclose the initial adoption of an accounting policy and, in particular, the company's reasoning for choosing one method over another when a choice exists. The following are specific comments on the proposal.

We strongly encourage the Commission to extend these disclosure requirements to foreign registrants. Requiring only domestic registrants to provide this highly relevant information would create one more significant financial reporting advantage to foreign registrants over domestic registrants at the expense of investors. The financial reporting model requires strengthening for all registrants; the current financial reporting requirements for foreign registrants are clearly deficient and the status quo for foreign registrants should not be perpetuated.

Accounting Estimates and the Application of Critical Accounting Policies

We support the proposed disclosures identified in Section IIIC. In particular, we believe that the quantitative discussion of changes in overall financial performance and, where material, line items if an accounting estimate were changed would be very useful in evaluating the sensitivity of the financial results. We also believe that the proposed quantitative and qualitative discussion of any material changes in accounting estimate in the past three years, the reasons for the change, and the effect would be helpful.

The Commission should also require that companies discuss the selection of, and measure the impact of, the application of an accounting method that is not generally used by other companies in the industry.

We suspect that the identification of the critical accounting policies that involve the use of estimates that may have material, near-term variability may be a challenge for some companies. However, that said, we would not support the SEC specifying a bright line (for example, "identify the 5 most critical accounting policies" or "identify a maximum of 7 of the company's most critical accounting policies") that would be applied by each company regardless of its complexity or the complexity of its business model.

We do not believe that a minimum percentage or any other type of "rule of thumb" for assessing the materiality of an estimate's impact should be prescribed by the Commission. In our view, SAB 99 provides useful guidance in assessing what companies should consider in determining the materiality of an estimate. For example, if in applying an accounting policy the effect of selecting one reasonably possible estimate over another would have resulted in the company reporting a loss versus earnings, or would have resulted in the company failing certain covenants, we believe that those estimates are ones that fit within the Commission's articulated objectives and should be disclosed (Section IIIA in the Proposing Release). A specified percentage might not result in the disclosure of these items. In addition, we are concerned that a specified percentage could result in companies using estimates that are right on the edge but just beneath that specified amount.

Initial Adoption of Accounting Policies

We support the proposal to require companies to disclose the events or transactions that gave rise to the initial adoption of an accounting policy, the principle adopted and the method of applying that principle, and the qualitative discussion of the impact of adopting that principle on the financial statements. We believe that companies also should disclose the quantitative, not just qualitative, effect of adopting that principle.

Investors would also benefit if companies would provide enhanced disclosures regarding changes in accounting principles (other than those mandated by a change in accounting standard) as to why the method of applying the principle is being changed and why that change is preferable. While companies may currently be required to make similar disclosures, we frequently have found the disclosures to be neither timely nor informative as to the preferability of the change.

We appreciate the opportunity to comment on this proposal. Please contact Lee Ainslie at (212) 418-6910, or Jane Adams at (212) 418-6915, if you have any questions or issues that you would like to discuss.


Lee S. Ainslie III
Jane B. Adams

Managing Partner Senior Analyst