July 19, 2002

Mr. Jonathan G. Katz
U.S. Securities & Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Re: File S7-16-02

Dear Mr. Katz:

Valmont Industries, Inc. (Valmont) is a global manufacturing company headquartered in Omaha, Nebraska with operations in fifteen countries. Our 2001 sales were $872 million and we have five reportable business segments. Our shares are traded on the NASDAQ exchange and accordingly are subject to SEC guideline and regulations. Valmont respectfully submits its comments and suggestions regarding the proposed rule regarding "Disclosure in Management's Discussion and Analysis (MD&A) about the Application of Critical Accounting Policies".

General Comments and Summary:

We are supportive of the Commission's efforts to improve disclosures regarding critical accounting estimates. The objective of any discussion as to accounting estimates or methods should focus on:

  1. Acceptability of methods under Generally Accepted Accounting Principles;

  2. Consistency of application;

  3. The differences in assumptions made in accounting methods and estimates.

The most significant risk areas are accounting estimates applied inconsistently or developed using overly aggressive or questionable assumptions. Inconsistency makes accurate trend analyses and other comparisons very difficult or impossible. Aggressive assumptions can yield inaccurate, overly optimistic results. Registrants should discuss these issues in the context of the MD&A. We believe the current MD&A and Form 10-K guidelines address material changes in estimates, including consistency issues. We also believe these disclosures should be reviewed by the registrant's independent accountants for completeness and accuracy.

We respectfully wish to summarize our main suggestions as to the proposed rule as follows:

  1. The Commission should consider more defined guidelines as to what is a "critical accounting estimate". While we support the notion that >the discussion should not be a "laundry list" of estimates, the Commission's definition of "material" (per SAB 99) sends mixed signals.

    Moreover, the term "reasonably possible" is somewhat vague and does not help define the materiality issue. In today's environment, we likely will end up with a discussion of an exhaustive list of estimates that either will not be read and/or will not enhance the reader's understanding of the financial statements and will not provide comparability among registrants.

  2. Make the quantitative sensitivity analysis discussions optional, but encouraged. We believe sensitivity analyses generally do not help the reader. In reading some of the examples in the proposed rule, the level of discussion is too detailed. Aside from confusing the reader, it's not clear how the reader would use sensitivity analyses on several estimates to make better decisions. We believe disclosure of the key assumptions used would be more meaningful to the financial statement users.

Scope of Proposal:

In general, we believe the scope of the project should not be expanded. In cases where there is no authoritative literature (e.g. unusual or innovative transactions), companies should describe the accounting for these transactions, as there may be wide variation as to how participants in an industry account for these transactions. Expanding the disclosures to a series of "what if" scenarios as to accounting alternatives would overwhelm readers of financial statements. Accordingly, we believe the scope of the rule should not go beyond critical accounting estimates.

Proposed Definition on Accounting Estimates:

Conceptually, we believe that the Commission has adequately described what constitutes a critical accounting estimate. However, these guidelines will be very difficult to implement. For instance:

  1. This proposal is intended for material estimates. The Commission's desire to avoid exhaustive lists of estimates disclosed is noted, but other guidance, such as SAB 99, tends to suggest otherwise. It would be helpful to provide quantitative guidelines (e.g. minimum percentage impacts) to help determine critical estimates.

  2. In defining a "critical accounting estimate", use of subjective wording such as "reasonably possible" makes it difficult to judge what is a "critical accounting estimate".

It would be helpful if the Commission would further clarify the definition of a "critical accounting estimate". In addition to a more definitive description, it may be helpful to include an Appendix listing examples of critical accounting policies or, alternatively, what would not constitute a critical accounting policy.

Proposed Identification and Analysis of Changes in Accounting Estimates:

The objectives should be consistency in the determination of the estimate and the reasonableness of the key underlying assumptions. Ideally, disclosures should help the reader understand the registrant's business and come to a conclusion as to the company's value. We believe broad, expansive sensitivity analyses would not be valuable to the reader. Aside from creating confusion, it will be difficult, if not impossible, to quantify the impact on the value of a Company based on a range of estimated outcomes of several key estimates. In a similar vein, the wording in the Proposed Rule as to "reasonably possible" is very subjective and will result in wide interpretations. As a result, discussions in this area may end up being academic in nature and not very relevant.

However, where changes in key assumptions can dramatically affect the result of an accounting estimate (e.g. valuation of reporting units related to intangibles, valuation on non-exchange traded derivative instruments), registrants should be encouraged to disclose the key assumptions used by management and comment as to the consistency of those assumptions over time. General (rather than specific) discussion of those issues would be more valuable to the reader.

Proposed Disclosure of Past Material Changes in Critical Accounting Estimates:

We believe the current MD&A requirements cover many of the proposed changes. For example, we believe the current three year reporting period provides investors with relevant information regarding a registrant's business and makes the most sense. Registrants should also be encouraged to provide data in tabular form, similar to the Schedule II in the Form 10-K to supplement such discussion.

Proposed Discussions Between Senior Management and the Audit Committee Regarding Critical Accounting Estimates:

The current SAS 61 requirements address the need for the audit committee to be informed as to the significant accounting estimates used by the Company. The independent accountants also are required to evaluate the consistency and reasonableness of those estimates and report their findings to the audit committee. We believe these requirements adequately address

Proposed Segment Disclosures Related to Critical Accounting Estimates:

Where significant, the discussions regarding accounting estimates should be organized on a segment basis, since much of the MD&A is presented on a segment basis. Where registrants have multiple reportable segments, however, we may end up with more duplicative disclosures than desired.

Initial Adoption of Accounting Policies:

In cases where there is no authoritative technical guidance on particular transactions or events, registrants should describe how those events were accounted for in the financial statements. Providing discussions on the various methods a registrant could have accounted for a transaction would not be meaningful to investors unless that treatment was substantially different that methods used by other companies in that industry. Aside from this situation, such discussions would be confusing to readers of the financial statements in that it would be very difficult to translate this information into a meaningful conclusion as to the value of the company.

We appreciate the opportunity to provide our comments as to the proposed rules. If you wish to contact me regarding this letter, I can be reached at (402) 963-1040.

Respectfully Submitted,



Mark C. Jaksich
Vice-President & Corporate Controller