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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000790730-06-000009.txt : 20061114
<SEC-HEADER>0000790730-06-000009.hdr.sgml : 20061114
<ACCEPTANCE-DATETIME>20060801205929
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000790730-06-000009
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20060801

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMERON INTERNATIONAL CORP
		CENTRAL INDEX KEY:			0000790730
		STANDARD INDUSTRIAL CLASSIFICATION:	CONCRETE GYPSUM  PLASTER PRODUCTS [3270]
		IRS NUMBER:				770100596
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		245 S LOS ROBLES AVE
		CITY:			PASADENA
		STATE:			CA
		ZIP:			91101
		BUSINESS PHONE:		6266834000

	MAIL ADDRESS:	
		STREET 1:		245 S LOS ROBLES AVE
		CITY:			PASADENA
		STATE:			CA
		ZIP:			91101

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AMERON INC/DE
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
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<head>
<title>August 1</title>
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<body>

<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">August 1, 2006</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" align="right" style="text-align: right; margin-top:0; margin-bottom:0"><i><u>VIA FAX
202-772-9368 and FEDEX</u></i></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">Mr. John Cash</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">Accounting Branch Chief</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">United States Securities and Exchange Commission</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">Division of Corporate Finance</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">100 F Street, N.E.</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">Mail Stop 7010</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">Washington, D.C.&nbsp; 20549-7010</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0"><b>RE:&nbsp;&nbsp;&nbsp;&nbsp; Ameron International Corporation</b></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form 10-K for Fiscal Year Ended November 30,
2005</b></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form 10-Q for Quarter Ended March 5, 2006</b></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>File No. 1-9102</b></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0"><b>&nbsp;</b></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">Dear Mr. Cash:</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">This letter is the response of Ameron International
Corporation (&quot;Ameron&quot; or the &quot;Company&quot;) to your follow-up comment letter dated
June 15, 2006.&nbsp; As you requested, in order to facilitate your review, the
numbered responses in this letter correspond to those contained in your letter.&nbsp;
Further, we have attempted to articulate in writing and provide further
information on certain items that we discussed with you on July 7, 2006, which
might be useful in further understanding our business and segment reporting.&nbsp;
Your comments are repeated in italics, followed by the Company's response in
normal font.</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0"><b><u>Form 10-K for the Year Ended November 30, 2005</u></b></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0"><b>&nbsp;</b></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0"><b><u>Note 17 - Segment Information</u></b></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0"><b>&nbsp;</b></p>
<p class="MsoNormal" style="text-indent: -.5in; margin-left: .5in; margin-top:0; margin-bottom:0"><i>1.</i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<i>We note the management reports and other information that you provided to us
in response to comment 2 from our previous comment letter dated April 14, 2006.&nbsp;
We note that the reports provided to your CODM contain a level of reporting
below that which you have identified to us as your operating segments.&nbsp; This
lower level of reporting appears to be based on geographic areas within each of
the products lines that you consider to be your operating segments.&nbsp; Given that
this lower level of reporting is provided to your CODM, it remains unclear to us
how you concluded that this lower level of reporting did not represent your
operating segments.</i></p>
<p class="MsoNormal" style="margin-left: .5in; margin-top:0; margin-bottom:0">&nbsp;</p>
<p class="MsoNormal" style="margin-left: .5in; margin-top:0; margin-bottom:0">As previously noted in the
Company's letter dated May 26, 2006 the Company has determined that in
accordance with SFAS No. 131 and, specifically paragraphs 10,13, and 14, it has
five operating segments and four reportable segments.&nbsp; The four reportable
segments include the Performance Coatings &amp; Finishes Group, Fiberglass-Composite
Pipe Group, Water Transmission Group and Infrastructure Products Group.&nbsp; The
Infrastructure Products Group is the aggregation of two operating segments:&nbsp; the
Pole Products and Hawaii Divisions that have been aggregated in accordance with
SFAS No. 131, paragraph 17.&nbsp; The Company believes that its segment reporting is
consistent with the provisions of SFAS No. 131 after careful consideration of
all relevant factors, including &nbsp;the Company's organization and management
structure and the manner in which the Company's chief operating decision maker
(&quot;CODM&quot;) manages the Company, assesses performance and allocates resources.&nbsp;&nbsp;
</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-left: .5in; margin-top:0; margin-bottom:0">In response to the Staff's
comment regarding the identification of operating segments, we note that while
the CODM receives selective financial information on a monthly basis at the
plant level within each operating segment, these plants do not represent the
Company's operating segments for the following reasons:</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: .75in; margin-top:0; margin-bottom:0">1)&nbsp;&nbsp;&nbsp;Paragraph 10 of SFAS No. 131 presents the initial definition of operating
segments.&nbsp; As both segment level and plant level data are provided to the CODM,
both the operating segments as defined by the Company and the individual plants
meet the conditions described in paragraphs in 10a and 10c.&nbsp; However, only the
five operating segments as defined by the Company also meet the condition
described in paragraph 10b.&nbsp; </p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: 1.25in; margin-top:0; margin-bottom:0">a.&nbsp;&nbsp;&nbsp;
Per paragraph 10(b) of SFAS No. 131, an operating segment is a component
whose operating results are regularly reviewed by the CODM to make decisions
about resources to be allocated to the segment <u>and</u> assess its
performance.&nbsp; The CODM does not use financial information on a plant level basis
to allocate resources.&nbsp; This is done by the CODM at the operating segment
level.&nbsp; Each year the CODM presents to the Board of Directors a business plan
which includes financial goals and capital budgets for the Company and by
operating segment.&nbsp; The commitments made by the CODM to the Board of Directors
in terms of financial performance are at the Company level and the operating
segment level, not at the plant level.&nbsp; The Board of Directors reviews and
approves the business plan and capital budgets at the Company level and the
operating segment level only, not at the plant level.&nbsp; Except for reviewing
proposed individual capital expenditures exceeding $500,000 as part of the
Company's internal control process, the CODM is not otherwise involved in the
approval process for capital expenditures.&nbsp; The foregoing demonstrates that the
CODM does not allocate resources at the plant level.&nbsp; Further, as set forth in
the Company's May 26, 2006 letter, the CODM manages the Company through segment
managers and does not regularly interact with plant managers to assess
performance.&nbsp; Therefore, the CODM does not allocate resources and assess
performance at the plant level. &nbsp;&nbsp;&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: 1.25in; margin-top:0; margin-bottom:0">b.&nbsp;&nbsp;&nbsp;The Company's CODM establishes strategy at the operating segment level,
allocates resources at such operating segment level, establishes operating
budgets at such operating segment level and assesses financial performance at
such operating segment level. The CODM regularly interacts with the segment
managers, not the plant managers, to assess the performance of the operating
segments as well as the performance of the segment managers.&nbsp; As the Company
does not have a report tailored for the CODM that identifies exception
conditions, the CODM receives data at both the segment level and at the plant
level in the monthly financial reporting package in order for him to identify
exception conditions or anomalies for follow-up.&nbsp; The inclusion of the more
detailed information helps the CODM probe segment managers to determine whether
he has been fully apprised by the segment manager of all significant matters
affecting segment performance and to put the discussion of the results in the
proper context.&nbsp; The CODM is also responsible for certifications under civil and
criminal liabilities under the Sarbanes-Oxley Act.&nbsp; The CODM's access to more
detailed information forms part of the basis for due diligence in the discharge
of his duties under the Sarbanes-Oxley Act. &nbsp;&nbsp;&nbsp;</p>
<p class="MsoNormal" style="margin-left: 1.0in; margin-top:0; margin-bottom:0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: .75in; margin-top:0; margin-bottom:0">2)&nbsp;&nbsp;&nbsp;Even if the plant level information was construed as segment information,
a notion which the Company disputes, paragraph 13 of SFAS No. 131 addresses the
issue of reporting when business activities are presented in a variety of
different ways and the CODM uses more than one set of information.&nbsp; We believe
this guidance would apply since the CODM receives both segment level and plant
level information.&nbsp; Specifically, paragraph 13 states. &quot;If the chief operating
decision maker uses more than one set of segment information, other factors may
identify a single set of components as constituting an enterprise's operating
segments, including the nature of the business activities of each component, the
existence of managers responsible for them, and information presented to the
board of directors.&quot;&nbsp; The Company sets forth below its analysis of this
guidance. &nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: 1.25in; margin-top:0; margin-bottom:0">a.&nbsp;&nbsp;&nbsp;&nbsp;<u>Nature of business activities</u></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-left: 1.25in; margin-top:0; margin-bottom:0">As indicated on p.3 of the
Company's letter dated May 26, 2006, within each operating segment the Company's
plants manufacture and sell the same family of products and conduct similar
business activities.&nbsp; Under the guidance of a segment manager each operating
segment functions as an integrated strategic business unit.&nbsp; Plants within the
operating segment share production capacity, technical know-how, best practices,
people and &nbsp;resources.&nbsp; If the individual plants were to be defined as the
operating segments, the presentation and disclosure of plant level detail
information would not be meaningful to the readers of the financial statements.&nbsp;
Further, because of the integrated manner in which the businesses are managed,
individual plants may meet or miss the quantitative criteria for reportable
segment disclosure year over year which the Company believes distorts, rather
than informs, as plants in identical businesses may be divided into reportable
plants versus non-reportable or &quot;other&quot; plants.&nbsp; Lastly, on August 1, 2006, the
Company completed the sale of its entire Performance Coatings &amp; Finishes Group
segment to PPG Industries, Inc. This transaction serves as additional evidence
that the Company manages its segments as strategic business units, and the
relevant financial reporting components are the Company's operating segments,
not the individual plants. </p>
<p class="MsoNormal" style="margin-left: 1.25in; margin-top:0; margin-bottom:0">&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: 1.25in; margin-top:0; margin-bottom:0">b.&nbsp;&nbsp;&nbsp;<u>Existence of managers responsible for segments </u></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-left: 1.25in; margin-top:0; margin-bottom:0">The Company described its
management structure and the existence of segment managers on p.3 of its May 26,
2006 letter.</p>
<p class="MsoNormal" style="margin-left: 1.25in; margin-top:0; margin-bottom:0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: 1.25in; margin-top:0; margin-bottom:0">c.&nbsp;&nbsp;&nbsp;<u>Information presented to the Board of Directors</u></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-left: 1.25in; margin-top:0; margin-bottom:0">The Company described the
information presented to its Board of Directors on p.3 of its May 26, 2006
letter.&nbsp; The Company had previously provided the Staff with a sample of the
quarterly package received by its Board of Directors.&nbsp; The company notes the
additional information provided on p.2 of this letter. &nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: .75in; margin-top:0; margin-bottom:0">3)&nbsp;&nbsp;&nbsp;Paragraph 14 of SFAS No. 131 further describes a segment manager and
states that generally, an operating segment has a segment manager who is <u>
directly</u> accountable to and maintains regular contact with the CODM to
discuss operating activities, financial results, forecasts, or plans for the
segment.&nbsp; The Company's management structure further supports that there are
five operating segments.</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: 1.25in; margin-top:0; margin-bottom:0">a.&nbsp;&nbsp;&nbsp;Each segment is managed by a segment manager who has profit and loss
responsibility and overall management responsibility for the segment.</p>
<p class="MsoNormal" style="margin-left: 1.0in; margin-top:0; margin-bottom:0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: 1.25in; margin-top:0; margin-bottom:0">b.&nbsp;&nbsp;&nbsp;Segment managers report to the Company's CODM, however, plant managers do
not report directly to the CODM.</p>
<p class="MsoNormal" style="margin-left: 1.0in; margin-top:0; margin-bottom:0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.25in; margin-left: 1.25in; margin-top:0; margin-bottom:0">c.&nbsp;&nbsp;&nbsp;Segment managers' incentive compensation is tied to the financial
performance of the segment.</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="text-indent: -.5in; margin-left: .5in; margin-top:0; margin-bottom:0"><i>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Furthermore, given that some of the categories at this lower level of reporting
appear to represent 10% or more of your total revenues or total segment income,
it is unclear to us how you determined that these operating segments did not
need to be reported separately in accordance with paragraph 18 of SFAS 131.&nbsp; In
this regard, based on the reports that you provided, we note the USA Performance
Coatings and Finishes, the Centron and Singapore Fiberglass-Composite Pipe, and
the Hawaii and Concrete Poles Infrastructure Products each appear to exceed the
threshold tests in paragraph 18.&nbsp; We would not object to the aggregation of
operating segments within your current reportable segments if they were not over
the quantitative thresholds specified in SFAS 131, based on your ability to meet
the criteria in sections a through e of paragraph 17 of SFAS 131 and because we
assume that you could demonstrate similar long-term average gross margins for
these operating segments.&nbsp; For those operating segments that exceed the
quantitative thresholds, please advise or revise your segment reporting.</i></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-left: .5in; margin-top:0; margin-bottom:0">Since the Company has concluded
that its plants are not operating segments, as explained above, we do not
believe that paragraph 18 would be applicable.&nbsp; We believe that the Company (1)
must first identify its operating segments, (2) determine whether any of those
segments meet the aggregation criteria, and (3) then disclose those segments
that exceed the quantitative thresholds as reportable segments.&nbsp; The diagram
provided in Appendix B of SFAS No. 131 supports this conclusion. The Company has
determined it has five operating segments, of which there are four reportable
segments after applying the aggregation criteria of paragraph 17.&nbsp; Each of those
four reportable segments meets the quantitative thresholds of paragraph 18 and
has been appropriately disclosed.</p>
<p class="MsoNormal" style="margin-left: .5in; margin-top:0; margin-bottom:0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">We confirm that we are responsible for the adequacy and
accuracy of the disclosures in our filings.&nbsp; Furthermore, we acknowledge that (i)
nether your comments nor changes in disclosure in response to your comments
preclude the Securities and Exchange Commission (the &quot;Commission&quot;) from taking
any action with respect to either the referenced filings or any other filing of
the Company, and (ii) we 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.</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">If you require additional information or clarification of
this response, please contact me.</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">Sincerely,</p>
  <p class=Style0><i>/s/ James R.
  McLaughlin</i></p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">James R. McLaughlin</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">Senior Vice President,</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">Chief Financial Officer &amp; Treasurer</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<p class="MsoNormal" style="margin-top: 0; margin-bottom: 0"><font size="2">JRM:aps</font></p>

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