Weingarten Realty Investors
2600 Citadel Plaza Drive, Suite 300
Houston, Texas 77008
December 13, 2002
Mr. Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609
Re: Conditions for Use of Non-GAAP Financial Measures (File No. S7-43-02)
Dear Mr. Katz:
Weingarten Realty Investors ("Weingarten") is pleased to have the opportunity to respond to the Securities and Exchange Commission ("Commission") regarding the proposals set forth in Release No. 33-8145 and 34-46788 ("Releases"). Weingarten is a publicly traded real estate investment trust, trading on the New York Stock Exchange under the trading symbol "WRI".
Weingarten supports the Commission's efforts to reform the use of Non-GAAP financial measures by public companies. We agree with the need to improve the transparency and quality of public disclosures, including pro forma financial information. We generally agree with the Commission's proposals relating to the use of Non-GAAP financial measures. However, we are concerned that one aspect of the proposals could be counterproductive to the interests of the investor community. Weingarten Realty Investors opposes the Commission's proposal that would prohibit the use of Non-GAAP per share information in corporate earnings releases.
Weingarten supports the Commission's proposal that any Non-GAAP financial measure must be reconciled with the comparable GAAP measure. Additionally, we agree that any comparable GAAP measure must be presented with equal or greater prominence of the comparable non-GAAP measure.
However, we use a non-GAAP measure, Funds From Operations (FFO), as an important supplemental indicator of our company's operating profitability. Reporting FFO, as well as other Non-GAAP measures, on only an absolute basis, not on a per-share basis, would be inappropriate since the issuance of shares or the repurchase of shares affects the absolute measure. Additionally, investors have advised us that these Non-GAAP per-share measures, including Funds From Operations, are important supplemental indicators of a real estate company's operating profitability, performance and financial condition.
We recommend that the final rule allow per share reporting of non-GAAP measures and require that both the numerator (the non-GAAP measure) and the denominator (the applicable diluted number of shares) be reconciled to GAAP net income and the number of diluted shares used to calculate GAAP net income per share respectively. This position agrees with the alternative suggested in "Questions regarding amendments to Item 10 of Regulation S-K, Item 10 of Regulation S-B and Form 20-F" of the Release.
Weingarten Realty Investors thanks the Commission for the opportunity to comment on this proposal. Please contact me directly at (713) 866-6054 or firstname.lastname@example.org if you have any questions regarding this letter.
WEINGARTEN REALTY INVESTORS
Stephen C. Richter
Sr. Vice President & Chief Financial Officer