Form: 8-K/A

Current report filing

December 12, 2003

8-K/A: Current report filing

Published on December 12, 2003

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


FORM 8-K/A

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934


December 12, 2003
Date of Report (Date of earliest event reported)


TANGER FACTORY OUTLET CENTERS, INC.
(Exact name of registrant as specified in its charter)

North Carolina
(State or other jurisdiction of incorporation or organization)


1-11986 56-1815473
(Commission File No.) (I.R.S. Employer Identification No.)


3200 Northline Avenue, Greensboro, NC 27408
(Address of principal executive offices, including zip code)

(336) 292-3010 (Registrant's telephone number,
including area code)


Not Applicable
(Former name or former address, if changed since last report)




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TANGER FACTORY OUTLET CENTERS, INC.

CURRENT REPORT

ON

FORM 8-K/A




Item 7. Financial Statements, Pro Forma Financial Information and Exhibits

We are amending the pro forma information previously included under
Item 7 (b) in our Current Report on Form 8-K, dated December 8, 2003
in order to reflect the actual offering price of our common share
offering which priced on December 10, 2003.

The unaudited pro forma financial information and exhibits filed
herewith are as set forth below

Page

(b) Pro Forma Financial Information

(1) Unaudited Pro Forma Consolidating Statements of Operations
for the nine months ended September 30, 2003 and 5
for the year ended December 31, 2002 6

(2) Unaudited Pro Forma Consolidating Balance Sheets
as of September 30, 2003 7

(3) Notes to Unaudited Pro Forma Consolidating
Financial Statements 8

(4) Unaudited Pro Forma Funds from Operations 9






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TANGER FACTORY OUTLET CENTERS, INC.
PRO FORMA CONSOLIDATING FINANCIAL STATEMENTS




The accompanying unaudited Pro Forma Consolidating Financial Statements have
been derived from the historical statements of the Company and give effect to
the proposed acquisition of the Charter Oak Properties, which is expected to
close in December 2003. The unaudited Pro Forma Consolidating Statements of
Operations for the nine months ended September 30, 2003 and the year ended
December 31, 2002 assume the acquisition had occurred as of January 1, 2002. The
unaudited Pro forma Consolidating Balance Sheet assumes the acquisition had
occurred on September 30, 2003.

The Charter Oak Properties are being acquired by COROC for a purchase price of
$491.0 million, including the assumption of $187.1 million of debt. We will be
required to fund one-third of the net acquisition costs plus closing costs and
certain other escrows and reserves, collectively estimated to be $107.9 million.
Blackstone will be required to contribute the remaining $215.8 million. The Pro
Forma Consolidating Financial Statements reflect our assumption that we will
issue 2.3 million common shares with net proceeds of approximately $88.0 million
and borrow an additional $19.9 million under our existing lines of credit to
fund our investment. There can be no assurance that closing on the transaction
will actually occur or that we will be able to issue the common shares to fund
our transaction.

The accompanying unaudited Pro Forma Consolidating Financial Statements reflect
a preliminary allocation of the purchase price under Statement of Financial
Accounting Standards No. 141, "Business Combinations" ("FAS 141"). This
allocation is subject to final adjustment following the acquisition. Included in
the allocation is $76.8 million allocated to lease related intangible assets.
The ultimate allocation and estimated useful lives could change upon final
valuation of these lease related intangibles. The Company expects to finalize
the valuation following the consummation of the transaction. Changes in the
allocation of the purchase price and/or estimated useful lives from those used
in the Pro Forma Consolidating Financial Statements would result in an increase
or decrease in pro forma net income and related pro forma earnings per share.
Further, the Pro Forma Consolidating Financial Statements reflect the
consolidation of the Charter Oak Properties as if it is a Variable Interest
Entity and we are the Primary Beneficiary under FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities" ("FIN 46"). Currently, there are
proposed amendments to FIN 46 that may ultimately lead us to conclude that we
should account for our investment in COROC under the equity method of accounting
in accordance with Accounting Principles Board Opinion No. 18, "The Equity
Method of Accounting for Investments in Common Stock".

Certain amounts in the historical financial statements of the Company for the
year ended December 31, 2002 have been reclassified to reflect the requirements
of Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("FAS 144"). FAS 144 requires that
results of operations and gains and losses from the sale of properties to be
reclassified as discontinued operations for all periods presented.

The unaudited Pro Forma Consolidating Financial Statements have been prepared by
the Company's management. These pro forma statements may not be indicative of
the results that would have actually occurred if the acquisition had been in
effect on the dates indicated, nor do they purport to represent the results of

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operations for future periods. The unaudited Pro Forma Consolidating Financial
Statements should be read in conjunction with the unaudited Combined Statement
of Revenues and Certain Operating Expenses of the Charter Oak Properties for the
nine months ended September 30, 2003 and the audited Combined Statement of
Revenues and Certain Operating Expenses of the Charter Oak Properties for the
year ended December 31, 2002 (both of which are contained in the Company's
Current Report on Form 8-K, dated December 8, 2003), the Company's unaudited
financial statements and notes thereto as of September 30, 2003 and for the nine
months then ended (which are contained in the Company's Form 10-Q for the period
ended September 30, 2003), and the Company's audited financial statements and
notes thereto as of December 31, 2002 and for the year then ended (which are
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002).


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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATING STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 2003
(Unaudited)
(In thousands, except per share data)


The Charter Pro forma Pro forma
Company Oak Adjustments Consolidated
- ----------------------------------------------------------------------------------------------------------------------------
(a) (b)
REVENUES

Base rentals $ 59,498 $ 37,203 $ (998)(c) $ 95,703
Percentage rentals 1,743 1,085 2,828
Expense reimbursements 25,305 13,551 38,856
Other income 2,547 187 2,734
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues 89,093 52,026 (998) 140,121
- ----------------------------------------------------------------------------------------------------------------------------
EXPENSES
Property operating 30,135 13,611 43,746
General and administrative 7,375 487 874 (d) 8,736
Interest 19,707 - 7,559 (e) 27,266
Depreciation and amortization 21,463 - 16,746 (f) 38,209
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses 78,680 14,098 25,179 117,957
- ----------------------------------------------------------------------------------------------------------------------------
Income before equity in earnings of unconsolidated joint
ventures, minority interest and discontinued operations 10,413 37,928 (26,177) 22,164
Equity in earnings of unconsolidated joint ventures 639 639
Minority interests:
Consolidated joint venture - (19,424)(g) (19,424)
Operating partnership (2,415) 1,897 (g) (518)
- ----------------------------------------------------------------------------------------------------------------------------
Income from continuing operations $ 8,637 $ 37,928 $ (43,704) $ 2,861
- ----------------------------------------------------------------------------------------------------------------------------

Basic earnings per common share:
Income from continuing operations $ .80 $ .17
Weighted average shares 9,729 2,300 (h) 12,029
- ----------------------------------------------------------------------------------------------------------------------------

Diluted earnings per common share:
Income from continuing operations $ .79 $ .17
Weighted average shares 9,958 2,300 (h) 12,258
- ----------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these unaudited pro forma consolidating financial statements.


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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATING STATEMENTS OF OPERATIONS
Year Ended December 31, 2002
(Unaudited)
(In thousands, except per share data)


The Charter Pro forma Pro forma
Company Oak Adjustments Consolidated
- ----------------------------------------------------------------------------------------------------------------------------
(i) (b)
REVENUES

Base rentals $ 75,560 $ 49,718 $ (1,330)(c) $ 123,948
Percentage rentals 3,558 1,838 5,396
Expense reimbursements 30,477 18,709 49,186
Other income 3,303 514 3,817
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues 112,898 70,779 $ (1,330) 182,347
- ----------------------------------------------------------------------------------------------------------------------------
EXPENSES
Property operating 35,898 18,727 54,625
General and administrative 9,227 822 1,165 (d) 11,214
Interest 28,460 - 10,331 (e) 38,791
Depreciation and amortization 28,551 - 22,328 (f) 50,879
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses 102,136 19,549 33,824 155,509
- ----------------------------------------------------------------------------------------------------------------------------
Income before equity in earnings of unconsolidated joint
ventures, minority interest and discontinued operations 10,762 51,230 (35,154) 26,838
Equity in earnings of unconsolidated joint ventures 392 392
Minority interests:
Consolidated joint venture - (25,898)(g) (25,898)
Operating partnership (2,438) 2,536 (g) 98
- ----------------------------------------------------------------------------------------------------------------------------
Income from continuing operations $ 8,716 $ 51,230 $ (58,516) $ 1,430
- ----------------------------------------------------------------------------------------------------------------------------

Basic earnings per common share:
Income from continuing operations $ .83 $ (.03)
Weighted average shares 8,322 2,300 (h) 10,622
- ----------------------------------------------------------------------------------------------------------------------------

Diluted earnings per common share:
Income from continuing operations $ .81 $ (.03)
Weighted average shares 8,514 2,300 (h) 10,814
- ----------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these unaudited pro forma consolidating financial statements.


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TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATING BALANCE SHEET
As of September 30, 2003
(Unaudited)
(In thousands)

The Charter Pro forma
Company Oak Consolidated
- --------------------------------------------------------------------------------------------------------------

ASSETS (a)
Rental Property

Land $ 50,474 $ 70,100 (j) $ 120,574
Buildings, improvements and fixtures 583,269 367,792 (j) 951,061
- --------------------------------------------------------------------------------------------------------------
633,743 437,892 1,071,635
Accumulated depreciation (191,628) (191,628)
- --------------------------------------------------------------------------------------------------------------
Rental property, net 442,115 437,892 880,007
Cash and cash equivalents 209 209
Deferred charges, net 9,398 76,817 (j) 86,215
Other assets 13,666 8,636 (k) 22,302
- --------------------------------------------------------------------------------------------------------------
Total assets $ 465,388 $ 523,345 $ 988,733
- --------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Debt
Senior, unsecured notes $ 147,509 $ 147,509
Mortgages payable 172,552 199,617 (l) 372,169
Lines of credit 7,272 19,916 (m) 27,188
- --------------------------------------------------------------------------------------------------------------
327,333 219,533 546,866
Construction trade payables 7,188 7,188
Accounts payable and accrued expenses 13,949 13,949
- --------------------------------------------------------------------------------------------------------------
Total liabilities 348,470 219,533 568,003
- --------------------------------------------------------------------------------------------------------------
Commitments
Minority interests:
Consolidated joint venture 215,819 (n) 215,819
Operating partnership 26,202 26,202
- --------------------------------------------------------------------------------------------------------------
Total minority interest 26,202 215,819 242,021
- --------------------------------------------------------------------------------------------------------------

Shareholders' equity
Common Stock 105 23 (h) 128
Paid in capital 171,747 87,970 (h) 259,717
Distributions in excess of net income (81,063) (81,063)
Accumulated other comprehensive loss (73) (73)
- --------------------------------------------------------------------------------------------------------------
Total shareholders' equity 90,716 87,993 178,709
- --------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 465,388 $ 523,345 $ 988,733
- --------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these unaudited pro forma consolidating financial statements.


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Notes to Pro Forma Consolidating Financial Statements

a) As reported in the unaudited consolidated financial statements of Tanger
Factory Outlet Centers, Inc. as of or for the nine months ended September
30, 2003.
b) Derived from the Combined Statements of Revenues and Certain Operating
Expenses of the Charter Oak Properties (contained herein).
c) To reflect amortization of the portion of the purchase price assigned to
above and below market leases in accordance with FAS 141.
d) To reflect estimated incremental personnel and overhead costs to be
incurred as a result of the acquisition.
e) To reflect interest expense from (1) the assumption of debt with a face
value of $187.1 million ($199.6 million fair value, 4.97% imputed interest
rate) and (2) additional borrowings under existing lines of credit of $19.9
million at LIBOR plus 160 basis points (assumed to be 2.7%). A 1% increase
or decrease in the LIBOR rate would equal $199,000.
f) To reflect depreciation and amortization based on an acquisition price of
$491.0 million (including debt assumption of $187.1 million and cash paid
to seller of $303.9), plus closing costs of $11.2 million and a market
value debt premium of $12.5 million. Estimated lives used are 35 years for
buildings, 4 to 24 years for site improvements, 10 years for lease in-place
value, and remaining leases terms for tenant improvements and other lease
related intangibles.
g) To reflect minority interest in net income.
h) To reflect the issuance of 2.3 million common shares in December 2003 with
net proceeds of $88.0 million as part of the funding of the acquisition of
the Charter Oak properties.
i) Derived from the audited consolidated financial statements of Tanger
Factory Outlet Centers, Inc. for the year ended December 31, 2002, as
reclassified from that previously reported to reflect the requirements of
FAS 144.
j) To reflect total acquisition costs of $514.7 million, including purchase
price of $491.0 million (including debt assumption of $187.1 million and
cash paid to seller of $303.9 million) plus estimated closing costs of
$11.2 million and market value debt premium of $12.5 million. In accordance
with FAS 141, a portion of the acquisition costs have been allocated to
deferred charges to reflect the fair value of in-place leases and other
related intangibles.
k) To reflect initial escrows for insurance and real estate taxes and other
working capital reserves expected to be funded at the closing of the
acquisition.
l) To reflect the assumption of debt with a face value of $187.1 million and
fair value of $199.6 million.
m) Represents additional borrowings under existing lines of credit to be used
along with the proceeds from the expected common share offering to fund the
acquisition.
n) To reflect the minority interest in the consolidated joint venture which
will own the Charter Oak Properties.


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FUNDS FROM OPERATIONS

Funds from operations, or "FFO," represents income before extraordinary items
and gains (losses) on sale or disposal of depreciable operating properties, plus
depreciation and amortization uniquely significant to real estate and after
adjustments for unconsolidated partnerships and joint ventures.

FFO is intended to exclude GAAP historical cost depreciation of real estate,
which assumes that the value of real estate assets diminish ratably over time.
Historically, however, real estate values have risen or fallen with market
conditions. Because FFO excludes depreciation and amortization unique to real
estate, gains and losses from property dispositions and extraordinary items, it
provides a performance measure that, when compared year over year, reflects the
impact to operations from trends in occupancy rates, rental rates, operating
costs, development activities and interest costs, providing perspective not
immediately apparent from net income.

We present FFO because we consider it an important supplemental measure of our
operating performance and believe it is frequently used by securities analysts,
investors and other interested parties in the evaluation of real estate
investment trusts, or "REITs", many of which present FFO when reporting their
results. FFO is widely used by us and others in our industry to evaluate and
price potential acquisition candidates. The National Association of Real Estate
Investment Trusts, Inc., of which we are a member, has encouraged its member
companies to report their FFO as a supplemental, industry-wide standard measure
of REIT operating performance. In addition, our employment agreements with
certain members of management base bonus compensation on our FFO performance.

FFO has significant limitations as an analytical tool, and you should not
consider it in isolation, or as a substitute for analysis of our results as
reported under GAAP. Some of these limitations are:

o FFO does not reflect our cash expenditures, or future requirements, for
capital expenditures or contractual commitments;

o FFO does not reflect changes in, or cash requirements for, our working
capital needs;

o Although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the
future, and FFO does not reflect any cash requirements for such
replacements;

o FFO may reflect the impact of earnings or charges resulting from matters
which may not to be indicative of our ongoing operations; and

o Other companies in our industry may calculate FFO differently than we do,
limiting its usefulness as a comparative measure.

Because of these limitations, FFO should not be considered as a measure of
discretionary cash available to us to invest in the growth of our business or
our dividend paying capacity. We compensate for these limitations by relying
primarily on our GAAP results and using FFO only supplementally.



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The following tables represent a reconciliation of the unaudited pro forma FFO
to unaudited pro forma income from continuing operations for the nine months
ended September 30, 2003 and the year ended December 31, 2002 after giving
effect to the acquisition of the Charter Oak Properties (in thousands, except
per share data):



The Charter Pro forma Pro forma
Company Oak Adjustments Consolidated
- ----------------------------------------------------------------------------------------------------------------------------------

For the nine months ended September 30, 2003
Funds from Operations:

Income from continuing operations $ 8,637 $ 37,928 $ (43,704) $ 2,861
Discontinued operations (619) - (32) (651)
Minority interest in operating partnership 2,415 (1,897) 518
Minority interest, depreciation and amortization
attributable to discontinued operations (107) 32 (75)
Depreciation and amortization uniquely significant to real estate
- consolidated 21,252 16,746 37,998
Depreciation and amortization uniquely significant to real estate
- unconsolidated joint ventures 808 808
Loss/(gain) on sale of real estate 735 735
- ----------------------------------------------------------------------------------------------------------------------------------
Funds from operations $ 33,121 $37,928 $ (28,855) $ 42,194
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average shares 13,424 2,300 15,724
- ----------------------------------------------------------------------------------------------------------------------------------
Funds from operations per share - diluted $ 2.47 $ 2.68
- ----------------------------------------------------------------------------------------------------------------------------------

For the year ended December 31, 2002
Funds from Operations:
Income from continuing operations $ 8,716 $ 51,230 $ (58,516) $ 1,430
Discontinued operations 2,291 140 2,431
Minority interest in operating partnership 2,438 (2,536) (98)
Minority interest, depreciation and amortization
attributable to discontinued operations 1,273 (140) 1,133
Depreciation and amortization uniquely significant to real estate
- consolidated 28,257 22,328 50,585
Depreciation and amortization uniquely significant to real estate
- unconsolidated joint ventures 422 422
Loss/(gain) on sale of real estate (1,702) (1,702)
- ----------------------------------------------------------------------------------------------------------------------------------
Funds from operations $ 41,695 $51,230 $ (38,724) $ 54,201
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average shares 12,271 2,300 14,571
- ----------------------------------------------------------------------------------------------------------------------------------
Funds from operations per share - diluted $ 3.40 $ 3.72
- ----------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused the report to be signed its behalf by the
undersigned thereunto duly authorized.


TANGER FACTORY OUTLET CENTERS, INC.

By: /s/ Frank C. Marchisello, Jr.
Frank C. Marchisello, Jr.
Executive Vice President, Chief Financial Officer



Date: December 12, 2003


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