-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A0vOst2Urf01AfJZrCMtsxbFecBVJEw8/P+VZXkehT4LpjJpOOa08jpGcRyW9pAA cBdACx6DM24TcIgmQwLZIw== 0000899715-03-000199.txt : 20031212 0000899715-03-000199.hdr.sgml : 20031212 20031212095640 ACCESSION NUMBER: 0000899715-03-000199 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20031212 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TANGER FACTORY OUTLET CENTERS INC CENTRAL INDEX KEY: 0000899715 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 561815473 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11986 FILM NUMBER: 031050802 BUSINESS ADDRESS: STREET 1: 3200 NORTHLINE AVENUE SUITE 360 CITY: GREENSBORO STATE: NC ZIP: 27408 BUSINESS PHONE: 3362923010 MAIL ADDRESS: STREET 1: 3200 NORTHLINE AVENUE SUITE 360 CITY: GREENSBORO STATE: NC ZIP: 27408 8-K/A 1 tfocform8ka121203.txt TFOC FORM 8K-A 121203 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) 1 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 2 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 3 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). 4
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.
7 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. 8 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. 9 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 - ----------------------------------------------------------------------------------------------------------------------------------
10 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 11 -----END PRIVACY-ENHANCED MESSAGE-----