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FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-11986

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

NORTH CAROLINA 56-1815473
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

3200 Northline Avenue, Suite 360, Greensboro, North Carolina 27408
(Address of principal executive offices)
(Zip code)

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



Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No


9,364,665 shares of Common Stock,
$.01 par value, outstanding as of April 30, 2003


1



TANGER FACTORY OUTLET CENTERS, INC.

Index

Part I. Financial Information

Page Number

Item 1. Financial Statements (Unaudited)

Consolidated Statements of Operations
For the three months ended March 31, 2003 and 2002 3

Consolidated Balance Sheets
As of March 31, 2003 and December 31, 2002 4

Consolidated Statements of Cash Flows
For the three months ended March 31, 2003 and 2002 5

Notes to Consolidated Financial Statements 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13

Item 3. Quantitative and Qualitative Disclosures about Market Risk 23

Item 4. Controls and Procedures 24

Part II. Other Information

Item 1. Legal proceedings 25

Item 6. Exhibits and Reports on Form 8-K 25

Signatures 25


2






TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

Three Months Ended
March 31,
2003 2002
- ----------------------------------------------------------------------------------------------
(unaudited)
REVENUES

Base rentals $19,661 $18,066
Percentage rentals 395 597
Expense reimbursements 8,450 7,260
Other income 671 564
- ----------------------------------------------------------------------------------------------
Total revenues 29,177 26,487
- ----------------------------------------------------------------------------------------------
EXPENSES
Property operating 10,017 8,611
General and administrative 2,430 2,275
Interest 6,724 7,129
Depreciation and amortization 7,329 7,066
- ----------------------------------------------------------------------------------------------
Total expenses 26,500 25,081
- ----------------------------------------------------------------------------------------------
Income before equity in earnings of unconsolidated joint ventures,
minority interest and discontinued operations 2,677 1,406
Equity in earnings of unconsolidated joint ventures 92 8
Minority interest (578) (252)
- ----------------------------------------------------------------------------------------------
Income from continuing operations 2,191 1,162
Discontinued operations --- 283
- ----------------------------------------------------------------------------------------------
Net income 2,191 1,445
Less applicable preferred share dividends (443) (444)
- ----------------------------------------------------------------------------------------------
Net income available to common shareholders $1,748 $1,001
- ----------------------------------------------------------------------------------------------

Basic earnings per common share:
Income from continuing operations $.19 $.09
Net income $.19 $.13
- ----------------------------------------------------------------------------------------------

Diluted earnings per common share:
Income from continuing operations $.19 $.09
Net income $.19 $.12
- ----------------------------------------------------------------------------------------------

Dividends paid per common share $.6125 $.6100
- ----------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated financial
statements.



3






TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

March 31, December 31,
2003 2002
- -----------------------------------------------------------------------------------------------
(unaudited)
ASSETS
Rental Property

Land $51,274 $51,274
Buildings, improvements and fixtures 581,074 571,125
Developments under construction 692 ---
- ------------------------------------------------------------------------------------------------
633,040 622,399
Accumulated depreciation (180,996) (174,199)
- ------------------------------------------------------------------------------------------------
Rental property, net 452,044 448,200
Cash and cash equivalents 209 1,072
Deferred charges, net 9,648 10,104
Other assets 13,424 18,299
- ------------------------------------------------------------------------------------------------
Total assets $475,325 $477,675
- ------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Long-term debt
Senior, unsecured notes $148,009 $150,109
Mortgages payable 173,811 174,421
Lines of credit 19,319 20,475
- ------------------------------------------------------------------------------------------------
341,139 345,005
Construction trade payables 7,560 3,310
Accounts payable and accrued expenses 12,070 15,095
- ------------------------------------------------------------------------------------------------
Total liabilities 360,769 363,410
- ------------------------------------------------------------------------------------------------
Commitments and contingencies
Minority interest 23,245 23,630
- ------------------------------------------------------------------------------------------------
Shareholders' equity
Preferred shares, $.01 par value, 1,000,000 shares authorized,
80,190 shares issued and outstanding
at March 31, 2003 and December 31, 2002 1 1
Common shares, $.01 par value, 50,000,000 shares authorized,
9,299,665 and 9,061,025 shares issued and outstanding
at March 31, 2003 and December 31, 2002 93 90
Paid in capital 165,641 161,192
Distributions in excess of net income (74,324) (70,485)
Accumulated other comprehensive loss (100) (163)
- ------------------------------------------------------------------------------------------------
Total shareholders' equity 91,311 90,635
- ------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $475,325 $477,675
- ------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated financial
statements.



4






TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Three Months Ended
March 31,
2003 2002
- -----------------------------------------------------------------------------------------
(unaudited)
OPERATING ACTIVITIES

Net income $ 2,191 $ 1,445
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 7,329 7,173
Amortization of deferred financing costs 314 343
Equity in earnings of unconsolidated joint ventures (92) (8)
Minority interest 578 382
Compensation under Unit Option Plan 26 ---
Straight-line base rent adjustment 57 41
Increase (decrease) due to changes in:
Other assets 1,470 1,649
Accounts payable and accrued expenses (2,931) (4,909)
- -----------------------------------------------------------------------------------------
Net cash provided by operating activites 8,942 6,116
- -----------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to rental property (1,690) (1,725)
Acquisition of rental property (4,700) ---
Additions to investments in unconsolidated joint ventures (952) (15)
Additions to deferred lease costs (297) (437)
Decrease in escrow from rental property purchase 4,006 ---
Distributions received from unconsolidated joint ventures 300 ---
Collections from officers --- 92
- -----------------------------------------------------------------------------------------
Net cash used in investing activities (3,333) (2,085)
- -----------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Cash dividends paid (6,030) (5,281)
Distributions to minority interest (1,858) (1,850)
Proceeds from issuance of debt 23,119 34,062
Repayments of debt (26,985) (32,686)
Additions to deferred financing costs (18) (3)
Proceeds from exercise of share and unit options 5,300 1,422
- -----------------------------------------------------------------------------------------
Net cash used in financing activities (6,472) (4,336)
- -----------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (863) (305)
Cash and cash equivalents, beginning of period 1,072 515
- -----------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 209 $ 210
- -----------------------------------------------------------------------------------------

Supplemental schedule of non-cash investing activities:
We purchase capital equipment and incur costs relating to construction of
new facilities, including tenant finishing allowances. Expenditures included in
construction trade payables as of March 31, 2003 and 2002 amounted to $7,560 and
$3,934, respectively.

The accompanying notes are an integral part of these consolidated financial
statements.



5



TANGER FACTORY OUTLET CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
(Unaudited)

1. Business

Tanger Factory Outlet Centers, Inc., a fully-integrated, self-administered,
self-managed real estate investment trust ("REIT"), develops, owns, operates and
manages factory outlet centers. At March 31, 2003, we operated 34 centers in 21
states totaling 6.2 million square feet. The factory outlet centers and other
assets of the Company's business are held by, and all of its operations are
conducted by, Tanger Properties Limited Partnership. Unless the context
indicates otherwise, the term the "Company" refers to Tanger Factory Outlet
Centers, Inc. and the term "Operating Partnership" refers to Tanger Properties
Limited Partnership. The terms "we", "our" and "us" refer to the Company or the
Company and the Operating Partnership together, as the context requires.

2. Basis of Presentation

Our unaudited consolidated financial statements have been prepared pursuant to
accounting principles generally accepted in the United States of America and
should be read in conjunction with the consolidated financial statements and
notes thereto of our Annual Report on Form 10-K for the year ended December 31,
2002. Certain information and note disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to the
Securities and Exchange Commission's ("SEC") rules and regulations, although
management believes that the disclosures are adequate to make the information
presented not misleading.

The accompanying unaudited consolidated financial statements reflect, in the
opinion of management, all adjustments necessary for a fair presentation of the
interim consolidated financial statements. All such adjustments are of a normal
and recurring nature.

Investments in real estate joint ventures that represent non-controlling
ownership interests are accounted for using the equity method of accounting.
These investments are recorded initially at cost and subsequently adjusted for
our net equity in the venture's income (loss) and cash contributions and
distributions. Our investments are included in other assets in our Consolidated
Balance Sheets.

Certain amounts in the 2002 consolidated financial statements have been
reclassified to conform to the 2003 presentation. See Footnote 5.



6



3. Summary of Significant Accounting Policies

The Company has a non-qualified and incentive share option plan (the "Share
Option Plan") and the Operating Partnership has a non-qualified Unit option plan
(the "Unit Option Plan"). Prior to 2003, these plans were accounted for under
the recognition and measurement provisions of APB Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations. No share-based
employee compensation cost was reflected in 2002 net income, as all options
granted under those plans had an exercise price equal to the market value of the
underlying common share on the date of grant. Effective January 1, 2003, we
adopted the fair value recognition provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS
123"). Under the modified prospective method of adoption selected by us under
the provisions of Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation-Transition and Disclosure",
compensation cost recognized in 2003 is the same as that which would have been
recognized had the recognition provisions of FAS 123 been applied from its
original effective date. Results for prior periods have not been restated. The
following table illustrates the effect on net income and earnings per share if
the fair value based method had been applied to all outstanding and unvested
awards in each period (in thousands except per share data):

Three Months Ended
March 31, March 31,
2003 2002
--------------------------------------------------------- ---------- ----------

Net income $2,191 $1,445
Add: Stock-based employee compensation expense included
in net income, net of minority interest of $6 20 ---
Less: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of minority interest of $6 (20) (30)
and $11, respectively
--------------------------------------------------------- ---------- ----------
Pro forma net income $2,191 $1,415
--------------------------------------------------------- ---------- ----------
Earnings per share:
Basic - as reported $ .19 $ .13
Basic - pro forma .19 .12

Diluted - as reported .19 .12
Diluted - pro forma $ .19 $ .12
--------------------------------------------------------- ---------- ----------


4. Acquisition and Development of Owned Rental Properties

In January 2003, we acquired a 29,000 square foot, 100% leased expansion located
contiguous with our existing factory outlet center in Sevierville, Tennessee for
$4.7 million. Construction of an additional 35,000 square foot expansion of the
center is currently under way, with stores expected to begin opening during the
summer of 2003.

Commitments to complete construction of the expansions to the existing
properties and other capital expenditure requirements amounted to approximately
$2.3 million at March 31, 2003. Commitments for construction represent only
those costs contractually required to be paid by us.

Interest costs capitalized during the three months ended March 31, 2003 and 2002
amounted to $14,000 and $79,000, respectively.


7



5. Disposition of Owned Rental Properties

In June and November 2002, respectively, we completed the sale of two of our
non-core properties located in Ft. Lauderdale, Florida and Bourne,
Massachusetts. Net proceeds received from the sales of these properties were
approximately $19.9 million. We retained management responsibility for the
Bourne center after the completion of the sale, however these responsibilities
are not considered a significant interest in the property. Management fees
received were immaterial.

In August and December 2002, respectively, we sold two outparcels of land which
had related land leases with identifiable cash flows, at two properties in our
portfolio. These sales totaled $700,000 in net proceeds.

In accordance with Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144"),
results of operations and gain/(loss) on sales of real estate for properties
with identifiable cash flows sold subsequent to December 31, 2001 are reflected
in the Consolidated Statements of Operations as discontinued operations for all
periods presented. Below is a summary of the results of operations of these
properties (in thousands):

Three Months Ended
March 31,
2002
----------------------------------------------------- -----------
Revenues:
Base rentals $ 523
Expense reimbursements 189
Other income 1
----------------------------------------------------- -----------
Total revenues 713
----------------------------------------------------- -----------
Expenses:
Property operating 193
Depreciation and amortization 107
----------------------------------------------------- -----------
Total expenses 300
----------------------------------------------------- -----------
Discontinued operations before minority interest 413
Minority Interest (130)
----------------------------------------------------- -----------
Discontinued operations $283
----------------------------------------------------- -----------



8





6. Investments in Real Estate Joint Ventures

In September 2001, we established Tanger-Warren Myrtle Beach, LLC ("TWMB"), a
joint venture in which we have a 50% ownership interest with Rosen-Warren Myrtle
Beach LLC ("Rosen-Warren") as our venture partner. We and Rosen-Warren each
contributed $4.3 million in cash for a total initial equity in TWMB of $8.6
million. In September 2001, TWMB began construction on the first phase of a new
400,000 square foot Tanger Outlet Center in Myrtle Beach, South Carolina. The
first phase opened 100% leased on June 28, 2002 at a cost of approximately $35.4
million with approximately 260,000 square feet and 60 brand name outlet tenants.
In November 2002, we began construction on a 64,000 square foot second phase
which is estimated to cost $6.5 million. We and Rosen-Warren have contributed
approximately $1.1 million each toward this second phase which will contain
approximately 22 additional brand name outlet tenants. Stores in this phase will
begin opening in May 2003. Construction commitments at TWMB amounted to
approximately $1.2 million at March 31, 2003. Commitments for construction
represent only those costs contractually required to be paid.

In conjunction with the construction of the center, TWMB closed on a
construction loan in September 2001 in the amount of $36.2 million with Bank of
America, NA (Agent) and SouthTrust Bank due in August 2004. As of March 31,
2003, the construction loan had a $25.7 million balance. In August 2002, TWMB
entered into an interest rate swap agreement with Bank of America, NA effective
through August 2004 with a notional amount of $19 million. Under this agreement,
TWMB receives a floating interest rate based on the 30 day LIBOR index and pays
a fixed interest rate of 2.49%. This swap effectively changes the payment of
interest on $19 million of variable rate debt to fixed rate debt for the
contract period at a rate of 4.49%. TWMB pays interest on the balance of the
outstanding loan at a floating interest rate equal to Libor plus 2.00%. All debt
incurred by this unconsolidated joint venture is collateralized by its property
as well as joint and several guarantees by Rosen-Warren and us.

Our investment in unconsolidated real estate joint ventures as of March 31, 2003
and December 31, 2002 was $4.7 million and $3.9 million, respectively. These
investments are recorded initially at cost and subsequently adjusted for our net
equity in the venture's income (loss) and cash contributions and distributions.
Our investment in real estate joint ventures are included in other assets and
are also reduced by 50% of the profits earned for management, leasing and
development services we provided to the joint ventures. During the first quarter
of 2003, we recognized approximately $34,000 in management fees, $58,000 in
leasing fees and $13,000 in development fees from services provided to TWMB.

Summary unaudited financial information of joint ventures accounted for using
the equity method is as follows (in thousands):

March 31, December 31,
Summary Balance Sheets - Unconsolidated Joint Ventures: 2003 2002
------------------------------------------------------------------- -----------
Assets:
Investment properties at cost, net $34,670 $32,153
Cash and cash equivalents 100 514
Deferred charges, net 1,790 1,751
Other assets 1,500 1,491
------------------------------------------------------------------- -----------
Total assets $38,060 $35,909
------------------------------------------------------------------- -----------
Liabilities and Owners' Equity
Mortgage payable $25,705 $25,513
Construction trade payables 1,729 1,644
Accounts payable and other liabilities 868 522
------------------------------------------------------------------- -----------
Total liabilities 28,302 27,679
Owners' equity 9,758 8,230
------------------------------------------------------------------- -----------
Total liabilities and owners' equity $38,060 $35,909
------------------------------------------------------------------- -----------



9




Three Months
Summary Statements of Operations Ended March 31,
Unconsolidated Joint Ventures 2003 2002
-------------------------------------------------------- ---------

Revenues $1,727 $ 16
-------------------------------------------------------- ---------

Expenses:
Property operating 704 ---
General and administrative 17 ---
Interest 325 ---
Depreciation and amortization 528 ---
-------------------------------------------------------- ---------

Total expenses 1,574 ---
--------------------------------------------------------- ---------
Net income $ 153 16
-------------------------------------------------------- ---------


Tanger Factory Outlet Centers, Inc. share of:
-------------------------------------------------------- ---------
Net operating income $ 503 $ 8
Net income $ 92 $ 8
Depreciation (real estate related) $ 254 ---
-------------------------------------------------------- ---------


7. Other Comprehensive Income - Derivative Financial Instruments

During the first quarter of 2003 our interest rate swap, which had been
designated as a cash flow hedge, expired and therefore the fair value of the
swap became zero resulting in a change in fair value of $98,000. TWMB's interest
rate swap agreement has been designated as a cash flow hedge and is carried on
TWMB's balance sheet at fair value. At March 31, 2003, our portion of the fair
value of TWMB's hedge is recorded as a reduction to investment in joint ventures
of $153,000. For the three months ended March 31, 2003, the change in the fair
value of the derivative instruments are recorded as a $63,000 loss, net of
minority interest of $21,000, to accumulated other comprehensive income (loss).

Three Months Ended
March 31, March 31,
2003 2002
- ----------------------------------------------------- ----------- ------------

Net income $ 2,191 $1,445
- ----------------------------------------------------- ----------- ------------
Other comprehensive income (loss):
Change in fair value of our portion of
TWMB cash flow hedge,
net of minority interest of $3 (11) ---
Change in fair value of cash flow hedge,
net of minority interest of $24 and $82 74 209
- ----------------------------------------------------- ----------- ------------
Other comprehensive income (loss) 63 209
- ----------------------------------------------------- ----------- ------------
Total comprehensive income $ 2,254 $ 1,654
- ----------------------------------------------------- ----------- ------------


10



8. Earnings Per Share

The following table sets forth a reconciliation of the numerators and
denominators in computing earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings Per Share (in thousands, except
per share amounts):

Three Months Ended
March 31,
2003 2002
------------------------------------------------------- ------------ ---------
Numerator:
Income from continuing operations $2,191 $1,162
Less applicable preferred share dividends (443) (444)
------------------------------------------------------- ------------ ---------
Income from continuing operations available to
common shareholders - basic and diluted 1,748 718
Discontinued operations --- 283
------------------------------------------------------- ------------ ---------
Net income available to common shareholders -
basic and diluted $ 1,748 $1,001
------------------------------------------------------- ------------ ---------
Denominator:
Basic weighted average common shares 9,181 7,948
Effect of outstanding share and unit options 227 80
------------------------------------------------------- ------------ ---------
Diluted weighted average common shares 9,408 8,028
------------------------------------------------------- ------------ ---------

Basic earnings per common share:
Income from continuing operations $.19 $.09
Discontinued operations --- .04
------------------------------------------------------- ------------ ---------
Net income $.19 $.13
------------------------------------------------------- ------------ ---------

Diluted earnings per common share:
Income from continuing operations $.19 $.09
Discontinued operations --- .03
------------------------------------------------------- ------------ ---------
Net income $.19 $.12
------------------------------------------------------- ------------ ---------


The computation of diluted earnings per share excludes options to purchase
common shares when the exercise price is greater than the average market price
of the common shares for the period. Options excluded totaled 232,000 and
520,000 for the three months ended March 31, 2003 and 2002, respectively. The
assumed conversion of preferred shares to common shares as of the beginning of
the year would have been anti-dilutive. The assumed conversion of the
partnership units held by the minority interest limited partner as of the
beginning of the year, which would result in the elimination of earnings
allocated to the minority interest, would have no impact on earnings per share
since the allocation of earnings to a partnership unit is equivalent to earnings
allocated to a common share.


11



9. Subsequent Event

On May 2, 2003, we announced that we would call for redemption of all of our
outstanding Series A Cumulative Convertible Redeemable Preferred Shares (the
"Preferred Shares") held by the Preferred Stock Depositary. Our Board of
Directors has set June 20, 2003 as the redemption date on which all outstanding
Depositary Shares, each representing 1/10th of a Preferred Share will be
redeemed. The Preferred Stock Depositary will in turn call for redemption, as of
the same redemption date, all of the Preferred Shares. The redemption price will
be $250 per Preferred Share ($25 per Depositary Share), plus accrued and unpaid
dividends, if any, to, but not including, the redemption date.

In lieu of receiving the cash redemption price, holders of the Depositary Shares
may, at their option, convert each Depositary Share into .901 common shares by
following the instructions for, and completing the Notice of Conversion located
on the back of their Depositary Share certificates. Those Depositary Shares, and
the corresponding Preferred Shares, that are converted to common shares will not
receive accrued and unpaid dividends, if any, but will be entitled to receive
common dividends declared after the date on which the Depositary Shares are
converted to common shares.

On or after the redemption date, the Depositary Shares, and the corresponding
Preferred Shares, will no longer be deemed to be outstanding, dividends on the
Depositary Shares, and the corresponding Preferred Shares, will cease to
accrue, and all rights of the holders of the Depositary Shares, and the
corresponding Preferred Shares, will cease, except for the right to receive the
redemption price, without interest thereon, upon surrender of certificates
representing the Depositary Shares, and the corresponding Preferred Shares. As
of May 2, 2003, 80,190 Preferred Shares, representing approximately 801,897
Depositary Shares, were outstanding.

10. New Accounting Pronouncements

In April 2002, the Financial Accounting Standards Board (FASB or the "Board")
issued Statement of Financial Accounting Standards No. 145 (FAS 145),
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections". In rescinding FASB Statement No. 4 (FAS 4),
"Reporting Gains and Losses from Extinguishment of Debt", and FASB Statement No.
64 (FAS 64), "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements", FAS 145 eliminates the requirement that gains and losses from the
extinguishment of debt be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. Generally, FAS 145 is
effective for transactions occurring after December 31, 2002. We adopted this
statement effective January 1, 2003, and it had no effect on our results of
operations or financial position for the 2003 or 2002 periods.

In January of 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"). FIN 46 clarifies the application of
existing accounting pronouncements to certain entities in which equity investors
do not have the characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. The provisions of
FIN 46 will be immediately effective for all variable interests in variable
interest entities created after January 31, 2003, and the Company will need to
apply its provisions to any existing variable interests in variable interest
entities by no later than the beginning of the first interim reporting period
beginning after June 15, 2003. We are currently evaluating the effects of this
statement.


12





Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following discussion should be read in conjunction with the unaudited
consolidated financial statements appearing elsewhere in this report. Historical
results and percentage relationships set forth in the unaudited, Consolidated
Statements of Operations, including trends which might appear, are not
necessarily indicative of future operations. Unless the context indicates
otherwise, the term "Company" refers to Tanger Factory Outlet Centers, Inc. and
subsidiaries and the term "Operating Partnership" refers to Tanger Properties
Limited Partnership. The terms "we", "our" and "us" refer to the Company or the
Company and the Operating Partnership together, as the text requires.

The discussion of our results of operations reported in the unaudited
Consolidated Statements of Operations compares the three months ended March 31,
2003 with the three months ended March 31, 2002. Certain comparisons between the
periods are made on a percentage basis as well as on a weighted average gross
leasable area ("GLA") basis, a technique which adjusts for certain increases or
decreases in the number of centers and corresponding square feet related to the
development, acquisition, expansion or disposition of rental properties. The
computation of weighted average GLA, however, does not adjust for fluctuations
in occupancy which may occur subsequent to the original opening date.

Cautionary Statements

Certain statements made below are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We intend for such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Reform Act of 1995 and included
this statement for purposes of complying with these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words "believe", "expect", "intend", "anticipate", "estimate", "project",
or similar expressions. You should not rely on forward-looking statements since
they involve known and unknown risks, uncertainties and other factors which are,
in some cases, beyond our control and which could materially affect our actual
results, performance or achievements. Factors which may cause actual results to
differ materially from current expectations include, but are not limited to, the
following:

- national and local general economic and market conditions;

- demographic changes; our ability to sustain, manage or forecast our
growth; existing government regulations and changes in, or the failure
to comply with, government regulations;

- adverse publicity; liability and other claims asserted against us;

- competition;

- the risk that we may not be able to finance our planned development
activities;

- risks related to the retail real estate industry in which we compete,
including the potential adverse impact of external factors such as
inflation, tenant demand for space, consumer confidence, unemployment
rates and consumer tastes and preferences;

- risks associated with our development activities, such as the
potential for cost overruns, delays and lack of predictability with
respect to the financial returns associated with these development
activities;



13





- risks associated with real estate ownership, such as the potential
adverse impact of changes in the local economic climate on the
revenues and the value of our properties;

- risks that a significant number of tenants may become unable to meet
their lease obligations or that we may be unable to renew or re-lease
a significant amount of available space on economically favorable
terms;

- fluctuations and difficulty in forecasting operating results; changes
in business strategy or development plans;

- business disruptions;

- the ability to attract and retain qualified personnel;

- the ability to realized planned costs savings in acquisitions; and

- retention of earnings.


14



General Overview

At March 31, 2003, we have ownership interests in or management responsibilities
for 34 centers in 21 states totaling 6.2 million square feet compared to 32
centers in 20 states totaling 5.4 million square feet at March 31, 2002. The
activity in our portfolio of properties since March 31, 2002 is summarized
below:



No. of GLA
Centers (000's) States
- -------------------------------------------------------------- ----------- -----
As of March 31, 2002 32 5,437 20
- ------------------------------------------------------------ ------------ ------
New development:
Myrtle Beach, South Carolina (joint venture) 1 260 1
Acquisitions:
Howell, Michigan (wholly-owned) 1 325 ---
Vero Beach, Florida (managed) 1 329 ---
Bourne, Massachusetts (managed) 1 23 1
Sevierville, Tennessee (wholly-owned) --- 29 ---
Dispositions:
Fort Lauderdale, Florida (wholly-owned) (1) (165) ---
Bourne, Massachusetts (wholly-owned) (1) (23) (1)
Other --- (1) ---
- ------------------------------------------------------------ ------------ ------
As of March 31, 2003 34 6,214 21
- ------------------------------------------------------------ ------------ ------

A summary of the operating results for the three months ended March 31, 2003 and
2002 is presented in the following table, expressed in amounts calculated on a
weighted average GLA basis.

Three Months Ended
March 31,

2003 2002
- ------------------------------------------------------------------- ------------
GLA at end of period (000's):
Wholly owned 5,497 5,332
Partially owned (1) 260 ---
Managed 457 105
- ------------------------------------------------------------------- ------------

Total GLA at end of period (000's) 6,214 5,437
Weighted average GLA (000's) (2) 5,492 5,144
Occupancy percentage at end of period (1) 95% 95%
Per square foot for wholly owned properties
Revenues
Base rentals $ 3.58 $ 3.51
Percentage rentals .07 .12
Expense reimbursements 1.54 1.41
Other income .12 .11
- ------------------------------------------------------------------- ------------
Total revenues 5.31 5.15
- ------------------------------------------------------------------- ------------
Expenses
Property operating 1.82 1.67
General and administrative .44 .44
Interest 1.22 1.39
Depreciation and amortization 1.33 1.38
- ------------------------------------------------------------------- ------------
Total expenses 4.81 4.88
- ------------------------------------------------------------------- ------------
Income before equity in earnings of unconsolidated joint
ventures, minority interest and discontinued operations $ .50 $ .27
- ------------------------------------------------------------------- ------------
(1) Includes Myrtle Beach, South Carolina property which we operate through a
50% ownership joint venture.
(2) GLA of 100% owned properties weighted by months of operations. GLA is not
adjusted for fluctuations in occupancy that may occur subsequent to the
original opening date. Excludes GLA of properties for which their results
are included in discontinued operations.


15





The table set forth below summarizes certain information with respect to our
existing centers in which we have an ownership interest as of March 31, 2003.

Mortgage Debt
Outstanding
(000's) as of
GLA March 31, %
Date Opened Location (sq. ft.) 2003 Occupied
-------------------- ----------------------------- ------------ --- ------------ -------------

Aug. 1994 Riverhead, NY 729,238 --- 98
May 1993 San Marcos, TX 441,936 $37,789 100
Feb. 1997 (1) Sevierville, TN 382,854 --- 100
Dec. 1995 Commerce II, GA 342,556 29,500 93
Sept. 2002 (1) Howell, MI 325,231 --- 99
Nov. 1994 Branson, MO 277,494 24,000 97
May 1991 Williamsburg, IA 277,230 19,340 97
Jun. 2002 (2) Myrtle Beach, SC 260,033 --- 100
Oct. 1994 (1) Lancaster, PA 255,059 14,435 94
Nov. 1994 Locust Grove, GA 248,854 --- 99
Feb. 1993 Gonzales, LA 245,199 --- 97
Jul. 1998 (1) Fort Meyers, FL 198,789 --- 97
Jul. 1989 Commerce, GA 185,750 8,173 79
Feb. 1992 Casa Grande, AZ 184,768 --- 89
Aug. 1994 Terrell, TX 177,490 --- 96
Mar. 1998 (1) Dalton, GA 173,430 11,082 93
Sept. 1994 Seymour, IN 141,051 --- 74
Dec. 1992 North Branch, MN 134,480 --- 99
Feb. 1991 West Branch, MI 112,420 7,035 95
Jan. 1995 Barstow, CA 105,950 --- 72
Sept. 1997 (1) Blowing Rock, NC 105,448 9,622 94
Jul. 1988 Pigeon Forge, TN 94,558 --- 95
Sept. 1997 (1) Nags Head, NC 82,254 6,529 100
Jul. 1988 Boaz, AL 79,575 --- 95
Jun. 1986 Kittery I, ME 59,694 6,306 100
Apr. 1988 LL Bean, North Conway, NH 50,745 --- 91
Nov. 1987 Martinsburg, WV 49,252 --- 61
Jun. 1988 Kittery II, ME 24,703 --- 100
Mar. 1987 Clover, North Conway, NH 11,000 --- 100
-------------------- ----------------------------- ------------ --- ------------ ---------
Total 5,757,041 $173,811 95%
==================== ============================= ============ === ============ =========

(1) Represents date acquired by us.
(2) Represents center operated by us through a 50% ownership joint venture.
Mortgage debt outstanding as of March 31, 2003 on this property is $25.7
million.





16





RESULTS OF OPERATIONS

Comparison of the three months ended March 31, 2003 to the three months ended
March 31, 2002

Base rentals increased $1.6 million, or 9%, in the 2003 period when compared to
the same period in 2002. The increase is primarily due to the acquisition of the
Howell, Michigan center during the third quarter of 2002 and the additional GLA
acquired at our Sevierville, Tennessee center early during the first quarter of
2003. Base rent per weighted average GLA increased by $.07 per square foot from
$3.51 per square foot in the 2002 period compared to $3.58 per square foot in
the 2003 period. The increase is primarily the result of the addition of the
Howell, Michigan acquisition which had a higher average base rent per square
foot compared to the portfolio average. In addition, we had an increase in
termination revenue, a component of base rentals, of $159,000 during the 2003
period compared to 2002. While the overall portfolio occupancy at March 31, 2003
remained constant at 95% compared to March 31, 2002, one center experienced
negative occupancy trends which were offset by positive occupancy gains in other
centers.

Percentage rentals, which represent revenues based on a percentage of tenants'
sales volume above predetermined levels (the "breakpoint"), decreased $202,000
or 34%, and on a weighted average GLA basis, decreased $.05 per square foot in
2003 compared to 2002. Reported same-space sales per square foot for the rolling
twelve months ended March 31, 2003 were $293 per square foot. This represents a
0.3% decrease compared to the same period in 2002. Same-space sales is defined
as the weighted average sales per square foot reported in space open for the
full duration of each comparison period. Same-space sales for the three months
ended March 31, 2003 decreased 6.1% compared to the same period of 2002. Severe
winter conditions made road travel very difficult and caused retailers at our
centers to loose the equivalent of an aggregate 27 shopping days during the
first quarter. Additionally, Easter and the associated spring break vacations
occurred in April of this year, while occurring in March last year. Importantly,
we do not view the first quarter sales as being indicative of a trend going
forward.

Expense reimbursements, which represent the contractual recovery from tenants of
certain common area maintenance, insurance, property tax, promotional,
advertising and management expenses generally fluctuates consistently with the
reimbursable property operating expenses to which it relates. Expense
reimbursements, expressed as a percentage of property operating expenses, were
84% in both the 2003 and 2002 periods.

Other income increased $107,000, or 19%, in 2003 compared to 2002 and on a
weighted average GLA basis, increased $.01 per square foot from $.11 to $.12.
The increase is due primarily to increases in vending income.

Property operating expenses increased by $1.4 million, or 16%, in the 2003
period as compared to the 2002 period and, on a weighted average GLA basis,
increased $.15 per square foot from $1.67 to $1.82. The increase is the result
of the additional operating costs of the Howell, Michigan center that we
acquired in September as well as portfolio wide increases in snow removal and
property insurance costs.

General and administrative expenses increased $155,000, or 7%, in the 2003
period as compared to the 2002 period. The increase is primarily due to
increases in employee compensation. Also, as a percentage of total revenues,
general and administrative expenses were 8% and 9%, respectively in the 2003 and
2002 periods and, on a weighted average GLA basis remained constant at $.44 per
square foot in the 2003 and 2002 period.


17





Interest expense decreased $405,000, or 6%, during 2003 as compared to 2002 due
primarily to lower outstanding debt and lower average interest rates during
2003. Also during the first quarter of 2003, we purchased at a 2% premium, $2.1
million of our outstanding 7.875% senior, unsecured public notes that mature in
October 2004. The purchases were funded by amounts available under our unsecured
lines of credit. The replacement of the 2004 bonds with funding through lines of
credit provided us with additional interest expense reduction as the lines of
credit have a lower interest rate.

Depreciation and amortization per weighted average GLA decreased from $1.38 per
square foot in the 2002 period to $1.33 per square foot in the 2003 period due
to a lower mix of tenant finishing allowances included in buildings and
improvements which are depreciated over shorter lives (i.e. over lives generally
ranging from 3 to 10 years as opposed to other construction costs which are
depreciated over lives ranging from 15 to 33 years).

Net income from unconsolidated joint ventures increased $84,000 in the 2003
period compared to the 2002 period due to the opening of the Myrtle Beach, SC
outlet center by TWMB in June of 2002.

In accordance with SFAS 144 "Accounting for the Impairment or Disposal of Long
Lived Assets," effective for financial statements issued for fiscal years
beginning after December 15, 2001, results of operations and gain/ (loss) on
sales of real estate for properties sold subsequent to December 31, 2001 are
reflected in the Consolidated Statements of Operations as discontinued
operations for both periods presented. The decrease in discontinued operations
is due to the 2002 period reflecting the discontinued operations of the Ft.
Lauderdale, Florida and Bourne Massachusetts centers which were sold in 2002.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $8.9 million and $6.1 million for
the three months ended March 31, 2003 and 2002, respectively. The increase in
cash provided by operating activities is due primarily to the increase in
accounts payable and accrued expenses in 2003 compared to 2002. Net cash used in
investing activities was $3.3 and $2.1 million during the first three months of
2003 and 2002, respectively. Cash used was higher in 2003 primarily due to the
cash needed to pay for the acquisition of the expansion in the Sevierville,
Tennessee center and the additional investment in joint ventures. Net cash used
in financing activities was $6.5 million and $4.3 million during the first three
months of 2003 and 2002, respectively. Cash used was higher in 2003 due to
increased dividends in 2003 compared to 2002 and due to proceeds used to reduce
our overall debt at March 31, 2003.

Acquisitions and Dispositions

In January 2003, we acquired a 29,000 square foot, 100% leased expansion located
contiguous with our existing factory outlet center in Sevierville, Tennessee.
The purchase price was $4.7 million with an expected return of 10%. Construction
of an additional 35,000 square foot expansion of the center is currently under
way, with stores expected to begin opening during the summer of 2003. We expect
to complete the expansion at a cost of $4 million. Upon completion of the
expansion, the Sevierville center will total approximately 418,000 square feet.

Also, construction by TWMB of a 64,000 square foot second phase at the Tanger
Outlet Center in Myrtle Beach, South Carolina is proceeding as planned with
stores expected to open during the summer of 2003. Our capital investment in the
second phase is approximately $1.1 million with an expected return in excess of
20%.


18


Joint Ventures

In September 2001, we established the TWMB joint venture with respect to our
Myrtle Beach, South Carolina project with Rosen-Warren Myrtle Beach LLC
("Rosen-Warren"). We and Rosen-Warren, each as 50% owners, contributed $4.3
million in cash for a total initial equity in TWMB of $8.6 million. In September
2001, TWMB began construction on the first phase of a new 400,000 square foot
Tanger Outlet Center in Myrtle Beach, South Carolina. The first phase opened
100% leased on June 28, 2002 at a cost of approximately $35.4 million with
approximately 260,000 square feet and 60 brand name outlet tenants. In November
2002, we began construction on a 64,000 square foot second phase which is
estimated to cost $6.5 million. We and Rosen-Warren have contributed
approximately $1.1 million each toward this second phase which will contain
approximately 22 additional brand name outlet tenants. Stores in this phase will
begin opening in May 2003.

In conjunction with the construction of the center, TWMB closed on a
construction loan in September 2001 in the amount of $36.2 million with Bank of
America, NA (Agent) and SouthTrust Bank due in August 2004. As of March 31,
2003, the construction loan had a $25.7 million balance. In August 2002, TWMB
entered into an interest rate swap agreement with Bank of America, NA effective
through August 2004 with a notional amount of $19 million. Under this agreement,
TWMB receives a floating interest rate based on the 30 day LIBOR index and pays
a fixed interest rate of 2.49%. This swap effectively changes the payment of
interest on $19 million of variable rate debt to fixed rate debt for the
contract period at a rate of 4.49%. TWMB pays interest on the balance of the
outstanding loan at a floating interest rate equal to Libor plus 2.00%. All debt
incurred by this unconsolidated joint venture is collateralized by its property
as well as joint and several guarantees by Rosen-Warren and us. We do not expect
events to occur that would trigger the provisions of the guarantee because our
properties have historically produced sufficient cash flow to meet the related
debt service requirements.

Either partner in TWMB has the right to initiate the sale or purchase of the
other party's interest. If such action is initiated, one partner would determine
the fair market value purchase price of the venture and the other would
determine whether they would take the role of seller or purchaser. The partners'
roles in this transaction would be determined by the tossing of a coin, commonly
known as a Russian roulette provision. If either Rosen-Warren or we enact this
provision and depending on our role in the transaction as either seller or
purchaser, we can potentially incur a cash outflow for the purchase of
Rosen-Warren's interest. However, we do not expect this event to occur in the
near future based on the positive results and expectations of developing and
operating an outlet center in the Myrtle Beach area.

Any developments or expansions that we, or a joint venture that we are involved
in, have planned or anticipated may not be started or completed as scheduled, or
may not result in accretive funds from operations. In addition, we regularly
evaluate acquisition or disposition proposals and engage from time to time in
negotiations for acquisitions or dispositions of properties. We may also enter
into letters of intent for the purchase or sale of properties. Any prospective
acquisition or disposition that is being evaluated or which is subject to a
letter of intent may not be consummated, or if consummated, may not result in an
increase in net income or funds from operations (see "Funds from Operations").

Financing Arrangements

During the first quarter of 2003, we purchased at a 2% premium, $2.1 million of
our outstanding 7.875% senior, unsecured public notes that mature in October
2004. The purchases were funded by amounts available under our unsecured lines
of credit. These purchases were in addition to $24.9 million of the notes that
were purchased in 2001 and 2002.

At March 31, 2003, approximately 49% of our outstanding long-term debt
represented unsecured borrowings and approximately 61% of the gross book value
of our real estate portfolio was unencumbered. The average interest rate,
including loan cost amortization, on average debt outstanding for the three
months ended March 31, 2003 was 7.85%.


19



On May 2, 2003, we announced that we would call for redemption of all of our
outstanding Series A Cumulative Convertible Redeemable Preferred Shares (the
"Preferred Shares") held by the Preferred Stock Depositary. Our Board of
Directors has set June 20, 2003 as the redemption date on which all outstanding
Depositary Shares, each representing 1/10th of a Preferred Share will be
redeemed. The Preferred Stock Depositary will in turn call for redemption, as of
the same redemption date, all of the Preferred Shares. The redemption price will
be $250 per Preferred Share ($25 per Depositary Share), plus accrued and unpaid
dividends, if any, to, but not including, the redemption date.

In lieu of receiving the cash redemption price, holders of the Depositary Shares
may, at their option, convert each Depositary Share into .901 common shares by
following the instructions for, and completing the Notice of Conversion located
on the back of their Depositary Share certificates. Those Depositary Shares, and
the corresponding Preferred Shares, that are converted to common shares will not
receive accrued and unpaid dividends, if any, but will be entitled to receive
common dividends declared after the date on which the Depositary Shares are
converted to common shares.

Should all holders of the Depositary Shares elect to receive the redemption
proceeds, rather than convert their Depositary Shares to common shares, we would
be required to fund approximately $20 million to complete the redemption of all
the outstanding Depositary Shares.

On or after the redemption date, the Depositary Shares, and the corresponding
Preferred Shares, will no longer be deemed to be outstanding, dividends on the
Depositary Shares, and the corresponding Preferred Shares, will cease to
accrue, and all rights of the holders of the Depositary Shares, and the
corresponding Preferred Shares, will cease, except for the right to receive the
redemption price, without interest thereon, upon surrender of certificates
representing the Depositary Shares, and the corresponding Preferred Shares. As
of May 2, 2003, 80,190 Preferred Shares, representing approximately 801,897
Depositary Shares, were outstanding.

We intend to retain the ability to raise additional capital, including public
debt or equity, to pursue attractive investment opportunities that may arise and
to otherwise act in a manner that we believe to be in our best interest and our
shareholders' interests. To generate capital to reinvest into other attractive
investment opportunities, we may also consider the use of operational and
developmental joint ventures, selling certain properties that do not meet our
long-term investment criteria or selling outparcels on existing properties.

We maintain unsecured, revolving lines of credit that provided for unsecured
borrowings up to $85 million at March 31, 2003. All of our lines of credit have
maturity dates of June 30, 2004. We also have the ability through our shelf
registration to issue up to $400 million in either all debt or all equity or any
combination thereof up to $400 million. Based on cash provided by operations,
existing credit facilities, ongoing negotiations with certain financial
institutions and our ability to sell debt or equity subject to market
conditions, we believe that we have access to the necessary financing to fund
the planned capital expenditures during 2003.

We anticipate that adequate cash will be available to fund our operating and
administrative expenses, regular debt service obligations, and the payment of
dividends in accordance with REIT requirements in both the short and long term.
Although we receive most of our rental payments on a monthly basis,
distributions to shareholders are made quarterly and interest payments on the
senior, unsecured notes are made semi-annually. Amounts accumulated for such
payments will be used in the interim to reduce the outstanding borrowings under
the existing lines of credit or invested in short-term money market or other
suitable instruments.

On April 10, 2003, our Board of Directors declared a $.6150 cash dividend per
common share payable on May 15, 2003 to each shareholder of record on April 30,
2003, and caused a $.6150 per Operating Partnership unit cash distribution to be
paid to the minority interests. The Board of Directors also declared a cash
dividend of $.5540 per preferred depositary share payable on May 15, 2003 to
each shareholder of record on April 30, 2003.


20



New Accounting Pronouncements

In April 2002, the Financial Accounting Standards Board (FASB or the "Board")
issued Statement of Financial Accounting Standards No. 145 (FAS 145),
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections". In rescinding FASB Statement No. 4 (FAS 4),
"Reporting Gains and Losses from Extinguishment of Debt", and FASB Statement No.
64 (FAS 64), "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements", FAS 145 eliminates the requirement that gains and losses from the
extinguishment of debt be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. Generally, FAS 145 is
effective for transactions occurring after December 31, 2002. We adopted this
statement effective January 1, 2003, and it had no effect on our results of
operations or financial position for the 2003 or 2002 periods.

In January of 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"). FIN 46 clarifies the application of
existing accounting pronouncements to certain entities in which equity investors
do not have the characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. The provisions of
FIN 46 will be immediately effective for all variable interests in variable
interest entities created after January 31, 2003, and the Company will need to
apply its provisions to any existing variable interests in variable interest
entities by no later than the beginning of the first interim reporting period
beginning after June 15, 2003. We are currently evaluating the effects of this
statement.


21


Funds from Operations ("FFO")

We believe that for a clear understanding of our consolidated historical
operating results, FFO should be considered along with net income as presented
in the unaudited consolidated financial statements included elsewhere in this
report. FFO is presented because it is a widely accepted financial indicator
used by certain investors and analysts to analyze and compare one equity real
estate investment trust ("REIT") with another on the basis of operating
performance. FFO is generally defined as net income (loss), computed in
accordance with generally accepted accounting principles, 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.
We caution that the calculation of FFO may vary from entity to entity and as
such our presentation of FFO may not be comparable to other similarly titled
measures of other reporting companies. FFO does not represent net income or cash
flow from operations as defined by generally accepted accounting principles and
should not be considered an alternative to net income as an indication of
operating performance or to cash from operations as a measure of liquidity. FFO
is not necessarily indicative of cash flows available to fund dividends to
shareholders and other cash needs.

Below is a calculation of funds from operations for the three months ended March
31, 2003 and 2002 and other data for those respective periods (in thousands):



Three Months Ended
March 31,
2003 2002
- ---------------------------------------------------------------------- ------------ -----------
Funds from Operations:

Net income $ 2,191 $1,445
Adjusted for:
Minority interest 578 252
Minority interest, depreciation and amortization
attributable to discontinued operations --- 237
Depreciation and amortization uniquely significant to real estate -
wholly owned 7,255 6,993
Depreciation and amortization uniquely significant to real estate -
joint ventures 254 ---
- ---------------------------------------------------------------------- ------------ -----------
Funds from operations before minority interest $10,278 $8,927
- ---------------------------------------------------------------------- ------------ -----------
- ---------------------------------------------------------------------- ------------ -----------

Weighted average shares outstanding (1) 13,164 11,787
- ---------------------------------------------------------------------- ------------ -----------

(1) Assumes the partnership units of the Operating Partnership held by the
minority interest, preferred shares of the Company and share and unit
options are converted to common shares of the Company.




22



Economic Conditions and Outlook

The majority of our leases contain provisions designed to mitigate the impact of
inflation. Such provisions include clauses for the escalation of base rent and
clauses enabling us to receive percentage rentals based on tenants' gross sales
(above predetermined levels, which we believe often are lower than traditional
retail industry standards) that generally increase as prices rise. Most of the
leases require the tenant to pay their share of property operating expenses,
including common area maintenance, real estate taxes, insurance and advertising
and promotion, thereby reducing exposure to increases in costs and operating
expenses resulting from inflation.

While factory outlet stores continue to be a profitable and fundamental
distribution channel for brand name manufacturers, some retail formats are more
successful than others. As typical in the retail industry, certain tenants have
closed, or will close, certain stores by terminating their lease prior to its
natural expiration or as a result of filing for protection under bankruptcy
laws.

During 2003, we have approximately 1,070,000 square feet, or 19% of our
portfolio, coming up for renewal. If we were unable to successfully renew or
release a significant amount of this space on favorable economic terms, the loss
in rent could have a material adverse effect on our results of operations.

As of March 31, 2003, we have renewed approximately 539,000 square feet, or 50%
of the square feet scheduled to expire in 2003. The existing tenants have
renewed at an average base rental rate approximately 1% higher than the expiring
rate. We also re-tenanted 138,000 square feet of vacant space during the first
three months of 2003 at a 3% increase in the average base rental rate from that
which was previously charged. Our factory outlet centers typically include
well-known, national, brand name companies. By maintaining a broad base of
creditworthy tenants and a geographically diverse portfolio of properties
located across the United States, we reduce our operating and leasing risks. No
one tenant (including affiliates) accounted for more than 6.4% of our combined
base and percentage rental revenues for the three months ended March 31, 2003.
Accordingly, we do not expect any material adverse impact on our results of
operations and financial condition as a result of leases to be renewed or stores
to be released.

As of March 31, 2003 and 2002, our centers were 95% occupied. Consistent with
our long-term strategy of re-merchandising centers, we will continue to hold
space off the market until an appropriate tenant is identified. While we believe
this strategy will add value to our centers in the long-term, it may reduce our
average occupancy rates in the near term.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various market risks, including changes in interest rates.
Market risk is the potential loss arising from adverse changes in market rates
and prices, such as interest rates. We do not enter into derivatives or other
financial instruments for trading or speculative purposes.

We negotiate long-term fixed rate debt instruments and enter into interest rate
swap agreements to manage our exposure to interest rate changes. The swaps
involve the exchange of fixed and variable interest rate payments based on a
contractual principal amount and time period. Payments or receipts on the
agreements are recorded as adjustments to interest expense. At March 31, 2003,
TWMB had an interest rate swap agreement effective through August 2004 with a
notional amount of $19 million. Under this agreement, TWMB receives a floating
interest rate based on the 30 day LIBOR index and pays a fixed interest rate of
2.49%. This swap effectively changes the payment of interest on $19 million of
variable rate construction debt to fixed rate debt for the contract period at a
rate of 4.49%.

23


The fair value of the interest rate swap agreement represents the estimated
receipts or payments that would be made to terminate the agreement. At March 31,
2003, TWMB would have paid approximately $305,000 to terminate the agreement. A
1% decrease in the 30 day LIBOR index would increase the amount paid by TWMB by
$271,000 to approximately $576,000. The fair value is based on dealer quotes,
considering current interest rates and remaining term to maturity. TWMB does not
intend to terminate the interest rate swap agreement prior to its maturity. The
fair value of this derivative is currently recorded as a liability in TWMB's
Consolidated Balance Sheet; however, if held to maturity, the value of the swap
will be zero at that time.

The fair market value of long-term fixed interest rate debt is subject to market
risk. Generally, the fair market value of fixed interest rate debt will increase
as interest rates fall and decrease as interest rates rise. The estimated fair
value of our total long-term debt at March 31, 2003 was $374.9 million and its
recorded value was $341.1 million. A 1% increase from prevailing interest rates
at March 31, 2003 would result in a decrease in fair value of total long-term
debt by approximately $12.6 million. Fair values were determined from quoted
market prices, where available, using current interest rates considering credit
ratings and the remaining terms to maturity.

Item 4. Controls and Procedures

The Chief Executive Officer, Stanley K. Tanger, and Chief Financial Officer,
Frank C. Marchisello, Jr., evaluated the effectiveness of the registrant's
disclosure controls and procedures on May 14, 2003 (Evaluation Date), and
concluded that, as of the Evaluation Date, the registrant's disclosure controls
and procedures were effective to ensure that information the registrant is
required to disclose in its filings with the Securities and Exchange Commission
under the Securities and Exchange Act of 1934 is recorded, processed, summarized
and reported, within the time periods specified in the Commission's rules and
forms, and to ensure that information required to be disclosed by the registrant
in the reports that it files under the Exchange Act is accumulated and
communicated to the registrant's management, including its principal executive
officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure.

There were no significant changes in the registrant's internal controls or in
other factors that could significantly affect these controls subsequent to the
Evaluation Date.



24




PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor the Operating Partnership is presently involved in any
material litigation nor, to their knowledge, is any material litigation
threatened against the Company or the Operating Partnership or its properties,
other than routine litigation arising in the ordinary course of business and
which is expected to be covered by liability insurance.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

99.1 Principal Executive Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes -
Oxley Act of 2002.

99.2 Principal Financial Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes -
Oxley Act of 2002.

99.3 Principal Executive Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002.

99.4 Principal Financial Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002.

(b) Reports on Form 8-K

We filed the following reports on Form 8-K during the three months
ended March 31, 2003:

Current Report on Form 8-K dated February 26, 2003 to file the
December 31, 2002 Supplemental Operating and Financial Data


SIGNATURES


Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on 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: May 14, 2003


25


Exhibit Index


Exhibit No. Description
- ---------- ---------------------------------------------------------------------

99.1 Principal Executive Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes -
Oxley Act of 2002.

99.2 Principal Financial Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes -
Oxley Act of 2002.

99.3 Principal Executive Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002.

99.4 Principal Financial Officer Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002.



26