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United Mobile Homes, Inc. Announces Restatement of Financial Statements to Correct Accounting for Interest Rate Swap Agreements


FREEHOLD, N.J., March 15 /PRNewswire-FirstCall/ -- United Mobile Homes, Inc. (Amex: UMH) announced today that following a review of its accounting treatment of various interest rate swaps, the Company, in consultation with its external auditors, KPMG LLP, has determined that it is necessary to restate its previously issued financial statements for periods ending on or prior to September 30, 2004. In an ongoing review of its accounting policies, the Company determined that the accounting for certain of its interest rate swaps did not comply with generally accepted accounting principles in the U.S. (GAAP). Although management believes the substance of the interest rate swaps achieved the original objectives of converting certain variable rate debt to effectively fixed rate obligations, certain technical documentation requirements for hedge accounting under Financial Accounting Standards Board (FAS) Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities" and related interpretations were not met.

Historically, the Company treated these interest rate swaps as embedded derivatives and did not separately recognize the fair value of these derivatives as an asset/liability in the Company's consolidated financial statements. The Company disclosed these borrowings as fixed rate obligations. Since these transactions do not qualify for hedge accounting under FAS Statement No. 133, the Company must record the fair value of the derivatives as an asset/liability and the changes in fair value as an income/expense in the period that such changes occurred. KPMG LLP is in the process of completing their 2004 audit of the Company's consolidated financial statements. Management estimates that these non-cash adjustments have the effect of decreasing net income by approximately $531,000 for the year ended December 31, 2002 and increasing net income by approximately $390,000 for the year ended December 31, 2003. The impact of this accounting change for the nine months ended September 30, 2004 is to increase net income by approximately $249,000. There is no effect on historical or future net cash flows provided by operating activities.

The restated financial statements for the two-year period ended December 31, 2003, the four quarters of 2003 and the first three quarters of 2004 will be reflected in the Company's 2004 Annual Report on Form 10-K. Accordingly, the financial statements and the related independent auditors' reports contained in the Company's prior filings with the Securities and Exchange Commission should no longer be relied upon.

Due to this restatement, the Company does not expect to file its 2004 Annual Report on Form 10-K by March 16, 2005. The Company will file a Notification of Late Filing on Form 12b-25 with the Securities and Exchange Commission today in connection with this delay.

United Mobile Homes, Inc., a publicly-owned real estate investment trust, owns and operates twenty-seven manufactured home communities located in New Jersey, New York, Pennsylvania, Ohio and Tennessee. In addition, the Company owns a portfolio of REIT securities.

This press release contains various "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. The words "may," "will," "expect," "believe," "anticipate," "should," "estimate," and similar expressions identify forward-looking statements. These forward-looking statements reflect the Company's current views with respect to future events and finance performance, but are based upon current assumptions regarding the Company's operations, future results and prospects, and are subject to many uncertainties and factors relating to the Company's operations and business environment which may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements.

Such factors include, but are not limited to, the following: (i) changes in the general economic climate; (ii) increased competition in the geographic areas in which the Company owns and operates manufactured housing communities; (iii) changes in government laws and regulations affecting manufactured housing communities; and (iv) the ability of the Company to continue to identify, negotiate and acquire manufactured housing communities and/or vacant land which may be developed into manufactured housing communities on terms favorable to the Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

SOURCE  United Mobile Homes, Inc.
    -0-                             03/15/2005
    /CONTACT:  Rosemarie Faccone or Susan Jordan, United Mobile Homes, Inc.,

CO:  United Mobile Homes, Inc.; KPMG LLP
ST:  New Jersey

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4535 03/15/200517:46 EST

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