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.,
+1-732-577-9997/
(UMH)
CO: United Mobile Homes, Inc.; KPMG LLP
ST: New Jersey
IN: RLT FIN
SU: ACC ERN
MZ
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4535 03/15/200517:46 ESThttp://www.prnewswire.com