SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
September 3, 1996
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(Date of earliest event reported)
UDC HOMES, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 1-11416 86-0702254
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(State of (Commission File No.) (IRS Employer
Incorporation Identification No.)
4812 South Mill Avenue, Tempe, Arizona 85282
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(Address of principal executive offices, including zip code)
(602) 820-4488
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report)
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Item 4. Changes in Registrant's Certifying Accountants
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On September 3, 1996, UDC Homes, Inc. (the "Company") dismissed its
former independent accountants, Arthur Andersen LLP ("Andersen") and engaged
Deloitte & Touche LLP, as independent accountants.
The reports of Andersen on the financial statements of the Company for either of
the past two years did not contain an adverse opinion or disclaimer of opinion,
nor were such reports qualified or modified as to uncertainty, audit scope, or
accounting principles except for the report dated October 20, 1995 related to
the audit of the Company's August 31, 1995 consolidated balance sheet. The
balance sheet was prepared assuming that the Company would continue as a going
concern. The appropriateness of using the going concern basis was dependent
upon, among other things, consummation of the plan of reorganization as
confirmed by the Bankruptcy Court, success of future operations and the
Company's ability to meet its obligations as they become due. The report of
Andersen stated there was uncertainty with respect to certain litigation claims
and the appropriateness of using the going concern assumption because of factors
which raised substantial doubt about the ability of the Company to continue as a
going concern.
During the two most recent fiscal years of the Company and each subsequent
interim period preceding the dismissal, the Company believes there were no
disagreements with Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not satisfactorily resolved, would have caused them to make
reference in connection with their reports to the subject matter of the
disagreements. Andersen has informed the Company that the following two items,
in Andersen's opinion, did constitute disagreements:
With respect to a contingent interest arrangement for one of the
Company's debt instruments, the Company inquired whether such
contingent interest could be recorded when due. Andersen believed that
the contingent interest should be recorded as each house was sold on an
estimated basis. This issue was resolved through the recording by the
Company of an approximately $1 million adjustment in connection with
fiscal year ended September 30, 1995, for which a Form 10-K was filed
on December 28, 1995. Neither the Company's Audit Committee nor its
Board of Directors discussed this matter with Andersen.
In connection with the Company's Bankruptcy proceeding, the Company
inquired whether it would be able to continue to carry on its balance
sheet the deferred tax asset of approximately $26.9 million as a result
of likely debt forgiveness and related income under the reorganization
plan then being formulated. Andersen could find no support for
continuing to carry this asset. Andersen and the Company's Board of
Directors agreed to increase the valuation allowance to reduce the
balance of the net deferred tax asset to zero at March 31, 1995.
The decision to change accountants was recommended by the Audit Committee of the
Board of Directors of the Company. The Company's Board of Directors approved the
decision to change independent accountants.
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The Company has requested that Andersen furnish it with a letter addressed to
the SEC, as required by Item 304(a)(3) of Regulation S-K, stating whether it
agrees with the above statements. After receipt of such letter, the Company will
file it with the SEC by amendment to this Report on Form 8-K.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UDC Homes, Inc.
By: /s/ Kenda B. Gonzales
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Name: Kenda B. Gonzales
Title: Senior Executive Vice President
and Chief Financial Officer
and Treasurer
Dated: September 10, 1996
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