Municipal Mortgage & Equity, Baltimore, has revised downward its net income and earnings per share for the three months ended March 31, 2004, and the six months ended June 30, 2004, citing "the GAAP effect of $3.0 million in deferred compensations expense which had not previously been recorded."For the three months ended March 31, MuniMae is now reporting a net loss of $1.3 million ($0.04 per share), down from the previously reported net income of $1.2 million ($0.04 per share). For the six months ended June 30, the company's net income has been revised to $9.9 million ($0.29 per share), from the previously reported $12.4 million ($0.37 per share). MuniMae had entered into a number of employment agreements with its senior executives in the first quarter, including one for deferred payment compensation totaling $3 million with its chairman and chief executive officer, who is retiring June 30, 2005, according to the company. The discounted value of this payment is reflected as a compensation expense for the three-month and six-month periods for which the revisions have been made. "The failure to timely record this expense was an oversight due to inadequate internal communications at the time the contract was executed," MuniMae said.

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