Fannie Shaves $6.3B From Retained Earnings

Fannie Mae's long-awaited revised financial results reduce the company's retained earnings by $6.3 billion through June 30, 2004.For periods prior to the start of 2002, retained earnings fell by $7 billion, Fannie Mae said. For 2002, there was a $705 million net decrease, while net earnings for 2003 increased by $176 million. And for 2004, net income was revised upward by $1.2 billion. The total downward revision is smaller than Fannie Mae's previous estimate that the accounting restatement might reduce cumulative earnings by $10.8 billion through June 30, 2004. Additionally, Fannie Mae said the restatement yielded a $4.1 billion increase in reported stockholders' equity through June 30, 2004, despite the reduction in retained earnings. The equity adjustment reflected a reversal of previously recorded derivative cash flow hedge adjustments and the recognition of fair-value adjustments on available-for-sale securities that were previously classified as held-to-maturity securities and recorded at amortized cost, Fannie Mae said. Fannie is still not current in reporting financial results and has not said when it will release results for 2005 and 2006. The government-sponsored enterprise can be found online at http://www.fanniemae.com.