The Federal Agricultural Mortgage Corp. has announced that it will restate earnings for the last three years to correct errors in hedge accounting.Farmer Mac said the restatement for 2003 through 2005 reflects the company's interpretation of Statement of Financial Accounting Standards No. 133, which covers derivatives and hedging instruments. The government-sponsored enterprise determined that its documentation did not support the use of hedge accounting for derivatives used to manage interest rate risk. Therefore, changes in the fair value of its derivatives should have been included in the statements of operations rather than being deferred or offset. While earnings will change under generally accepted accounting principles as a result, Farmer Mac said the restatement will have an "insignificant" effect on the company's financial position, stockholders' equity, cash flows, and business model. Farmer Mac also said the restatements will not have a significant effect on its capital position or its "core earnings," a non-GAAP measure of profitability. Farmer Mac can be found online at http://www.farmermac.com.

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