Countrywide to Revise 2004 Results Due to Accounting Error

0

Countrywide Financial Corp. said it overstated its 2004 results by 20 cents a share because it improperly recognized securities sales in quarterly periods when the sales were made afterward.


The Calabasas-based mortgage lender said it will reduce its previously reported 2004 earnings per share to $3.63 (diluted) from $3.83.


The 20 cents per share will be shifted into the first quarter of 2005. As a result, Countrywide increased its previously announced guidance for 2005 to a range of $3.45 to $4.45 per diluted share, from a range of $3.25 to $4.25.


Countrywide will not need to restate its 2004 results because it has not yet filed its annual 10-K report for the year.


Countrywide said in a press release that the error was flagged by its auditor, KPMG LLP, on Feb. 18. The mortgage-backed securities contained “embedded derivatives” used to hedge against extreme changes in short-term rates and to enhance the securities’ credit rating.


The revision will require the company to report a “material weakness in internal controls over financial reporting” in its 10-K report, Countrywide said.


In mid-afternoon trading on Tuesday, Countrywide shares were down 81 cents, or 2.3 percent, to $34.15.

No posts to display