Fannie Mae 2004 Annual Report Download - page 272

(net of tax) as of December 31, 2003, which was primarily due to changes in the estimated fair values of
mortgage revenue bonds and REMICs. For our debt, we did not appropriately exclude certain commission
costs associated with the issuance of new debt securities in creating the yield curve we used for estimating fair
value. Correcting this error resulted in an increase in the estimated fair value of our debt of approximately
$300 million (net of tax) as of December 31, 2003. For our out-of-the-money derivative options, we did not
fully incorporate available market information that differentiates at-the-money volatilities from out-of-the-
money volatilities in estimating fair value. Correcting the error resulted in a decrease in the estimated fair
value of our derivatives of approximately $200 million (net of tax) as of December 31, 2003. To correct these
errors, we recalculated the fair value of these items using new assumptions, observable data and appropriate
levels of specificity. The impact of recalculating the estimated fair value of these items is reflected in “Note 19,
Fair Value of Financial Instruments.”
Financial Statement Impact
The following tables display the net impact of restatement adjustments in the previously issued consolidated
balance sheets, consolidated statements of income, consolidated statements of cash flows and regulatory capital
for 2003 and 2002. In addition, we have included tables displaying the net impact of restatement adjustments
on stockholders’ equity and in the consolidated balance sheet as of December 31, 2001. The following
consolidated financial statements are presented in a condensed format.
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FANNIE MAE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)