Freddie Mac 2004 Annual Report Download - page 14

EXPLANATORY NOTE
This Information Statement contains forward-looking statements regarding our current expectations and
objectives for Ñnancial reporting, future business plans, results of operations, Ñnancial condition and trends and
other matters that could aÅect our business. Forward-looking statements do not relate to historical matters
and involve known and unknown risks, uncertainties and other factors, including those listed in the section
titled ""FORWARD-LOOKING STATEMENTS.'' Such statements are made as of the date of this
Information Statement and we undertake no obligation to publicly update any forward-looking statement to
reÖect events or circumstances after the date of this Information Statement, or to reÖect the occurrence of
unanticipated events.
The publication of this Information Statement has been delayed as a result of the ongoing controls
remediation and systems re-engineering and development necessary to return to timely Ñnancial reporting.
Although we are working to address the operational weaknesses that are contributing to our current inability to
release Ñnancial results on a timely basis, uncertainty regarding the expected success, scope and timing of
these activities remains. See ""MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, or MD&A Ì RISK MANAGEMENT Ì Opera-
tional Risks Ì Sources of Operational Risks.''
Our current objective is to provide Ñnancial results for Ñrst and second quarter 2005 by August 31, 2005
and for third quarter 2005 by mid-November 2005. In addition, our current objective is to provide Ñnancial
results for fourth quarter and full-year 2005, including the timely Ñling of a minimum capital report with our
regulator, the OÇce of Federal Housing Enterprise Oversight, or OFHEO, that complies with U.S. generally
accepted accounting principles, or GAAP, at the end of January 2006. In 2004 and continuing into 2005, we
have focused on our controls and systems remediation eÅorts to address the material weaknesses and other
deÑciencies in our internal controls over Ñnancial reporting. We expect to continue to make signiÑcant
progress in developing and building a fully capable systems infrastructure. This infrastructure will facilitate our
return to timely Ñnancial reporting, enabling us to fulÑll our commitment to register our common stock with
the Securities and Exchange Commission, or SEC, under the Exchange Act. We anticipate Ñling our Form 10
registration statement with the SEC in the second quarter of 2006 and becoming an SEC reporting company
as soon as possible thereafter.
Although we have made signiÑcant progress during 2004 and the Ñrst Ñve months of 2005, signiÑcant
systems revisions are still required for us to return to timely Ñnancial reporting as a result of our adoption of
revised and new accounting policies in recent years. We face continuing challenges because of the prior
deÑciencies in our accounting infrastructure and the operational complexities caused by the volume of revised
and new accounting policies that we have adopted.
Systems improvements to date have enabled us to move to a one-step Ñnancial close process in 2005, a
signiÑcant improvement over the two-step process used for the production of 2003 and 2004 results that
involved the ""remeasurement'' of preliminary Ñnancial Ñgures. We continue, however, to rely extensively on
substantial validation and analytical review procedures to verify that the Ñnancial results produced by our
recently implemented systems comply with GAAP.
This Information Statement and the certiÑcations by our Chief Executive OÇcer and Chief Financial
OÇcer, which are based on the certiÑcations required of SEC registrants as to the accuracy and completeness
of the information and the fair presentation of the consolidated Ñnancial statements and other Ñnancial
information in periodic reports, do not address our internal controls over Ñnancial reporting or our disclosure
controls and procedures because a comprehensive evaluation of the eÅectiveness of these controls and
procedures was not performed as of December 31, 2004. See ""MD&A Ì RISK MANAGEMENT Ì
Operational Risks Ì Sources of Operational Risks'' for additional information regarding our internal control
weaknesses and remediation eÅorts.
Freddie Mac
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