Freddie Mac 2010 Annual Report Download - page 83

write-down of our LIHTC investments. Other items previously recorded in the All Other category prior to the revision to our
method for presenting Segment Earnings have been allocated to our three reportable segments.
Effective January 1, 2010, we also made significant changes to our GAAP consolidated statements of operations as a
result of our adoption of changes in accounting standards for transfers of financial assets and the consolidation of VIEs.
These changes make it difficult to see the earnings impact of the business activities conducted by our Investments, Single-
family Guarantee and Multifamily segments. For example, much of the earnings impact of our securitization activity is now
included within the net interest income line of our GAAP consolidated statements of operations, whereas, prior to January 1,
2010, the earnings impact of such activity was reflected in GAAP management and guarantee income and other line items.
As a result, in presenting Segment Earnings we make significant reclassifications to certain line items in order to reflect a
measure of net interest income on investments, and a measure of management and guarantee income on guarantees, that is in
line with our internal measures of performance.
We present Segment Earnings by: (a) reclassifying certain investment-related activities and credit guarantee-related
activities between various line items on our GAAP consolidated statements of operations; and (b) allocating certain revenues
and expenses, including certain returns on assets and funding costs, and all administrative expenses to our three reportable
segments.
As a result of these reclassifications and allocations, Segment Earnings for our reportable segments differs significantly
from, and should not be used as a substitute for, net income (loss) as determined in accordance with GAAP. Our definition of
Segment Earnings may differ from similar measures used by other companies. However, we believe that Segment Earnings
provides us with meaningful metrics to assess the financial performance of each segment and our company as a whole.
We restated Segment Earnings for 2009 and 2008 to reflect the changes in our method of measuring and assessing the
performance of our reportable segments described above. The restated Segment Earnings for 2009 and 2008 do not include
changes to the guarantee asset, guarantee obligation or other items that were eliminated or changed as a result of our
implementation of the amendments to the accounting standards for transfers of financial assets and consolidation of VIEs
adopted on January 1, 2010, as this change was applied prospectively consistent with our GAAP results. As a result, our
Segment Earnings results for 2010 are not directly comparable with the results for 2009 and 2008. See “NOTE 2: CHANGE
IN ACCOUNTING PRINCIPLES” for further information regarding the consolidation of certain of our securitization trusts.
See “NOTE 17: SEGMENT REPORTING” for further information regarding our segments, including the descriptions
and activities of the segments and the reclassifications and allocations used to present Segment Earnings.
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