Poor Derivatives Accounting ForcesCountrywide To Restate Earnings

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CALABASAS, Calif. - (02/23/05) -- Countrywide Financial Corp., thenation's largest mortgage lender, said Tuesday it will restate its2004 earnings because it improperly booked a gain on the sale offinancial derivatives. The restatement will result in a reductionin fiscal year net income by about $1.2 million, or 20 cents ashare, and will boost the company's first quarter earnings forfiscal 2005 by the same amount. The restatement applies to the saleof deep out of the money interest rate caps which the company usesto hedge interest rate risk. Countrywide earned net income of $2.3billion, or $3.63 a share, in fiscal 2004, counting therestatement.

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