Freddie Mac, still struggling to fix its accounting systems after correcting billions of dollars of misstatements, yesterday released financial results for 2003 showing that its earnings declined by more than half, to just under $5 billion.

The McLean-based mortgage finance company, one of the nation's largest financial institutions, also said it may not release financial results for any part of 2004 until March 31, 2005. "[W]e still have much work to do to get our financial house in order," chief executive Richard F. Syron said in a conference call with stock analysts. "We continue to rely on a veritable army of consultants to make up for outmoded systems and controls," he said, calling the situation "unacceptable."

Freddie attributed the drop in profit largely to shrinking gains on derivatives, complex financial contracts it uses to hedge against changes in interest rates.

Chartered by the federal government, Freddie serves as a middleman between mortgage lenders and the capital markets. It packages batches of mortgages into securities for sale to investors and is itself a major investor in mortgages. It profits from interest earned on its mortgage holdings and from fees it charges lenders to guarantee the payment of principal and interest on the mortgage-backed securities.

Until last year, the company was known as "Steady Freddie" because it delivered the predictable earnings growth that Wall Street cherishes. However, an investigation for the company's board last year found that executives had engineered elaborate transactions to circumvent an accounting rule and smooth earnings by understating them.

Yesterday's long-delayed earnings report showed how volatile the company's earnings have become, largely as the result of an accounting rule that requires it to factor in changes in the value of derivatives.

The company said it earned $4.9 billion ($6.79 per share), down 51.5 percent from $10.1 billion ($14.18) in 2002. Quarterly results ranged from a profit of $2.5 billion in the second quarter to a loss of $288 million in the third quarter. The company said it gained $39 million on derivatives in 2003, compared with $5.3 billion in 2002.

Freddie and some analysts have argued that the bottom line can be misleading because accounting rules require the company to book fluctuations in the value of derivatives that the company continues to hold.

The decline in income last year "doesn't reflect what's really happening underneath in a fundamental sense," Syron said.

Some analysts focused on another measure of Freddie's performance, the fair value of its net assets, essentially the value of assets minus liabilities as estimated by the company. That number rose to $27.4 billion at the end of 2003 from $22.9 billion a year earlier.

Fannie Mae, Freddie's direct competitor, reported a profit of $7.9 billion last year, up 71.1 percent from $4.6 billion. The swing was partly a reflection of changes in the value of derivatives the company still held.

At Freddie, the costly effort to correct old accounting problems and cope with the fallout also ate into profit. The company said it spent $172 million last year on accounting, auditing, consulting and legal expenses, and it paid a $125 million penalty to resolve an investigation by its regulator, the Office of Federal Housing Enterprise Oversight.

Lynn E. Turner, former chief accountant at the Securities and Exchange Commission, said, "It's highly unusual that a financial institution of this magnitude could have . . . such poor bookkeeping and internal controls. You have to ask yourself, how did it blow up so badly? How could [it] be so out of control?"

Syron, who took over Freddie in January, repeated his view that Freddie won't grow as fast in the future as it did over the past decade, when its mortgage investments soared from about $60 billion to about $600 billion. Federal Reserve Chairman Alan Greenspan has cited such rapid growth at Freddie and its rival Fannie Mae as potential risks to the financial system.

Freddie said it plans to issue quarterly and full-year results for 2004 by the end of next March and to resume issuing timely quarterly reports in 2005. In the meantime, the company's plan to voluntarily register with the Securities and Exchange Commission has been delayed. As a government-sponsored enterprise, Freddie has not been required to register with the SEC and meet the same disclosure standards that typically apply to publicly traded companies.

In addition, regulators have ordered Freddie to maintain an extra financial cushion against losses, and OFHEO spokeswoman Corinne Russell said yesterday that the agency has no plans to lift that requirement until Freddie meets a number of conditions, including issuing financial results on a timely basis.

Freddie's stock closed yesterday at $63.30, up 11 cents.

Freddie Mac chief executive Richard F. Syron said the company has a lot of work to do on its financial situation.