Citibank 2008 Annual Report Download - page 221

Statement of Changes in Stockholder’s Equity
(Continued)
In millions of dollars, except shares
Year ended December 31
2008 2007 2006
Total common stockholder’s equity $ 81,358 $99,306 $73,153
Total stockholder’s equity $ 81,358 $99,306 $73,153
Comprehensive income (loss)
Net income (loss) $ (6,215) $ 2,304 $ 9,338
Net change in Accumulated other comprehensive
income (loss) (13,400) (785) 841
Comprehensive income (loss) $(19,615) $ 1,519 $10,179
(1) Primarily represents the transfer of Citibank, N.A.’s investment in Citi Financial Japan, KK to the
Citigroup’s affiliate, Nikko Citi Holdings.
(2) The adjustment to opening balance for Retained earnings represents the total of the after-tax gain
(loss) amounts for the adoption of the following accounting pronouncements:
• SFAS 157 for $9 million,
• SFAS 159 for $15 million,
• FSP 13-2 for $(142) million, and
• FIN 48 for $22 million.
See Notes 1, 26 and 27 on pages 122, 192 and 202, respectively.
(3) The after-tax adjustment to the opening balance of Accumulated other comprehensive income (loss)
represents the reclassification of the unrealized gains (losses) related to several miscellaneous items
previously reported in accordance with SFAS 115. The related unrealized gains and losses were
reclassified to Retained earnings upon the adoption of the fair value option in accordance with
SFAS 159. See Notes 1 and 27 on pages 122 and 202 for further discussions.
32. SUBSEQUENT EVENTS
Exchange Offer and U.S. Government Exchange
On February 27, 2009, Citigroup announced an exchange offer of its
common stock for up to $27.5 billion of its existing preferred securities and
trust preferred securities at a conversion price of $3.25 per share. The U.S.
government will match this exchange up to a maximum of $25 billion of its
preferred stock at the same conversion price. These transactions will
significantly dilute the existing common stockholders of the Company. As
announced, the transactions will increase the Company’s tangible common
equity (TCE). The transactions will require no additional U.S. government
investment in Citigroup and will not change the Company’s overall strategy
or operations. In addition, the transactions will not change the Company’s
Tier 1 Capital Ratio of 11.9% as of December 31, 2008. In connection with
the transactions, Citigroup will suspend dividends on its preferred securities
(other than its trust preferred securities) and, as a result, on its common
stock. Full implementation of the proposed exchange offer is subject to
approval of Citigroup’s shareholders, which cannot be guaranteed.
Reset of Conversion Terms of the $12.5 Billion
Convertible Preferred Stock
On January 23, 2009, pursuant to Citibank’s prior agreement with the
purchasers of the $12.5 billion convertible preferred stock issued in a private
offering during 2008, the conversion price was reset from $31.62 per share to
$26.35 per share. The reset will result in Citigroup issuing approximately
79 million additional common shares if converted. There will be no impact
to net income, total stockholders’ equity or capital ratios due to the reset.
However, the reset will result in a reclassification from retained earnings to
additional paid in capital of $1.2 billion to reflect the benefit of the reset to
the preferred stockholders.
215