Citibank 2010 Annual Report Download - page 182

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Sale of Nikko Cordial
On October 1, 2009 the Company announced the successful completion
of the sale of Nikko Cordial Securities to Sumitomo Mitsui Banking
Corporation. The transaction had a total cash value to Citi of 776 billion
yen (U.S. $8.7 billion at an exchange rate of 89.60 yen to U.S. $1.00 as of
September 30, 2009). The cash value is composed of the purchase price for
the transferred business of 545 billion yen, the purchase price for certain
Japanese-listed equity securities held by Nikko Cordial Securities of 30 billion
yen, and 201 billion yen of excess cash derived through the repayment of
outstanding indebtedness to Citi. After considering the impact of foreign
exchange hedges of the proceeds of the transaction, the sale resulted in an
immaterial gain in 2009. A total of about 7,800 employees were included in
the transaction.
The Nikko Cordial operations had total assets and total liabilities of
approximately $24 billion and $16 billion, respectively, at the time of sale,
which were reflected in Citi Holdings prior to the sale.
Results for all of the Nikko Cordial businesses sold are reported as
Discontinued operations for all periods presented.
Summarized financial information for Discontinued operations,
including cash flows, related to the sale of Nikko Cordial is as follows:
In millions of dollars 2010 2009 2008
Total revenues, net of interest expense (1) $ 92 $ 646 $1,194
Income (loss) from discontinued
operations $ (7) $ (623) $ (694)
Gain on sale 94 97 —
Benefit for income taxes (122) (78) (286)
Income (loss) from discontinued
operations, net of taxes $ 209 $ (448) $ (408)
In millions of dollars 2010 2009 2008
Cash flows from operating activities $(134) $(1,830) $ (675)
Cash flows from investing activities 185 1,824 768
Cash flows from financing activities —— —
Net cash provided by (used in)
discontinued operations $ 51 $ (6) $ 93
(1) Total revenues include gain or loss on sale, if applicable.
Sale of Citigroup’s German Retail Banking Operations
On December 5, 2008, Citigroup sold its German retail banking operations
to Crédit Mutuel for 5.2 billion Euro in cash plus the German retail bank’s
operating net earnings accrued in 2008 through the closing. The sale
resulted in an after-tax gain of approximately $3.9 billion, including the
after-tax gain on the foreign currency hedge of $383 million recognized
during the fourth quarter of 2008.
The sale does not include the corporate and investment banking business
or the Germany-based European data center.
The German retail banking operations had total assets and total liabilities
as of November 30, 2008 of $15.6 billion and $11.8 billion, respectively.
Results for all of the German retail banking businesses sold, as well as
the net gain recognized in 2008 from this sale, are reported as Discontinued
operations for all periods presented.
Summarized financial information for Discontinued operations,
including cash flows, related to the sale of the German retail banking
operations is as follows:
In millions of dollars 2010 2009 2008
Total revenues, net of interest
expense (1) $ 55 $ 87 $ 6,592
Income (loss) from discontinued
operations $(15) $(22) $ 1,438
Gain on sale 15 (41) 3,695
Provision (benefit) for income taxes (55) (42) 426
Income (loss) from discontinued
operations, net of taxes (2)(3) $ 55 $(21) $ 4,707
In millions of dollars 2010 2009 2008
Cash flows from operating activities $ 2 $ 5 $ (4,719)
Cash flows from investing activities 91 18,547
Cash flows from financing activities (3) (6) (14,226)
Net cash provided by (used in)
discontinued operations $ 8 $ — $ (398)
(1) Total revenues include gain or loss on sale, if applicable.
(2) During 2010, the Company completed an income tax audit in Germany related to the business sold
in 2008. As a result of completing this audit, the Company has released reserves of approximately
$68 million after-tax.
(3) During 2010, the Company recorded a $19 million after-tax write-down of goodwill related to an
accounting error, which affected the German business sold in 2008.