Citibank 2013 Annual Report Download - page 183

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Earnings per Share
Earnings per share (EPS) is computed after deducting preferred stock
dividends. The Company has granted restricted and deferred share awards
with dividend rights that are considered to be participating securities,
which are akin to a second class of common stock. Accordingly, a portion
of Citigroup’s earnings is allocated to those participating securities in the
EPS calculation.
Basic earnings per share is computed by dividing income available to
common stockholders after the allocation of dividends and undistributed
earnings to the participating securities by the weighted average number
of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised. It is computed after giving
consideration to the weighted average dilutive effect of the Company’s
stock options and warrants, convertible securities and the shares that
could have been issued under the Company’s Management Committee
Long-Term Incentive Plan and after the allocation of earnings to the
participating securities.
Use of Estimates
Management must make estimates and assumptions that affect the
Consolidated Financial Statements and the related footnote disclosures. Such
estimates are used in connection with certain fair value measurements. See
Note 25 to the Consolidated Financial Statements for further discussions
on estimates used in the determination of fair value. The Company also
uses estimates in determining consolidation decisions for special-purpose
entities as discussed in Note 22 to the Consolidated Financial Statements.
Moreover, estimates are significant in determining the amounts of other-
than-temporary impairments, impairments of goodwill and other intangible
assets, provisions for probable losses that may arise from credit-related
exposures and probable and estimable losses related to litigation and
regulatory proceedings, and tax reserves. While management makes its
best judgment, actual amounts or results could differ from those estimates.
Current market conditions increase the risk and complexity of the judgments
in these estimates.
Cash Flows
Cash equivalents are defined as those amounts included in Cash and due
from banks. Cash flows from risk management activities are classified in the
same category as the related assets and liabilities.
Related Party Transactions
The Company has related party transactions with certain of its subsidiaries
and affiliates. These transactions, which are primarily short-term in nature,
include cash accounts, collateralized financing transactions, margin
accounts, derivative trading, charges for operational support and the
borrowing and lending of funds, and are entered into in the ordinary course
of business.