Travelers 2003 Annual Report Download - page 103

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101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
The 2001 effect of applying the fair value based method to all outstanding and unvested stock-based employee
awards in Citigroup’s common stock is as follows:
(for the year ended December 31, in millions, except per share data) 2001
Net income, as reported $ 1,065.4
Add: Stock-based employee compensation expense included in
reported net income, net of related tax effects (1)
19.4
Deduct: Stock-based employee compensation expense determined
under fair value based method, net of related tax effects (2)
(68.1)
Net income, pro forma $ 1,016.7
Earnin
g
s
p
er share
Basic and diluted – as reported $ 1.39
Basic and diluted – pro forma 1.32
(1) Restricted stock compensation expense.
(2) Includes the restricted stock compensation expense added back in (1).
Earnings per Share (EPS)
EPS has been computed in accordance with Financial Accounting Standards No. 128, “Earnings per Share”.
Basic EPS is computed by dividing income available to common shareholders by the weighted average number
of common shares outstanding during the period. The computation of diluted EPS reflects the effect of
potentially dilutive outstanding employee stock-based awards, principally the incremental shares which are
assumed to be issued under Travelers 2002 Incentive Plan. Excluded from the computation of diluted EPS were
38.6 million of potentially dilutive shares related to convertible junior subordinated notes because the
contingency conditions for their issuance have not been satisfied. Shares for the years ended December 31, 2002
and 2001 have been adjusted to give effect to the recapitalization in March 2002, prior to the IPO, whereby the
outstanding shares of common stock (1,500 shares) were changed into 269.0 million shares of class A common
stock and 500.0 million shares of class B common stock.