AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 31, 2004
REGISTRATION NO. 333-117615
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
<Table>
CITIGROUP INC. DELAWARE 52-1568099
CITIGROUP CAPITAL XI DELAWARE 06-1532087
CITIGROUP CAPITAL XII DELAWARE 06-1532088
CITIGROUP CAPITAL XIII DELAWARE 06-1532089
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER) INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBERS)
</Table>
399 PARK AVENUE
NEW YORK, NY 10043
(212) 559-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------------
JOHN R. DYE, ESQ.
GENERAL COUNSEL-CAPITAL MARKETS
CITIGROUP INC.
425 PARK AVENUE
NEW YORK, NY 10043
(212) 559-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
---------------------
COPIES TO:
<Table>
GREGORY A. FERNICOLA, ESQ. JEFFREY D. KARPF, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP CLEARY, GOTTLIEB, STEEN & HAMILTON
FOUR TIMES SQUARE ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10036-6522 NEW YORK, NEW YORK 10006
(212) 735-3000 (212) 225-2000
</Table>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: At such time (from time to time) after the effective date of this
Registration Statement as agreed upon by Citigroup Inc. and the Underwriters in
light of market conditions.
---------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
---------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
---------------------
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
---------------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
PURSUANT TO RULE 429 OF THE GENERAL RULES AND REGULATIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, THE FORM OF BASE PROSPECTUS RELATING TO DEBT
SECURITIES, COMMON STOCK WARRANTS, INDEX WARRANTS, PREFERRED STOCK, DEPOSITARY
SHARES, STOCK PURCHASE CONTRACTS, STOCK PURCHASE UNITS AND COMMON STOCK OF THE
REGISTRANT (COLLECTIVELY, THE "SECURITIES") THAT IS PART OF THIS REGISTRATION
STATEMENT IS A COMBINED PROSPECTUS THAT ALSO RELATES TO $3,514,820,000 OF
UNISSUED SECURITIES REGISTERED UNDER REGISTRATION STATEMENT NO. 333-106598
INITIALLY FILED ON JUNE 27, 2003 BY THE REGISTRANT. THE REGISTRATION STATEMENT
CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT 333-106598.
ACCORDINGLY, THE COMBINED BASE PROSPECTUS RELATES TO A TOTAL OF UP TO
$33,514,820,000 OF SECURITIES, WHICH HAVE BEEN REGISTERED UNDER THIS
REGISTRATION STATEMENT AND REGISTRATION STATEMENT NO. 333-106598.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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INTRODUCTORY NOTE
This Registration Statement contains:
- a form of base prospectus relating to debt securities, common stock
warrants, index warrants, preferred stock, depositary shares, stock
purchase contracts, stock purchase units and common stock of Citigroup
Inc.;
- a form of prospectus supplement to the base prospectus relating to the
offering by Citigroup of its Medium-Term Senior Notes, Series H, and
Medium-Term Subordinated Notes, Series H, in registered form; and
- a form of capital securities prospectus relating to junior subordinated
debt securities of Citigroup and to the capital securities of Citigroup
Capital XI, Citigroup Capital XII and Citigroup Capital XIII. The capital
securities prospectus may be used for one or more offerings by Citigroup
and the respective Citigroup trusts. To the extent required, the
information in the capital securities prospectus, including financial
information, will be updated at the time of each offering.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. CITIGROUP
INC. MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED AUGUST 31, 2004
PROSPECTUS
[CITIGROUP LOGO]
May Offer --
$33,514,820,000
Debt Securities
Common Stock Warrants
Index Warrants
Preferred Stock
Depositary Shares
Stock Purchase Contracts
Stock Purchase Units
Common Stock
Citigroup will provide the specific terms of these securities in
supplements to this prospectus. You should read this prospectus and the
accompanying prospectus supplement carefully before you invest.
------------------------
Neither the Securities and Exchange Commission nor any state securities or
insurance commission has approved or disapproved of these securities or
determined if this prospectus or any accompanying prospectus supplement is
truthful or complete. Any representation to the contrary is a criminal offense.
These securities are not deposits or savings accounts but are unsecured
obligations of Citigroup. These securities are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency or
instrumentality.
------------------------
, 2004
PROSPECTUS SUMMARY
This summary provides a brief overview of the key aspects of Citigroup and
all material terms of the offered securities that are known as of the date of
this prospectus. For a more complete understanding of the terms of the offered
securities, before making your investment decision, you should carefully read:
- this prospectus, which explains the general terms of the securities that
Citigroup may offer;
- the accompanying prospectus supplement, which (1) explains the specific
terms of the securities being offered and (2) updates and changes
information in this prospectus; and
- the documents referred to in "Where You Can Find More Information" on
page 6 for information on Citigroup, including its financial statements.
CITIGROUP INC.
Citigroup is a diversified global financial services holding company whose
businesses provide a broad range of financial services to consumer and corporate
customers with some 200 million customer accounts doing business in more than
100 countries. Citigroup's activities are conducted through the Global Consumer,
Global Corporate and Investment Bank, Private Client Services, Global Investment
Management, and Proprietary Investment Activities business segments.
Citigroup's principal executive office is at 399 Park Avenue, New York, NY
10043, and its telephone number is (212) 559-1000.
THE SECURITIES CITIGROUP MAY OFFER
Citigroup may use this prospectus to offer up to $33,514,820,000 of:
- debt securities;
- common stock warrants;
- index warrants;
- preferred stock;
- depositary shares;
- stock purchase contracts;
- stock purchase units; and
- common stock.
A prospectus supplement will describe the specific types, amounts, prices
and detailed terms of any of these offered securities.
DEBT SECURITIES
Debt securities are unsecured general obligations of Citigroup in the form
of senior or subordinated debt. Senior debt includes Citigroup's notes, debt and
guarantees and any other debt for money borrowed that is not subordinated.
Subordinated debt, so designated at the time it is issued, would not be entitled
to interest and principal payments if interest and principal payments on the
senior debt were not made.
The senior and subordinated debt will be issued under separate indentures
between Citigroup and a trustee. Below are summaries of the general features of
the debt securities from these indentures. For a more detailed description of
these features, see "Description of Debt Securities" below. You are also
encouraged to read the indentures, which are included or incorporated by
reference in Citigroup's registration statement No. 333-117615, Citigroup's most
recent annual report on Form 10-K, Citigroup's quarterly reports on Form 10-Q
filed after the Form 10-K and Citigroup's current reports on Form 8-K filed
after the Form 10-K. You can receive copies of these documents by following the
directions on page 6.
1
General Indenture Provisions that Apply to Senior and Subordinated Debt
- Neither indenture limits the amount of debt that Citigroup may issue or
provides holders any protection should there be a highly leveraged
transaction involving Citigroup, although the senior debt indenture does
limit Citigroup's ability to pledge the stock of any subsidiary that
meets the financial thresholds in the indenture. These thresholds are
described below under "Description of Debt Securities."
- The senior debt indenture allows for different types of debt securities,
including indexed securities, to be issued in series.
- The indentures allow Citigroup to merge or to consolidate with another
company, or sell all or substantially all of its assets to another
company. If any of these events occur, the other company generally would
be required to assume Citigroup's responsibilities for the debt. Unless
the transaction resulted in a default, Citigroup would be released from
all liabilities and obligations under the debt securities when the other
company assumed its responsibilities.
- The indentures provide that holders of 66 2/3% of the principal amount of
the senior debt securities and holders of a majority of the total
principal amount of the subordinated debt securities outstanding in any
series may vote to change Citigroup's obligations or your rights
concerning those securities. However, changes to the financial terms of
that security, including changes in the payment of principal or interest
on that security or the currency of payment, cannot be made unless every
holder affected consents to the change.
- Citigroup may satisfy its obligations under the debt securities or be
released from its obligation to comply with the limitations discussed
above at any time by depositing sufficient amounts of cash or U.S.
government securities with the trustee to pay Citigroup's obligations
under the particular securities when due.
- The indentures govern the actions of the trustee with regard to the debt
securities, including when the trustee is required to give notices to
holders of the securities and when lost or stolen debt securities may be
replaced.
Events of Default and Defaults
The events of default specified in the senior debt indenture and defaults
under the subordinated debt indenture include:
- failure to pay principal when due;
- failure to pay required interest for 30 days;
- failure to make a required scheduled installment payment for 30 days;
- failure to perform other covenants for 90 days after notice;
- certain events of insolvency or bankruptcy, whether voluntary or not; and
- any additional events as may be set forth in the applicable prospectus
supplement.
Unless otherwise specified in the prospectus supplement relating to any
series of subordinated debt, the only events of default specified in the
subordinated debt indenture are certain events of insolvency or bankruptcy,
whether voluntary or not. There is no event of default, and accordingly there is
no right of acceleration, in the case of a default in the payment of principal
of, premium, if any, or interest on, subordinated debt securities, the
performance of any other covenant of Citigroup in the subordinated indenture or
any other default which is not also an event of default.
Remedies
Senior Indenture: If there were an event of default, the trustee or holders
of 25% of the principal amount of senior debt securities outstanding in a series
could demand that the principal be paid immediately. However, holders of a
majority in principal amount of the securities in that series could rescind that
acceleration of the debt securities.
2
Subordinated Indenture: If there were an event of default involving certain
events of insolvency or bankruptcy, the trustee or holders of 25% of the
principal amount of subordinated debt securities outstanding in a series could
demand that the principal be paid immediately. However, holders of a majority in
principal amount of the securities in that series may rescind that acceleration
of the debt securities. The occurrence of a default for any reason other than
these events of insolvency or bankruptcy will not give the trustee or such
holders the right to demand that the principal of the subordinated debt
securities be paid immediately.
COMMON STOCK WARRANTS
Citigroup may issue common stock warrants independently or together with
any securities. Citigroup will issue any common stock warrants under a separate
common stock warrant agreement between Citigroup and a bank or trust company.
You are encouraged to read the standard form of the common stock warrant
agreement, which will be filed as an exhibit to one of Citigroup's future
current reports and incorporated by reference in its registration statement No.
333-117615. You can receive copies of these documents by following the
directions on page 6.
Common stock warrants are securities pursuant to which Citigroup may sell
or purchase common stock. The particular terms of each issue of common stock
warrants, the common stock warrant agreement relating to the common stock
warrants and the common stock warrant certificates representing common stock
warrants will be described in the applicable prospectus supplement.
INDEX WARRANTS
Citigroup may issue index warrants independently or together with debt
securities. Citigroup will issue any series of index warrants under a separate
index warrant agreement between Citigroup and a bank or trust company. You are
encouraged to read the standard form of the index warrant agreement, which will
be filed as an exhibit to one of Citigroup's future current reports and
incorporated by reference in its registration statement No. 333-117615. You can
receive copies of these documents by following the directions on page 6.
Index warrants are securities that, when properly exercised by the
purchaser, entitle the purchaser to receive from Citigroup an amount in cash or
a number of securities that will be indexed to prices, yields, or other
specified measures or changes in an index or differences between two or more
indices.
The prospectus supplement for a series of index warrants will describe the
formula for determining the amount in cash or number of securities, if any, that
Citigroup will pay you when you exercise an index warrant and will contain
information about the relevant underlying assets and other specific terms of the
index warrant.
Citigroup will generally issue index warrants in book-entry form, which
means that they will not be evidenced by physical certificates. Also, Citigroup
will generally list index warrants for trading on a national securities
exchange, such as the New York Stock Exchange, the Nasdaq Stock Market's
National Market or the Chicago Board Options Exchange.
The index warrant agreement for any series of index warrants will provide
that holders of a majority of the total principal amount of the index warrants
outstanding in any series may vote to change their rights concerning those index
warrants. However, changes to fundamental terms such as the amount or manner of
payment on an index warrant or changes to the exercise times cannot be made
unless every holder affected consents to the change.
Any prospective purchasers of index warrants should be aware of special
United States federal income tax considerations applicable to instruments such
as the index warrants. The prospectus supplement relating to each series of
index warrants will describe the important tax considerations.
3
PREFERRED STOCK
Citigroup may issue preferred stock with various terms to be established by
its board of directors or a committee designated by the board. Each series of
preferred stock will be more fully described in the particular prospectus
supplement that will accompany this prospectus, including redemption provisions,
rights in the event of liquidation, dissolution or winding up of Citigroup,
voting rights and conversion rights.
Generally, each series of preferred stock will rank on an equal basis with
each other series of preferred stock and will rank prior to Citigroup's common
stock. The prospectus supplement will also describe how and when dividends will
be paid on the series of preferred stock.
DEPOSITARY SHARES
Citigroup may issue depositary shares representing fractional shares of
preferred stock. Each particular series of depositary shares will be more fully
described in the prospectus supplement that will accompany this prospectus.
These depositary shares will be evidenced by depositary receipts and issued
under a deposit agreement between Citigroup and a bank or trust company. You are
encouraged to read the standard form of the deposit agreement, which is
incorporated by reference in Citigroup's registration statement No. 333-117615.
You can receive copies of this document by following the directions on page 6.
STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Citigroup may issue stock purchase contracts, including contracts
obligating holders to purchase from or sell to Citigroup, and Citigroup to sell
to or purchase from the holders, a specified number of shares of common stock,
shares of preferred stock or depositary shares at a future date or dates. The
stock purchase contracts may be issued separately or as part of stock purchase
units, consisting of a stock purchase contract and any combination of debt
securities, capital securities, junior subordinated debt securities or debt
obligations of third parties, including U.S. Treasury securities. The applicable
prospectus supplement will describe the terms of the stock purchase contracts
and stock purchase units, including, if applicable, collateral or depositary
arrangements.
COMMON STOCK
Citigroup may issue common stock, par value $.01 per share. Holders of
common stock are entitled to receive dividends when declared by Citigroup's
board of directors. Each holder of common stock is entitled to one vote per
share. The holders of common stock have no preemptive rights or cumulative
voting rights.
4
USE OF PROCEEDS
Citigroup will use the net proceeds it receives from any offering of these
securities for general corporate purposes, which may include funding its
operating units and subsidiaries, financing possible acquisitions or business
expansion and refinancing or extending the maturity of existing debt
obligations. Citigroup may use a portion of the proceeds from the sale of index
warrants and indexed notes to hedge its exposure to payments that it may have to
make on such index warrants and indexed notes as described below under "Use of
Proceeds and Hedging."
PLAN OF DISTRIBUTION
Citigroup may sell the offered securities in any of the following ways:
- to or through underwriters or dealers;
- by itself directly;
- through agents; or
- through a combination of any of these methods of sale.
The prospectus supplement will explain the ways Citigroup sells specific
securities, including the names of any underwriters and details of the pricing
of the securities, as well as the commissions, concessions or discounts
Citigroup is granting the underwriters, dealers or agents.
If Citigroup uses underwriters in any sale, the underwriters will buy the
securities for their own account and may resell the securities from time to time
in one or more transactions, at a fixed public offering price or at varying
prices determined at the time of sale. In connection with an offering,
underwriters and selling group members and their affiliates may engage in
transactions to stabilize, maintain or otherwise affect the market price of the
securities, in accordance with applicable law.
Citigroup expects that the underwriters for any offering will include one
or more of its broker-dealer subsidiaries, including Citigroup Global Markets
Inc. These broker-dealer subsidiaries also expect to offer and sell previously
issued offered securities as part of their business, and may act as a principal
or agent in such transactions. Citigroup or any of its subsidiaries may use this
prospectus and the related prospectus supplements and pricing supplements in
connection with these activities.
RATIO OF INCOME TO FIXED CHARGES AND
RATIO OF INCOME TO COMBINED FIXED CHARGES
INCLUDING PREFERRED STOCK DIVIDENDS
The following table shows (1) the consolidated ratio of income to fixed
charges and (2) the consolidated ratio of income to combined fixed charges
including preferred stock dividends of Citigroup for the six months ended June
30, 2004 and each of the five most recent fiscal years.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------
2004 2003 2002 2001 2000 1999
---------- ---- ---- ---- ---- ----
Ratio of income to fixed charges (excluding
interest on deposits)...................... 2.53 3.43 2.57 2.00 1.82 1.90
Ratio of income to fixed charges (including
interest on deposits)...................... 1.92 2.48 1.95 1.64 1.52 1.56
Ratio of income to combined fixed charges
including preferred stock dividends
(excluding interest on deposits)........... 2.51 3.40 2.54 1.98 1.81 1.88
Ratio of income to combined fixed charges
including preferred stock dividends
(including interest on deposits)........... 1.91 2.47 1.94 1.63 1.52 1.55
</Table>
5
WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities Act of 1933, Citigroup filed a registration
statement (No. 333-117615) relating to the securities offered by this prospectus
with the Securities and Exchange Commission. This prospectus is a part of that
registration statement, which includes additional information.
Citigroup files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document Citigroup
files at the SEC's public reference room in Washington, D.C. You can also
request copies of the documents, upon payment of a duplicating fee, by writing
the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the public reference room. These SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.
The SEC allows Citigroup to "incorporate by reference" the information it
files with the SEC, which means that it can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus. Information that
Citigroup files later with the SEC will automatically update information in this
prospectus. In all cases, you should rely on the later information over
different information included in this prospectus or the prospectus supplement.
Citigroup incorporates by reference the documents listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
(a) Annual Report on Form 10-K for the year ended December 31, 2003;
(b) Current Report on Form 8-K filed on May 14, 2004 (conforming
Citigroup's business segment results to reflect the implementation of
the Risk Capital Allocation Methodology);
(c) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004
and June 30, 2004;
(d) Current Reports on Form 8-K filed on January 12, 2004, January 15,
2004, January 20, 2004, February 9, 2004, February 10, 2004, March 29,
2004, April 2, 2004, May 5, 2004, May 10, 2004, May 13, 2004, May 14,
2004, May 27, 2004, June 4, 2004, June 9, 2004, June 21, 2004, July 15,
2004, July 16, 2004, July 20, 2004, July 29, 2004 and August 11, 2004
and;
(e) Registration Statement on Form 8-B, dated May 10, 1988, describing our
common stock, including any amendments or reports filed for the purpose
of updating such description.
All documents Citigroup files pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this prospectus and before the later of
(1) the completion of the offering of the securities described in this
prospectus and (2) the date the broker-dealer subsidiaries of Citigroup stop
offering securities pursuant to this prospectus shall be incorporated by
reference in this prospectus from the date of filing of such documents.
You may request a copy of these filings, at no cost, by writing or
telephoning Citigroup at the following address:
Citigroup Document Services
140 58th Street, Suite 7i
Brooklyn, NY 11220
(877) 936-2737 (toll free)
(718) 765-6514 (outside the U.S.)
You should rely only on the information provided in this prospectus and the
prospectus supplement, as well as the information incorporated by reference. If
anyone provides you with different or inconsistent information, you should not
rely on it. Citigroup has not authorized anyone to provide you with different
information. Citigroup is not making an offer of these securities in any
jurisdiction where the offer is not permitted. You should not assume that the
information in this prospectus, the prospectus supplement or any documents
incorporated by reference is accurate as of any date other than the date of the
applicable document.
6
FORWARD-LOOKING STATEMENTS
This prospectus, the accompanying prospectus supplement and the information
incorporated by reference in this prospectus include forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. These forward-looking statements are based on Citigroup's
management's beliefs and assumptions and on information currently available to
Citigroup's management. Forward-looking statements include information
concerning Citigroup's possible or assumed future results of operations and
statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "intends," "plans," "estimates" or similar
expressions.
Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. Factors that could cause actual results to differ
from these forward-looking statements include, but are not limited to, those
discussed elsewhere in this prospectus, the accompanying prospectus supplement
and the documents incorporated by reference in this prospectus. You should not
put undue reliance on any forward-looking statements. Citigroup does not have
any intention or obligation to update forward-looking statements after it
distributes this prospectus.
7
CITIGROUP INC.
Citigroup is a diversified global financial services holding company whose
businesses provide a broad range of financial services to consumer and corporate
customers with some 200 million customer accounts doing business in more than
100 countries. Citigroup's activities are conducted through the Global Consumer,
Global Corporate and Investment Bank, Private Client Services, Global Investment
Management, and Proprietary Investment Activities business segments.
Citigroup is a holding company and services its obligations primarily with
dividends and advances that it receives from subsidiaries. Citigroup's
subsidiaries that operate in the banking, insurance and securities business can
only pay dividends if they are in compliance with the applicable regulatory
requirements imposed on them by federal and state bank regulatory authorities,
state insurance departments and securities regulators. Citigroup's subsidiaries
may be party to credit agreements that also may restrict their ability to pay
dividends. Citigroup currently believes that none of these regulatory or
contractual restrictions on the ability of its subsidiaries to pay dividends
will affect Citigroup's ability to service its own debt. Citigroup must also
maintain the required capital levels of a bank holding company before it may pay
dividends on its stock. Each of Citigroup's major operating subsidiaries
finances its operations on a stand-alone basis consistent with its
capitalization and ratings.
Under longstanding policy of The Board of Governors of the Federal Reserve
System, a bank holding company is expected to act as a source of financial
strength for its subsidiary banks and to commit resources to support such banks.
As a result of that policy, Citigroup may be required to commit resources to its
subsidiary banks.
The principal office of Citigroup is located at 399 Park Avenue, New York,
NY 10043, and its telephone number is (212) 559-1000.
8
USE OF PROCEEDS AND HEDGING
General. Citigroup will use the proceeds it receives from the sale of the
offered securities for general corporate purposes, which may include:
- funding the business of its operating units;
- funding investments in, or extensions of credit or capital contributions
to, its subsidiaries;
- financing possible acquisitions or business expansion; and
- lengthening the average maturity of liabilities, which means that it
could reduce its short-term liabilities or refund maturing indebtedness.
Citigroup expects to incur additional indebtedness in the future to fund
its businesses. Citigroup or an affiliate may enter into a swap agreement in
connection with the sale of the offered securities and may earn additional
income from that transaction.
Use of Proceeds Relating to Index Warrants and Indexed Notes. Citigroup or
one or more of its subsidiaries may use all or some of the proceeds received
from the sale of index warrants or indexed notes to purchase or maintain
positions in the assets that are used to determine the relevant index or
indices. Citigroup or one or more of its subsidiaries may also purchase or
maintain positions in options, futures contracts, forward contracts or swaps, or
options on such securities, or other derivative or similar instruments relating
to the relevant index or underlying assets. Citigroup may also use the proceeds
to pay the costs and expenses of hedging any currency, interest rate or other
index-related risk relating to such index warrants and indexed notes.
Citigroup expects that it or one or more of its subsidiaries will increase
or decrease their initial hedging position over time using techniques that help
evaluate the size of any hedge based upon a variety of factors affecting the
value of the underlying instrument. These factors may include the history of
price changes in that underlying instrument and the time remaining to maturity.
Citigroup may take long or short positions in the index, the underlying assets,
options, futures contracts, forward contracts, swaps, or other derivative or
similar instruments related to the index and the underlying assets. These other
hedging activities may occur from time to time before the index warrants and
indexed notes mature and will depend on market conditions and the value of the
index and the underlying assets.
In addition, Citigroup or one or more of its subsidiaries may purchase or
otherwise acquire a long or short position in index warrants and indexed notes
from time to time and may, in their sole discretion, hold, resell, exercise,
cancel or retire such offered securities. Citigroup or one or more of its
subsidiaries may also take hedging positions in other types of appropriate
financial instruments that may become available in the future.
If Citigroup or one or more of its subsidiaries has a long hedge position
in, options contracts in, or other derivative or similar instruments related to,
the underlying assets or index, Citigroup or one or more of its subsidiaries may
liquidate all or a portion of its holdings at or about the time of the maturity
of the index warrants and indexed notes. The aggregate amount and type of such
positions are likely to vary over time depending on future market conditions and
other factors. Citigroup is only able to determine profits or losses from any
such position when the position is closed out and any offsetting position or
positions are taken into account.
Citigroup has no reason to believe that its hedging activity will have a
material impact on the price of such options, swaps, futures contracts, options
on the foregoing, or other derivative or similar instruments, or on the value of
the index or the underlying assets. However, Citigroup cannot guarantee you that
its hedging activities will not affect such prices or values. Citigroup will use
the remainder of the proceeds from the sale of index warrants and indexed notes
for the general corporate purposes described above.
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EUROPEAN MONETARY UNION
The foreign currencies in which debt securities may be denominated or
payments in respect of index warrants may be due or by which amounts due on the
offered securities may be calculated could be issued by countries that are
member states of the European Union that have adopted or adopt the single euro
currency in accordance with the Treaty establishing the European Community (as
that Treaty is amended from time to time) (the "participating member states").
The current twelve participating member states are: Austria, Belgium,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands,
Portugal and Spain. Other member states of the European Union may also become
participating member states.
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DESCRIPTION OF DEBT SECURITIES
The debt securities offered by this prospectus will be unsecured
obligations of Citigroup and will be either senior or subordinated debt. Senior
debt will be issued under a senior debt indenture. Subordinated debt will be
issued under a subordinated debt indenture. The senior debt indenture and the
subordinated debt indenture are sometimes referred to in this prospectus
individually as an "indenture" and collectively as the "indentures." Forms of
the indentures have been filed with the SEC and are incorporated by reference or
included in the registration statement on Form S-3 (No. 333-117615) under the
Securities Act of 1933 of which this prospectus forms a part.
The following briefly summarizes the material provisions of the indentures
and the debt securities, other than pricing and related terms disclosed in the
accompanying prospectus supplement. You should read the more detailed provisions
of the applicable indenture, including the defined terms, for provisions that
may be important to you. You should also read the particular terms of a series
of debt securities, which will be described in more detail in the applicable
prospectus supplement. Copies of the indentures may be obtained from Citigroup
or the applicable trustee. So that you may easily locate the more detailed
provisions, the numbers in parentheses below refer to sections in the applicable
indenture or, if no indenture is specified, to sections in each of the
indentures. Wherever particular sections or defined terms of the applicable
indenture are referred to, such sections or defined terms are incorporated into
this prospectus by reference, and the statements in this prospectus are
qualified by that reference.
Unless otherwise provided in the applicable prospectus supplement, the
trustee under the senior debt indenture will be The Bank of New York, and the
trustee under the subordinated debt indenture will be J.P. Morgan Trust Company,
N.A. Citigroup has appointed Citibank, N.A. to act as paying agent under each
indenture.
GENERAL
The indentures provide that unsecured senior or subordinated debt
securities of Citigroup may be issued in one or more series, with different
terms, in each case as authorized from time to time by Citigroup. Citigroup also
has the right to "reopen" a previous issue of a series of debt securities by
issuing additional debt securities of such series.
United States federal income tax consequences and other special
considerations applicable to any debt securities issued by Citigroup at a
discount or a premium will be described in the applicable prospectus supplement.
Because Citigroup is a holding company, the claims of creditors of
Citigroup's subsidiaries will have a priority over Citigroup's equity rights and
the rights of Citigroup's creditors, including the holders of debt securities,
to participate in the assets of the subsidiary upon the subsidiary's
liquidation.
The applicable prospectus supplement relating to any series of debt
securities will describe the following terms, where applicable:
- the title of the debt securities;
- whether the debt securities will be senior or subordinated debt;
- the indenture under which the debt securities are being issued;
- the total principal amount of the debt securities;
- the percentage of the principal amount at which the debt securities will
be sold and, if applicable, the method of determining the price;
- the maturity date or dates;
- the interest rate or the method of computing the interest rate;
- the date or dates from which any interest will accrue, or how such date
or dates will be determined, and the interest payment date or dates and
any related record dates;
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- if other than in United States dollars, the currency or currency unit in
which payment will be made;
- if the amount of any payment may be determined with reference to an index
or formula based on a currency or currency unit other than that in which
the debt securities are payable, the manner in which the amounts will be
determined;
- if the amount of any payment may be determined with reference to an index
or formula based on securities, commodities, intangibles, articles or
goods, or any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or circumstance,
the manner in which the amount will be determined;
- if any payments may be made at the election of Citigroup or a holder of
debt securities in a currency or currency unit other than that in which
the debt securities are stated to be payable, the periods within which,
and the terms upon which, such election may be made;
- the location where payments on the debt securities will be made;
- the terms and conditions on which the debt securities may be redeemed at
the option of Citigroup;
- any obligation of Citigroup to redeem, purchase or repay the debt
securities at the option of a holder upon the happening of any event and
the terms and conditions of redemption, purchase or repayment;
- if other than the principal amount, the portion of the principal amount
of the debt securities payable if the maturity is accelerated;
- any provisions for the discharge of Citigroup's obligations relating to
the debt securities by deposit of funds or United States government
securities;
- whether the debt securities are to trade in book-entry form and the terms
and any conditions for exchanging the global security in whole or in part
for paper certificates;
- the date of any global security if other than the original issuance of
the first debt security to be issued;
- any material provisions of the applicable indenture described in this
prospectus that do not apply to the debt securities;
- whether the securities are to be issued in registered form, bearer form,
or both; and
- any other specific terms of the debt securities (Section 2.02).
The terms on which a series of debt securities may be convertible into or
exchangeable for common stock or other securities of Citigroup will be set forth
in the prospectus supplement relating to such series. Such terms will include
provisions as to whether conversion or exchange is mandatory, at the option of
the holder or at the option of Citigroup. The terms may include provisions
pursuant to which the number of shares of common stock or other securities of
Citigroup to be received by the holders of such series of debt securities may be
adjusted.
The senior debt securities will be issued only in registered form. The
subordinated debt securities may be issued in registered form, bearer form, or
both. If bearer securities are issued, the United States federal income tax
consequences and other special considerations, procedures and limitations
applicable to such bearer securities will be described in the applicable
prospectus supplement. As currently anticipated, debt securities of a series
will trade in book-entry form, and global notes will be issued in physical
(paper) form, as described below under "Book-Entry Procedures and Settlement."
Unless otherwise provided in the accompanying prospectus supplement, debt
securities denominated in United States dollars will be issued only in
denominations of $1,000 and whole multiples of $1,000 (Section 2.01). The
prospectus supplement relating to offered securities denominated in a foreign
currency will specify the denomination of the offered securities.
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The debt securities may be presented for exchange, and debt securities
other than a global security may be presented for registration of transfer, at
the principal trust office of the relevant trustee in New York City. Holders
will not have to pay any service charge for any registration of transfer or
exchange of debt securities, but Citigroup may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
with such registration of transfer. (Section 2.05) Debt securities in bearer
form will be transferable by delivery. Provisions with respect to the exchange
of debt securities in bearer form will be described in the applicable prospectus
supplement.
PAYMENT AND PAYING AGENTS
Distributions on the debt securities other than those represented by global
notes or bearer securities will be made in U.S. dollars against surrender of the
debt securities at the principal office of the relevant trustee in New York
City. Payment will be made to the registered holder at the close of business on
the record date for such payment. Interest payments in U.S. dollars will be made
at the principal trust office of the paying agent in New York City, or by a
check mailed to the holder at his registered address (Sections 2.01 and 5.02).
Payments in any other manner will be specified in the prospectus supplement.
SENIOR DEBT
The senior debt securities will be issued under the senior debt indenture
and will rank on an equal basis with all other unsecured debt of Citigroup
except subordinated debt.
SUBORDINATED DEBT
The subordinated debt securities will be issued under the subordinated debt
indenture and will rank subordinated and junior in right of payment, to the
extent set forth in the subordinated debt indenture, to all "Senior
Indebtedness" (as defined below) of Citigroup.
If Citigroup defaults in the payment of any principal of, or premium, if
any, or interest on any Senior Indebtedness when it becomes due and payable
after any applicable grace period, then, unless and until the default is cured
or waived or ceases to exist, Citigroup cannot make a payment on account of or
redeem or otherwise acquire the subordinated debt securities. Nevertheless,
holders of subordinated debt securities may still receive and retain:
- securities of Citigroup or any other corporation provided for by a plan
of reorganization or readjustment that are subordinate, at least to the
same extent that the subordinated debt securities are subordinate to
Senior Indebtedness; and
- payments made from a defeasance trust as described below.
If there is any insolvency, bankruptcy, liquidation or other similar
proceeding relating to Citigroup, its creditors or its property, then all Senior
Indebtedness must be paid in full before any payment may be made to any holders
of subordinated debt securities. Holders of subordinated debt securities must
return and deliver any payments received by them, other than in a plan of
reorganization or through a defeasance trust as described below, directly to the
holders of Senior Indebtedness until all Senior Indebtedness is paid in full.
(Subordinated Debt Indenture, Section 14.01).
"Senior Indebtedness" means:
(1) the principal, premium, if any, and interest in respect of (A)
indebtedness for money borrowed and (B) indebtedness evidenced by
securities, notes, debentures, bonds or other similar instruments
issued by Citigroup, including all indebtedness (whether now or
hereafter outstanding) issued under the senior debt indenture, as the
same may be amended, modified or supplemented from time to time;
(2) all capital lease obligations of Citigroup;
(3) all obligations of Citigroup issued or assumed as the deferred purchase
price of property, all conditional sale obligations of Citigroup and
all obligations of Citigroup under any conditional sale or title
retention agreement, but excluding trade accounts payable in the
ordinary course of business;
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(4) all obligations, contingent or otherwise, of Citigroup in respect of
any letters of credit, bankers acceptance, security purchase facilities
and similar credit transactions;
(5) all obligations of Citigroup in respect of interest rate swap, cap or
other agreements, interest rate future or option contracts, currency
swap agreements, currency future or option contracts and other similar
agreements;
(6) all obligations of the type referred to in clauses (1) through (5)
above of other persons for the payment of which Citigroup is
responsible or liable as obligor, guarantor or otherwise; and
(7) all obligations of the type referred to in clauses (1) through (6)
above of other persons secured by any lien on any property or asset of
Citigroup whether or not such obligation is assumed by Citigroup;
but Senior Indebtedness does not include:
(A) any indebtedness issued prior to July 23, 2004 under the subordinated
debt indenture;
(B) any indebtedness issued by Citigroup under an indenture with Bank One
Trust Company, N.A., dated as of July 17, 1998, as supplemented;
(C) any indebtedness issued to a Citigroup Trust before May 31, 2004 under
the indenture, dated as of October 7, 1996, between Citigroup and
JPMorgan Chase Bank, as supplemented (the "1996 junior subordinated
debt indenture");
(D) any guarantee entered into by Citigroup before May 31, 2004 in respect
of any preferred securities, capital securities or preference stock of
a Citigroup Trust to which Citigroup issued any indebtedness under the
1996 junior subordinated debt indenture; and
(E) any indebtedness or any guarantee that is by its terms subordinated to,
or ranks equally with the subordinated debt securities and the issuance
of which (x) has received the concurrence or approval of the staff of
the Federal Reserve Bank of New York or the staff of the Board of
Governors of the Federal Reserve System or (y) does not at the time of
issuance prevent the subordinated debt securities from qualifying for
Tier 2 capital treatment (irrespective of any limits on the amount of
Citigroup's Tier 2 capital) under the applicable capital adequacy
guidelines, regulations, policies or published interpretations of the
Board of Governors of the Federal Reserve System.
"Citigroup Trust" means each of Citigroup Capital II, Citigroup Capital VI,
Citigroup Capital VII, Citigroup Capital VIII, Citigroup Capital IX, Citigroup
Capital X, Citigroup Capital XI, Citigroup Capital XII and Citigroup Capital
XIII, each a Delaware statutory business trust.
"Junior Subordinated Debt" means Citigroup's:
- 6.10% Junior Subordinated Deferrable Interest Debentures due September
30, 2033;
- 6.00% Junior Subordinated Deferrable Interest Debentures due February 14,
2033;
- 6.950% Junior Subordinated Deferrable Interest Debentures due September
15, 2031;
- 7 1/8% Junior Subordinated Deferrable Interest Debentures due July 31,
2031;
- 6 7/8% Junior Subordinated Deferrable Interest Debentures due March 15,
2029;
- 7 3/4% Junior Subordinated Deferrable Interest Debentures due December 1,
2036;
- other notes or other obligations which may be issued under the indenture,
dated as of October 7, 1996, between Citigroup and JPMorgan Chase Bank,
as trustee; and
- indebtedness that is by its terms subordinated to, or ranks on an equal
basis with, the Junior Subordinated Debt.
"Capital Securities Guarantees" means the guarantees issued by Citigroup in
connection with:
- the 6.10% Capital Securities of Citigroup Capital X;
- the 6.00% Capital Securities of Citigroup Capital IX;
- the 6.950% Capital Securities of Citigroup Capital VIII;
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- the 7 1/8% Capital Securities of Citigroup Capital VII;
- the 6 7/8% Capital Securities of Citigroup Capital VI;
- the 7 3/4% Trust Preferred Securities of Citigroup Capital II; and
- any existing or future preferred or preference stock, including capital
securities, that is by its terms subordinated to, or ranks on an equal
basis with, the Capital Securities.
COVENANTS
Limitations on Liens. The senior debt indenture provides that Citigroup
will not, and will not permit any Subsidiary to, incur, issue, assume or
guarantee any indebtedness for money borrowed if such indebtedness is secured by
a pledge of, lien on, or security interest in any shares of Voting Stock of any
Significant Subsidiary, without providing that each series of senior debt
securities and, at Citigroup's option, any other senior indebtedness ranking
equally with such series of senior debt securities, is secured equally and
ratably with such indebtedness. This limitation shall not apply to indebtedness
secured by a pledge of, lien on or security interest in any shares of Voting
Stock of any corporation at the time it becomes a Significant Subsidiary,
including any renewals or extensions of such secured indebtedness (Senior Debt
Indenture, Section 5.04). The subordinated debt indenture does not contain a
similar provision.
"Significant Subsidiary" means a Subsidiary, including its Subsidiaries,
that meets any of the following conditions:
- Citigroup's and its other Subsidiaries' investments in and advances to
the Subsidiary exceed 10 percent of the total assets of Citigroup and its
Subsidiaries consolidated as of the end of the most recently completed
fiscal year;
- Citigroup's and its other Subsidiaries' proportionate share of the total
assets of the Subsidiary after intercompany eliminations exceeds 10
percent of the total assets of Citigroup and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
- Citigroup's and its other Subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principles of the Subsidiary
exceeds 10 percent of such income of Citigroup and its Subsidiaries
consolidated for the most recently completed fiscal year.
"Subsidiary" means any corporation of which securities entitled to elect at
least a majority of the corporation's directors shall at the time be owned,
directly or indirectly, by Citigroup, and/or one or more Subsidiaries, except
securities entitled to vote for directors only upon the happening of a
contingency.
"Voting Stock" means capital stock, the holders of which have general
voting power under ordinary circumstances to elect at least a majority of the
board of directors of a corporation, except capital stock that carries only the
right to vote conditioned on the happening of an event regardless of whether
such event shall have happened (Senior Debt Indenture, Sections 1.02 and 5.04).
Limitations on Mergers and Sales of Assets. The indentures provide that
Citigroup will not merge or consolidate with another corporation or sell other
than for cash or lease all or substantially all its assets to another
corporation, or purchase all or substantially all the assets of another
corporation unless:
- either (1) Citigroup is the continuing corporation, or (2) the successor
corporation, if other than Citigroup, expressly assumes by supplemental
indenture the obligations evidenced by the securities issued pursuant to
the indenture and
- in the case of the senior debt indenture or if provided in the applicable
prospectus supplement for a series of subordinated debt, immediately
after the transaction, there would not be any default in the performance
of any covenant or condition of the indenture (Senior Debt Indenture,
Sections 5.05 and 14.01; Subordinated Debt Indenture, Section 15.01).
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Limitations on Future Issuances of Subordinated Debt Securities under the
Subordinated Debt Indenture. The subordinated debt indenture provides that any
subordinated debt securities issued under the subordinated debt indenture shall
either (x) be issued with the concurrence or approval of the staff of the
Federal Reserve Bank of New York or the staff of the Board of Governors of the
Federal Reserve System or (y) qualify at the time of issuance for Tier 2 capital
treatment (irrespective of any limits on the amount of Citigroup's Tier 2
capital) under the applicable capital adequacy guidelines, regulations, policies
or published interpretations of the Board of Governors of the Federal Reserve
System.
Other than the restrictions described above, the indentures do not contain
any covenants or provisions that would protect holders of the debt securities in
the event of a highly leveraged transaction.
MODIFICATION OF THE INDENTURES
Under the indentures, Citigroup and the relevant trustee can enter into
supplemental indentures to establish the form and terms of any series of debt
securities without obtaining the consent of any holder of debt securities.
Citigroup and the trustee may, with the consent of the holders of at least
66 2/3% in aggregate principal amount of the senior debt securities of a series
or at least a majority in aggregate principal amount of the subordinated debt
securities of a series, modify the applicable indenture or the rights of the
holders of the securities of such series to be affected.
No such modification may, without the consent of the holder of each
security so affected:
- change the fixed maturity of any such securities;
- reduce the rate of interest on such securities;
- reduce the principal amount of such securities or the premium, if any, on
such securities;
- reduce the amount of the principal of any securities issued originally at
a discount;
- change the currency in which any such securities are payable; or
- impair the right to sue for the enforcement of any such payment on or
after the maturity of such securities.
In addition, no such modification may:
- reduce the percentage of securities referred to above whose holders need
to consent to the modification without the consent of such holders; or
- change, without the written consent of the trustee, the rights, duties or
immunities of the trustee (Sections 13.01 and 13.02).
In addition, the subordinated debt indenture may not be amended without the
consent of each holder of subordinated debt securities affected thereby to
modify the subordination of the subordinated debt securities issued under that
indenture in a manner adverse to the holders of the subordinated debt securities
(Subordinated Debt Indenture, Section 13.02).
EVENTS OF DEFAULT AND DEFAULTS
Events of default under the senior debt indenture and defaults under the
subordinated debt indenture are:
- failure to pay required interest on any debt security of such series for
30 days;
- failure to pay principal, other than a scheduled installment payment to a
sinking fund or premium, if any, on any debt security of such series when
due;
- failure to make any required scheduled installment payment to a sinking
fund for 30 days on debt securities of such series;
- failure to perform for 90 days after notice any other covenant in the
relevant indenture other than a covenant included in the relevant
indenture solely for the benefit of a series of debt securities other
than such series; and
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- certain events of bankruptcy or insolvency, whether voluntary or not
(Senior Debt Indenture, Section 6.01; Subordinated Debt Indenture,
Section 6.07).
Unless otherwise specified in the prospectus supplement relating to any
series of subordinated debt, the only events of default specified in the
subordinated debt indenture are events of insolvency or bankruptcy, whether
voluntary or not. There is no event of default, and accordingly there is no
right of acceleration, in the case of a default in the payment of principal of,
premium, if any, or interest on, subordinated debt securities, the performance
of any other covenant of Citigroup in the subordinated indenture or any other
default that is not also an event of default (Subordinated Debt Indenture,
Sections 6.01 and 6.02).
If an event of default regarding debt securities of any series issued under
the indentures should occur and be continuing, either the trustee or the holders
of 25% in the principal amount of outstanding debt securities of such series may
declare each debt security of that series due and payable (Section 6.02).
Citigroup is required to file annually with the trustee a statement of an
officer as to the fulfillment by Citigroup of its obligations under the
indenture during the preceding year (Senior Debt Indenture, Section 5.06;
Subordinated Debt Indenture, Section 5.04).
No event of default regarding one series of senior debt securities issued
under the senior debt indenture is necessarily an event of default regarding any
other series of senior debt securities (Senior Debt Indenture, Section 6.02).
Holders of a majority in principal amount of the outstanding debt
securities of any series will be entitled to control certain actions of the
trustee under the indentures and to waive past defaults regarding such series
(Sections 6.02 and 6.06). The trustee generally will not be under any obligation
to act at the request, order or direction of any of the holders of debt
securities, unless one or more of such holders shall have offered to the trustee
reasonable security or indemnity (Section 10.01).
If an event of default occurs regarding a series of debt securities, the
trustee may use any sums that it collects under the relevant indenture for its
own reasonable compensation and expenses incurred prior to paying the holders of
debt securities of such series (Section 6.05).
Before any holder of any series of debt securities may institute action for
any remedy, except payment on such holder's debt security when due, the holders
of not less than 25% in principal amount of the debt securities of that series
outstanding must request the trustee to take action. Holders must also offer
satisfactory security and indemnity against liabilities incurred by the trustee
for taking such action (Section 6.07).
DEFEASANCE
Senior Debt Indenture. If so specified when the senior debt securities of
a particular series are created, after Citigroup has deposited with the trustee
cash or U.S. government securities in trust for the benefit of the holders
sufficient to pay the principal of, premium, if any, and interest on the senior
debt securities of such series when due, then Citigroup, at its option:
- will be deemed to have paid and satisfied its obligations on all
outstanding senior debt securities of such series, which is known as
"defeasance and discharge;" or
- will cease to be under any obligation, other than to pay when due the
principal of, premium, if any, and interest on such senior debt
securities, relating to the senior debt securities of such series, which
is known as "covenant defeasance."
In the case of covenant defeasance, Citigroup must also deliver to the
trustee an opinion of counsel to the effect that the holders of the senior debt
securities of such series will have no United States federal income tax
consequences as a result of such deposit.
When there is a defeasance and discharge, (1) the senior debt indenture
will no longer govern the senior debt securities of such series, (2) Citigroup
will no longer be liable for payment and (3) the holders of such senior debt
securities will be entitled only to the deposited funds. When there is a
covenant
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defeasance, however, Citigroup will continue to be obligated to make payments
when due if the deposited funds are not sufficient.
The obligations and rights under the senior debt indenture regarding
compensation, reimbursement and indemnification of the trustee, optional
redemption, mandatory and optional scheduled installment payments, if any,
registration of transfer and exchange of the senior debt securities of such
series, replacement of mutilated, destroyed, lost or stolen senior debt
securities and certain other administrative provisions will continue even if
Citigroup exercises its defeasance and discharge or covenant defeasance options
(Senior Debt Indenture, Sections 11.03 and 11.04).
Under current United States federal income tax law, defeasance and
discharge should be treated as a taxable exchange of the senior debt securities
for an interest in the trust. As a consequence, each holder of the senior debt
securities would recognize gain or loss equal to the difference between the
value of the holder's interest in the trust and holder's adjusted tax basis for
the senior debt securities deemed exchanged, except to the extent attributable
to accrued but unpaid interest, which will be taxable as ordinary income. Each
holder would then be required to include in income his share of any income, gain
and loss recognized by the trust. Even though United States federal income tax
on the deemed exchange would be imposed on a holder, the holder would not
receive any cash until the maturity or an earlier redemption of the senior debt
securities, except for any current interest payments. Prospective investors are
urged to consult their tax advisors as to the specific consequences of a
defeasance and discharge, including the applicability and effect of tax laws
other than the United States federal income tax law.
Under current United States federal income tax law, a covenant defeasance
would not be treated as a taxable exchange of senior debt securities.
Subordinated Debt Indenture. The defeasance and discharge and covenant
defeasance provisions contained in the subordinated debt indenture are
substantially the same as those described above for the senior debt indenture
(Subordinated Debt Indenture, Sections 11.01, 11.02, 11.03, 11.04 and 11.05).
Under the subordinated debt indenture, Citigroup must also deliver to the
trustee an opinion of counsel to the effect that the holders of the subordinated
debt securities will not recognize income, gain or loss for United States
federal income tax purposes as a result of such deposit and defeasance and
discharge or covenant defeasance and that United States federal income tax would
be imposed on the holders in the same manner as if such defeasance and discharge
had not occurred. In the case of a defeasance and discharge, such opinion must
be based upon a ruling or administrative pronouncement of the Internal Revenue
Service.
CONCERNING THE TRUSTEES
Citigroup has had and may continue to have banking relationships with the
trustees in the ordinary course of business.
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DESCRIPTION OF COMMON STOCK WARRANTS
The following briefly summarizes the material terms and provisions of the
common stock warrants. You should read the particular terms of the common stock
warrants that are offered by Citigroup, which will be described in more detail
in a prospectus supplement. The prospectus supplement will also state whether
any of the general provisions summarized below do not apply to the common stock
warrants being offered. The prospectus supplement may add, update or change the
terms and conditions of the common stock warrants as described in this
prospectus.
Citigroup may offer common stock warrants pursuant to which it may sell or
purchase common stock. Common stock warrants may be issued independently or
together with any securities and may be attached to or separate from those
securities. The common stock warrants will be issued under common stock warrant
agreements to be entered into between Citigroup and a bank or trust company, as
common stock warrant agent. Except as otherwise stated in a prospectus
supplement, the common stock warrant agent will act solely as the agent of
Citigroup under the applicable common stock warrant agreement and will not
assume any obligation or relationship of agency or trust for or with any owners
of common stock warrants. A copy of the form of common stock warrant agreement,
including the form of common stock warrant certificate, will be filed as an
exhibit to a document incorporated by reference in the registration statement of
which this prospectus forms a part. You should read the more detailed provisions
of the common stock warrant agreement and the common stock warrant certificate
for provisions that may be important to you.
GENERAL
The particular terms of each issue of common stock warrants, the common
stock warrant agreement relating to the common stock warrants and the common
stock warrant certificates representing common stock warrants will be described
in the applicable prospectus supplement, including, as applicable:
- the title of the common stock warrants;
- the offering price of the common stock warrants;
- the aggregate number of common stock warrants and the aggregate number of
shares of common stock purchasable upon exercise of the common stock
warrants;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- the designation and terms of the common stock with which the common stock
warrants are issued, and the number of common stock warrants issued with
each share of common stock;
- the date, if any, on and after which the common stock warrants and the
related common stock will be separately transferable;
- the minimum or maximum number of the common stock warrants that may be
exercised at any one time;
- the date on which the right to exercise the common stock warrants will
commence and the date on which the right will expire;
- a discussion of United States federal income tax, accounting or other
considerations applicable to the common stock warrants;
- anti-dilution provisions of the common stock warrants, if any;
- redemption or call provisions, if any, applicable to the common stock
warrants; and
- any additional terms of the common stock warrants, including terms,
procedures and limitations relating to the exchange and exercise of the
common stock warrants.
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NO RIGHTS AS STOCKHOLDERS
Holders of common stock warrants will not be entitled, solely by virtue of
being holders, to vote, to consent, to receive dividends, to receive notice as
stockholders with respect to any meeting of stockholders for the election of
directors or any other matter, or to exercise any rights whatsoever as a holder
of the common stock purchasable upon exercise of the common stock warrants.
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITION
If at any time there is a merger or consolidation involving Citigroup or a
sale, transfer, conveyance, other than lease, or other disposition of all or
substantially all of the assets of Citigroup, then the assuming corporation will
succeed to the obligations of Citigroup under the common stock warrant agreement
and the related common stock warrants. Citigroup will then be relieved of any
further obligation under the common stock warrant agreement and common stock
warrants.
20
DESCRIPTION OF INDEX WARRANTS
The following briefly summarizes the material terms and provisions of the
index warrants, other than pricing and related terms disclosed in the
accompanying prospectus supplement. You should read the particular terms of the
index warrants that are offered by Citigroup, which will be described in more
detail in a prospectus supplement. The prospectus supplement will also state
whether any of the general provisions summarized below do not apply to the index
warrants being offered.
Index warrants may be issued independently or together with debt securities
and may be attached to, or separate from, any such offered securities. Each
series of index warrants will be issued under a separate index warrant agreement
to be entered into between Citigroup and a bank or trust company, as index
warrant agent. A single bank or trust company may act as index warrant agent for
more than one series of index warrants. The index warrant agent will act solely
as the agent of Citigroup under the applicable index warrant agreement and will
not assume any obligation or relationship of agency or trust for or with any
owners of index warrants. A copy of the form of index warrant agreement,
including the form of certificate or global certificate that will represent the
index warrant certificate, will be filed as an exhibit to a document
incorporated by reference in the registration statement of which this prospectus
forms a part. You should read the more detailed provisions of the index warrant
agreement and the index warrant certificate or index warrant global certificate
for provisions that may be important to you.
GENERAL
The index warrant agreement does not limit the number of index warrants
that may be issued. Citigroup will have the right to "reopen" a previous series
of index warrants by issuing additional index warrants of such series.
Each index warrant will entitle the warrant holder to receive from
Citigroup, upon exercise, cash or securities. The amount in cash or number of
securities will be determined by referring to an index calculated on the basis
of prices, yields, levels or other specified objective measures in respect of:
- one or more specified securities or securities indices;
- one or more specified foreign currencies or currency indices;
- a combination thereof; or
- changes in such measure or differences between two or more such measures.
The prospectus supplement for a series of index warrants will describe the
formula or methodology to be applied to the relevant index or indices to
determine the amount payable or distributable on the index warrants.
If so specified in the prospectus supplement, the index warrants will
entitle the warrant holder to receive from Citigroup a minimum or maximum amount
upon automatic exercise at expiration or the happening of any other event
described in the prospectus supplement.
The index warrants will be deemed to be automatically exercised upon
expiration. Upon such automatic exercise, warrant holders will be entitled to
receive the cash amount or number of securities due, if any, on such exercise.
You should read the prospectus supplement applicable to a series of index
warrants for any circumstances in which the payment or distribution or the
determination of the payment or distribution on the index warrants may be
postponed or exercised early or cancelled. The amount due after any such delay
or postponement, or early exercise or cancellation, will be described in the
applicable prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement,
Citigroup will not purchase or take delivery of or sell or deliver any
securities or currencies, including the underlying assets, other than
21
the payment of any cash or distribution of any securities due on the index
warrants, from or to warrant holders pursuant to the index warrants.
The applicable prospectus supplement relating to a series of index warrants
will describe the following:
- the aggregate number of such index warrants;
- the offering price of such index warrants;
- the measure or measures by which payment or distribution on such index
warrants will be determined;
- certain information regarding the underlying securities, foreign
currencies or indices;
- the amount of cash or number of securities due, or the means by which the
amount of cash or number of securities due may be calculated, on exercise
of the index warrants, including automatic exercise, or upon
cancellation;
- the date on which the index warrants may first be exercised and the date
on which they expire;
- any minimum number of index warrants exercisable at any one time;
- any maximum number of index warrants that may, at Citigroup's election,
be exercised by all warrant holders or by any person or entity on any
day;
- any provisions permitting a warrant holder to condition an exercise of
index warrants;
- the method by which the index warrants may be exercised;
- the currency in which the index warrants will be denominated and in which
payments on the index warrants will be made or the securities that may be
distributed in respect of the index warrants;
- the method of making any foreign currency translation applicable to
payments or distributions on the index warrants;
- the method of providing for a substitute index or indices or otherwise
determining the amount payable in connection with the exercise of index
warrants if an index changes or is no longer available;
- the time or times at which amounts will be payable or distributable in
respect of such index warrants following exercise or automatic exercise;
- any national securities exchange on, or self-regulatory organization
with, which such index warrants will be listed;
- any provisions for issuing such index warrants in certificated form;
- if such index warrants are not issued in book-entry form, the place or
places at and the procedures by which payments or distributions on the
index warrants will be made; and
- any other terms of such index warrants.
Prospective purchasers of index warrants should be aware of special United
States federal income tax considerations applicable to instruments such as the
index warrants. The prospectus supplement relating to each series of index
warrants will describe these tax considerations. The summary of United States
federal income tax considerations contained in the prospectus supplement will be
presented for informational purposes only, however, and will not be intended as
legal or tax advice to prospective purchasers. You are urged to consult your tax
advisors before purchasing any index warrants.
LISTING
Unless otherwise indicated in the prospectus supplement, the index warrants
will be listed on a national securities exchange or with a self-regulatory
organization, in each case as specified in the
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prospectus supplement. It is expected that such organization will stop trading a
series of index warrants as of the close of business on the related expiration
date of such index warrants.
MODIFICATION
The index warrant agreement and the terms of the related index warrants may
be amended by Citigroup and the index warrant agent, without the consent of the
holders of any index warrants, for any of the following purposes:
- curing any ambiguity or curing, correcting or supplementing any defective
or inconsistent provision;
- maintaining the listing of such index warrants on any national securities
exchange or with any other self-regulatory organization;
- registering such index warrants under the Exchange Act, permitting the
issuance of individual index warrant certificates to warrant holders,
reflecting the issuance by Citigroup of additional index warrants of the
same series or reflecting the appointment of a successor depositary; or
- for any other purpose that Citigroup may deem necessary or desirable and
which will not materially and adversely affect the interests of the
warrant holders.
Citigroup and the index warrant agent also may modify or amend the index
warrant agreement and the terms of the related index warrants, with the consent
of the holders of not less than a majority of the then outstanding warrants of
each series affected by such modification or amendment, for any purpose.
However, no such modification or amendment may be made without the consent of
each holder affected thereby if such modification or amendment:
- changes the amount to be paid to the warrant holder or the manner in
which that amount is to be determined;
- shortens the period of time during which the index warrants may be
exercised;
- otherwise materially and adversely affects the exercise rights of the
holders of the index warrants; or
- reduces the percentage of the number of outstanding index warrants the
consent of whose holders is required for modification or amendment of the
index warrant agreement or the terms of the related index warrants.
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITION
If at any time there is a merger or consolidation involving Citigroup or a
sale, transfer, conveyance, other than lease, or other disposition of all or
substantially all of the assets of Citigroup, then the assuming corporation will
succeed to the obligations of Citigroup under the index warrant agreement and
the related index warrants. Citigroup will then be relieved of any further
obligation under the index warrant agreement and index warrants.
ENFORCEABILITY OF RIGHTS BY WARRANT HOLDERS
Any warrant holder may, without the consent of the index warrant agent or
any other warrant holder, enforce by appropriate legal action on its own behalf
his right to exercise, and to receive payment for, its index warrants.
23
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of the date of this prospectus, Citigroup's authorized capital stock
consists of 15 billion shares of common stock and 30 million shares of preferred
stock. The following briefly summarizes the material terms of Citigroup's common
stock and outstanding preferred stock. You should read the more detailed
provisions of Citigroup's certificate of incorporation and the certificate of
designation relating to a series of preferred stock for provisions that may be
important to you.
COMMON STOCK
As of June 30, 2004, Citigroup had outstanding approximately 5.18 billion
shares of its common stock. Each holder of common stock is entitled to one vote
per share for the election of directors and for all other matters to be voted on
by Citigroup's stockholders. Except as otherwise provided by law, the holders of
shares of common stock vote as one class. Holders of common stock may not
cumulate their votes in the election of directors, and are entitled to share
equally in the dividends that may be declared by the board of directors, but
only after payment of dividends required to be paid on outstanding shares of
preferred stock.
Upon voluntary or involuntary liquidation, dissolution or winding up of
Citigroup, the holders of the common stock share ratably in the assets remaining
after payments to creditors and provision for the preference of any preferred
stock. There are no preemptive or other subscription rights, conversion rights
or redemption or scheduled installment payment provisions relating to shares of
common stock. All of the outstanding shares of common stock are fully paid and
nonassessable. The transfer agent and registrar for the common stock is
Citibank, N.A. The common stock is listed on the New York Stock Exchange and the
Pacific Exchange under the symbol "C".
PREFERRED STOCK
The general terms of Citigroup's preferred stock are described below under
"Description of Preferred Stock."
As of the date of this prospectus, Citigroup had outstanding the following
series of preferred stock with the following terms:
<Table>
<Caption>
NUMBER REDEMPTION DATE NEXT
OF SHARES DIVIDENDS PRICE PER REDEEMABLE GENERAL
TITLE OF SERIES OUTSTANDING PER YEAR SHARE ($) BY CITIGROUP VOTING RIGHTS
- --------------- ----------- ---------------- ---------- --------------------- -------------
6.365% Cumulative Preferred
Stock, Series F........... 1,600,000 6.365% 250 June 16, 2007 No
6.213% Cumulative Preferred
Stock, Series G........... 800,000 6.213% 250 July 11, 2007 No
6.231% Cumulative Preferred
Stock, Series H........... 800,000 6.231% 250 September 8, 2007 No
5.864% Cumulative Preferred
Stock, Series M........... 800,000 5.864% 250 October 8, 2007 No
Fixed/Adjustable Rate
Cumulative Preferred
Stock, Series V........... 250,000 Variable Rate(1) 500 February 15, 2006(3) No
Cumulative Adjustable Rate
Preferred Stock, Series
Y......................... 2,262 Variable Rate(2) 100,000 On any payment date No
5.321% Cumulative Preferred
Stock, Series YY.......... 987 5.321% 1,000,000 December 22, 2018 No
6.767% Cumulative Preferred
Stock, Series YYY......... 2,597 6.767% 1,000,000 February 27, 2022 No
</Table>
24
Where the above table indicates that the holders of the preferred stock
have no general voting rights, this means that they do not vote on matters
submitted to a vote of the common stockholders. However, the holders of this
preferred stock do have other special voting rights (1) that are required by
law, (2) that apply if there is a default in paying dividends for the equivalent
of six calendar quarters, in some cases whether or not consecutive and (3) when
Citigroup wants to create any class of stock having a preference as to dividends
or distributions of assets over such series or alter or change the provisions of
the certificate of incorporation so as to adversely affect the powers,
preferences or rights of the holders of such series. These special voting rights
apply to all series of preferred stock listed above.
- ---------------
(1) The Series V Preferred Stock provides for a cumulative dividend at a rate
that changes over time. For each dividend period up to but not including
February 15, 2006, the dividend rate will be 5.86% per year. For each
dividend period beginning on or after February 15, 2006, the dividend rate
will be equal to 0.50% plus the Effective Rate, but not less than 6.00% or
more than 12.00%. The dividend rate will be increased in the event of
specified changes in the Internal Revenue Code that would decrease the
dividends received deduction applicable to corporate stockholders.
(2) The holders of the Series Y Preferred Stock are entitled to a cumulative
quarterly dividend at an annual rate equal to the greater of (a) the Short
Term Rate and (b) 4.85%. The "Short Term Rate" generally will be equal to
either 85% or 78% of the Money Market Yield, as defined in the certificate
of incorporation, of the 90-day rate for commercial paper multiplied by the
stock's $100,000 per share liquidation value.
(3) Prior to February 15, 2006, in the event of specified changes in the
Internal Revenue Code that would decrease the dividends received deduction
applicable to corporate stockholders, Citigroup at its option may redeem
all, but not less than all, of the Series V Preferred Stock at a price
declining over time from $520 per share to $500 per share.
IMPORTANT PROVISIONS OF CITIGROUP'S CERTIFICATE OF INCORPORATION AND BY-LAWS
Business Combinations. The certificate of incorporation generally requires
the affirmative vote of at least 66 2/3% of the votes entitled to be cast by the
holders of the then outstanding shares of voting stock, voting together as a
single class, to approve any merger or other business combination between
Citigroup and any interested stockholder, unless (1) the transaction has been
approved by a majority of the continuing directors of Citigroup or (2) minimum
price, form of consideration and procedural requirements are satisfied. An
"interested stockholder" as defined in the certificate of incorporation
generally means a person who owns at least 25% of the voting stock of Citigroup.
A "continuing director", as defined in the certificate of incorporation,
generally means a director who is not related to an interested stockholder who
held that position before an interested stockholder became an interested
stockholder.
Amendments to Certificate of Incorporation and By-Laws. The affirmative
vote of the holders of at least 75% of the voting power of the shares entitled
to vote for the election of directors is required to amend the provisions of the
certificate of incorporation relating to the issuance of preferred stock or
common stock. Amendments of provisions of the certificate of incorporation
relating to business combinations generally require a vote of the holders of
66 2/3% of the then outstanding shares of voting stock, unless 75% of the board
of directors recommend such amendment and the directors comprising such 75%
would qualify as continuing directors. The board of directors, at any meeting,
may alter or amend the by-laws upon the affirmative vote of at least 66 2/3% of
the entire board of directors.
Vacancies. Vacancies on the board of directors resulting from an increase
in the number of directors may be filled by a majority of the board of directors
then in office, so long as a quorum is present. Any other vacancies on the board
of directors may be filled by a majority of the directors then in office, even
if less than a quorum. Any director elected to fill a vacancy that did not
result from increasing the size of the board of directors shall hold office for
a term coinciding with the predecessor director's remaining term.
25
DESCRIPTION OF PREFERRED STOCK
The following briefly summarizes the material terms of Citigroup's
preferred stock, other than pricing and related terms disclosed in the
accompanying prospectus supplement. You should read the particular terms of any
series of preferred stock offered by Citigroup, which will be described in more
detail in any prospectus supplement relating to such series, together with the
more detailed provisions of Citigroup's restated certificate of incorporation
and the certificate of designation relating to each particular series of
preferred stock for provisions that may be important to you. The certificate of
incorporation, as amended and restated, is incorporated by reference into the
registration statement of which this prospectus forms a part. The certificate of
designation relating to the particular series of preferred stock offered by the
accompanying prospectus supplement and this prospectus will be filed as an
exhibit to a document incorporated by reference in the registration statement.
The prospectus supplement will also state whether any of the terms summarized
below do not apply to the series of preferred stock being offered. For a
description of Citigroup's outstanding preferred stock, see "Description of
Capital Stock."
Under Citigroup's certificate of incorporation, the board of directors of
Citigroup is authorized to issue shares of preferred stock in one or more
series, and to establish from time to time a series of preferred stock with the
following terms specified:
- the number of shares to be included in the series;
- the designation, powers, preferences and rights of the shares of the
series; and
- the qualifications, limitations or restrictions of such series.
Prior to the issuance of any series of preferred stock, the board of
directors of Citigroup will adopt resolutions creating and designating the
series as a series of preferred stock and the resolutions will be filed in a
certificate of designation as an amendment to the certificate of incorporation.
The term "board of directors of Citigroup" includes any duly authorized
committee.
The rights of holders of the preferred stock offered may be adversely
affected by the rights of holders of any shares of preferred stock that may be
issued in the future. The board of directors may cause shares of preferred stock
to be issued in public or private transactions for any proper corporate purpose.
Examples of proper corporate purposes include issuances to obtain additional
financing in connection with acquisitions or otherwise, and issuances to
officers, directors and employees of Citigroup and its subsidiaries pursuant to
benefit plans or otherwise. Shares of preferred stock issued by Citigroup may
have the effect of rendering more difficult or discouraging an acquisition of
Citigroup deemed undesirable by the board of directors of Citigroup.
Under existing interpretations of The Board of Governors of the Federal
Reserve System, if the holders of the preferred stock become entitled to vote
for the election of directors because dividends on the preferred stock are in
arrears as described below, preferred stock may then be deemed a "class of
voting securities" and a holder of 25% or more of the preferred stock or a
holder of 5% or more of the preferred stock that is otherwise a bank holding
company may then be regulated as a "bank holding company" with respect to
Citigroup in accordance with the Bank Holding Company Act. In addition, at such
time:
- any bank holding company or foreign bank with a U.S. presence generally
would be required to obtain the approval of the Federal Reserve Board
under the BHC Act to acquire or retain 5% or more of the preferred stock;
and
- any person other than a bank holding company may be required to obtain
the approval of the Federal Reserve Board under the Change in Bank
Control Act to acquire or retain 10% or more of the preferred stock.
Before exercising its option to redeem any shares of preferred stock, Citigroup
will obtain the approval of the Federal Reserve Board if then required by
applicable law.
The preferred stock will be, when issued, fully paid and nonassessable.
Holders of preferred stock will not have any preemptive or subscription rights
to acquire more stock of Citigroup.
26
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in the
prospectus supplement relating to such series.
RANK
Unless otherwise specified in the prospectus supplement relating to the
shares of a series of preferred stock, such shares will rank on an equal basis
with each other series of preferred stock and prior to the common stock as to
dividends and distributions of assets.
DIVIDENDS
Holders of each series of preferred stock will be entitled to receive cash
dividends when, as and if declared by the board of directors of Citigroup out of
funds legally available for dividends. The rates and dates of payment of
dividends will be set forth in the prospectus supplement relating to each series
of preferred stock. Dividends will be payable to holders of record of preferred
stock as they appear on the books of Citigroup or, if applicable, the records of
the depositary referred to below under "Description of Depositary Shares," on
the record dates fixed by the board of directors. Dividends on a series of
preferred stock may be cumulative or noncumulative.
Citigroup may not declare, pay or set apart for payment dividends on the
preferred stock unless full dividends on other series of preferred stock that
rank on an equal or senior basis have been paid or sufficient funds have been
set apart for payment for
- all prior dividend periods of other series of preferred stock that pay
dividends on a cumulative basis; or
- the immediately preceding dividend period of other series of preferred
stock that pay dividends on a noncumulative basis.
Partial dividends declared on shares of preferred stock and each other
series of preferred stock ranking on an equal basis as to dividends will be
declared pro rata. A pro rata declaration means that the ratio of dividends
declared per share to accrued dividends per share will be the same for each
series of preferred stock.
Similarly, Citigroup may not declare, pay or set apart for payment
non-stock dividends or make other payments on the common stock or any other
stock of Citigroup ranking junior to the preferred stock until full dividends on
the preferred stock have been paid or set apart for payment for
- all prior dividend periods if the preferred stock pays dividends on a
cumulative basis; or
- the immediately preceding dividend period if the preferred stock pays
dividends on a noncumulative basis.
CONVERSION AND EXCHANGE
The prospectus supplement for a series of preferred stock will state the
terms, if any, on which shares of that series are convertible into or
exchangeable for shares of Citigroup's common stock.
REDEMPTION
If so specified in the applicable prospectus supplement, a series of
preferred stock may be redeemable at any time, in whole or in part, at the
option of Citigroup or the holder thereof and may be mandatorily redeemed.
Any partial redemptions of preferred stock will be made in a way that the
board of directors decides is equitable.
27
Unless Citigroup defaults in the payment of the redemption price, dividends
will cease to accrue after the redemption date on shares of preferred stock
called for redemption and all rights of holders of such shares will terminate
except for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Citigroup, holders of each series of preferred stock will be entitled to receive
distributions upon liquidation in the amount set forth in the prospectus
supplement relating to such series of preferred stock, plus an amount equal to
any accrued and unpaid dividends. Such distributions will be made before any
distribution is made on any securities ranking junior relating to liquidation,
including common stock.
If the liquidation amounts payable relating to the preferred stock of any
series and any other securities ranking on a parity regarding liquidation rights
are not paid in full, the holders of the preferred stock of such series and such
other securities will share in any such distribution of available assets of
Citigroup on a ratable basis in proportion to the full liquidation preferences.
Holders of such series of preferred stock will not be entitled to any other
amounts from Citigroup after they have received their full liquidation
preference.
VOTING RIGHTS
The holders of shares of preferred stock will have no voting rights,
except:
- as otherwise stated in the prospectus supplement;
- as otherwise stated in the certificate of designation establishing such
series; and
- as required by applicable law.
28
DESCRIPTION OF DEPOSITARY SHARES
The following briefly summarizes the material provisions of the deposit
agreement and of the depositary shares and depositary receipts, other than
pricing and related terms disclosed in the accompanying prospectus supplement.
You should read the particular terms of any depositary shares and any depositary
receipts that are offered by Citigroup and any deposit agreement relating to a
particular series of preferred stock, which will be described in more detail in
a prospectus supplement. The prospectus supplement will also state whether any
of the generalized provisions summarized below do not apply to the depositary
shares or depositary receipts being offered. A copy of the form of deposit
agreement, including the form of depositary receipt, is incorporated by
reference as an exhibit in the registration statement of which this prospectus
forms a part. You should read the more detailed provisions of the deposit
agreement and the form of depositary receipt for provisions that may be
important to you.
GENERAL
Citigroup may, at its option, elect to offer fractional shares of preferred
stock, rather than full shares of preferred stock. In such event, Citigroup will
issue receipts for depositary shares, each of which will represent a fraction of
a share of a particular series of preferred stock.
The shares of any series of preferred stock represented by depositary
shares will be deposited under a deposit agreement between Citigroup and a bank
or trust company selected by Citigroup having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000, as
preferred stock depositary. Each owner of a depositary share will be entitled to
all the rights and preferences of the underlying preferred stock, including
dividend, voting, redemption, conversion and liquidation rights, in proportion
to the applicable fraction of a share of preferred stock represented by such
depositary share.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock in accordance
with the terms of the applicable prospectus supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the deposited preferred stock to the
record holders of depositary shares relating to such preferred stock in
proportion to the number of such depositary shares owned by such holders.
The preferred stock depositary will distribute any property received by it
other than cash to the record holders of depositary shares entitled thereto. If
the preferred stock depositary determines that it is not feasible to make such
distribution, it may, with the approval of Citigroup, sell such property and
distribute the net proceeds from such sale to such holders.
REDEMPTION OF PREFERRED STOCK
If a series of preferred stock represented by depositary shares is to be
redeemed, the depositary shares will be redeemed from the proceeds received by
the preferred stock depositary resulting from the redemption, in whole or in
part, of such series of preferred stock. The depositary shares will be redeemed
by the preferred stock depositary at a price per depositary share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of preferred stock so redeemed.
Whenever Citigroup redeems shares of preferred stock held by the preferred
stock depositary, the preferred stock depositary will redeem as of the same date
the number of depositary shares representing the shares of preferred stock so
redeemed. If fewer than all the depositary shares are to be redeemed, the
depositary shares to be redeemed will be selected by the preferred stock
depositary by lot or ratably or by any other equitable method as the preferred
stock depositary may decide.
29
WITHDRAWAL OF PREFERRED STOCK
Unless the related depositary shares have previously been called for
redemption, any holder of depositary shares may receive the number of whole
shares of the related series of preferred stock and any money or other property
represented by such depositary receipts after surrendering the depositary
receipts at the corporate trust office of the preferred stock depositary.
Holders of depositary shares making such withdrawals will be entitled to receive
whole shares of preferred stock on the basis set forth in the related prospectus
supplement for such series of preferred stock.
However, holders of such whole shares of preferred stock will not be
entitled to deposit such preferred stock under the deposit agreement or to
receive depositary receipts for such preferred stock after such withdrawal. If
the depositary shares surrendered by the holder in connection with such
withdrawal exceed the number of depositary shares that represent the number of
whole shares of preferred stock to be withdrawn, the preferred stock depositary
will deliver to such holder at the same time a new depositary receipt evidencing
such excess number of depositary shares.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited preferred stock are entitled to vote, the preferred stock depositary
will mail the information contained in such notice of meeting to the record
holders of the depositary shares relating to such series of preferred stock.
Each record holder of such depositary shares on the record date will be entitled
to instruct the preferred stock depositary to vote the amount of the preferred
stock represented by such holder's depositary shares. The preferred stock
depositary will try to vote the amount of such series of preferred stock
represented by such depositary shares in accordance with such instructions.
Citigroup will agree to take all reasonable actions that the preferred
stock depositary determines are necessary to enable the preferred stock
depositary to vote as instructed. The preferred stock depositary will vote all
shares of any series of preferred stock held by it proportionately with
instructions received if it does not receive specific instructions from the
holders of depositary shares representing such series of preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between Citigroup and the preferred stock depositary. However, any amendment
that imposes additional charges or materially and adversely alters any
substantial existing right of the holders of depositary shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the affected depositary shares then outstanding. Every holder of an
outstanding depositary receipt at the time any such amendment becomes effective,
or any transferee of such holder, shall be deemed, by continuing to hold such
depositary receipt, or by reason of the acquisition thereof, to consent and
agree to such amendment and to be bound by the deposit agreement, which has been
amended thereby. The deposit agreement automatically terminates if:
- all outstanding depositary shares have been redeemed;
- each share of preferred stock has been converted into or exchanged for
common stock; or
- a final distribution in respect of the preferred stock has been made to
the holders of depositary shares in connection with any liquidation,
dissolution or winding up of Citigroup.
The deposit agreement may be terminated by Citigroup at any time and the
preferred stock depositary will give notice of such termination to the record
holders of all outstanding depositary receipts not less than 30 days prior to
the termination date. In such event, the preferred stock depositary will deliver
or make available for delivery to holders of depositary shares, upon surrender
of such depositary shares, the number of whole or fractional shares of the
related series of preferred stock as are represented by such depositary shares.
30
CHARGES OF PREFERRED STOCK DEPOSITARY; TAXES AND OTHER GOVERNMENTAL CHARGES
No fees, charges and expenses of the preferred stock depositary or any
agent of the preferred stock depositary or of any registrar shall be payable by
any person other than Citigroup, except for any taxes and other governmental
charges and except as provided in the deposit agreement. If the preferred stock
depositary incurs fees, charges or expenses for which it is not otherwise liable
hereunder at the election of a holder of a depositary receipt or other person,
such holder or other person will be liable for such fees, charges and expenses.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by delivering to
Citigroup notice of its intent to do so, and Citigroup may at any time remove
the preferred stock depositary, any such resignation or removal to take effect
upon the appointment of a successor preferred stock depositary and its
acceptance of such appointment. Such successor preferred stock depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The preferred stock depositary will forward all reports and communications
from Citigroup that are delivered to the preferred stock depositary and that
Citigroup is required to furnish to the holders of the deposited preferred
stock.
Neither the preferred stock depositary nor Citigroup will be liable if it
is prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the deposit agreement. The obligations of
Citigroup and the preferred stock depositary under the deposit agreement will be
limited to performance with honest intentions of their duties thereunder and
they will not be obligated to prosecute or defend any legal proceeding in
respect of any depositary shares, depositary receipts or shares of preferred
stock unless satisfactory indemnity is furnished. Citigroup and the preferred
stock depositary may rely upon written advice of counsel or accountants, or upon
information provided by holders of depositary receipts or other persons believed
to be competent and on documents believed to be genuine.
31
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Citigroup may issue stock purchase contracts, including contracts
obligating holders to purchase from or sell to Citigroup, and Citigroup to sell
to or purchase from the holders, a specified number of shares of common stock,
shares of preferred stock or depositary shares at a future date or dates. The
consideration per share of common stock, preferred stock or depositary shares
and the number of shares of each may be fixed at the time the stock purchase
contracts are issued or may be determined by reference to a specific formula set
forth in the stock purchase contracts. The stock purchase contracts may be
issued separately or as part of units, often known as stock purchase units,
consisting of a stock purchase contract and any combination of:
- debt securities,
- capital securities issued by trusts, all of whose common securities are
owned by Citigroup or by one of its subsidiaries,
- junior subordinated debt securities; or
- debt obligations of third parties, including U.S. Treasury securities,
which may secure the holders' obligations to purchase the common stock,
preferred stock or depositary shares under the stock purchase contracts. The
stock purchase contracts may require Citigroup to make periodic payments to the
holders of the stock purchase units or vice versa, and these payments may be
unsecured or prefunded on some basis. The stock purchase contracts may require
holders to secure their obligations under those contracts in a specified manner.
The applicable prospectus supplement will describe the terms of the stock
purchase contracts and stock purchase units, including, if applicable,
collateral or depositary arrangements.
32
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Most series of debt securities and index warrants will be book-entry
securities. Upon issuance, all book-entry securities of the same issue will be
represented by one or more fully registered global securities, without interest
coupons. Each global security will be deposited with, or on behalf of, The
Depository Trust Company, a securities depositary, and will be registered in the
name of DTC or a nominee of DTC. DTC will thus be the only registered holder of
these debt securities or index warrants and will be considered the sole owner of
the securities for purposes of the indenture or index warrant agreement.
Purchasers may only hold interests in the global notes or index warrants
through DTC if they are a participant in the DTC system. Purchasers may also
hold interests through a securities intermediary -- banks, brokerage houses and
other institutions that maintain securities accounts for customers -- that has
an account with DTC or its nominee. DTC will maintain accounts showing the
securities holdings of its participants, and these participants will in turn
maintain accounts showing the securities holdings of their customers. Some of
these customers may themselves be securities intermediaries holding debt
securities or index warrants for their customers. Thus, each beneficial owner of
a book-entry security will hold that security indirectly through a hierarchy of
intermediaries, with DTC at the "top" and the beneficial owner's own securities
intermediary at the "bottom."
The securities of each beneficial owner of a book-entry security will be
evidenced solely by entries on the books of the beneficial owner's securities
intermediary. The actual purchaser of the securities will generally not be
entitled to have the securities represented by the global securities registered
in its name and will not be considered the owner under the indenture or index
warrant agreement. In most cases, a beneficial owner will also not be able to
obtain a paper certificate evidencing the holder's ownership of securities. The
book-entry system for holding securities eliminates the need for physical
movement of certificates and is the system through which most publicly traded
common stock is held in the United States. However, the laws of some
jurisdictions require some purchasers of securities to take physical delivery of
their securities in definitive form. These laws may impair the ability to
transfer or pledge book-entry securities.
A beneficial owner of book-entry securities represented by a global
security may exchange the securities for definitive (paper) securities only if:
(a) DTC is unwilling or unable to continue as depositary for such global
security and Citigroup is unable to find a qualified replacement for
DTC within 90 days;
(b) at any time DTC ceases to be a clearing agency registered under the
Securities Exchange Act of 1934; or
(c) Citigroup in its sole discretion decides to allow some or all
book-entry securities to be exchangeable for definitive securities in
registered form.
Unless we indicate otherwise in the applicable prospectus supplement, any
global security that is exchangeable will be exchangeable in whole for
definitive securities in registered form, with the same terms and of an equal
aggregate principal amount, in denominations of $1,000 and whole multiples of
$1,000. Definitive notes or index warrants will be registered in the name or
names of the person or persons specified by DTC in a written instruction to the
registrar of the securities. DTC may base its written instruction upon
directions it receives from its participants.
In this prospectus and the accompanying prospectus supplement, for
book-entry securities, references to actions taken by security holders will mean
actions taken by DTC upon instructions from its participants, and references to
payments and notices of redemption to security holders will mean payments and
notices of redemption to DTC as the registered holder of the securities for
distribution to participants in accordance with DTC's procedures.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New York
banking law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial
33
Code and a "clearing agency" registered under section 17A of the Securities
Exchange Act of 1934. The rules applicable to DTC and its participants are on
file with the SEC.
Citigroup will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in the book-entry securities or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
The information in this section about DTC has been provided by DTC for
information purposes only. Citigroup takes no responsibility for the accuracy of
this information, and this information is not intended to serve as a
representation, warranty or contract modification of any kind.
34
PLAN OF DISTRIBUTION
Citigroup may offer the offered securities in one or more of the following
ways from time to time:
- to or through underwriters or dealers;
- by itself directly;
- through agents; or
- through a combination of any of these methods of sale.
Any such underwriters, dealers or agents may include any broker-dealer
subsidiary of Citigroup.
The prospectus supplement relating to an offering of offered securities
will set forth the terms of such offering, including:
- the name or names of any underwriters, dealers or agents;
- the purchase price of the offered securities and the proceeds to
Citigroup from such sale;
- any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation;
- the initial public offering price;
- any discounts or concessions to be allowed or reallowed or paid to
dealers; and
- any securities exchanges on which such offered securities may be listed.
Any initial public offering prices, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
In compliance with the guidelines of the National Association of Securities
Dealers, Inc., the maximum discount or commission to be received by any NASD
member or independent broker-dealer may not exceed 8% of the aggregate amount of
the securities offered pursuant to this prospectus and any applicable prospectus
supplement; however, it is anticipated that the maximum commission or discount
to be received in any particular offering of securities will be significantly
less than this amount.
If underwriters are used in an offering of offered securities, such offered
securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The securities may be offered either to the public through
underwriting syndicates represented by one or more managing underwriters or by
one or more underwriters without a syndicate. Unless otherwise set forth in the
prospectus supplement, the underwriters will not be obligated to purchase
offered securities unless specified conditions are satisfied, and if the
underwriters do purchase any offered securities, they will purchase all offered
securities.
In connection with underwritten offerings of the offered securities and in
accordance with applicable law and industry practice, underwriters may
over-allot or effect transactions that stabilize, maintain or otherwise affect
the market price of the offered securities at levels above those that might
otherwise prevail in the open market, including by entering stabilizing bids,
effecting syndicate covering transactions or imposing penalty bids, each of
which is described below.
- A stabilizing bid means the placing of any bid, or the effecting of any
purchase, for the purpose of pegging, fixing or maintaining the price of
a security.
- A syndicate covering transaction means the placing of any bid on behalf
of the underwriting syndicate or the effecting of any purchase to reduce
a short position created in connection with the offering.
35
- A penalty bid means an arrangement that permits the managing underwriter
to reclaim a selling concession from a syndicate member in connection
with the offering when offered securities originally sold by the
syndicate member are purchased in syndicate covering transactions.
These transactions may be effected on the NYSE, in the over-the-counter market,
or otherwise. Underwriters are not required to engage in any of these
activities, or to continue such activities if commenced.
If dealers are utilized in the sale of offered securities, Citigroup will
sell such offered securities to the dealers as principals. The dealers may then
resell such offered securities to the public at varying prices to be determined
by such dealers at the time of resale. The names of the dealers and the terms of
the transaction will be set forth in the prospectus supplement relating to that
transaction.
Offered securities may be sold directly by Citigroup to one or more
institutional purchasers, or through agents designated by Citigroup from time to
time, at a fixed price or prices, which may be changed, or at varying prices
determined at the time of sale. Any agent involved in the offer or sale of the
offered securities in respect of which this prospectus is delivered will be
named, and any commissions payable by Citigroup to such agent will be set forth,
in the prospectus supplement relating to that offering. Unless otherwise
indicated in such prospectus supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
As one of the means of direct issuance of offered securities, Citigroup may
utilize the services of an entity through which it may conduct an electronic
"dutch auction" or similar offering of the offered securities among potential
purchasers who are eligible to participate in the auction or offering of such
offered securities, if so described in the applicable prospectus supplement.
If so indicated in the applicable prospectus supplement, Citigroup will
authorize agents, underwriters or dealers to solicit offers from certain types
of institutions to purchase offered securities from Citigroup at the public
offering price set forth in such prospectus supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to those conditions set forth in the
prospectus supplement and the prospectus supplement will set forth the
commission payable for solicitation of such contracts.
The broker-dealer subsidiaries of Citigroup, including Citigroup Global
Markets Inc., are members of the NASD and may participate in distributions of
the offered securities. Accordingly, offerings of offered securities in which
Citigroup's broker-dealer subsidiaries participate will conform with the
requirements set forth in Rule 2720 of the Conduct Rules of the NASD.
This prospectus, together with any applicable prospectus supplement, may
also be used by any broker-dealer subsidiary of Citigroup in connection with
offers and sales of the offered securities in market-making transactions,
including block positioning and block trades, at negotiated prices related to
prevailing market prices at the time of sale. Any of Citigroup's broker-dealer
subsidiaries may act as principal or agent in such transactions. None of
Citigroup's broker-dealer subsidiaries have any obligation to make a market in
any of the offered securities and may discontinue any market-making activities
at any time without notice, at its sole discretion.
One or more dealers, referred to as "remarketing firms," may also offer or
sell the securities, if the prospectus supplement so indicates, in connection
with a remarketing arrangement contemplated by the terms of the securities.
Remarketing firms will act as principals for their own accounts or as agents.
The prospectus supplement will identify any remarketing firm and the terms of
its agreement, if any, with Citigroup and will describe the remarketing firm's
compensation. Remarketing firms may be deemed to be underwriters in connection
with the remarketing of the securities.
Underwriters, dealers and agents may be entitled, under agreements with
Citigroup, to indemnification by Citigroup relating to material misstatements
and omissions. Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for, Citigroup and affiliates of
Citigroup in the ordinary course of business.
36
Except for securities issued upon a reopening of a previous series, each
series of offered securities will be a new issue of securities and will have no
established trading market. Any underwriters to whom offered securities are sold
for public offering and sale may make a market in such offered securities, but
such underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The offered securities may or may not be
listed on a securities exchange. No assurance can be given that there will be a
market for the offered securities.
37
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing or other employee benefit plan
governed by the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), should consider the fiduciary standards of ERISA in the context of
the ERISA plan's particular circumstances before authorizing an investment in
the offered securities of Citigroup. Among other factors, the fiduciary should
consider whether such an investment is in accordance with the documents
governing the ERISA plan and whether the investment is appropriate for the ERISA
plan in view of its overall investment policy and diversification of its
portfolio.
Certain provisions of ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"), prohibit employee benefit plans (as defined in Section
3(3) of ERISA) that are subject to Title I of ERISA, plans described in Section
4975(e)(1) of the Code (including, without limitation, retirement accounts and
Keogh Plans), and entities whose underlying assets include plan assets by reason
of a plan's investment in such entities (including, without limitation, as
applicable, insurance company general accounts), from engaging in certain
transactions involving "plan assets" with parties that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to the plan or
entity. Governmental and other plans that are not subject to ERISA or to the
Code may be subject to similar restrictions under state, federal or local law.
Any employee benefit plan or other entity, to which such provisions of ERISA,
the Code or similar law apply, proposing to acquire the offered securities
should consult with its legal counsel.
Citigroup has subsidiaries, including insurance company subsidiaries and
broker-dealer subsidiaries, that provide services to many employee benefit
plans. Citigroup and any such direct or indirect subsidiary of Citigroup may
each be considered a "party in interest" and a "disqualified person" to a large
number of plans. A purchase of offered securities of Citigroup by any such plan
would be likely to result in a prohibited transaction between the plan and
Citigroup.
Accordingly, unless otherwise provided in the related prospectus
supplement, offered securities may not be purchased, held or disposed of by any
plan or any other person investing "plan assets" of any plan that is subject to
the prohibited transaction rules of ERISA or Section 4975 of the Code or other
similar law, unless one of the following Prohibited Transaction Class Exemptions
("PTCE") issued by the Department of Labor or a similar exemption or exception
applies to such purchase, holding and disposition:
- PTCE 96-23 for transactions determined by in-house asset managers,
- PTCE 95-60 for transactions involving insurance company general accounts,
- PTCE 91-38 for transactions involving bank collective investment funds,
- PTCE 90-1 for transactions involving insurance company separate accounts,
or
- PTCE 84-14 for transactions determined by independent qualified
professional asset managers.
Unless otherwise provided in the related prospectus supplement, any
purchaser of the offered securities or any interest therein will be deemed to
have represented and warranted to Citigroup on each day including the date of
its purchase of the offered securities through and including the date of
disposition of such offered securities that either:
(a) it is not a plan subject to Title I of ERISA or Section 4975 of the
Code and is not purchasing such securities or interest therein on
behalf of, or with "plan assets" of, any such plan;
(b) its purchase, holding and disposition of such securities are not and
will not be prohibited because they are exempted by one or more of the
following prohibited transaction exemptions: PTCE 96-23, 95-60, 91-38,
90-1 or 84-14; or
(c) it is a governmental plan (as defined in section 3 of ERISA) or other
plan that is not subject to the provisions of Title I of ERISA or
Section 4975 of the Code and its purchase, holding and disposition of
such securities are not otherwise prohibited.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is important that any person considering
the purchase of the offered securities with plan
38
assets consult with its counsel regarding the consequences under ERISA and the
Code, or other similar law, of the acquisition and ownership of offered
securities and the availability of exemptive relief under the class exemptions
listed above.
LEGAL MATTERS
John R. Dye, Esq., General Counsel -- Capital Markets of Citigroup, 425
Park Avenue, New York, New York 10043 and/or Skadden, Arps, Slate, Meagher &
Flom LLP, New York, New York, or counsel to be identified in the applicable
prospectus supplement, will act as legal counsel to Citigroup. Mr. Dye
beneficially owns, or has rights to acquire under Citigroup's employee benefit
plans, an aggregate of less than 1% of Citigroup's common stock. Cleary,
Gottlieb, Steen & Hamilton, New York, New York, or other counsel identified in
the applicable prospectus supplement, will act as legal counsel to the
underwriters. Cleary, Gottlieb, Steen & Hamilton has from time to time acted as
counsel for Citigroup and its subsidiaries and may do so in the future.
EXPERTS
The consolidated financial statements of Citigroup Inc. as of December 31,
2003 and 2002, and for each of the years in the three-year period ended December
31, 2003, have been audited by KPMG LLP, Independent Registered Public
Accounting Firm, as set forth in their report dated February 26, 2004 (except as
to Note 4, which is as of May 14, 2004) on the consolidated financial
statements. The consolidated financial statements for the year ended December
31, 2003 are included in Citigroup's May 14, 2004 Current Report on Form 8-K and
are incorporated by reference in this prospectus. The consolidated financial
statements included in the May 14, 2004 Current Report on Form 8-K have been
conformed to reflect the implementation of the Risk Capital Allocation
Methodology on Citigroup's business segment results. The report of KPMG LLP
included in this Form 8-K also is incorporated by reference in this prospectus.
The report of KPMG LLP refers to changes, in 2003, in Citigroup's methods of
accounting for variable interest entities and stock-based compensation, in 2002,
in Citigroup's methods of accounting for goodwill and intangible assets and
accounting for the impairment or disposal of long-lived assets, and, in 2001, in
Citigroup's methods of accounting for derivative instruments and hedging
activities, accounting for interest income and impairment on purchased and
retained beneficial interests in securitized financial assets, and accounting
for goodwill and intangible assets resulting from business combinations
consummated after June 30, 2001. The consolidated financial statements of
Citigroup referred to above are incorporated by reference in this prospectus in
reliance upon such report and upon the authority of that Firm as experts in
accounting and auditing. To the extent that KPMG LLP audits and reports on
consolidated financial statements of Citigroup issued at future dates, and
consents to the use of their report thereon, such consolidated financial
statements also will be incorporated by reference in the registration statement
in reliance upon their report and said authority.
39
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. CITIGROUP INC. MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED AUGUST 31, 2004
PROSPECTUS SUPPLEMENT
(To prospectus dated , 2004)
[CITIGROUP LOGO]
MEDIUM-TERM SENIOR NOTES, SERIES H
MEDIUM-TERM SUBORDINATED NOTES, SERIES H
DUE NINE MONTHS OR MORE FROM THE DATE OF ISSUE
GENERAL TERMS OF SALE
The following terms will generally apply to the medium-term senior and
subordinated notes that we will sell from time to time using this prospectus
supplement and the attached prospectus. Citigroup will include information on
the specific terms for each note in a pricing supplement to this prospectus
supplement that Citigroup will deliver to prospective buyers of any note. The
maximum amount that Citigroup expects to receive from the sale of the notes is
between $ and $ after paying the agent commissions
of between $ and $ .
<Table>
MATURITY: 9 months or more from the INTEREST RATES: Fixed, floating, or zero
date of issue. coupon.
INDEXED NOTES: Payments of interest or RANKING: Senior notes are part of our
principal may be linked to senior indebtedness; and
the price of one or more subordinated notes are part
securities, currencies, of our subordinated
commodities or other goods. indebtedness.
REDEMPTION: Terms of specific notes may OTHER TERMS: You should review
permit or require redemption "Description of the Notes"
or repurchase at our option and the pricing supplement
or your option. for features that apply to
your notes.
RISKS: Index and currency risks may
exist.
CURRENCIES: U.S. dollars and other
currencies.
</Table>
------------------------
CONSIDER CAREFULLY THE INFORMATION UNDER "RISK FACTORS" BEGINNING ON PAGE
S-3 OF THIS PROSPECTUS SUPPLEMENT.
Neither the Securities and Exchange Commission nor any state securities or
insurance commission has approved or disapproved of these securities or
determined if this prospectus supplement or any accompanying prospectus or
pricing supplement is truthful or complete. Any representation to the contrary
is a criminal offense.
These notes are not deposits or savings accounts but are unsecured debt
obligations of Citigroup Inc. These notes are not insured by the Federal Deposit
Insurance Corporation or any other governmental agency or instrumentality.
CITIGROUP
, 2004
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<Table>
<Caption>
PAGE
----
Risk Factors................................................ S-3
Important Currency Information.............................. S-6
Description of the Notes.................................... S-7
United States Federal Income Tax Considerations............. S-31
Plan of Distribution........................................ S-38
Legal Matters............................................... S-39
</Table>
PROSPECTUS
<Table>
Prospectus Summary.......................................... 1
Forward-Looking Statements.................................. 7
Citigroup Inc. ............................................. 8
Use of Proceeds and Hedging................................. 9
European Monetary Union..................................... 10
Description of Debt Securities.............................. 11
Description of Common Stock Warrants........................ 19
Description of Index Warrants............................... 21
Description of Capital Stock................................ 24
Description of Preferred Stock.............................. 26
Description of Depositary Shares............................ 29
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 32
Book-Entry Procedures and Settlement........................ 33
Plan of Distribution........................................ 35
ERISA Considerations........................................ 38
Legal Matters............................................... 39
Experts..................................................... 39
</Table>
S-2
RISK FACTORS
CHANGES IN EXCHANGE RATES AND EXCHANGE CONTROLS COULD RESULT IN A SUBSTANTIAL
LOSS TO YOU.
An investment in foreign currency notes, which are notes denominated in a
specified currency other than U.S. dollars, entails significant risks that are
not associated with a similar investment in a security denominated in U.S.
dollars. Similarly, an investment in an indexed note, on which all or a part of
any payment due is based on a currency other than U.S. dollars, has significant
risks that are not associated with a similar investment in non-indexed notes.
Such risks include, but are not limited to:
- the possibility of significant market changes in rates of exchange
between U.S. dollars and such specified currency;
- the possibility of significant changes in rates of exchange between U.S.
dollars and the specified currency resulting from official redenomination
relating to such specified currency; and
- the possibility of the imposition or modification of foreign exchange
controls by either the United States or foreign governments.
Such risks generally depend on factors over which Citigroup has no control and
which cannot be readily foreseen, such as
- economic events;
- political events; and
- the supply of, and demand for, the relevant currencies.
In recent years, rates of exchange between the U.S. dollar and some foreign
currencies in which Citigroup's notes may be denominated, and between these
foreign currencies and other foreign currencies, have been volatile. This
volatility may be expected in the future. Fluctuations that have occurred in any
particular exchange rate in the past are not necessarily indicative, however, of
fluctuations that may occur in the rate during the term of any foreign currency
note. Depreciation of the specified currency of a foreign currency note against
U.S. dollars would result in a decrease in the effective yield of such foreign
currency note below its coupon rate and could result in a substantial loss to
the investor on a U.S. dollar basis.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a specified currency other than U.S. dollars at the time of payment of
principal, any premium, or interest on a foreign currency note. There can be no
assurance that exchange controls will not restrict or prohibit payments of
principal, any premium, or interest denominated in any such specified currency.
Even if there are no actual exchange controls, it is possible that such
specified currency would not be available to Citigroup when payments on such
note are due because of circumstances beyond the control of Citigroup. In this
event, Citigroup will make required payments in U.S. dollars on the basis
described in this prospectus supplement. You should consult your own financial
and legal advisors as to the risks of an investment in notes denominated in a
currency other than U.S. dollars. See "-- The Unavailability of Currencies Could
Result in a Substantial Loss to You" and "Description of the Notes -- Payment of
Principal and Interest" below.
The information set forth in this prospectus supplement is directed to
prospective purchasers of notes who are United States residents. Citigroup
disclaims any responsibility to advise prospective purchasers who are residents
of countries other than the United States regarding any matters that may affect
the purchase or holding of, or receipt of payments of principal, premium or
interest on, notes. Such persons should consult their advisors with regard to
these matters. Any pricing supplement relating to notes having a specified
currency other than U.S. dollars will contain a description of any material
exchange controls affecting such currency and any other required information
concerning such currency.
S-3
THE UNAVAILABILITY OF CURRENCIES COULD RESULT IN A SUBSTANTIAL LOSS TO YOU.
Except as set forth below, if payment on a note is required to be made in a
specified currency other than U.S. dollars and such currency is --
- unavailable due to the imposition of exchange controls or other
circumstances beyond Citigroup's control;
- no longer used by the government of the country issuing such currency; or
- no longer used for the settlement of transactions by public institutions
of the international banking community --
then all payments on such note will be made in U.S. dollars until such currency
is again available or so used. The amounts so payable on any date in such
currency shall be converted into U.S. dollars on the basis of the most recently
available market exchange rate for such currency or as otherwise indicated in
the applicable pricing supplement. Any payment on such note made under such
circumstances in U.S. dollars will not constitute a default or an event of
default under the indenture under which such note was issued.
If the specified currency of a note is officially redenominated, other than
as a result of European Monetary Union, such as by an official redenomination of
any such specified currency that is a composite currency, then the payment
obligations of Citigroup on such note will be the amount of redenominated
currency that represents the amount of Citigroup's obligations immediately
before the redenomination. The notes will not provide for any adjustment to any
amount payable under such notes as a result of
- any change in the value of the specified currency of such notes relative
to any other currency due solely to fluctuations in exchange rates; or
- any redenomination of any component currency of any composite currency,
unless such composite currency is itself officially redenominated.
For a description of European Monetary Union, see "European Monetary Union" in
the prospectus and any disclosure on European Monetary Union in an applicable
pricing supplement.
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, banks do
not generally offer non-U.S. dollar-denominated checking or savings account
facilities in the United States. Accordingly, payments on notes made in a
currency other than U.S. dollars will be made from an account at a bank located
outside the United States, unless otherwise specified in the applicable pricing
supplement.
JUDGMENTS IN A FOREIGN CURRENCY COULD RESULT IN A SUBSTANTIAL LOSS TO YOU.
The notes will be governed by, and construed in accordance with, the laws
of New York State. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of New York State provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation. Any judgment awarded in such an action will be converted into U.S.
dollars at the rate of exchange prevailing on the date of the entry of the
judgment or decree.
CHANGES IN THE VALUE OF UNDERLYING ASSETS OF INDEXED NOTES COULD RESULT IN A
SUBSTANTIAL LOSS
TO YOU.
An investment in indexed notes may have significant risks that are not
associated with a similar investment in a debt instrument that:
- has a fixed principal amount;
- is denominated in U.S. dollars; and
S-4
- bears interest at either a fixed rate or a floating rate based on
nationally published interest rate references.
The risks of a particular indexed note will depend on the terms of such
indexed note. Such risks may include, but are not limited to, the possibility of
significant changes in the prices of:
- the underlying assets;
- another objective price; and
- economic or other measures making up the relevant index.
Underlying assets could include:
- securities;
- currencies;
- intangibles;
- goods;
- articles; and
- commodities.
The risks associated with a particular indexed note generally depend on
factors over which Citigroup has no control and which cannot readily be
foreseen. These risks include:
- economic events;
- political events; and
- the supply of, and demand for, the underlying assets.
In recent years, currency exchange rates and prices for various underlying
assets have been highly volatile. Such volatility may be expected in the future.
Fluctuations in any such rates or prices that have occurred in the past are not
necessarily indicative, however, of fluctuations that may occur during the term
of any indexed note.
In considering whether to purchase indexed notes, you should be aware that
the calculation of amounts payable on indexed notes may involve reference to:
- an index determined by an affiliate of Citigroup; or
- prices that are published solely by third parties or entities which are
not regulated by the laws of the United States.
The risk of loss as a result of linking principal or interest payments on
indexed notes to an index and to the underlying assets can be substantial. You
should consult your own financial and legal advisors as to the risks of an
investment in indexed notes.
------------------------
You should only rely on the information contained or incorporated by
reference in this prospectus supplement, the prospectus and any pricing
supplement. Citigroup has not, and the agent has not, authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. Citigroup is
not, and the agent is not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the prospectus, as
well as information Citigroup previously filed with the Securities and Exchange
Commission and incorporated by reference, is accurate as of the date of the
applicable document. Citigroup's business, financial condition, results of
operations and prospects may have changed since that date.
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IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each note in a currency specified by
Citigroup for such note. If requested by a prospective purchaser of a note
having a specified currency other than U.S. dollars, the agent may at its
discretion arrange for the exchange of U.S. dollars into such specified currency
to enable the purchaser to pay for such note. Each such exchange will be made by
the agent. The terms, conditions, limitations and charges that the agent may
from time to time establish in accordance with its regular foreign exchange
practice shall control the exchange. The purchaser must pay all costs of
exchange.
References in this prospectus supplement to "U.S. dollars," "U.S.$,"
"dollar" or "$" are to the lawful currency of the United States.
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DESCRIPTION OF THE NOTES
The following description of the particular terms of the Medium-Term Senior
Notes, Series H and Medium-Term Subordinated Notes, Series H supplements the
description of the general terms and provisions of the debt securities set forth
in the prospectus. If any specific information regarding the notes in this
prospectus supplement is inconsistent with the more general terms of the debt
securities described in the prospectus, you should rely on the information in
this prospectus supplement.
The pricing supplement for each offering of notes will contain the specific
information and terms for that offering. If any information in the pricing
supplement, including any changes in the method of calculating interest on any
note, is inconsistent with this prospectus supplement, you should rely on the
information in the pricing supplement. The pricing supplement may also add,
update or change information contained in the prospectus and this prospectus
supplement. It is important for you to consider the information contained in the
prospectus, this prospectus supplement and the pricing supplement in making your
investment decision.
GENERAL
Introduction. The senior notes are a series of senior debt securities
issued under Citigroup's senior debt indenture. The subordinated notes are a
series of subordinated debt securities issued under Citigroup's subordinated
debt indenture. At the date of this prospectus supplement, the notes offered
pursuant to this prospectus supplement are limited to an aggregate initial
public offering price or purchase price of up to $ or its
equivalent in one or more foreign currencies. This amount is subject to
reduction as a result of the sale of other securities under the registration
statement of which this prospectus supplement and the accompanying prospectus
form a part, or under a registration statement to which this prospectus
supplement and the accompanying prospectus also relate.
The amount of notes sold of either series will reduce the amount of notes
of the other series that may be sold. Citigroup reserves the right to withdraw,
cancel or modify the offer made by this prospectus supplement without notice.
The aggregate amount of notes may be increased from time to time to such larger
amount as may be authorized by Citigroup.
The U.S. dollar equivalent of the public offering price or purchase price
of a note having a specified currency other than U.S. dollars will be determined
on the basis of the market exchange rate. Unless otherwise specified in the
pricing supplement, this market exchange rate will be the noon buying rate in
New York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York for such specified currency on
the applicable issue date. Such determination will be made by Citigroup or its
agent, as the exchange rate agent for the applicable series of notes.
Ranking. The senior notes will constitute part of the senior indebtedness
of Citigroup and will rank on an equal basis with all other unsecured debt of
Citigroup other than subordinated debt. The subordinated notes will be
subordinate and junior in the right of payment, to the extent and in the manner
set forth in the subordinated debt indenture, to all senior indebtedness of
Citigroup. See "Description of Debt Securities -- Subordinated Debt" in the
prospectus.
If there were an event of default with respect to any senior indebtedness,
the trustee or holders of 25% of the principal amount of senior debt securities
outstanding in a series could demand that the principal be repaid immediately.
If there were an event of default with respect to any subordinated indebtedness
involving certain events of insolvency or bankruptcy, the trustee or holders of
25% of the principal amount of subordinated debt securities outstanding in a
series could demand that the principal be paid immediately. In the absence of
certain events of insolvency or bankruptcy, failure to pay amounts due with
respect to subordinated indebtedness would not permit the trustee or such
holders to demand that the principal of such subordinated debt securities be
paid immediately. See "Description of Debt Securities -- Events of Default and
Defaults" in the prospectus.
On a consolidated basis, the aggregate principal amount of senior
indebtedness of Citigroup outstanding as of June 30, 2004 was approximately
$239.0 billion. This senior indebtedness consisted of
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approximately $171.6 billion of term debt, approximately $32.7 billion of
commercial paper and approximately $34.7 billion of other short-term borrowings.
Forms of Notes. The notes will be issued in fully registered form only,
without coupons. Each note will be issued initially as a book-entry note, which
will be a global security registered in the name of a nominee of the Depository
Trust Company, or DTC, as depositary, or such other depositary named in the
pricing supplement. Alternatively, if specified in the applicable pricing
supplement, each note will be issued initially as a certificated note, which
will be a certificate issued in temporary or definitive form. Except as set
forth in the prospectus under "Book-Entry Procedures and Settlement," book-entry
notes will not be issuable as certificated notes. See "Book-Entry System" below.
Denominations. Unless otherwise specified in the applicable pricing
supplement, the authorized denominations of notes denominated in U.S. dollars
will be $1,000 and any larger amount that is a whole multiple of $1,000. The
authorized denominations of notes that have a specified currency other than U.S.
dollars will be the approximate equivalents in the specified currency.
Maturity. Unless otherwise specified in the applicable pricing supplement,
each note will mature on a stated maturity date. Such stated maturity date will
be a business day nine months or more from its date of issue, as selected by the
purchaser and agreed to by Citigroup. If so specified in the pricing supplement,
the stated maturity date may be extended at the option of Citigroup, and each
note may also be redeemed at the option of Citigroup, or repaid at the option of
the holder, prior to its stated maturity. Each note that has a specified
currency of pounds sterling will mature in compliance with the regulations the
Bank of England may promulgate from time to time.
Additional Information. The pricing supplement relating to a note will
describe the following terms:
- the specified currency for such note;
- whether such note
(1) is a fixed rate note;
(2) is a floating rate note;
(3) is an amortizing note, meaning that a portion or all the principal
amount is payable prior to stated maturity in accordance with a
schedule, by application of a formula, or based on an index; and/or
(4) is an indexed note on which payments of interest or principal may be
linked to the price of one or more securities, currencies,
intangibles, articles, commodities or goods or any other financial,
economic or other measure or instrument, including the occurrence or
non-occurrence of any event or circumstance;
- the price at which such note will be issued, which will be expressed as a
percentage of the aggregate principal amount or face amount;
- the original issue date on which such note will be issued;
- the date of the stated maturity;
- if such note is a fixed rate note, the rate per annum at which such note
will bear any interest, and whether and the manner in which such rate may
be changed prior to its stated maturity;
- if such note is a floating rate note, relevant terms such as:
(1) the base rate;
(2) the initial interest rate;
(3) the interest reset period or the interest reset dates;
(4) the interest payment dates;
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(5) any index maturity;
(6) any maximum interest rate;
(7) any minimum interest rate;
(8) any spread or spread multiplier; and
(9) any other terms relating to the particular method of calculating the
interest rate for such note and whether and how any spread or spread
multiplier may be changed prior to stated maturity;
- whether such note is a note issued originally at a discount;
- if such note is an amortizing note, the terms for repayment prior to
stated maturity;
- if such note is an indexed note, in the case of an indexed rate note, the
manner in which the amount of any interest payment will be determined or,
in the case of an indexed principal note, its face amount and the manner
in which the principal amount payable at stated maturity will be
determined;
- whether such note may be redeemed at the option of Citigroup, or repaid
at the option of the holder, prior to stated maturity as described under
"Optional Redemption, Repayment and Repurchase" below and the terms of
its redemption or repayment;
- whether such note may have an optional extension beyond its stated
maturity as described under "Extension of Maturity" below;
- whether such note will be represented by a global security or a
certificate issued in definitive form;
- any special United States federal income tax consequences of the
purchase, ownership and disposition of a particular issuance of notes;
- whether such note is a renewable note, and, if so, its specific terms;
- the use of proceeds, if materially different than that disclosed in the
accompanying prospectus; and
- any other terms of such note provided in the accompanying prospectus to
be set forth in a pricing supplement or that are otherwise consistent
with the provisions of the indenture under which such note will be
issued.
As used in this prospectus supplement, business day means:
- for any note, any day that is not a Saturday or Sunday and that, in New
York City, is not a day on which banking institutions generally are
authorized or obligated by law or executive order to close;
- for LIBOR notes only, a London business day, which shall be any day on
which dealings in deposits in the specified currency are transacted in
the London interbank market;
- for any determination by the exchange rate agent of an exchange rate
pursuant to notes having a specified currency other than U.S. dollars, an
exchange rate business day, which shall be any day on which banking
institutions and foreign exchange markets settle payments in New York
City and London;
- for notes having a specified currency other than U.S. dollars only, other
than notes denominated in euros, any day that, in the principal financial
center (as defined below) of the country of the specified currency, is
not a day on which banking institutions generally are authorized or
obligated by law to close; and
- for EURIBOR notes and notes denominated in euros, a TARGET business day,
which shall be any day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer System is open.
As used above, a principal financial center means the capital city of the
country issuing the specified currency. However, for Australian dollars,
Canadian dollars and Swiss francs, the principal financial center will be
Sydney, Toronto and Zurich, respectively.
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PAYMENT OF PRINCIPAL AND INTEREST
Citigroup will pay the principal of, and any premium and interest on, each
note in the specified currency for such note. If the specified currency for a
note is other than U.S. dollars, Citigroup will, unless otherwise specified in
the applicable pricing supplement, arrange to convert all payments in respect of
such note into U.S. dollars in the manner described in the following paragraph.
The holder of a note having a specified currency other than U.S. dollars may, if
stated in the applicable pricing supplement and such note, elect to receive all
payments on such note in the specified currency by delivering a written notice
to the paying agent for such note not later than fifteen calendar days prior to
the applicable payment date, except under the circumstances described under
"Risk Factors -- The Unavailability of Currencies Could Result in a Substantial
Loss to You" above. Such election will remain in effect until revoked by a
written notice to such paying agent that is received not later than fifteen
calendar days prior to the applicable payment date. If an event of default has
occurred or Citigroup has given notice of redemption of a note, no such change
of election may be made.
Unless otherwise specified in the pricing supplement, the amount of any
U.S. dollar payment on a note having a specified currency other than U.S.
dollars will be determined by the exchange rate agent:
- based on the specified currency/U.S. dollar exchange rate prevailing at
11:00 a.m., London time, on the second exchange rate business day prior
to the applicable payment date, or
- if an exchange rate bid quotation is not so available, the exchange rate
agent will obtain a bid quotation from a leading foreign exchange bank in
London selected by the exchange rate agent after consultation with
Citigroup.
The exchange rate agent will also determine prior to settlement the
aggregate amount of the specified currency payable on a payment date for all
notes denominated in such specified currency. All currency exchange costs will
be deducted from payments to the holders of such notes. If no such bid
quotations are available, the payments will be made in the specified currency,
unless the specified currency is unavailable due to the imposition of exchange
controls or due to other circumstances beyond Citigroup's control. In that case,
such payments will be made as described under "Risk Factors -- The
Unavailability of Currencies Could Result in a Substantial Loss to You" above.
Unless otherwise specified in the applicable pricing supplement, U.S.
dollar payments of interest on notes, other than interest payable at stated
maturity, will be made, except as provided below, by check mailed to the
registered holders of such notes. In the case of global securities representing
book-entry notes, such payments of interest on notes will be made to a nominee
of the depositary.
A holder of at least $10,000,000, or its equivalent in a specified currency
other than U.S. dollars, in aggregate principal amount of notes of like tenor
and term, will be entitled to receive such U.S. dollar payments by wire transfer
of immediately available funds. However, such a holder is entitled to receive
such payments only if the paying agent receives written appropriate wire
transfer instructions for such notes not later than fifteen calendar days prior
to the applicable interest payment date. Unless otherwise specified in the
applicable pricing supplement, principal and any premium and interest payable at
the stated maturity of a note will be paid in immediately available funds upon
surrender of such note at the office of the paying agent for such note in New
York City.
Unless otherwise specified in this prospectus supplement or the applicable
pricing supplement, any payment required to be made on a note on a date,
including the stated maturity date, that is not a business day for such note
need not be made on such date. A payment may be made on the next succeeding
business day with the same force and effect as if made on such date. No
additional interest will accrue as a result of such delayed payment.
Unless otherwise specified in the applicable pricing supplement, if the
principal of any original issue discount note, or OID note, other than an
indexed note, is declared to be due and payable immediately as a result of the
acceleration of stated maturity, the amount of principal due and payable
relating to such note will be limited to the aggregate principal amount of such
note multiplied by the sum of (1) its issue
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price, expressed as a percentage of the aggregate principal amount, plus (2) the
original issue discount amortized from the date of issue to the date of
declaration. Amortization will be calculated using the interest method, computed
in accordance with U.S. generally accepted accounting principles in effect on
the date of declaration.
FIXED RATE NOTES
Each fixed rate note will bear interest from its original issue date, or
from the last interest payment date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable pricing supplement
until its principal amount is paid or made available for payment. However, as
described below under "Subsequent Interest Periods" and "Extension of Maturity,"
or as otherwise may be described in the applicable pricing supplement, the rate
of interest payable on fixed rate notes may be adjusted from time to time.
Unless otherwise set forth in the applicable pricing supplement, interest
on each fixed rate note will be payable semiannually in arrears on such dates as
set forth in the applicable pricing supplement, with each such day being an
interest payment date, and at stated maturity. Unless "accrue to pay" is
specified in the applicable pricing supplement or unless otherwise specified in
the applicable pricing supplement, if an interest payment date for any fixed
rate note would otherwise be a day that is not a business day, any payment
required to be made on such note on such date, including the stated maturity
date, may be made on the next succeeding business day with the same force and
effect as if made on such date. No additional interest will accrue as a result
of such delayed payment.
If in connection with any fixed rate note, "accrue to pay" is specified in
the applicable pricing supplement, and any interest payment date for such fixed
rate note would otherwise be a day that is not a business day, such interest
payment date will be postponed to the next succeeding business day. Any payment
of interest on such interest payment date will include interest accrued through
the day before such interest payment date. Unless otherwise specified in the
applicable pricing supplement, interest on fixed rate notes will be computed on
the basis of a 360-day year of twelve 30-day months or, in the case of an
incomplete month, the number of days elapsed.
FLOATING RATE NOTES
The initial interest period is the period from the original issue date to,
but not including, the first interest reset date. Each floating rate note will
bear interest at the initial interest rate set forth, or otherwise described, in
the applicable pricing supplement. The interest reset period is the period from
each interest reset date to, but not including, the following interest reset
date. The initial interest period and any interest reset period is an interest
period. The interest rate for each floating rate note will be determined based
on an interest rate basis, the base rate, plus or minus any spread, or
multiplied by any spread multiplier. A basis point, or bp, equals one-hundredth
of a percentage point. The spread is the number of basis points that may be
specified in the applicable pricing supplement as applicable to such note. The
spread multiplier is the percentage that may be specified in the applicable
pricing supplement as applicable to such note. As described below under
"Subsequent Interest Periods" and "Extension of Maturity," or as may otherwise
be specified in the applicable pricing supplement, the spread or spread
multiplier on floating rate notes may be adjusted from time to time.
The applicable pricing supplement will designate one of the following base
rates as applicable to a floating rate note:
- the CD Rate;
- the Commercial Paper Rate;
- the Federal Funds Rate;
- LIBOR;
- the Treasury Rate;
- the Prime Rate;
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- the Eleventh District Cost of Funds Rate;
- EURIBOR; or
- such other base rate as is set forth in the applicable pricing supplement
and in such note.
The following terms are used in describing the various base rates.
The "index maturity" is the period of maturity of the instrument or
obligation from which the base rate is calculated.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/H15/update or any
successor site or publication.
"Calculation date" means the date on which the calculation agent is to
calculate the interest rate which will be the earlier of (1) the tenth calendar
day after the related rate determination date, or if any such day is not a
business day, the next succeeding business day or (2) the business day preceding
the applicable interest payment date or the stated maturity.
As specified in the applicable pricing supplement, a floating rate note may
also have either or both of the following, which will be expressed as a rate per
annum on a simple interest basis:
- maximum interest rate, which will be a maximum limitation, or ceiling, on
the rate at which interest may accrue during any interest period; and/or
- minimum interest rate, which will be a minimum limitation, or floor, on
the rate at which interest may accrue during any interest period.
In addition to any maximum interest rate that may be applicable to any
floating rate note, the interest rate on a floating rate note will in no event
be higher than the maximum rate permitted by applicable law. The notes will be
governed by the law of New York State. As of the date of this prospectus
supplement, the maximum rate of interest under provisions of the New York penal
law, with a few exceptions, is 25% per annum on a simple interest basis. Such
maximum rate of interest only applies to obligations that are less than
$2,500,000.
Citigroup will appoint and enter into agreements with calculation agents to
calculate interest rates on floating rate notes. Unless otherwise specified in
the applicable pricing supplement, Citibank, N.A. will be the calculation agent
for each floating rate note. All determinations of interest by a calculation
agent will, in the absence of manifest error, be conclusive for all purposes and
binding on the holders of the floating rate notes.
The interest rate on each floating rate note will be reset on an interest
reset date, which means that the interest rate is reset daily, weekly, monthly,
quarterly, semiannually or annually, as specified in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement, the
interest reset dates will be as follows:
- in the case of floating rate notes that reset daily, each business day;
- in the case of floating rate notes that reset weekly, other than Treasury
Rate notes, the Wednesday of each week;
- in the case of Treasury Rate notes that reset weekly and except as
provided below under "Treasury Rate Notes," the Tuesday of each week;
- in the case of floating rate notes that reset monthly, other than
Eleventh District Cost of Funds Rate notes, the third Wednesday of each
month;
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- in the case of floating rate notes that are Eleventh District Cost of
Funds Rate notes, the first calendar day of each month;
- in the case of floating rate notes that reset quarterly, the third
Wednesday of March, June, September and December of each year;
- in the case of floating rate notes that reset semiannually, the third
Wednesday of each of two months of each year specified in the applicable
pricing supplement; and
- in the case of floating rate notes that reset annually, the third
Wednesday of one month of each year specified in the applicable pricing
supplement.
If an interest reset date for any floating rate note would fall on a day that is
not a business day, such interest reset date will be postponed to the next
succeeding business day. In the case of a LIBOR note or a EURIBOR note, if
postponement to the next business day would cause the interest reset date to be
in the next succeeding calendar month, the interest reset date will instead be
the immediately preceding business day. If an auction of direct obligations of
United States Treasury bills falls on a day that is an interest reset date for
Treasury Rate notes, the interest reset date will be the succeeding business
day.
Unless otherwise specified in the applicable pricing supplement and except
as set forth below, the rate of interest that goes into effect on any interest
reset date will be determined on a rate determination date preceding such
interest reset date, as further described below.
Unless otherwise specified in the applicable pricing supplement, interest
payable on floating rate notes will be the interest accrued from and including
the original issue date or the last date to which interest has been paid, as the
case may be, to but excluding the applicable interest payment date.
Accrued interest on a floating rate note with more than one interest reset
date will be calculated by multiplying the principal amount of the note by an
accrued interest factor. If the floating rate note is an indexed principal note,
the face amount of the note will be multiplied by the accrued interest factor.
The accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. Unless otherwise specified in the applicable pricing supplement, the
interest factor for each such day will be computed by dividing the interest rate
in effect on such day by 360, in the case of CD Rate notes, Commercial Paper
Rate notes, Federal Funds Rate notes, LIBOR notes, Prime Rate notes, Eleventh
District Cost of Funds Rate notes and EURIBOR notes. In the case of Treasury
Rate notes, the interest factor for each such day will be computed by dividing
such interest rate by the actual number of days in the year. The interest factor
will be expressed as a decimal calculated to seven decimal places without
rounding. For purposes of making the foregoing calculation, the interest rate in
effect on any interest reset date will be the applicable rate as reset on such
date.
For all other floating rate notes, accrued interest will be calculated by
multiplying the principal amount of the note by the interest rate in effect
during the period for which accrued interest is being calculated. That product
is then multiplied by the quotient obtained by dividing the number of days in
the period for which accrued interest is being calculated by 360, in the case of
CD Rate notes, Commercial Paper Rate notes, Federal Funds Rate notes, LIBOR
notes, Prime Rate notes, Eleventh District Cost of Funds Rate notes and EURIBOR
notes. In the case of Treasury Rate notes, such product is multiplied by the
quotient obtained by dividing the number of days in the period for which accrued
interest is being calculated by the actual number of days in the year.
Unless otherwise specified in the applicable pricing supplement, all
percentages resulting from any calculation of the rate of interest on a floating
rate note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward. All
currency amounts used in, or resulting from, such calculation on floating rate
notes will be rounded to the nearest one-hundredth of a unit. For purposes of
such rounding, .005 of a unit shall be rounded upward.
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Unless otherwise indicated in the applicable pricing supplement and except
as provided below, interest will be payable as follows:
- In the case of floating rate notes that reset daily, weekly or monthly,
other than Eleventh District Cost of Funds Rate notes, interest will be
payable on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified in the
applicable pricing supplement.
- In the case of Eleventh District Cost of Funds Rate notes, interest will
be payable on the first calendar day of each March, June, September and
December.
- In the case of floating rate notes that reset quarterly, interest will be
payable on the third Wednesday of March, June, September, and December of
each year.
- In the case of floating rate notes that reset semiannually, interest will
be payable on the third Wednesday of each of two months of each year
specified in the applicable pricing supplement.
- In the case of floating rate notes that reset annually, interest will be
payable on the third Wednesday of one month of each year specified in the
applicable pricing supplement.
In each of these cases, interest will also be payable at maturity.
If an interest payment date for any floating rate note would fall on a day
that is not a business day, such interest payment date will be postponed to the
next succeeding business day. In the case of a LIBOR note or a EURIBOR note, if
postponement to the next business day would cause the interest payment date to
be in the next succeeding calendar month, the interest payment date will instead
be the immediately preceding business day.
If for any floating rate note, the applicable pricing supplement provides
that the note does not accrue to pay, and if an interest payment date for such
floating rate note would otherwise be a day that is not a business day, such
interest payment date will not be postponed. Any payment required to be made on
such floating rate note, however, may be made on the next succeeding business
day with the same force and effect as if made on the due date. No additional
interest will accrue as a result of such delayed payment.
Upon the request of the holder of any floating rate note, the calculation
agent for such note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next interest
reset date for such floating rate note.
CD Rate Notes. Each CD Rate note will bear interest for each interest
reset period at an interest rate equal to the CD Rate and any spread or spread
multiplier specified in such note and in the applicable pricing supplement.
The calculation agent will determine the CD Rate on each CD Rate
determination date. The CD Rate determination date is the second business day
prior to the interest reset date for each interest reset period for negotiable
U.S. dollar certificates of deposit having the index maturity designated in the
applicable pricing supplement as published in H.15(519) under the heading "CDs
(Secondary Market)."
The following procedures will be followed if the CD Rate cannot be
determined as described above.
- If the above rate is not published prior to 3:00 p.m., New York City
time, on the calculation date pertaining to the CD Rate determination
date, then the CD Rate for such interest reset period will be the rate on
that date for negotiable U.S. dollar certificates of deposit of the index
maturity designated in the applicable pricing supplement as published in
the H.15 Daily Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the heading "CDs
(Secondary Market)."
- If by 3:00 p.m., New York City time, on the calculation date, the above
rate is not yet published, then the CD Rate will be the arithmetic mean
of the secondary market offered rates as of 10:00 a.m., New York City
time, on that CD Rate determination date of three leading nonbank dealers
in negotiable U.S. dollar certificates of deposit in New York City
selected by the calculation agent for negotiable U.S. dollar certificates
of deposit of major United States money center banks of the highest
credit standing, in the market for negotiable U.S. certificates of
deposit, with a
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remaining maturity closest to the index maturity designated in the
pricing supplement in a denomination of $5,000,000.
- If the dealers selected by the calculation agent, however, are not
quoting offered rates as mentioned in the preceding sentence, the CD Rate
for such interest reset period will be the same as the CD Rate for the
immediately preceding interest reset period. If there was no such
interest reset period, the CD Rate will be the initial interest rate.
CD Rate notes, like other notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
Commercial Paper Rate Notes. Each Commercial Paper Rate note will bear
interest for each interest reset period at an interest rate equal to the
Commercial Paper Rate and any spread or spread multiplier, specified in such
note and the applicable pricing supplement.
The calculation agent will determine the Commercial Paper Rate on each
Commercial Paper Rate determination date. The Commercial Paper Rate
determination date is the business day immediately preceding the interest reset
date for each interest reset period. The Commercial Paper Rate will be the money
market yield on that date of the rate for commercial paper having the index
maturity specified in the applicable pricing supplement, as such rate will be
published in H.15(519) under the heading "Commercial Paper -- Nonfinancial."
The following procedures will be followed if the Commercial Paper Rate
cannot be determined as described above.
- If such rate is not published prior to 3:00 p.m., New York City time, on
the calculation date pertaining to the Commercial Paper Rate
determination date, then the Commercial Paper Rate for such interest
reset period will be the money market yield on that date of the rate for
commercial paper of the specified index maturity as published in H.15
Daily Update, or such other recognized electronic source used for the
purpose of displaying the applicable rate, under the heading "Commercial
Paper -- Nonfinancial."
- If by 3:00 p.m., New York City time, on such calculation date, the above
rate is not yet published, then the Commercial Paper Rate for such
interest reset period will be the money market yield of the arithmetic
mean of the offered rates, as of 11:00 a.m., New York City time, on that
date, of three leading dealers of U.S. dollar commercial paper in New
York City selected by the calculation agent for such Commercial Paper
Rate note for commercial paper of the specified index maturity placed for
an industrial issuer whose bonds are rated "AA" or the equivalent by a
nationally recognized rating agency.
- If the dealers selected by such calculation agent, however, are not
quoting offered rates as mentioned in the preceding sentence, the
Commercial Paper Rate for such interest reset period will be the same as
the Commercial Paper Rate for the immediately preceding interest reset
period. If there was no such interest reset period, the Commercial Paper
Rate will be the initial interest rate.
Money market yield will be calculated as follows:
<Table>
D X 360
money market yield = ------------- X 100
360 - (D X M)
</Table>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable interest reset period.
Federal Funds Rate Notes. Each Federal Funds Rate note will bear interest
for each interest reset period at an interest rate equal to the Federal Funds
Rate and any spread or spread multiplier specified in such note and the
applicable pricing supplement.
The calculation agent will determine the Federal Funds Rate on each Federal
Funds Rate determination date. The Federal Funds Rate determination date is the
business day immediately preceding the interest reset date for such interest
reset period. The Federal Funds Rate will be the rate for U.S. dollar federal
funds as published in H.15(519) under the heading "Federal Funds (Effective)"
and
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displayed on Moneyline Telerate (or any successor service) on Page 120 (or any
other page as may replace the specified Page on that service).
The following procedures will be followed if the Federal Funds Rate cannot
be determined as described above.
- If the above rate does not appear on Moneyline Telerate Page 120 or is
not published prior to 3:00 p.m., New York City time, on the calculation
date pertaining to the Federal Funds Rate determination date, the Federal
Funds Rate for such interest reset period will be the rate on that date
as published in the H.15 Daily Update under the heading "Federal Funds
(Effective)," or such other recognized electronic source used for the
purpose of displaying the applicable rate.
- If by 3:00 p.m., New York City time, on such calculation date the above
rate is not yet published, then the Federal Funds Rate for such interest
reset period will be the arithmetic mean of the rates for the last
transaction in overnight U.S. dollar federal funds arranged by three
leading brokers of U.S. dollar federal funds transactions in New York
City, selected by the calculation agent prior to 9:00 a.m., New York City
time, on that Federal Funds Rate determination date.
- If the brokers so selected by the calculation agent are not quoting as
mentioned above, the Federal Funds Rate for such interest reset period
will be the Federal Funds Rate in effect for the particular Federal Funds
Rate determination date. If there was no such Federal Funds Rate in
effect for the interest reset period, the Federal Funds Rate will be the
initial interest rate.
LIBOR Notes. Each LIBOR note will bear interest for each interest reset
period at an interest rate equal to LIBOR and any spread or spread multiplier
specified in such note and the applicable pricing supplement.
The calculation agent will determine LIBOR on each LIBOR determination
date. The LIBOR determination date is the second London business day prior to
the interest reset date for each interest reset period.
On a LIBOR determination date, the calculation agent will determine LIBOR
for each interest reset period as follows.
The calculation agent will determine the offered rates for deposits in the
specified currency for the period of the index maturity specified in the
applicable pricing supplement, commencing on such interest reset date, which
appears on the "designated LIBOR page" at approximately 11:00 a.m., London time,
on that date.
- If "LIBOR Moneyline Telerate" is designated in the applicable pricing
supplement, or if neither "LIBOR Reuters" nor "LIBOR Moneyline Telerate"
is specified in the applicable pricing supplement as the method for
calculating LIBOR, "designated LIBOR page" means the display designated
as page "3750" on the Moneyline Telerate Service, and LIBOR will be the
relevant offered rate determined by the calculation agent. If page "3750"
on the Telerate Service is replaced by another page, or if the Moneyline
Telerate Service is replaced by a successor service, then "LIBOR
Telerate" means the replacement page or service selected to display the
London interbank offered rates of major banks.
- If "LIBOR Reuters" is designated in the applicable pricing supplement,
"designated LIBOR page" means the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service, and LIBOR will be the arithmetic
mean of the offered rates, calculated by the calculation agent, or the
offered rate, if the designated LIBOR page by its terms provides only for
a single rate. If the LIBO page on such service is replaced by another
page, or if the Reuters Monitor Money Rates Service is replaced by a
successor service, then "LIBOR Reuters" means the replacement page or
service selected to display the London interbank offered rates of major
banks.
If LIBOR cannot be determined on a LIBOR determination date as described
above, then the calculation agent will determine LIBOR as follows.
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- The calculation agent will select four major banks in the London
interbank market.
- The calculation agent will request that the principal London offices
of those four selected banks provide their offered quotations to prime
banks in the London interbank market at approximately 11:00 a.m.,
London time, on the LIBOR determination date. These quotations shall
be for deposits in the specified currency for the period of the
specified index maturity, commencing on such interest reset date.
Offered quotations must be based on a principal amount equal to at
least $1,000,000 or the approximate equivalent in the specified
currency that is representative of a single transaction in such market
at such time.
(1) If two or more quotations are provided, LIBOR for such interest reset
period will be the arithmetic mean of such quotations.
(2) If fewer than two quotations are provided, the calculation agent will
select three major banks in New York City and follow the steps in the
two bullet points below.
- The calculation agent will then determine LIBOR for such interest
reset period as the arithmetic mean of rates quoted by those three
major banks in New York City to leading European banks at
approximately 11:00 a.m., New York City time, on such LIBOR
determination date. The rates quoted will be for loans in the
specified currency for the period of the specified index maturity
commencing on the interest reset date. Rates quoted must be based on a
principal amount of at least $1,000,000 or the approximate equivalent
in the specified currency that is representative of a single
transaction in such market at such time.
- If fewer than three New York City banks selected by the calculation
agent are quoting rates, LIBOR for such interest reset period will be
the same as for the immediately preceding interest reset period. If
there was no such interest reset period, the LIBOR Rate will be the
initial interest rate.
Treasury Rate Notes. Each Treasury Rate note will bear interest for each
interest reset period at an interest rate equal to the Treasury Rate and any
spread or spread multiplier, specified in such note and the applicable pricing
supplement.
Treasury Rate Notes other than Constant Maturity Treasury Rate Notes
Unless "Constant Maturity" is specified in the applicable pricing
supplement, the Treasury Rate for each interest reset period will be the rate
for the auction held on the Treasury Rate determination date for such interest
reset period of treasury securities as such rate appears on Moneyline Telerate
(or any successor service) on page 56 (or any other page as may replace the page
on that service) or on page 57 (or any other page as may replace that page on
that service) under the heading "INVESTMENT RATE." Treasury securities are
direct obligations of the United States that have the index maturity specified
in the applicable pricing supplement.
If the Treasury Rate cannot be determined as described above, the following
procedures will be followed in the order set forth below.
(1) If the Treasury Rate referred to above is not published prior to 3:00
p.m., New York City time, on the related calculation date, then the
Treasury Rate will be the Bond Equivalent Yield (as defined below) of
the rate for the applicable treasury securities as published in H.15
Daily Update, or another recognized electronic source used for the
purpose of displaying the applicable rate, under the heading "U.S.
Government Securities/Treasury Bills/Auction High."
(2) If the rate referred to in clause (1) is not so published by 3:00 p.m.,
New York City time, on the related calculation date, the Treasury Rate
will be the Bond Equivalent Yield of the auction rate of the applicable
treasury securities as announced by the United States Department of the
Treasury.
(3) If the rate referred to in clause (2) is not so announced by the United
States Department of the Treasury, or if the auction is not held, then
the Treasury Rate will be the Bond Equivalent Yield
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of the rate on the Treasury Rate determination date of the applicable
treasury securities as published in H.15(519) under the heading "U.S.
Government Securities/Treasury Bills/Secondary Market."
(4) If the rate referred to in clause (3) is not so published by 3:00 p.m.,
New York City time, on the related calculation date, then the Treasury
Rate will be the rate on the Treasury Rate determination date of the
applicable treasury securities as published in H.15 Daily Update, or
another recognized electronic source used for the purpose of displaying
the applicable rate, under the heading "U.S. Government
Securities/Treasury Bills/Secondary Market."
(5) If the rate referred to in clause (4) is not so published by 3:00 p.m.,
New York City time, on the related calculation date, then the Treasury
Rate will be the rate on the Treasury Rate determination date
calculated by the calculation agent as the Bond Equivalent Yield of the
arithmetic mean of the secondary market bid rates, as of approximately
3:30 p.m., New York City time, on the Treasury Rate determination date,
of three primary United States government securities dealers selected
by the calculation agent, for the issue of treasury securities with a
remaining maturity closest to the index maturity specified in the
applicable pricing supplement.
(6) If the dealers selected by the calculation agent are not quoting bid
rates as mentioned in (5) above, then the Treasury Rate for such
interest reset period will be the same as the Treasury Rate for the
immediately preceding interest reset period. If there was no preceding
interest reset period, the Treasury Rate will be the initial interest
rate.
The Treasury Rate determination date for each interest reset period will be
the day of the week in which the interest reset date for such interest reset
period falls on which treasury securities would normally be auctioned.
Treasury securities are normally sold at auction on Monday of each week
unless that day is a legal holiday. In that case the auction is normally held on
the following Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is held on the
preceding Friday, such Friday will be the Treasury Rate determination date
pertaining to the interest reset period commencing in the next succeeding week.
If an auction date falls on any day that would otherwise be an interest reset
date for a Treasury Rate note, then that interest reset date will instead be the
business day immediately following the auction date.
Bond Equivalent: Yield will be calculated as follows:
<Table>
D X N
Bond Equivalent Yield = ------------- X 100
360 - (D X M)
</Table>
where "D" refers to the applicable per annum rate for treasury securities quoted
on a bank discount basis and expressed as a decimal, "N" refers to 365 or 366,
as the case may be, and "M" refers to the actual number of days in the
applicable interest reset period.
Constant Maturity Treasury Rate Notes
If "Constant Maturity" is specified in the applicable pricing supplement,
the Treasury Rate for each interest reset period will be the rate displayed on
the designated CMT Moneyline Telerate page under the caption "Treasury Constant
Maturities" under the column for the designated CMT maturity index in the
following manner.
- If the designated CMT Moneyline Telerate page is 7051, the Treasury Rate
will be the rate on the Constant Maturity Treasury Rate determination
date.
- If the rate referred to above does not appear on Moneyline Telerate
Page 7051, then the Treasury Rate will be the treasury constant
maturity rate for the designated CMT maturity index as published in
the relevant H.15(519) under the caption "Treasury Constant
Maturities."
S-18
- If the rate referred to above does not so appear in H.15(519), then
the Treasury Rate will be the constant treasury maturity rate on the
Constant Maturity Treasury Rate determination date for the designated
CMT maturity index as may then be published by either the Federal
Reserve System Board of Governors or the United States Department of
the Treasury that the calculation agent determines to be comparable to
the rate which would have otherwise been published in H.15(519).
- If the designated CMT Moneyline Telerate page is 7052, the Treasury Rate
will be the average for the week or for the month, as specified in the
applicable pricing supplement, ended immediately preceding the week or
month, as applicable, in which the related Constant Maturity Treasury
Rate determination date occurs.
- If the rate referred to above does not appear on Moneyline Telerate
Page 7052, then the Treasury Rate will be the one-week or one-month,
as specified in the applicable pricing supplement, average of the
treasury constant maturity rate for the designated CMT maturity index
for the week or month as applicable, preceding the Constant Maturity
Treasury determination date as published in the relevant H.15(519)
under the caption "Treasury Constant Maturities."
- If the rate referred to above does not so appear in H.15(519), then
the Treasury Rate will be the one-week or one-month, as specified in
the applicable pricing supplement, average of the constant treasury
maturity rate for the designated CMT maturity index as otherwise
announced by the Federal Reserve Bank of New York for the week or
month, as applicable, ended immediately preceding the week or month,
as applicable, in which the Constant Maturity Treasury Rate
determination date falls.
If the Treasury Rate cannot be determined as indicated above, the following
procedures will be followed in the order set forth below:
(1) If the above information, as applicable, is not so published, then the
calculation agent will calculate the Treasury Rate on the Constant
Maturity Treasury Rate determination date as follows:
- The Treasury Rate will be a yield to maturity based on the arithmetic
mean of the secondary market bid prices as of approximately 3:30 p.m.,
New York City time, on the Constant Maturity Treasury Rate
determination date of three leading U.S. government securities dealers
in New York City, for Treasury notes. The Treasury notes will be
United States treasury securities, with an original maturity of
approximately the designated CMT maturity index and a remaining term
to maturity of not less than such designated CMT maturity index minus
one year and in a principal amount that is representative for a single
transaction in the securities in that market at that time.
- The three government securities dealers referenced above will be
identified from five such dealers who are selected by the calculation
agent, one of which may be the agent, by eliminating the dealers with
the highest and lowest quotations, or in the event of equality, one of
the highest and/or lowest quotation, as the case may require.
(2) If three or four, but not five, of such dealers provide quotations as
described above, then the Treasury Rate will be based on the arithmetic
mean of the bid prices obtained and neither the highest nor the lowest
of such quotes will be eliminated.
(3) If the calculation agent is unable to obtain three such Treasury note
quotations as described in (1) above, the Treasury Rate on such
Constant Maturity Treasury Rate determination date will be calculated
by the calculation agent as follows.
- The rate will be a yield to maturity based on the arithmetic mean of
the secondary market bid prices as of approximately 3:30 p.m., New
York City time, on the Constant Maturity Treasury Rate determination
date reported, according to their written records, by three leading
U.S.
S-19
government securities dealers in New York City, for Treasury notes with
an original maturity of the number of years that is the next highest to
the designated CMT maturity index and a remaining maturity closest to
the index maturity specified in the applicable pricing supplement, and
in an amount that is representative for a single transaction in that
market at that time.
- If two Treasury notes with an original maturity, as described above,
have remaining terms to maturity equally close to the designated CMT
maturity index, the calculation agent will obtain quotations for the
Treasury note with the shorter remaining term to maturity and will use
such quotations to calculate the Treasury Rate as set forth above.
- The three government securities dealers referenced above will be
identified from five such dealers who are selected by the calculation
agent, one of which may be the agent, by eliminating the dealers with
the highest and lowest quotations, or in the event of equality, one of
the highest and/or lowest quotation, as the case may require.
(4) If three or four, but not five, of such dealers provide quotations as
described above, then the Treasury Rate will be based on the arithmetic
mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated.
(5) If fewer than three dealers selected by the calculation agent provide
quotations as described in (3) above, the Treasury Rate determined as
of the Constant Maturity Treasury Rate determination date will be the
Treasury Rate in effect on such Constant Maturity Treasury Rate
determination date.
"Designated CMT Moneyline Telerate page" means the display on the Telerate
Service, or any successor service on the page specified in the applicable
pricing supplement, or any other page as may replace such page on that service,
or any successor service, for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519). If no such page is specified in the
applicable pricing supplement, the designated CMT Telerate page will be 7052,
for the most recent week.
"Designated CMT maturity index" means the original period to maturity of
the U.S. Treasury securities, either one, two, three, five, seven, ten, twenty
or thirty years, specified in the applicable pricing supplement for which the
Treasury Rate will be calculated. If no such maturity is specified in the
applicable pricing supplement, the designated CMT maturity index will be two
years.
The "Constant Maturity Treasury Rate determination date" will be the second
business day prior to the interest reset date for the applicable interest reset
period.
The CMT Rate for a Treasury security maturity as published as of any
business day is intended to be indicative of the yield of a U.S. Treasury
security having as of such business day a remaining term to maturity equivalent
to such maturity. The CMT Rate as of any business day is based upon an
interpolation by the U.S. Treasury of the daily yield curve of outstanding
Treasury securities. This yield curve, which relates the yield on a security to
its time to maturity, is based on the over-the-counter market bid yields on
actively traded Treasury securities. Such yields are calculated from composites
of quotations reported by leading U.S. government securities dealers, which may
include one or more of the calculation agents or other affiliates of Citigroup.
Certain constant maturity yield values are read from the yield curve. Such
interpolation from the yield curve provides a theoretical yield for a Treasury
security having ten years to maturity, for example, even if no outstanding
Treasury security has as of such date exactly ten years remaining to maturity.
Prime Rate Notes. Prime Rate notes will bear interest at a rate equal to
the Prime Rate and any spread or spread multiplier specified in the Prime Rate
notes and the applicable pricing supplement.
The calculation agent will determine the Prime Rate for each interest reset
period on each Prime Rate determination date. The Prime Rate determination date
is the second business day prior to the interest reset date for each interest
reset period. The Prime Rate will be the rate made available and subsequently
published on that date in H.15(519) under the heading "Bank Prime Loan."
S-20
The following procedures will be followed if the Prime Rate cannot be
determined as described above.
- If the rate is not published prior to 3:00 p.m., New York City time, on
the related calculation date, then the Prime Rate will be the rate on the
Prime Rate determination date that is published in the H.15 Daily Update,
or such other recognized electronic source used for the purpose of
displaying the applicable rate, under the heading "Bank Prime Loan."
- If the rate referred to above is not published prior to 3:00 p.m., New
York City time, on the related calculation date, then the Prime Rate will
be the arithmetic mean of the rates of interest that appear on the
Reuters Screen USPRIME1 page as such bank's prime rate or base lending
rate as of 11:00 a.m. New York City time, on the Prime Rate determination
date.
- If fewer than four such rates appear on the Reuters Screen USPRIME1 page,
then the calculation agent will select three major banks in New York
City. The Prime Rate will be the arithmetic mean of the prime rates or
base lending rates quoted by those three banks on the basis of the actual
number of days in the year divided by a 360-day year as of the close of
business on the Prime Rate determination date.
- If the banks that the calculation agent selects do not provide quotations
as described above, then the Prime Rate will remain the same as the Prime
Rate in effect on the Prime Rate determination date.
"Reuters Screen USPRIME1 page" means the display designated as page
"USPRIME1" on the Reuters Monitor Money Rates Service, or any successor service
or page, for the purpose of displaying prime rates or base lending rates of
major United States banks.
Eleventh District Cost of Funds Rate Notes. Eleventh District Cost of
Funds Rate notes will bear interest at the interest rates, calculated based on
the Eleventh District Cost of Funds Rate and any spread and/or spread
multiplier, specified in the Eleventh District Cost of Funds Rate notes and the
applicable pricing supplement.
The calculation agent will determine the Eleventh District Cost of Funds
Rate on each Eleventh District Cost of Funds Rate determination date. The
Eleventh District Cost of Funds Rate determination date is the last working day
of the month immediately prior to each interest reset date for each interest
reset period on which the Federal Home Loan Bank of San Francisco publishes the
Eleventh District Cost of Funds Index.
The Eleventh District Cost of Funds Rate will be the rate equal to the
monthly weighted average cost of funds for the calendar month preceding such
Eleventh District Cost of Funds Rate determination date as set forth under the
caption "Eleventh District" on Moneyline Telerate (or any successor service) on
page 7058. Such page will be deemed to include any successor page, determined by
the calculation agent, as of 11:00 A.M., San Francisco time, on the Eleventh
District Cost of Funds Rate determination date.
The following procedures will be followed if the Eleventh District Cost of
Funds Rate cannot be determined as described above.
- If the rate does not appear on Telerate page 7058 on any related Eleventh
District Cost of Funds Rate determination date, the Eleventh District
Cost of Funds Rate for the Eleventh District Cost of Funds Rate
determination date will be the Eleventh District Cost of Funds Rate
Index.
- If the FHLB of San Francisco fails to announce the Eleventh District Cost
of Funds Rate Index on or prior to the Eleventh District Cost of Funds
Rate determination date for the calendar month immediately preceding that
date, then the Eleventh District Cost of Funds Rate for such date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh
District Cost of Funds Rate determination date.
The "Eleventh District Cost of Funds Rate Index" will be the monthly
weighted average cost of funds paid by member institutions of the Eleventh
Federal Home Loan Bank District that the FHLB of
S-21
San Francisco most recently announced as the cost of funds for the calendar
month preceding the date of such announcement.
EURIBOR Notes. Each EURIBOR note will bear interest for each interest
reset period at an interest rate equal to EURIBOR and any spread or spread
multiplier specified in such note and the applicable pricing supplement.
The calculation agent will determine EURIBOR on each EURIBOR determination
date. The EURIBOR determination date is the second TARGET business day prior to
the interest reset date for each interest reset period.
On a EURIBOR determination date, the calculation agent will determine
EURIBOR for each interest reset period as follows.
The calculation agent will determine the offered rates for deposits in
euros for the period of the index maturity specified in the applicable pricing
supplement, commencing on such interest reset date, which appears on page 248 on
the Telerate Service or any successor service or any page that may replace page
248 on that service which is commonly referred to as "Telerate Page 248" as of
11:00 a.m., Brussels time, on that date.
If EURIBOR cannot be determined on a EURIBOR determination date as
described above, then the calculation agent will determine EURIBOR as follows.
- The calculation agent will select four major banks in the Euro-zone
interbank market.
- The calculation agent will request that the principal Euro-zone
offices of those four selected banks provide their offered quotations
to prime banks in the Euro-zone interbank market at approximately
11:00 a.m., Brussels time, on the EURIBOR determination date. These
quotations shall be for deposits in euros for the period of the
specified index maturity, commencing on such interest reset date.
Offered quotations must be based on a principal amount equal to at
least $1,000,000 or the approximate equivalent in euros that is
representative of a single transaction in such market at such time.
(1) If two or more quotations are provided, EURIBOR for such interest reset
period will be the arithmetic mean of such quotations.
(2) If fewer than two quotations are provided, the calculation agent will
select four major banks in the Euro-zone and follow the steps in the
two bullet points below.
- The calculation agent will then determine EURIBOR for such interest
reset period as the arithmetic mean of rates quoted by those four
major banks in the Euro-zone to leading European banks at
approximately 11:00 a.m., Brussels time, on such EURIBOR determination
date. The rates quoted will be for loans in euros, for the period of
the specified index maturity, commencing on the interest reset date.
Rates quoted must be based on a principal amount of at least
$1,000,000 or the approximate equivalent in euros that is
representative of a single transaction in such market at such time.
- If the banks so selected by the calculation agent are not quoting
rates as described above, EURIBOR for such interest reset period will
be the same as for the immediately preceding interest reset period. If
there was no such interest reset period, EURIBOR will be the initial
interest rate.
"Euro-zone" means the region comprised of member states of the European
Union that adopted the single currency in accordance with the Treaty
establishing the European Community, as amended by the Treaty on European Union.
S-22
Inverse Floating Rate Notes. Any floating rate note may be designated in
the applicable pricing supplement as an inverse floating rate note. In such an
event, unless otherwise specified in the applicable pricing supplement, the
interest rate on such floating rate note will be equal to:
- in the case of the period, if any, commencing on the issue date, or the
date on which such note otherwise begins to accrue interest if different
from the issue date, up to the first interest reset date, a fixed rate of
interest established by Citigroup as described in the applicable pricing
supplement; and
- in the case of each period commencing on an interest reset date, a fixed
rate of interest specified in the pricing supplement minus the interest
rate determined based on the base rate as adjusted by any spread and/or
spread multiplier.
However, on any inverse floating rate note, the interest rate will not be less
than zero.
Floating/Fixed Rate Notes. The applicable pricing supplement may provide
that a note will be a floating rate note for a specified portion of its term and
a fixed rate note for the remainder of its term. In such an event, the interest
rate on such note will be determined as if it were a floating rate note and a
fixed rate note for each such respective period, all as specified in such
applicable pricing supplement.
SUBSEQUENT INTEREST PERIODS
The pricing supplement relating to each note will indicate whether
Citigroup has the option to reset the interest rate, or the spread, spread
multiplier, or method of calculation, as the case may be, for such note. If
Citigroup has the option to reset, the pricing supplement will also indicate the
optional reset date or dates on which such interest rate or such spread, spread
multiplier, or method of calculation, as the case may be, may be reset.
Citigroup shall notify the trustee whether or not it intends to exercise
such option relating to such note at least 45 but not more than 60 days prior to
an optional reset date for such note. Not later than 40 days prior to such
optional reset date, the trustee will mail to the holder of such note a reset
notice first class, postage prepaid, indicating whether Citigroup has elected to
reset the interest rate, or the spread, spread multiplier or method of
calculation, as the case may be.
If Citigroup elects to reset the interest rate, or the spread, spread
multiplier or method of calculation, as the case may be, the trustee will mail
to the holder in a manner described above a notice indicating such new interest
rate or such new spread, spread multiplier, or method of calculation, as the
case may be. The notice will also indicate any provisions for redemption during
the subsequent interest period. The subsequent interest period is the period
from such optional reset date to the next optional reset date or, if there is no
such next optional reset date, to the stated maturity of such note, including
the date or dates on which or the period or periods during which and the price
or prices at which such redemption may occur during such subsequent interest
period.
Upon the transmittal by the trustee of a reset notice to the holder of a
note, such new interest rate or such new spread, spread multiplier, and/or
method of calculation as the case may be, will take effect automatically. Except
as modified by the reset notice and as described below, such note will have the
same terms as prior to the transmittal of such reset notice.
Despite the foregoing, not later than 20 days prior to an optional reset
date for a note, Citigroup may, at its option, revoke the interest rate, or the
spread or spread multiplier, provided for in the reset notice relating to such
optional reset date and establish a higher interest rate, or a higher spread or
spread multiplier, as applicable, for the subsequent interest period commencing
on such optional reset date.
Citigroup can make such revocations by causing the trustee for such note to
mail notice of such higher interest rate or higher spread or spread multiplier,
as the case may be, first class, postage prepaid, to the holder of such note.
Such notice shall be irrevocable. All notes for which the interest rate or
spread or spread multiplier is reset on an optional reset date will bear such
higher interest rate, or higher spread or spread multiplier, as the case may be,
whether or not tendered for repayment.
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The holder of a note will have the option to elect repayment of such note
by Citigroup on each optional reset date at a price equal to the principal
amount of such note plus interest accrued to such optional reset date. In order
for a note to be repaid on an optional reset date, the holder of such note must
follow the procedures set forth below under "Optional Redemption, Repayment and
Repurchase" for optional repayment. However, the period for delivery of such
note or notification to the trustee for such note will be at least 25 but not
more than 35 days prior to such optional reset date. Further, a holder who has
tendered a note for repayment pursuant to a reset notice may, by written notice
to the trustee for such note, revoke any such tender for repayment until the
close of business on the tenth day prior to such optional reset date.
AMORTIZING NOTES
Citigroup may from time to time offer amortizing notes on which a portion
or all the principal amount is payable prior to stated maturity
- in accordance with a schedule;
- by application of a formula; or
- based on an index.
Further information concerning additional terms and conditions of any amortizing
notes, including terms for repayment of such notes, will be set forth in the
applicable pricing supplement.
INDEXED NOTES
Citigroup may from time to time offer indexed notes on which some or all
interest payments, in the case of an indexed rate note, and/or the principal
amount payable at stated maturity or earlier redemption or retirement, in the
case of an indexed principal note, is determined based on:
- the principal amount of such notes or, in the case of an indexed
principal note, the amount designated in the applicable pricing
supplement as the "face amount" of such indexed note; and
- an index, which may be based on
(1) prices, changes in prices, or differences between prices, of one
or more securities, currencies, intangibles, goods, articles or
commodities;
(2) the application of a formula; or
(3) an index which shall be such other objective price, economic or
other measures as are described in the applicable pricing
supplement.
A description of the index used in any determination of an interest or principal
payment, and the method or formula by which interest or principal payments will
be determined based on such index, will be set forth in the applicable pricing
supplement.
If a fixed rate note, floating rate note or indexed rate note is also an
indexed principal note, the amount of any interest payment will be determined
based on the face amount of such indexed note unless specified otherwise in the
applicable pricing supplement. If an indexed note is also an indexed principal
note, the principal amount payable at stated maturity or any earlier redemption
or repayment of the indexed note may be different from the face amount.
If a third party is appointed to calculate or announce the index for a
particular indexed note, and the third party either (1) suspends the calculation
or announcement of such index or (2) changes the basis upon which such index is
calculated in a manner that is inconsistent with the applicable pricing
supplement, then Citigroup will select another third party to calculate or
announce the index. The agent or another affiliate of Citigroup may be either
the original or successor third party selected by Citigroup.
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If for any reason such index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then any indexed interest payments or any indexed principal amount of
such indexed note will be calculated in the manner set forth in the applicable
pricing supplement. Any determination by the selected third party will be
binding on all parties, except in the case of an obvious error.
Unless otherwise specified in the applicable pricing supplement, for the
purpose of determining whether holders of the requisite principal amount of
notes outstanding under the applicable indenture have made a demand or given a
notice or waiver or taken any other action, the outstanding principal amount of
indexed notes will be deemed to be the face amount stated on such notes. Unless
otherwise specified in the applicable pricing supplement, in the event of an
acceleration of the stated maturity of an indexed note, the principal amount
payable to the holder of such note upon acceleration will be the principal
amount determined based on the formula used to determine the principal amount of
such note on the stated maturity of such note, as if the date of acceleration
were the stated maturity.
An investment in indexed notes has significant risks, including wide
fluctuations in market value as well as in the amounts of payments due, that are
not associated with a similar investment in a conventional debt security. Such
risks depend on a number of factors including supply and demand for the
particular security, currency, commodity or other good or article to which the
note is indexed and economic and political events over which Citigroup has no
control. See "Risk Factors -- Changes in the Value of Underlying Assets of
Indexed Notes Could Result in a Substantial Loss to You" above for a discussion
of these considerations.
Fluctuations in the price of any particular security or commodity, in the
rates of exchange between particular currencies or in particular indices that
have occurred in the past are not necessarily indicative, however, of
fluctuations in the price or rates of exchange that may occur during the term of
any indexed notes. Accordingly, prospective investors should consult their own
financial and legal advisors as to the risks of investment in indexed notes.
DUAL CURRENCY NOTES
Citigroup may from time to time offer dual currency notes on which
Citigroup has a one time option of making all payments of principal, any premium
and interest on such notes that are issued on the same day and have the same
terms, the payments on which would otherwise be made in the specified currency
of such notes, in the optional payment currency specified in the applicable
pricing supplement. Such option will be exercisable in whole but not in part on
an option election date, which will be any one of the dates specified in the
applicable pricing supplement.
The pricing supplement for each issuance of dual currency notes will
specify, among other things,
- the specified currency;
- the optional payment currency; and
- the designated exchange rate.
Such designated exchange rate will be a fixed exchange rate used for
converting amounts denominated in the specified currency into amounts
denominated in the optional payment currency. The pricing supplement will also
specify the option election dates and interest payment dates for the related
issuance of dual currency notes. Each option election date will be a particular
number of days before an interest payment date or stated maturity, as set forth
in the applicable pricing supplement. Each option election date will be the date
on which Citigroup may select whether to make all scheduled payments due
thereafter in the optional payment currency rather than in the specified
currency.
If Citigroup makes such an election, the amount payable in the optional
payment currency will be determined using the designated exchange rate specified
in the applicable pricing supplement. If such election is made, notice of such
election will be mailed in accordance with the terms of the dual currency notes
within two business days of the option election date. Such notice will state (1)
the first date, whether an interest payment date and/or stated maturity, on
which scheduled payments in the optional
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payment currency will be made and (2) the designated exchange rate. Any such
notice by Citigroup, once given, may not be withdrawn. The equivalent value in
the specified currency of payments made after such an election may be less, at
the then current exchange rate, than if Citigroup had made such payment in the
specified currency.
For United States federal income tax purposes, holders of dual currency
notes may need to comply with rules which differ from the general rules
applicable to holders of other types of notes offered by this prospectus
supplement. The United States federal income tax consequences of the purchase,
ownership and disposition of dual currency notes will be set forth in the
applicable pricing supplement.
RENEWABLE NOTES
Citigroup may from time to time offer renewable notes, which will mature on
an initial maturity date. Such initial maturity date will be an interest payment
date specified in the applicable pricing supplement occurring in, or prior to,
the twelfth month following the original issue date of such notes, unless the
term of all or any portion of any such notes is renewed in accordance with the
procedures described below.
The term of a renewable note may be extended to the interest payment date
occurring in the twelfth month, or, if a special election interval is specified
in the applicable pricing supplement, the last month in a period equal to twice
the special election interval elected by the holder after such renewal date.
Such an extension may be made on the initial renewal date. That date will be the
interest payment date occurring in the sixth month, unless a special election
interval is specified in the applicable pricing supplement, prior to the initial
maturity date of a renewable note and on the interest payment date occurring in
each sixth month, or in the last month of each special election interval, after
such initial renewal date which, together with the initial renewal date,
constitutes a renewal date.
If a holder does not elect to extend the term of any portion of the
principal amount of a renewable note during the specified period prior to any
renewal date, such portion will become due and payable on the new maturity date.
Such new maturity date will be the interest payment date occurring in the sixth
month, or the last month in the special election interval, after such renewal
date.
A holder of a renewable note may elect to renew the term of such renewable
note, or if so specified in the applicable pricing supplement, any portion of
such renewable note, by delivering a notice to such effect to the trustee or any
duly appointed paying agent at the corporate trust office of the trustee or
agency of the trustee in New York City. Such notice will be delivered not less
than 15 nor more than 30 days prior to such renewal date, unless another period
is specified in the applicable pricing supplement as the special election
period. Such election will be irrevocable and will be binding upon each
subsequent holder of such renewable note.
An election to renew the term of a renewable note may be exercised for less
than the entire principal amount of such renewable note only if so specified in
the applicable pricing supplement and only in such principal amount, or any
integral multiple in excess of such amount, that is specified in the applicable
pricing supplement. However, the term of the renewable notes may not be extended
beyond the stated maturity specified for such renewable notes in the applicable
pricing supplement.
If the holder does not elect to renew the term, such renewable note must be
presented to the trustee, or any duly appointed paying agent. If such renewable
note is a certificate issued in definitive form, it must be presented to the
trustee as soon as practicable following receipt of such renewable note. The
trustee, or any duly appointed paying agent, will issue in exchange for such
note, in the name of such holder, a note. The note will be in a principal amount
equal to the principal amount of such exchanged renewable note for which no
election to renew such term was exercised, with terms identical to those
specified on such renewable note. However, such note will have a fixed,
nonrenewable stated maturity on the new maturity date.
If an election to renew is made for less than the full principal amount of
a holder's renewable note, the trustee, or any duly appointed paying agent, will
issue in exchange for such note in the name of such holder, a replacement
renewable note. The replacement renewable note will be in a principal amount
equal
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to the principal amount elected to be renewed of such exchanged renewable note,
with terms otherwise identical to such exchanged renewable note.
EXTENSION OF MATURITY
The pricing supplement will indicate whether Citigroup has the option to
extend the stated maturity of such note for an extension period. Such an
extension period is one or more periods of one to five whole years, up to but
not beyond the final maturity date set forth in such pricing supplement.
Citigroup may exercise such option for a note by notifying the trustee for
such note at least 45 but not more than 60 days prior to the original stated
maturity of such note. Not later than 40 days prior to the original stated
maturity of such note, the trustee will mail to the holders of such notes an
extension notice, first class, postage prepaid. The extension notice will set
forth:
- the election of Citigroup to extend the stated maturity of such note;
- the new stated maturity;
- in the case of a fixed rate note, the interest rate applicable to the
extension period;
- in the case of a floating rate note, the spread, spread multiplier or
method of calculation applicable to the extension period; and
- any provisions for redemption during the extension period, including the
date or dates on which, or the period or periods during which, and the
price or prices at which, such redemption may occur during the extension
period.
Upon the mailing by the trustee of an extension notice to the holders of
the notes, the stated maturity of such note will be extended automatically, and,
except as modified by the extension notice and as described in the next
paragraph, such note will have the same terms as prior to the mailing of such
extension notice. Despite the foregoing, not later than 20 days prior to the
original stated maturity of such note, Citigroup may, at its option, revoke the
interest rate, or the spread or spread multiplier, as the case may be, provided
for in the extension notice for such note and establish for the extension period
a higher interest rate, in the case of a fixed rate note, or a higher spread or
spread multiplier, in the case of a floating rate note.
Citigroup may so act by causing the trustee for such note to mail notice of
such higher interest rate or higher spread or spread multiplier, as the case may
be, first class, postage prepaid, to the holder of such note. Such notice will
be irrevocable. All notes for which the stated maturity is extended will bear
such higher interest rate, in the case of fixed rate notes, or higher spread or
spread multiplier, in the case of floating rate notes, for the extension period,
whether or not tendered for repayment.
If Citigroup extends the stated maturity of a note, the holder of such note
will have the option to elect repayment of such note by Citigroup on the
original stated maturity at a price equal to the principal amount of such note,
plus interest accrued to such date. In order for a note to be repaid on the
original stated maturity once Citigroup has extended its stated maturity, the
holder of such note must follow the procedures set forth below under "Optional
Redemption, Repayment and Repurchase" for optional repayment. The period for
delivery of such note or notification to the trustee for such note will be at
least 25 but not more than 35 days prior to the original stated maturity. A
holder who has tendered a note for repayment after an extension notice may give
written notice to the trustee for such note to revoke any such tender for
repayment until the close of business on the tenth day before the original
stated maturity.
COMBINATION OF PROVISIONS
If so specified in the applicable pricing supplement, any note may be
required to comply with all of the provisions, or any combination of the
provisions, described above under "Subsequent Interest Periods," "Extension of
Maturity" and "Renewable Notes."
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BOOK-ENTRY SYSTEM
Upon issuance, and unless the rules of DTC state otherwise, all book-entry
notes having the same original issue date and otherwise identical terms will be
represented by a single global security. Each global security representing
book-entry notes will be deposited with, or on behalf of, DTC and registered in
the name of a nominee of DTC. Book-entry notes will not be exchangeable for
certificated notes and, except under the circumstances described in the
prospectus under "Book-Entry Procedures and Settlement," will not otherwise be
issuable as certificated notes.
If an issue of notes is denominated in a currency other than the U.S.
dollar, Citigroup will make payments of principal and any interest in the
foreign currency in which the notes are denominated or in U.S. dollars. DTC has
elected to have all such payments of principal and interest in U.S. dollars
unless notified by any of its participants through which an interest in the
notes is held that it elects, in accordance with, and to the extent permitted
by, the applicable pricing supplement and the revelant note, to receive such
payment of principal or interest in the foreign currency. On or prior to the
third business day after the record date for payment of interest and twelve days
prior to the date for payment of principal, such participant will notify DTC of
(1) its election to receive all, or the specified portion, of such payment in
the foreign currency and (2) its instructions for wire transfer of such payment
to a foreign currency account.
A further description of DTC's procedures regarding global securities
representing book-entry notes is set forth in the prospectus under "Book-Entry
Procedures and Settlement." DTC has confirmed to Citigroup, the agent and the
trustees that it intends to follow such procedures.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The pricing supplement relating to each note will indicate whether such
note can be redeemed at the option of Citigroup, in whole or in part prior to
its stated maturity. The applicable pricing supplement will also indicate (1)
the optional redemption date or dates on which such note may be redeemed and (2)
the redemption price at which, together with accrued interest to such optional
redemption date, such note may be redeemed on each such optional redemption
date.
Unless otherwise specified in the applicable pricing supplement, at least
30 days prior to the date of redemption, the trustee will mail notice of such
redemption, first class, postage prepaid, to the holder of such note. Unless
otherwise specified in the applicable pricing supplement, Citigroup may exercise
such option relating to a redemption of a note in part only by notifying the
trustee for such note at least 45 days prior to any optional redemption date. In
the event of redemption of a note in part only, a new note or notes for the
unredeemed portion of such note or notes will be issued to the holder of such
note or notes upon the cancellation of such note or notes. The redemption of any
subordinated note that is included in Citigroup's capital may be subject to
consultation with the Federal Reserve, which may not acquiesce in the redemption
of such note unless it is satisfied that the capital position of Citigroup will
be adequate after the proposed redemption.
The pricing supplement relating to each note will also indicate whether the
holder of such note will have the option to elect repayment of such note by
Citigroup prior to its stated maturity. If so, such pricing supplement will
specify (1) the optional repayment date or dates on which such note may be
repaid and (2) the optional repayment price. Such optional repayment price is
the price at which, together with accrued interest to such optional repayment
date, such note may be repaid on each such optional repayment date.
In order for a note to be repaid, the trustee for such note must receive,
at least 30 but not more than 45 days prior to an optional repayment date:
(1) such note with the form entitled "Option to Elect Repayment" on the
reverse of such note duly completed; or
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(2) a telegram, telex, facsimile transmission or letter from a member of a
national securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United
States setting forth:
- the name of the holder of such note;
- the principal amount of such note to be repaid;
- the certificate number or a description of the tenor and terms of such
note;
- a statement that the option to elect repayment is being exercised; and
- a guarantee that the note to be repaid with the form entitled "Option
to Elect Repayment" on the reverse of the note duly completed will be
received by such trustee not later than five business days after the
date of such telegram, telex, facsimile transmission or letter.
If the guarantee procedure described in clause (2) above is followed, then
such note and form duly completed must be received by the trustee by such fifth
business day. Any tender of a note by the holder for repayment, except pursuant
to a reset notice or an extension notice, will be irrevocable. The repayment
option may be exercised by the holder of a note for less than the entire
principal amount of such note, provided, that the principal amount of such note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, such note will be canceled and a new note or notes for the
remaining principal amount will be issued in the name of the holder of such
repaid note.
If a note is represented by a global security, DTC's nominee will be the
holder of such note and, therefore, will be the only entity that can exercise a
right to repayment. In order to ensure that DTC's nominee will timely exercise a
right to repayment relating to a particular note, the beneficial owner of such
note must instruct the broker or other direct or indirect participant through
which it holds an interest in such note to notify DTC of its desire to exercise
a right to repayment. Different firms have different cut-off times for accepting
instructions from their customers. Accordingly, each beneficial owner should
consult the broker or other direct or indirect participant through which it
holds an interest in a note in order to ascertain the cut-off time by which such
an instruction must be given in order for timely notice to be delivered to DTC.
If Citigroup redeems or repays a note that is an OID note other than an
indexed note prior to its stated maturity, then Citigroup will pay the amortized
face amount of the note as of the date of redemption or repayment regardless of
anything else stated in this prospectus supplement or the accompanying
prospectus.
The amortized face amount of a note on any date means the amount equal to:
- the issue price set forth on the face of the applicable pricing
supplement plus
- that portion of the difference between the issue price and the stated
principal amount of the note that has accrued by that date at
(1) the bond yield to maturity set forth in the applicable pricing
supplement, or
(2) if so specified in the applicable pricing supplement, the bond yield
to call set forth on the face of the note.
These computations will be made in accordance with generally accepted United
States bond yield computation principles. However, the amortized face amount of
a note will never exceed its stated principal amount. The bond yield to call
listed in a pricing supplement will be computed on the basis of:
- the first occurring optional redemption date with respect to such note
and
- the amount payable on such optional redemption date.
In the event that any such note is not redeemed on such first occurring optional
redemption date, the bond yield to call that applies to such note will be
recomputed on such optional redemption date on the basis of
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(1) the next occurring optional redemption date and (2) the amount payable on
such optional redemption date. The bond yield to call will continue to be so
recomputed on each succeeding optional redemption date until the note is so
redeemed.
Citigroup may at any time purchase notes at any price in the open market or
otherwise. Notes so purchased by Citigroup may, at the discretion of Citigroup,
be held, resold or surrendered to the trustee for such notes for cancellation.
OTHER PROVISIONS
The terms in the applicable pricing supplement may modify any provisions
relating to:
- the determination of an interest rate basis;
- the specification of an interest rate basis;
- calculation of the interest rate applicable to, or the principal payable
at maturity on, any note;
- interest payment dates; or
- any other related matters.
DEFEASANCE
The defeasance provisions described in the prospectus will not be
applicable to the notes except as set forth in the applicable pricing
supplement.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTION
The following is a general summary of United States federal income tax
considerations that may be relevant to a beneficial owner of a note. The summary
is based on:
- laws;
- regulations;
- rulings; and
- decisions now in effect,
all of which may change, possibly with retroactive effect. This summary deals
only with beneficial owners that will hold notes as capital assets. This summary
does not address all of the United States federal income tax considerations that
may be relevant to a beneficial owner of notes. For example, this summary does
not address tax considerations applicable to investors to whom special tax rules
may apply, including:
- banks or other financial institutions;
- tax-exempt entities;
- insurance companies;
- regulated investment companies;
- common trust funds;
- entities that are treated for United States federal income tax purposes
as partnerships or other pass-through entities;
- controlled foreign corporations;
- dealers in securities or currencies;
- persons that will hold notes as a hedge or in order to hedge against
currency risk or as a part of an integrated investment, including a
"straddle" or "conversion transaction", comprised of a note and one or
more other positions; or
- United States holders (as defined below) that have a functional currency
other than the U.S. dollar.
Any special United States federal income tax considerations relevant to a
particular issue of notes, including any indexed notes, dual currency notes or
notes providing for contingent payments, will be provided in the applicable
pricing supplement. Purchasers of such notes should carefully examine the
applicable pricing supplement and should consult with their tax advisors with
respect to such notes.
Prospective investors should consult their tax advisors in determining the
tax consequences to them of purchasing, holding, and disposing of the notes,
including the application to their particular situation of the United States
federal income tax considerations discussed below, as well as the application of
state, local, foreign or other tax laws.
As used in this summary, the term United States holder means a beneficial
owner of a note who is
- a citizen or resident of the United States;
- a corporation or other entity treated as a corporation created or
organized in or under the laws of the United States or any political
subdivision thereof;
- an estate, if United States federal income taxation is applicable to the
income of such estate regardless of its source; or
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- a trust if a United States court is able to exercise primary supervision
over the trust's administration and one or more United States persons
have the authority to control all of the trust's substantial decisions.
As used in this summary, the term "non-United States holder" means a beneficial
owner of a note who is not a United States holder and the term "United States"
means the United States of America, including the fifty states and the District
of Columbia, but excluding its territories and possessions.
UNITED STATES HOLDERS
Payments of Interest
Payments of qualified stated interest, as defined below under "Original
Issue Discount," on a note will be taxable to a United States holder as ordinary
interest income at the time that such payments are accrued or are received, in
accordance with the United States holder's method of tax accounting.
If such payments of interest are made relating to a note that is
denominated in a foreign currency, the amount of interest income realized by a
United States holder that uses the cash method of tax accounting will be the
U.S. dollar value of the specified currency payment based on the spot rate of
exchange on the date of receipt regardless of whether the payment is in fact
converted into U.S. dollars. No exchange gain or loss will be recognized with
respect to the receipt of such payment (other than exchange gain or loss
realized on the disposition of the foreign currency so received). A United
States holder that uses the accrual method of tax accounting will accrue
interest income on the foreign currency note in the relevant foreign currency
and translate the amount accrued into U.S. dollars based on:
- the average exchange rate in effect during the interest accrual period,
or portion thereof, within such holder's taxable year; or
- at such holder's election, at the spot rate of exchange on (1) the last
day of the accrual period, or the last day of the taxable year within
such accrual period if the accrual period spans more than one taxable
year, or (2) the date of receipt, if such date is within five business
days of the last day of the accrual period.
Such election must be applied consistently by the United States holder to all
debt instruments from year to year and can be changed only with the consent of
the Internal Revenue Service (the "IRS"). A United States holder that uses the
accrual method of tax accounting will recognize foreign currency gain or loss on
the receipt of an interest payment made relating to a foreign currency note if
the spot rate of exchange on the date the payment is received differs from the
rate applicable to a previous accrual of that interest income. Such foreign
currency gain or loss will be treated as ordinary income or loss, but generally
will not be treated as an adjustment to interest income received on the notes.
Purchase, Sale and Retirement of Notes
A United States holder's tax basis in a note generally will equal the cost
of such note to such holder
- increased by any amounts includible in income by the holder as original
issue discount ("OID") and market discount (each as described below) and
- reduced by any amortized premium and any payments other than payments of
qualified stated interest (each as described below) made on such note.
In the case of a foreign currency note, the cost of such note to a United
States holder will generally be the U.S. dollar value of the foreign currency
purchase price on the date of purchase calculated at the spot rate of exchange
on that date. In the case of a foreign currency note that is traded on an
established securities market, a United States holder generally should determine
the U.S. dollar value of the cost of such note by translating the amount paid in
foreign currency into its U.S. dollar value at the spot rate of exchange (i) on
the settlement date of the purchase in the case of a United States holder using
the cash method of tax accounting and (ii) on the trade date, in the case of a
United States holder using the accrual method of tax accounting, unless such
holder elects to use the spot rate applicable to cash method United States
holders. The amount of any subsequent adjustments to a United States holder's
tax basis in a foreign currency note in respect of OID, market discount and
premium will be determined in the manner
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described under "Original Issue Discount," "Market Discount" and "Notes
Purchased at a Premium" below. The conversion of U.S. dollars to another
specified currency and the immediate use of such specified currency to purchase
a foreign currency note generally will not result in any exchange gain or loss
for a United States holder.
Upon the sale, exchange, retirement or other taxable disposition
(collectively, a "disposition") of a note, a United States holder generally will
recognize gain or loss equal to the difference between (1) the amount realized
on the disposition, less any accrued qualified stated interest, which will be
taxable as ordinary income in the manner described above under "Payments of
Interest," and (2) the United States holder's adjusted tax basis in such note.
If a United States holder receives a specified currency other than the U.S.
dollar in respect of such disposition of a note, the amount realized will be the
U.S. dollar value of the specified currency received calculated at the spot rate
of exchange on the date of disposition of the note.
In the case of a foreign currency note that is traded on an established
securities market, a United States holder that receives a specified currency
other than the U.S. dollar in respect of such disposition generally should
determine the amount realized (as determined on the trade date) by translating
that specified currency into its U.S. dollar value at the spot rate of exchange
(i) on the settlement date of the disposition in the case of a United States
holder using the cash method of tax accounting and (ii) on the trade date, in
the case of a United States holder using the accrual method of tax accounting,
unless such holder elects to use the spot rate applicable to cash method United
States holders. The election available to accrual basis United States holders in
respect of the purchase and sale of foreign currency notes traded on an
established securities market, discussed above, must be applied consistently by
the United States holder to all debt instruments from year to year and can be
changed only with the consent of the IRS.
Except as discussed below in connection with foreign currency gain or loss,
market discount and short-term notes, gain or loss recognized by a United States
holder on the disposition of a note will generally be long term capital gain or
loss if the United States holder's holding period for the note exceeds one year
at the time of such disposition.
Gain or loss recognized by a United States holder on the disposition of a
foreign currency note generally will be treated as ordinary income or loss to
the extent that the gain or loss is attributable to changes in exchange rates
during the period in which the holder held such note.
Original Issue Discount
In General. Notes with a term greater than one year may be issued with OID
for United States federal income tax purposes. Such notes are called OID notes
in this prospectus supplement. United States holders generally must accrue OID
in gross income over the term of the OID notes on a constant yield basis,
regardless of their regular method of tax accounting. As a result, United States
holders generally will recognize taxable income in respect of an OID note in
advance of the receipt of cash attributable to such income.
OID generally will arise if the stated redemption price at maturity of the
note exceeds its issue price by more than a de minimis amount of 0.25% of the
note's stated redemption price at maturity multiplied by the number of complete
years to maturity. OID may also arise if a note has particular interest payment
characteristics, such as interest holidays, interest payable in additional
securities or stepped interest. For this purpose, the issue price of a note is
the first price at which a substantial amount of notes is sold for cash, other
than to bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers. The stated redemption
price at maturity of a note is the sum of all payments due under the note, other
than payments of qualified stated interest. The term qualified stated interest
generally means stated interest that is unconditionally payable in cash or
property, other than debt instruments of the issuer, at least annually during
the entire term of the OID note at a single fixed rate of interest or, under
particular conditions, based on one or more interest indices.
S-33
For each taxable year of a United States holder, the amount of OID that
must be included in gross income in respect of an OID note will be the sum of
the daily portions of OID for each day during such taxable year or any portion
of such taxable year in which such a United States holder held the OID note.
Such daily portions are determined by allocating to each day in an accrual
period a pro rata portion of the OID allocable to that accrual period. Accrual
periods may be of any length and may vary in length over the term of an OID
note. However, accrual periods may not be longer than one year and each
scheduled payment of principal or interest must occur on the first day or the
final day of a period.
The amount of OID allocable to any accrual period generally will equal (1)
the product of the OID note's adjusted issue price at the beginning of such
accrual period multiplied by its yield to maturity (as adjusted to take into
account the length of such accrual period), less (2) the amount, if any, of
qualified stated interest allocable to that accrual period. The adjusted issue
price of an OID note at the beginning of any accrual period will equal the issue
price of the OID note, as defined above, (1) increased by previously accrued OID
from prior accrual periods, and (2) reduced by any payment made on such note,
other than payments of qualified stated interest, on or before the first day of
the accrual period.
Foreign Currency Notes. In the case of an OID note that is also a foreign
currency note, a United States holder should determine the U.S. dollar amount
includible in income as OID for each accrual period by
- calculating the amount of OID allocable to each accrual period in the
specified currency using the constant-yield method described above and
- translating the amount of the specified currency so derived at the
average exchange rate in effect during that accrual period, or portion of
such accrual period within a United States holder's taxable year, or, at
the United States holder's election (as described above under "Payments
of Interest"), at the spot rate of exchange on (1) the last day of the
accrual period, or the last day of the taxable year within such accrual
period if the accrual period spans more than one taxable year, or (2) on
the date of receipt, if such date is within five business days of the
last day of the accrual period.
All payments on an OID note, other than payments of qualified stated interest,
will generally be viewed first as payments of previously accrued OID, to the
extent thereof, with payments attributed first to the earliest accrued OID, and
then as payments of principal. Upon the receipt of an amount attributable to
OID, whether in connection with a payment of an amount that is not qualified
stated interest or the disposition of the OID note, a United States holder will
recognize ordinary income or loss measured by the difference between (1) the
amount received and (2) the amount accrued. The amount received will be
translated into U.S. dollars at the spot rate of exchange on the date of receipt
or on the date of disposition of the OID note. The amount accrued will be
determined by using the spot rate of exchange applicable to such previous
accrual.
Acquisition Premium. A United States holder that purchases an OID note for
an amount less than or equal to the remaining redemption amount, but in excess
of the OID note's adjusted issue price, generally is permitted to reduce the
daily portions of OID by a fraction. The numerator of such fraction is the
excess of the United States holder's adjusted tax basis in the OID note
immediately after its purchase over the OID note's adjusted issue price. The
denominator of such fraction is the excess of the remaining redemption amount
over the OID note's adjusted issue price. For purposes of this prospectus
supplement,
"acquisition premium" means the excess of the purchase price paid by a
United States holder for an OID note over the OID note's adjusted issue price;
and
"remaining redemption amount" means the sum of all amounts payable on an
OID note after the purchase date other than payments of qualified stated
interest.
The notes may have special redemption, repayment or interest rate reset
features, as indicated in the applicable pricing supplement. Notes containing
such features, in particular OID notes, may be subject to special rules that
differ from the general rules discussed above. Accordingly, purchasers of notes
with such
S-34
features should carefully examine the applicable pricing supplement and should
consult their tax advisors relating to such notes.
Market Discount
If a United States holder purchases a note, other than a short-term note,
for an amount that is less than the note's stated redemption price at maturity
or, in the case of an OID note, for an amount that is less than the note's
revised issue price, i.e., the note's issue price increased by the amount of
accrued OID, the note will be considered to have market discount. The market
discount rules are subject to a de minimis rule similar to the rule relating to
de minimis OID, described above (in the second paragraph under "Original Issue
Discount"). Any gain recognized by the United States holder on the disposition
of notes having market discount generally will be treated as ordinary income to
the extent of the market discount that accrued on the note while held by such
United States holder.
Alternatively, the United States holder may elect to include market
discount in income currently over the life of the note. Such an election will
apply to market discount notes acquired by the United States holder on or after
the first day of the first taxable year to which such election applies and is
revocable only with the consent of the IRS. Market discount will accrue on a
straight-line basis unless the United States holder elects to accrue the market
discount on a constant-yield method. Such an election will apply to the note to
which it is made and is irrevocable. Unless the United States holder elects to
include market discount in income on a current basis, as described above, the
United States holder could be required to defer the deduction of a portion of
the interest paid on any indebtedness incurred or maintained to purchase or
carry the note.
Market discount on a foreign currency note will be accrued by a United
States holder in the specified currency. The amount includible in income by a
United States holder in respect of such accrued market discount will be the U.S.
dollar value of the amount accrued. This is generally calculated at the spot
rate of exchange on the date that the note is disposed of by the United States
holder. Any accrued market discount on a foreign currency note that is currently
includible in income will be translated into U.S. dollars at the average
exchange rate for the accrual period or portion of such accrual period within
the United States holder's taxable year.
Short-Term Notes
The rules set forth above also will generally apply to notes having
maturities of not more than one year from the date of issuance. Those notes are
called short-term notes in this prospectus supplement. Modifications apply to
these general rules.
First, none of the interest on a short-term note is treated as qualified
stated interest but instead is treated as part of the short-term note's stated
redemption price at maturity, thereby giving rise to OID. Thus, all short-term
notes will be OID notes. OID will be treated as accruing on a short-term note
ratably, or at the election of a United States holder, under a constant yield
method.
Second, a United States holder of a short-term note that uses the cash
method of tax accounting will generally not be required to include OID in
respect of the short-term note in income on a current basis. Such a United
States holder may not be allowed to deduct all of the interest paid or accrued
on any indebtedness incurred or maintained to purchase or carry such note until
the maturity of the note or its earlier disposition in a taxable transaction. In
addition, such a United States holder will be required to treat any gain
realized on a disposition of the note as ordinary income to the extent of the
holder's accrued OID on the note, and short-term capital gain to the extent the
gain exceeds accrued OID. A United States holder of a short-term note using the
cash method of tax accounting may, however, elect to accrue OID into income on a
current basis. In such case, the limitation on the deductibility of interest
described above will not apply. A United States holder using the accrual method
of tax accounting generally will be required to include OID on a short-term note
in income on a current basis.
S-35
Third, any United States holder of a short-term note, whether using the
cash or accrual method of tax accounting, can elect to accrue the acquisition
discount, if any, on the note on a current basis. If such an election is made,
the OID rules will not apply to the note. Acquisition discount is the excess of
the note's stated redemption price at maturity over the holder's purchase price
for the note. Acquisition discount will be treated as accruing ratably or, at
the election of the United States holder, under a constant-yield method based on
daily compounding.
As described above, the notes may have special redemption features. These
features may affect the determination of whether a note has a maturity of not
more than one year and thus is a short-term note. Purchasers of notes with such
features should carefully examine the applicable pricing supplement and should
consult their tax advisors in relation to such features.
Notes Purchased at a Premium
A United States holder that purchases a note for an amount in excess of the
remaining redemption amount will be considered to have purchased the note at a
premium and the OID rules will not apply to such holder. Such holder may elect
to amortize such premium, as an offset to interest income, using a
constant-yield method, over the remaining term of the note. Such election, once
made, generally applies to all debt instruments held by the United States holder
at the beginning of the first taxable year to which the election applies and to
all debt instruments subsequently acquired by the United States holder. Such
election may be revoked only with the consent of the IRS. A United States holder
that elects to amortize such premium must reduce its tax basis in a note by the
amount of the premium amortized during its holding period. For a United States
holder that does not elect to amortize bond premium, the amount of such premium
will be included in the United States holder's tax basis when the note matures
or is disposed of by the United States holder. Therefore, a United States holder
that does not elect to amortize premium and holds the note to maturity will
generally be required to treat the premium as capital loss when the note
matures.
Amortizable bond premium in respect of a foreign currency note will be
computed in the specified currency and will reduce interest income in the
specified currency. At the time amortized bond premium offsets interest income,
exchange gain or loss, which will be taxable as ordinary income or loss, will be
realized on the amortized bond premium on such note based on the difference
between (1) the spot rate of exchange on the date or dates such premium is
recovered through interest payments on the note and (2) the spot rate of
exchange on the date on which the United States holder acquired the note. See
"Original Issue Discount -- Acquisition Premium" above for a discussion of the
treatment of a note purchased for an amount less than or equal to the remaining
redemption amount but in excess of the note's adjusted issue price.
Information Reporting and Backup Withholding
Information returns may be required to be filed with the IRS relating to
payments made to particular United States holders of notes. In addition, United
States holders may be subject to a backup withholding tax on such payments if
they do not provide their taxpayer identification numbers to the trustee in the
manner required, fail to certify that they are not subject to backup withholding
tax, or otherwise fail to comply with applicable backup withholding tax rules.
United States holders may also be subject to information reporting and backup
withholding tax with respect to the proceeds from a disposition of the notes.
Any amounts withheld under the backup withholding rules will be allowed as a
credit against the United States holder's United States federal income tax
liability provided the required information is timely furnished to the IRS.
S-36
NON-UNITED STATES HOLDERS
Under current United States federal income tax law:
- withholding of United States federal income tax will not apply to a
payment on a note to a non-United States holder, provided that,
(1) the holder does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of Citigroup
entitled to vote and is not a controlled foreign corporation related
to Citigroup through stock ownership;
(2) the beneficial owner provides a statement signed under penalties of
perjury that includes its name and address and certifies that it is
a non-United States holder in compliance with applicable
requirements; and
(3) neither Citigroup nor its paying agent has actual knowledge or
reason to know that the beneficial owner of the note is a United
States holder.
- withholding of United States federal income tax will generally not apply
to any gain realized on the disposition of a note.
Despite the above, if a non-United States holder is engaged in a trade or
business in the United States (or, if certain tax treaties apply, if the
non-United States holder maintains a permanent establishment within the United
States) and the interest on the notes is effectively connected with the conduct
of that trade or business (or, if certain tax treaties apply, attributable to
that permanent establishment), such non-United States holder will be subject to
United States federal income tax on the interest on a net income basis in the
same manner as if such non-United States holder were a United States holder. In
addition, a non-United States holder that is a foreign corporation engaged in a
trade or business in the United States may be subject to a 30% (or, if certain
tax treaties apply, such lower rates as provided) branch profits tax.
Any gain realized on the disposition of a note generally will not be
subject to United States federal income tax unless:
- that gain is effectively connected with the non-United States holder's
conduct of a trade or business in the United States (or, if certain tax
treaties apply, is attributable to a permanent establishment maintained
by the non-United States holder within the United States); or
- the non-United States holder is an individual who is present in the
United States for 183 days or more in the taxable year of the disposition
and certain other conditions are met.
In general, backup withholding and information reporting will not apply to
a payment of interest on a note to a non-United States holder, or to proceeds
from the disposition of a note by a non-United States holder, in each case, if
the holder certifies under penalties of perjury that it is a non-United States
holder and neither Citigroup nor its paying agent has actual knowledge to the
contrary. Any amounts withheld under the backup withholding rules will be
refunded or credited against the non-United States holder's United States
federal income tax liability provided the required information is timely
furnished to the IRS. In certain circumstances, if a note is not held through a
qualified intermediary, the amount of payments made on such note, the name and
address of the beneficial owner and the amount, if any, of tax withheld may be
reported to the IRS.
S-37
PLAN OF DISTRIBUTION
The notes are being offered on a continuous basis by Citigroup through
Citigroup Global Markets Inc., as agent. The agent has agreed to use its
reasonable efforts to solicit orders to purchase notes. The agent and Citigroup
will sign a distribution agreement. A form of distribution agreement has been
filed as an exhibit to the registration statement of which this prospectus
supplement forms a part. Citigroup will have the sole right to accept orders to
purchase notes and may reject proposed purchases in whole or in part. The agent
will have the right to reject any proposed purchase in whole or in part.
Citigroup reserves the right to withdraw, cancel or modify the offer made by
this prospectus supplement, the accompanying prospectus or any pricing
supplement without notice.
The following table summarizes the aggregate commissions or discounts
payable in connection with offerings of the notes. Commissions and discounts
will vary depending upon the stated maturity of the notes.
<Table>
<Caption>
PUBLIC AGENT'S PROCEEDS, BEFORE
OFFERING DISCOUNTS EXPENSES, TO
PRICE AND COMMISSIONS CITIGROUP
--------------- --------------- ----------------
Principal Amount............................... $ $ $
Total.......................................... 100%
</Table>
Citigroup may also sell notes at a discount to the agent for its own
account or for resale to one or more purchasers at varying prices related to
prevailing market prices or at a fixed public offering price. After any initial
public offering of notes to be resold to purchasers at a fixed public offering
price, the public offering price and any concession or discount may be changed.
Unless otherwise specified in the applicable pricing supplement, any note
purchased by the agent as principal will be purchased at 100% of the principal
amount or face amount less a percentage equal to the commission applicable to an
agency sale of a note of identical maturity.
The agent may offer and sell notes purchased by it as principal to other
dealers. These notes may be sold at a discount which, unless otherwise specified
in the applicable pricing supplement, will not exceed the discount to be
received by the agent.
Citigroup reserves the right to sell notes directly to investors on its own
behalf and to enter into agreements similar to the distribution agreement with
other parties. No commission will be payable nor will a discount be allowed on
any sales made directly by Citigroup.
Unless notes are issued upon the reopening of a prior series, no note will
have an established trading market when issued. Unless otherwise specified in
the applicable pricing supplement, the notes will not be listed on any
securities exchange. The agent may make a market in the notes, but the agent is
not obligated to do so. The agent may discontinue any market-making at any time
without notice, at its sole discretion. There can be no assurance of the
existence or liquidity of a secondary market for any notes, or that the maximum
amount of notes will be sold.
Citigroup estimates that its total expenses for the offering, excluding
underwriting commissions or discounts, will be approximately $ .
The agent, whether acting as agent or principal, may be deemed to be an
underwriter within the meaning of the Securities Act of 1933. Citigroup has
agreed to indemnify the agent against liabilities relating to material
misstatements and omissions, or to contribute to payments that the agent may be
required to make relating to these liabilities. Citigroup will reimburse the
agent for customary legal and other expenses, incurred by it in connection with
the offer and sale of the notes.
Unless otherwise specified in the applicable pricing supplement, payment of
the purchase price of the notes will be required to be made in immediately
available funds in New York City on the date of settlement.
Concurrently with the offering of notes through the agent as described in
this prospectus supplement, Citigroup may issue other securities under the
indenture referred to in the prospectus.
S-38
The broker-dealer subsidiaries of Citigroup are members of the NASD and may
participate in offerings of the notes. Accordingly, offerings of the notes in
which Citigroup's broker-dealer subsidiaries participate will conform with the
requirements set forth in Rule 2720 of the Conduct Rules of the NASD.
This prospectus supplement, the accompanying prospectus and the related
pricing supplement may be used by the agent or other affiliates of Citigroup in
connection with offers and sales of the notes offered by this prospectus
supplement in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. The agent or these other
affiliates may act as principal or agent in such transactions.
LEGAL MATTERS
John R. Dye, Esq., General Counsel -- Capital Markets of Citigroup, 425
Park Avenue, New York, New York 10043, will act as legal counsel to Citigroup.
Mr. Dye beneficially owns, or has rights to acquire under Citigroup's employee
benefit plans, an aggregate of less than 1% of Citigroup's common stock. Cleary,
Gottlieb, Steen & Hamilton, New York, New York, will act as legal counsel for
the agent. Cleary, Gottlieb, Steen & Hamilton has from time to time acted as
counsel for Citigroup and its subsidiaries and may do so in the future.
S-39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[CITIGROUP LOGO]
MEDIUM-TERM SENIOR NOTES, SERIES H
MEDIUM-TERM SUBORDINATED NOTES, SERIES H
DUE NINE MONTHS OR MORE FROM THE DATE OF ISSUE
------------------------------
PROSPECTUS SUPPLEMENT
, 2004
(INCLUDING PROSPECTUS
DATED , 2004)
------------------------------
CITIGROUP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. CITIGROUP
INC. MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED AUGUST 31, 2004
PROSPECTUS
000,000 SECURITIES
CITIGROUP CAPITAL
% CAPITAL SECURITIES
$ Liquidation Amount
Guaranteed to the extent set forth herein by
Citigroup Inc.
[Citigroup Logo]
------------------------
A brief description of the % capital securities can be found under
"Summary Information -- Q&A" in this prospectus.
Application will be made to list the % capital securities on the New
York Stock Exchange. If approved for listing, Citigroup expects the %
capital securities will begin trading on the New York Stock Exchange within 30
days after they are first issued.
Some or all of the capital securities may be redeemed at any time on or
after , 20 . In addition, the capital securities may be redeemed, in
whole or in part, at any time if certain changes in tax, investment company or
bank regulatory law or interpretation occur and certain other conditions are
satisfied. Any change in the Tier 1 capital treatment of the capital securities
resulting from actions taken by the Board of Governors of the Federal Reserve
System in light of certain recent accounting changes, as discussed in this
prospectus, would constitute such a change and could result in the early
redemption of the capital securities.
YOU ARE URGED TO CAREFULLY READ THE "RISK FACTORS" SECTION BEGINNING ON
PAGE 6, WHERE SPECIFIC RISKS ASSOCIATED WITH THESE % CAPITAL SECURITIES
ARE DESCRIBED, ALONG WITH THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE YOU
MAKE YOUR INVESTMENT DECISION.
Neither the Securities and Exchange Commission nor any state securities or
insurance commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
These securities are not deposits or savings accounts. These securities are
not insured by the Federal Deposit Insurance Corporation or any other
governmental agency or instrumentality.
------------------------
<Table>
<Caption>
PER CAPITAL
SECURITY TOTAL
----------- --------
Public offering price....................................... $ $
Underwriting commissions to be paid by Citigroup Inc. ...... (1) (1)
Proceeds to Citigroup Capital............................... $ $
</Table>
- ---------------
(1) Underwriting commissions of $ per capital security, or $ for
all % capital securities, will be paid by Citigroup Inc.; except that
for sales of 10,000 or more % capital securities to a single purchaser,
the commissions will be $ per capital security.
Citigroup expects that the % capital securities will be ready for
delivery in book-entry form only through The Depository Trust Company on or
about .
------------------------
, 2004
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
Summary Information -- Q&A.................................. 3
Ratio of Income to Fixed Charges and Ratio of Income to
Combined Fixed Charges Including Preferred Stock
Dividends................................................. 5
Risk Factors................................................ 6
Where You Can Find More Information......................... 9
Forward-Looking Statements.................................. 10
Citigroup Inc. ............................................. 10
Use of Proceeds............................................. 10
Accounting Treatment; Regulatory Capital.................... 11
Capitalization.............................................. 12
Description of the Capital Securities....................... 13
Description of the Junior Subordinated Debt Securities...... 25
Description of Guarantee.................................... 35
Effect of Obligations Under the Junior Subordinated Debt
Securities and the Guarantee.............................. 38
United States Federal Income Tax Considerations............. 40
ERISA Considerations........................................ 45
Underwriting................................................ 47
Legal Matters............................................... 49
Experts..................................................... 49
</Table>
2
SUMMARY INFORMATION -- Q&A
This summary provides a brief overview of the key aspects of Citigroup and
the % capital securities. You should carefully read this prospectus to
understand fully the terms of the capital securities as well as the tax and
other considerations that are important to you in making a decision about
whether to invest in the capital securities. You should pay special attention to
the "Risk Factors" section beginning on page 6 of this prospectus to determine
whether an investment in the capital securities is appropriate for you.
WHAT ARE THE CAPITAL SECURITIES?
Each capital security represents an undivided beneficial interest in the
assets of Citigroup Capital. Each capital security will entitle the holder to
receive cash distributions as described in this prospectus.
Citigroup Capital is offering capital securities at a price of
$ for each capital security.
WHO IS CITIGROUP CAPITAL?
Citigroup Capital (referred to in this prospectus as "Citigroup
Capital") is a Delaware statutory trust. Its principal place of business is c/o
Citigroup Inc., 399 Park Avenue, New York, NY 10043, and its telephone number is
(212) 559-1000.
All of the common securities of Citigroup Capital will be owned by
Citigroup Inc. Citigroup Capital will use the proceeds from the sale of the
capital securities and the common securities to buy a series of % junior
subordinated deferrable interest debentures due , 20 from
Citigroup with the same financial terms as the capital securities.
WHO IS CITIGROUP INC.?
Citigroup is a diversified global financial services holding company whose
businesses provide a broad range of financial services to consumer and corporate
customers with some 200 million customer accounts doing business in more than
100 countries. Citigroup's activities are conducted through the Global Consumer,
Global Corporate and Investment Bank, Private Client Services, Global Investment
Management, and Proprietary Investment Activities business segments.
The mailing address of Citigroup's principal executive office is 399 Park
Avenue, New York, NY 10043, and its telephone number is (212) 559-1000.
WHEN WILL YOU RECEIVE DISTRIBUTIONS ON THE CAPITAL SECURITIES?
Citigroup Capital's only source of cash to make payments on the capital
securities are payments on the junior subordinated debt securities it purchases
from Citigroup.
If you purchase the capital securities, you are entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation
amount of $ per capital security. Distributions will accumulate from the
date Citigroup Capital issues the capital securities and will be paid
in arrears on of each year, beginning
.
WHEN WILL PAYMENT OF YOUR DISTRIBUTIONS BE DEFERRED?
If Citigroup defers interest payments on the junior subordinated debt
securities, Citigroup Capital generally will defer distributions on the capital
securities. A deferral may be for up to consecutive
periods. A deferral of distributions cannot extend, however, beyond
, 20 .
3
During any deferral period, except as described on page 28, Citigroup will
not be permitted to:
- pay a dividend or make any distributions on its capital stock or redeem,
purchase, acquire or make a liquidation payment on any of its capital
stock, or make any guarantee payments relating to the foregoing; or
- make an interest, principal or premium payment on, or repurchase or
redeem, any of its debt securities that rank equal with or junior to the
junior subordinated debt securities.
WHEN CAN CITIGROUP CAPITAL REDEEM THE CAPITAL SECURITIES?
Citigroup Capital must redeem all of the outstanding capital securities on
, 20 .
Some or all of the capital securities may be redeemed before
, 20 on one or more occasions any time on or after
, 20 . See "Risk Factors -- You Should Not Rely on the
Distributions From the Capital Securities Through Their Maturity Date -- They
May Be Redeemed at the Option of Citigroup." Also the capital securities may be
redeemed, in whole or in part, at any time if certain changes in tax, investment
company or bank regulatory law or interpretations occur and certain other
conditions are satisfied. Citigroup may need regulatory approval to redeem the
capital securities. See "Risk Factors -- You Should Not Rely on the
Distributions From the Capital Securities Through Their Maturity Date -- They
May Be Redeemed at Any Time if Certain Changes in Tax, Investment Company or
Bank Regulatory Law Occur and -- You Should Not Rely on the Distributions From
the Capital Securities Through Their Maturity Date -- Recent Accounting Changes
May Give Rise to a Future Regulatory Capital Event That Would Entitle Citigroup
to Redeem the Capital Securities" on page 7 and "Description of the Capital
Securities -- Special Event Redemption" on page 16.
WHAT IS CITIGROUP'S GUARANTEE OF THE CAPITAL SECURITIES?
Citigroup's guarantee of the capital securities consists of:
- its obligations to make payments on the junior subordinated debt
securities;
- its obligations under the capital securities guarantee; and
- its obligations under the amended and restated declaration of trust of
Citigroup Capital, which sets forth the terms of Citigroup Capital.
Citigroup has irrevocably guaranteed that if a payment on the junior
subordinated debt securities is made to Citigroup Capital but, for any reason,
Citigroup Capital does not make the corresponding distribution or redemption
payment to the holders of the capital securities, then Citigroup will make the
payments directly to the holders of the capital securities. The guarantee does
not cover payments when Citigroup Capital does not have sufficient funds to make
payments on the capital securities.
Citigroup's obligations under the guarantee are subordinated as described
on page 35.
WHEN COULD THE JUNIOR SUBORDINATED DEBT SECURITIES BE DISTRIBUTED TO YOU?
Citigroup has the right to dissolve Citigroup Capital at any time. If
Citigroup terminates Citigroup Capital, Citigroup Capital will redeem the
capital securities by distributing the junior subordinated debt securities to
holders of the capital securities and the common securities on a ratable basis.
If the junior subordinated debt securities are distributed, Citigroup will use
its best efforts to list the junior subordinated debt securities on the New York
Stock Exchange or any other exchange on which the capital securities are then
listed.
WILL THE CAPITAL SECURITIES BE LISTED ON A STOCK EXCHANGE?
Application will be made to list the capital securities on the NYSE. If
approved for listing, Citigroup Capital expects the capital securities will
begin trading on the NYSE within 30 days after they are first issued.
4
WILL HOLDERS OF THE CAPITAL SECURITIES HAVE ANY VOTING RIGHTS?
Generally, the holders of the capital securities will not have any voting
rights. See "Description of the Capital Securities -- Voting Rights" on page 19.
IN WHAT FORM WILL THE CAPITAL SECURITIES BE ISSUED?
The capital securities will be represented by one or more global securities
that will be deposited with and registered in the name of The Depository Trust
Company or its nominee. This means that you will not receive a certificate for
your capital securities and that your broker will maintain your position in the
capital securities. Citigroup Capital expects that the capital securities will
be ready for delivery through DTC on or about .
RATIO OF INCOME TO FIXED CHARGES AND RATIO OF INCOME TO
COMBINED FIXED CHARGES INCLUDING PREFERRED STOCK DIVIDENDS
The following table shows (1) the consolidated ratio of income to fixed
charges and (2) the consolidated ratio of income to combined fixed charges
including preferred stock dividends of Citigroup for the six months ended June
30, 2004 and each of the five most recent fiscal years.
<Table>
<Caption>
SIX
MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------
2004 2003 2002 2001 2000 1999
-------- ---- ---- ---- ---- ----
Ratio of income to fixed charges (excluding
interest on deposits)............................ 2.53 3.43 2.57 2.00 1.82 1.90
Ratio of income to fixed charges (including
interest on deposits)............................ 1.92 2.48 1.95 1.64 1.52 1.56
Ratio of income to combined fixed charges including
preferred stock dividends (excluding interest on
deposits)........................................ 2.51 3.40 2.54 1.98 1.81 1.88
Ratio of income to combined fixed charges including
preferred stock dividends (including interest on
deposits)........................................ 1.91 2.47 1.94 1.63 1.52 1.55
</Table>
5
RISK FACTORS
Your investment in the capital securities will involve several risks. You
should carefully consider the following discussion of risks, and the other
information in this prospectus, before deciding whether an investment in the
capital securities is suitable for you.
CITIGROUP IS NOT REQUIRED TO PAY YOU UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBT SECURITIES UNLESS IT FIRST MAKES OTHER REQUIRED PAYMENTS.
Citigroup's obligations under the junior subordinated debt securities and
the guarantee will rank junior to all of Citigroup's senior indebtedness as
described on page 26. This means that Citigroup cannot make any payments on the
junior subordinated debt securities or the guarantee if it defaults on a payment
of senior indebtedness and does not cure the default within the applicable grace
period or if the senior indebtedness becomes immediately due because of a
default and has not yet been paid in full. In addition, Citigroup's obligations
under the junior subordinated debt securities and the guarantee will be
structurally subordinated to all existing and future liabilities of Citigroup's
subsidiaries.
In the event of the bankruptcy, liquidation or dissolution of Citigroup,
its assets would be available to pay obligations under the junior subordinated
debt securities and the guarantee only after Citigroup made all payments on its
senior indebtedness.
Neither the capital securities, the junior subordinated debt securities nor
the guarantee limit the ability of Citigroup and its subsidiaries to incur
additional indebtedness, including indebtedness that ranks senior in priority of
payment to the junior subordinated debt securities and the guarantee. See
"Description of Guarantee -- Status of the Guarantee" and "Description of the
Junior Subordinated Debt Securities -- Subordination" on pages 37 and 26,
respectively.
CITIGROUP IS NOT REQUIRED TO PAY YOU UNDER THE GUARANTEE IF CITIGROUP CAPITAL
DOES NOT HAVE CASH AVAILABLE.
The ability of Citigroup Capital to make payments on the capital securities
is solely dependent upon Citigroup making the related payments on the junior
subordinated debt securities when due.
If Citigroup defaults on its obligations to make payments on the junior
subordinated debt securities, Citigroup Capital will not have sufficient funds
to make payments on the capital securities. In those circumstances, you will not
be able to rely upon the guarantee for payment of these amounts. If this
happens, your options are discussed on page 13.
DEFERRAL OF DISTRIBUTIONS WOULD HAVE ADVERSE TAX CONSEQUENCES FOR YOU AND MAY
ADVERSELY AFFECT THE TRADING PRICE OF THE CAPITAL SECURITIES.
If distributions on the capital securities are deferred, you will be
required to recognize interest income for United States federal income tax
purposes in respect of your ratable share of the interest on the junior
subordinated debt securities held by Citigroup Capital before you receive any
cash distributions relating to this interest. In addition, you will not receive
this cash if you sold the capital securities before the end of any deferral
period or before the record date relating to distributions which are paid.
Citigroup has no current intention of deferring interest payments on the
junior subordinated debt securities and believes that such deferral is a remote
possibility. However, if Citigroup exercises its right in the future, the
capital securities may trade at a price that does not fully reflect the value of
accrued but unpaid interest on the junior subordinated debt securities. If you
sell the capital securities during an interest deferral period, you may not
receive the same return on investment as someone else who continues to hold the
capital securities. In addition, the existence of Citigroup's right to defer
payments of interest on the junior subordinated debt securities may mean that
the market price for the capital securities, which represent an undivided
beneficial interest in the junior subordinated debt securities, may be more
volatile than other securities that do not have these rights.
6
See "United States Federal Income Tax Considerations" on page 40 for more
information regarding the tax consequences of purchasing, holding and selling
the capital securities.
YOU SHOULD NOT RELY ON THE DISTRIBUTIONS FROM THE CAPITAL SECURITIES THROUGH
THEIR MATURITY DATE -- THEY MAY BE REDEEMED AT THE OPTION OF CITIGROUP.
The capital securities may be redeemed, in whole, at any time, or in part,
from time to time, on or after , at a redemption price equal
to $ per capital security plus any accrued and unpaid distributions to the
redemption date. You should assume that this redemption option will be exercised
if Citigroup is able to refinance at a lower interest rate or it is otherwise in
the interest of Citigroup to redeem the junior subordinated debt securities. If
the junior subordinated debt securities are redeemed, Citigroup Capital must
redeem the capital securities and the common securities having an aggregate
liquidation amount equal to the aggregate principal amount of junior
subordinated debt securities to be redeemed. See "Description of the Capital
Securities -- Redemption of Trust Securities" and "Description of the Junior
Subordinated Debt Securities -- Optional Redemption" on pages 15 and 27,
respectively.
YOU SHOULD NOT RELY ON THE DISTRIBUTIONS FROM THE CAPITAL SECURITIES THROUGH
THEIR MATURITY DATE -- THEY MAY BE REDEEMED AT ANY TIME IF CERTAIN CHANGES IN
TAX, INVESTMENT COMPANY OR BANK REGULATORY LAW OCCUR.
If certain changes, which are more fully described below, in tax,
investment company or bank regulatory law or interpretations occur and are
continuing, and certain other conditions that are more fully described below are
satisfied, the capital securities could be redeemed by Citigroup Capital within
90 days of the event at a redemption price equal to $ per security plus any
accrued and unpaid distributions. See "Accounting Treatment; Regulatory Capital"
"Description of the Capital Securities -- Special Event Redemption" and
"-- Distribution of the Junior Subordinated Debt Securities" on pages 11, 16 and
17, respectively.
YOU SHOULD NOT RELY ON THE DISTRIBUTIONS FROM THE CAPITAL SECURITIES THROUGH
THEIR MATURITY DATE -- RECENT ACCOUNTING CHANGES MAY GIVE RISE TO A FUTURE
REGULATORY CAPITAL EVENT THAT WOULD ENTITLE CITIGROUP TO REDEEM THE CAPITAL
SECURITIES
In January 2003, the Financial Accounting Standards Board (the "FASB")
issued Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest
Entities and, in December 2003, issued Revised Interpretation No. 46 ("FIN
46R"), Consolidation of Variable Interest Entities, which amended FIN 46.
Historically, issuer trusts that issued capital securities have been
consolidated by their parent companies. In addition, capital securities have
been treated as eligible for Tier 1 capital treatment by bank holding companies,
like Citigroup, under rules and regulations of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") relating to minority interests in
equity accounts of consolidated subsidiaries. Accordingly, Citigroup has
consolidated its existing issuer trusts in preparing its consolidated financial
statements in the past, and such issuer trusts' outstanding capital securities
have been treated as Tier 1 capital by Citigroup.
It has been concluded that issuer trusts should no longer be consolidated
by their parent companies under FIN 46R. As a result, Citigroup no longer
consolidates its issuer trusts in preparing its financial statements in
accordance with generally accepted accounting principles, and has made certain
adjustments to its financial statements to reflect the deconsolidation of such
issuer trusts. Moreover, such deconsolidation could result in a change to the
regulatory capital treatment of capital securities issued by Citigroup and other
U.S. bank holding companies. Specifically, it is possible that since its issuer
trusts are no longer consolidated by Citigroup, the capital securities issued by
such issuer trusts would not be accorded Tier 1 capital treatment by the Federal
Reserve. Although the Federal Reserve has indicated in supervisory letter SR
03-13, dated July 2, 2003 (the "supervisory letter"), that capital securities
will continue to be treated as Tier 1 capital until notice is given to the
contrary, the supervisory letter also indicates that the Federal Reserve will
review the regulatory implications of any accounting treatment changes and will
provide further guidance if necessary. In May 2004, the Federal Reserve proposed
to revise its regulatory capital guidelines to permit bank holding companies to
include in Tier 1 capital trust preferred securities that meet certain criteria
even if such securities are not treated as a minority interest
7
in a consolidated subsidiary for accounting and regulatory reporting purposes.
The capital securities are intended to meet the criteria for Tier 1 capital
treatment that are established in the Federal Reserve's proposal. There is no
assurance, however, that the proposal will be adopted as proposed.
If Tier 1 capital treatment were disallowed, Citigroup would have the right
to redeem the junior subordinated debentures, thereby causing a mandatory early
redemption of capital securities pursuant to the special "Regulatory Capital
Event" redemption provisions described below. See "Description of the Capital
Securities -- Distribution of the Junior Subordinated Debt Securities,"
"-- Special Event Redemption" and "Accounting Treatment; Regulatory Capital" on
pages 17, 16 and 11, respectively.
THERE CAN BE NO ASSURANCE AS TO THE MARKET PRICES FOR THE CAPITAL SECURITIES OR
THE JUNIOR SUBORDINATED DEBT SECURITIES; THEREFORE, YOU MAY SUFFER A LOSS.
Citigroup Capital and Citigroup cannot give you any assurance as to the
market prices for the capital securities or the junior subordinated debt
securities that may be distributed in exchange for capital securities.
Accordingly, the capital securities that an investor may purchase, whether
pursuant to the offer made by this prospectus or in the secondary market, or the
junior subordinated debt securities that a holder of capital securities may
receive in exchange for capital securities, may trade at a discount to the price
that the investor paid to purchase the capital securities. As a result of the
right to defer payments on the capital securities, the market price of the
capital securities may be more volatile than the market prices of other
securities to which such optional deferrals do not apply.
THERE COULD BE AN ADVERSE TAX CONSEQUENCE TO YOU IF CITIGROUP TERMINATES
CITIGROUP CAPITAL AND DISTRIBUTES JUNIOR SUBORDINATED DEBT SECURITIES TO
HOLDERS.
Citigroup has the right to terminate Citigroup Capital at any time, so long
as it obtains any required regulatory approval. If Citigroup decides to exercise
its right to terminate Citigroup Capital, Citigroup Capital will redeem the
capital securities and common securities by distributing the junior subordinated
debt securities to holders of the capital securities and common securities on a
ratable basis.
Under current United States federal income tax law, a distribution of
junior subordinated debt securities to you on the dissolution of Citigroup
Capital should not be a taxable event to you. However, if Citigroup Capital is
characterized for United States federal income tax purposes as an association
taxable as a corporation at the time it is dissolved or if there is a change in
law, the distribution of junior subordinated debt securities may be a taxable
event to you.
THERE MAY BE NO TRADING MARKET FOR THE JUNIOR SUBORDINATED DEBT SECURITIES IF
CITIGROUP CAPITAL DISTRIBUTES THEM TO YOU.
Although Citigroup will use its best efforts to list the junior
subordinated debt securities on the NYSE, or any other exchange on which the
capital securities are then listed, if they are distributed, Citigroup cannot
assure you that the junior subordinated debt securities will be approved for
listing or that a trading market will exist for those securities.
SINCE YOU HAVE LIMITED VOTING RIGHTS, YOU CANNOT PREVENT THE CITIGROUP CAPITAL
TRUSTEES FROM TAKING ACTIONS YOU MAY NOT AGREE WITH.
You will have limited voting rights. In particular, except for the limited
exceptions described below, only Citigroup can elect or remove any of Citigroup
Capital trustees. See "Description of the Capital Securities -- Voting Rights"
on page 19.
8
WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities Act of 1933, Citigroup and the subsidiary
trusts filed a registration statement (No. 333-117615) relating to the
securities offered by this prospectus with the Securities and Exchange
Commission. This prospectus is a part of that registration statement, which
includes additional information. Citigroup has filed the exhibits discussed in
this prospectus with the registration statement, and you should read the
exhibits carefully for provisions that may be important to you.
Citigroup files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document Citigroup
files at the SEC's public reference room in Washington, D.C. You can also
request copies of these documents, upon payment of a duplicating fee, by writing
to the Public Reference Section of the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. These SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov.
The SEC allows Citigroup to "incorporate by reference" the information it
files with the SEC, which means that it can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus. Information that
Citigroup files with the SEC will automatically update the information in this
prospectus. In all cases, you should rely on the later information over
different information included in this prospectus. Citigroup incorporates by
reference the documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
(a) Annual Report on Form 10-K for the year ended December 31, 2003;
(b) Current Report on Form 8-K filed on May 14, 2004 (conforming
Citigroup's business segment results to reflect the implementation of
the Risk Capital Allocation Methodology);
(c) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004
and June 30, 2004, and;
(d) Current Reports on Form 8-K filed on January 12, 2004, January 15,
2004, January 20, 2004, February 9, 2004, February 10, 2004, March 29,
2004, April 2, 2004, May 5, 2004, May 10, 2004, May 13, 2004, May 14,
2004, May 27, 2004, June 4, 2004, June 9, 2004, June 21, 2004, July 15,
2004, July 16, 2004, July 20, 2004, July 29, 2004 and August 11, 2004.
All documents Citigroup files pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this prospectus and before the later of
(1) the completion of the offering of the securities described in this
prospectus and (2) the date the broker-dealer subsidiaries of Citigroup stop
offering securities pursuant to this prospectus shall be incorporated by
reference in this prospectus from the date of filing of such documents.
You may request a copy of these filings, at no cost, by writing or
telephoning Citigroup at the following address:
Citigroup Document Services
140 58th Street, Suite 7i
Brooklyn, NY 11220
(877) 936-2737 (toll free)
(718) 765-6514 (outside the U.S.)
------------------------
You should only rely on the information provided or incorporated by
reference in this prospectus. Citigroup has not, and the underwriters have not,
authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it.
Citigroup is not, and the underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should not assume that the information in this prospectus or any documents
incorporated by reference is accurate as of any date other than the date of the
applicable document. Citigroup's business, financial condition, results of
operations and prospects may have changed since that date.
9
FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in this
prospectus include forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. These forward-looking
statements are based on Citigroup's management's beliefs and assumptions and on
information currently available to Citigroup's management. Forward-looking
statements include information concerning Citigroup's possible or assumed future
results of operations and statements preceded by, followed by or that include
the words "believes," "expects," "anticipates," "intends," "plans," "estimates"
or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. Factors that could cause actual results to differ
materially from these forward-looking statements include, but are not limited
to, those discussed elsewhere in this prospectus and the documents incorporated
by reference in this prospectus. You should not put undue reliance on any
forward-looking statements. Citigroup does not have any intention or obligation
to update forward-looking statements after it distributes this prospectus.
CITIGROUP INC.
Citigroup is a diversified global financial services holding company whose
businesses provide a broad range of financial services to consumer and corporate
customers with some 200 million customer accounts doing business in more than
100 countries. Citigroup's activities are conducted through the Global Consumer,
Global Corporate and Investment Bank, Private Client Services, Global Investment
Management, and Proprietary Investment Activities business segments.
Citigroup is a holding company and services its obligations primarily with
dividends and advances that it receives from subsidiaries. Citigroup's
subsidiaries that operate in the banking, insurance and securities business can
only pay dividends if they are in compliance with the applicable regulatory
requirements imposed on them by federal and state bank regulatory authorities,
state insurance departments, and securities regulators. Citigroup's subsidiaries
may be party to credit agreements that also may restrict their ability to pay
dividends. Citigroup currently believes that none of these regulatory or
contractual restrictions on the ability of its subsidiaries to pay dividends
will affect Citigroup's ability to service its own debt. Citigroup must also
maintain the required capital levels of a bank holding company before it may pay
dividends on its stock. Each of Citigroup's major operating subsidiaries
finances its operations on a stand-alone basis consistent with its
capitalization and ratings.
Under longstanding policy of The Board of Governors of the Federal Reserve
System, a bank holding company is expected to act as a source of financial
strength for its subsidiary banks and to commit resources to support such banks.
As a result of that policy, Citigroup may be required to commit resources to its
subsidiary banks.
Citigroup's principal office is located at 399 Park Avenue, New York, NY
10043, and its telephone number is (212) 559-1000.
USE OF PROCEEDS
All of the net proceeds from the sale of the capital securities will be
invested by Citigroup Capital in junior subordinated debt securities of
Citigroup. Citigroup will use the proceeds from the sale of the junior
subordinated debt securities to Citigroup Capital for general corporate
purposes, which may include:
- funding the business of its operating units;
- funding investments in, or extensions of credit or capital contributions
to, its subsidiaries;
- financing of possible acquisitions or business expansion, and
- lengthening the average maturity of liabilities, which means that it
could reduce its short-term liabilities or refund maturing indebtedness.
In order to fund its businesses, Citigroup expects to incur additional
indebtedness in the future. See "Capitalization."
10
ACCOUNTING TREATMENT; REGULATORY CAPITAL
As discussed above under "Risk Factors -- You Should Not Rely on the
Distributions From the Capital Securities Through Their Maturity Date -- Recent
Accounting Changes May Give Rise to a Future Regulatory Capital Event That Would
Entitle Citigroup to Redeem the Capital Securities," FIN 46R addresses the
consolidation rules to be applied to all variable interest entities as of
December 31, 2003. Historically, issuer trusts that issued capital securities
have been consolidated by their parent companies and the accounts of such issuer
trusts have been included in the consolidated financial statements of such
parent companies. Accordingly, Citigroup has included capital securities in its
consolidated balance sheet in the past, and has included appropriate disclosures
about such capital securities and the corresponding guarantees and junior
subordinated debentures in the notes to its consolidated financial statements.
For financial reporting purposes, Citigroup has recorded distributions on such
capital securities in its consolidated statements of income. In addition,
capital securities have been treated as eligible for Tier 1 capital treatment by
bank holding companies, like Citigroup, under Federal Reserve rules and
regulations relating to minority interests in equity accounts of consolidated
subsidiaries. Accordingly, the outstanding capital securities of Citigroup's
issuer trusts have been treated as Tier 1 capital by Citigroup.
It has been concluded that issuer trusts should no longer be consolidated
by their parent companies under FIN 46. As a result, Citigroup no longer
consolidates its issuer trusts in preparing its financial statements in
accordance with generally accepted accounting principles, and has made certain
adjustments to its financial statements to reflect the deconsolidation of such
issuer trusts. Specifically, Citigroup records its junior subordinated
debentures issued to the issuer trusts as liabilities, and records offsetting
assets for the cash and common securities received from such issuer trusts in
its consolidated balance sheet. For financial reporting purposes, Citigroup
records interest expense on the corresponding junior subordinated debentures in
its consolidated statements of income. Citigroup does not believe that such
adjustments have had a material effect on its financial condition or results of
operations as presented in its consolidated financial statements.
Moreover, such deconsolidation could result in a change to the regulatory
capital treatment of capital securities issued by Citigroup and other U.S. bank
holding companies. Specifically, it is possible that since the issuer trusts are
no longer consolidated by Citigroup, the trust preferred securities issued by
such issuer trusts would not be accorded Tier 1 capital treatment by the Federal
Reserve. Although the Federal Reserve has indicated in the Supervisory Letter
that capital securities will continue to be treated as Tier 1 capital until
notice is given to the contrary, the Supervisory Letter also indicates that the
Federal Reserve will review the regulatory implications of any accounting
treatment changes and will provide further guidance if necessary or warranted.
In May 2004 the Federal Reserve proposed to revise its regulatory capital
guidelines to permit bank holding companies to include in Tier 1 capital trust
preferred securities that meet certain criteria even if such securities are not
treated as a minority interest in a consolidated subsidiary for accounting and
regulatory reporting purposes. The Securities are intended to meet the criteria
for Tier 1 capital treatment that are established in the Federal Reserve's
proposal. There is no assurance, however, that the proposal will be adopted as
proposed. If Tier 1 capital treatment were disallowed, there would be a
reduction in Citigroup's consolidated capital ratios. However, Citigroup
believes that it would remain "well capitalized" under existing Federal Reserve
guidelines.
As of June 30, 2004, approximately $6.15 billion in capital securities were
outstanding that Citigroup treated as Tier 1 capital for bank regulatory
purposes.
11
CAPITALIZATION
The following table sets forth the consolidated capitalization of Citigroup
at June 30, 2004, and as adjusted to give effect to the issuance and sale of the
capital securities, and no other change in the consolidated capitalization of
Citigroup since June 30, 2004 is reflected in the table. The information is only
a summary and should be read together with the financial information
incorporated by reference in this prospectus and which can be obtained free of
charge. See "Where You Can Find More Information" on page 9.
<Table>
<Caption>
AT JUNE 30, 2004
--------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
Debt:
Investment banking and brokerage borrowings............... $ 26,459
Short-term borrowings..................................... 40,917
Long-term debt............................................ 189,071
--------
Total debt............................................. 256,447
--------
Stockholders' equity:
Preferred stock at aggregate liquidation value............ 1,125
Common stock and additional paid-in capital (net of
treasury stock)(1)..................................... 7,439
Retained earnings......................................... 95,707
Accumulated other changes in equity from nonowner
sources................................................ (3,338)
Unearned compensation..................................... (2,622)
--------
Total stockholders' equity............................. 98,311
--------
Total capitalization........................................ $354,758
========
</Table>
- ---------------
(1) Common stock, par value U.S. $0.01 per share, 15 billion shares authorized,
5,180,258,364 shares outstanding at June 30, 2004.
12
DESCRIPTION OF THE CAPITAL SECURITIES
The capital securities will be issued pursuant to the terms of the amended
and restated declaration of trust of Citigroup Capital. The declaration will be
qualified as an indenture under the Trust Indenture Act of 1939. The
institutional trustee, JPMorgan Chase Bank, will act as indenture trustee under
the declaration for purposes of compliance with the provisions of the Trust
Indenture Act. The terms of the capital securities will include those stated in
the declaration and those made part of the declaration by the Trust Indenture
Act. The following summary of the material terms and provisions of the capital
securities is not intended to be complete and is qualified by the declaration,
the Statutory Trust Act of the State of Delaware and the Trust Indenture Act. A
copy of the declaration is filed as an exhibit to the registration statement of
which this prospectus is a part.
GENERAL
The declaration authorizes the regular trustees to issue on behalf of
Citigroup Capital the common securities and the capital securities. These trust
securities represent undivided beneficial interests in the assets of Citigroup
Capital. All of the common securities will be owned, directly or indirectly, by
Citigroup. The common securities rank equally, and payments will be made on the
common securities on a ratable basis, with the capital securities. If a default
under the declaration occurs and continues, however, the rights of the holders
of the common securities to receive payment of periodic distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the capital securities. The declaration does not permit
the issuance by Citigroup Capital of any securities other than the trust
securities or the incurrence of any indebtedness by Citigroup Capital.
Pursuant to the declaration, the institutional trustee will hold title to
the junior subordinated debt securities purchased by Citigroup Capital for the
benefit of the holders of the trust securities. The payment of distributions out
of money held by Citigroup Capital, and payments upon redemption of the capital
securities or liquidation of Citigroup Capital out of money held by Citigroup
Capital, are guaranteed by Citigroup to the extent described under "Description
of Guarantee." The guarantee will be held by JPMorgan Chase Bank, the guarantee
trustee, for the benefit of the holders of the capital securities. The guarantee
does not cover payment of distributions when Citigroup Capital does not have
sufficient available funds to pay such distributions. In such event, the remedy
of a holder of capital securities is to:
- vote to direct the institutional trustee to enforce the institutional
trustee's rights under the junior subordinated debt securities; or
- if the failure of Citigroup Capital to pay distributions is attributable
to the failure of Citigroup to pay interest or principal on the junior
subordinated debt securities, sue Citigroup for enforcement of payment to
such holder of the principal or interest on the junior subordinated debt
securities having a principal amount equal to the aggregate liquidation
amount of the capital securities of such holder on or after the
respective due date specified in the junior subordinated debt securities.
DISTRIBUTIONS
Distributions on the capital securities will be fixed at a rate per annum
of % of the stated liquidation amount of $ per capital security.
Distributions not paid when due, or when they would be due if not for any
extension period or default by Citigroup on the junior subordinated debt
securities, will themselves accumulate additional interest at the annual rate of
% thereof compounded . When this prospectus refers to any payment
of distributions, distributions include any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the capital securities will be cumulative, will accrue
from and including , and will be payable in arrears on
of each year, commencing . When, as and if available for
payment, distributions will be made by the institutional trustee, except as
otherwise described below.
13
The distribution rate and the distribution payment dates and other payment
dates for the capital securities will correspond to the interest rate and
interest payment dates and other payment dates on the junior subordinated debt
securities.
Deferral of Distributions. Citigroup has the right under the indenture to
defer interest payments on the junior subordinated debt securities for an
extension period not exceeding consecutive interest periods
during which no interest shall be due and payable. A deferral of interest
payments cannot extend, however, beyond the maturity of the junior subordinated
debt securities. As a consequence of Citigroup's extension of the interest
payment period, distributions on the capital securities would be
deferred during any such extended interest payment period. During an extension
period, the amount of distributions due to you would continue to accumulate and
such deferred distributions will themselves accrue interest. In the event that
Citigroup exercises its right to extend an interest payment period, then:
(1) Citigroup shall not declare or pay any dividend on, make any
distributions relating to, or redeem, purchase, acquire or make a
liquidation payment relating to, any of its capital stock or make any
guarantee payment relating thereto other than
- repurchases, redemptions or other acquisitions of shares of capital
stock of Citigroup in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of
employees, officers, directors or consultants;
- as a result of an exchange or conversion of any class or series of
Citigroup's capital stock for any other class or series of
Citigroup's capital stock; or
- the purchase of fractional interests in shares of Citigroup's
capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged; and
(2) Citigroup may not make any payment of interest, principal or premium
on, or repay, repurchase or redeem, any debt securities issued by
Citigroup that rank equally with or junior to the junior subordinated
debt securities.
These restrictions, however, will not apply to any stock dividends paid by
Citigroup where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any extension period,
Citigroup may further extend such extension period, so long as such extension
period, together with all such previous extension periods, do not exceed
consecutive interest periods. An extension period
cannot extend, however, beyond the maturity of the junior subordinated debt
securities.
Upon the termination of any extension period and the payment of all amounts
then due, Citigroup may commence a new extension period, which must comply with
the above requirements. Consequently, there could be up to
extension periods of varying lengths throughout the term of the
junior subordinated debt securities. The regular trustees shall give the holders
of the capital securities notice of any extension period upon their receipt of
notice thereof from Citigroup. If distributions are deferred, the deferred
distributions and accrued interest on such distributions will be paid to holders
of record of the capital securities as they appear on the books and records of
Citigroup Capital on the record date next following the termination of the
related extension period. See "Description of the Junior Subordinated Debt
Securities -- Interest" and "-- Option to Extend Interest Payment Period."
Payment of Distributions. Distributions on the capital securities will be
payable to the extent that Citigroup Capital has funds available for the payment
of such distributions in its property account. Citigroup Capital's funds
available for distribution to the holders of the capital securities will be
limited to payments received from Citigroup on the junior subordinated debt
securities. The payment of distributions out of monies held by Citigroup Capital
is guaranteed by Citigroup to the extent set forth under "Description of
Guarantee." See "Description of the Junior Subordinated Debt Securities."
14
Distributions on the capital securities will be payable to the holders
named on the securities register of Citigroup Capital at the close of business
on the relevant record dates. As long as the capital securities remain in
book-entry only form, the record date will be one business day before the
distribution dates. Such distributions will be paid through the institutional
trustee who will hold amounts received in respect of the junior subordinated
debt securities in the property account for the benefit of the holders of the
trust securities. Unless any applicable laws and regulations and the provisions
of the declaration state otherwise, each such payment will be made as described
under "-- Book-Entry Only Issuance" below.
In the event that the capital securities do not continue to remain in
book-entry only form, the relevant record dates will conform to the rules of any
securities exchange on which the capital securities are listed and, if none, the
regular trustees will have the right to select relevant record dates, which will
be more than 14 days but less than 60 days prior to the relevant payment dates.
In the event that any date on which distributions are to be made on the capital
securities is not a business day, then payment of the distributions payable on
such date will be made on the next succeeding day that is a business day, and
without any interest or other payment in respect of any such delay. However, if
such business day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding business day, in each case with the same force
and effect as if made on such record date. A "business day" means any day other
than Saturday, Sunday or any other day on which banking institutions in New York
City are permitted or required by any applicable law to close.
REDEMPTION OF TRUST SECURITIES
The capital securities have no stated maturity date but will be redeemed
upon the maturity of the junior subordinated debt securities. In addition, the
capital securities may be redeemed prior to maturity of the junior subordinated
debt securities on the dates and to the extent the junior subordinated debt
securities are redeemed. See "Description of the Junior Subordinated Debt
Securities -- Optional Redemption." The junior subordinated debt securities will
mature on , 20 , and may be redeemed, in whole or in part, at
any time on or after . The junior subordinated debt securities
can also be redeemed at any time, in whole or in part, in certain circumstances
upon the occurrence of a Tax Event, an Investment Company Event or a Regulatory
Capital Event.
If required under the Federal Reserve Capital Adequacy Rules, Citigroup
will obtain the prior approval of the Federal Reserve Bank of New York before
exercising its redemption rights described in the preceding paragraph.
Upon the maturity of the junior subordinated debt securities, the proceeds
of their repayment will simultaneously be applied to redeem all outstanding
trust securities at the redemption price. Upon the redemption of the junior
subordinated debt securities, whether in whole or in part, either at the option
of Citigroup or pursuant to a Tax Event, an Investment Company Event or a
Regulatory Capital Event, Citigroup Capital will use the cash it receives upon
the redemption to redeem trust securities having an aggregate liquidation amount
equal to the aggregate principal amount of the junior subordinated debt
securities so redeemed at the redemption price. Before such redemption, holders
of trust securities will be given not less than 30 nor more than 60 days'
notice. In the event that fewer than all of the outstanding capital securities
are to be redeemed, the capital securities will be redeemed on a ratable basis
as described under "-- Book-Entry Only Issuance" below. See "-- Special Event
Redemption" and "Description of the Junior Subordinated Debt
Securities -- Optional Redemption." If a partial redemption of the capital
securities resulting from a partial redemption of the junior subordinated debt
securities would result in a delisting of the capital securities, Citigroup may
only redeem the junior subordinated debt securities in whole.
15
SPECIAL EVENT REDEMPTION
"Tax Event" means that the regular trustees will have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
which states that, as a result of any:
- amendment to, or change (including any announced prospective change) in,
the laws or associated regulations of the United States or any political
subdivision or taxing authority of the United States; or
- amendment to, or change in, an interpretation or application of such laws
or regulations by any legislative body, court, governmental agency or
regulatory authority, including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or
after the date of this prospectus,
there is more than an insubstantial risk that:
- Citigroup Capital would be subject to United States federal income tax
relating to interest accrued or received on the junior subordinated debt
securities;
- interest payable to Citigroup Capital on the junior subordinated debt
securities would not be deductible, in whole or in part, by Citigroup for
United States federal income tax purposes; or
- Citigroup Capital would be subject to more than a minimal amount of other
taxes, duties or other governmental charges.
"Investment Company Event" means that the regular trustees will have
received an opinion of a nationally recognized independent counsel experienced
in such matters which states that, as a result of the occurrence of a change in
law or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that Citigroup Capital is or
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940 (the "1940 Act").
"Regulatory Capital Event" means that if Citigroup determines, based on an
opinion of counsel experienced in such matters, who may be an employee of
Citigroup or any of its affiliates, that, as a result of
- any amendment to, clarification of or change (including any announced
prospective change) in applicable laws or regulations or official
interpretations thereof or policies with respect thereto or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
there is more than an insubstantial risk that the capital securities will no
longer constitute Tier 1 capital of Citigroup or any bank holding company of
which Citigroup is a subsidiary for purposes of the capital adequacy guidelines
or policies of the Board of Governors of the Federal Reserve System or its
successor as Citigroup's primary federal banking regulator.
A Regulatory Capital Event would include a change in the regulatory capital
treatment of the capital securities as a result of recent accounting changes
affecting the criteria for consolidation of variable interest entities such as
Citigroup Capital under FIN 46R. See "Accounting Treatment; Regulatory Capital"
on page 11.
This prospectus refers to a Tax Event, an Investment Company Event or a
Regulatory Capital Event as a "Special Event." Provided that Citigroup obtains
any required regulatory approval, if a Special Event occurs and continues,
Citigroup may, upon not less than 30 nor more than 60 days' notice, redeem the
junior subordinated debt securities, in whole or in part, for cash within 90
days following the occurrence of such Special Event. Following such redemption,
trust securities with an aggregate liquidation amount equal to the aggregate
principal amount of the junior subordinated debt securities so redeemed shall be
redeemed by Citigroup Capital at the redemption price on a ratable basis. If,
however, at the time there is available to Citigroup or Citigroup Capital the
opportunity to eliminate, within such 90-day period, the
16
Special Event by taking some ministerial action, such as filing a form or making
an election or pursuing some other similar reasonable measure that will have no
adverse effect on Citigroup Capital, Citigroup or the holders of the trust
securities, then Citigroup or Citigroup Capital will pursue such measure instead
of redemption.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Citigroup will have the right at any time to dissolve Citigroup Capital.
After satisfaction of the liabilities of creditors of Citigroup Capital as
provided by applicable law, Citigroup Capital may cause junior subordinated debt
securities to be distributed to the holders of the capital and common securities
in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of such securities then outstanding. Prior to any such
dissolution, Citigroup will obtain any required regulatory approvals.
If the junior subordinated debt securities are distributed to the holders
of the capital securities, Citigroup will use its best efforts to cause the
junior subordinated debt securities to be listed on the NYSE or on such other
exchange as the capital securities are then listed.
After the date for any distribution of junior subordinated debt securities
upon dissolution of Citigroup Capital:
- the capital securities will no longer be deemed to be outstanding;
- the securities depositary or its nominee, as the record holder of the
capital securities, will receive a registered global certificate or
certificates representing the junior subordinated debt securities to be
delivered upon such distribution; and
- any certificates representing capital securities not held by the
depositary or its nominee will be deemed to represent junior subordinated
debt securities having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical
to the distribution rate of, and with accrued and unpaid interest equal
to accrued and unpaid distributions on, such capital securities until
such certificates are presented to Citigroup or its agent for transfer or
reissuance.
There can be no assurance as to the market prices for either the capital
securities or the junior subordinated debt securities that may be distributed in
exchange for the capital securities if a dissolution and liquidation of
Citigroup Capital were to occur. This means that the capital securities that an
investor may purchase, whether pursuant to the offer made by this prospectus or
in the secondary market, or the junior subordinated debt securities that an
investor may receive if a dissolution and liquidation of Citigroup Capital were
to occur, may trade at a discount to the price that the investor paid to
purchase the capital securities.
REDEMPTION PROCEDURES
Citigroup Capital may not redeem fewer than all of the outstanding capital
securities unless all accrued and unpaid distributions have been paid on all
capital securities for all distribution periods terminating on or
prior to the date of redemption.
If (1) Citigroup Capital gives an irrevocable notice of redemption of the
capital securities, and (2) if Citigroup has paid to the institutional trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the junior subordinated debt securities, then, by 12:00 noon, New York City
time, on the redemption date, the institutional trustee will irrevocably deposit
with the depositary funds sufficient to pay the applicable redemption price.
Citigroup Capital will also give the depositary irrevocable instructions and
authority to pay the redemption price to the holders of the capital securities.
Once notice of redemption is given and redemption funds are deposited,
distributions will cease to accrue and all rights of holders of capital
securities called for redemption will cease, except the right of the holders to
receive the redemption price but without interest on such redemption price. If
any redemption date is not a business day, then payment of the redemption price
payable on such date will be made on the next succeeding day that is a business
day, without any interest or other payment in respect of any
17
such delay. However, if such business day falls in the next calendar year, such
payment will be made on the immediately preceding business day.
If payment of the redemption price for any capital securities is improperly
withheld or refused and not paid either by Citigroup Capital, or by Citigroup
pursuant to the guarantee, distributions on such capital securities will
continue to accrue at the then applicable rate from the original redemption date
to the date of payment. In this case, the actual payment date will be the
redemption date for purposes of calculating the redemption price. See
"-- Book-Entry Only Issuance."
In the event that fewer than all of the outstanding capital securities are
to be redeemed, the capital securities will be redeemed in accordance with the
depositary's standard procedures. See "-- Book-Entry Only Issuance."
Citigroup or its subsidiaries may, at any time, and from time to time,
purchase outstanding capital securities by tender, in the open market or by
private agreement, provided that they comply with United States federal
securities laws and any other applicable laws.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
This prospectus refers to any voluntary or involuntary liquidation,
dissolution, winding-up or termination of Citigroup Capital as a "liquidation."
If a liquidation occurs, the holders of the capital securities will be entitled
to receive out of the assets of Citigroup Capital, after satisfaction of
liabilities to creditors, distributions in an amount equal to the aggregate of
the stated liquidation amount of $ per capital security plus accrued and
unpaid distributions thereon to the date of payment. However, such holders will
not receive such distribution if Citigroup instead distributes on a ratable
basis to the holders of the capital securities junior subordinated debt
securities in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and with accrued and unpaid interest equal to accrued and unpaid
distributions on, the capital securities outstanding at such time. See
"-- Distribution of the Junior Subordinated Debt Securities."
If this distribution can be paid only in part because Citigroup Capital has
insufficient assets available to pay in full the aggregate distribution, then
the amounts payable directly by Citigroup Capital on the capital securities
shall be paid on a ratable basis. The holders of the common securities will be
entitled to receive distributions upon any such liquidation on a ratable basis
with the holders of the capital securities. However, if a declaration default
has occurred and is continuing, the capital securities will have a preference
over the common securities with regard to such distributions.
Pursuant to the declaration, Citigroup Capital will terminate:
(1) on , 20 , the expiration of the term of Citigroup
Capital;
(2) upon the bankruptcy of Citigroup or the holder of the common
securities;
(3) upon (a) the filing of a certificate of dissolution or its equivalent
regarding the holder of the common securities or Citigroup, the filing
of a certificate of cancellation regarding Citigroup Capital, or the
revocation of the charter of the holder of the common securities or
Citigroup and (b) the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(4) upon the distribution of junior subordinated debt securities to holders
of capital securities;
(5) upon the entry of a decree of a judicial dissolution of the holder of
the common securities, Citigroup or Citigroup Capital; or
(6) upon the redemption of all the trust securities.
DECLARATION DEFAULTS
An "indenture default" is a default under the indenture and also
constitutes a "declaration default," which is an event of default under the
declaration relating to the trust securities. Pursuant to the
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declaration, however, the holder of the common securities will be deemed to have
waived any declaration defaults relating to the common securities until all
declaration defaults relating to the capital securities have been cured, waived
or otherwise eliminated. Until such declaration defaults relating to the capital
securities have been so cured, waived, or otherwise eliminated, the
institutional trustee will be deemed to be acting solely on behalf of the
holders of the capital securities. Only the holders of the capital securities
will have the right to direct the institutional trustee as to matters under the
declaration, and therefore the indenture. In the event that any declaration
default relating to the capital securities is waived by the holders of the
capital securities as provided in the declaration, the holders of common
securities pursuant to the declaration have agreed that such waiver also
constitutes a waiver of such declaration default relating to the common
securities for all purposes under the declaration without any further act, vote
or consent of the holders of common securities. See "-- Voting Rights."
If the institutional trustee fails to enforce its rights under the junior
subordinated debt securities, any holder of capital securities may directly
institute a legal proceeding against Citigroup to enforce these rights without
first suing the institutional trustee or any other person or entity. If a
declaration default has occurred and is continuing and such event is
attributable to the failure of Citigroup to pay interest or principal on the
junior subordinated debt securities on the date such interest or principal is
otherwise payable, or in the case of redemption, the redemption date, then a
holder of capital securities may also bring a direct action. This means that a
holder may directly sue for enforcement of payment to such holder of the
principal of or interest on the junior subordinated debt securities having a
principal amount equal to the aggregate liquidation amount of the capital
securities of such holder on or after the respective due date specified in the
junior subordinated debt securities. Such holder need not first (1) direct the
institutional trustee to enforce the terms of the junior subordinated debt
securities or (2) sue Citigroup to enforce the institutional trustee's rights
under the junior subordinated debt securities.
In connection with such direct action, Citigroup will be subrogated to the
rights of such holder of capital securities under the declaration to the extent
of any payment made by Citigroup to such holder of capital securities in such
direct action. This means that Citigroup will be entitled to payment of amounts
that a holder of capital securities receives in respect of an unpaid
distribution that resulted in the bringing of a direct action to the extent that
such holder receives or has already received full payment relating to such
unpaid distribution from Citigroup Capital. The holders of capital securities
will not be able to exercise directly any other remedy available to the holders
of the junior subordinated debt securities.
Upon the occurrence of an indenture event of default, the institutional
trustee as the sole holder of the junior subordinated debt securities will have
the right under the indenture to declare the principal of and interest on the
junior subordinated debt securities to be immediately due and payable. Citigroup
and Citigroup Capital are each required to file annually with the institutional
trustee an officers' certificate as to its compliance with all conditions and
covenants under the declaration.
VOTING RIGHTS
Except as described in this prospectus under "Description of
Guarantee -- Modification of Guarantee; Assignment," and except as provided
under the Statutory Trust Act, the Trust Indenture Act and as otherwise required
by law and the declaration, the holders of the capital securities will have no
voting rights.
The holders of a majority in aggregate liquidation amount of the capital
securities have the right to direct any proceeding for any remedy available to
the institutional trustee so long as the institutional trustee receives the tax
opinion discussed below. The holders also have the right to direct the
institutional trustee under the declaration to:
(1) direct any proceeding for any remedy available to the indenture
trustee, or exercising any trust or power conferred on the indenture
trustee;
(2) waive any past indenture event of default that is waivable under
Section 5.6 of the indenture;
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(3) exercise any right to rescind or annul an acceleration of the maturity
of the junior subordinated debt securities; or
(4) consent to any amendment, modification or termination of the indenture
where such consent is required.
Where a consent or action under the indenture would require the consent or
act of holders of more than a majority in principal amount of the junior
subordinated debt securities, or a "super majority," then only a super majority
may direct the institutional trustee to give such consent or take such action.
If the institutional trustee fails to enforce its rights under the junior
subordinated debt securities, any record holder of capital securities may
directly sue Citigroup to enforce the institutional trustee's rights under the
junior subordinated debt securities. The record holder does not have to sue the
institutional trustee or any other person or entity before enforcing his rights.
The institutional trustee is required to notify all holders of the capital
securities of any notice of default received from the indenture trustee. The
notice is required to state that the default also constitutes a declaration
default. Except for directing the time, method and place of conducting a
proceeding for a remedy available to the institutional trustee, the
institutional trustee will not take any of the actions described in clauses (1),
(2), (3) or (4) above unless the institutional trustee receives an opinion of a
nationally recognized independent tax counsel. The opinion must be to the effect
that, as a result of such action, Citigroup Capital will not fail to be
classified as a grantor trust for United States federal income tax purposes.
If the consent of the institutional trustee is required under the indenture
for any amendment, modification or termination of the indenture, the
institutional trustee is required to request the written direction of the
holders of the trust securities. Then, the institutional trustee will vote as
directed by a majority in liquidation amount of the trust securities voting
together as a single class. Where any amendment, modification or termination
under the indenture would require the consent of a super majority, however, the
institutional trustee may only give such consent at the direction of the holders
of the same super majority of the holders of the trust securities. The
institutional trustee is not required to take any such action in accordance with
the directions of the holders of the trust securities unless the institutional
trustee has obtained a tax opinion to the effect described above.
A waiver of an indenture default by the institutional trustee at the
direction of the holders of the capital securities will constitute a waiver of
the corresponding declaration default.
Any required approval or direction of holders of capital securities may be
given at a separate meeting of holders of capital securities convened for such
purpose, at a meeting of all of the holders of trust securities or by written
consent. The regular trustees will mail to each holder of record of capital
securities a notice of any meeting at which such holders are entitled to vote,
or of any matter upon which action by written consent of such holders is to be
taken. Each such notice will include a statement setting forth the following
information:
- the date of such meeting or the date by which such action is to be taken;
- a description of any resolution proposed for adoption at such meeting on
which such holders are entitled to vote or of such matter upon which
written consent is sought; and
- instructions for the delivery of proxies or consents.
No vote or consent of the holders of capital securities will be required
for Citigroup Capital to redeem and cancel capital securities or distribute
junior subordinated debt securities in accordance with the declaration.
Despite the fact that holders of capital securities are entitled to vote or
consent under the circumstances described above, any capital securities that are
owned at the time by Citigroup or any entity directly or indirectly controlling
or controlled by, or under direct or indirect common control with,
20
Citigroup, will not be entitled to vote or consent. Instead, these capital
securities will be treated as if they were not outstanding.
The procedures by which holders of capital securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance."
Holders of the capital securities generally will have no rights to appoint
or remove the regular trustees. Instead, these trustees may be appointed,
removed or replaced solely by Citigroup as the indirect or direct holder of all
of the common securities.
MODIFICATION OF THE DECLARATION
The declaration may be modified and amended if approved by the regular
trustees, and in certain circumstances, the institutional trustee and the
Delaware trustee. If, however, any proposed amendment provides for, or the
regular trustees otherwise propose to effect,
(1) any action that would adversely affect the powers, preferences or
special rights of the trust securities, whether by way of amendment to
the declaration or otherwise or
(2) the dissolution, winding-up or termination of Citigroup Capital other
than pursuant to the terms of the declaration,
then the holders of the trust securities voting together as a single class will
be entitled to vote on such amendment or proposal. Such amendment or proposal
shall not be effective except with the approval of holders of at least a
majority in liquidation amount of the trust securities affected thereby. If,
however, any amendment or proposal referred to in clause (1) above would
adversely affect only the capital securities or only the common securities, then
only holders of the affected class will be entitled to vote on such amendment or
proposal. Such amendment or proposal shall not be effective except with the
approval of holders of a majority in liquidation amount of such class of trust
securities.
Despite the foregoing, no amendment or modification may be made to the
declaration if such amendment or modification would
(1) cause Citigroup Capital to be classified for United States federal
income tax purposes as other than a grantor trust,
(2) reduce or otherwise adversely affect the powers of the institutional
trustee or
(3) cause Citigroup Capital to be deemed an "investment company" which is
required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
Citigroup Capital may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body except as
described below. Citigroup Capital may, with the consent of the regular trustees
and without the consent of the holders of the trust securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State, provided that:
(1) such successor entity either
(a) expressly assumes all of the obligations of Citigroup Capital under
the trust securities or
(b) substitutes for the capital securities other successor securities
having substantially the same terms as the capital securities, so
long as the successor securities rank the same as the capital
securities rank regarding distributions and payments upon
liquidation, redemption and otherwise;
21
(2) Citigroup expressly acknowledges a trustee of such successor entity
possessing the same powers and duties as the institutional trustee, in
its capacity as the holder of the junior subordinated debt securities;
(3) the capital securities or any successor securities are listed, or any
successor securities will be listed upon notification of issuance, on
any national securities exchange or with another organization on which
the capital securities are then listed or quoted;
(4) such merger, consolidation, amalgamation or replacement does not cause
the capital securities, including any successor securities, to be
downgraded by any nationally recognized statistical rating
organization;
(5) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders
of the trust securities, including any successor securities, in any
material respect, other than in connection with any dilution of the
holders' interest in the new entity;
(6) such successor entity has a purpose identical to that of Citigroup
Capital;
(7) prior to such merger, consolidation, amalgamation or replacement,
Citigroup Capital has received an opinion of a nationally recognized
independent counsel to Citigroup Capital experienced in such matters to
the effect that
(a) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the
holders of the trust securities, including any successor securities,
in any material respect, other than in connection with any dilution
of the holders' interest in the new entity;
(b) following such merger, consolidation, amalgamation or replacement,
neither Citigroup Capital nor such successor entity will be required
to register as an "investment company" under the 1940 Act; and
(c) following such merger, consolidation, amalgamation or replacement,
Citigroup Capital or such successor entity will continue to be
classified as a grantor trust for United States federal income tax
purposes; and
(8) Citigroup guarantees the obligations of such successor entity under the
successor securities at least to the extent provided by the guarantee.
Despite the foregoing, Citigroup Capital will not, except with the consent
of holders of 100% in liquidation amount of the trust securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
in the opinion of a nationally recognized independent tax counsel experienced in
such matters, such consolidation, amalgamation, merger or replacement would
cause Citigroup Capital or the successor entity to be classified as other than a
grantor trust for United States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE
The capital securities will be book-entry securities. Upon issuance, all
book-entry securities will be represented by one or more fully registered global
capital securities, without distribution coupons. Each global capital security
will be deposited with, or on behalf of, The Depository Trust Company, a
securities depositary, and will be registered in the name of DTC or a nominee of
DTC. DTC will thus be the only registered holder of these capital securities and
will be considered the sole owner of the capital securities for purposes of the
declaration.
Purchasers of capital securities may hold interests in the global capital
securities only through DTC, if they are a participant in the DTC system.
Purchasers may also hold interests through a securities intermediary -- banks,
brokerage houses and other institutions that maintain securities accounts for
customers -- that has an account with DTC or its nominee ("Participants"). DTC
will maintain accounts
22
showing the capital security holdings of its participants, and these
participants will in turn maintain accounts showing the capital security
holdings of their customers. Some of these customers may themselves be
securities intermediaries holding capital securities for their customers. Thus,
each beneficial owner of a book-entry capital security will hold that capital
security indirectly through a hierarchy of intermediaries, with DTC at the "top"
and the beneficial owner's own securities intermediary at the "bottom."
The capital securities of each beneficial owner of a book-entry security
will be evidenced solely by entries on the books of the beneficial owner's
securities intermediary. The actual purchaser of the capital securities will
generally not be entitled to have the capital securities represented by the
global securities registered in its name and will not be considered the owner
under the declaration. In most cases, a beneficial owner will also not be able
to obtain a paper certificate evidencing the holder's ownership of capital
securities. The book-entry system for holding capital securities eliminates the
need for physical movement of certificates and is the system through which most
publicly traded common stock is held in the United States. However, the laws of
some jurisdictions require some purchasers of securities to take physical
delivery of their securities in definitive form. These laws may impair the
ability to transfer or pledge book-entry securities.
In this prospectus, for book-entry capital securities, references to
actions taken by capital security holders will mean actions taken by DTC upon
instructions from its participants, and references to payments and notices of
redemption to capital security holders will mean payments and notices of
redemption to DTC as the registered holder of the capital securities for
distribution to participants in accordance with DTC's procedures.
A beneficial owner of book-entry securities represented by a global capital
security may exchange the securities for definitive (paper) capital securities
only if:
(a) DTC is unwilling or unable to continue as depositary for such global
capital security and Citigroup is unable to find a qualified
replacement for DTC within 90 days;
(b) at any time DTC ceases to be a clearing agency registered under the
Exchange Act; or
(c) Citigroup in its sole discretion decides to allow some or all
book-entry securities to be exchangeable for definitive capital
securities in registered form.
Unless we indicate otherwise in the applicable prospectus supplement, any
global capital security that is exchangeable will be exchangeable in whole for
definitive notes in registered form, with the same terms and of an equal
aggregate principal amount, in denominations of $ and whole multiples
of $ . Definitive capital securities will be registered in the name or
names of the person or persons specified by DTC in a written instruction to the
registrar of the securities. DTC may base its written instruction upon
directions it receives from its participants.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New York
banking law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered under Section 17A of the Exchange Act. The rules applicable
to DTC and its participants are on file with the SEC.
Citigroup and the regular trustees will not have any responsibility or
liability for any aspect of the records relating to, or payments made on account
of, beneficial ownership interest in the book-entry securities or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
DTC may discontinue providing its services as securities depositary with
respect to the capital securities at any time by giving reasonable notice to
Citigroup Capital. Under such circumstances, in the event that a successor
securities depositary is not obtained, capital securities certificates are
required to be printed and delivered. Additionally, the regular trustees, with
the consent of Citigroup, may decide to discontinue use of
23
the system of book-entry transfers through DTC or any successor depositary with
respect to the capital securities. In that event, certificates for the capital
securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Citigroup and Citigroup Capital believe to
be reliable, but neither Citigroup nor Citigroup Capital takes responsibility
for the accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
Prior to the occurrence of a default relating to the trust securities, the
institutional trustee undertakes to perform only such duties as are specifically
set forth in the declaration. After a default, the institutional trustee will
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. The institutional trustee is under no
obligation to exercise any of the powers vested in it by the declaration at the
request of any holder of capital securities unless offered reasonable indemnity
by such holder against the costs, expenses and liabilities which might be
incurred thereby. Despite the foregoing, the holders of capital securities will
not be required to offer such indemnity in the event such holders, by exercising
their voting rights, direct the institutional trustee to take any action
following a declaration default.
PAYING AGENT
In the event that the capital securities do not remain in book-entry only
form, the following provisions will apply:
- the institutional trustee will act as paying agent and may designate an
additional or substitute paying agent at any time;
- registration of transfers of capital securities will be effected without
charge by or on behalf of Citigroup Capital, but upon payment, with the
giving of such indemnity as Citigroup Capital or Citigroup may require,
in respect of any tax or other government charges that may be imposed in
relation to it; and
- Citigroup Capital will not be required to register or cause to be
registered the transfer of capital securities after such capital
securities have been called for redemption.
GOVERNING LAW
The declaration and the capital securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The regular trustees are authorized and directed to operate Citigroup
Capital in such a way so that Citigroup Capital will not be required to register
as an "investment company" under the 1940 Act or be characterized as other than
a grantor trust for United States federal income tax purposes. Citigroup is
authorized and directed to conduct its affairs so that the junior subordinated
debt securities will be treated as indebtedness of Citigroup for United States
federal income tax purposes. In this connection, Citigroup and the regular
trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust of Citigroup Capital or the certificate of
incorporation of Citigroup, that each of Citigroup and the regular trustees
determine in their discretion to be necessary or desirable to achieve such ends,
as long as such action does not adversely affect the interests of the holders of
the capital securities or vary the terms of the capital securities in any
material way.
Holders of the capital securities have no preemptive rights.
24
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the junior
subordinated debt securities in which Citigroup Capital will invest the proceeds
from the issuance and sale of the trust securities. The following description is
not intended to be complete and is qualified by the indenture, dated as of July
23, 2004, between Citigroup and JPMorgan Chase Bank, as the indenture trustee,
the form of which is filed as an exhibit to the registration statement of which
this prospectus forms a part, and by the Trust Indenture Act. Several
capitalized terms used herein are defined in the indenture. Wherever particular
sections or defined terms of the indenture are referred to, such sections or
defined terms are incorporated herein by reference as part of the statement
made, and the statement is qualified in its entirety by such reference.
Under circumstances discussed more fully below involving the dissolution of
Citigroup Capital, provided that any required regulatory approval is obtained,
junior subordinated debt securities will be distributed to the holders of the
trust securities in liquidation of Citigroup Capital. See "Description of the
Capital Securities -- Distribution of the Junior Subordinated Debt Securities."
If the junior subordinated debt securities are distributed to the holders
of the capital securities, Citigroup will use its best efforts to have the
junior subordinated debt securities listed on the NYSE or on such other exchange
on which the capital securities are then listed.
GENERAL
The junior subordinated debt securities will be issued as unsecured debt
under the indenture and will be limited in aggregate principal amount to
approximately $ . This amount is the sum of the aggregate stated
liquidation amount of the capital securities and the capital contributed by
Citigroup to Citigroup Capital in exchange for the common securities. (Section
3.1)
The entire principal amount of the junior subordinated debt securities will
mature and become due and payable, together with any accrued and unpaid interest
thereon including compound interest (as defined herein) and any additional
interest (as defined herein), on , 20 .
If junior subordinated debt securities are distributed to holders of
capital securities in liquidation of such holders' interests in Citigroup
Capital, such junior subordinated debt securities will initially be issued in
the form of one or more global securities (as described below). As described in
this prospectus, under limited circumstances, junior subordinated debt
securities may be issued in certificated form in exchange for a global security.
In the event that junior subordinated debt securities are issued in certificated
form, such junior subordinated debt securities will be in denominations of
$ and integral multiples thereof and may be transferred or exchanged at the
offices described below. Payments on junior subordinated debt securities issued
as a global security will be made to DTC, to a successor depositary or, in the
event that no depositary is used, to a paying agent for the junior subordinated
debt securities. In the event junior subordinated debt securities are issued in
certificated form, principal and interest will be payable, the transfer of the
junior subordinated debt securities will be registrable and junior subordinated
debt securities will be exchangeable for junior subordinated debt securities of
other denominations of a like aggregate principal amount at the corporate trust
office of the indenture trustee in New York, New York. Payment of interest may
be made at the option of Citigroup by check mailed to the address of the persons
entitled thereto. See "-- Book-Entry and Settlement."
Citigroup does not intend to issue the junior subordinated debt securities
to anyone other than Citigroup Capital.
There are no covenants or provisions in the indenture that would afford the
holders of the junior subordinated debt securities protection in the event of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction involving Citigroup that may adversely affect such holders.
25
CONSOLIDATION, MERGER AND SALE OF ASSETS
The indenture provides that Citigroup will not consolidate or merge with
another corporation or convey, transfer or lease its assets substantially as an
entirety unless:
- the successor is a corporation organized in the United States and
expressly assumes the due and punctual payment of the principal of, and
premium, if any, and interest on all junior subordinated debt securities
issued thereunder and the performance of every other covenant of the
indenture on the part of Citigroup; and
- immediately thereafter no default and no event which, after notice or
lapse of time, or both, would become a default, shall have happened and
be continuing.
Upon any such consolidation, merger, conveyance or transfer, the successor
corporation shall succeed to and be substituted for Citigroup under the
indenture. Thereafter the predecessor corporation shall be relieved of all
obligations and covenants under the indenture and the junior subordinated debt
securities. (Sections 8.1 and 8.2)
SUBORDINATION
The indenture provides that the junior subordinated debt securities are
subordinated and junior in right of payment to all Senior Indebtedness (as
defined below) of Citigroup. This means that no payment of principal, including
redemption payments, premium, if any, or interest on the junior subordinated
debt securities may be made if:
- any Senior Indebtedness of Citigroup has not been paid when due and any
applicable grace period relating to such default has ended and such
default has not been cured or been waived or ceased to exist; or
- the maturity of any Senior Indebtedness of Citigroup has been accelerated
because of a default.
Upon any payment by Citigroup or distribution of assets of Citigroup to
creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all principal, premium, if any, and interest due or to become
due on all Senior Indebtedness of Citigroup must be paid in full before the
holders of junior subordinated debt securities are entitled to receive or retain
any payment. Upon satisfaction of all claims related to all Senior Indebtedness
of Citigroup then outstanding, the rights of the holders of the junior
subordinated debt securities will be subrogated to the rights of the holders of
Senior Indebtedness of Citigroup to receive payments or distributions applicable
to Senior Indebtedness until all amounts owing on the junior subordinated debt
securities are paid in full.
The term "Senior Indebtedness" means, with respect to Citigroup:
(1) the principal, premium, if any, and interest in respect of (a)
indebtedness for money borrowed and (b) indebtedness evidenced by securities,
notes, debentures, bonds or other similar instruments issued by Citigroup
including all indebtedness (whether now or hereafter outstanding) issued under
the senior debt indenture, dated as of March 15, 1987, between Citigroup and The
Bank of New York, as trustee, in case as the same may be amended, modified, or
supplemented from time to time, and the subordinated debt indenture, dated as of
April 12, 2001, between Citigroup and J.P. Morgan Trust Company, National
Association, as trustee, in case as the same may be amended, modified or
supplemented from time to time;
(2) all capital lease obligations of Citigroup;
(3) all obligations of Citigroup issued or assumed as the deferred purchase
price of property, all conditional sale obligations of Citigroup and all
obligations of Citigroup under any conditional sale or title retention
agreement, but excluding trade accounts payable arising in the ordinary course
of business;
26
(4) all obligations, contingent or otherwise, of Citigroup in respect of
any letters of credit, bankers acceptance, security purchase facilities or
similar credit transactions;
(5) all obligations of Citigroup in respect of interest rate swap, cap or
other agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar agreements;
(6) all obligations of the type referred to in clauses (1) through (5)
above of other persons for the payment of which Citigroup is responsible or
liable as obligor, guarantor or otherwise; and
(7) all obligations of the type referred to in clauses (1) through (6)
above of other persons secured by any lien on any property or asset of
Citigroup, whether or not such obligation is assumed by Citigroup
except that Senior Indebtedness will not include
(A) any indebtedness issued under this indenture;
(B) any indebtedness issued to a Citigroup Trust before May 31, 2004
under the indenture, dated as of October 7, 1996, between Citigroup
and JPMorgan Chase Bank as supplemented (the "prior junior
subordinated debt indenture");
(C) any guarantee entered into by Citigroup before May 31, 2004 in
respect of any preferred securities, capital securities or
preference stock of a Citigroup Trust to which Citigroup issued any
indebtedness under the prior junior subordinated debt indenture; and
(D) any indebtedness or any guarantee that is by its terms subordinated
to, or ranks equally with, the junior subordinated debt securities
and the issuance of which (x) has received the concurrence or
approval of the staff of the Federal Reserve Bank of New York or the
staff of the Board of Governors of the Federal Reserve System or (y)
does not at the time of issuance prevent the junior subordinated
debt securities from qualifying for Tier 1 capital treatment
(irrespective of any limits on the amount of Citigroup's Tier 1
capital) under the applicable capital adequacy guidelines,
regulations, policies or published interpretations of the Board of
Governors of the Federal Reserve System.
"Citigroup Trust" means each of Citigroup Capital II, Citigroup Capital VI,
Citigroup Capital VII, Citigroup Capital VIII, Citigroup Capital IX, Citigroup
Capital X, Citigroup Capital XI, Citigroup Capital XII and Citigroup Capital
XIII or any other similar trust created for the purpose of issuing preferred
securities in connection with the issuances of junior subordinated debt
securities under the indenture.
Such Senior Indebtedness shall continue to be Senior Indebtedness and be
entitled to the benefits of these subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
The indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by Citigroup.
OPTIONAL REDEMPTION
Citigroup shall have the right to redeem the junior subordinated debt
securities, in whole or in part, from time to time, on or after ,
or at any time upon the occurrence of a Tax Event, an Investment Company Event
or a Regulatory Capital Event, as described above, upon not less than 30 nor
more than 60 days' notice. The redemption price will be equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest, including
any additional interest (as described below), to the redemption date. If a
partial redemption of the capital securities resulting from a partial redemption
of the junior subordinated debt securities would result in the delisting of the
capital securities, Citigroup may only redeem the junior subordinated debt
securities in whole. (Section 11.2) Citigroup may need regulatory approval to
redeem the junior subordinated debt securities. See "Description of the Capital
Securities -- Special Event Redemption."
27
INTEREST
The junior subordinated debt securities will bear interest at the annual
rate of %, from and including the original date of issuance, payable
in arrears on of each year, commencing
. Each date on which interest is payable is called an "interest
payment date." Interest will be paid to the person in whose name such junior
subordinated debt security is registered, with limited exceptions, at the close
of business on the business day preceding such interest payment date. In the
event the junior subordinated debt securities shall not continue to remain in
book-entry only form, Citigroup shall have the right to select record dates,
which shall be more than 14 days but less than 60 days prior to the interest
payment date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full period will be computed on the
basis of the actual number of days elapsed per 30-day month. In the event that
any date on which interest is payable on the junior subordinated debt securities
is not a business day, then payment of the interest payable on such date will be
made on the next succeeding day that is a business day, and without any interest
or other payment in respect of any such delay. However, if such business day is
in the next succeeding calendar year, then such payment shall be made on the
immediately preceding business day, in each case with the same force and effect
as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Citigroup can defer interest payments by extending the interest payment
period for a period not exceeding consecutive
periods. However, no extension period may extend beyond the maturity of the
junior subordinated debt securities. At the end of such extension period,
Citigroup will pay all interest then accrued and unpaid, including any
additional interest as described under "-- Additional Interest" below, together
with interest thereon compounded at the rate specified for the
junior subordinated debt securities to the extent permitted by applicable law.
During any such extension period:
- Citigroup will not declare or pay any dividend on, make any distributions
relating to, or redeem, purchase, acquire or make a liquidation payment
relating to, any of its capital stock or make any guarantee payment with
respect thereto other than
- repurchases, redemptions or other acquisitions of shares of capital
stock of Citigroup in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of
employees, officers, directors or consultants;
- as a result of an exchange or conversion of any class or series of
Citigroup's capital stock for any other class or series of Citigroup's
capital stock; or
- the purchase of fractional interests in shares of Citigroup's capital
stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged; and
- Citigroup will not make any payment of interest, principal or premium on,
or repay, repurchase or redeem, any debt securities issued by Citigroup
which rank equally with or junior to the junior subordinated debt
securities.
The foregoing, however, will not apply to any stock dividends paid by Citigroup
where the dividend stock is the same stock as that on which the dividend is
being paid. (Section 13.3) Prior to the termination of any extension period,
Citigroup may further defer payments of interest by extending such extension
period. Such extension period, including all such previous and further
extensions, however, may not exceed consecutive
interest periods, including the interest period in which notice
of such extension period is given. No extension period, however, may extend
beyond the maturity of the junior subordinated debt securities. Upon the
termination of any extension period and the payment of all amounts then due,
Citigroup may commence a new extension period, if consistent with the
28
terms set forth in this section. No interest during an extension period, except
at the end of such period, shall be due and payable. However, Citigroup has the
right to prepay accrued interest during an extension period.
Citigroup has no present intention of exercising its right to defer
payments of interest by extending the interest payment period on the junior
subordinated debt securities. If the institutional trustee is the sole holder of
the junior subordinated debt securities, Citigroup will give the regular
trustees and the institutional trustee notice of its selection of such extension
period one business day prior to the earlier of
(1) the date distributions on the capital securities would be payable, if
not for such extension period, or
(2) the date the regular trustees are required to give notice to the NYSE
or other applicable self-regulatory organization or to holders of the
capital securities of the record date or the date such distributions
would be payable, if not for such extension period, but in any event at
least one business day prior to such record date.
The regular trustees will give notice of Citigroup's selection of such extension
period to the holders of the capital securities. If the institutional trustee is
not the sole holder of the junior subordinated debt securities, Citigroup will
give the holders of the junior subordinated debt securities notice of its
selection of such extension period ten business days prior to the earlier of
(1) the next succeeding interest payment date or
(2) the date upon which Citigroup is required to give notice to the NYSE or
other applicable self-regulatory organization or to holders of the
junior subordinated debt securities of the record or payment date of
such related interest payment. (Sections 13.1 and 13.2)
ADDITIONAL INTEREST
If at any time Citigroup Capital is required to pay any taxes, duties,
assessments or governmental charges of whatever nature, other than withholding
taxes, imposed by the United States or any other taxing authority, then
Citigroup will be required to pay additional interest on the junior subordinated
debt securities. The amount of any additional interest will be an amount
sufficient so that the net amounts received and retained by Citigroup Capital
after paying any such taxes, duties, assessments or other governmental charges
will be not less than the amounts Citigroup Capital would have received had no
such taxes, duties, assessments or other governmental charges been imposed. This
means that Citigroup Capital will be in the same position it would have been if
it did not have to pay such taxes, duties, assessments or other charges.
(Section 3.10(c)).
INDENTURE EVENTS OF DEFAULT
The indenture provides that the following are events of default relating to
the junior subordinated debt securities:
(1) failure to pay in full interest accrued on any junior subordinated debt
security upon the conclusion of a period consisting of 20 consecutive
quarters commencing with the earliest quarter for which interest
(including interest accrued on deferred payments) has not been paid in
full and continuance of such failure to pay for a period of 30 days; or
(2) specified events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of Citigroup.
If any indenture event of default shall occur and be continuing, the
institutional trustee, as the holder of the junior subordinated debt securities,
will have the right to declare the principal of and the interest on the junior
subordinated debt securities, including any compound interest and any additional
interest, and any other amounts payable under the indenture to be immediately
due and payable. The institutional
29
trustee may also enforce its other rights as a creditor relating to the junior
subordinated debt securities. (Section 5.2)
INDENTURE DEFAULTS
The indenture provides that the following are defaults relating to the
junior subordinated debt securities:
(1) an indenture event of default;
(2) a default in the payment of the principal of, or premium, if any, on,
any junior subordinated debt security at its maturity;
(3) a default for 30 days in the payment of any installment of interest on
any junior subordinated debt security;
(4) a default for 90 days after written notice in the performance of any
other covenant in respect of the junior subordinated debt securities;
(5) failure to make any required scheduled installment payment to a sinking
fund for 30 days on debt securities of such series; and
(6) Citigroup Capital shall have voluntarily or involuntarily dissolved,
wound-up its business or otherwise terminated its existence, except in
connection with (i) the distribution of the junior subordinated debt
securities to holders of the capital securities in liquidation or
redemption of their interests in Citigroup Capital upon a Special
Event, (ii) the redemption of all of the outstanding capital securities
or (iii) certain mergers, consolidations or amalgamations of Citigroup
Capital.
There is no right of acceleration with respect to indenture defaults, except for
indenture defaults that are indenture events of default. An indenture default
also constitutes a declaration default. The holders of capital securities in
limited circumstances have the right to direct the institutional trustee to
exercise its rights as the holder of the junior subordinated debt securities.
See "Description of the Capital Securities -- Declaration Defaults" and
- -- Voting Rights."
Any deferral of interest on the junior subordinated debt securities made in
accordance with the provisions described above in "Option to Extend Interest
Payment Period" will not constitute a default under the indenture for the junior
subordinated debt securities. (Section 5.7)
The indenture trustee may withhold notice to the holders of the junior
subordinated debt securities of any default with respect thereto, except in the
payment of principal, premium or interest, if it considers such withholding to
be in the interests of such holders. (Section 6.2)
Despite the foregoing, if a declaration default has occurred and is
continuing and such event is attributable to the failure of Citigroup to pay
interest or principal on the junior subordinated debt securities when such
interest or principal is payable, Citigroup acknowledges that, in such event, a
holder of capital securities may sue for payment on or after the respective due
date specified in the junior subordinated debt securities. Citigroup may not
amend the declaration to remove this right to bring a direct action without the
prior written consent of all of the holders of capital securities of Citigroup
Capital. Despite any payment made to such holder of capital securities by
Citigroup in connection with a direct action, Citigroup shall remain obligated
to pay the principal of or interest on the junior subordinated debt securities
held by Citigroup Capital or the institutional trustee of Citigroup Capital.
Citigroup shall be subrogated to the rights of the holder of such capital
securities relating to payments on the capital securities to the extent of any
payments made by Citigroup to such holder in any direct action. The holders of
capital securities will not be able to exercise directly any other remedy
available to the holders of the junior subordinated debt securities.
30
MODIFICATIONS AND AMENDMENTS
Modifications and amendments to the indenture through a supplemental
indenture may be made by Citigroup and the indenture trustee with the consent of
the holders of a majority in principal amount of the junior subordinated debt
securities at the time outstanding. However, no such modification or amendment
may, without the consent of the holder of each junior subordinated debt security
affected thereby:
(1) modify the terms of payment of principal, premium, if any, or interest
on such junior subordinated debt securities; or
(2) reduce the percentage of holders of junior subordinated debt securities
necessary to modify or amend the indenture or waive compliance by
Citigroup with any covenant or past default.
If the junior subordinated debt securities are held by Citigroup Capital or a
trustee of Citigroup Capital, such supplemental indenture shall not be effective
until the holders of a majority in liquidation preference of trust securities of
Citigroup Capital shall have consented to such supplemental indenture. If the
consent of the holder of each outstanding junior subordinated debt security is
required, such supplemental indenture shall not be effective until each holder
of the trust securities of Citigroup Capital shall have consented to such
supplemental indenture. (Section 9.2)
DISCHARGE AND DEFEASANCE
Citigroup may discharge most of its obligations under the indenture to
holders of the junior subordinated debt securities if such junior subordinated
debt securities have not already been delivered to the indenture trustee for
cancellation and either have become due and payable or are by their terms due
and payable within one year, or are to be called for redemption within one year.
Citigroup discharges its obligations by depositing with the indenture trustee an
amount certified to be sufficient to pay when due the principal of and premium,
if any, and interest on all outstanding junior subordinated debt securities and
to make any mandatory scheduled installment payments thereon when due. (Section
4.1)
Unless otherwise specified in this prospectus relating to the junior
subordinated debt securities, Citigroup, at its option:
(1) will be released from any and all obligations in respect of the junior
subordinated debt securities, which is known as "defeasance and
discharge"; or
(2) need not comply with certain covenants specified herein regarding the
junior subordinated debt securities, which is known as "covenant
defeasance."
If Citigroup exercises its covenant defeasance option, the failure to comply
with any defeased covenant and any default in the applicable resolution of the
board of directors or supplemental indenture will no longer be a default under
the indenture.
To exercise either its defeasance and discharge or covenant defeasance
option, Citigroup must
(1) deposit with the indenture trustee, in trust, cash or U.S. government
obligations in an amount sufficient to pay all the principal of and
premium, if any, and any interest on the junior subordinated debt
securities when such payments are due; and
(2) deliver an opinion of counsel, which, in the case of a defeasance and
discharge, must be based upon a ruling or administrative pronouncement
of the Internal Revenue Service (the "IRS"), to the effect that the
holders of the junior subordinated debt securities will not recognize
income, gain or loss for U.S. federal income tax purposes as a result
of such deposit or defeasance and will be required to pay U.S. federal
income tax in the same manner as if such defeasance had not occurred.
(Sections 4.2, 4.3 and 4.4).
When there is a defeasance and discharge, the indenture will no longer
govern the junior subordinated debt securities, Citigroup will no longer be
liable for payment and the holders of such junior subordinated
31
debt securities will be entitled only to the deposited funds. When there is a
covenant defeasance, however, Citigroup will continue to be obligated for
payments when due if the deposited funds are not sufficient to pay the holders.
The obligations under the indenture to pay all expenses of Citigroup
Capital, to register the transfer or exchange of junior subordinated debt
securities, to replace mutilated, defaced, destroyed, lost or stolen junior
subordinated debt securities, and to maintain paying agents and hold monies for
payment in trust will continue even if Citigroup exercises its defeasance and
discharge or covenant defeasance option.
CONCERNING THE INDENTURE TRUSTEE
The indenture trustee has extended substantial credit facilities, the
borrowings under which constitute Senior Indebtedness, to Citigroup. Citigroup
and certain of its subsidiaries also maintain bank accounts, borrow money and
have other customary commercial banking or investment banking relationships with
the indenture trustee in the ordinary course of business.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of capital securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of Citigroup
Capital as a result of the occurrence of a Special Event, the junior
subordinated debt securities will be issued in the form of one or more global
certificates registered in the name of the depositary or its nominee. Each
global certificate is referred to as a "global security." Except under the
limited circumstances described below under "-- Discontinuance of the
Depositary's Services," junior subordinated debt securities represented by a
global security will not be exchangeable for, and will not otherwise be issuable
as, junior subordinated debt securities in definitive form. The global
securities may not be transferred except by the depositary to a nominee of the
depositary or by a nominee of the depositary to the depositary or another
nominee of the depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. These
laws may impair the ability to transfer or pledge beneficial interests in a
global security.
Except as provided below, owners of beneficial interests in a global
security will not be entitled to receive physical delivery of junior
subordinated debt securities in definitive form and will not be considered the
holders, as defined in the indenture, of the global security for any purpose
under the indenture. A global security representing junior subordinated debt
securities is only exchangeable for another global security of like denomination
and tenor to be registered in the name of the depositary or its nominee or to a
successor depositary or its nominee. This means that each beneficial owner must
rely on the procedures of the depositary, or if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the indenture.
THE DEPOSITARY
If junior subordinated debt securities are distributed to holders of
capital securities in liquidation of such holders' interests in Citigroup
Capital, DTC will act as securities depositary for the junior subordinated debt
securities. As of the date of this prospectus, the description in this
prospectus of DTC's book-entry system and DTC's practices as they relate to
purchases, transfers, notices and payments relating to the capital securities
apply in all material respects to any debt obligations represented by one or
more global securities held by DTC. Citigroup may appoint a successor to DTC or
any successor depositary in the event DTC or such successor depositary is unable
or unwilling to continue as a depositary for the global securities. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Capital Securities -- Book-Entry Only Issuance."
None of Citigroup, Citigroup Capital, the indenture trustee, any paying
agent and any other agent of Citigroup or the indenture trustee will have any
responsibility or liability for any aspect of the records
32
relating to or payments made on account of beneficial ownership interests in a
global security for such junior subordinated debt securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A global security shall be exchangeable for junior subordinated debt
securities registered in the names of persons other than the depositary or its
nominee only if:
- the depositary notifies Citigroup that it is unwilling or unable to
continue as a depositary for such global security and no successor
depositary shall have been appointed;
- the depositary, at any time, ceases to be a clearing agency registered
under the Exchange Act at which time the depositary is required to be so
registered to act as such depositary and no successor depositary shall
have been appointed; or
- Citigroup, in its sole discretion, determines that such global security
shall be so exchangeable.
Any global security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for junior subordinated debt securities registered in such
names as the depositary shall direct. It is expected that such instructions will
be based upon directions received by the depositary from its participants
relating to ownership of beneficial interests in such global security.
CERTAIN COVENANTS
If the junior subordinated debt securities are issued to Citigroup Capital
or a trustee of such trust in connection with the issuance of trust securities
by Citigroup Capital and
(1) there shall have occurred and be continuing a default under the
indenture;
(2) Citigroup shall be in default relating to its payment or other
obligations under the guarantee; or
(3) Citigroup shall have given notice of its election to defer payments of
interest on the junior subordinated debt securities by extending the
interest payment period and such period, or any extension of such
period, shall be continuing;
then
(a) Citigroup shall not declare or pay any dividend on, make any
distributions relating to, or redeem, purchase, acquire or make a
liquidation payment relating to, any of its capital stock or make any
guarantee payment with respect thereto other than
- repurchases, redemptions or other acquisitions of shares of capital
stock of Citigroup in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of
employees, officers, directors or consultants;
- as a result of an exchange or conversion of any class or series of
Citigroup's capital stock for any other class or series of Citigroup's
capital stock; or
- the purchase of fractional interests in shares of Citigroup's capital
stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged; and
(b) Citigroup shall not make any payment of interest, principal or premium
on, or repay, repurchase or redeem, any debt securities issued by
Citigroup that rank equally with or junior to the junior subordinated
debt securities.
These restrictions, however, will not apply to any stock dividends paid by
Citigroup where the dividend stock is the same stock as that on which the
dividend is being paid. (Section 13.3)
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So long as the trust securities remain outstanding, Citigroup will covenant
to:
- directly or indirectly maintain 100% ownership of the common securities
of Citigroup Capital, unless a permitted successor of Citigroup succeeds
to its ownership of the common securities;
- not voluntarily dissolve, wind-up or terminate Citigroup Capital, except
in connection with
(a) a distribution of junior subordinated debt securities or
(b) mergers, consolidations or amalgamations permitted by the
declaration;
- timely perform its duties as sponsor of Citigroup Capital; and
- use its reasonable efforts to cause Citigroup Capital to
(a) remain a statutory trust, except in connection with the distribution
of junior subordinated debt securities to the holders of trust
securities in liquidation of Citigroup Capital, the redemption of
all of the trust securities of Citigroup Capital, or mergers,
consolidations or amalgamations, each as permitted by the
declaration of Citigroup Capital, and
(b) otherwise continue to be classified as a grantor trust for United
States federal income tax purposes. (Section 10.5)
MISCELLANEOUS
The indenture provides that Citigroup will pay all fees and expenses
related to:
- the offering of the trust securities and the junior subordinated debt
securities;
- the organization, maintenance and dissolution of Citigroup Capital;
- the retention of the regular trustees; and
- the enforcement by the institutional trustee of the rights of the holders
of the capital securities.
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DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning the guarantee that
will be executed and delivered by Citigroup for the benefit of the holders of
capital securities. The guarantee will be qualified as an indenture under the
Trust Indenture Act. JPMorgan Chase Bank will act as the guarantee trustee. The
terms of the guarantee will be those set forth in the guarantee and those made
part of the guarantee by the Trust Indenture Act. The summary is not intended to
be complete and is qualified in all respects by the provisions of the form of
guarantee, which is filed as an exhibit to the registration statement of which
this prospectus forms a part, and the Trust Indenture Act. The guarantee will be
held by the guarantee trustee for the benefit of the holders of the capital
securities.
GENERAL
Pursuant to and to the extent set forth in the guarantee, Citigroup will
irrevocably and unconditionally agree to pay in full to the holders of the
capital securities, except to the extent paid by Citigroup Capital, as and when
due, regardless of any defense, right of set-off or counterclaim that Citigroup
Capital may have or assert, the following payments, which are referred to as
"guarantee payments," without duplication:
- any accrued and unpaid distributions that are required to be paid on the
capital securities, to the extent Citigroup Capital has funds available
for such distributions;
- the redemption price of $ per capital security, plus all accrued and
unpaid distributions, to the extent Citigroup Capital has funds available
for such redemptions, relating to any capital securities called for
redemption by Citigroup Capital; and
- upon a voluntary or involuntary dissolution, winding-up or termination of
Citigroup Capital, other than in connection with the distribution of
junior subordinated debt securities to the holders of capital securities
or the redemption of all of the capital securities, the lesser of
- the aggregate of the liquidation amount and all accrued and unpaid
distributions on the capital securities to the date of payment, or
- the amount of assets of Citigroup Capital remaining for distribution
to holders of the capital securities in liquidation of Citigroup
Capital.
Citigroup's obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by Citigroup to the holders of capital
securities or by causing Citigroup Capital to pay such amounts to such holders.
The guarantee will not apply to any payment of distributions or redemption
price, or to payments upon the dissolution, winding-up or termination of
Citigroup Capital, except to the extent Citigroup Capital has funds available
for such payments. If Citigroup does not make interest payments on the junior
subordinated debt securities, Citigroup Capital will not pay distributions on
the capital securities and will not have funds available for such payments. The
guarantee, when taken together with Citigroup's obligations under the junior
subordinated debt securities, the indenture and the declaration, including its
obligations to pay costs, expenses, debts and liabilities of Citigroup Capital,
other than those relating to trust securities, will provide a full and
unconditional guarantee on a subordinated basis by Citigroup of payments due on
the capital securities. Citigroup's obligations in respect of the guarantee will
be subordinated in right of payment to Senior Indebtedness of Citigroup to the
same extent that the junior subordinated debt securities are subordinated to
Senior Indebtedness of Citigroup. See "Description of the Junior Subordinated
Debt Securities."
35
IMPORTANT COVENANTS OF CITIGROUP
In the guarantee, Citigroup will covenant that, so long as any capital
securities remain outstanding, if there shall have occurred any event that would
constitute an event of default under such guarantee or a default under the
declaration, then:
- Citigroup shall not declare or pay any dividend on, make any
distributions relating to, or redeem, purchase, acquire or make a
liquidation payment relating to, any of its capital stock or make any
guarantee payment with respect thereto other than
(1) repurchases, redemptions or other acquisitions of shares of capital
stock of Citigroup in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of
employees, officers, directors or consultants;
(2) as a result of an exchange or conversion of any class or series of
Citigroup's capital stock for any other class or series of
Citigroup's capital stock; or
(3) the purchase of fractional interests in shares of Citigroup's
capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged; and
- Citigroup shall not make any payment of interest, principal or premium
on, or repay, repurchase or redeem, any debt securities issued by
Citigroup which rank equally with or junior to the junior subordinated
debt securities.
The above restrictions, however, will not apply to any stock dividends paid by
Citigroup where the dividend stock is the same stock as that on which the
dividend is being paid.
MODIFICATION OF GUARANTEE; ASSIGNMENT
The guarantee may be amended only with the prior approval of the holders of
not less than a majority in aggregate liquidation amount of the outstanding
capital securities. No vote will be required, however, for any changes that do
not adversely affect the rights of holders of capital securities. All guarantees
and agreements contained in the guarantee shall bind the successors, assignees,
receivers, trustees and representatives of Citigroup and shall inure to the
benefit of the holders of the capital securities then outstanding.
EVENTS OF DEFAULT
An event of default under the guarantee will occur upon the failure of
Citigroup to perform any of its payment or other obligations required by the
guarantee. The holders of a majority in aggregate liquidation amount of the
capital securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the guarantee trustee in
respect of the guarantee or to direct the exercise of any trust or power
conferred upon the guarantee trustee under the guarantee.
If the guarantee trustee fails to enforce its rights under the guarantee,
any holder of related capital securities may directly sue Citigroup to enforce
the guarantee trustee's rights under the guarantee without first suing Citigroup
Capital, the guarantee trustee or any other person or entity. A holder of
capital securities may also directly sue Citigroup to enforce such holder's
right to receive payment under the guarantee without first (1) directing the
guarantee trustee to enforce the terms of the guarantee or (2) suing Citigroup
Capital or any other person or entity.
Citigroup will be required to provide to the guarantee trustee such
documents, reports and information as required by the Trust Indenture Act.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
Prior to the occurrence of a default relating to the guarantee, the
guarantee trustee undertakes to perform only such duties as are specifically set
forth in the guarantee. After such default, the guarantee
36
trustee will exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Provided that the foregoing
requirements have been met, the guarantee trustee is under no obligation to
exercise any of the powers vested in it by the guarantee at the request of any
holder of capital securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The guarantee will terminate as to the capital securities upon full payment
of the redemption price of all capital securities, upon distribution of the
junior subordinated debt securities to the holders of the capital securities or
upon full payment of the amounts payable in accordance with the declaration upon
liquidation of Citigroup Capital. The guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of capital
securities must restore payment of any sums paid under the capital securities or
the guarantee.
STATUS OF THE GUARANTEE
The guarantee will constitute an unsecured obligation of Citigroup and will
rank:
- junior in right of payment to all Senior Indebtedness of Citigroup to the
extent provided in the indenture; and
- equally with all other trust preferred security guarantees that Citigroup
issues.
The terms of the capital securities provide that each holder of capital
securities by acceptance of such securities agrees to the subordination
provisions and other terms of the guarantee.
The guarantee will constitute a guarantee of payment and not of collection.
This means that the guaranteed party may directly sue the guarantor to enforce
its rights under the guarantee without suing any other person or entity.
GOVERNING LAW
The guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
37
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the declaration, the sole purpose of Citigroup Capital is
to issue the trust securities and to invest the proceeds from such issuance in
the junior subordinated debt securities.
As long as payments of interest and other payments are made when due on the
junior subordinated debt securities, such payments will be sufficient to cover
the distributions and payments due on the trust securities. This is due to the
following factors:
- the aggregate principal amount of junior subordinated debt securities
will be equal to the aggregate stated liquidation amount of the trust
securities;
- the interest rate and the interest and other payment dates on the junior
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the capital securities;
- under the indenture, Citigroup will pay, and Citigroup Capital will not
be obligated to pay, directly or indirectly, all costs, expenses, debts
and obligations of Citigroup Capital other than those relating to the
trust securities; and
- the declaration further provides that the regular trustees may not cause
or permit Citigroup Capital to engage in any activity that is not
consistent with the purposes of Citigroup Capital.
Payments of distributions, to the extent there are available funds, and
other payments due on the capital securities, to the extent there are available
funds, are guaranteed by Citigroup to the extent described in this prospectus.
If Citigroup does not make interest payments on the junior subordinated debt
securities, Citigroup Capital will not have sufficient funds to pay
distributions on the capital securities. The guarantee is a subordinated
guarantee in relation to the capital securities. The guarantee does not apply to
any payment of distributions unless and until Citigroup Capital has sufficient
funds for the payment of such distributions. See "Description of Guarantee."
The guarantee covers the payment of distributions and other payments on the
capital securities only if and to the extent that Citigroup has made a payment
of interest or principal or other payments on the junior subordinated debt
securities. The guarantee, when taken together with Citigroup's obligations
under the junior subordinated debt securities and the indenture and its
obligations under the declaration, will provide a full and unconditional
guarantee of distributions, redemption payments and liquidation payments on the
capital securities.
If Citigroup fails to make interest or other payments on the junior
subordinated debt securities when due, taking account of any extension period,
the declaration allows the holders of the capital securities to direct the
institutional trustee to enforce its rights under the junior subordinated debt
securities. If the institutional trustee fails to enforce these rights, any
holder of capital securities may directly sue Citigroup to enforce such rights
without first suing the institutional trustee or any other person or entity. See
"Description of the Capital Securities -- Declaration Events of Default" and
"-- Voting Rights."
A holder of capital securities may institute a direct action if a
declaration default has occurred and is continuing and such event is
attributable to the failure of Citigroup to pay interest or principal on the
junior subordinated debt securities on the date such interest or principal is
otherwise payable. A direct action may be brought without first (1) directing
the institutional trustee to enforce the terms of the junior subordinated debt
securities or (2) suing Citigroup to enforce the institutional trustee's rights
under the junior subordinated debt securities. In connection with such direct
action, Citigroup will be subrogated to the rights of such holder of capital
securities under the declaration to the extent of any payment made by Citigroup
to such holder of capital securities. Consequently, Citigroup will be entitled
to payment of amounts that a holder of capital securities receives in respect of
an unpaid distribution to the extent that such holder receives or has already
received full payment relating to such unpaid distribution from Citigroup
Capital.
38
Citigroup acknowledges that the guarantee trustee will enforce the
guarantee on behalf of the holders of the capital securities. If Citigroup fails
to make payments under the guarantee, the guarantee allows the holders of the
capital securities to direct the guarantee trustee to enforce its rights
thereunder. If the guarantee trustee fails to enforce the guarantee, any holder
of capital securities may directly sue Citigroup to enforce the guarantee
trustee's rights under the guarantee. Such holder need not first sue Citigroup
Capital, the guarantee trustee, or any other person or entity. A holder of
capital securities may also directly sue Citigroup to enforce such holder's
right to receive payment under the guarantee. Such holder need not first (1)
direct the guarantee trustee to enforce the terms of the guarantee or (2) sue
Citigroup Capital or any other person or entity.
Citigroup and Citigroup Capital believe that the above mechanisms and
obligations, taken together, are equivalent to a full and unconditional
guarantee by Citigroup of payments due on the capital securities. See
"Description of Guarantee -- General."
39
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a general summary of United States federal income tax
consequences of the purchase, ownership and disposition of capital securities.
The summary is based on:
- laws;
- regulations;
- rulings; and
- decisions now in effect,
all of which may change, possibly with retroactive effect. This summary deals
only with a beneficial owner of capital securities that purchases the capital
securities upon original issuance at the initial issue price and who will hold
the capital securities as capital assets. This summary does not address all of
the United States federal income tax considerations that may be relevant to a
beneficial owner of notes. For example, this summary does not address tax
considerations applicable to investors to whom special tax rules may apply,
including:
- banks or other financial institutions;
- tax-exempt entities;
- insurance companies;
- regulated investment companies;
- common trust funds;
- entities that are treated for United States federal income tax purposes
as partnerships or other pass-through entities;
- controlled foreign corporations;
- dealers in securities or currencies;
- persons that will hold the capital securities as a hedge or in order to
hedge against currency risk or as a part of an integrated investment,
including a straddle or conversion transaction, comprised of a capital
security and one or more other positions; or
- United States holders (as defined below) that have a functional currency
other than the U.S. dollar.
As used in this summary, a "United States holder" is a beneficial owner of
capital securities who is:
- a citizen or resident of the United States;
- a corporation or other entity treated as a corporation created or
organized in or under the laws of the United States or any political
subdivision thereof;
- an estate, if United States federal income taxation is applicable to the
income of such estate regardless of the income's source; or
- a trust if a United States court is able to exercise primary supervision
over the trust's administration and one or more United States persons
have the authority to control all of the trust's substantial decisions.
As used in this summary, the term "non-United States holder" means a beneficial
owner of capital securities who is not a United States holder and the term
"United States" means the United States of America, including the fifty states
and the District of Columbia, but excluding its territories and possessions.
Prospective investors should consult their tax advisors in determining the
tax consequences to them of purchasing, holding and disposing of the capital
securities, including the application to their particular situation of the
United States federal income tax considerations discussed below, as well as the
application of state, local, foreign or other tax laws.
40
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
In connection with the issuance of the junior subordinated debt securities,
Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to Citigroup and
Citigroup Capital, will render its opinion generally to the effect that, under
then current law and assuming full compliance with the terms of the indenture
and other relevant documents, and based on the facts and assumptions contained
in such opinion, the junior subordinated debt securities held by Citigroup
Capital will be classified for United States federal income tax purposes as
indebtedness of Citigroup.
CLASSIFICATION OF CITIGROUP CAPITAL
In connection with the issuance of the capital securities, Skadden, Arps,
Slate, Meagher & Flom LLP will render its opinion generally to the effect that,
under then current law and assuming full compliance with the terms of the
declaration, the indenture and other relevant documents, and based on the facts
and assumptions contained in such opinion, Citigroup Capital will be classified
for United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Accordingly, for United States federal
income tax purposes, each holder of capital securities generally will be
considered the owner of an undivided interest in the junior subordinated debt
securities. Each United States holder will be required to include in its gross
income all interest or original issue discount ("OID") and any gain recognized
relating to its allocable share of those junior subordinated debt securities.
UNITED STATES HOLDERS
Interest Income and Original Issue Discount
Under applicable Treasury regulations, a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether a debt
instrument is issued with OID. Citigroup believes that the likelihood of its
exercising its option to defer payments is remote within the meaning of the
Treasury regulations. Based on the foregoing, Citigroup believes that, although
the matter is not free from doubt, the junior subordinated debt securities will
not be considered to be issued with OID at the time of their original issuance.
Accordingly, each United States holder of capital securities should include in
gross income such United States holder's allocable share of interest on the
junior subordinated debt securities in accordance with such United States
holder's method of tax accounting.
Under the regulations, if the option to defer any payment of interest was
determined not to be "remote," or if Citigroup exercised such option, the junior
subordinated debt securities would be treated as issued with OID at the time of
issuance or at the time of such exercise, as the case may be. Then, all stated
interest on the junior subordinated debt securities would thereafter be treated
as OID as long as the junior subordinated debt securities remained outstanding.
In such event, all of a United States holder's taxable interest income relating
to the junior subordinated debt securities would constitute OID that would have
to be included in income on an economic accrual basis before the receipt of the
cash attributable to the interest, regardless of such United States holder's
method of tax accounting, and actual distributions of stated interest would not
be reported as taxable income. Consequently, a United States holder of capital
securities would be required to include in gross income OID even though
Citigroup would not make any actual cash payments during an extension period.
No rulings or other interpretations have been issued by the IRS which have
addressed the meaning of the term "remote" as used in the applicable Treasury
regulations, and it is possible that the IRS could take a position contrary to
the interpretation in this prospectus.
Because income on the capital securities will constitute interest or OID,
corporate holders of capital securities will not be entitled to a
dividends-received deduction relating to any income recognized relating to the
capital securities, and individual holders will not be entitled to a lower
income tax rate in respect of certain dividends, relating to any income
recognized relating to the capital securities.
41
Receipt of Junior Subordinated Debt Securities or Cash Upon Liquidation of
Citigroup Capital
Under the circumstances described in this prospectus, junior subordinated
debt securities may be distributed to holders in exchange for capital securities
upon the liquidation of Citigroup Capital. Under current law, such a
distribution, for United States federal income tax purposes, would be treated as
a non-taxable event to each United States holder, and each United States holder
would receive an aggregate tax basis in the junior subordinated debt securities
equal to such holder's aggregate tax basis in its capital securities. A United
States holder's holding period in the junior subordinated debt securities
received in liquidation of Citigroup Capital would include the period during
which the capital securities were held by such holder. See "Description of the
Capital Securities -- Distribution of the Junior Subordinated Debt Securities."
Under the circumstances described in this prospectus, the junior
subordinated debt securities may be redeemed by Citigroup for cash and the
proceeds of such redemption distributed by Citigroup Capital to holders in
redemption of their capital securities. Under current law, such a redemption
would, for United States federal income tax purposes, constitute a taxable
disposition of the redeemed capital securities. Accordingly, a United States
holder could recognize gain or loss as if it had sold such redeemed capital
securities for cash. See "Description of the Capital Securities -- Special Event
Redemption" and "-- Sale Exchange, or Other Disposition of Capital Securities"
below.
Sale, Exchange, or Other Disposition of Capital Securities
Upon the sale, exchange, retirement or other taxable disposition
(collectively, a "disposition") of a capital security, a United States holder
will be considered to have disposed of all or part of its ratable share of the
junior subordinated debt securities. Such United States holder will recognize
gain or loss equal to the difference between its adjusted tax basis in the
capital securities and the amount realized on the disposition of such capital
securities. Assuming that Citigroup does not exercise its option to defer
payment of interest on the junior subordinated debt securities and that the
junior subordinated debt securities are not deemed to be issued with OID, a
United States holder's adjusted tax basis in the capital securities generally
will be its initial purchase price. If the junior subordinated debt securities
are deemed to be issued with OID, a United States holder's tax basis in the
capital securities generally will be its initial purchase price, increased by
OID previously includible in such United States holder's gross income to the
date of disposition and decreased by distributions or other payments received on
the capital securities since and including the date that the junior subordinated
debt securities were deemed to be issued with OID. Such gain or loss generally
will be a capital gain or loss, except to the extent of any accrued interest
relating to such United States holder's ratable share of the junior subordinated
debt securities required to be included in income, and generally will be a
long-term capital gain or loss if the capital securities have been held for more
than one year.
Should Citigroup exercise its option to defer payment of interest on the
junior subordinated debt securities, the capital securities may trade at a price
that does not fully reflect the accrued but unpaid interest relating to the
underlying junior subordinated debt securities. In the event of such a deferral,
a United States holder who disposes of its capital securities between record
dates for payments of distributions will be required to include in income as
ordinary income accrued but unpaid interest on the junior subordinated debt
securities to the date of disposition and to add such amount to its adjusted tax
basis in its ratable share of the underlying junior subordinated debt securities
deemed disposed of. To the extent the selling price is less than the holder's
adjusted tax basis, such holder will recognize a capital loss. Capital losses
generally cannot be applied to offset ordinary income for United States federal
income tax purposes.
Under Treasury regulations that address "reportable transactions," a United
States holder that recognizes a loss that meets certain threshold amounts upon
the disposition of a capital security may be required to disclose the loss
generating transaction to the IRS. You should consult your tax advisor
concerning any possible disclosure obligation with respect to your disposition
of the capital securities.
42
Information Reporting and Backup Withholding
Generally, income on the capital securities will be reported to the IRS and
to holders on Forms 1099-INT, which forms should be mailed to holders of capital
securities by January 31 following each calendar year of payment. In addition,
United States holders may be subject to a backup withholding tax on such
payments if they do not provide their taxpayer identification numbers to the
trustee in the manner required, fail to certify that they are not subject to
backup withholding tax, or otherwise fail to comply with applicable backup
withholding tax rules. United States holders may also be subject to information
reporting and backup withholding tax with respect to the proceeds from a
disposition of the capital securities. Any amounts withheld under the backup
withholding rules will be allowed as a credit against the United States holder's
United States federal income tax liability provided the required information is
timely furnished to the IRS.
NON-UNITED STATES HOLDERS
Under current United States federal income tax law:
- withholding of United States federal income tax will not apply to a
payment on a capital security to a non-United States holder, provided
that,
(1) the holder does not actually or constructively own 10 percent or
more of the total combined voting power of all classes of stock of
Citigroup entitled to vote and is not a controlled foreign
corporation related to Citigroup through stock ownership;
(2) the beneficial owner provides a statement signed under penalties of
perjury that includes its name and address and certifies that it is
a non-United States holder in compliance with applicable
requirements; and
(3) neither Citigroup nor its paying agent has actual knowledge or
reason to know that the beneficial owner of the note is a United
States holder.
- withholding of United States federal income tax will generally not apply
to any gain realized on the disposition of a capital security.
Despite the above, if a non-United States holder is engaged in a trade or
business in the United States (or, if certain tax treaties apply, if the
non-United States holder maintains a permanent establishment within the United
States) and the interest on the capital securities is effectively connected with
the conduct of that trade or business (or, if certain tax treaties apply,
attributable to that permanent establishment), such non-United States holder
will be subject to United States federal income tax on the interest on a net
income basis in the same manner as if such non-United States holder were a
United States holder. In addition, a non-United States holder that is a foreign
corporation engaged in a trade or business in the United States may be subject
to a 30% (or, if certain tax treaties apply, such lower rates as provided)
branch profits tax.
Any gain realized on the disposition of a capital security generally will
not be subject to United States federal income tax unless:
- that gain is effectively connected with the non-United States holder's
conduct of a trade or business in the United States (or, if certain tax
treaties apply, is attributable to a permanent establishment maintained
by the non-United States holder within the United States); or
- the non-United States holder is an individual who is present in the
United States for 183 days or more in the taxable year of the disposition
and certain other conditions are met.
In general, backup withholding and information reporting will not apply to
a payment of interest on a capital security to a non-United States holder, or to
proceeds from the disposition of a capital security by a non-United States
holder, in each case, if the holder certifies under penalties of perjury that it
is a non-United States holder and neither Citigroup nor its paying agent has
actual knowledge to the contrary. Any amounts withheld under the backup
withholding rules will be refunded or credited against the non-United
43
States holder's United States federal income tax liability provided the required
information is timely furnished to the IRS. In certain circumstances, if a
capital security is not held through a qualified intermediary, the amount of
payments made on such capital security, the name and address of the beneficial
owner and the amount, if any, of tax withheld may be reported to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS IN DETERMINING
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
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ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing or other employee benefit plan
governed by the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), should consider the fiduciary standards of ERISA in the context of
the ERISA plan's particular circumstances before authorizing an investment in
the capital securities of Citigroup Capital. Among other factors, the fiduciary
should consider whether such an investment is in accordance with the documents
governing the ERISA plan and whether the investment is appropriate for the ERISA
plan in view of its overall investment policy and diversification of its
portfolio.
Certain provisions of ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"), prohibit employee benefit plans (as defined in Section
3(3) of ERISA) that are subject to Title I of ERISA, plans described in Section
4975(e)(1) of the Code (including, without limitation, retirement accounts and
Keogh Plans), and entities whose underlying assets include plan assets by reason
of a plan's investment in such entities (including, without limitation, as
applicable, insurance company general accounts), from engaging in certain
transactions involving "plan assets" with parties that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to the plan or
entity. Governmental and other plans that are not subject to ERISA or to the
Code may be subject to similar restrictions under state, federal or local law.
Any employee benefit plan or other entity, to which such provisions of ERISA,
the Code or similar law apply, proposing to acquire the offered securities
should consult with its legal counsel.
The U.S. Department of Labor has issued a regulation with regard to whether
the underlying assets of an entity in which employee benefit plans acquire
equity interests are deemed to be plan assets (the "Plan Asset Regulation").
Under such regulation, for purposes of ERISA and section 4975 of the Code, the
assets of Citigroup Capital would be deemed to be "plan assets" of a plan whose
assets were used to purchase capital securities of Citigroup Capital if the
capital securities of Citigroup Capital were considered to be equity interests
in Citigroup Capital and no exception to plan asset status were applicable under
such regulation.
The Plan Asset Regulation defines an "equity interest" as any interest in
an entity other than an instrument that is treated as indebtedness under
applicable local law and which has no substantial equity features. Although it
is not free from doubt, capital securities of Citigroup Capital offered hereby
should be treated as "equity interests" for purposes of the Plan Asset
Regulation. One exception to plan asset status under the Plan Asset Regulation
applies to a class of "equity" interests that are (i) widely held (i.e., held by
100 or more investors who are independent of the issuer and each other), (ii)
freely transferable, and (iii) either (a) part of a class of securities
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
(the "34 Act"), or (b) sold as part of an offering of securities to the public
pursuant to an effective registration statement under the Securities Act of 1933
and such class is registered under the 34 Act within 120 days after the end of
the fiscal year of the issuer during which the offering of such securities to
the public occurred (the "Publicly Offered Securities Exception"). Although no
assurances can be given, the underwriters believe that the Publicly Offered
Securities Exception will be applicable to the capital securities of Citigroup
Capital offered hereby.
If, however, the assets of Citigroup Capital were deemed to be plan assets
of plans that are holders of the capital securities of Citigroup Capital, a
plan's investment in the capital securities of Citigroup Capital might be deemed
to constitute a delegation under ERISA of the duty to manage plan assets by a
fiduciary investing in capital securities of Citigroup Capital. Also, Citigroup
might be considered a "party in interest" or "disqualified person" relating to
plans whose assets were used to purchase capital securities of Citigroup
Capital. If this were the case, an investment in capital securities of Citigroup
Capital by a plan might constitute, or in the course of the operation of
Citigroup Capital give rise to, one or more prohibited transactions under ERISA
or the Code. In particular, it is likely that under such circumstances a
prohibited extension of credit to Citigroup would be considered to occur under
ERISA and the Code.
In addition, Citigroup might be considered a "party in interest" or
"disqualified person" for certain plans for reasons unrelated to the operation
of Citigroup Capital, e.g., because of the provision of services
45
by Citigroup or its affiliates to the plan. A purchase of capital securities of
Citigroup Capital by any such plan would be likely to result in a prohibited
extension of credit to Citigroup, without regard to whether the assets of
Citigroup Capital constituted plan assets.
Accordingly, the capital securities of Citigroup Capital may be not
purchased, held or disposed by any plan or any person investing "plan assets" of
any plan that is subject to the prohibited transaction rules of ERISA or Section
4975 of the Code or other similar law, unless one of the following Prohibited
Transaction Class Exemptions ("PTCE") issued by the Department of Labor (or
similar exemption or exception) applies to such purchase, holding and
disposition:
- PTCE 96-23 for transactions determined by in-house asset managers,
- PTCE 95-60 for transactions involving insurance company general accounts,
- PTCE 91-38 for transactions involving bank collective investment funds,
- PTCE 90-1 for transactions involving insurance company separate accounts,
or
- PTCE 84-14 for transactions determined by independent qualified
professional asset managers.
Any purchaser of the capital securities of Citigroup Capital or any
interest therein will be deemed to have represented and warranted to Citigroup
Capital on each day from and including the date of its purchase of such capital
securities through and including the date of disposition of such capital
securities that either
(a) it is not a plan subject to Title I of ERISA or Section 4975 of the
Code and is not purchasing such securities or interest therein on
behalf of, or with "plan assets" of, any such plan;
(b) its purchase, holding and disposition of the capital securities are not
and will not be prohibited because they are exempted by one or more of
the following prohibited transaction exemptions: PTCE 96-23, 95-60,
91-38, 90-1 or 84-14; or
(c) it is a governmental (as defined in section 3 or ERISA) or other plan
that is not subject to the provisions of Title I or ERISA or Section
4975 of the Code and its purchase, holding and disposition of capital
securities are not otherwise prohibited.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is important that any person considering
the purchase of capital securities of Citigroup Capital with plan assets consult
with its counsel regarding the consequences under ERISA and the Code, or other
similar law, of the acquisition and ownership of capital securities of Citigroup
Capital and the availability of exemptive relief under the class exemptions
listed above.
46
UNDERWRITING
Pursuant to the terms and conditions of the underwriting agreement dated
, each underwriter named below has severally agreed to purchase
from Citigroup Capital, and Citigroup Capital has agreed to sell to such
underwriter, the number of capital securities set forth opposite the name of
such underwriter below.
<Table>
<Caption>
NUMBER OF
CAPITAL
UNDERWRITERS SECURITIES
- ------------ ----------
.............................................................
--------
Total.......................................................
========
</Table>
The underwriters are obligated to take and pay for all of the capital
securities if any are purchased. In the event of default by any underwriter, the
underwriting agreement provides that, in certain circumstances, purchase
commitments of the non-defaulting underwriters may be increased or the
underwriting agreement may be terminated.
Underwriters, dealers and agents may be entitled, under agreements with
Citigroup Capital and Citigroup, to indemnification by Citigroup against
liabilities relating to material misstatements and omissions. Underwriters,
dealers and agents may be customers of, engage in transactions with, or perform
services for, Citigroup Capital and Citigroup and affiliates of Citigroup
Capital and Citigroup in the ordinary course of business.
Citigroup Capital and Citigroup have agreed, during the period beginning on
the date of the underwriting agreement and continuing to and including the date
that is days after the closing date for the purchase of the capital
securities, not to offer, sell, contract to sell or otherwise dispose of any
preferred securities, any preferred stock or any other securities, including any
backup undertakings of such preferred stock or other securities, of Citigroup or
of Citigroup Capital, in each case that are substantially similar to the capital
securities, or any securities convertible into or exchangeable for the capital
securities or such substantially similar securities of either Citigroup Capital
or Citigroup, except securities in the offering or with the prior written
consent of .
The following table summarizes the commissions to be paid by Citigroup to
the underwriters:
<Table>
<Caption>
PER CAPITAL
SECURITY TOTAL
----------- -----
Public offering price....................................... $ $
Underwriting commissions to be paid by Citigroup............ (1) (1)
Proceeds to Citigroup Capital............................... $ $
</Table>
- ---------------
(1) Underwriting commissions of $ per capital security, or $ for all
% capital securities, will be paid by Citigroup; except that for
sales of 10,000 or more % capital securities to a single purchaser,
the commissions will be $ per capital security.
Citigroup estimates that its total expenses for the offering, excluding
underwriting commissions, will be approximately $ .
The underwriters propose to offer the capital securities, in part, directly
to the public at the initial public offering price set forth on the cover page
of this prospectus. The underwriters may also offer the capital securities to
dealers at a price that represents a concession not in excess of $ ,
provided that such concession for sales of 10,000 or more capital securities to
a single purchaser will not be in excess of $ per capital security. The
underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per capital security to brokers and dealers. After the capital
securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the representatives of the
underwriters.
47
Application will be made to list the capital securities on the NYSE. If
approved for listing, Citigroup expects the capital securities will begin
trading on the NYSE within 30 days after they are first issued.
If any broker-dealer subsidiary of Citigroup makes an offering of the
capital securities, such offering will be conducted pursuant to any applicable
sections of Rule 2810 of the Conduct Rules of the NASD. The underwriters may not
confirm sales to any discretionary account without the prior specific written
approval of a customer.
In connection with this offering and in accordance with applicable law and
industry practice, the underwriters may over-allot or effect transactions that
stabilize, maintain or otherwise affect the market price of the capital
securities at levels above those that might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids, each of which is described below.
- A stabilizing bid means the placing of any bid, or the effecting of any
purchase, for the purpose of pegging, fixing or maintaining the price of
a security.
- A syndicate covering transaction means the placing of any bid on behalf
of the underwriting syndicate or the effecting of any purchase to reduce
a short position created in connection with the offering.
- A penalty bid means an arrangement that permits the managing underwriter
to reclaim a selling concession from a syndicate member in connection
with the offering when capital securities originally sold by the
syndicate member are purchased in syndicate covering transactions.
These transactions may be effected on the NYSE, in the over-the-counter
market, or otherwise. The underwriters are not required to engage in any of
these activities, or continue such activities if commenced.
This prospectus may also be used by any broker-dealer subsidiary of
Citigroup in connection with offers and sales of the capital securities in
market-making transactions at negotiated prices related to prevailing market
prices at the time of sale. Any of Citigroup's broker-dealer subsidiaries may
act as principal or agent in such transactions. None of Citigroup's
broker-dealer subsidiaries have any obligation to make a market in any of the
capital securities and may discontinue any market-making activities at any time
without notice, at their sole discretion.
48
LEGAL MATTERS
Skadden, Arps, Slate, Meagher & Flom LLP New York, New York, will act as
legal counsel to Citigroup. Cleary, Gottlieb, Steen and Hamilton, New York, New
York, will act as legal counsel to the underwriters. Cleary, Gottlieb, Steen and
Hamilton has from time to time acted as counsel for Citigroup and its
subsidiaries and may do so in the future.
EXPERTS
The consolidated financial statements of Citigroup Inc. as of December 31,
2003 and 2002, and for each of the years in the three-year period ended December
31, 2003, have been audited by KPMG LLP, Independent Registered Public
Accounting Firm, as set forth in their report dated February 26, 2004 (except as
to Note 4, which is as of May 14, 2004) on the consolidated financial
statements. The consolidated financial statements for the year ended December
31, 2003 are included in Citigroup's May 14, 2004 Current Report on Form 8-K and
are incorporated by reference in this prospectus. The consolidated financial
statements included in the May 14, 2004 Current Report on Form 8-K have been
conformed to reflect the implementation of the Risk Capital Allocation
Methodology on Citigroup's business segment results. The report of KPMG LLP
included in this Form 8-K also is incorporated by reference in this prospectus.
The report of KPMG LLP refers to changes, in 2002, in Citigroup's methods of
accounting for variable interest entities and stock-based compensation, in 2002,
in Citigroup's methods of accounting for goodwill and intangible assets and
accounting for the impairment or disposal of long-lived assets, and, in 2001, in
Citigroup's methods of accounting for derivative instruments and hedging
activities, accounting for interest income and impairment on purchased and
retained beneficial interests in securitized financial assets, and accounting
for goodwill and intangible assets resulting from business combinations
consummated after June 30, 2001. The consolidated financial statements of
Citigroup referred to above are incorporated by reference in this prospectus in
reliance upon such report and upon the authority of that Firm as experts in
accounting and auditing. To the extent that KPMG LLP audits and reports on
consolidated financial statements of Citigroup issued at future dates, and
consents to the use of their report thereon, such consolidated financial
statements also will be incorporated by reference in the registration statement
in reliance upon their report and said authority.
49
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
000,000 SECURITIES
CITIGROUP CAPITAL
% CAPITAL SECURITIES
$ Liquidation Amount
Guaranteed to the extent set forth herein by
Citigroup Inc.
[CITIGROUP LOGO]
------------------------
PROSPECTUS
------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the
Registrants in connection with the Securities being registered hereby. All of
the fees set forth below are estimates except for the Commission Registration
fee and the NASD fee.
<Table>
Commission Registration Fee................................. $3,801,000.00
Accounting Fees............................................. 600,000.00
Trustees' Fees and Expenses................................. 200,000.00
Printing and Engraving Fees................................. 700,000.00
Rating Agency Fees.......................................... 1,500,000.00
NASD Fee.................................................... 30,500.00
Legal Fees and Expenses..................................... 900,000.00
Stock Exchange Listing Fees................................. 90,000.00
Miscellaneous............................................... 178,500.00
-------------
Total............................................. $8,000,000.00
=============
</Table>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware, or DGCL, empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interest of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit if the person
acted in good faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper.
Subsection (d) of Section 145 of the DGCL provides that any indemnification
under subsections (a) and (b) of Section 145 (unless ordered by a court) shall
be made by the corporation only as authorized in
II-1
the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of Section 145. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by the majority vote of such directors,
even though less than a quorum, or (3) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written opinion, or
(4) by the stockholders.
Section 145 of the DGCL further provides that to the extent a present or
former director or officer of a corporation has been successful on the merits or
otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith and that such expenses may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in Section 145 of the DGCL; that
any indemnification and advancement of expenses provided by, or granted pursuant
to, Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; that indemnification provided by, or granted
pursuant to, Section 145 shall, unless otherwise provided when authorized and
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of such person's heirs,
executors and administrators; and empowers the corporation to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liabilities under
Section 145. Section Four of Article IV of Citigroup's By-Laws provides that
Citigroup shall indemnify its directors and officers to the fullest extent
permitted by the DGCL.
Citigroup also provides liability insurance for its directors and officers
which provides for coverage against loss from claims made against directors and
officers in their capacity as such, including, subject to certain exceptions,
liabilities under the federal securities laws.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
Article Tenth of Citigroup's Restated Certificate of Incorporation limits the
liability of directors to the fullest extent permitted by Section 102(b)(7).
The Declaration of each of the Citigroup Trusts provides that no
Institutional Trustee or any of its affiliates, Delaware Trustee or any of its
affiliates, or officer, director, shareholder, member, partner, employee,
representative custodian, nominee or agent of the Institutional Trustee or the
Delaware Trustee (each a "Fiduciary Indemnified Person"), and no Regular
Trustee, affiliate of any Regular Trustee, or any officer, director,
shareholder, member, partner, employee, representative or agent of any Regular
Trustee, or any employee or agent of such Citigroup Trust or its affiliates
(each a "Company Indemnified Person") shall be liable, responsible or
accountable in damages or otherwise to such Citigroup Trust, any affiliate of
such Citigroup Trust or any holder of securities issued by such Citigroup Trust,
or to any officer, director, shareholder, partner, member, representative,
employee or agent of such Citigroup Trust or its Affiliates for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
II-2
Fiduciary Indemnified Person or Company Indemnified Person in good faith on
behalf of such Citigroup Trust and in a manner such Fiduciary Indemnified Person
or Company Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Fiduciary Indemnified Person or Company Indemnified
Person by such Declaration or by law, except that a Fiduciary Indemnified Person
or Company Indemnified Person shall be liable for any loss, damage, or claim
incurred by reason of such Fiduciary Indemnified Person's or Company Indemnified
Person's gross negligence (or in the case of a Fiduciary Indemnified Person,
negligence) or willful misconduct with respect to such acts or omissions. The
Declaration of each Citigroup Trust also provides that, to the full extent
permitted by law, Citigroup shall indemnify any Company Indemnified Person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in right of such Citigroup Trust)
by reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Citigroup Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Declaration of each
Citigroup Trust also provides that to the full extent permitted by law,
Citigroup shall indemnify any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in right of such Citigroup Trust to procure a judgment in
its favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Citigroup Trust and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such Company Indemnified Person shall have been adjudged to be liable to
the Citigroup Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper. The Declaration of each Citigroup Trust further provides that
expenses (including attorneys' fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in the immediately preceding two sentences shall be paid
by Citigroup in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by Citigroup as authorized in the
Declaration.
The directors and officers of Citigroup and the Regular Trustee are covered
by insurance policies indemnifying them against certain liabilities, including
certain liabilities arising under the Securities Act, which might be incurred by
them in such capacities and against which they cannot be indemnified by
Citigroup or the Citigroup Trusts. Any agents, dealers or underwriters who
execute any underwriting or distribution agreement relating to securities
offered pursuant to this Registration Statement will agree to indemnify
Citigroup's directors and their officers and the Citigroup Trustees who signed
the Registration Statement against certain liabilities that may arise under the
Securities Act with respect to information furnished to Citigroup or any of the
Citigroup Trusts by or on behalf of such indemnifying party.
For the undertaking with respect to indemnification, see Item 17 herein.
See the forms of Underwriting Agreements and the form of Distribution
Agreement filed or to be filed as Exhibits 1.01, 1.02, 1.03, 1.04, 1.05 and 1.06
for certain indemnification provisions.
II-3
ITEM 16. EXHIBITS.
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.01 -- Underwriting Agreement Basic Provisions, dated January 12,
1993 relating to Debt Securities (incorporated by reference
to Exhibit 1.01 to Amendment No. 1 to Citigroup's
Registration Statement on Form S-3 (No. 33-55542)).
1.02 -- Form of Underwriting Agreement for Common Stock Warrants
will be filed as an Exhibit to a Current Report on Form 8-K
and incorporated herein by reference.
1.03 -- Form of Underwriting Agreement for Index Warrants will be
filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
1.04 -- Form of Underwriting Agreement for Preferred Stock
(incorporated by reference to Exhibit 1.2 to Citigroup's
Registration Statement on Form S-3 (No. 333-27155)).
1.05 -- Form of Distribution Agreement relating to Citigroup's
Medium-Term Senior Notes, Series H, and Medium-Term
Subordinated Notes, Series H.+
1.06 -- Form of Underwriting Agreement for Capital Securities
(incorporated by reference to Exhibit 1.05 to Citigroup's
Registration Statement on Form S-3 (No. 333-68949-01 to
08)).
1.07 -- Form of Underwriting Agreement for Stock Purchase Contracts
will be filed as an Exhibit to a Current Report on Form 8-K
and incorporated herein by reference.
1.08 -- Form of Underwriting Agreement for Stock Purchase Units will
be filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
1.09 -- Form of Underwriting Agreement for Common Stock will be
filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4.01 -- Restated Certificate of Incorporation of Citigroup
(incorporated by reference to Exhibit 4.01 to Citigroup's
Registration Statement on Form S-3 (No. 333-68949-01 to
08)).
4.02 -- Certificate of Designation of 5.321% Cumulative Preferred
Stock, Series YY, of Citigroup (incorporated by reference to
Exhibit 4.45 to Citigroup's Registration Statement on Form
S-3 (No. 333-68949-01 to 08)).
4.03 -- Certificate of Designation of 6.767% Cumulative Preferred
Stock, Series YYY, of Citigroup (incorporated by reference
to Exhibit 3.01.5 to Citigroup's Annual Report on Form 10-K
for the year ended December 31, 2001, as amended).
4.04 -- Certificate of Amendment to Restated Certificate of
Incorporation (incorporated by reference to Exhibit 3.01.03
to Citigroup's Quarterly Report on Form 10-Q for the period
ended March 31, 2000).
4.05 -- Certificate of Amendment to Restated Certificate of
Incorporation (incorporated by reference to Exhibit 3.01.4
to Citigroup's Quarterly Report on Form 10-Q for the period
ended March 31, 2001).
4.06 -- By-Laws of Citigroup, as amended effective April 1, 2004
(incorporated by reference to Exhibit 3.1 to Citigroup's
Current Report on Form 8-K filed on April 2, 2004).
4.07 -- Indenture, dated as of March 15, 1987, between Primerica
Corporation, a New Jersey corporation, and The Bank of New
York, as trustee (incorporated by reference to Exhibit 4.01
to Citigroup's Registration Statement on Form S-3 (No.
33-55542)).
4.08 -- First Supplemental Indenture, dated as of December 15, 1988,
among Primerica Corporation, Primerica Holdings, Inc. and
The Bank of New York, as trustee (incorporated by reference
to Exhibit 4.02 to Citigroup's Registration Statement on
Form S-3 (No. 33-55542)).
4.09 -- Second Supplemental Indenture, dated as of January 31, 1991,
between Primerica Holdings, Inc. and The Bank of New York,
as trustee (incorporated by reference to Exhibit 4.03 to
Citigroup's Registration Statement on Form S-3 (No.
33-55542)).
4.10 -- Third Supplemental Indenture, dated as of December 9, 1992,
among Primerica Holdings, Inc., Primerica Corporation and
The Bank of New York, as trustee (incorporated by reference
to Exhibit 5 to Citigroup's Form 8-A dated December 21,
1992, with respect to Citigroup's 7 3/4% Notes Due June 15,
1999 (No. 1-9924)).
4.11 -- Fourth Supplemental Indenture, dated as of November 2, 1998,
between Citigroup and The Bank of New York, as trustee
(incorporated by reference to Exhibit 4.01 to Citigroup's
Quarterly Report on Form 10-Q for the period ended September
30, 1998).
4.12 -- Form of Indenture between Citigroup and J.P. Morgan Trust
Company, N.A. (formerly Bank One Trust Company, N.A.), as
trustee (incorporated by reference to Exhibit 4.10 to
Citigroup's Registration Statement on Form S-3 (No.
333-57364)).
4.13 -- First Supplemental Indenture, dated as of August 2, 2004,
between Citigroup and J.P. Morgan Trust Company, N.A., as
trustee.*
</Table>
II-4
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.14 -- Form of proposed Common Stock Warrant Agreement for Common
Stock Warrants, with form of proposed Common Stock Warrant
Certificate attached as an exhibit thereto, will be filed as
an Exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4.15 -- Form of proposed Index Warrant Agreement for Index Warrants,
with form of proposed Index Warrant Certificate attached as
an exhibit thereto, will be filed as an Exhibit to a Current
Report on Form 8-K and incorporated herein by reference.
4.16 -- Form of Certificate for Preferred Stock will be filed as an
Exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4.17 -- Form of Deposit Agreement (incorporated by reference to
Exhibit 4.18 to Citigroup's Registration Statement on Form
S-3 (No. 333-27155)).
4.18 -- Form of Depositary Receipt (included in Exhibit 4.17).
4.19 -- Forms of Medium-Term Senior Notes, Series H, and Medium-Term
Subordinated Notes, Series H.+
4.20 -- Certificate of Trust of Citigroup Capital XI (incorporated
by reference to Exhibit 4.20 to Citigroup's Registration
Statement on Form S-3 (No. 333-68949-01 to 08)).
4.21 -- Certificate of Trust of Citigroup Capital XII (incorporated
by reference to Exhibit 4.21 to Citigroup's Registration
Statement on Form S-3 (No. 333-68949-01 to 08)).
4.22 -- Certificate of Trust of Citigroup Capital XIII (incorporated
by reference to Exhibit 4.22 to Citigroup's Registration
Statement on Form S-3 (No. 333-68949-01 to 08)).
4.23 -- Form of Amended and Restated Declaration of Trust for
Citigroup Capital XI.+
4.24 -- Form of Amended and Restated Declaration of Trust for
Citigroup Capital XII.+
4.25 -- Form of Amended and Restated Declaration of Trust for
Citigroup Capital XIII.+
4.26 -- Form of Indenture between Citigroup and JPMorgan Chase Bank,
as trustee (incorporated by reference to Exhibit 4.11 to
Citigroup's Registration Statement on Form S-3 (No.
333-12439)).
4.27 -- First Supplemental Indenture, dated as of December 15, 1998,
between Citigroup and JPMorgan Chase Bank, as trustee
(incorporated by reference to Exhibit 4.32 to Citigroup's
Registration Statement on Form S-3 (No. 333-68949-01 to
08)).
4.28 -- Second Supplemental Indenture, dated as of September 6,
2001, between Citigroup and JPMorgan Chase Bank, as trustee
(incorporated by reference to Exhibit 4.30 to Citigroup's
Registration Statement on Form S-3 (No. 333-102206)).
4.29 -- Indenture, dated July 23, 2004, between Citigroup and
JPMorgan Chase Bank, as trustee.+
4.30 -- Forms of Capital Security for each of the Trusts (included
in Exhibits 4.23-4.25).
4.31 -- Form of Guarantee with respect to the Capital Securities of
Citigroup Capital XI.+
4.32 -- Form of Guarantee with respect to the Capital Securities of
Citigroup Capital XII.+
4.33 -- Form of Guarantee with respect to the Capital Securities of
Citigroup Capital XIII.+
4.34 -- Form of Junior Subordinated Debt Securities (included in
Exhibit 4.29).
4.35 -- Form of Stock Purchase Contract will be filed as an Exhibit
to a Current Report on Form 8-K and incorporated herein by
reference.
4.36 -- Form of Stock Purchase Unit will be filed as an Exhibit to a
Current Report on Form 8-K and incorporated herein by
reference.
5.01 -- Opinion of John R. Dye, Esq.+
5.02 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*
8.01 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
certain tax matters will be filed as an Exhibit to a Current
Report on Form 8-K and incorporated herein by reference.
12.01 -- Supplemental Calculation of Ratio of Income to Fixed Charges
(incorporated by reference to Exhibit 12.01 to Citigroup's
Annual Report on Form 10-K for the year ended December 31,
2003).
12.02 -- Supplemental Calculation of Ratio of Income to Combined
Fixed Charges Including Preferred Stock Dividends
(incorporated by reference to Exhibit 12.01 to Citigroup's
Annual Report on Form 10-K for the year ended December 31,
2003).
12.03 -- Calculation of Ratio of Income to Fixed Charges
(incorporated by reference to Exhibit 12.01 to Citigroup's
Quarterly Report on Form 10-Q for the period ended March 31,
2004).
12.04 -- Calculation of Ratio of Income to Fixed Charges (including
preferred stock dividends) (incorporated by reference to
Exhibit 12.02 to Citigroup's Quarterly Report on Form 10-Q
for the period ended March 31, 2004).
23.01 -- Consent of KPMG LLP, Independent Registered Public
Accounting Firm.*
23.02 -- Consent of John R. Dye, Esq. (included in Exhibit 5.01).+
</Table>
II-5
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
23.03 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.02).*
24.01 -- Powers of Attorney of certain Directors.+
25.01 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as trustee under the Indenture dated as of March
15, 1987, as supplemented.+
25.02 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of J.P. Morgan
Trust Company, N.A., as trustee under the Indenture dated as
of April 12, 2001.+
25.03 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Declaration of Trust of Citigroup Capital XI.+
25.04 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Declaration of Trust of Citigroup Capital XII.+
25.05 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Declaration of Trust of Citigroup Capital XIII.+
25.06 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Indenture dated as of October 7, 1996, as
supplemented.+
25.07 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Indenture dated as of July 23, 2004.+
25.08 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as
Guarantee Trustee under the Capital Securities Guarantee of
Citigroup Inc. for the benefit of holders of Capital
Securities of Citigroup Capital XI.+
25.09 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as
Guarantee Trustee under the Capital Securities Guarantee of
Citigroup Inc. for the benefit of holders of Capital
Securities of Citigroup Capital XII.+
25.10 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as
Guarantee Trustee under the Capital Securities Guarantee of
Citigroup Inc. for the benefit of holders of Capital
Securities of Citigroup Capital XIII.+
</Table>
- ---------------
+ Previously filed.
* Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(A)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
II-6
provided, however, that the undertakings set forth in clauses (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed with or furnished to the Securities and Exchange Commission by
Citigroup Inc. pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended, that are incorporated by reference in
this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(B) That, for purposes of determining any liability under the
Securities Act of 1933, as amended, each filing of Citigroup Inc.'s annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, as amended (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the registrants pursuant to the provisions
described under Item 15 above, or otherwise, the registrants have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of
expenses incurred or paid by a director, officer or controlling person of
the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will,
unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(D)(1) For purposes of determining any liability under the Securities
Act of 1933, as amended, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrants
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of
1933, as amended, shall be deemed to be part of this registration statement
as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Citigroup Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or Amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of New York, State of New
York, on August 31, 2004.
CITIGROUP INC.
By: /s/ TODD S. THOMSON
------------------------------------
Todd S. Thomson
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement or Amendment thereto has been signed below by the
following persons in the capacities indicated on August 31, 2004.
<Table>
<Caption>
SIGNATURES
----------
/s/ CHARLES PRINCE Chief Executive Officer (Principal Executive
- --------------------------------------------------- Officer) and Director
Charles Prince
/s/ TODD S. THOMSON Chief Financial Officer (Principal Financial
- --------------------------------------------------- Officer)
Todd S. Thomson
/s/ WILLIAM P. HANNON Controller and Chief Accounting Officer
- --------------------------------------------------- (Principal Accounting Officer)
William P. Hannon
* Chairman of the Board
- ---------------------------------------------------
Sanford I. Weill
* Director
- ---------------------------------------------------
C. Michael Armstrong
* Director
- ---------------------------------------------------
Alain J.P. Belda
Director
- ---------------------------------------------------
George David
Director
- ---------------------------------------------------
Kenneth T. Derr
* Director
- ---------------------------------------------------
John M. Deutch
* Director
- ---------------------------------------------------
Roberto Hernandez
</Table>
II-8
<Table>
<Caption>
SIGNATURES
----------
* Director
- ---------------------------------------------------
Ann Dibble Jordan
* Director
- ---------------------------------------------------
Dudley C. Mecum
* Director
- ---------------------------------------------------
Richard D. Parsons
* Director
- ---------------------------------------------------
Andrall E. Pearson
* Director
- ---------------------------------------------------
Robert E. Rubin
* Director
- ---------------------------------------------------
Franklin A. Thomas
* Director
- ---------------------------------------------------
Robert B. Willumstad
*By: /s/ TODD S. THOMSON
- ---------------------------------------------------
Todd S. Thomson
Attorney-in-Fact
</Table>
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each of Citigroup Capital XI, Citigroup Capital XII and Citigroup Capital XIII
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or Amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in The City of New York, State of New York, on August
31, 2004.
CITIGROUP CAPITAL XI
By: /s/ TODD S. THOMSON
----------------------------------
Todd S. Thomson, as Trustee
By: /s/ WILLIAM P. HANNON
----------------------------------
William P. Hannon, as Trustee
By: /s/ GUY WHITTAKER
----------------------------------
Guy Whittaker, as Trustee
CITIGROUP CAPITAL XII
By: /s/ TODD S. THOMSON
----------------------------------
Todd S. Thomson, as Trustee
By: /s/ WILLIAM P. HANNON
----------------------------------
William P. Hannon, as Trustee
By: /s/ GUY WHITTAKER
----------------------------------
Guy Whittaker, as Trustee
CITIGROUP CAPITAL XIII
By: /s/ TODD THOMSON
----------------------------------
Todd Thomson, as Trustee
By: /s/ WILLIAM P. HANNON
----------------------------------
William P. Hannon, as Trustee
By: /s/ GUY WHITTAKER
----------------------------------
Guy Whittaker, as Trustee
II-10
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.01 -- Underwriting Agreement Basic Provisions, dated January 12,
1993 relating to Debt Securities (incorporated by reference
to Exhibit 1.01 to Amendment No. 1 to Citigroup's
Registration Statement on Form S-3 (No. 33-55542)).
1.02 -- Form of Underwriting Agreement for Common Stock Warrants
will be filed as an Exhibit to a Current Report on Form 8-K
and incorporated herein by reference.
1.03 -- Form of Underwriting Agreement for Index Warrants will be
filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
1.04 -- Form of Underwriting Agreement for Preferred Stock
(incorporated by reference to Exhibit 1.2 to Citigroup's
Registration Statement on Form S-3 (No. 333-27155)).
1.05 -- Form of Distribution Agreement relating to Citigroup's
Medium-Term Senior Notes, Series H, and Medium-Term
Subordinated Notes, Series H.+
1.06 -- Form of Underwriting Agreement for Capital Securities
(incorporated by reference to Exhibit 1.05 to Citigroup's
Registration Statement on Form S-3 (No. 333-68949-01 to
08)).
1.07 -- Form of Underwriting Agreement for Stock Purchase Contracts
will be filed as an Exhibit to a Current Report on Form 8-K
and incorporated herein by reference.
1.08 -- Form of Underwriting Agreement for Stock Purchase Units will
be filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
1.09 -- Form of Underwriting Agreement for Common Stock will be
filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4.01 -- Restated Certificate of Incorporation of Citigroup
(incorporated by reference to Exhibit 4.01 to Citigroup's
Registration Statement on Form S-3 (No. 333-68949-01 to
08)).
4.02 -- Certificate of Designation of 5.321% Cumulative Preferred
Stock, Series YY, of Citigroup (incorporated by reference to
Exhibit 4.45 to Citigroup's Registration Statement on Form
S-3 (No. 333-68949-01 to 08)).
4.03 -- Certificate of Designation of 6.767% Cumulative Preferred
Stock, Series YYY, of Citigroup (incorporated by reference
to Exhibit 3.01.5 to Citigroup's Annual Report on Form 10-K
for the year ended December 31, 2001, as amended).
4.04 -- Certificate of Amendment to Restated Certificate of
Incorporation (incorporated by reference to Exhibit 3.01.03
to Citigroup's Quarterly Report on Form 10-Q for the period
ended March 31, 2000).
4.05 -- Certificate of Amendment to Restated Certificate of
Incorporation (incorporated by reference to Exhibit 3.01.4
to Citigroup's Quarterly Report on Form 10-Q for the period
ended March 31, 2001).
4.06 -- By-Laws of Citigroup, as amended effective April 1, 2004
(incorporated by reference to Exhibit 3.1 to Citigroup's
Quarterly Report on Form 8-K filed on April 2, 2004).
4.07 -- Indenture, dated as of March 15, 1987, between Primerica
Corporation, a New Jersey corporation, and The Bank of New
York, as trustee (incorporated by reference to Exhibit 4.01
to Citigroup's Registration Statement on Form S-3 (No.
33-55542)).
4.08 -- First Supplemental Indenture, dated as of December 15, 1988,
among Primerica Corporation, Primerica Holdings, Inc. and
The Bank of New York, as trustee (incorporated by reference
to Exhibit 4.02 to Citigroup's Registration Statement on
Form S-3 (No. 33-55542)).
4.09 -- Second Supplemental Indenture, dated as of January 31, 1991,
between Primerica Holdings, Inc. and The Bank of New York,
as trustee (incorporated by reference to Exhibit 4.03 to
Citigroup's Registration Statement on Form S-3 (No.
33-55542)).
4.10 -- Third Supplemental Indenture, dated as of December 9, 1992,
among Primerica Holdings, Inc., Primerica Corporation and
The Bank of New York, as trustee (incorporated by reference
to Exhibit 5 to Citigroup's Form 8-A dated December 21,
1992, with respect to Citigroup's 7 3/4% Notes Due June 15,
1999 (No. 1-9924)).
4.11 -- Fourth Supplemental Indenture, dated as of November 2, 1998,
between Citigroup and The Bank of New York, as trustee
(incorporated by reference to Exhibit 4.01 to Citigroup's
Quarterly Report on Form 10-Q for the period ended September
30, 1998).
4.12 -- Form of Indenture between Citigroup and J.P. Morgan Trust
Company, N.A. (formerly Bank One Trust Company, N.A.), as
trustee (incorporated by reference to Exhibit 4.10 to
Citigroup's Registration Statement on Form S-3 (No.
333-57364)).
</Table>
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.13 -- First Supplemental Indenture, dated as of August 2, 2004,
between Citigroup and J.P. Morgan Trust Company, N.A., as
trustee.*
4.14 -- Form of proposed Common Stock Warrant Agreement for Common
Stock Warrants, with form of proposed Common Stock Warrant
Certificate attached as an exhibit thereto, will be filed as
an Exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4.15 -- Form of proposed Index Warrant Agreement for Index Warrants,
with form of proposed Index Warrant Certificate attached as
an exhibit thereto, will be filed as an Exhibit to a Current
Report on Form 8-K and incorporated herein by reference.
4.16 -- Form of Certificate for Preferred Stock will be filed as an
Exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4.17 -- Form of Deposit Agreement (incorporated by reference to
Exhibit 4.18 to Citigroup's Registration Statement on Form
S-3 (No. 333-27155)).
4.18 -- Form of Depositary Receipt (included in Exhibit 4.17).
4.19 -- Forms of Medium-Term Senior Notes, Series H, and Medium-Term
Subordinated Notes, Series H.+
4.20 -- Certificate of Trust of Citigroup Capital XI (incorporated
by reference to Exhibit 4.20 to Citigroup's Registration
Statement on Form S-3 (No. 333-68949-01 to 08)).
4.21 -- Certificate of Trust of Citigroup Capital XII (incorporated
by reference to Exhibit 4.21 to Citigroup's Registration
Statement on Form S-3 (No. 333-68949-01 to 08)).
4.22 -- Certificate of Trust of Citigroup Capital XIII (incorporated
by reference to Exhibit 4.22 to Citigroup's Registration
Statement on Form S-3 (No. 333-68949-01 to 08)).
4.23 -- Form of Amended and Restated Declaration of Trust for
Citigroup Capital XI.+
4.24 -- Form of Amended and Restated Declaration of Trust for
Citigroup Capital XII.+
4.25 -- Form of Amended and Restated Declaration of Trust for
Citigroup Capital XIII.+
4.26 -- Form of Indenture between Citigroup and JPMorgan Chase Bank,
as trustee (incorporated by reference to Exhibit 4.11 to
Citigroup's Registration Statement on Form S-3 (No.
333-12439)).
4.27 -- First Supplemental Indenture, dated as of December 15, 1998,
between Citigroup and JPMorgan Chase Bank, as trustee
(incorporated by reference to Exhibit 4.32 to Citigroup's
Registration Statement on Form S-3 (No. 333-68949-01 to
08)).
4.28 -- Second Supplemental Indenture, dated as of September 6,
2001, between Citigroup and JPMorgan Chase Bank, as trustee
(incorporated by reference to Exhibit 4.30 to Citigroup's
Registration Statement on Form S-3 (No. 333-102206)).
4.29 -- Indenture, dated July 23, 2004, between Citigroup and
JPMorgan Chase Bank, as trustee.+
4.30 -- Forms of Capital Security for each of the Trusts (included
in Exhibits 4.23-4.25).
4.31 -- Form of Guarantee with respect to the Capital Securities of
Citigroup Capital XI.+
4.32 -- Form of Guarantee with respect to the Capital Securities of
Citigroup Capital XII.+
4.33 -- Form of Guarantee with respect to the Capital Securities of
Citigroup Capital XIII.+
4.34 -- Form of Junior Subordinated Debt Securities (included in
Exhibit 4.29).
4.35 -- Form of Stock Purchase Contract will be filed as an Exhibit
to a Current Report on Form 8-K and incorporated herein by
reference.
4.36 -- Form of Stock Purchase Unit will be filed as an Exhibit to a
Current Report on Form 8-K and incorporated herein by
reference.
5.01 -- Opinion of John R. Dye, Esq.+
5.02 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*
8.01 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
certain tax matters will be filed as an Exhibit to a Current
Report on Form 8-K and incorporated herein by reference.
12.01 -- Supplemental Calculation of Ratio of Income to Fixed Charges
(incorporated by reference to Exhibit 12.01 to Citigroup's
Annual Report on Form 10-K for the year ended December 31,
2003).
12.02 -- Supplemental Calculation of Ratio of Income to Combined
Fixed Charges Including Preferred Stock Dividends
(incorporated by reference to Exhibit 12.01 to Citigroup's
Annual Report on Form 10-K for the year ended December 31,
2003).
12.03 -- Calculation of Ratio of Income to Fixed Charged
(incorporated by reference to Exhibit 12.01 to Citigroup's
Quarterly Report on Form 10-Q for the period ended March 31,
2004).
12.04 -- Calculation of Ratio of Income to Fixed Charges (including
preferred stock dividends) (incorporated by reference to
Exhibit 12.02 to Citigroup's Quarterly Report on Form 10-Q
for the period ended March 31, 2004).
</Table>
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
23.01 -- Consent of KPMG LLP, Independent Registered Public
Accounting Firm.*
23.02 -- Consent of John R. Dye, Esq. (included in Exhibit 5.01).+
23.03 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.02).*
24.01 -- Powers of Attorney of certain Directors.+
25.01 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as trustee under the Indenture dated as of March
15, 1987, as supplemented.+
25.02 -- Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of J.P. Morgan
Trust Company, N.A., as trustee under the Indenture dated as
of April 12, 2001.+
25.03 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Declaration of Trust of Citigroup Capital XI.+
25.04 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Declaration of Trust of Citigroup Capital XII.+
25.05 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Declaration of Trust of Citigroup Capital XIII.+
25.06 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Indenture dated as of October 7, 1996, as
supplemented.+
25.07 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as Trustee
under the Indenture dated as of July 23, 2004.+
25.08 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as
Guarantee Trustee under the Capital Securities Guarantee of
Citigroup Inc. for the benefit of holders of Capital
Securities of Citigroup Capital XI.+
25.09 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as
Guarantee Trustee under the Capital Securities Guarantee of
Citigroup Inc. for the benefit of holders of Capital
Securities of Citigroup Capital XII.+
25.10 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, as
Guarantee Trustee under the Capital Securities Guarantee of
Citigroup Inc. for the benefit of holders of Capital
Securities of Citigroup Capital XIII.+
</Table>
- ---------------
+ Previously filed.
* Filed herewith.