Filed by Citigroup Inc. and
Associates First Capital Corporation
Pursuant to Rule 425 under the Securities Act
of 1933 and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934 in respect of
Associates First Capital Corporation
Commission File No. 2-44197
In connection with the proposed transaction, Citigroup will file a registration
statement on Form S-4 and Associates will file a proxy statement, each with the
Securities and Exchange Commission. Investors and security holders are advised
to read the registration statement and the proxy statement when they become
available because they will contain important information. Investors and
security holders may obtain a free copy of the registration statement and the
proxy statement (when available) and other documents filed by Citigroup and
Associates with the SEC at the SEC's web site at http://www.sec.gov. Free copies
of the registration statement (when available) and other documents filed by
Citigroup with the SEC may also be obtained from Citigroup by directing a
request to Citigroup Inc., 153 East 53rd Street, New York NY 10043, Attention:
Treasurer (212-559-1000). Free copies of the proxy statement (when available)
and other documents filed by Associates with the SEC may also be obtained from
Associates by directing a request to Associates First Capital Corporation, 290
Carpenter Freeway, Irving TX 75062, Attention: General Counsel (972-652-4000).
Associates and certain other persons referred to below may be deemed to be
participants in the solicitations of proxies of Associates' shareholders to
adopt the agreement providing for Citigroup's acquisition of Associates. The
participants in the solicitation may include the directors and executive
officers of Associates, who may have an interest in the transaction including as
a result of holding shares or options of Associates. A detailed list of the
names and interests of Associates' directors and executive officers is contained
in Associates proxy statement for its 2000 Annual Meeting, which may be obtained
without charge at the SEC's web site at http://www.sec.gov.
###
<PAGE>
FOR IMMEDIATE RELEASE
Citigroup Inc. (NYSE symbol: C)
Associates First Capital Corporation (NYSE symbol: AFS)
September 6, 2000
CITIGROUP TO ACQUIRE ASSOCIATES FIRST CAPITAL CORPORATION
Associates Shareholders to Receive .7334 Citigroup Shares for
Each Associates Share in a Tax-Free Merger,
for Total Purchase Price of $31.1 Billion
Transaction Expected to Be Accretive to Citigroup Earnings
by at Least $.10 Per Share in First Year
Builds Citigroup's Finance Businesses Internationally and in U.S.
New York, NY September 6, 2000 -- Citigroup, Inc. (NYSE: C) and Associates
First Capital Corporation (NYSE: AFS; "Associates") today announced that
Citigroup will acquire Associates in a merger under which Associates
shareholders will receive .7334 common shares of Citigroup for each share
of Associates common stock. Based on closing prices on September 5, 2000,
the value of the transaction to Associates' shareholders is $42.49 per
share with a total transaction value of approximately $31.1 billion.
The transaction, which has been unanimously approved by the Boards of
Directors of both companies and is expected to close on or about year end,
will be accounted for by the pooling-of-interests method and will be
tax-free to holders of Associates common stock.
The Associates is the largest publicly traded finance company in the U.S.,
with managed assets of more than $100 billion and shareholder's equity of
$10.3 billion and 2,750 offices in the U.S. and 13 other countries.
Citigroup is a preeminent global financial services company, with assets of
more than $791 billion and shareholders' equity of $51 billion, offering an
unparalleled range of financial products and services to customers in more
than 100 countries. Following consummation of the transaction, Associates
shareholders will own approximately 10% of Citigroup's common shares.
"This transaction, which will be accretive to Citigroup earnings by at
least $.10 per share in the first year of combined operation, accelerates
our consumer financial services expansion globally," said Sanford I. Weill,
Chairman and Chief Executive Officer of Citigroup. "In one step, we
catapult our international earnings in these rapidly growing segments by
more than 40%. We are particularly excited about The Associates' strong
presence in Japan, where it is the fifth largest consumer finance company,
and in Europe, where it has more than 700,000 customers. In addition, this
transaction further increases our base of recurring and predictable
earnings, strengthens our position in the credit card business, consumer
and commercial finance business domestically and will expand our commercial
leasing business.
"Citigroup has a long history of effectively integrating businesses,
retaining the best from every company while assuring our standards become
the norm," said Weill. "Because of our focus on providing quality products
and services that serve customer needs and build long-term relationships
between our company and consumers, our consumer finance operations are very
well regarded. We are excited about the prospects for the combined
operation."
"This transaction marks a defining moment in our company's history," said
Keith W. Hughes, Chairman and Chief Executive Officer of Associates. "With
an extraordinary global infrastructure, formidable capital resources,
unquestioned stability and the broadest spectrum of high-quality, cost
effective, efficiently distributed products and services, Citigroup is
building upon its leadership position in the global economy. We are excited
to be joining forces in this effort, contributing the energy and drive that
has led Associates to twenty-five consecutive years of record earnings. The
Citigroup stock our shareholders will receive in the transaction represents
ownership in the world's premier, broad-based financial services company.
Their track record of creating value is truly exceptional. For all of these
reasons, this is a compelling combination. For Associates, joining
Citigroup will provide exciting opportunities for customers and employees."
Following the close of the transaction, Associates' North American consumer
finance operations will be combined with CitiFinancial, Citigroup's
consumer finance business, and Associates' commercial unit will be combined
with Citigroup's Global Equipment Finance operations. Associates' credit
card operation will be combined with Citibank's card operations. Keith W.
Hughes, Chairman and Chief Executive Officer of Associates, will join
Citigroup's Board of Directors and become a Citigroup Vice Chairman, and
Roy A. Guthrie, Senior Executive Vice President and Chief Financial Officer
of Associates, will have responsibilities that include the Associates'
current operations in commercial and international finance.
The transaction is subject to approval by Associates' shareholders. It is
also subject to approvals by certain domestic and foreign antitrust,
banking and insurance regulators. Following the close of the transaction,
all outstanding indebtedness of Associates (rated A2/A+/A+ by
Moody's/S&P/Fitch) and its subsidiaries will be guaranteed by Citicorp
(rated Aa3/AA-/AA by Moody's/S&P/Fitch). Associates and its subsidiaries
will no longer be separately rated and maturing indebtedness after the
closing will be refinanced at the Citicorp level.
# # #
Citigroup (NYSE: C), the most global financial services company, provides
some 100 million consumers, corporations, governments and institutions in
over 100 countries with a broad range of financial products and services,
including consumer banking and credit, corporate and investment banking,
insurance, securities brokerage and asset management. The 1998 merger of
Citicorp and Travelers Group brought together such brand names as Citibank,
Travelers, Salomon Smith Barney, CitiFinancial and Primerica under
Citigroup's trademark red umbrella. Additional information may be found at
www.citigroup.com
Associates, established in 1918, is a leading diversified finance company
providing consumer and commercial finance, leasing, insurance and related
services worldwide. Associates, headquartered in Dallas, has operations in
the United States and 13 international markets. For more information, visit
Associates Web sites at www.theAssociates.com
Live Webcast Alert:
A webcast of a 10:30 a.m. investment community meeting to review the
transaction will be available on the Citigroup website. To gain access to
the webcast, which will be "listen-only," go to www.citigroup.com. Please
log on to the website at approximately 10:15 a.m. A replay of the webcast
will also be available at www.citigroup.com, as will a copy of the
investment community presentation.
Media: Leah Johnson 212-559-9446
Analysts: Sheri Ptashek 212-559-4658
Fixed Income Analysts: Firoz Tarapore 212-793-8090
# # #
<PAGE>
On September 6, 2000, Citigroup and Associates First Capital held a meeting for
the investment community to discuss the acquisition by Citigroup of Associates
First Capital. A transcript of the simultaneous webcast of the meeting and a
copy of the slides shown at the meeting and available on the webcast follows.
MR. WEILL: First of all, I would like to thank everybody that worked their way
through the gridlock in the City and thought that this might be a more
interesting presentation than the millennium celebration at the UN.
I'm here this morning with Keith Hughes who is the Chairman and Chief Executive
of Associates and Roy Guthrie who is the Chief Financial Officer of Associates,
as well as being responsible for their global operations and other things, and
withstood an attack of about 70 people over very many days and obviously did a
very good job.
Also Bob Lipp who is, among other things, responsible for our global consumer
business and Bob Willumstad who is Vice Chairman of our global consumer
operation as well as what we are doing on the Internet and a lot of other things
with boundless energy.
What I would like to do this morning is just give you a very brief overview of
the transaction, which most everybody knows anyway, then introduce Keith to give
some of his thoughts on why he thinks this is a combination that makes sense for
the people, for the customers, especially for the shareholders of both of our
organizations. Then I'm going to talk about five or six bullet points about why
we think this is a significant growth story for our company. Then Bob Lipp will
talk about how these businesses really come together and integrate together and
then we will all be here available for questions, and that will include Roy and
Bob Willumstad.
So basically this is a transaction that is being done stock for stock. It will
be accounted for as a pooling of interests. We would be hopeful that it could
close by the end of the year and that we are starting today all the various
regulatory filings of which we have to participate in all of them.
This will be a tax-free exchange with a value as of last night's close of a
touch over $31 billion. So that this is going to be something that will be very
important for the ongoing company and that, from a people point of view, Keith
will become a Vice Chairman of Citigroup and on the board of Citigroup and
working directly with me in making sure that this consolidation is one that
takes place in a seamless way and the most productive way for all of our various
constituencies.
It is something that I think we are really incredibly excited about. It is a
transaction that really fits better than most anything that we can think about
and has the kind of scale that will really benefit the shareholders for the
effort that is going to go into that. I'm going to talk a little bit more about
that later.
What I would like to do is introduce my friend Keith who already has a tie and
pin and he is indoctrinated. Keith.
MR. HUGHES: Thank you, Sandy, very much.
We, speaking on behalf of all the Associates employees, we are really very
pleased to be part of Citigroup and we look forward to really taking what has
been a long-term relationship, principally as banking relationships go and a
little bit as competitors, into something that we think is the most powerful
thing that our organization, culture, has ever had an opportunity to participate
in.
It is pretty clear to those of you who have followed Associates that we have a
company that lines up incredibly well with what Citigroup does. If you look at
our domestic business, our card business, our consumer finance, our version of
commercial finance really is kind of a hand-in-glove fit with Citigroup. And
beyond that we think that our version of international, which has been
successful in Asia, North America, and perhaps to a little smaller degree
Europe, will really contribute significantly to the forward look of our new
organization.
I think as a company I would just tell you that we have been very proud of our
organization for a lot of years. Our culture has always been focused on growth
and predictable profitability. This has really been a transaction that has, in
our perspective, really allowed us to join forces with what is clearly the
premiere financial services organization anywhere in the world.
As far as our constituencies are concerned, we think this is a tremendous win
for our shareholders, our employees, and our customers. We think that there are
major opportunities that will allow us to contribute to the forward progress of
Citigroup's earnings and we look forward to being part of that culture.
With the merger we are even more excited than we have been this year. We will
record our 26th year of record profitability. We are proud of that. As we look
at what we can do now within the Citigroup family, we know we can elevate that
contribution rather dramatically. I know Bob will be talking about some of those
opportunities, at least as we see them in a preliminary sense.
Our company has had an 82 year history as an organization. We think that the
greatest thing that has ever happened in that 82-year period is the chance to
become part of Citigroup. We admire Sandy and his management team. We think it
is world class and we think there are many cultural similarities between
Associates and Citigroup and we are very proud to be part of this great
organization going forward. Sandy, thanks.
MR. WEILL: Keith, thank you very much.
I would just like to take a couple of minutes to give you a view of how I look
at these various pieces that are going to be coming together and, as I said
before, we look at this as really a growth story. Associates for the last 25
years has seen their income grow at better than 23 percent a year, and we think
that when you put the Citibank brand next to that in different parts of the
world that those numbers can accelerate.
One of the exciting pieces for us is really the global business where when you
put Citigroup's global consumer business together with Associates, it increases
our earnings from the international arena by about 40 percent in the consumer
category. When you look at what Associates has done on an international basis
over the last three years, its top-line revenue has grown 56 percent a year and
the bottom line has grown over 30 percent a year. So we are going into an area
that is growing a lot. It has been an area that Bob has targeted to be a really
important part of what we do on a global basis and we think that this really
fits and will accelerate what we can do outside of the United States, which we
think is very important.
Second, in the consumer finance business, Associates' receivable growth has been
about five percent a year in its branches whereas ours over the last three years
has averaged about 26 percent a year. Over the last two years, we have bought
about 170 branches from Associates just to test this out, this theory, and the
branches really fit in well, both ones that were traditional old Associates
branches as well as the Avco branches and the ability to have what maestro can
do in building up the ability to do a broader base of business in those offices.
We think that putting these together we can get the growth rate of the
Associates branches to look something like the growth rate of our present
branches, and that kind of increase is not included in any of the numbers that
we are talking about when we talk about an accretion of at least ten cents a
share.
I think the card business, Bob is going to talk about more, but that is one of
our major priorities. I think it is a very good fit with the bank cards, with
our present bank cards in Citibank as well as Associates' position in the
private label card business, and especially in the oil card business which was
an area that they concentrated in much more than we did and we think that we can
expand our position in that part of the card market.
From the consumer lending point of view, Associates had about $20 billion of
receivables. We had about $15 billion in basically the same markets. We are
going to put those together. Roy is going to have the responsibility of managing
that. And we are going to see how we can really grow that business in a sound
way both in the United States and look to what are the international
opportunities taking advantage of our positions in 100 countries around the
world.
We, as part of this transaction, will take a restructuring charge of somewhere
between $600 million and $700 million after taxes in putting the two companies
together. We haven't completely figured out exactly where that is going to be.
So that will be something that we will get back to you over the next four or six
weeks.
We have also been very conservative in the savings that we are looking at in
this transaction which we say will conservatively be about $600 million which
will come in to our income statement over the first two years of the transaction
and hopefully there will be even more than that. It doesn't represent a very
large segment of what either companies' costs are in the areas where we are
consolidating. I think that when you can do something that handles all the
strategic areas that we as a company are interested in, it increases the
percentage of our income that is recurring and predictable, really ignites what
we want to do as far as the global expansion of our consumer franchise and at
the same time increases our earnings a minimum of ten cents on five billion
shares, I think that we have structured something that makes a heck of a lot of
sense for our shareholders, it makes a heck of a lot of sense for this company
going forward and I think puts us in a position to continue the kind of growth
that we have afforded our shareholders over the last ten years and really over
the last two years.
One of the key people that has been responsible for a lot of our success over
that period is Bob Lipp who I will now introduce. He has the heavy lifting part
to make all of this happen. Bob.
MR. LIPP: Thank you, Sandy.
What I thought we would do, and again Bob and Roy are very much part of this, is
give you some of our thoughts about how the two companies might come together
and also some of the implementation plans and a little feel for the outlook of
each of these areas.
As you can see from this slide, this really gives you the breakdown of
Associates, essentially their receivables as of year-end and actually their
pre-tax -- I'm sorry, the receivables as of midyear, this year, and then the
pre-tax earnings that they showed by business unit last year. It is a big
operation. We are enthusiastic about it.
I think what you are going to see is that the risk of putting these companies
together is we think relatively small because there is absolutely natural fits
between the two, as both Keith and Sandy mentioned, natural fits between the two
companies in each one of these segments and also the opportunity for revenue
enhancement, which I will mention as we go through each area. It really plays to
I think the strengths of the combined companies and, again, I emphasize I think
some of our estimates and feeling about them are pretty low risk in terms of the
implementation risk.
Let me give you some of the early thoughts about each one of these. Let's go to
the international side first to give you a flavor. As you can see, the
international side from Associates' point of view has been a very strong
operation and a growth area in the last several years. Going from managed
receivables in '97 of $4.3 billion, this is consumer finance activities outside
the United States, to $15 billion as of the second quarter. It has had a huge
growth rate.
You can see there is a commensurate growth rate in pre-tax operating earnings
from $335 million to $740 million and, in the first six months of this year,
$435 million pre-tax is a 37 percent increase over the comparable period of last
year.
When you look at this operation, and this is one of the strategic priorities as
far as the consumer group in Citigroup, the expansion of the very strong
operations that we both have domestically in the United States and what
Associates has in the rest of the world and to combine that with really the
basic business that we have through Citibank in 50 countries around the world,
that really the combination of these two companies really looks to a very
bright, growing future as far as consumer finance earnings outside the United
States.
Citicorp, Citigroup, we are in consumer activities in 50 countries. We actually
have over 1,000 offices. We have $50 billion in loans. This is to be added with
the numbers that you see up here for Associates, and $77 billion in deposits. So
there is an absolute base in many other countries, especially the emerging
markets, for the development and expansion of Associates' international consumer
finance activities in the rest of the world.
So we look forward to this very much and think this will be an excellent
franchise for growth in the future.
I do want to mention Japan because it is such a unique opportunity. It has been
mentioned here before. The growth of Associates in Japan really represents a
tremendous plus for all of Citigroup. The number five position in consumer
finance in Japan, 677 branches, and substantial earnings and growing earnings in
the past and outlook for the future, it especially works very well as far as the
overall Citigroup strategy in Japan. As you know, we have a very good brand
image. The Citibank name is very good in Japan. We have a substantial
deposit-taking capacity in our consumer branches. Nikko Salomon Smith Barney has
a wonderful investment banking operation and now with consumer finance it really
rounds out a very diversified operation.
Next is commercial finance. As you can see from this slide, there is about $22
billion of receivables in the Associates commercial finance. As Sandy indicated,
there is a comparable operation in Citigroup of about $15 billion, both domestic
and international in terms of the Citigroup assets, which gives you, as you can
see, 37 or so billion dollars in terms of outstandings.
Associates is number one in the truck and trailer leasing business, and although
this is a difficult area now, I think all of us feel that this is going through
a cycle and that that excellent franchise will create the kind of earnings that
it should in the future. It is number two in construction equipment finance.
Really there are a lot of revenue opportunities when you look at the combination
of these two companies, both in terms of product expansion in commercial finance
and the use of the contacts that the Citibank global relationship bank and
international expansion and international contacts will have for commercial
finance.
Next is the U.S. consumer lending business. This is consumer finance. Here we
have in Associates $34 billion in receivables and about $15 billion in
CitiFinancial. So when you combine those two operations, as you can see on the
bottom right-hand side, we end up with $48 billion in receivables on a pro forma
basis, actually bigger than Household as you can see from this chart and a very
powerful earnings base.
When you throw the numbers together quickly, we are looking at over a billion
dollars in this area in terms of after-tax earnings, really before you even
think about the cost saves and the revenue enhancement opportunities from the
combination of these two operations.
As you can see, Associates has 750 full-service branches. This would be combined
with CitiFinancial's about 1,200 comparable branches for a nationwide network of
about 2,000 branches, which is really what we always sort of dreamed about in
the scale of some 1,800 to 2,000 branches to really cover the consumer finance
business in the United States very actively. You all know we all sort of started
with that business, we all love it, we have all had our experience in it, and we
think we are going to be able to significantly improve the revenue enhancements
and expense enhancements here.
As shown, this is just a rough comparison of the revenue per branch between
Associates and CitiFinancial. As you can see, CitiFinancial is about twice or
more than twice the revenue per branch in the United States. This is primarily
due to an emphasis on real estate loans in the Associates area and a much more
balanced approach I would say in CitiFinancial which creates personal loans and
real estate loans and substantially more revenue. So we think we can move that
442 up toward our 1,100 over a period of time.
Additionally, from an expense ratio point of view, again just a direct
comparison of the two branch networks, CitiFinancial has an advantage here and
we would hope that could be extended to the Associates branches also.
The next unit is the card business. As Sandy indicated, as you all know, we are
the largest credit card business in the world now, Citibank is. This of course
adds another 20 million card customers and about $12 billion, that was as of
last -- year-end it is actually larger than that now to our combined operation.
This would give really pro forma numbers for Citigroup, about 85, to really
closer to $90 billion in receivables outstanding in the United States. It is a
wonderful business which we -- it is a great franchise for Citigroup and
certainly what Associates brings to this would make a very big plus.
The bank card, there will be expense opportunities here because of Citibank's
efficiency in this area especially as far as combining the bank card operations.
As indicated before we do like -- this really puts us into the oil card business
which is a very good margin business and very profitable, and also the
combination of our private label cards will create a very significant base in
that business.
So essentially, really in conclusion, we think it is a winner. It is terrific on
the international side. It really gets Citigroup as far as consumer finance in a
big way outside the United States. It enhances our current leadership positions
in credit cards and consumer finance and equipment finance and leasing in the
United States. It significantly expands Citigroup's consumer finance network
everywhere. We are going to have 2,600 branches worldwide. I think, as I
emphasized starting out, we think there is going to be substantial increase in
profitability both through expense savings and revenue enhancement in the
future.
So, again, I think we are all very comfortable and enthusiastic about the
opportunities here.
MR. WEILL: Bob, thank you, and before we take questions, I would just like to
make two comments.
Number one, to me just sitting and listening, it is great to do a deal that you
don't have to go through all kinds of machinations to explain. I think that that
is what this is. It really I think is pretty obvious what can happen.
Second, we had meetings with all the rating agencies yesterday and our ratings
were affirmed by all of the rating agencies and went one better with Moody's
where they put Citigroup's ratings on credit watch with positive implications,
which I think is very, very good and I think sort of explains -- or their view
sort of corroborates ours as to what is going to happen here.
With that, I'm going to be the director of the questions.
Ron.
VOICE: Thanks, Sandy.
Two questions.
One is in regard to Japan where there are great opportunities but you have
somewhat disparate views. I was wondering if you could talk about how they might
work together to enhance growth there.
Then, the second question, somewhat related to the rating agencies, if you seek
chances to save the funding costs of Associates and how much that might be and
whether that is included in the cost savings numbers that you gave.
MR. WEILL: I think that as far as Japan, basically I think that this consumer
finance business will fit in with what we are doing in the consumer business in
Japan generally.
As Bob mentioned, which I thought was a very interesting number, that we would
have $77 billion of deposits outside the United States. Japan is a place where
we have more deposits -- or had more deposits than we knew what to do with. This
will be a very big plus in how we utilize those deposits.
The second part of the question was?
VOICE: Savings from debt rating upgrades for Associates.
MR. WEILL: I think that Associates has been very efficient in how they have
funded their businesses and did some very advantageous long-term financing. I
think there will be savings from funding costs. That is not going to be,
initially, a significant number. If we grow our deposit-taking ability in the
U.S. beyond our current capabilities, which is going to be something that we
look at, there could be significant savings. But we do not have factored into
our model any significant savings from the present cost of money.
VOICE: The credit quality methodologies between the two companies, do you see
any major changes in that regard?
MR. WEILL: Credit quality, do you want to do that, Bob?
MR. WILLUMSTAD: We have done a fair amount of due diligence. While there are
some differences in credit quality the net margins on the business themselves,
Associates would take maybe a little more risk than what you would see in a Citi
portfolio. But they price accordingly. So the credit looks pretty good to us.
VOICE: Two questions.
The first one, you identify on the expense side you could get $600 million
pre-tax and two-thirds of that realized in the first year. Could you give us
more clarity on the revenue side, how long is that going to take and what type
of revenue growth opportunities there are, just be a little more specific?
MR. WEILL: We are just into this transaction two hours, but I think just take a
look at what the revenue growth has been in the international segment of
Associates, take the fact that we are on the ground in a lot of countries that
neither company has gone into yet. I think that there is no reason to expect
that we will not have significant revenue growth going forward in the global
part of this business.
I think Bob did a very good example of looking at the consumer finance branches,
which is a big part of Associates' revenue base, where if I remember the numbers
that I saw up there, there was 440 a branch versus 1,100 a branch. We have
worked with 170 of the branches already, which is maybe 15 percent of the total
of what Associates has, and we think that by blending in home equity loans as
well as unsecured or partly secured, working with our various other products in
the branch, that that revenue, and with the technology, we will be able to
ramp-up the revenue at a pretty decent pace. Would you say that is right?
MR. WILLUMSTAD: Yes, I would think that six months or so after we get our
technology in place we would start to see some revenue increases.
VOICE: Do you have a position where the 170 branches are today, if the old
Associates was at 442 and the Citi branches are at whatever, 1,100, where are
the 170 branches; is it three-quarters of that, is it 850?
MR. WILLUMSTAD: I didn't get the question.
MR. WEILL: I think he is asking where the 170 branches are. Some of them are in
Canada.
VOICE: No, in terms of productivity, I'm trying to get a feel for what the
upside is.
MR. WEILL: The branches that we bought from Associates in the last few years,
how do those branches look today vis-a-vis an old commercial credit branch?
MR. WILLUMSTAD: It is hard to make generalized statements because these offices
were located in a lot of different places, Texas, scattered around the U.S., and
40 or 50 of them were in Canada.
I would say, generally speaking, certainly in the U.S. core branches that we
bought, obviously Texas is a different set of circumstances, inside of nine
months to a year these offices were performing at the CitiFinancial productivity
levels.
VOICE: As I understood it, Associates had been prioritizing new technology
spending this year and I'm curious about both from the cost saves that you have
targeted and revenue enhancements, how much of the cost saves that you have laid
out today are dependent upon those technology initiatives or would the saves
from those initiatives be noticeably additive to the $400 million to $600
million number?
MR. WEILL: Let me just say that I think we feel very comfortable with $600
million.
Do you want to say anything about the technology, anybody?
MR. GUTHRIE: I think we have made a large push and it is really in the direction
that CitiFinancial has already taken. So the direction that those spending
initiatives had was very, very aligned with what was occurring or what has
already occurred over some time at CitiFinancial.
They are complementary. They may be redundant though. What I'm really saying
here is we are heading in a direction that is very similar but there will be a
single set of technologies that underlies this combined system and from that
there will be significant savings.
VOICE: I just asked as to the percentage of the $400 million to $600 million
saved from corporate-level expenses and credit card integration, how much of the
saves would come from those two areas?
MR. LIPP: Just to give sort of ballpark numbers, maybe half of it will come from
just the integration of the credit card operation, and that is actually just the
bank card part of the Associates, it is about $7 billion, but put on to the
Citibanking operations there will be a savings of about $300 million there.
The other savings are sort of scattered around. Obviously there are duplicates
in terms of overhead and things like that which will make up a fair amount of
the remainder.
MR. WEILL: But none of the assumptions are anywhere near what anybody would
qualify as aggressive.
VOICE: It does have very little assumed in terms of branch level productivity
saves, is that a correct assumption?
MR. WEILL: I think, again, if you look at the chart and you can take something
north of a five percent expense ratio to something just north of a four percent
expense ratio, part of which happened because of items increase without a
commensurate increase --
VOICE: It just doesn't sound like that is in your $600 million number.
MR. WILLUMSTAD: I think we are talking about in terms of productivity, is expand
the top-line revenue and push more business through the branches instead of
significant cost saves coming out of the branches.
VOICE: This question is directed to Keith and Roy.
I'm just curious why you chose to sell now just as you are starting to come back
from some issues. Why not wait until the engine is humming?
MR. WEILL: Good question.
MR. HUGHES: Maybe I didn't make the point as clear as I should have. But we have
for a long time admired Citigroup from a product market leadership, the way they
do business, and there is no better time then when things feel right. And we
think that we had a good future but it is going to be much better for our
shareholders, our employees, and our customers being part of what I think is the
most powerful worldwide franchise in financial services anywhere.
And we have never believed in doing things -- trying to time things right. We
think that the payment, the agreed-upon economic terms are superb. We think that
it is a win across the board and we can't wait to get it done.
MR. WEILL: Can I just add something and then you can go to the second part of
your question?
But Keith and Roy are taking our stock. They are going to have the same kind of
obligations that the rest of us have to stay shareholders. So they are not
getting out. They are continuing their commitment to building this together to
create even more value.
VOICE: It wasn't clear to me, will the Associates name remain or is that going
to be changed?
MR. WEILL: You mean will we change Citigroup to Associates Group?
VOICE: Exactly, that is what I meant.
(Laughter.)
MR. HUGHES: We have talked about that and there is no question that the Citi
brand throughout the domestic and international markets is the most superior
brand we could ever dream of. So we look forward to having our brand become
Citigroup.
VOICE: Can you guys give some detail on the restructuring charge? Does that
include any provision for boosting up loan loss reserves, et cetera, or does it
deal with any of the securitization of residual assets on Associates' balance
sheet?
Secondly, can you talk a little bit about the difference in profitability
between the two commercial franchises?
MR. WEILL: The first part of it, the answer is no. What we have done is give you
an area where we think we are going to come out in restructuring reserve and, as
I think I said before, when we come up with all the specifics and have it worked
out exactly right, we will tell you. But the range is $600 million to $700
million.
As far as the difference in the profitability of the commercial business, Roy.
MR. GUTHRIE: I think I could probably speak with a bit more conviction on the
Associates. Ours is about a 14 or 15 percent. As you know, we disclosed this as
a segment. So it is very clear to everyone, and certainly those of you who have
followed the company, it is a market basket full of very specialized address of
parts of the U.S., construction equipment, transportation, and so forth.
I think the complementary aspect of this clearly is that vendor financing and
equipment financing out of the Citigroup area is going to provide us with I
think some opportunity to broaden the existing products that go through these
distribution channels and also to have some administrative complementary
administrative back office functions combined. And our estimates are that the
profitability between both of them combined is actually going to rise a little
bit.
I would have to draw short of commenting on the Citibank profitability because
I'm not that familiar with it.
MR. WEILL: One thing we will do is Citibank's commercial leasing business now is
buried in foreign exchange and structural products and whatever, but when you
put these together that will be a large enough segment that we will break it
out.
VOICE: I was hoping you could provide some more color on what you are planning
to do with Associates' private label program, and if you could comment on Sears
move to convert existing private label card members to Visa and Mastercard.
MR. WILLUMSTAD: We obviously haven't spent a whole lot of time looking at
private label per se. What we have seen is the private label business at
Associates is very much like the private label business at CitiFinancial. That
business becomes an important component of our branch strategy at CitiFinancial.
Obviously we are going to take a hard look at it and see whether that strategy
makes sense for the total organization. We don't anticipate right now any
meaningful change in terms of conversion to Visa or Mastercard.
VOICE: Just to follow up, would you be willing to entertain keeping the
Associates brand name for subprime ventures?
MR. WILLUMSTAD: Again, I think both Sandy and Keith mentioned, our intention
right now is to use the Citi brand.
VOICE: Where do you stand with additional large acquisitions? Are you where you
want to be with regard to consumer finance? Would you consider some acquisitions
outside the U.S.? What about, say, insurance and commercial banking?
MR. WEILL: I think that this is an acquisition that at least in our consumer
business goes across a lot of the businesses that we are in, both in the United
States and on a global basis, which I think is going to keep us pretty busy.
However, we are always looking at opportunities in countries that we think
represent good growth opportunities for Citigroup where we can expand our
presence and think we can manage it appropriately.
So that is an ongoing process all the time that will not be conflicted by this.
But I would say that we like to do one thing right at a time and we figured that
the company was in a very good position now, its businesses are running well,
that we missed a lot of things that happened over the last bunch of years in the
consumer finance business and Keith was buying up a lot of them and some of the
others and we really felt badly about that and this gave us an opportunity to
catch up.
VOICE: With regard to commercial banking, you are getting a lot of branches
nationally now; would this make you more inclined to buy a commercial bank down
the road where you could get synergies?
MR. WEILL: I don't think this would affect our position in commercial banking. I
think what we have said is that we are in a process of evaluating how efficient
our branches can be from the point of view of collecting deposits and selling
other kinds of financial products. That seems to be moving along okay. But it is
still a little bit too early for us to think about anything like that.
I would say this is not like doing a little thing. This is a very big company
that will add north of $2 billion to our earnings and we want to make sure we
execute it right. I think that is our responsibility together for this point in
time.
VOICE: Was this a strictly negotiated transaction or were there other potential
bidders involved?
MR. WEILL: You know, I can only tell you what he told me.
Go ahead, why don't you answer that.
MR. HUGHES: This transaction was just with Citigroup and that met our strategic
goals and covered eventually all the points that we felt were important to our
three principal constituencies, shareholders, employees and customers.
VOICE: Two specific follow-on questions.
Keith, you took a charge earlier in the year to exit manufactured housing. I
just want to make sure there are no residual issues there.
Secondly, as I understand it in Japan there have been some rate caps imposed.
I'm curious what your update is in profit margin outlook in the Japanese
consumer finance business.
MR. GUTHRIE: The manufacturing housing business was a great opportunity again
for me to spend a lot of time with the due diligence team explaining what we did
there, and I think to their satisfaction importantly.
As we said publicly in the first quarter of this year, when we took a one-time
charge we did not intend to come back. I think we stressed all the things that
you should stress about how large that reserve should be. There was no
limitations on that process and our estimates, so we remained as comfortable as
we were the day we actually took it and I think we have outperformed or more
effectively performed the use of it since then.
MR. WEILL: Let me say that we agree with that. However, we might be more
conservative or not. I think it is too early to say. But it wouldn't affect
anything that they thought or did. It might be just another view of the same
subject.
MR. GUTHRIE: In terms of Japan, we remain, and I think it has been echoed here
by the speakers, very, very excited about what is going on in Japan. A
consequence of the usury ceiling reduction in Japan is an unfortunate one on
about a third of the industry. Because those who lacked scale to access the
capital markets and have the risk management systems to be efficient
unfortunately are probably going to succumb to this lower interest rate. It does
indeed have a small effect on our top line. But our view is that we will be able
to grow through that and have earnings increases somewhat consistent with the
company taken as a whole, in the double digit, mid double digit range next year.
MR. WEILL: Let me just add a little bit of that in answer to your question, that
our doing this transaction together would not preclude their being able to take
advantage of appropriate ways to increase their size in Japan if those kind of
opportunities presented themselves, because we do have the same philosophy.
OPERATOR: First question from the phone lines is from Richard Strauss from
Goldman Sachs.
MR. STRAUSS: Most of my questions have actually been asked, but just on the
usury ceiling question, you said you are going to work that out. Over what time
frame and over what period do you think you will be able to grow through that?
MR. GUTHRIE: That is a prospective application of the new ceiling. So in effect
what you are going to need is obviously time for the entire file to turn over.
So our estimates are 18 to 24 months before the full impact of that legislation
has found itself on our file, and that is the period over which we basically
said, and I think through this process confirmed with our new partners, that we
are going to continue to experience that mid teens growth rate.
VOICE: How does PFS fit into all of this? Maybe you could just give us some
color there. And also just growing AFS's European platform, the specific
joint-type operations you are thinking, along those lines.
MR. WEILL: Let me do PFS quickly and then, Bob, do you want to do the European?
But PFS will have, in the United States, an additional 750 branches, so that
they will be able to work together through a broader part of the United States
in creating Smart and Safe loans and other products. I think that would be
really the only kind of connection that they would have as it related to this.
Plus, in Canada our position would increase dramatically and, as you know, we
have quite a number of agents in Canada so we should see ourselves doing more
home equity business in Canada that comes in through the PFS sales force.
MR. LIPP: I believe the question had to do with the impact on our operations in
Europe. It is obviously a positive in the sense that Associates is in several
European countries.
I think the most significant step was in our credit card strategy, which we are
in 48 countries now, one of the weakest positions we had was the U.K. and
Associates has $600 million outstanding in the U.K. in terms of credit cards. So
we immediately at least have got a very good position in the U.K. which was one
that was not available to Citigroup previously.
MR. WEILL: Plus $700,000 in accounts in five or six countries in Europe.
VOICE: Congratulations. Thank you.
OPERATOR: Our last question from the phone lines comes from Catherine Murray
from JP Morgan.
MS. MURRAY: I was wondering if you see a big distinction between retail banking
and consumer finance in most of the emerging markets; and what I'm wondering is,
are we likely to see more expansion in the retail finance business in the
emerging markets via consumer finance instead of retail banking?
MR. LIPP: I think it is sort of complementary would be my immediate reaction to
that question.
We have got a couple of things. Retail banking is both loans and deposits. So in
emerging markets we have the nice combination of having sources of funds and
local currency to be able to fund our asset growth. Now, that asset growth can
be and will be in consumer finance, credit cards, and other types of consumer
lending. So it is sort of a really nice fit when you can put together a consumer
finance operation with a deposit-taking activity, especially around the world.
It really fits. You have got good, stable sources of funds. They are being
picked up at a low cost. And certainly the ability to get involved in the
consumer finance operation, which we have real expertise between Associates and
Citigroup, and then build it into, as these countries really develop, into
credit card portfolios and other types of lending, I think is a real natural.
MS. MURRAY: A separate question would be could you elaborate on the technology
enhancements that you have there that you think are going to drive the revenue
growth in the U.S.
MR. WILLUMSTAD: As Roy mentioned earlier, Associates was marching down the same
path that CitiFinancial has and our expectations are that we would implement the
CitiFinancial technology in the Associates offices.
We are heavily driven by our technology. It does our underwriting. It does our
pricing and marketing support, especially on the unsecured lending portfolio. So
I think the implementation of that technology will go a long way towards
improving the productivity.
MR. LIPP: I think, too, in talking with Roy in previous conversations, it is
going to be a real plus for the people in the Associates branches around the
United States to have what we think is really an upgrade in terms of the
technology. They will have it right away.
As we have done in other acquisitions, the ability to institute and make these
technology moves are going to be done as close to the closing as possible and I
think it will be a real up-tick for the people in the Associates branches.
VOICE: A couple of questions.
First, I assume Equity Plus, is that still on or is that cancelled now,
September 14th?
MR. HUGHES: It is cancelled.
VOICE: You have alluded to the due diligence process. First, if you could walk
through just a little bit more of what was involved, how much time.
The second issue, to the extent that you can, while the numbers have not been
finalized in the restructuring charge, if you could tell us your current view,
is that entirely related to redundant people and facilities, operating expense
driven, or whether we should assume there might be some credit or residual
charges baked into that number that you gave us.
MR. WEILL: Good try. We are not going to comment at this meeting on how we are
-- I think what we know enough about is to give you the magnitude of it and when
we come up with the exact specifics we will let you know when we know.
As far as the due diligence, recognizing that Associates is a public company and
has been a public company for four and a half years, we had access to the books
and records and work papers and had a wonderful Labor Day weekend. Thank God the
weather wasn't too good in a lot of places that we didn't really miss as much as
we might. But we spent what we felt was a significant amount of time reviewing
the numbers of all of the businesses with maybe I would say 60 or 70 people from
our company involved in every aspect of that process and we feel comfortable
with our new partners that aren't really going away, they are all becoming
shareholders.
So what we are trying to do is build something for everybody and we feel very
good about what we saw, how the delinquencies worked out, the ethics of how the
business is managed.
MR. LIPP: Just to emphasize that, the amount of detail, and again I think many
of you know Roy, for example, who led the due diligence effort from Associates,
we had access to all the operating reports right down to a significant amount of
detail by reaging, extensions, by month, by sector. It was a significant amount
of detail which we all reviewed and felt very comfortable with.
Of course, we are in all of these businesses ourselves. That is another
important thing to recognize. So that the ability to make direct comparisons and
have people that are experts, that are in the business also, it wasn't as though
we were guessing about these things. It was really people that were involved in
both sides could talk the same language.
MR. WEILL: We also were fortunate enough to have the help of Salomon Smith
Barney in our going through this. I felt I just should say that.
VOICE: Sandy, the stock market has given very low PEs to companies like
Associates and its peers. Obviously today we talked about opportunities for even
enhancing the growth rate that Associates has enjoyed. But, still, combining
your company with Associates it is not really that clear to me how this enhances
the PE of the overall company. I was wondering if you could comment on that.
MR. WEILL: I think that, Ron, you were looking at it at a spot in time. Two
years ago I remember Associates selling in the high 40s with significantly less
earnings than what it has today. So I would say two years ago it sold at a high
multiple, or certainly significantly higher than now. And I remember the stock
nearly went up five-fold, or four and a half times, from the price that it was
issued at, including the split to where it got to. I think that the company
obviously had some problems in some of their businesses, like manufactured
housing.
We see this as really a top-line revenue growth business. We think that one of
the real growth parts of our company going forward is what we can do in the
consumer business on the international front. This helps us an incredible amount
in that. So I think it does a lot to what we can do. I think we have always said
multiples are going to take care of themselves. We have watched brokerage
multiples go from highs to lows.
Really the key things are, are we going to be at the forefront of what is
happening, what are we doing in technology to utilize technology to be more
efficient, what kind of service are we providing to our customers. I think this
transaction really does all the things that any shareholder of ours should want,
at least from our point of view, and we are very big shareholders ourselves. So
we think this should be worth a very big multiple.
I mean, our growth rate has been higher -- and this would not hurt our
traditional growth rate -- than financial companies that sell at a 50 percent
higher multiple than ours that shall be nameless, but you can find them in the
beginning of the alphabet. We think this is very good. It brings in that
recurring and predictable earnings that allows us to continue to make
investments. We will expand our investments overseas and in the U.S.
MR. LIPP: I think a couple of clear winners in terms of top-line growth too will
be the international side. And having done the due diligence it is more than
just words. It is especially, given the base that we have around the world in
the form of Citibank consumer people, they don't know consumer finance, but they
know credit cards and they are in 50 countries, and the excellent operation that
Associates has here, I think this is going to be a real winner in terms of what
the earnings and especially over the next few years can be in that area, plus
even the inherent activities that they have where they are, Japan especially
looks very positive.
The other thing is really, as Bob talked about here, even though the domestic
consumer business like CitiFinancial is a pretty prosaic kind of marketplace, it
is a prosaic industry, Bob and his team have been able to demonstrate growth
rates in the high 20s over the last several years in that kind of business. That
is done through just operational excellence and marketing excellence.
The ability to have literally 1,000 more branches, and we really look forward to
those, not as expense saves, but as revenue opportunities, I think we are going
to have some pretty interesting growth rates in that area too.
MR. WEILL: If you look back on the consumer finance business over the last 20 or
25 years, it has done better in recessionary periods than large-money banks and
other parts of the economy. It is a very good area of business. It happens to be
one that all of us up here know something about.
And there are high multiples in the lending business. Some of the credit card
companies sell at pretty good multiples. They are all selling better this
morning.
VOICE: Hi, congratulations.
Can you navigate the regulatory process for us and highlight the key approvals
that will be needed to close by year-end?
MR. WEILL: I think that the regulatory process here will be getting the approval
of the Comptroller of the Currency and the Treasury. I'm not sure that we need
Fed approval. Let's say we do. It is a similar kind of process. About 12
different insurance regulators, certain states. It is -- you know, everybody has
a good job to do over the next three or four months. It is a lot of regulators.
We are used to doing that in most of the deals that we do.
This company does not create new ground in anything we do. I think one of the
good things is I don't think we have any kind of position that really would get
the attention of the European Union in Brussels as to what we are doing and how
we might be inhibiting some French bank or something like that. So we think that
we should be fine.
VOICE: You are going to add 1,200 more branches with the Citigroup umbrella. Are
you not getting to a point where critical mass is achieved in physical touch
points such that with the Internet you might start going after national consumer
banking in a more aggressive fashion?
MR. WILLUMSTAD: That is obviously a very interesting question. We will have I
think a unique branch distribution network certainly for the consumer finance
business. It is something we have looked forward to for years, to having this
number of branches. It is unclear to me that these branches necessarily relate
to a strategy that would be complimentary with the Internet.
I mean, our intentions on the Internet is to have a broad-based financial
service offering with all of our products literally in the next several months
so that we are able to do that. We continue to look at opportunities to
supplement the Internet activities with physical locations and it is something
we are going to look at. But I think it would be premature to kind of judge that
this network would be the supplement to the Internet. But it also shouldn't be
ruled out.
MR. WEILL: I think that most people have found out that some connectivity
between bricks and clicks makes that customer feel much more comfortable and
enhances the desire possibly to do a transaction rather than just collect
information. But we are coming up with some very, very interesting stuff on the
Internet. Some of the things we are doing with AOL and some of the thoughts we
have as to how we can utilize broad-band and get into people's living rooms. We
just have to see.
MR. WILLUMSTAD: I think, more importantly, we have just acquired another 20
million customers. That, to me, is the real opportunity for the Internet here is
the broad base of customers that Associates has.
MR. WEILL: Any other questions? If not, again, thank you all for caring enough
to come up here and let's make this thing work for everybody. Thank you very
much.
###
<PAGE>
[Citigroup Logo]
Acquisition of Associates First Capital Corp.
[The Associates logo]
September 6, 2000
<PAGE>
TRANSACTION OVERVIEW
--------------------
Consideration paid: 100% Citigroup stock
Fixed exchange ratio: 0.7334 Citigroup shares for each Associates First
Capital Corp. share
Accounting treatment: Pooling-of-interests
Tax treatment: Tax-free exchange of shares
Total equity value: $31.1B
Premium to 9/5/00 price: 51%
Earnings Impact: Accretive to earnings by more than $0.10/share in
first year
Cost Savings: Expect approximately $600 million (pre-tax) in cost
saving - Two-thirds realized within first year
Restructuring Charge: Estimated $600-700 million after-tax restructuring
charge
Board representation: Associates First Capital Chairman and CEO will join
Citigroup Board of Directors
Timetable: Closing anticipated by year-end
2 [Citigroup logo]
<PAGE>
ASSOCIATES FIRST CAPITAL CORP.-
TRACK RECORD OF GROWTH
-------------------------------
4-Year CAGR
(1995-99)
---------
Total Managed Receivables 21%
Earnings 20%
International Receivables* 60%
------------
*3-year CAGR
Pre Tax Earnings: 1975-1999
---------------------------
[Table representing 23.4% 10-Year CAGR]
3 [Citigroup logo]
<PAGE>
STRATEGIC RATIONALE
-------------------
Compelling Fit with Citigroup's Strategic Priorities
o Accelerates international consumer finance expansion
Revenue Income growth international consumer
o Enhances leadership positions in
- Worldwide cards
- U. S. consumer finance
- Equipment finance and leasing
o Builds base of stable recurring profits
o Immediately accretive to earnings
4 [Citigroup logo]
<PAGE>
SUMMARY OF ASSOCIATES FIRST CAPITAL CORP.
-----------------------------------------
o Leading provider of consumer finance, credit cards and commercial
leasing services
- 27 million customers
- Over 2,600 branches
- 15 countries
- Broad international exposure
$84.8B Managed Receivables (6/30/00)
------------------------------------
[chart]
International Finance 17.6% ($15.0B)
Commercial Finance 26.5% ($22.4B)
Domestic Credit Card 15.7% ($13.3B)
Domestic Consumer Finance 40.2% ($31.1B)
$2.4B Pre-Tax Earnings (12/31/99)
---------------------------------
[chart]
International Finance 31.1% ($740M)
Commercial Finance 21.3% ($507M)
Domestic Credit Card 18.6% ($441M)
Domestic Consumer Finance 29.0% ($689M)
5 [Citigroup logo]
<PAGE>
ACCELERATES INTERNATIONAL EXPANSION
-----------------------------------
International Consumer Finance
Managed Receivables
-------------------
[chart]
1997 $4.3B
1998 $8.5B
1999 $14.0B
6/30/00 $15.0B
Pre-Tax Operating Earnings
--------------------------
[chart]
1997 $335M
1998 $474M
1999 $740M
6/30/00 $435M
Expanding Distribution Network
$15.0B Managed Receivables (6/30/00)
------------------------------------
[chart]
Japan (46.7%)
o #5 position in consumer finance
o 677 branches
o Primarily personal/sales finance and home equity loans
UK (17.6%)
o 113 branches
o Primarily home equity loans, personal loans and cards
Canada (25.0%)
o #1 branch network
o 326 branches
o Primarily sales finance, personal and home equity loans
Other (20.7%)
o Significant operations in Mexico, Hong Kong, Puerto Rico and Spain
6 [Citigroup logo]
<PAGE>
STRENGTHENS POSITION IN COMMERCIAL FINANCE
------------------------------------------
o #1 in truck and trailer leasing
o #2 in construction equipment finance
o Largest transportation and equipment finance sales force in U.S.
o Increasing fee based services: auto fleet leasing, appraisal and title
service, insurance and trailer
o Integration with Citigroup's Global Equipment Finance
Associates Business Mix (12/31/99)
----------------------------------
$22.4B Managed Receivables
[chart]
Truck and Trailer 53%
Equipment 30%
Fleet Leasing 9%
Warehouse/Other 8%
Combined Market Position
------------------------
[chart]
GE Capital $81.7B
Pro Forma Citigroup/Associates $35.3B
CIT $35.1B
IBM Global Financing $29.4B
Associates $20.3B
International Lease Finance $16.2B
Citigroup $15.0B
7 [Citigroup logo]
<PAGE>
CREATES LEADING U.S. CONSUMER FINANCE BUSINESS
----------------------------------------------
Significant Integration Synergies
o Powerful distribution network with 1,155 branches
- 750 full service branches
- 225 home equity branches
- 180 auto finance branches
o More than 90% of portfolio secured by tangible property
o Leading provider of U.S. home equity loans
- $3.5B real estate loans originated in 1999
Associates Business Mix (Note: As of 6/30/00)
---------------------------------------------
$34.1B Managed Receivables
[chart]
Home Equity 63%
Personal Loans/Retail Sales Finance 37%
Combined Market Position (6/30/00)
----------------------------------
[chart]
Pro Forma Citigroup/Associates $48.7B
Household International $38.1B
Associates $32.3B
CitiFinancial $16.4B
American General $11.6B
Norwest $6.0B
8 [Citigroup logo]
<PAGE>
CREATING PRODUCTIVITY ENHANCEMENTS
----------------------------------
U.S. Consumer Finance
Revenue per Branch
------------------
[chart]
Associates $442M
CitiFinancial $1,100M
Expense Ratio
-------------
[chart]
Associates U.S. 5.5%
CitiFinancial 4.3%
9 [Citigroup logo]
<PAGE>
EXPANDING IN WORLDWIDE CARDS
----------------------------
Associates Card Business
o Adds 20MM card customers
o Marketing partnerships with Key Bank, GTE and Washington Mutual
o #1 in private label oil business
- 10MM customers
- Relationships with BP Amoco, Texaco, CITGO and Shell
o Significant retail private label business
- 3.8 million customers
- Relationships with Radio Shack, Office Max, Office Depot, Gateway,
Goodyear and Staples
o Integration benefits with bankcard portfolio
$11.6B Managed Receivables (Note: As of 12/31/99)
-------------------------------------------------
[chart]
U.S. Bankcard 52%
Private Label 41%
International 7%
Combined Market Position (12/99)
--------------------------------
[chart]
Pro Forma Citigroup/Associates $85.9B
Citibank $74.2B
Bank One $69.4B
MBNA(2) $64.3B
Discover $38.0B
Chase $33.6B
Bank of America $19.7B
Associates(1) $11.6B
------------
(1) Includes $4.7B of US Private Label Credit Cards
(2) Pro-forma to include $5.5B portfolio recently purchased from First Union
10 [Citigroup logo]
<PAGE>
CONCLUSION
----------
o Significantly enhances Citigroup's Global Consumer business domestically
and internationally, particularly in Japan
o Enhances leadership positions in credit cards, U.S. consumer finance, and
equipment finance and leasing
o Significantly expands Citigroup's consumer finance distribution network
with the addition of approximately 2,600 branches worldwide
o Substantial international operations with very attractive profit and
growth characteristics
o Significant synergistic benefits with low integration risk
o Immediately earnings accretive
11 [Citigroup logo]
<PAGE>
o Statements made today may include forward-looking information subject to
risks, uncertainties and other factors that could materially affect actual
results.
o For further information please see Citigroup's reports filed with the SEC
pursuant to the Securities Exchange Act of 1934 which are available at the
SEC's website (www.sec.gov).
12 [Citigroup logo]
