FINANCIAL INFORMATION
THE COMPANY 2
Global Consumer 2
Global Corporate and Investment Bank 3
Global Investment Management
and Private Banking 4
Corporate/Other 4
Investment Activities 4
FIVE-YEAR SUMMARY OF
SELECTED FINANCIAL DATA 5
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 6
GLOBAL CONSUMER 8
Banking/Lending 8
Citibanking North America 8
Mortgage Banking 9
Cards 10
CitiFinancial 11
Insurance 11
Travelers Life and Annuity 11
Primerica Financial Services 12
Personal Lines 13
International Consumer 14
Europe, Middle East & Africa 14
Asia Pacific 15
Latin America 15
e-Citi 16
Other Consumer 16
Consumer Portfolio Review 17
Global Consumer Outlook 18
GLOBAL CORPORATE
AND INVESTMENT BANK 20
Salomon Smith Barney 21
Global Corporate Bank 22
Emerging Markets 22
Global Relationship Banking 22
Commercial Lines 23
Commercial Portfolio Review 29
Global Corporate and
Investment Bank Outlook 29
GLOBAL INVESTMENT MANAGEMENT
AND PRIVATE BANKING 31
SSB Citi Asset Management Group 31
Citibank Private Bank 32
Global Investment Management
and Private Banking Outlook 32
CORPORATE/OTHER 33
INVESTMENT ACTIVITIES 33
FUTURE APPLICATION OF
ACCOUNTING STANDARDS 33
YEAR 2000 34
FORWARD-LOOKING STATEMENTS 34
MANAGING GLOBAL RISK 34
The Credit Process 35
The Market Risk Management Process 36
Management of Cross-Border Risk 38
LIQUIDITY AND CAPITAL RESOURCES 40
REPORT OF MANAGEMENT 44
INDEPENDENT AUDITORS' REPORT 44
CONSOLIDATED FINANCIAL STATEMENTS 45
Consolidated Statement of Income 45
Consolidated Statement of
Financial Position 46
Consolidated Statement of
Changes in Stockholders' Equity 47
Consolidated Statement of
Cash Flows 48
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS 49
FINANCIAL DATA SUPPLEMENT 80
Average Balances and Interest Rates,
Taxable Equivalent Basis 80
Analysis of Changes in
Net Interest Revenue 82
Ratios 83
Foregone Interest Revenue on Loans 83
Loan Maturities and Sensitivity to
Changes in Interest Rates 83
Loans Outstanding 83
Cash-Basis, Renegotiated,
and Past Due Loans 84
Other Real Estate Owned and
Assets Pending Disposition 84
Details of Credit Loss Experience 84
Average Deposit Liabilities
in Offices Outside the U.S. 85
Maturity Profile of Time Deposits
($100,000 or more) in U.S. Offices 85
Short-Term and Other Borrowings 85
10-K CROSS-REFERENCE INDEX 93
CITIGROUP BOARD OF DIRECTORS 96
1
<PAGE>
THE COMPANY
Citigroup Inc. (together with its subsidiaries, the Company) is a diversified
holding company whose businesses provide a broad range of financial services to
consumer and corporate customers in 101 countries and territories. The Company's
activities are conducted through Global Consumer, Global Corporate and
Investment Bank, Global Investment Management and Private Banking, and
Investment Activities.
On October 8, 1998, Citicorp merged with and into a newly formed, wholly
owned subsidiary of Travelers Group Inc. (TRV) (the Merger). Following the
Merger, TRV changed its name to Citigroup Inc. (Citigroup). Under the terms of
the Merger, 1.698 billion shares (adjusted to reflect the three-for-two stock
split in May 1999) of Citigroup's common stock were issued in exchange for all
of the outstanding shares of Citicorp common stock. The merger was accounted for
under the pooling of interests method.
Upon consummation of the Merger, Citigroup became a bank holding company.
In November 1999, President Clinton signed into law the Gramm-Leach-Bliley Act
(the GLB Act), which will become effective in most significant respects on March
11, 2000. Under the GLB Act, bank holding companies, such as Citigroup, all of
whose controlled depository institutions are "well capitalized" and "well
managed" as defined in Federal Reserve Regulation Y and which obtain
satisfactory Community Reinvestment Act ratings, will have the ability to
declare themselves to be "financial holding companies" and engage in a broader
spectrum of activities than those currently permitted, including insurance
underwriting and brokerage (including annuities), and underwriting and dealing
in securities without a revenue limit. The Company anticipates that its
declaration to become a financial holding company will become effective shortly
after the effective date of the GLB Act, and that as a result, it will be
permitted to continue to operate its insurance businesses as currently
structured and, if it so determines, to expand those businesses.
Because the GLB Act repeals Section 20 of the Glass-Steagall Act, Citigroup
will be permitted to operate without regard to revenue limits on "ineligible"
securities activities and to acquire other securities firms without regard to
such limits. Subject to certain limitations, new merchant banking rules will
permit Citigroup to make investments in companies that engage in activities that
are not financial in nature without regard to the existing 5% limit for domestic
investments and 20% limit for overseas investments.
On November 28, 1997, a newly formed, wholly owned subsidiary of TRV merged
with and into Salomon Inc (Salomon) (the Salomon Merger). Under the terms of the
Salomon Merger, approximately 282.8 million shares (adjusted to reflect the
three-for-two stock split in May 1999) of Citigroup common stock were issued in
exchange for all of the outstanding shares of Salomon common stock. Thereafter,
Smith Barney Holdings Inc. (Smith Barney), a wholly owned subsidiary of
Citigroup, was merged with and into Salomon to form Salomon Smith Barney
Holdings Inc. (Salomon Smith Barney). The Salomon Merger was accounted for under
the pooling of interests method.
The Company's Global Consumer segment includes a global, full-service
consumer franchise encompassing, among other things, branch and electronic
banking, consumer lending services, investment services, credit and charge card
services, and life, auto and homeowners insurance. The businesses included in
the Company's Global Corporate and Investment Bank segment serve corporations,
financial institutions, governments, and other participants in developed and
emerging markets throughout the world. These businesses provide, among other
things, investment banking, retail brokerage, corporate banking, cash management
products and services, and commercial insurance. Global Investment Management
and Private Banking includes asset management services provided to mutual funds,
institutional, and individual investors, and personalized wealth management
services for high net worth clients. Corporate/Other includes net corporate
treasury results, unallocated expenses and corporate administration. The
Investment Activities segment includes the Company's venture capital activities,
the realized investment gains and losses related to certain corporate- and
insurance-related investments, and the results of certain investments in
countries that refinanced debt under the 1989 Brady plan or plans of a similar
nature.
GLOBAL CONSUMER
Global Consumer delivers a wide array of banking, lending, and investment
services, including the issuance of credit and charge cards, and personal
insurance products in 52 countries and territories. Global Consumer creates
products and platforms to meet the expanding needs of the world's growing middle
class.
Citibanking North America delivers banking, lending, and investment
services to customers through 370 branches and through electronic delivery
systems. Through its Mortgage Banking unit, Global Consumer originates and
services mortgages and student loans for customers across North America.
The Cards unit offers products such as MasterCard and VISA, and Diners Club
across North America. As of December 31, 1999, the U.S. bankcards business had
41 million accounts and $74 billion of managed receivables, which represented
approximately 16% of the U.S. credit card receivables market. New accounts are
primarily acquired through direct marketing efforts, portfolio acquisitions, and
over the Internet.
The CitiFinancial unit of Global Consumer provides community-based lending
services through its branch network system. As of December 31, 1999,
CitiFinancial maintained 1,174 loan offices in 47 states and Canada, including
19 servicing centers for $.M.A.R.T. loans(R) and $.A.F.E.(R) loans sold through
the independent agents (the Primerica sales force) of Primerica Financial
Services (Primerica), a subsidiary of Citigroup. Loans to consumers include real
estate-secured loans, unsecured and partially secured personal loans, and loans
to finance consumer goods purchases.
2
<PAGE>
The Insurance units of Global Consumer through Travelers Life and Annuity
offer individual annuity, group annuity, and individual life insurance. The
individual products include fixed and variable deferred annuities, payout
annuities, and term and universal life insurance. These products are primarily
distributed through Citigroup businesses and a nationwide network of independent
agents. The group annuity products offered include institutional pension
products, including guaranteed investment contracts, payout annuities,
structured finance, and group annuities to U.S. employer-sponsored retirement
and savings plans through direct sales and various intermediaries.
The business operations of Primerica involve the sale in North America of
life insurance, and other products manufactured by its affiliates, including
Salomon Smith Barney (SSB) mutual funds, CitiFinancial mortgages and personal
loans, The Travelers Insurance Company (TIC) annuity products, and Travelers
Property Casualty Corp. (TAP) automobile and homeowners insurance. The Primerica
sales force is composed of over 100,000 independent representatives. A great
majority of the sales force is employed on a part-time basis.
Through TAP, a subsidiary in which Citigroup has an approximate 85%
interest, Global Consumer writes virtually all types of property and casualty
insurance covering personal risks. The Personal Lines unit of TAP had
approximately 5.3 million policies in force at December 31, 1999. The primary
coverages are personal automobile and homeowners insurance sold to individuals,
and are distributed through approximately 5,400 independent agencies located
throughout the United States. Personal Lines also uses alternative distribution
channels, including sponsoring organizations such as employee and affinity
groups, and joint marketing arrangements with other insurers, and are marketed
through other Citigroup businesses.
The International unit of Global Consumer provides full-service banking and
lending, including credit and charge cards, and investment services in Europe,
Middle East & Africa, Asia Pacific (including Japan and Australia), and Latin
America through more than 1,000 branches in 50 countries and territories.
Outside North America, Global Consumer has approximately 11 million credit and
charge card member accounts.
e-Citi is the business responsible for developing and implementing
Citigroup's Internet financial services products and e-commerce solutions.
e-Citi's mission is to build and deliver new forms of financial services that
meet the changing needs of customers and to facilitate all aspects of e-commerce
as it grows with the new digital economy.
GLOBAL CORPORATE AND INVESTMENT BANK
Global Corporate and Investment Bank provides corporations, governments,
institutions, and investors in 100 countries and territories with a broad range
of financial products and services, including investment advice, financial
planning and retail brokerage services, banking and financial services, and
commercial insurance products.
Global Corporate and Investment Bank, through Salomon Smith Barney,
delivers investment banking services that encompass a full range of global
capital market activities, including the underwriting and distribution of fixed
income and equity securities for United States and foreign corporations and for
state, local and other governmental and government-sponsored authorities. Global
Corporate and Investment Bank also provides capital raising, advisory, research,
and other brokerage services to its customers, acts as a market-maker, and
executes securities and commodities futures brokerage transactions on all major
United States and international exchanges on behalf of customers and for its own
account. It also executes proprietary trading strategies on its own behalf,
principally in fixed income securities and in commodities. In 1999 and 1998, SSB
restructured and significantly decreased the risk profile of the global fixed
income arbitrage groups because of lessening profit opportunities and growing
risk and volatility. On February 26, 1999, SSB and The Nikko Securities Co.
Ltd., formed a joint venture, to provide investment banking, sales and trading,
and research services for corporate and institutional clients in Japan and
overseas markets. In January 2000, SSB agreed to acquire the global investment
banking business and related assets of Schroders PLC, including all corporate
financial markets and securities activities, subject to Schroders PLC
shareholder approval, various regulatory approvals and other customary closing
conditions.
Global Corporate and Investment Bank is a major participant in foreign
exchange and in the over-the-counter (OTC) market for derivative instruments
involving a wide range of products, including interest rate, equity and currency
swaps, caps and floors, options, warrants and other derivative products. It also
creates and sells various types of structured securities.
Citibank has a long-standing presence in emerging markets, which include
all locations outside North America, Western Europe, and Japan. Citigroup's
Emerging Markets business offers a wide array of banking and financial services
products and services that help multinational and local companies fulfill their
financial goals or needs. Citigroup's Embedded Bank and Emerging Local Corporate
strategies focus on its plans to gain market share in selected emerging market
countries and to establish Citibank as a local bank as well as a leading
international bank. Citibank typically enters a country to serve global
customers, providing them with cash management, trade services, short-term
loans, and foreign-exchange services. Then, Citibank offers project finance,
fixed-income issuance and trading and, later, introduces securities custody,
loan syndications and derivatives services. Finally, as a brand image is
established and services for locally headquartered companies become significant,
consumer banking services may be offered.
3
<PAGE>
The Global Relationship Bank (GRB) provides banking and financial services
to multinational companies and their subsidiaries around the world. A dedicated
relationship team serves each parent company and its subsidiaries everywhere
they operate. Product offerings are determined by the demands of these
sophisticated customers. Core products include cash management, foreign
exchange, structured products, securities custody, trade services, and loan
products.
SSB investment bankers and GRB and Emerging Markets corporate relationship
managers also jointly market to their customers. SSB's investment banking
products are sold to corporate relationships in GRB and Emerging Markets. In
addition, Citibank's capabilities in foreign exchange, lending and liquidity,
and transaction services are sold to SSB's customers.
TAP's Commercial Lines unit offers a broad array of property and casualty
insurance and insurance-related services, which it distributes through
approximately 5,200 brokers and independent agencies located throughout the
United States. TAP is the third largest writer of commercial lines insurance in
the U.S. based on 1998 direct written premiums published by A.M. Best Company.
Commercial Lines is organized into four marketing and underwriting groups that
are designed to focus on a particular client base or industry segment to provide
products and services that specifically address customers' needs: National
Accounts, primarily serving large national corporations; Commercial Accounts,
serving mid-size businesses; Select Accounts, serving small businesses; and
Specialty Accounts, providing a variety of specialty coverages. Environmental,
asbestos and other cumulative injury claims are segregated from other claims and
are handled separately by TAP's Special Liability Group, a special unit staffed
by dedicated legal, claim, finance, and engineering professionals.
GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING
The Global Investment Management and Private Banking group is comprised of the
SSB Citi Asset Management Group and the Citibank Private Bank. The SSB Citi
Asset Management Group includes Salomon Brothers Asset Management, Smith Barney
Asset Management, and Citibank Global Asset Management. These businesses offer a
broad range of asset management products and services from global investment
centers around the world, including mutual funds, closed-end funds, managed
accounts, unit investment trusts, variable annuities, and personalized wealth
management services to institutional, high net worth, and retail clients.
Clients include private and public retirement plans, endowments,
foundations, banks, central banks, insurance companies, other corporations,
government agencies, and high net worth and other individuals. Client
relationships may be introduced through the cross marketing and distribution
opportunities within Citigroup, through SSB Citi Asset Management Group's own
sales force, or through independent sources.
The Citibank Private Bank provides personalized wealth management services
for high net worth clients through 100 offices in 31 countries and territories,
generating fee and interest income from investment funds management and customer
trading activity, trust and fiduciary services, custody services, and banking
and lending activities. Its Relationship Managers and Product Specialists use
their knowledge about their clients' individual needs and goals to bring them an
array of personal wealth management services.
CORPORATE/OTHER
Corporate/Other includes net corporate treasury results, and corporate staff and
other corporate expenses.
INVESTMENT ACTIVITIES
The Company's Investment Activities segment consists primarily of its venture
capital activities, the realized investment gains and losses related to certain
corporate- and insurance-related investments, and the results of certain
investments in countries that refinanced debt under the 1989 Brady Plan or plans
of a similar nature.
The periodic reports of Citicorp, Salomon Smith Barney, TAP, The Student
Loan Corporation (STU), TIC, and Travelers Life and Annuity Company (TLAC),
subsidiaries of the Company that make filings pursuant to the Securities
Exchange Act of 1934, as amended (the Exchange Act), provide additional business
and financial information concerning those companies and their consolidated
subsidiaries.
The principal executive offices of the Company are located at 153 East 53rd
Street, New York, New York 10043; telephone number 212-559-1000.
4
<PAGE>
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA Citigroup Inc. and Subsidiaries
<TABLE>
<CAPTION>
In Millions of Dollars, Except Per Share Amounts 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 82,005 $ 76,431 $ 72,306 $ 65,101 $ 58,957
Total revenues, net of interest expense 57,237 48,936 47,782 43,765 36,567
Provisions for benefits, claims, and credit losses 11,508 11,116 9,911 9,566 7,193
Operating expenses(1) 29,781 28,551 27,121 23,475 20,460
Income from continuing operations(1) 9,994 5,807 6,705 7,073 5,610
Discontinued operations -- -- -- (334) 150
Cumulative effect of accounting changes(2) (127) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 9,867 $ 5,807 $ 6,705 $ 6,739 $ 5,760
===================================================================================================================================
Earnings per share(3)
Basic earnings per share:
Income from continuing operations $ 2.95 $ 1.66 $ 1.91 $ 1.98 $ 1.60
Net income 2.91 1.66 1.91 1.88 1.65
Diluted earnings per share:
Income from continuing operations 2.86 1.62 1.83 1.89 1.46
Net income 2.83 1.62 1.83 1.80 1.50
Dividends declared per common share 0.540 0.370 0.267 0.200 0.178
- -----------------------------------------------------------------------------------------------------------------------------------
At December 31,
Total assets $ 716,937 $ 668,641 $ 697,384 $ 626,906 $ 559,146
Total deposits 261,091 228,649 199,121 184,955 167,131
Long-term debt 47,092 48,671 47,387 43,246 40,723
Mandatorily redeemable securities of subsidiary trusts 4,920 4,320 2,995 2,545 --
Redeemable preferred stock -- 140 280 420 560
Common stockholders' equity 47,761 40,395 38,498 35,213 31,000
Total stockholders' equity 49,686 42,708 41,851 38,416 35,183
===================================================================================================================================
Ratio of earnings to fixed charges and preferred stock
dividends 1.62X 1.32X 1.41X 1.48X 1.35X
Return on average common stockholders' equity(4) 22.49% 13.95% 17.49% 19.42% 18.88%
Common stockholders' equity to assets 6.66% 6.04% 5.52% 5.62% 5.54%
Total stockholders' equity to assets 6.93% 6.39% 6.00% 6.13% 6.29%
===================================================================================================================================
Income Analysis(5)
Total revenues, net of interest expense $ 57,237 $ 48,936 $ 47,782 $ 43,765 $ 36,567
Effect of credit card securitization activity 2,269 2,187 1,713 1,392 917
- -----------------------------------------------------------------------------------------------------------------------------------
Adjusted revenues, net of interest expense 59,506 51,123 49,495 45,157 37,484
- -----------------------------------------------------------------------------------------------------------------------------------
Adjusted operating expenses(6) 29,869 27,756 25,403 23,489 20,460
- -----------------------------------------------------------------------------------------------------------------------------------
Provisions for benefits, claims, and credit losses 11,508 11,116 9,911 9,566 7,193
Effect of credit card securitization activity 2,269 2,187 1,713 1,392 917
Acquisition-related costs -- -- -- (541) --
- -----------------------------------------------------------------------------------------------------------------------------------
Adjusted provisions for benefits, claims, and credit costs 13,777 13,303 11,624 10,417 8,110
- -----------------------------------------------------------------------------------------------------------------------------------
Restructuring-related items and merger-related costs 88 (795) (1,718) -- --
Acquisition-related costs -- -- -- (650) --
Operating loss from discontinued operations -- -- -- 123 --
Gain on sale of stock by subsidiary -- -- -- 363 --
- -----------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before taxes and minority
interest 15,948 9,269 10,750 11,087 8,914
- -----------------------------------------------------------------------------------------------------------------------------------
Provision for income taxes 5,703 3,234 3,833 3,967 3,304
Minority interest, net of income taxes 251 228 212 47 --
- -----------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 9,994 5,807 6,705 7,073 5,610
Discontinued operations, net of tax -- -- -- (334) 150
Cumulative effect of accounting changes(2) (127) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 9,867 $ 5,807 $ 6,705 $ 6,739 $ 5,760
===================================================================================================================================
</TABLE>
(1) The years ended December 31, 1999, 1998 and 1997 include net
restructuring-related items (and in 1998 merger-related costs) of ($88)
million (($47) million after-tax), $795 million ($535 million after-tax)
and $1,718 million ($1,046 million after-tax), respectively. See Note 14 of
Notes to Consolidated Financial Statements.
(2) Accounting changes include the adoption of Statement of Position (SOP)
97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments" of ($135) million; SOP 98-7, "Deposit Accounting: Accounting
for Insurance and Reinsurance Contracts That Do Not Transfer Insurance
Risk" of $23 million; and SOP 98-5, "Reporting on the Costs of Start-Up
Activities" of ($15) million. See Note 1 of Notes to Consolidated Financial
Statements.
(3) All amounts have been adjusted to reflect stock splits.
(4) The return on average common stockholders' equity is calculated using net
income after deducting preferred stock dividend requirements.
(5) The income analysis reconciles amounts shown in the Consolidated Statement
of Income on page 45 to the basis presented in the Management's Discussion
and Analysis of Financial Condition and Results of Operations section.
(6) Excludes restructuring-related items and merger-related costs, and in 1996,
operating loss from discontinued operations and acquisition-related costs.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF Citigroup Inc. and Subsidiaries
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business Focus
The table below shows the core income (loss) for each of Citigroup's businesses
for the three years ended December 31:
In Millions of Dollars 1999 1998(1) 1997(1)
- ----------------------------------------------------------------------------
Global Consumer
Citibanking North America $ 414 $ 107 $ 111
Mortgage Banking 231 212 163
Cards 1,172 808 573
CitiFinancial 392 222 174
- ----------------------------------------------------------------------------
Total Banking/Lending 2,209 1,349 1,021
- ----------------------------------------------------------------------------
Travelers Life and Annuity 623 493 421
Primerica Financial Services 452 400 335
Personal Lines 279 319 300
- ----------------------------------------------------------------------------
Total Insurance 1,354 1,212 1,056
- ----------------------------------------------------------------------------
Europe, Middle East & Africa 327 225 203
Asia Pacific 443 383 407
Latin America 228 160 243
- ----------------------------------------------------------------------------
Total International 998 768 853
- ----------------------------------------------------------------------------
e-Citi (179) (141) (78)
Other (86) (77) 8
- ----------------------------------------------------------------------------
Total Global Consumer 4,296 3,111 2,860
- ----------------------------------------------------------------------------
Global Corporate and Investment Bank
Salomon Smith Barney 2,354 408 1,438
- ----------------------------------------------------------------------------
Emerging Markets 1,190 748 917
Global Relationship Banking 686 490 711
- ----------------------------------------------------------------------------
Total Global Corporate Bank 1,876 1,238 1,628
- ----------------------------------------------------------------------------
Commercial Lines Insurance 845 723 632
- ----------------------------------------------------------------------------
Total Global Corporate and
Investment Bank 5,075 2,369 3,698
- ----------------------------------------------------------------------------
Global Investment Management and
Private Banking
SSB Citi Asset Management Group 324 256 222
Citibank Private Bank 278 251 263
- ----------------------------------------------------------------------------
Total Global Investment Management and
Private Banking 602 507 485
- ----------------------------------------------------------------------------
Corporate/Other (686) (478) (392)
Investment Activities 660 833 1,100
- ----------------------------------------------------------------------------
Core Income 9,947 6,342 7,751
Restructuring-related items and
merger-related costs, after-tax 47 (535) (1,046)
Cumulative effect of accounting changes (127) -- --
- ----------------------------------------------------------------------------
Net Income $ 9,867 $ 5,807 $ 6,705
============================================================================
Diluted earnings per share
Core income $ 2.85 $ 1.77 $ 2.12
Net income 2.83 1.62 1.83
============================================================================
(1) Reclassified to conform to the 1999 presentation, including changes in
capital and tax allocations among the segments.
Results of Operations
Citigroup reported 1999 core income of $9.947 billion or $2.85 per diluted
common share, up 57% and 61%, respectively, from $6.342 billion or $1.77 in
1998. Core income in 1999 excluded a credit of $47 million for after-tax
restructuring-related items and a charge of $127 million reflecting the
cumulative effect of adopting several new accounting standards as described in
Notes 1 and 14 of Notes to the Consolidated Financial Statements. Core income in
1998 excluded a charge of $535 million for after-tax restructuring-related items
and merger-related costs. Net income was $9.867 billion or $2.83 per diluted
share, up 70% and 75%, respectively, from $5.807 billion or $1.62 in 1998.
Citigroup's 1998 core income was down $1.409 billion or 18% from 1997. Net
income in 1998 was down $898 million or 13% from 1997. Core income return on
common equity was 22.7% compared to 14.9% for 1998 and 20.2% for 1997.
Core income growth in 1999 was led by Global Corporate and Investment Bank
which improved $2.706 billion or 114%, reflecting a rebound from global economic
turmoil in 1998 and strong 1999 growth across the franchise, and reflected
increases of $1.946 billion or 477% in Salomon Smith Barney (SSB), $442 million
or 59% in Emerging Markets, $196 million or 40% in Global Relationship Banking
(GRB), and $122 million or 17% in Commercial Lines. Global Consumer increased
$1.185 billion or 38%, led by Banking/Lending where Cards was up $364 million or
45%; Citibanking North America up $307 million or 287%; and CitiFinancial up
$170 million or 77%. Core income in the International businesses was up $230
million or 30%, reflecting increases across all regions. Insurance businesses
core income grew $142 million or 12%, led by Travelers Life and Annuity (up $130
million or 26%) and Primerica (up $52 million or 13%), partially offset by
Personal Lines (down $40 million or 13%). Global Investment Management and
Private Banking improved $95 million or 19%, while Investment Activities
decreased $173 million or 21%. Core income in 1998 was sharply impacted by the
global economic turmoil experienced during the year as income decreased $1.329
billion or 36% in Global Corporate and Investment Bank, and decreased $267
million or 24% in Investment Activities. Partially offsetting this was a $251
million or 9% increase in Global Consumer complemented by a $22 million or 5%
increase in Global Investment Management and Private Banking.
Adjusted revenues, net of interest expense of $59.5 billion in 1999 were up
$8.4 billion or 16% from 1998. Revenues in 1998 were up $1.6 billion or 3% from
1997. Global Corporate and Investment Bank revenues of $27.4 billion in 1999
were up $5.0 billion or 22%, led by an increase of $4.3 billion or 52% in SSB,
largely due to significantly improved principal transactions, up $2.7 billion,
and investment banking, up $689 million. Reflecting the 1998 economic turmoil
and strong 1999 results, Emerging Markets was up $695 million or 19%, and GRB
was up $169 million or 4%. Partially offsetting these increases was a decrease
of $216 million or 3% in Commercial Lines,
6
<PAGE>
reflecting lower production. In 1998 Global Corporate and Investment Bank
revenues of $22.4 billion were down $1.5 billion or 6%, principally reflecting a
decline in SSB of $1.9 billion or 18% to $8.3 billion, driven by a sharp drop in
principal transactions revenues due to economic turmoil. Emerging Markets
increased by 4% to $3.6 billion, and GRB was up 3% to $3.9 billion. Commercial
Lines was up 3% to $6.5 billion. Global Consumer revenues increased strongly in
almost all businesses and were up $3.4 billion or 13% in 1999 to $28.6 billion,
including acquisitions. The Global Consumer revenue growth was led by a $1.5
billion or 13% increase in Banking/Lending (Cards up $846 million or 12%), a
$976 million or 17% increase in International, and an $880 million or 11%
increase in Insurance. Revenues in Global Consumer in 1998 increased $3.1
billion or 14% to $25.2 billion, led by Cards, up $1.6 billion or 30%, primarily
reflecting the Universal Card Services (UCS) acquisition, growth in the
Insurance businesses, up $857 million or 11%, and increases in CitiFinancial, up
$268 million or 27%. Global Investment Management and Private Banking revenues
of $2.7 billion and $2.4 billion grew $305 million or 13% and $247 million or
12% in 1999 and 1998, and reflected continued growth in assets under management.
Investment Activities revenues in 1999 decreased $233 million primarily
reflecting lower realized gains from sales of investments and net asset gains,
partially offset by higher venture capital revenues, and decreased $410 million
in 1998 primarily due to lower venture capital revenues.
Net interest revenue as calculated from the Consolidated Statement of
Income was $20.1 billion in 1999, up $1.4 billion or 7% from 1998, which was up
$1.2 billion or 7% from 1997, reflecting business volume growth in most markets
and Global Consumer acquisitions. Net interest revenue, adjusted for the effect
of credit card securitization, of $24.3 billion was up $2.0 billion or 9% in
1999 and $2.4 billion or 12% in 1998. Adjusted commissions, asset management and
administration fees, and other fee revenues of $16.8 billion were up $2.7
billion or 19% in 1999 and $1.4 billion or 11% in 1998, primarily reflecting
continued growth in assets under management. Insurance premiums of $10.4 billion
in 1999 were up $591 million or 6%, and were up $855 million or 10% in 1998,
reflecting solid growth in the Global Consumer Insurance businesses, partially
offset by lower premiums in Commercial Lines. Principal transactions revenues
rebounded strongly to $5.2 billion in 1999, up from $1.8 billion in 1998 and
$4.2 billion in 1997, reflecting the difficult trading conditions in 1998.
Realized gains from sales of investments of $557 million were down from $840
million in 1998 and $995 million in 1997. Other income as shown on the
Consolidated Statement of Income of $4.1 billion increased $548 million from
1998, which was up $454 million from 1997. The 1999 improvement reflected
increased revenues related to credit card securitization activity, and higher
venture capital revenues, partially offset by lower net asset gains. Other
income, adjusted for the effect of credit card securitization activity, of $2.2
billion was up slightly from 1998, and compared to $2.5 billion in 1997.
Adjusted operating expenses in 1999 of $29.9 billion, which exclude the
restructuring-related items, and in 1998 merger-related costs, were up $2.1
billion or 8% in 1999 and grew $2.4 billion or 9% in 1998. Citigroup achieved
its target of $2 billion in annualized expense reductions for 1999. Global
Corporate and Investment Bank expenses were up 7% in 1999 and 2% in 1998,
primarily attributable to production-related compensation at SSB, partially
offset by lower year 2000 and European Economic Monetary Union (EMU) expenses in
the GRB, and Commercial Lines' benefit from an assessment change in workers
compensation. Expenses increased in Global Consumer by 7% in 1999 and 17% in
1998, reflecting acquisitions, business volume growth, and higher spending in
e-Citi. Global Consumer expense growth in 1999 was reduced by a decline in fixed
costs due to expense control initiatives. Global Investment Management and
Private Banking expenses increased 9% in 1999 and 14% in 1998 driven by
investments in technology, and sales and marketing capabilities.
Adjusted provisions for benefits, claims, and credit costs were $13.8
billion in 1999 compared with $13.3 billion and $11.6 billion in 1998 and 1997,
respectively. Policyholder benefits and claims increased 4% to $8.7 billion in
1999 and 8% to $8.4 billion in 1998. The adjusted provision for credit losses
increased 3% to $5.1 billion in 1999 and 26% to $4.9 billion in 1998.
Global Consumer adjusted provisions for benefits, claims, and credit losses
of $9.9 billion were up 8% in 1999 and 14% in 1998. Managed net credit losses in
1999 were $4.7 billion and the related loss ratio was 2.49%, compared with $4.4
billion and 2.70% in 1998 and $3.8 billion and 2.61% in 1997. The increase in
the 1998 net credit losses from 1997 primarily reflects the UCS acquisition. The
managed consumer loan delinquency ratio (90 days or more past due) was 1.91%, a
decrease from 2.12% and 2.23% at the end of 1998 and 1997.
Global Corporate and Investment Bank provisions for benefits, claims, and
credit losses decreased to $3.9 billion from $4.2 billion in 1998, which was up
from $3.7 billion in 1997. The decrease in 1999 reflected economic improvements
in Russia and Asia, partially offset by increased losses in Latin America, and a
lower provision for credit losses resulting from an improved credit outlook in
Emerging Markets. Commercial Lines prior-year loss development and
weather-related catastrophes in 1999 both improved from the prior year. The
increase in 1998 primarily reflected the turmoil in Asia and Russia. Commercial
cash-basis loans and other real estate owned (OREO) of $1.9 billion at December
31, 1999 were down from $2.1 billion a year earlier, primarily reflecting the
improved economic conditions in Asia, and compared to $1.8 billion in 1997.
Total capital (Tier 1 and Tier 2) was $61.4 billion or 12.43% of net
risk-adjusted assets, and Tier 1 capital was $47.6 billion or 9.64% at December
31, 1999. See page 40 for the components of Tier 1 and Tier 2 capital.
7
<PAGE>
GLOBAL CONSUMER
<TABLE>
<CAPTION>
In Millions of Dollars 1999 1998(1) 1997(1)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues, net of interest expense $ 26,282 $ 23,004 $ 20,348
Effect of credit card securitization activity 2,269 2,187 1,713
- -----------------------------------------------------------------------------------
Adjusted revenues, net of
interest expense 28,551 25,191 22,061
- -----------------------------------------------------------------------------------
Total operating expenses 11,900 11,634 9,984
Restructuring-related items (87) (636) (552)
- -----------------------------------------------------------------------------------
Adjusted operating expenses 11,813 10,998 9,432
- -----------------------------------------------------------------------------------
Provisions for benefits, claims, and
credit losses 7,611 6,962 6,328
Effect of credit card securitization activity 2,269 2,187 1,713
- -----------------------------------------------------------------------------------
Adjusted provisions for benefits, claims,
and credit losses 9,880 9,149 8,041
- -----------------------------------------------------------------------------------
Core income before taxes and
minority interest 6,858 5,044 4,588
Income taxes 2,489 1,864 1,666
Minority interest, after-tax 73 69 62
- -----------------------------------------------------------------------------------
Core income 4,296 3,111 2,860
Restructuring-related items, after-tax 56 403 333
- -----------------------------------------------------------------------------------
Net income $ 4,240 $ 2,708 $ 2,527
===================================================================================
</TABLE>
(1) Reclassified to conform to the 1999 presentation.
Global Consumer--which provides banking, lending, investment and personal
insurance products and services, including credit and charge cards, to customers
around the world--reported core income of $4.296 billion in 1999, up $1.185
billion or 38% from 1998, reflecting strong growth in virtually all businesses,
particularly in Banking/Lending where Cards increased $364 million or 45%,
Citibanking grew $307 million or 287%, and CitiFinancial increased $170 million
or 77%. In the Insurance businesses, core income grew $142 million or 12% from
1998, while the International businesses grew $230 million or 30%, reflecting
increases across all regions. Core income in 1998 of $3.111 billion increased
$251 million or 9% from 1997 reflecting double-digit growth in Banking/Lending
and in the Insurance businesses, offset by a 10% decline in International due to
economic conditions in Latin America and Asia Pacific. Net income of $4.240
billion in 1999, $2.708 billion in 1998, and $2.527 billion in 1997 included
restructuring-related items of $56 million ($87 million pretax), $403 million
($636 million pretax), and $333 million ($552 million pretax), respectively.
During 1999, Global Consumer recorded restructuring-related items totaling
$87 million ($56 million after-tax), including charges of $104 million (pretax),
of which $82 million related to new initiatives primarily for the
reconfiguration of certain consumer branch operations outside the U.S.,
downsizing of certain marketing operations, and costs associated with exiting a
non-strategic business. The 1999 items also include accelerated depreciation
charges on assets associated with restructuring initiatives of $114 million
(pretax), offset by a reduction of restructuring reserves due to changes in
estimates attributable to facts and circumstances arising subsequent to the
original restructuring charge of $131 million (pretax). In 1998, Global Consumer
recorded a net restructuring charge totaling $636 million ($403 million
after-tax) for regional consolidation of call centers and other back office
functions worldwide, reduction of management layers, sales force restructuring,
integration of overlapping marketing and product management groups and exiting
several non-strategic operations. In 1997, Global Consumer recorded a
restructuring charge of $552 million ($333 million after-tax) for the
consolidation of data centers and operations processing and customer service
facilities, the reconfiguration of electronic and other distribution channels,
the outsourcing of various technological functions, and the rationalization of
administrative and management functions. See Note 14 of Notes to Consolidated
Financial Statements for a discussion of restructuring-related items.
BANKING/LENDING
Citibanking North America
In Millions of Dollars 1999 1998(1) 1997(1)
- ----------------------------------------------------------------------------
Total revenues, net of interest expense $ 2,109 $ 1,974 $ 1,864
Adjusted operating expenses(2) 1,338 1,672 1,568
Provision for credit losses 64 100 105
- ----------------------------------------------------------------------------
Core income before taxes 707 202 191
Income taxes 293 95 80
- ----------------------------------------------------------------------------
Core income 414 107 111
Restructuring-related items, after-tax (1) 89 124
- ----------------------------------------------------------------------------
Net income (loss) $ 415 $ 18 $ (13)
============================================================================
Average assets (in billions of dollars) $ 10 $ 10 $ 10
Return on assets 4.15% 0.18% NM
============================================================================
Excluding restructuring-related items
Return on assets 4.14% 1.07% 1.11%
============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
NM Not meaningful.
8
<PAGE>
Citibanking North America--which delivers banking, lending and investment
services to customers through Citibank's branches and electronic delivery
systems--reported core income of $414 million in 1999, up $307 million or 287%
from 1998 due to expense reduction initiatives, revenue growth, and credit cost
improvements. Core income of $107 million in 1998 was down from $111 million in
1997 as business volume growth was more than offset by a higher effective tax
rate. Net income (loss) of $415 million in 1999, $18 million in 1998, and ($13)
million in 1997 included restructuring-related credits in 1999 of $1 million ($4
million pretax), and restructuring charges of $89 million ($139 million pretax)
and $124 million ($203 million pretax) in 1998 and 1997, respectively.
As shown in the following table, Citibanking grew accounts and customer
deposits in both 1999 and 1998. The decline in loans reflects a decrease in home
equity loans due to increased industry-wide mortgage refinancing activity during
1998 and the first half of 1999. See also the Mortgage Banking discussion below.
In Billions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Accounts (in millions) 6.3 5.8 5.6
Average customer deposits $ 42.1 $ 39.6 $ 37.1
Average loans 7.6 7.9 8.1
================================================================================
Revenues, net of interest expense, of $2.109 billion increased $135 million
or 7% in 1999 and grew $110 million or 6% in 1998, reflecting growth in customer
deposits and higher investment product fees and commissions, offset by lower
loan revenues. The 1999 increase also reflects higher spreads on customer
deposits.
Adjusted operating expenses of $1.338 billion in 1999 declined $334 million
or 20% from 1998, reflecting the impact of significant expense management
initiatives that reduced staff and other fixed expenses as well as lower
marketing program spending. Expenses grew $104 million or 7% in 1998,
principally reflecting business volume growth.
The provision for credit losses declined to $64 million in 1999 from $100
million in 1998 and $105 million in 1997. The net credit loss ratio of 1.18% in
1999 declined from 1.34% in 1998 and 1.36% in 1997. Loans delinquent 90 days or
more of $55 million or 0.75% at December 31, 1999 declined from $93 million or
1.20% at December 31, 1998 and $133 million or 1.59% at December 31, 1997. The
declines in the provision for credit losses and delinquencies reflect continued
improvement in the portfolio and a decline in loan volumes.
Mortgage Banking
In Millions of Dollars 1999 1998(1) 1997(1)
- -----------------------------------------------------------------------------
Total revenues, net of interest expense $747 $619 $590
Adjusted operating expenses(2) 320 242 233
Provision for credit losses 17 20 89
- -----------------------------------------------------------------------------
Core income before taxes and
minority interest 410 357 268
Income taxes 160 140 105
Minority interest, after-tax 19 5 --
- -----------------------------------------------------------------------------
Core income 231 212 163
Restructuring-related items, after-tax -- 6 12
- -----------------------------------------------------------------------------
Net income $231 $206 $151
=============================================================================
Average assets (in billions of dollars) $ 29 $ 25 $ 24
Return on assets 0.80% 0.82% 0.63%
=============================================================================
Excluding restructuring-related items
Return on assets 0.80% 0.85% 0.68%
=============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
Mortgage Banking--which originates and services mortgages and student loans
for customers across North America--reported core income of $231 million in
1999, up $19 million or 9% from 1998, reflecting growth in student loans and
credit improvement in the mortgage portfolio. Core income in 1998 of $212
million increased $49 million or 30% from 1997, reflecting lower credit costs
and higher revenues resulting from increased business volumes. Net income of
$206 million in 1998 and $151 million in 1997 included restructuring-related
items of $6 million ($9 million pretax) and $12 million ($20 million pretax),
respectively.
The acquisition of the principal operating assets and certain liabilities
of Source One Mortgage Services Corporation (Source One) in April 1999 added
approximately $25 billion to the mortgage servicing/subservicing portfolio.
As shown in the following table, Mortgage Banking accounts, loans, and
mortgage originations increased in both 1999 and 1998, including the effect of
the Source One acquisition. Excluding Source One, mortgage originations declined
in 1999 reflecting the industry-wide slowdown in mortgage refinancing activity
in the second half of 1999.
In Billions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Accounts (in millions) 3.4 2.8 2.5
Average loans $ 27.4 $ 23.9 $ 22.3
Mortgage originations 18.3 16.4 8.2
================================================================================
9
<PAGE>
Revenues, net of interest expense, of $747 million in 1999 grew $128
million or 21% from 1998, reflecting the Source One acquisition and growth in
the student loan portfolio. Revenues in 1998 increased $29 million or 5% from
1997, reflecting growth in the student loan portfolio and increased mortgage
originations, including refinancing activity. Adjusted operating expenses
increased $78 million or 32% in 1999 and grew $9 million or 4% in 1998,
reflecting additional business volumes, including the Source One acquisition in
1999.
The provision for credit losses of $17 million in 1999 declined from $20
million in 1998 and $89 million in 1997. The 1999 net credit loss ratio of 0.16%
declined from 0.31% and 0.51% in 1998 and 1997, respectively, and the ratio of
loans delinquent 90 days or more of 2.31% declined from 2.44% at December 31,
1998 and 3.13% at December 31, 1997. The declines in the provision, the net
credit loss ratio, and the delinquency ratio reflect improvement in the mortgage
portfolio. The 1999 improvement in mortgage delinquencies was partially offset
by higher student loan delinquencies as a result of a statutory increase in the
length of time Citigroup must hold delinquent government-guaranteed student
loans prior to submitting a claim under the government guarantee.
Cards
<TABLE>
<CAPTION>
In Millions of Dollars 1999 1998(1) 1997(1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues, net of interest expense $ 5,729 $ 4,965 $ 3,790
Effect of credit card securitization activity 2,269 2,187 1,713
- --------------------------------------------------------------------------------
Adjusted revenues, net of interest expense 7,998 7,152 5,503
- --------------------------------------------------------------------------------
Adjusted operating expenses(2) 2,886 2,595 1,759
Adjusted provision for credit losses(3) 3,259 3,264 2,828
- --------------------------------------------------------------------------------
Core income before taxes 1,853 1,293 916
Income taxes 681 485 343
- --------------------------------------------------------------------------------
Core income 1,172 808 573
Restructuring-related items, after-tax (12) 39 36
- --------------------------------------------------------------------------------
Net income $ 1,184 $ 769 $ 537
================================================================================
Average assets (in billions of dollars)(4) $ 28 $ 28 $ 25
Return on assets 4.23% 2.75% 2.15%
================================================================================
Excluding restructuring-related items
Return on assets(5) 4.19% 2.89% 2.29%
================================================================================
</TABLE>
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
(3) Adjusted for the effect of credit card securitization activity.
(4) Adjusted for the effect of credit card securitization activity, managed
average assets were $75 billion, $64 billion, and $50 billion in 1999,
1998, and 1997, respectively.
(5) Adjusted for the effect of credit card securitization activity, the return
on managed assets, excluding restructuring-related items was 1.56% in
1999, 1.26% in 1998, and 1.15% in 1997.
Cards--U.S. bankcards, Canada bankcards, and North America Diners
Club--reported core income of $1.172 billion, up $364 million or 45% from 1998
and in 1998 was up $235 million or 41% from 1997, reflecting significant
increases in the U.S. bankcards business, despite competitive pricing pressures.
Net income of $1.184 billion in 1999, $769 million in 1998, and $537 million in
1997 included restructuring-related credits in 1999 of $12 million ($18 million
pretax), and restructuring charges of $39 million ($58 million pretax) and $36
million ($59 million pretax) in 1998 and 1997, respectively.
Universal Card Services (UCS), which was acquired in April 1998,
contributed approximately $52 million to core income in 1999 compared with a
loss of $72 million in 1998.
Risk adjusted margin is a measure of profitability that takes adjusted
revenues less managed net credit losses as a percentage of average managed
loans, consistent with the goal of matching the revenues generated by the loan
portfolio with the credit risk undertaken. As shown in the following table, U.S.
bankcards risk adjusted margin of 6.37% increased 27 basis points from 1998 and
120 basis points from 1997.
In Billions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
Risk adjusted revenues(1) $ 4.4 $ 3.6 $ 2.4
Risk adjusted margin %(2) 6.37% 6.10% 5.17%
===============================================================================
(1) Adjusted revenues less managed net credit losses.
(2) Risk adjusted revenues as a percentage of average managed loans.
Adjusted revenues, net of interest expense, of $7.998 billion increased
$846 million or 12% from 1998, reflecting receivable growth, including
acquisitions, higher interchange fee revenues due to sales volume growth and
pricing changes, and risk-based pricing actions, offset by changes in portfolio
mix and lower spreads. Excluding the effect of UCS and 1999 acquisitions,
revenues increased approximately 5%. Revenues in 1998 increased $1.649 billion
or 30% primarily reflecting the acquisition of UCS.
As shown in the following table, on a managed basis, the U.S. bankcard
portfolio experienced a 15% growth in sales volumes and a 7% increase in
receivables, including the effect of portfolio acquisitions. Portfolio acqui-
sitions during 1999 added approximately 1.3 million accounts and $2.6 billion of
receivables. Accounts increased only slightly in the year reflecting management
initiatives that resulted in the closing of inactive and/or high-risk accounts.
Growth in 1998 from 1997 reflects the acquisition of UCS.
In Billions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Accounts (in millions) 40.6 40.5 25.8
Cards in force (in millions) 69 69 41
Total sales $ 162.3 $ 140.6 $ 106.3
End-of-period managed receivables 74.2 69.6 49.6
================================================================================
10
<PAGE>
Adjusted operating expenses of $2.886 billion increased $291 million or 11%
in 1999 and grew $836 million or 48% in 1998, reflecting acquisitions and
increased target marketing efforts in U.S. bankcards.
The adjusted provision for credit losses in 1999 was $3.259 billion
compared with $3.264 billion in 1998 and $2.828 billion in 1997. U.S. bankcards
managed net credit losses in 1999 were $3.143 billion and the related loss ratio
was 4.56%, compared with $3.123 billion and 5.33% in 1998 and $2.662 billion and
5.74% in 1997. U.S. bankcards managed loans delinquent 90 days or more were
$1.061 billion or 1.44% at December 31, 1999 compared with $1.001 billion or
1.45% at December 31, 1998 and $868 million or 1.77% at December 31, 1997. The
improvement in the 1999 net credit loss ratio reflects declining industry-wide
bankruptcy trends and credit risk management initiatives.
CitiFinancial
<TABLE>
<CAPTION>
In Millions of Dollars 1999 1998(1) 1997(1)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues, net of interest expense $1,619 $1,275 $1,007
Adjusted operating expenses(2) 617 505 422
Provisions for benefits, claims, and credit losses 385 419 316
- ---------------------------------------------------------------------------------
Core income before taxes 617 351 269
Income taxes 225 129 95
- ---------------------------------------------------------------------------------
Core income 392 222 174
Restructuring-related items, after-tax 2 1 --
- ---------------------------------------------------------------------------------
Net income $ 390 $ 221 $ 174
=================================================================================
Average assets (in billions of dollars) $ 16 $ 12 $ 9
Return on assets 2.44% 1.84% 1.93%
=================================================================================
Excluding restructuring-related items
Return on assets 2.45% 1.85% 1.93%
=================================================================================
</TABLE>
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
CitiFinancial (formerly Consumer Finance Services) includes the consumer
lending operations (including secured and unsecured personal loans, real
estate-secured loans and consumer goods financing) of CitiFinancial Credit
Company (CCC). Also included are related credit insurance services provided
through subsidiaries.
Core income was $392 million in 1999 compared to $222 million in 1998 and
$174 million in 1997. The 77% increase in 1999 reflects strong receivables
growth in all major products, an improved credit environment, and the 1999
acquisition of certain Associates First Capital (Associates) branches. The 28%
increase in 1998 reflects continued internal receivables growth in all major
products, an improved charge-off rate, and the integration of Security Pacific
Financial Services (Security Pacific) into the CitiFinancial branch system since
July 1997. Net receivables at December 31, 1999 reached a record $15.5 billion
compared to $11.9 billion at year-end 1998 and $9.8 billion at year- end 1997.
The receivables growth in 1999 was due to increased business flow at
CitiFinancial branches (including portfolio acquisitions), cross-selling of
CitiFinancial products through Primerica distribution channels, and the
Associates acquisition. Much of the growth in 1998 was in real estate-secured
loans which resulted from the continued strong performance of the $.M.A.R.T.
loan(R) program, as well as solid sales in the branch network. The internal
growth during 1999 and 1998 was led by the Primerica generated portfolio, which
grew 39% to $4.1 billion in 1999 and 31% to $2.95 billion in 1998. At December
31, 1999, CitiFinancial had 1,174 branches, up from 980 at year-end 1998. The
increase in adjusted operating expenses was primarily attributable to the
acquisitions.
The average yield on receivables was 14.45% in 1999 compared to 14.88% in
1998 and 15.24% in 1997. The decline in the average yield resulted from a shift
in the portfolio mix towards lower yielding, higher quality real estate loans,
particularly first mortgage loans. At December 31,1999, the portfolio consisted
of 58% real-estate secured loans, 34% personal loans and 8% sales finance and
other compared to 56% real-estate secured loans, 36% personal loans and 8% sales
finance and other at December 31, 1998.
The provisions for benefits, claims, and credit losses was $385 million in
1999 compared to $419 million in 1998 and $316 million in 1997, reflecting the
continued strong credit environment. The net credit loss ratio of 2.18% in 1999
was down from 2.74% in 1998 and 2.82% in 1997. Loans delinquent 90 days or more
were $203 million or 1.31% in 1999 compared to $172 million or 1.44% in 1998 and
$133 million or 1.36% in 1997.
INSURANCE
Travelers Life and Annuity
In Millions of Dollars 1999 1998(1) 1997(1)
- -----------------------------------------------------------------------------
Total revenues, net of interest expense $3,394 $3,012 $2,677
Provision for benefits and claims 1,997 1,863 1,677
Adjusted operating expenses(2) 451 396 362
- -----------------------------------------------------------------------------
Core income before taxes 946 753 638
Income taxes 323 260 217
- -----------------------------------------------------------------------------
Core income(3) 623 493 421
Restructuring-related items, after-tax -- 8 --
- -----------------------------------------------------------------------------
Net income $ 623 $ 485 $ 421
=============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
(3) Excludes investment gains/losses included in Investment Activities segment.
11
<PAGE>
Travelers Life and Annuity offers individual annuity, group annuity,
individual life and long-term care products marketed by The Travelers Insurance
Company (TIC) and its wholly owned subsidiary The Travelers Life and Annuity
Company (TLAC) under the Travelers name. Among the range of individual products
offered are fixed and variable deferred annuities, payout annuities and term,
universal and variable life and long-term care insurance. These products are
primarily distributed through The Copeland Companies (Copeland), an indirect
wholly owned subsidiary of TIC, Salomon Smith Barney Financial Consultants,
Primerica, Citibank, and a nationwide network of independent agents. The group
products include institutional pensions, including guaranteed investment
contracts (GICs), payout annuities, group annuities to employer-sponsored
retirement and savings plans and structured finance transactions.
Core income was $623 million in 1999 compared to $493 million in 1998 and
$421 million in 1997. The 26% improvement in 1999 was largely driven by
increases in business volumes and strong investment income. During 1999, this
business achieved double-digit growth in individual and group annuity account
balances and direct periodic life and long-term care insurance premiums
reflecting both greater popularity of these products with an aging American
population and strong momentum from cross-selling initiatives. The 17%
improvement in 1998 reflects strong double-digit business volume growth in
annuity account balances and life and long term care premiums, and an increase
in net investment income despite a decline in investment income yields during
1998, resulting primarily from participation in partnership investment interests
being negatively impacted by a downturn in market conditions. This decline in
yields was substantially offset by earnings on an increased capital base created
by business volume growth.
The successful cross-selling initiatives of Travelers Life and Annuity
products through the Primerica, Citibank, Copeland, and Salomon Smith Barney
Financial Consultants distribution channels, along with improved sales through a
nationwide network of independent agents, reflect the ongoing effort to build
market share by strengthening relationships in key distribution channels.
The following table shows net written premiums and deposits by product for
the three years ended December 31, 1999:
In Millions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
Deferred annuities
Fixed $ 1,008 $ 908 $ 779
Variable 4,265 2,892 1,775
Payout annuities 448 429 310
GIC and other annuities 5,249 3,690 2,109
Individual life insurance
Direct periodic premiums and deposits 409 322 290
Single premium deposits 84 85 56
Reinsurance (71) (66) (58)
Individual long-term care insurance 240 213 184
- -------------------------------------------------------------------------------
$ 11,632 $ 8,473 $ 5,445
===============================================================================
The majority of the annuity business and a substantial portion of the life
business written by Travelers Life and Annuity is accounted for as investment
contracts, with the result that the premiums and deposits collected are not
included in revenues.
Significant deferred annuities sales, combined with favorable market
returns from variable annuities, drove account balances to $27.3 billion at
December 31, 1999, from $20.9 billion at year-end 1998 (up 31%) and $16.1
billion at year-end 1997. Net written premiums and deposits increased in 1999 to
$5.27 billion from $3.80 billion in 1998 (up 39%) and $2.55 billion in 1997. The
strong sales reflect the marketing initiatives at Salomon Smith Barney,
Primerica and Citibank as well as Copeland's continued success in the small
company segment of the 401(k) market and very strong agency results.
Payout and group annuity account balances and benefit reserves reached
$15.73 billion at December 31, 1999, up from $13.84 billion at year-end 1998 (up
14%), and $11.94 billion at year-end 1997. This substantial volume growth
reflects strong sales of GICs and structured finance transactions. Net written
premiums and deposits (excluding the Company's employee pension plan deposits)
in 1999 were $5.70 billion, up from $4.12 billion in 1998 (up 38%) and $2.42
billion in 1997.
Direct periodic premiums and deposits for individual life insurance were
$409 million in 1999 compared to $322 million in 1998 (up 27%) and $290 million
in 1997. Life insurance in force was $60.6 billion at December 31, 1999, up from
$55.4 billion at year-end 1998 and $51.6 billion at year-end 1997.
Net written premiums for the long-term care insurance line reached $240
million in 1999 compared to $213 million in 1998 and $184 million in 1997.
Primerica Financial Services
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Total revenues, net of interest expense $1,775 $1,654 $1,522
Provision for benefits and claims 487 484 497
Adjusted operating expenses(1) 586 546 502
- --------------------------------------------------------------------------------
Core income before taxes 702 624 523
Income taxes 250 224 188
- --------------------------------------------------------------------------------
Core income(2) 452 400 335
Restructuring-related items, after-tax -- 2 --
- --------------------------------------------------------------------------------
Net income $ 452 $ 398 $ 335
================================================================================
(1) Excludes restructuring-related items.
(2) Excludes investment gains/losses included in Investment Activities.
12
<PAGE>
Core income was $452 million in 1999 compared to $400 million in 1998 and
$335 million in 1997. The 13% increase in 1999 results reflects continued
success at cross-selling a range of products (particularly mutual funds,
variable annuities and debt consolidation loans), growth in life insurance in
force, improved investment income, and disciplined expense management. The 19%
improvement in 1998 reflects success at cross-selling, growth in life insurance
in force, favorable mortality experience and disciplined expense management.
Increases in production and cross-selling initiatives were achieved during
1999. Earned premiums net of reinsurance were $1.071 billion, $1.057 billion,
and $1.035 billion in 1999, 1998, and 1997, including $1.008 billion, $987
million, and $967 million for Primerica individual term life policies. Total
face amount of issued term life insurance was $56.2 billion in 1999 compared to
$57.4 billion in 1998 and $52.6 billion in 1997. The number of policies issued
was 209,900 in 1999, compared to 223,600 in 1998 and 228,900 in 1997. The
average face value per policy issued was $229,000 in 1999 compared to $223,000
in 1998 and $200,000 in 1997. Life insurance in force at year-end 1999 reached
$394.9 billion, up from $383.7 billion at year-end 1998 and $369.9 billion at
year-end 1997, and continued to reflect good policy persistency.
In recent years, Primerica has leveraged cross-selling through the
Financial Needs Analysis (FNA)--the diagnostic tool that enhances the ability of
the Personal Financial Analysts to address client needs--to expand its business
beyond life insurance and now offers its clients a greater array of financial
products and services, delivered personally through its sales force. More than
490,000 FNAs were submitted during 1999. In addition, Primerica has
traditionally offered mutual funds to clients as a means to invest the relative
savings realized through the purchase of term life insurance as compared to
traditional whole life insurance. Sales of mutual funds were $3.124 billion in
1999 compared to $2.942 billion in 1998 and $2.689 billion in 1997. Salomon
Smith Barney mutual funds accounted for 60% of Primerica's U.S. sales in 1999
and 1998 and 53% and 50% of Primerica's total sales in 1999 and 1998,
respectively. Variable annuity sales continued to show momentum, reaching net
written premiums and deposits of $990 million in 1999, up from $652 million in
1998 and $347 million in 1997. The growth reflects the increased emphasis placed
on cross-selling initiatives in the latter part of 1998, with the current period
sales predominately reflecting sales of Travelers Life and Annuity variable
annuity products. Cash advanced on $.M.A.R.T. loan(R) and $.A.F.E.(R) loan
products underwritten by Travelers Bank & Trust, fsb and CitiFinancial was $1.92
billion in 1999, up 31% from $1.46 billion in 1998 and $1.30 billion in 1997.
The TRAVELERS SECURE(R) line of property and casualty insurance products (sales
in this program were curtailed during the latter part of 1999) showed premiums
of $225 million in 1999 compared to $213 million in 1998 and $73 million in
1997.
Personal Lines
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Total revenues, net of interest expense $4,043 $3,666 $3,276
Claims and claim adjustment expenses 2,554 2,181 1,853
Total operating expenses 1,013 930 884
- --------------------------------------------------------------------------------
Income before taxes and
minority interest 476 555 539
Income taxes 143 172 177
Minority interest, after-tax 54 64 62
- --------------------------------------------------------------------------------
Net income(1) $ 279 $ 319 $ 300
================================================================================
(1) Excludes investment gains/losses included in Investment Activities
segment.
Net income was $279 million in 1999 compared to $319 million in 1998 and
$300 million in 1997. The 1999 decrease primarily reflects higher catastrophe
losses due to Hurricane Floyd, higher loss ratios in the TRAVELERS SECURE(R)
program, a charge related to curtailing the sale of TRAVELERS SECURE(R) auto and
homeowners products, and lower prior-year favorable reserve development,
partially offset by growth in earned premiums. The 1998 increase was primarily
due to higher net investment income and increased production, partially offset
by higher catastrophe losses and a decrease in favorable prior-year reserve
development.
The following table shows net written premiums by product line for the
three years ended December 31:
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Personal automobile $2,369 $2,328 $1,950
Homeowners and other 1,436 1,162 1,124
- --------------------------------------------------------------------------------
$3,805 $3,490 $3,074
================================================================================
Personal Lines net written premiums for 1999 were $3.805 billion compared
to $3.490 billion in 1998 and $3.074 billion in 1997. The 1999 net written
premiums include an increase of $72 million due to the termination of a quota
share reinsurance arrangement. The 1997 net written premiums include an increase
of $69 million due to an adjustment associated with the quota share reinsurance
arrangement. The 1999 and 1998 increases compared to 1998 and 1997,
respectively, primarily reflected growth
13
<PAGE>
in independent agents business and growth in affinity marketing and joint
marketing arrangements. During the third quarter of 1999, TAP decided to curtail
the sale of its TRAVELERS SECURE(R) auto and homeowners products because insured
losses exceeded levels anticipated in the pricing of the products. The growth in
premiums from the independent agent distribution channel has been partially due
to pursuing transfers of books of business to the Company within certain
independent insurance agencies. Frequently, Personal Lines will pay these
agencies an incentive to cover their expenses related to the transfer and
include a competitive inducement to move the book. Many independent agencies are
consolidating their business to a smaller number of insurance carriers resulting
in transfers of business to their preferred carriers.
Catastrophe losses, net of taxes and reinsurance, were $79 million in 1999
compared to $44 million in 1998 and $10 million in 1997. Catastrophe losses in
1999 were primarily due to Hurricane Floyd in the third quarter, wind and hail
storms on the East Coast and tornadoes in the Midwest in the second quarter and
a wind and ice storm in the Midwest and Northeast in the first quarter.
Catastrophe losses in 1998 were primarily due to Hurricanes Bonnie and Georges,
severe first quarter winter storms and second and third quarter wind and hail
storms.
Statutory and generally accepted accounting principles (GAAP) combined
ratios (before allocation of corporate expenses) for Personal Lines were as
follows:
1999 1998 1997
- -------------------------------------------------------------------------------
Statutory
Loss and LAE ratio(1) 70.0% 66.7% 63.5%
Underwriting expense ratio 26.7 27.2 28.7
Combined ratio 96.7 93.9 92.2
- -------------------------------------------------------------------------------
GAAP
Loss and LAE ratio(1) 70.3% 66.7% 63.5%
Underwriting expense ratio 26.5 26.5 28.3
Combined ratio 96.8 93.2 91.8
===============================================================================
(1) LAE represents loss adjustment expenses.
GAAP combined ratios for Personal Lines differ from statutory combined
ratios primarily due to the deferral and amortization of certain expenses for
GAAP reporting purposes only.
The 1999 statutory and GAAP combined ratios for Personal Lines include an
adjustment associated with the termination of a quota share reinsurance
arrangement. Excluding this adjustment the 1999 statutory and GAAP combined
ratios were 96.5% and 97.3%, respectively. The increase in the 1999 statutory
and GAAP combined ratios excluding this adjustment compared to the 1998
statutory and GAAP combined ratios was due to higher catastrophe losses due to
Hurricane Floyd, higher loss ratios in the TRAVELERS SECURE(R) program, the
TRAVELERS SECURE(R) charge, and lower favorable prior-year reserve development
in the automobile bodily injury line.
The 1997 statutory and GAAP combined ratios for Personal Lines include an
adjustment associated with a change in a quota share reinsurance arrangement.
Excluding this adjustment, the 1997 statutory and GAAP combined ratios would
have been 92.1% and 92.5%, respectively. The increase in the 1998 statutory and
GAAP combined ratios compared to the 1997 statutory and GAAP combined ratios
excluding this adjustment was primarily due to higher catastrophe and other
weather-related losses and a decrease in favorable prior-year reserve
development, partially offset by a decrease in the underwriting expense ratio
due to a lower commission expense ratio associated with the alternative
distribution channels.
INTERNATIONAL CONSUMER
Europe, Middle East & Africa
<TABLE>
<CAPTION>
In Millions of Dollars 1999 1998(1) 1997(1)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues, net of interest expense $2,335 $2,143 $2,047
Adjusted operating expenses(2) 1,501 1,473 1,440
Provisions for benefits, claims, and credit losses 312 299 282
- ---------------------------------------------------------------------------------
Core income before taxes 522 371 325
Income taxes 195 146 122
- ---------------------------------------------------------------------------------
Core income 327 225 203
Restructuring-related items, after-tax 15 125 65
- ---------------------------------------------------------------------------------
Net income $ 312 $ 100 $ 138
=================================================================================
Average assets (in billions of dollars) $ 22 $ 22 $ 22
Return on assets 1.42% 0.45% 0.63%
=================================================================================
Excluding restructuring-related items
Return on assets 1.49% 1.02% 0.92%
=================================================================================
</TABLE>
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
Europe, Middle East & Africa (EMEA--including India and Pakistan)--which
provides banking, lending and investment services, including credit and charge
cards, to customers throughout the region--reported core income of $327 million
in 1999, up $102 million or 45% from 1998, reflecting growth across the region,
particularly Germany, and a $16 million ($25 million pretax) gain related to an
investment in an affiliate. Core income in 1998 was up $22 million or 11% from
1997, reflecting business volume growth. Net income of $312 million in 1999,
$100 million in 1998, and $138 million in 1997 included restructuring-related
items of $15 million ($23 million pretax), $125 million ($239 million pretax),
and $65 million ($112 million pretax), respectively.
The net effect of foreign currency translation on core income was minimal;
however, the impact on revenue growth was a reduction of approximately 3 and 2
percentage points and on expense growth was a reduction of approximately 4 and 2
percentage points in 1999 and 1998, respectively.
As shown in the following table, EMEA reported 8% account growth in 1999
and 4% in 1998 primarily reflecting loan growth, including credit cards.
However, loans and customer deposits were reduced by the effect of foreign
currency translation.
In Billions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Accounts (in millions) 11.1 10.2 9.8
Average customer deposits $ 17.0 $ 17.3 $ 16.8
Average loans 16.9 16.3 15.6
================================================================================
14
<PAGE>
Revenues, net of interest expense, of $2.335 billion in 1999 grew $192
million or 9% from 1998 reflecting loan growth, improved spreads, and higher
insurance and investment product fees. Revenues in 1999 also reflected the $25
million gain associated with an investment in an affiliate. Revenues in 1998
increased $96 million or 5% from 1997 reflecting growth across all countries
except India and Pakistan where revenues declined as a result of economic
conditions.
Adjusted operating expenses increased $28 million or 2% in 1999 and grew
$33 million or 2% in 1998. Excluding the effect of foreign currency translation,
expenses in 1999 and 1998 reflect higher business volumes and costs associated
with franchise growth in Central and Eastern Europe.
The provisions for benefits, claims, and credit losses in 1999 were $312
million, compared to $299 million in 1998 and $282 million in 1997. The net
credit loss ratio of 1.67% in 1999 declined from 1.70% in 1998 and 1.75% in
1997. Loans delinquent 90 days or more were $914 million or 5.33% at December
31, 1999, down from $955 million or 5.46% at December 31, 1998 and $919 million
or 5.92% at December 31, 1997.
Asia Pacific
<TABLE>
<CAPTION>
In Millions of Dollars 1999 1998(1) 1997(1)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues, net of interest expense $2,248 $1,849 $1,878
Adjusted operating expenses(2) 1,186 976 1,025
Provisions for benefits, claims, and credit losses 353 251 198
- ---------------------------------------------------------------------------------
Core income before taxes 709 622 655
Income taxes 266 239 248
- ---------------------------------------------------------------------------------
Core income 443 383 407
Restructuring-related items, after-tax 13 64 60
- ---------------------------------------------------------------------------------
Net income $ 430 $ 319 $ 347
=================================================================================
Average assets (in billions of dollars) $ 31 $ 28 $ 27
Return on assets 1.39% 1.14% 1.29%
=================================================================================
Excluding restructuring-related items
Return on assets 1.43% 1.37% 1.51%
=================================================================================
</TABLE>
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
Asia Pacific (including Japan and Australia)--which provides banking,
lending and investment services, including credit and charge cards, to customers
throughout the region--reported core income of $443 million in 1999, up from
$383 million and $407 million in 1998 and 1997, respectively, reflecting
business growth and expansion as the region rebounds from weak 1998 results. Net
income of $430 million in 1999, $319 million in 1998, and $347 million in 1997
included restructuring-related items of $13 million ($22 million pretax), $64
million ($83 million pretax), and $60 million ($97 million pretax),
respectively.
Strengthening currencies across the region resulted in net foreign currency
translation effects that increased core income by approximately $10 million in
1999 and revenue and expense growth was increased by approximately 5 and 6
percentage points, respectively. In 1998, the net effect of foreign currency
translation reduced core income by approximately $112 million and revenue and
expense growth was reduced by approximately 22 and 16 percentage points,
respectively.
As shown in the following table, Asia Pacific accounts grew 21% in both
1999 and 1998. The growth in 1999 reflects significant increases in Japan,
growth in the Cards business across the region, and economic stabilization in
most countries. The 1998 increase in accounts and customer deposits reflects the
"flight to quality" in the region.
In Billions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Accounts (in millions) 9.2 7.6 6.3
Average customer deposits $ 42.1 $ 36.1 $ 30.5
Average loans 23.3 20.2 20.8
================================================================================
Revenues, net of interest expense, of $2.248 billion increased $399 million
or 22% from 1998 reflecting strong performance in Japan and business volume
growth and higher spreads in most other countries. Revenues in 1998 declined $29
million from 1997 reflecting the effect of foreign currency translation and
spread compression in certain countries, offset by higher deposit volumes due to
the "flight to quality" in the region.
Adjusted operating expenses of $1.186 billion increased $210 million or 22%
from 1998 reflecting higher marketing spending across the region and costs
associated with new branches and additional product offerings, particularly in
Japan. Expenses in 1998 declined $49 million or 5% from 1997 reflecting the
effect of foreign currency translation, partially offset by costs associated
with business volume growth.
The provisions for benefits, claims, and credit losses in 1999 of $353
million increased from $251 million in 1998 and $198 million in 1997. The net
credit loss ratio was 1.28% in 1999, up from 1.12% in 1998 and 0.82% in 1997.
Loans delinquent 90 days or more were $453 million or 1.80% at December 31,
1999, compared with $498 million or 2.28% at December 31, 1998 and $259 million
or 1.34% at December 31, 1997. The increases in the provision and the net credit
loss ratio from 1998 primarily reflect increases in Taiwan and Hong Kong;
however, the delinquency ratio declined in 1999 reflecting the economic
stabilization across the region.
Latin America
In Millions of Dollars 1999 1998(1) 1997(1)
- -----------------------------------------------------------------------------
Total revenues, net of interest expense $1,983 $1,598 $1,475
Adjusted operating expenses(2) 1,193 1,068 921
Provision for credit losses 447 265 192
- -----------------------------------------------------------------------------
Core income before taxes 343 265 362
Income taxes 115 105 119
- -----------------------------------------------------------------------------
Core income 228 160 243
Restructuring-related items, after-tax 27 67 20
- -----------------------------------------------------------------------------
Net income $ 201 $ 93 $ 223
=============================================================================
Average assets (in billions of dollars) $ 14 $ 12 $ 8
Return on assets 1.44% 0.78% 2.79%
=============================================================================
Excluding restructuring-related items
Return on assets 1.63% 1.33% 3.04%
=============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
15
<PAGE>
Latin America--which provides banking, lending and investment services,
including credit and charge cards, to customers throughout the region--reported
core income of $228 million in 1999, up $68 million or 43% from 1998, reflecting
an increase in earnings from Credicard, a 33%-owned Brazilian Card affiliate,
and the effect of certain acquisitions, partially offset by a higher provision
for credit losses. Core income of $160 million in 1998 declined from $243
million in 1997 primarily reflecting lower earnings from Credicard. Net income
of $201 million in 1999, $93 million in 1998, and $223 million in 1997 included
restructuring-related items of $27 million ($42 million pretax), $67 million
($88 million pretax), and $20 million ($33 million pretax), respectively.
The Brazilian currency devaluation in the beginning of 1999 significantly
contributed to the 1999 foreign currency translation effects that reduced core
income by approximately $34 million. Foreign currency translation effects
reduced revenue and expense growth by approximately 10 and 7 percentage points,
respectively. The effect of foreign currency translation in 1998 reduced revenue
and expense growth by approximately 4 and 5 percentage points, respectively,
however the impact on core income was minimal.
As shown in the following table, Latin America experienced strong business
volume growth in 1999 and 1998, including the effect of acquisitions. Average
loan growth of 1% in 1999 was reduced by credit risk management initiatives.
Customer deposit growth also reflects a "flight to quality" in the region.
In Billions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Accounts (in millions) 8.8 7.3 5.4
Average customer deposits $ 13.5 $ 10.2 $ 8.2
Average loans 7.9 7.8 6.6
================================================================================
Revenues, net of interest expense, of $1.983 billion increased $385 million
or 24% from 1998 reflecting acquisitions in the region and increased earnings
from Credicard. Revenues in 1998 increased $123 million or 8% from 1997,
reflecting acquisitions in the region and business volume growth, offset by
lower earnings from Credicard.
Adjusted operating expenses of $1.193 billion increased $125 million or 12%
from 1998 reflecting acquisitions in the region. Efficiency efforts in 1999
contributed to a 3% decline in expenses excluding the effect of acquisitions and
foreign currency translation. Expenses in 1998 grew $147 million or 16% from
1997 reflecting acquisitions in the region, spending on new strategic alliances,
and increased collection efforts.
The provision for credit losses of $447 million in 1999 increased from $265
million in 1998 and $192 million in 1997. The net credit loss ratio was 5.30% in
1999, up from 3.07% in 1998 and 2.66% in 1997. Loans delinquent 90 days or more
of $320 million or 4.10% at December 31, 1999 increased from $288 million or
3.60% at December 31, 1998 and $173 million or 2.34% at December 31, 1997. The
increases in the provision and the net credit loss ratio from 1998 reflect
economic conditions in the region, particularly in Argentina and Chile, and the
effect of recent acquisitions.
e-CITI
In Millions of Dollars 1999 1998(1) 1997(1)
- ----------------------------------------------------------------------------
Total revenues, net of interest expense $ 233 $ 149 $ 114
Adjusted operating expenses(2) 527 378 236
Provision for credit losses 5 3 4
- ----------------------------------------------------------------------------
Loss before tax benefits (299) (232) (126)
Income tax benefits (120) (91) (48)
- ----------------------------------------------------------------------------
Loss (179) (141) (78)
Restructuring-related items, after-tax -- 2 16
- ----------------------------------------------------------------------------
Net loss $(179) $(143) $ (94)
============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
e-Citi--the business responsible for developing and implementing the
Company's internet financial services products and e-commerce
solutions--reported losses before restructuring-related items of $179 million in
1999, compared to $141 million in 1998 and $78 million in 1997. Net losses of
$143 million in 1998 and $94 million in 1997 included restructuring-related
items of $2 million ($3 million pretax) and $16 million ($28 million pretax),
respectively.
Revenues, net of interest expense, were $233 million in 1999, up from $149
million in 1998 and $114 million in 1997, reflecting business volume increases
in certain electronic banking services.
Adjusted operating expenses of $527 million increased from $378 million and
$236 million in 1998 and 1997, respectively, reflecting continued investment in
Internet-based and other electronic financial services as well as other
e-commerce solutions and volume increases associated with electronic banking
services.
OTHER CONSUMER
In Millions of Dollars 1999 1998(1) 1997(1)
- -----------------------------------------------------------------------------
Total revenues, net of interest expense $ 67 $ 100 $ 108
Adjusted operating expenses(2) 195 217 80
- -----------------------------------------------------------------------------
(Loss) income before taxes (128) (117) 28
Income taxes (benefits) (42) (40) 20
- -----------------------------------------------------------------------------
(Loss) income (86) (77) 8
Restructuring-related items, after-tax 12 -- --
- -----------------------------------------------------------------------------
Net (loss) income $ (98) $ (77) $ 8
=============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
Other Consumer--which includes certain treasury operations and global
marketing and other programs--reported losses before restructuring-related items
of $86 million in 1999, compared with $77 million in 1998, reflecting higher
costs associated with global distribution initiatives and lower treasury results
reflecting the higher interest rate environment, offset by lower marketing costs
and reduced staff levels. The loss of $77 million in 1998 as compared to income
of $8 million in 1997 reflects higher spending on global advertising, marketing,
and distribution development initiatives. The net loss of $98 million in 1999
included restructuring-related items of $12 million ($19 million pretax).
16
<PAGE>
CONSUMER PORTFOLIO REVIEW
In the consumer portfolio, credit loss experience is often expressed in terms of
annualized net credit losses as a percentage of average loans. Pricing and
credit policies reflect the loss experience of each particular product. Consumer
loans are generally written off no later than a predetermined number of days
past due on a contractual basis, or earlier in the event of bankruptcy. The
number of days is set at an appropriate level according to loan product and
country.
The table below summarizes delinquency and net credit loss experience in
both the managed and on-balance sheet loan portfolios in terms of loans 90 days
or more past due, net credit losses, and as a percentage of related loans.
Consumer Loan Delinquency Amounts, Net Credit Losses, and Ratios
<TABLE>
<CAPTION>
Total Average
Loans 90 Days or More Past Due(1) Loans
-------- ------------------------------- --------
In Millions of Dollars, Except Loan Amounts in Billions 1999 1999 1998 1997 1999
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Citibanking North America $ 7.4 $ 55 $ 93 $ 133 $ 7.6
Ratio 0.75% 1.20% 1.59%
Mortgage Banking 30.1 696 625 715 27.4
Ratio 2.31% 2.44% 3.13%
U.S. Bankcards 73.7 1,061 1,001 868 69.0
Ratio 1.44% 1.45% 1.77%
Other Cards 2.2 30 28 32 2.4
Ratio 1.38% 1.23% 1.56%
CitiFinancial 15.5 203 172 133 13.6
Ratio 1.31% 1.44% 1.36%
Europe, Middle East & Africa 17.2 914 955 919 16.9
Ratio 5.33% 5.46% 5.92%
Asia Pacific 25.1 453 498 259 23.3
Ratio 1.80% 2.28% 1.34%
Latin America 7.8 320 288 173 7.9
Ratio 4.10% 3.60% 2.34%
Citibank Private Bank (2) 22.4 120 193 110 19.2
Ratio 0.54% 1.14% 0.72%
Other 0.8 3 2 1 0.9
- ------------------------------------------------------------------------------------------------------------------
Total managed 202.2 3,855 3,855 3,343 188.2
Ratio 1.91% 2.12% 2.23%
- ------------------------------------------------------------------------------------------------------------------
Securitized credit card receivables (49.0) (725) (658) (481) (46.9)
Loans held for sale (4.5) (32) (38) (35) (5.2)
- ------------------------------------------------------------------------------------------------------------------
Total loans $ 148.7 $ 3,098 $ 3,159 $ 2,827 $ 136.1
Ratio 2.08% 2.39% 2.36%
==================================================================================================================
<CAPTION>
Net Credit Losses(1)
-------------------------------
In Millions of Dollars, Except Loan Amounts in Billions 1999 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Citibanking North America $ 90 $ 106 $ 109
Ratio 1.18% 1.34% 1.36%
Mortgage Banking 43 75 115
Ratio 0.16% 0.31% 0.51%
U.S. Bankcards 3,143 3,123 2,662
Ratio 4.56% 5.33% 5.74%
Other Cards 87 79 81
Ratio 3.70% 3.51% 3.88%
CitiFinancial 295 291 233
Ratio 2.18% 2.74% 2.82%
Europe, Middle East & Africa 281 277 273
Ratio 1.67% 1.70% 1.75%
Asia Pacific 298 227 171
Ratio 1.28% 1.12% 0.82%
Latin America 419 239 175
Ratio 5.30% 3.07% 2.66%
Citibank Private Bank (2) 19 5 (13)
Ratio 0.10% 0.03% NM
Other 5 3 4
- -----------------------------------------------------------------------------------------
Total managed 4,680 4,425 3,810
Ratio 2.49% 2.70% 2.61%
- -----------------------------------------------------------------------------------------
Securitized credit card receivables (2,159) (2,053) (1,587)
Loans held for sale (110) (134) (126)
- -----------------------------------------------------------------------------------------
Total loans $ 2,411 $ 2,238 $ 2,097
Ratio 1.77% 1.82% 1.79%
=========================================================================================
</TABLE>
(1) The ratios of 90 days or more past due and net credit losses are calculated
based on end-of-period and average loans, respectively, both net of
unearned income.
(2) Citibank Private Bank results are reported as part of the Global Investment
Management and Private Banking segment.
Consumer Loan Balances, Net of Unearned Income
<TABLE>
<CAPTION>
End of Period Average
----------------------------- -----------------------------
In Billions of Dollars 1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Managed $ 202.2 $ 181.6 $ 149.8 $ 188.2 $ 163.8 $ 145.7
Securitized credit card receivables (49.0) (44.3) (26.8) (46.9) (36.5) (25.2)
Loans held for sale (4.5) (5.0) (3.5) (5.2) (4.6) (3.6)
- ----------------------------------------------------------------------------------------------------------
On-balance sheet $ 148.7 $ 132.3 $ 119.5 $ 136.1 $ 122.7 $ 116.9
==========================================================================================================
</TABLE>
17
<PAGE>
Total delinquencies 90 days or more past due in the managed portfolio were
$3.9 billion with a related delinquency ratio of 1.91% at December 31, 1999,
compared with $3.9 billion or 2.12% at December 31, 1998 and $3.3 billion or
2.23% at December 31, 1997. Total managed net credit losses in 1999 were $4.7
billion and the related loss ratio was 2.49%, compared with $4.4 billion and
2.70% in 1998 and $3.8 billion and 2.61% in 1997. For a discussion on trends by
business, see business discussions on pages 8-16.
Citigroup's allowance for credit losses of $6.7 billion is available to
absorb all probable credit losses inherent in the portfolio. For analytical
purposes only, the portion of Citigroup's allowance for credit losses attributed
to the consumer portfolio was $3.4 billion as of December 31, 1999, up from $3.3
billion and $2.8 billion as of December 31, 1998 and 1997, respectively. The
increase in 1998 from 1997 reflects the addition of $320 million of credit loss
reserves related to the acquisition of UCS. The allowance as a percentage of
loans on the balance sheet was 2.31% as of December 31, 1999, down from 2.50% at
December 31, 1998 reflecting improved credit performance in the portfolio. The
attribution of the allowance is made for analytical purposes only and may change
from time to time.
In Millions of Dollars 1999 1998 1997
- ------------------------------------------------------------------------------
Allowance for credit losses $3,435 $3,310 $2,808
As a percentage of total consumer loans 2.31% 2.50% 2.35%
==============================================================================
GLOBAL CONSUMER OUTLOOK
The statements below are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. See "Forward-Looking Statements" on
page 34.
In 2000, Citigroup will adopt the Federal Financial Institutions
Examination Council's (FFIEC) revised Uniform Retail Credit Classification and
Account Management Policy. The policy provides guidance on the reporting of
delinquent consumer loans and the timing of associated credit charge-offs for
Citigroup's financial institution subsidiaries. The revised policy is not
expected to have a material effect on financial results since Citigroup
maintains adequate reserves for probable credit losses inherent in its loan
portfolios. However, net credit losses, delinquencies and the related ratios may
increase from 1999 levels as a result of portfolio growth, global economic
conditions, and the credit performance of the portfolios, including
bankruptcies.
Banking/Lending
Citibanking North America. 1999 was a year of major transformation and success.
The business significantly changed its expense structure, reducing operating
expenses by $334 million or 20%. Citibanking invested in training and licensing
programs and implemented new compensation programs to enable and motivate
associates to sell a full range of financial products that meet clients' needs.
By the end of 1999, the majority of sales associates became licensed and
Citibanking introduced Citipro, a complimentary financial analysis to assess
clients' financial needs and recommend appropriate financial products to meet
those needs. This new sales strategy and culture has accelerated revenue growth
through increased sales of banking products and higher investment product fees.
As a result, revenues grew 11% in the second half of 1999 as compared to 3% in
the first half of 1999. Revenue growth in 2000 is expected to exceed the growth
experienced in 1999.
Mortgage Banking. In 1999 Mortgage Banking, which includes the student loan
business, expanded its product set and geographic presence through the
acquisition of Source One and distribution through Citigroup affiliates.
Continued growth is expected in 2000 through improved returns on the mortgage
servicing portfolio, expanded Internet and cross-sell opportunities, and the
introduction of new lending products. Student loan growth will be driven by
increased presence in the wholesale business and Internet lending.
Cards. The Cards business delivered outstanding performance in 1999 within a
challenging business environment, led by growth in receivables and sales volume
and improved risk adjusted margins despite competitive pressures. Additionally,
the business successfully executed two portfolio acquisitions in the year. As a
result, the business is moving into 2000 with solid momentum. While competitive
pressures will continue, the business will leverage its size in meeting the
needs of existing customers and gain wallet share by continuing to grow existing
profitable relationships and testing new value propositions and channels,
including the Internet. Further, Cards will meet its customers broader needs
through cross-selling and financial facilitation opportunities that will provide
for continued business growth. Improved credit performance significantly
contributed to earnings growth in 1999. Credit performance is not expected to
improve further in 2000 and credit costs and delinquencies may increase from
1999 levels as a result of the economic environment and continued business
growth.
18
<PAGE>
CitiFinancial. During 1999, CitiFinancial acquired operations in Florida that
had access to significant correspondent and broker networks, as well as
purchased approximately 200 branches. CitiFinancial is also pursuing other
sources of new volume through its affiliates within Citigroup. In addition, the
number of competitors in consumer finance lending has changed over the past few
years. CitiFinancial believes that the industry will continue to consolidate and
this may present an opportunity to grow via acquisitions both domestically and
internationally.
Utilizing the existing and recently acquired new channels, CitiFinancial
expects continued growth in 2000. CitiFinancial believes that its secured
lending products will produce above average returns should interest rates
continue to rise. Increases in interest rates could possibly have an adverse
effect on the economy. Credit losses are expected to increase modestly in 2000
given that they were at historical lows in 1999.
Insurance Industry
Changes in the general interest rate environment affect the return received by
the insurance subsidiaries on newly invested and reinvested funds. While a
rising interest rate environment enhances the returns available, it reduces the
market value of existing fixed maturity investments and the availability of
gains on disposition. A decline in interest rates reduces the return available
on investment of funds, but creates the opportunity for realized investment
gains on disposition of fixed maturity investments.
As required by various state laws and regulations, the Company's insurance
subsidiaries are subject to assessments from state-administered guaranty
associations, second injury funds and similar associations.
Certain social, economic, political, and litigation issues have led to an
increased number of legislative and regulatory proposals aimed at addressing the
cost and availability of certain types of insurance, as well as the claim and
coverage obligations of insurers. While most of these provisions have failed to
become law, these initiatives may continue as legislators and regulators try to
respond to the public availability, affordability, and claims concerns, and the
resulting laws, if any, could adversely affect the Company's ability to write
business with appropriate returns.
Travelers Life and Annuity should benefit from growth in the aging population
who are becoming more focused on the need to accumulate adequate savings for
retirement, to protect these savings and to plan for the transfer of wealth to
the next generation. Travelers Life and Annuity is well positioned to take
advantage of the favorable long-term demographic trends through its strong
financial position, widespread brand name recognition and broad array of
competitive life, annuity and retirement and estate planning products sold
through established distribution channels.
However, competition in both product pricing and customer service is
intensifying. While there has been some consolidation within the industry, other
financial services organizations are increasingly involved in the sale and/or
distribution of insurance products. Financial Services reform is likely to have
many effects on the life insurance industry and the results will take time to
assess; however, heightened competition is expected. Also, the annuities
business is interest sensitive, and swings in interest rates could influence
sales and retention of in force policies. In order to strengthen its competitive
position, Travelers Life and Annuity expects to maintain a current product
portfolio, further diversify its distribution channels, and retain its healthy
financial position through strong sales growth and maintenance of an efficient
cost structure.
Primerica. During the last few years Primerica has instituted programs including
sales and product training that are designed to maintain high compliance
standards, increase the number of producing agents and customer contacts and,
ultimately, increase production levels. Additionally, increased effort has been
made to provide all Primerica customers full access to all Primerica marketed
lines. Insurance in force continues to grow. A continuation of these trends
could positively influence future operations. Primerica continues to expand
cross-selling with other Company subsidiaries of products such as loans, mutual
funds, and annuity products.
Personal Lines strategy includes control of operating expenses to improve
competitiveness and profitability, growth in sales through independent agents
and continued expansion of alternative marketing channels to broaden
distribution to a wider customer base. Personal Lines is continuing its state by
state rollout of nonstandard auto insurance to broaden its product capabilities.
These growth strategies also provide opportunities to leverage the existing cost
structure and achieve economies of scale. In addition, Personal Lines continues
to take action to control its exposure to catastrophe losses, including limiting
the writing of new homeowners business in certain markets and implementing price
increases in certain hurricane-prone areas, subject to restrictions imposed by
insurance regulatory authorities.
The personal auto insurance marketplace has become more competitive in 1999
as some personal auto carriers have reduced prices in selected markets.
Additionally, auto loss costs have deteriorated slightly. These trends are
expected to continue in 2000. Personal Lines will continue to emphasize
underwriting discipline in this competitive marketplace and pursue a strategy of
flat to modest increases in auto rates. Market conditions for homeowners
insurance have remained stable with the industry experiencing modest rate
increases. Personal Lines expects homeowner rate increases to continue in 2000.
Homeowners loss cost trends have held at modest levels.
The property and casualty insurance industry in the United States continues
to consolidate. The Company's strategic objectives are to enhance its position
as a consistently profitable market leader and to become a low-cost provider of
property and casualty insurance in the United States, as the industry
consolidates.
In relation to the Company's objective of being a low-cost provider of
property and casualty insurance, an emphasis on claim payout and performance and
enhanced productivity efforts are expected to continue. However, some of the
insurance industry's methods have been challenged in litigation.
19
<PAGE>
International Consumer
Europe, Middle East & Africa. The newly unified Europe represents a large market
whose size and strong demographic characteristics rival that of the U.S.
Additional growth opportunity comes from the developing markets of Central and
Eastern Europe where an emerging middle class is expected to fuel the demand for
financial services. In 2000, the region will focus on the development of
Internet banking and investment products, including e-brokerage services. Not
unlike the U.S., as the social reforms take hold, an increasing recognition on
the part of consumers that they will need to fund their own retirements is
fueling a substantial investment product opportunity. Although the European
Economic Monetary Union represents great opportunity, the challenges are
substantial. A single market requires pan-European product offerings, brings
increased competition, and creates a greater ability on the part of consumers to
comparison shop across borders. Citigroup's strengths in distribution and
consistent global advertising and marketing efforts will provide a strong
platform to expand beyond the current European presence.
Asia Pacific. Asia's economic crisis has highlighted the need for a deep, rapid
restructuring of the banking industry across the region. 1999 was one of the
industry's most challenging years on record. Local banks consolidated,
competition intensified with the growing presence of foreign banks and non-bank
financial institutions, and market dynamics changed due to structural shifts,
including the rapid development of the Internet across Asia. In 1999, the
business embarked on a number of strategic cost management initiatives to
support a strengthened franchise. Both revenues and earnings experienced healthy
growth in 1999. Asia's economic recovery is expected to broaden in 2000. As a
result of the economic outlook and the business momentum built in 1999, Asia
Pacific is well positioned in 2000 for continued franchise growth.
Latin America. The region experienced deteriorating economic conditions during
1999 in many of its countries, which resulted in contracting Gross Domestic
Product, currency volatility, and a difficult credit environment. The
macroeconomic outlook is expected to remain challenging in 2000, with most
countries returning to only modest growth. The business will focus its growth on
less risky products and population segments, and continue to implement operating
expense reduction programs. Tight controls on loan underwriting and collections
implemented in 1999, coupled with a moderately improved economic climate in
2000, should result in improved credit performance.
GLOBAL CORPORATE AND INVESTMENT BANK
<TABLE>
<CAPTION>
In Millions of Dollars 1999 1998(1) 1997(1)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues, net of interest expense $ 27,355 $ 22,360 $ 23,819
Adjusted operating expenses(2) 15,476 14,462 14,177
Provisions for benefits, claims, and credit losses 3,852 4,160 3,667
- ----------------------------------------------------------------------------------------
Core income before taxes and
minority interest 8,027 3,738 5,975
Income taxes 2,785 1,226 2,145
Minority interest, after-tax 167 143 132
- ----------------------------------------------------------------------------------------
Core income 5,075 2,369 3,698
Restructuring-related items, after-tax (121) (26) 664
- ----------------------------------------------------------------------------------------
Net income(3) $ 5,196 $ 2,395 $ 3,034
========================================================================================
</TABLE>
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
(3) The 1999 period excludes cumulative effect of accounting changes.
Citigroup's Global Corporate and Investment Bank business serves
corporations, financial institutions, governments, investors, and other
participants in capital markets throughout the world and consists of SSB,
Emerging Markets, GRB, and the Commercial Lines business of TAP. SSB is one of
the largest investment banking, underwriting and brokerage firms in the world,
with a significant presence in most major financial products. Emerging Markets
provides a wide array of banking products and services to multinational and
large and emerging local corporations in 78 emerging market countries. GRB
focuses on providing banking, capital markets, and transaction processing
services to large multinational companies in 22 developed countries and to their
subsidiaries around the world. TAP is one of the largest property and casualty
insurers in the United States offering, among other products, workers'
compensation, commercial multi-peril, commercial auto, other liability, fidelity
and surety, and property and other lines, which it distributes through
independent agents and brokers. Earnings generated from businesses outside the
U.S. represented about 35% of total Global Corporate and Investment Bank core
income in 1999.
The Global Corporate and Investment Bank reported core income of $5.075
billion in 1999, up $2.706 billion or 114%, reflecting a rebound from 1998
economic turmoil and strong 1999 growth across the franchise. The growth in core
income was led by SSB, up $1.946 billion to $2.354 billion, Emerging Markets, up
$442 million to $1.190 billion, and GRB, up $196 million to $686 million.
Excluding the 1998 severe market conditions, core income growth reflected strong
revenue momentum across SSB, revenue growth and improved credit in Emerging
Markets, and lower expenses combined with revenue growth in GRB. Commercial
Lines' core income growth reflected favorable legislation benefits and
prior-year reserve development, along with lower weather-related losses.
Net income of $5.196 billion, $2.395 billion, and $3.034 billion in 1999,
1998 and 1997, respectively, included net restructuring-related credits of $121
million ($207 million pretax) and $26 million ($62 million pretax) in 1999 and
1998, respectively, and in 1997, a charge of $664 million ($1.119 billion
20
<PAGE>
pretax). Restructuring-related items in 1999 included reductions in the
restructuring reserve of $150 million ($255 million pretax) of which $127
million ($214 million pretax) related to the 1997 reserve that resulted from
SSB's reassessment of space needs due to the Citicorp merger.
Restructuring-related items in 1998 included a reduction of the 1997
restructuring reserve of $191 million ($324 million pretax) that resulted from
SSB's favorable negotiations on a sublease on the Seven World Trade Center
location. Also included in 1998 is a restructuring charge of $165 million ($262
million pretax) related to initiatives designed to realize synergies and
operating efficiencies. Included in 1997 are charges recorded by SSB related to
the Salomon Smith Barney merger and by Emerging Markets and GRB related to
cost-management programs and customer service initiatives. See Note 14 of Notes
to Consolidated Financial Statements for further discussion of
restructuring-related items.
SALOMON SMITH BARNEY
The following data does not include the Asset Management division of Salomon
Smith Barney. The division's results are included in the SSB Citi Asset
Management Group segment.
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Total revenues, net of interest expense $ 12,680 $ 8,333 $ 10,218
Adjusted operating expenses(1) 8,973 7,702 7,895
- --------------------------------------------------------------------------------
Core income before taxes 3,707 631 2,323
Income taxes 1,353 223 885
- --------------------------------------------------------------------------------
Core income 2,354 408 1,438
Restructuring-related items, after-tax (143) (163) 496
- --------------------------------------------------------------------------------
Net income(2) $ 2,497 $ 571 $ 942
================================================================================
(1) Excludes restructuring-related items.
(2) 1999 excludes cumulative effect of accounting change.
Core income was $2.354 billion in 1999 compared to $408 million in 1998 and
$1.438 billion in 1997. Salomon Smith Barney's earnings during 1999 reflect a
rebound from 1998 economic turmoil losses and strong growth in commission income
from the Private Client group, investment banking fees and principal
transactions. During the latter part of 1998 Salomon Smith Barney's performance
was depressed by extreme economic turmoil in much of the world.
Revenues for the three years ended December 31, 1999 by category were as
follows:
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Commissions $ 3,630 $ 3,203 $ 2,956
Investment banking 2,970 2,281 2,082
Principal transactions 2,544 (115) 2,501
Asset management and administration fees(1) 1,638 1,325 998
Interest income, net(2) 1,614 1,460 1,533
Other income 284 179 148
- --------------------------------------------------------------------------------
Total revenues, net of interest expense(2) $12,680 $ 8,333 $10,218
================================================================================
(1) Excludes the revenues of SSB Asset Management, which are reported in the
SSB Citi Asset Management Group results.
(2) Net of interest expense of $9,652 million, $11,433 million, and $10,496
million in 1999, 1998, and 1997, respectively.
Revenues, net of interest expense, increased 52% in 1999 to $12.680 billion
from $8.333 billion in 1998 and $10.218 billion in 1997. The 1999 increase
compared to 1998 reflects strong growth in all businesses as well as a rebound
from the prior year's economic turmoil. The 1998 decrease compared to 1997
primarily reflects a decline in principal transaction revenues from fixed income
and global arbitrage offset, to an extent, by increases in commissions, asset
management and administration fees, and investment banking revenues.
Commissions revenue increased 13% in 1999 to $3.630 billion from $3.203
billion in 1998 and $2.956 billion in 1997. The 1999 and 1998 increases reflect
growth in sales of listed and over-the-counter (OTC) securities.
Investment banking revenues were $2.970 billion in 1999 compared to $2.281
billion in 1998 and $2.082 billion in 1997. The increases in 1999 reflect growth
in equity and high grade debt underwritings and mergers and acquisitions fees.
The increases in 1998 reflect revenue growth in unit trust, public finance and
high grade debt underwritings, and mergers and acquisitions fees. This was
offset somewhat by a decline in equity underwritings. Investment banking
revenues in 1998 were also favorably impacted by increased high yield
underwriting revenues.
Principal transactions revenues were $2.544 billion in 1999 compared to a
loss of $115 million in 1998 and $2.501 billion in 1997. The 1999 period
reflects strong growth in institutional global fixed income and global equities.
The 1998 period reflects decreases in fixed income trading results including
losses due to risk reductions in the U.S. fixed income arbitrage business. These
decreases in 1998 were partially offset by an increase in equity trading
results. In 1998 fixed income trading results were adversely impacted by
significant dislocations in the global fixed income markets, including greatly
reduced liquidity and widening credit spreads. Included in these results were
Russia-related losses.
Asset management and administration fees were $1.638 billion in 1999
compared to $1.325 billion in 1998 and $998 million in 1997. The year to year
increases reflect growth in assets under fee-based management. These fees
include results from assets managed by the Financial Consultants as well as
assets that are externally managed through the consulting group.
Total assets under fee-based management at December 31, were as follows:
In Billions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Financial Consultant managed accounts $ 27.4 $ 16.5 $ 11.6
Consulting Group externally managed assets 83.0 71.9 59.7
- --------------------------------------------------------------------------------
Total assets under
fee-based management(1) $ 110.4 $ 88.4 $ 71.3
================================================================================
(1) Excludes the assets under management of SSB Asset Management, which are
reported in the SSB Citi Asset Management Group business segment.
Interest income, net was $1.614 billion in 1999 compared to $1.460 billion
in 1998 and $1.533 billion in 1997. The increase in 1999 compared to 1998 is
primarily due to increases in margin lending to clients.
Adjusted operating expenses were $8.973 billion in 1999 compared to $7.702
billion in 1998 and $7.895 billion in 1997. Adjusted operating expenses
increased 17% in 1999 over 1998 primarily due to an increase in
production-related compensation and employee benefits expense, reflecting
increased revenues. Adjusted operating expenses were relatively unchanged in
1998 as compared to 1997. Salomon Smith Barney continues to maintain its focus
on controlling fixed expenses.
21
<PAGE>
GLOBAL CORPORATE BANK
Emerging Markets
In Millions of Dollars 1999 1998(1) 1997(1)
- -----------------------------------------------------------------------------
Total revenues, net of interest expense $4,327 $3,632 $3,483
Adjusted operating expenses(2) 2,062 2,015 1,898
Provision for credit losses 347 424 120
- -----------------------------------------------------------------------------
Core income before taxes and
minority interest 1,918 1,193 1,465
Income taxes 722 445 548
Minority interest, after-tax 6 -- --
- -----------------------------------------------------------------------------
Core income 1,190 748 917
Restructuring-related items, after-tax 10 50 32
- -----------------------------------------------------------------------------
Net income $1,180 $ 698 $ 885
=============================================================================
Average assets (in billions of dollars) $ 82 $ 78 $ 64
Return on assets 1.44% 0.89% 1.38%
=============================================================================
Excluding restructuring-related items
Return on assets 1.45% 0.96% 1.43%
=============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
Emerging Markets core income totaled $1.190 billion in 1999, up $442
million or 59% from 1998, reflecting Russia-related losses in 1998 and strong
1999 revenue growth in Latin America, along with an improved credit outlook that
resulted in a lower provision for credit losses. In Asia (including Australia
and New Zealand but excluding Japan and the Indian subcontinent), improved net
write-offs and lower expenses offset revenue declines from lower trading
activity. Core income in 1998 of $748 million declined $169 million or 18% from
1997. Net income of $1.180 billion, $698 million and $885 million in 1999, 1998
and 1997, respectively, included restructuring-related items of $10 million ($17
million pretax), $50 million ($73 million pretax) and $32 million ($54 million
pretax), respectively.
Revenues, net of interest expense, of $4.327 billion grew $695 million or
19% compared with 1998 reflecting double-digit growth in loan product revenues,
structured products revenues and trade services and an $86 million improvement
in trading-related revenues. Revenue growth in 1999 included double-digit growth
in Latin America and CEEMEA (Central and Eastern Europe, Middle East and Africa)
that was partially offset by a decline in trading-related revenues in Asia.
Revenues of $3.632 billion in 1998 grew $149 million or 4% compared with 1997,
as double-digit growth in transaction banking revenues was partially offset by
losses attributable to the Russia related market turmoil.
Revenues attributed to the Embedded Bank and Emerging Local Corporate
strategies (Citigroup's plans to gain market share in selected emerging market
countries), together with new franchises, grew 30% in 1999 and 66% in 1998.
These revenues accounted for 7%, 7% and 4% of the Emerging Markets revenues in
1999, 1998, and 1997, respectively. Revenues in the Emerging Markets business
that were attributable to business from multinational companies managed jointly
with GRB grew 18% in 1999 and 15% in 1998. These revenues accounted for
approximately 28%, 28%, and 29% of total Emerging Markets revenues in 1999,
1998, and 1997, respectively.
Adjusted operating expenses in 1999 were well controlled, increasing $47
million or 2% to $2.062 billion as investment spending to gain market share in
selected emerging market countries and volume growth were essentially funded by
savings from the 1997 and 1998 restructuring actions and other expense
initiatives. Expenses in 1998 were $2.015 billion, up $117 million or 6%
compared to 1997, primarily due to investment spending to build the franchise,
together with volume growth.
The provision for credit losses totaled $347 million in 1999, down $77
million compared with 1998. The decrease in 1999 was primarily attributable to
lower net write-offs in Russia and Asia, partially offset by an increase in
Latin America, as well as an overall improved credit outlook that resulted in a
lower provision for credit losses. The provision for credit losses in 1998 of
$424 million was up $304 million compared with 1997. The increase in 1998 was
concentrated in Indonesia and Russia and reflected the effects of economic
turmoil experienced in those countries. Cash-basis loans at December 31, 1999,
1998, and 1997 were $1.044 billion, $1.062 billion and $649 million. The 1999
balance reflected decreases in Asia partially offset by increases in Latin
America. The increase in 1998 was concentrated in Indonesia and several other
Asian countries.
Average assets of $82 billion in 1999 rose $4 billion or 5% from 1998
reflecting growth across all regions. The growth was concentrated in the loan
portfolio and structured products. Average assets of $78 billion in 1998 rose
$14 billion or 22% from 1997 reflecting growth across all regions, primarily in
loan portfolio, trade finance, and treasury products.
Global Relationship Banking
In Millions of Dollars 1999 1998(1) 1997(1)
- ----------------------------------------------------------------------------
Total revenues, net of interest expense $ 4,083 $ 3,914 $ 3,815
Adjusted operating expenses(2) 3,008 3,170 2,756
Provision (benefit) for credit losses 1 (30) (84)
- ----------------------------------------------------------------------------
Core income before taxes 1,074 774 1,143
Income taxes 388 284 432
- ----------------------------------------------------------------------------
Core income 686 490 711
Restructuring-related items, after-tax 12 87 136
- ----------------------------------------------------------------------------
Net income $ 674 $ 403 $ 575
============================================================================
Average assets (in billions of dollars) $ 81 $ 92 $ 83
Return on assets 0.83% 0.44% 0.69%
============================================================================
Excluding restructuring-related items
Return on assets 0.85% 0.53% 0.86%
============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
22
<PAGE>
Core income from Global Relationship Banking in North America, Europe, and
Japan was $686 million in 1999, up $196 million or 40% from 1998 primarily
reflecting current year revenue growth, prior year economic turmoil and lower
expenses. Core income in 1998 was $490 million, down $221 million or 31% from
1997. Net income of $674 million, $403 million, and $575 million in 1999, 1998
and 1997, respectively, included restructuring-related items of $12 million ($18
million pretax), $87 million ($141 million pretax) and $136 million ($227
million pretax), respectively.
Revenues, net of interest expense, in 1999 of $4.083 billion increased $169
million or 4% from 1998. Revenues in 1998 included losses attributable to global
economic turmoil as well as gains related to the disposition of real estate
investments. Excluding these items, the 1999 results reflect growth in
structured products, global equities and transaction services, partially offset
by a decline in loan portfolio revenues. Revenues in 1998 of $3.914 billion
increased $99 million or 3% from 1997 as double-digit growth in foreign exchange
and transaction services revenues was partially offset by the effect of the 1998
global economic turmoil.
Adjusted operating expenses were $3.008 billion in 1999, down $162 million
or 5% from 1998. The decline in expenses from 1998 to 1999 was primarily the
result of decreased costs related to the year 2000 and the EMU, coupled with
restructuring actions and business integration initiatives with SSB. Expenses of
$3.170 billion in 1998 were $414 million or 15% higher than 1997. The 1998
increase was primarily attributable to increased technology spending, including
year 2000 and EMU expenses, along with volume-related expense growth.
The provision for credit losses was $1 million in 1999 compared to net
benefits of $30 million and $84 million in 1998 and 1997, respectively. Net
benefits in 1998 were primarily the result of real estate recoveries partially
offset by write-offs resulting from the financial market turmoil in Russia. Net
benefits in 1997 resulted from recoveries in real estate and corporate loan
portfolios.
Cash-basis loans at December 31, 1999, 1998 and 1997 were $304 million,
$268 million and $401 million while the OREO portfolio totaled $156 million,
$235 million and $440 million, respectively. The increase in cash-basis loans in
1999 was due to an increase in North America partially offset by improvements in
the real estate portfolio. The improvements in cash-basis loans in 1998 and in
OREO in 1999 and 1998 were primarily related to the real estate portfolio.
Average assets of $81 billion in 1999 declined $11 billion or 12% from
1998, primarily reflecting the transfer of certain fixed income businesses to
SSB. Average assets of $92 billion in 1998 increased $9 billion or 11% from 1997
primarily reflecting higher lending to target market clients and higher volumes
in transaction banking services.
COMMERCIAL LINES
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Total revenues, net of interest expense $6,265 $6,481 $6,303
Claims and claim adjustment expenses 3,504 3,766 3,631
Total operating expenses 1,433 1,575 1,628
- --------------------------------------------------------------------------------
Income before taxes and
minority interest 1,328 1,140 1,044
Income taxes 322 274 280
Minority interest, after-tax 161 143 132
- --------------------------------------------------------------------------------
Net income(1)(2) $ 845 $ 723 $ 632
================================================================================
(1) Excludes investment gains/losses included in Investment Activities segment.
(2) 1999 excludes cumulative effect of accounting changes.
Net income was $845 million in 1999 compared to $723 million in 1998 and
$632 million in 1997. The 1999 increase compared to 1998 reflects a benefit
resulting from legislative actions by the states of New York and Pennsylvania
that changed the manner in which these states finance their workers'
compensation second-injury funds, and favorable prior-year reserve development.
Also contributing to the earnings improvement in 1999 were lower weather-
related losses and lower operating expenses, partially offset by lower fee
income. Operating results in 1999 reflected TAP's long-standing insistence on
maintaining discipline in the highly competitive commercial lines marketplace
and on growing business only where market conditions warrant. During 1999, the
Company began to see modest price increases on renewal business. However, these
increases varied significantly and reinforced the fact that rates in many areas
still have not improved to the point of producing acceptable returns. The 1998
increase compared to 1997 was due to increased after-tax net investment income,
expense reductions, and lower environmental and cumulative injury incurred
losses, partially offset by increased losses from catastrophes and other
weather-related events. Operating results during this period also reflected
market conditions characterized by difficult pricing and increased competition.
The impact of this trend in market conditions on 1998 and 1997 operating results
was offset by the factors previously indicated, as well as a disciplined
approach to underwriting and risk management.
Net written premiums by market for the three years ended December 31, 1999
were as follows:
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
National accounts $ 488 $ 625 $ 657
Commercial accounts 1,816 1,800 1,986
Select accounts 1,494 1,494 1,432
Specialty accounts 610 695 682
- --------------------------------------------------------------------------------
$4,408 $4,614 $4,757
================================================================================
23
<PAGE>
Commercial Lines net written premiums were $4.408 billion in 1999 compared
to $4.614 billion in 1998 and $4.757 billion in 1997. The 1997 net written
premiums reflect a $142 million adjustment ($127 million in Commercial Accounts
and $15 million in Select accounts) in the first quarter of 1997 due to a change
to conform the method of recording certain net written premiums of the domestic
property and casualty insurance subsidiaries acquired from Aetna Services Inc.
(Aetna P&C) to the method employed by Travelers Indemnity and its subsidiaries
(Travelers P&C). The trend in net written premiums for all lines continues to
reflect the highly competitive marketplace and the Company's continued
disciplined approach to underwriting and risk management. Also contributing to
the 1999 decrease in net written premiums in National Accounts and Specialty
Accounts is the impact of additional reinsurance coverage. The slight increase
in Commercial Accounts net written premiums in 1999 reflects growth in specific
business segments and an improving rate environment. The slight increase in
Specialty Accounts net written premiums in 1998 reflects strong production in
excess and surplus lines.
Fee income was $275 million in 1999 compared to $306 million in 1998 and
$365 million in 1997. The decreases in fee income were the result of the
depopulation of involuntary pools serviced by the Company and the Company's
continued success in lowering workers' compensation losses of service customers.
National Accounts new business in 1999 was significantly lower than in 1998
reflecting the Company's continued disciplined approach to the highly
competitive marketplace. National Accounts business retention ratio was
moderately higher in 1999 than in 1998, primarily reflecting the loss of one
large account in 1998. National Accounts new business and business retention
ratio were virtually the same in 1998 as they were in 1997. National Accounts
experienced an increase in claim service-only business as well as favorable
results from continued product development efforts, especially in workers'
compensation cost containment programs.
In 1999, new business in Commercial Accounts was significantly lower than
in 1998, reflecting the Company's continued focus on obtaining new business
accounts only where it can maintain its selective underwriting policy. The
Commercial Accounts business retention ratio in 1999 was virtually the same as
in 1998. For 1998, new premium business in Commercial Accounts significantly
declined compared to 1997, reflecting TAP's focus on maintaining its selective
underwriting policy. The Commercial Accounts business retention ratio remained
strong in 1998 and was virtually the same as 1997, reflecting TAP's focus on
retaining profitable business.
New premium business in Select Accounts was significantly lower in 1999
compared to 1998 and continued to reflect its selective underwriting policy in
the highly competitive marketplace. New premium business in Select Accounts was
moderately lower in 1998 compared to 1997 reflecting the highly competitive
marketplace and the Company's continued disciplined approach to underwriting and
risk management. Select Accounts business retention ratio remained strong in
1999 and was virtually the same as 1998 and 1997.
Catastrophe losses, net of tax and reinsurance, were $27 million in 1999
compared to $25 million in 1998 and $5 million in 1997. The 1999 catastrophe
losses were primarily due to Hurricane Floyd in the third quarter and tornadoes
in Oklahoma in the second quarter. The 1998 catastrophe losses were primarily
due to Hurricane Georges in the third quarter and tornadoes in Nashville,
Tennessee in the second quarter. The 1997 catastrophe losses were primarily due
to tornadoes in the Midwest in the first quarter.
Statutory and GAAP combined ratios (before allocation of corporate
expenses) for Commercial Lines were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory
Loss and LAE ratio 77.9% 78.5% 78.4%
Underwriting expense ratio 30.7 29.7 30.6
Combined ratio before policyholder dividends 108.6 108.2 109.0
Combined ratio 109.7 109.1 111.0
- -------------------------------------------------------------------------------
GAAP
Loss and LAE ratio 75.2% 78.4% 78.3%
Underwriting expense ratio 29.8 31.1 30.4
Combined ratio before policyholder dividends 105.0 109.5 108.7
Combined ratio 106.1 110.4 109.9
===============================================================================
</TABLE>
GAAP combined ratios for Commercial Lines differ from statutory combined
ratios primarily due to the deferral and amortization of certain expenses for
GAAP reporting purposes only. For purposes of computing GAAP combined ratios,
fee income is allocated as a reduction of losses and loss adjustment expenses
and other underwriting expenses.
The 1999 statutory combined ratio for Commercial Lines reflected the
treatment of the commutation of an asbestos liability to an insured. Excluding
this commutation, the statutory combined ratio before policyholder dividends for
1999 would have been 106.1% compared to 108.2% in 1998. The improvement was
primarily due to favorable prior-year reserve development and lower
weather-related losses. The decrease in the 1999 GAAP combined ratio before
policyholder dividends compared to 1998 was due to favorable prior-year reserve
development, lower weather-related losses, and the benefit of the New York and
Pennsylvania legislative actions, partially offset by lower fee income.
The 1997 statutory and GAAP combined ratios for Commercial Lines included
an adjustment due to a change to conform the Aetna P&C method with the Travelers
P&C method of recording certain net written premiums. Excluding this adjustment,
the statutory and GAAP combined ratios before policyholder dividends for 1997
would have been 109.5% and 109.6%, respectively. The decrease in the 1998
statutory and GAAP combined ratios before policyholder dividends compared to the
1997 statutory and GAAP combined ratios before policyholder dividends excluding
this adjustment was due to expense reductions and lower environmental and
cumulative injury incurred losses, partially offset by higher catastrophe and
other weather-related losses and lower fee income.
24
<PAGE>
Environmental Claims
As a result of various state and federal legislative and regulatory efforts
aimed at environmental remediation, the insurance industry has been, and
continues to be, involved in litigation involving policy coverage and liability
issues. The Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") enacted in 1980 and later modified, enables private parties as well
as federal and state governments to take action with respect to releases and
threatened releases of hazardous substances. This federal statute permits both
the recovery of response costs from certain liable parties and may require
liable parties to directly undertake their own remedial action. Liability under
CERCLA may be joint and several with other responsible persons. In addition to
the regulatory pressures, the Company believes that certain court decisions have
expanded insurance coverage beyond the original intent of the insurers and
insureds. These decisions often pertain to insurance policies that were issued
by TAP prior to the mid-1970s. The court decisions affecting the industry's
coverage positions continue to be inconsistent. Accordingly, the ultimate
responsibility and liability for environmental remediation costs remain
uncertain.
The Company continues to receive claims alleging liability exposures
arising out of insureds' alleged disposition of toxic substances. These claims
when submitted rarely indicate the monetary amount being sought by the claimant
from the insured and the Company does not keep track of the monetary amount
being sought in those few claims which indicated such a monetary amount.
The Company's reserves for environmental claims are not established on a
claim-by-claim basis. An aggregate bulk reserve is carried for all of the
Company's environmental claims that are in the dispute process, until the
dispute is resolved. This bulk reserve is established and adjusted based upon
the aggregate volume of in-process environmental claims and the Company's
experience in resolving such claims. At December 31, 1999, approximately 22% of
the net environmental loss reserve (approximately $149 million) consists of case
reserves for resolved claims. The balance, approximately 78% of the net
aggregate reserve (approximately $527 million), is carried in a bulk reserve and
includes incurred but not reported environmental claims for which the Company
has not received any specific claims.
The Company's reserving methodology is preferable to one based on
"identified claims" since the resolution of environmental exposures by the
Company generally occurs by settlement on an insured-by-insured basis as opposed
to a claim-by-claim basis. Generally, the settlement between the Company and the
insured extinguishes any obligation the Company may have under any policy issued
to the insured for past, present and future environmental liabilities as well as
extinguishes any pending coverage litigation dispute with the insured. This form
of settlement is commonly referred to as a "buy-back" of policies for future
environmental liability. Additional provisions of these agreements include
appropriate indemnities and hold harmless provisions to protect the Company. The
Company's general purpose in executing such agreements is to reduce its
potential environmental exposure and eliminate both the risks presented by
coverage litigation with the insured and the cost of such litigation.
The reserving methodology includes an analysis by the Company of the
exposure presented by each insured and the anticipated cost of resolution, if
any, for each insured. This analysis is completed by the Company on a quarterly
basis. In the course of its analysis, an assessment of the probable liability,
available coverage, judicial interpretations and historical value of similar
exposures is considered by the Company. In addition, due consideration is given
to the many variables presented, such as the nature of the alleged activities of
the insured at each site; the allegations of environmental damage at each site;
the number of sites; the total number of potentially responsible parties at each
site; the nature of environmental harm and the corresponding remedy at a site;
the nature of government enforcement activities at each site; the ownership and
general use of each site; the overall nature of the insurance relationship
between the Company and the insured; the identification of other insurers; the
potential other coverage available, if any, including the number of years of
coverage, if any; and the applicable law in each jurisdiction. Analysis of these
and other factors, including the potential for future claims, results in the
establishment of the bulk reserve.
The duration of the Company's investigation and review of such claims and
the extent of time necessary to determine an appropriate estimate, if any, of
the value of the claim to the Company, vary significantly and are dependent upon
a number of factors. These factors include, but are not limited to, the
cooperation of the insured in providing claim information, the pace of
underlying litigation or claim processes, the pace of coverage litigation
between the insured and the Company and the willingness of the insured and the
Company to negotiate, if appropriate, a resolution of any dispute between them
pertaining to such claims. Since the foregoing factors vary from claim to claim
and insured by insured, the Company cannot provide a meaningful average of the
duration of an environmental claim. However, based upon the Company's experience
in resolving such claims, the duration may vary from months to several years.
The property and casualty insurance industry does not have a standard
method of calculating claim activity for environmental losses. Generally for
Superfund remediation-type environmental claims, the Company establishes a claim
file for each insured on a per site, per claimant basis. If there is more than
one claimant such as a federal and a state agency, this method will result in
two claims being set up for a policyholder at that one site. The Company adheres
to this method of calculating claim activity on all environmental-related
claims, whether such claims are tendered on primary, excess or umbrella
policies.
25
<PAGE>
In addition, the Company establishes claim files for environmental claims
brought by individual claimants who allege injury or damage as a result of the
discharge of wastes or pollutants allegedly by the policyholder. As it pertains
to such claims tendered on policies issued by Travelers P&C, the Company
establishes a claim file on a per claim, per insured, per site basis. For
example, if one hundred claimants file a lawsuit against five policyholders
alleging bodily injury and property damage as a result of the discharge of
wastes or pollutants, one thousand claims (five hundred for the bodily injury
claims and five hundred for the property damage claims) would be established.
As it pertains to environmental claims brought by individual claimants and
tendered on Aetna P&C policies, the Company establishes claim files on a per
insured, per site basis due to current claim system limitations. For example, if
one hundred claimants file a lawsuit against five policyholders alleging bodily
injury and property damage as a result of the discharge of wastes or pollutants,
five claims for the bodily injury claims and five for the property damage claims
would be established.
As of December 31, 1999, calculated as described above, the Company had
approximately 39,000 pending environmental-related claims tendered by 968 active
policyholders. Of the total pending environmental-related claims, 28,800 claims
relate to Travelers P&C policies tendered by 413 policyholders and 10,200 claims
relate to Aetna P&C policies tendered by 646 policyholders. Approximately 91 of
these Aetna P&C policyholders are also included in the 413 Travelers P&C
policyholders' count. The pending environmental-related claims represent federal
or state EPA-type claims as well as plaintiffs' claims alleging bodily injury
and property damage due to the discharge of waste or pollutants allegedly by the
policyholder.
The following table displays activity for environmental losses and loss
expenses and reserves for the years ended December 31:
Environmental Losses
In Millions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
Beginning reserves
Direct $ 928 $ 1,193 $ 1,369
Ceded (96) (74) (127)
- -------------------------------------------------------------------------------
Net 832 1,119 1,242
Incurred losses and loss expenses
Direct 139 123 79
Ceded (82) (73) (14)
Losses paid
Direct 266 388 271
Ceded (53) (51) (67)
Other(1)
Direct -- -- 16
Ceded -- -- --
- -------------------------------------------------------------------------------
Ending reserves
Direct 801 928 1,193
Ceded (125) (96) (74)
- -------------------------------------------------------------------------------
Net $ 676 $ 832 $ 1,119
===============================================================================
(1) Represents reallocation of general liability reserves to environmental
reserves.
Over the past two years the Company has experienced a substantial reduction
in the number of policyholders with pending coverage litigation disputes
pertaining to environmental claims as well as a continued reduction in the
number of policyholders with active environmental claims.
As of December 31, 1999, the number of policyholders with pending coverage
litigation disputes pertaining to environmental claims was 270, approximately
33% less than the number pending as of December 31,1998 and approximately 50%
less than the number pending as of December 31, 1997. As of December 31, 1999
the Company, for approximately $1.57 billion (before reinsurance), has resolved
the environmental liabilities presented by 4,953 of the 5,921 policyholders who
have tendered environmental claims to the Company. This resolution comprises 84%
of the policyholders who have tendered such claims. The Company generally has
been successful in resolving its coverage litigation disputes and continues to
reduce its potential exposure through favorable settlements with certain
insureds. Generally the settlement dollars paid in disputed coverage claims are
a percentage of the total coverage sought by such insureds.
The Company has direct environmental reserves (before reinsurance) of
approximately $801 million, $530 million of which relates to 968 policyholders
with unresolved environmental claims (the remaining 16% of the 5,921
policyholders who have tendered environmental claims); policyholders that may
tender an environmental claim in the future; and for the anticipated cost of
coverage litigation disputes pertaining to such environmental claims. Based upon
the Company's reserving methodology and the experience of its historical
resolution of environmental exposures, it believes that the environmental
reserve is appropriate.
Asbestos Claims
In the area of asbestos claims, the Company believes that the property and
casualty insurance industry has suffered from judicial interpretations that have
attempted to maximize insurance availability from both a coverage and liability
standpoint far beyond the intent of the contracting parties. These policies
generally were issued prior to 1980. The Company continues to receive asbestos
claims alleging insureds' liability from claimants' asbestos-related injuries.
These claims, when submitted, rarely indicate the monetary amount being sought
by the claimant from the insured and the Company does not keep track of the
monetary amount being sought in those few claims that indicated such a monetary
amount. Originally the cases involved mainly plant workers and traditional
asbestos manufacturers and distributors. However, in the mid-1980s, a new group
of plaintiffs, whose
26
<PAGE>
exposure to asbestos was less direct and whose injuries were often speculative,
began to file lawsuits in increasing numbers against the traditional defendants
as well as peripheral defendants who had produced products that may have
contained small amounts of some form of encapsulated asbestos. These claims
continue to arise and on an individual basis generally involve smaller companies
with smaller limits of potential coverage. Also, there has emerged a group of
non-product claims by plaintiffs, mostly independent labor union workers, mainly
against companies, alleging exposure to asbestos while working at these
companies' premises. The Company continues to receive this type of asbestos
claim.
Various classes of asbestos defendants, such as major product
manufacturers, peripheral and regional product defendants as well as premises
owners, are tendering asbestos-related claims to the industry. Because each
insured presents different liability and coverage issues, including whether such
claims qualify as products or non-products claims, the Company evaluates those
issues on an insured-by-insured basis.
The Company's evaluations have not resulted in any meaningful data from
which an average asbestos defense or indemnity payment may be determined. The
varying defense and indemnity payments made by the Company on behalf of its
insureds have also precluded the Company from deriving any meaningful data by
which it can predict whether its defense and indemnity payments for asbestos
claims (on average or in the aggregate) will remain the same or change in the
future. Based upon the Company's experience with asbestos claims, the duration
period of an asbestos claim from the date of submission to resolution is
approximately two years.
At December 31, 1999, approximately 11% of the net aggregate reserve
(approximately $94 million) is for pending asbestos claims. The balance,
approximately 89% (approximately $733 million) of the net asbestos reserve,
represents incurred but not reported losses for which the Company has not
received any specific claims.
In general, the Company posts case reserves for pending asbestos claims
within approximately 30 business days of receipt of such claims. The following
table displays activity for asbestos losses and loss expenses and reserves for
the years ended December 31:
Asbestos Losses
<TABLE>
<CAPTION>
In Millions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning reserves
Direct $ 1,252 $ 1,363 $ 1,443
Ceded (266) (249) (370)
- -------------------------------------------------------------------------------
Net 986 1,114 1,073
Incurred losses and loss expenses
Direct 128 135 87
Ceded (71) (69) (18)
Losses paid
Direct 330 246 174
Ceded (114) (52) (140)
Other(1)
Direct -- -- 7
Ceded -- -- (1)
- -------------------------------------------------------------------------------
Ending reserves
Direct 1,050 1,252 1,363
Ceded (223) (266) (249)
- -------------------------------------------------------------------------------
Net $ 827 $ 986 $ 1,114
===============================================================================
</TABLE>
(1) Represents reallocation of reserves.
Uncertainty Regarding Adequacy of Environmental and Asbestos Reserves
It is difficult to estimate the reserves for environmental and asbestos-related
claims due to the vagaries of court coverage decisions, plaintiffs' expanded
theories of liability, the risks inherent in major litigation and other
uncertainties. Conventional actuarial techniques are not used to estimate such
reserves.
For environmental claims, the Company estimates its financial exposure and
establishes reserves based upon an analysis of its historical claim experience
and the facts of the individual underlying claims. The unique facts presented in
each claim are evaluated individually and collectively. Due consideration is
given to the many variables presented in each claim, as discussed above.
The following factors are evaluated in projecting the ultimate reserve for
asbestos-related claims: available insurance coverage; limits and deductibles;
an analysis of each policyholder's potential liability; jurisdictional
involvement; past and projected future claim activity; past settlement values of
similar claims; allocated claim adjustment expense; potential role of other
insurance; and applicable coverage defenses, if
27
<PAGE>
any. Once the gross ultimate exposure for indemnity and allocated claim
adjustment expense is determined for a policyholder by policy year, a ceded
projection is calculated based on any applicable facultative and treaty
reinsurance, and past ceded experience.
As a result of these processes and procedures, the reserves carried for
environmental and asbestos claims at December 31, 1999 are the Company's best
estimate of ultimate claims and claim adjustment expenses based upon known facts
and current law. However, the conditions surrounding the final resolution of
these claims continue to change. Currently, it is not possible to predict
changes in the legal and legislative environment and their impact on the future
development of asbestos and environmental claims. Such development will be
affected by future court decisions and interpretations, as well as changes in
legislation applicable to such claims. Because of these future unknowns,
additional liabilities may arise for amounts in excess of the current reserves.
These additional amounts, or a range of these additional amounts, cannot now be
reasonably estimated, and could result in a liability exceeding reserves by an
amount that would be material to the Company's operating results in a future
period. However, the Company believes that it is not likely that these claims
will have a material adverse effect on the Company's financial condition or
liquidity.
Cumulative Injury Other Than Asbestos (CIOTA) Claims
CIOTA claims are generally submitted to the Company under general liability
policies and often involve an allegation by a claimant against an insured that
the claimant has suffered injuries as a result of long-term or continuous
exposure to potentially harmful products or substances. Such potentially harmful
products or substances include, but are not limited to, lead paint, pesticides,
pharmaceutical products, silicone-based personal products, solvents and other
deleterious substances.
Due to claimants' allegations of long-term bodily injury in CIOTA claims,
numerous complex issues regarding such claims are presented. The claimants'
theories of liability must be evaluated, evidence pertaining to a causal link
between injury and exposure to a substance must be reviewed, the potential role
of other causes of injury must be analyzed, the liability of other defendants
must be explored, an assessment of a claimant's damages must be made, and the
law of the jurisdiction must be applied. In addition, the Company must review
the number of policies issued by the Company to the insured and whether such
policies are triggered by the allegations, the terms and limits of liability of
such policies, the obligations of other insurers to respond to the claim, and
the applicable law in each jurisdiction.
To the extent disputes exist between the Company and a policyholder
regarding the coverage available for CIOTA claims, the Company resolves the
disputes, where feasible, through settlements with the policyholder or through
coverage litigation. Generally, the terms of a settlement agreement set forth
the nature of the Company's participation in resolving CIOTA claims, the scope
of coverage to be provided by the Company and contain the appropriate
indemnities and hold harmless provisions to protect the Company. These
settlements generally eliminate uncertainties for the Company regarding the
risks extinguished, including the risk that losses would be greater than
anticipated due to evolving theories of tort liability or unfavorable coverage
determinations. The Company's approach also has the effect of determining losses
at a date earlier than would have occurred in the absence of such settlement
agreements. On the other hand, in cases where future developments are favorable
to insurers, this approach could have the effect of resolving claims for amounts
in excess of those that would ultimately have been paid had the claims not been
settled in this manner. No inference should be drawn that because of the
Company's method of dealing with CIOTA claims, its reserves for such claims are
more conservatively stated than those of other insurers.
At December 31, 1999, approximately 21% of the net aggregate reserve
(approximately $179 million) is for pending CIOTA claims. The balance,
approximately 79% (approximately $692 million) of the net CIOTA reserve,
represents incurred but not reported losses for which the Company has not
received any specific claims. In general, the Company posts case reserves for
pending CIOTA claims within approximately 30 business days of receipt of such
claims.
The following table displays activity for CIOTA losses and loss expenses
and reserves for the years ended December 31:
CIOTA Losses
In Millions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
Beginning reserves
Direct $ 1,346 $ 1,520 $ 1,560
Ceded (392) (432) (446)
- -------------------------------------------------------------------------------
Net 954 1,088 1,114
Incurred losses and loss expenses
Direct (36) (31) 32
Ceded 28 29 (6)
Losses paid
Direct 126 143 72
Ceded (51) (11) (20)
- -------------------------------------------------------------------------------
Ending reserves
Direct 1,184 1,346 1,520
Ceded (313) (392) (432)
- -------------------------------------------------------------------------------
Net $ 871 $ 954 $ 1,088
===============================================================================
28
<PAGE>
COMMERCIAL PORTFOLIO REVIEW
Commercial loans are identified as impaired and placed on a nonaccrual basis
when it is determined that the payment of interest or principal is doubtful of
collection or when interest or principal is past due for 90 days or more, except
when the loan is well secured and in the process of collection. Impaired
commercial loans are written down to the extent that principal is judged to be
uncollectible. Impaired collateral-dependent loans are written down to the lower
of cost or collateral value. The following table summarizes commercial
cash-basis loans and net credit losses (recoveries).
In Millions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
Commercial cash-basis loans at year-end
Emerging Markets $ 1,044 $ 1,062 $ 649
Global Relationship Banking 304 268 401
- -------------------------------------------------------------------------------
Total Global Corporate Bank 1,348 1,330 1,050
Insurance and Investment Activities 55 265 14
- -------------------------------------------------------------------------------
Total commercial cash-basis loans $ 1,403 $ 1,595 $ 1,064
===============================================================================
Net credit losses (recoveries)
Emerging Markets $ 406 $ 446 $ 120
Global Relationship Banking 1 (30) (84)
- -------------------------------------------------------------------------------
Total Global Corporate Bank 407 416 36
Investment Activities -- (10) (64)
- -------------------------------------------------------------------------------
Total net credit losses (recoveries) $ 407 $ 406 $ (28)
===============================================================================
The 1999 decrease in Insurance cash-basis loans reflected a transfer to
OREO during the year. The increase in 1998 Insurance cash-basis loans was
primarily due to a limited number of commercial real estate loans. Net
recoveries in Investment Activities in 1997 included $50 million from the
refinancing agreement concluded with Peru. For a further discussion of trends by
business, see the business discussions on pages 22-23.
Citigroup's allowance for credit losses of $6.7 billion is available to
absorb all probable credit losses inherent in the portfolio. For analytical
purposes only, the portion of Citigroup's allowance for credit losses attributed
to the commercial portfolio was $3.2 billion at December 31, 1999 compared to
$3.3 billion at both December 31, 1998 and 1997. The decline in the allowance in
1999 primarily reflected an improved credit outlook in Emerging Markets.
In Millions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
Commercial allowance for credit losses $3,244 $3,307 $3,329
As a percentage of total commercial loans 3.40% 3.69% 4.21%
===============================================================================
GLOBAL CORPORATE AND INVESTMENT BANK OUTLOOK
The statements below are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. See "Forward-Looking Statements" on
page 34.
The businesses of Global Corporate and Investment Bank are significantly
affected by the levels of activity in the global capital markets which, in turn,
are influenced by macro-economic and political policies and developments, among
other factors, in the 100 countries in which the businesses operate. Global
economic events can have both positive and negative effects on the revenue
performance of the businesses and can negatively affect credit performance. In
particular, levels of principal transactions, realized gains from sales of
investments, and gains from asset sales may fluctuate in the future as a result
of market and asset-specific factors.
Losses on commercial lending activities and the level of cash-basis loans
can vary widely with respect to timing and amount, particularly within any
narrowly defined business or loan type.
A variety of factors continue to affect the property and casualty insurance
market, including the competitive pressures affecting pricing and profitability,
inflation in the cost of medical care, and litigation.
Salomon Smith Barney and Global Corporate Bank. In 1998, the global capital
markets experienced economic turmoil not seen in at least a decade, as currency
crises sparked economic turmoil that began in Asia Pacific and spread to Russia
and, in early 1999, to Latin America. In response to the turmoil, the businesses
undertook a number of initiatives to mitigate the negative effects of global
instability. These initiatives include significantly reducing the risk profile,
particularly in SSB's global arbitrage operation where, at December 31, 1999,
assets were down over 95% from their peak in 1998. Risk management is a priority
with the goal of deriving a higher percentage of earnings from controllable
business operations.
Investments are expected to continue in 2000 to expand CitiDirect, which
gives clients Internet-based access to cash management and trade capabilities,
and CitiFX Interactive, an online tool for foreign exchange services. Further
increases in the Financial Consultants sales force are planned, as well as
expanding the integration of Internet services with personal advice through the
Salomon Smith Barney Access web site.
In January 2000, SSB agreed to acquire the global investment banking
business and related assets of Schroders PLC, including all corporate financial
markets and securities activities, subject to Schroders PLC shareholder
approval, various regulatory approvals, and other customary closing conditions.
The announced acquisition, when completed, is expected to enhance the investment
banking and equities platforms in Europe.
29
<PAGE>
Commercial Lines. In 1999, Commercial Lines began to see higher rates on renewal
business. This is an improvement over the past few years where the trend in
market conditions, characterized by difficult pricing and increased competition,
was evidenced by pricing declines in all markets.
In National Accounts, where programs include risk service, such as claims
settlement, loss control and risk management information services, which is
generally offered in connection with a large deductible or self-insured program,
and risk transfer, which is typically provided through a guaranteed cost or
retrospectively rated insurance policy, pricing declines have continued. This
business continues to reflect the negative impact of price declines as evidenced
by the decrease in premium and fee levels and, more importantly, in the
narrowing of profit margins earned on this business. Although National Accounts
believes that pricing will continue to be very competitive in 2000, recent data
has suggested that the pricing environment may be stabilizing. However, National
Accounts will continue to reject business that is not expected to produce
acceptable returns, which is reflected in a decline in anticipated business
volumes.
Commercial Accounts began to see modest price increases on renewal business
during 1999. However, these increases varied significantly by region and
industry, reinforcing the fact that rates in many areas and business segments
still have not improved to the point of producing acceptable returns. In this
environment, Commercial Accounts continues to reject unprofitable business, as
reflected in the decline in new business.
For Select Accounts, the highly competitive marketplace and soft
underwriting cycle continue to pressure the pricing of guaranteed cost products.
Premiums on this business continue to reflect price declines, and have not kept
pace with loss cost inflation in recent years. The impact of this negative trend
in market conditions and resultant price declines has been partially offset by a
continued disciplined approach to underwriting and risk management by the
Company. The Company's focus is to retain existing profitable business and
obtain new accounts only where it can maintain its selective underwriting
policy. The Company continues to adhere to strict guidelines to maintain high
quality underwriting and to focus on its core product lines and markets, with
particular emphasis on both product and industry specialization. In the last six
months of 1999, Select Accounts began to see small price increases on renewal
business. However, as noted above in Commercial Accounts, these increases varied
significantly by region and industry.
Specialty Accounts also operates within a highly competitive marketplace
characterized by pressure on both price and terms. The Company's focus in this
market is to sustain its emphasis on strict adherence to underwriting standards,
to continue using reinsurance judiciously, and to increase its efforts to
cross-sell its expanding array of specialty products to existing customers of
National Accounts, Commercial Accounts, Select Accounts, Personal Lines and
various other Citigroup units where it believes it has the greatest sales and
profit opportunities.
The highly competitive marketplace and the Company's selective underwriting
criteria continued to have an adverse impact on premium and fee levels during
1999. However the Company did begin to achieve modest price increases, primarily
in the middle market. Although the increases vary significantly by region and
industry, the Company believes that pricing environment is stabilizing.
In December 1998, TAP announced a global strategic relationship with
Winterthur International, called Travelers/Winterthur International, which
markets a variety of commercial lines products to multinational corporations.
The Company expects that Travelers/Winterthur International will allow it to
participate in business requiring international underwriting and insurance
services.
The property and casualty insurance industry in the United States continues
to consolidate. The Company's strategic objectives are to enhance its position
as a consistently profitable market leader and to become a low-cost provider of
property and casualty insurance in the United States, as the industry
consolidates.
In relation to the Company's objective of being a low-cost provider of
property and casualty insurance, an emphasis on claim payout and performance and
enhanced productivity efforts are expected to continue. However, some of the
insurance industry's methods have been challenged in litigation.
Changes in the general interest rate environment affect the return received
by the insurance subsidiaries on newly invested and reinvested funds. While a
rising interest rate environment enhances the returns available, it reduces the
market value of existing fixed maturity investments and the availability of
gains on disposition. A decline in interest rates reduces the return available
on investment of funds, but also creates the opportunity for realized investment
gains on disposition of fixed maturity investments.
As required by various state laws and regulations, the Company's insurance
subsidiaries are subject to assessments from state-administered guaranty
associations, second injury funds and similar associations. Management believes
that such assessments will not have a material impact on the Company's results
of operations, financial condition or liquidity.
Certain social, economic, political and litigation issues have led to an
increased number of legislative and regulatory proposals aimed at addressing the
cost and availability of certain types of insurance as well as the claim and
coverage obligations of insurers. While most of these provisions have failed to
become law, these initiatives may continue as legislators and regulators try to
respond to public availability, affordability and claim concerns and the
resulting laws, if any, could adversely affect the Company's ability to write
business with appropriate returns.
30
<PAGE>
GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING
In Millions of Dollars 1999 1998(1) 1997(1)
- ----------------------------------------------------------------------------
Total revenues, net of interest expense $ 2,686 $ 2,381 $ 2,134
Adjusted operating expenses(2) 1,693 1,549 1,357
Provision (benefit) for credit losses 12 5 (13)
- ----------------------------------------------------------------------------
Core income before taxes 981 827 790
Income taxes 379 320 305
- ----------------------------------------------------------------------------
Core income 602 507 485
Restructuring-related items, after-tax (2) 53 18
- ----------------------------------------------------------------------------
Net income $ 604 $ 454 $ 467
============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
The Global Investment Management and Private Banking group is comprised of
the SSB Citi Asset Management Group and the Citibank Private Bank. These
companies offer a broad range of asset management products and services from
global investment centers around the world, including mutual funds, closed-end
funds, managed accounts, unit investment trusts, variable annuities, and
personalized wealth management services to institutional, high net worth, and
retail clients.
Global Investment Management and Private Banking core income in 1999 of
$602 million, up $95 million or 19% from 1998, reflected improving revenue
momentum, which outpaced moderate increases in expenses and the provision for
credit losses. Revenue growth was primed by the continued growth in managed
assets in most sectors, while expense increases were driven by investments in
technology, and sales and marketing capabilities. Core income of $507 million in
1998 was up $22 million or 5% from $485 million in 1997, reflecting the above,
partially offset by lower earnings in Asia Pacific in the Citibank Private Bank.
Net income of $604 million in 1999, $454 million in 1998, and $467 million in
1997 included a restructuring-related credit of $2 million ($4 million pretax),
and restructuring-related charges of $53 million ($87 million pretax) and $18
million ($28 million pretax), respectively.
SSB CITI ASSET MANAGEMENT GROUP
In Millions of Dollars 1999 1998(1) 1997(1)
- -----------------------------------------------------------------------------
Total revenues, net of interest expense $ 1,485 $ 1,259 $ 1,065
Adjusted operating expenses(2) 950 835 696
- -----------------------------------------------------------------------------
Core income before taxes 535 424 369
Income taxes 211 168 147
- -----------------------------------------------------------------------------
Core income 324 256 222
Restructuring-related items, after-tax (1) 10 --
- -----------------------------------------------------------------------------
Net income $ 325 $ 246 $ 222
=============================================================================
Assets under management
(in billions of dollars)(3) $ 364 $ 327 $ 261
=============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
(3) Includes $31 billion, $34 billion, and $28 billion in 1999, 1998, and 1997,
respectively, for Citibank Private Bank clients.
SSB Citi Asset Management Group is comprised of the substantial resources
that are available through its three primary asset management business
platforms: Salomon Brothers Asset Management, Smith Barney Asset Management, and
Citibank Global Asset Management. These businesses offer institutional, high net
worth, and retail clients a broad range of investment disciplines from global
investment centers around the world. Products and services offered include
mutual funds, closed-end funds, separately managed accounts, unit investment
trusts, and variable annuities (through affiliated and third party insurance
companies).
Core income of $324 million and $256 million in 1999 and 1998 was up $68
million or 27% and $34 million or 15% from 1998 and 1997, respectively,
primarily reflecting an increase in assets under management and a corresponding
increase in revenues. Net income of $325 million in 1999 and $246 million in
1998 included a restructuring-related credit of $1 million ($2 million pretax)
and a restructuring-related charge of $10 million ($17 million pretax),
respectively.
Aggregate assets under management totaled $364 billion as of December 31,
1999, up 11% from $327 billion in 1998, and included $156 billion in equity,
$112 billion in fixed income, and $96 billion in liquidity products.
Approximately $269 billion is managed in the United States, $58 billion in
Europe, $23 billion in Japan, $8 billion in Latin America, $5 billion in
Australia, and $1 billion in Asia Pacific.
Cross-selling efforts helped fuel a 12% increase in institutional client
assets to $155 billion, with the Corporate Bank channel generating $8 billion in
sales. Sales of proprietary mutual funds represented 34% of SSB's retail channel
mutual fund sales for the year versus 31% in 1998. Sales of Smith Barney Private
Client separately managed accounts were up 117% from the prior year. SSB Citi
Asset Management Group sold $3.0 billion of mutual and money funds through the
Citibank consumer bank in Europe during 1999. In Japan, 1999 sales through both
the Citibank consumer bank and non-proprietary channels generated $2.0 billion
in mutual and money funds.
Revenues, net of interest expense, increased $226 million or 18% to $1.485
billion in 1999, compared to $1.259 billion in 1998, up $194 million or 18% from
1997. The increase in both years was predominantly in advisory fee revenues and
reflected the broad growth in assets under management. Revenue growth in 1999
also benefited from higher levels of investment gains, unit investment trust
revenue, and the full year's impact of the JP Morgan Australia business
acquisition in 1998. Assets under management grew at a faster pace than revenue
in 1998 as a result of a larger proportion of the growth occurring in lower
yielding liquidity funds.
Adjusted operating expenses of $950 million in 1999 were up $115 million or
14% from $835 million in 1998, which was up $139 million or 20% from 1997. The
increases in both years primarily reflected higher costs associated with
building the business' global sales and marketing capabilities, and continued
investments in research, quantitative, and technology expertise. This investment
management build-out is now more than 75% complete. Expenses also increased from
the JP Morgan acquisition, and in 1998, from incremental technology spending
related to year 2000 and EMU.
31
<PAGE>
CITIBANK PRIVATE BANK
In Millions of Dollars 1999 1998(1) 1997(1)
- ----------------------------------------------------------------------------
Total revenues, net of interest expense $ 1,201 $ 1,122 $ 1,069
Adjusted operating expenses(2) 743 714 661
Provision (benefit) for credit losses 12 5 (13)
- ----------------------------------------------------------------------------
Core income before taxes 446 403 421
Income taxes 168 152 158
- ----------------------------------------------------------------------------
Core income 278 251 263
Restructuring-related items, after-tax (1) 43 18
- ----------------------------------------------------------------------------
Net income $ 279 $ 208 $ 245
============================================================================
Average assets (in billions of dollars) $ 20 $ 17 $ 17
Return on assets 1.40% 1.22% 1.44%
============================================================================
Excluding restructuring-related items
Return on assets 1.39% 1.48% 1.55%
============================================================================
Client business volumes under
management (in billions of dollars) $ 140 $ 116 $ 101
============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items.
Citibank Private Bank--which provides personalized wealth management
services for high net worth clients around the world--reported core income in
1999 of $278 million, up $27 million or 11% from 1998, reflecting improving
revenue momentum, which outpaced moderate increases in expenses and the
provision for credit losses. Core income of $251 million in 1998 was down $12
million or 5% from $263 million in 1997, primarily reflecting lower earnings in
Asia Pacific. Net income of $279 million in 1999, $208 million in 1998, and $245
million in 1997 included a restructuring-related credit of $1 million ($2
million pretax), and restructuring-related charges of $43 million ($70 million
pretax) and $18 million ($28 million pretax), respectively.
Client business volumes under management, which include loans, deposits,
and other client assets under management and custody, were $140 billion at the
end of the year, up from $116 billion in 1998 and $101 billion in 1997,
reflecting growth in all regions. Business volumes grew in all product lines,
led by the custody and lending businesses.
Revenues in 1999 were $1.201 billion, up $79 million or 7% from 1998,
reflecting particularly strong growth in the U.S. and Japan. This growth was
driven by strong lending and asset management activity, partially offset by
lower fees from customer trading-related activities. Revenues for 1998 were
$1.122 billion, up $53 million or 5% from 1997, primarily reflecting growth in
customer-related fee revenues.
Adjusted operating expenses of $743 million in 1999 were up $29 million or
4% from 1998, reflecting increased spending related to growth in the sales force
and technology platform development, partially offset by lower employee-related
costs associated with restructuring initiatives. Expenses of $714 million in
1998 were up $53 million or 8% from 1997, reflecting an increased sales force
and higher product management costs.
The provision (benefit) for credit losses for 1999 was $12 million,
compared with $5 million in 1998 and ($13) million in 1997. Net credit losses in
1999 remained at a nominal level of 0.10% of average loans outstanding. Loans 90
days or more past due at year-end were $120 million or 0.54% of total loans
outstanding, compared with 1.14% at the end of 1998 and 0.72% at the end of
1997. The increase in the provision in 1998 reflected both the high level of
credit recoveries in 1997 and the worsening credit picture in 1998 related to
the global economic turmoil in Asia Pacific.
GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING OUTLOOK
The statements below are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. See "Forward-Looking Statements" on
page 34.
The market for investment management and private banking services is
extremely attractive because the "wealth" segment has been growing faster than
the overall market, and the prospects for the overall market continue to be
positive over the longer term. While competition for this attractive and dynamic
market segment is increasing, the global market is highly fragmented with no
dominant competitors. This presents Global Investment Management and Private
Banking with an extremely attractive business opportunity because it is one of
the few providers that can claim to offer a full range of services on a global
basis.
32
<PAGE>
CORPORATE/OTHER
In Millions of Dollars 1999 1998(1) 1997(1)
- ----------------------------------------------------------------------------
Total revenues, net of interest expense $ (176) $ (132) $ (252)
Adjusted operating expenses(2) 823 697 397
Provisions for benefits, claims,
and credit losses 33 (1) (7)
- ----------------------------------------------------------------------------
Loss before tax benefits (1,032) (828) (642)
Tax benefits (346) (350) (250)
- ----------------------------------------------------------------------------
Loss (686) (478) (392)
Restructuring-related items and
merger-related costs, after-tax 20 105 31
- ----------------------------------------------------------------------------
Net loss $ (706) $ (583) $ (423)
============================================================================
(1) Reclassified to conform to the 1999 presentation.
(2) Excludes restructuring-related items and merger-related costs.
Corporate/Other includes net corporate treasury results and corporate staff
and other corporate expenses.
Revenues in 1999 included higher corporate treasury costs and in 1998
included income from the disposition of a real estate development property.
Expenses in 1999 included certain technology costs associated with year 2000
remediation, partially offset by decreases in corporate staff expenses as a
result of headcount reductions in 1999. Expenses in 1998 included a $100 million
contribution of appreciated venture capital securities to the Company's
Foundation, which had minimal impact on Citigroup's earnings after related tax
benefits and investment gains. Performance-based options granted in 1998 to a
group of key Citicorp employees vested in 1999 as certain pre-determined price
levels were met. All expenses related to these options have been recognized.
1999, 1998 and 1997 expenses included $108 million, $70 million and $72 million,
respectively, associated with performance-based stock options granted in 1998
and prior years.
The 1999 after-tax restructuring-related items of $20 million primarily
included accelerated depreciation charges on the planned disposition of certain
premises and equipment assets, in excess of the normal scheduled depreciation on
those assets. The 1998 amounts included $69 million of restructuring-related
items ($40 million after-tax) to streamline and integrate corporate staff
functions, as well as $65 million (before and after-tax) of one-time expenses
associated with merging Citigroup's predecessor organizations. The 1997 charge
related to the reorganization of various Citicorp corporate support functions.
See Note 14 of Notes to the Consolidated Financial Statements for additional
information on restructuring-related items and merger-related costs.
INVESTMENT ACTIVITIES
In Millions of Dollars 1999 1998(1) 1997(1)
- ----------------------------------------------------------------------------
Total revenues, net of interest expense $ 1,090 $ 1,323 $ 1,733
Total operating expenses 64 50 40
Benefit for credit losses -- (10) (64)
- ----------------------------------------------------------------------------
Income before taxes and minority interest 1,026 1,283 1,757
Income taxes 355 434 639
Minority interest, after-tax 11 16 18
- ----------------------------------------------------------------------------
Net income $ 660 $ 833 $ 1,100
============================================================================
(1) Reclassified to conform to the 1999 presentation.
Investment Activities comprises Citigroup's venture capital activities,
realized investment gains (losses) related to certain corporate and insurance
related investments, and the results of certain investments in countries that
refinanced debt under the 1989 Brady Plan or plans of a similar nature.
Revenues in 1999 of $1.090 billion declined $233 million or 18% from 1998,
primarily reflecting declines in realized gains from sales of Brady bonds and
insurance-related investments, partially offset by an increase in venture
capital results and realized investment gains on certain corporate-related
investments. Revenues in 1998 of $1.323 billion declined $410 million or 24%
from 1997 primarily reflecting a decrease in venture capital revenues and lower
realized gains from sales of investments. Revenues in 1999, 1998, and 1997
included net gains (write-downs) of ($14) million, $29 million, and ($39)
million related to investments in Latin America.
Credit benefits in 1997 included $50 million from the refinancing agreement
concluded with Peru.
Levels of venture capital revenues and realized gains from sales of
investments may fluctuate in the future as a result of market and asset-specific
factors. This statement is a forward-looking statement within the meaning of the
Private Securities Litigation Reform Act. See "Forward-Looking Statements" on
page 34.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See Note 1 of Notes to the Consolidated Financial Statements for a discussion of
recently issued accounting pronouncements.
33
<PAGE>
YEAR 2000
Reflecting the work done around the world to complete Citigroup's year 2000
program, the Company's computer systems and business processes successfully
handled the date change from December 31, 1999 to January 1, 2000. The Company
is not aware of any significant year 2000 problems encountered internally or
with the third parties with which it interfaces, including customers and
counterparties, the global financial market infrastructure, and the utility
infrastructure on which all corporations rely.
Based on operations since January 1, 2000, Citigroup does not expect any
significant impact to its ongoing business as a result of the year 2000 issue.
However, it is possible that the full impact of year 2000 issues has not been
fully recognized, including any potential impact of claims for coverage from
property casualty insurance customers, and no assurances can be given that year
2000 problems or claims will not emerge.
The pretax cost associated with the required systems modifications and
conversions totaled approximately $970 million, including approximately $310
million in 1999. Citigroup had previously estimated the cost at approximately
$950 million. The cost was funded from a combination of a reprioritization of
technology development initiatives and incremental costs and was expensed as
incurred.
The Company's expectations with respect to remediation of and claims from
customers with respect to year 2000 issues constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act. See
"Forward-Looking Statements" below.
FORWARD-LOOKING STATEMENTS
Certain of the statements contained herein that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act. Many of these statements appear under the heading "Global
Consumer Outlook," "Global Corporate and Investment Bank Outlook," and "Global
Investment Management and Private Banking Outlook." The Company's actual results
may differ materially from those included in the forward-looking statements.
Forward-looking statements are typically identified by words or phrases such as
"believe," "expect," "anticipate," "intend," "estimate," "may increase," "may
fluctuate," and similar expressions or future or conditional verbs such as
"will," "should," "would," and "could." These forward-looking statements involve
risks and uncertainties including, but not limited to global economic
conditions, portfolio growth, the credit performance of the portfolios, and
seasonal factors; changes in general economic conditions including the
performance of global financial markets, prevailing inflation and interest
rates, realized gains from sales of investments, gains from asset sales, and
losses on commercial lending activities; results of various Investment
Activities; the effects of competitors' pricing policies, of changes in laws and
regulations on competition and of demographic changes on target market
populations' savings and financial planning needs; the resolution of legal
proceedings and related matters; the actual amount of liabilities associated
with certain environmental and asbestos-related insurance claims; the actual
costs associated with year 2000-related claims; and the Company's success in
managing the costs associated with the expansion of existing distribution
channels and developing new ones, and in realizing increased revenues from such
distribution channels, including cross-selling initiatives and electronic
commerce-based efforts.
MANAGING GLOBAL RISK
Risk management is the cornerstone of Citigroup's business. Risks arise from
lending, underwriting, trading, insurance and other activities routinely
undertaken around the world. Outlined below is the process that management
employs to provide oversight and direction of risk taking, followed by
discussions of the credit and market risk management processes in place across
the Company.
The Windows on Risk Committee is the most senior corporate forum for
reviewing the corporation's risk tolerance and practices. It provides top-down
examination and review of material corporate-wide risks. The Committee is
chaired by Citigroup's Senior Risk Manager and includes the Chairmen of
Citigroup and other senior officers in the Company.
The Windows on Risk process has three major components: an assessment of
the global external environment, drawing on our own knowledge and frequently on
the knowledge of outside experts; an assessment of the Company's exposures in
terms of the various risk windows, with special focus on potentially material
risks to Citigroup; and decisions on desired exposure levels and determination
of follow-up actions required to adjust exposure.
The review of the external environment encompasses the outlook for major
country and regional economies; significant consumer markets and global
industries; potential near-term critical economic and political events; and the
implications of potential unfavorable developments as they relate to specific
businesses.
The review of the risk profile covers the following 18 windows:
o Risk ratings, including trends in client creditworthiness together with a
comparison of risk against return;
o Industry concentrations, globally and within regions;
o Limits assigned to relationship concentrations and consumer programs;
o Product concentrations in consumer managed receivables, by product and by
region;
o Global real estate limits and exposure, including commercial and consumer
portfolios;
o Country risk, encompassing political and cross-border risk;
o Counterparty risk, evaluating presettlement risk on foreign exchange,
derivative products, and securities trades;
o Dependency, linking and evaluating specific industry and consumer product
exposure to external environmental factors;
o Distribution and underwriting risk, capturing the risk that arises when
Citigroup commits to purchase an instrument from an issuer for subsequent
sale;
o Audit and Risk Review, evaluating and measuring defects in our business
processes;
o Price risk, evaluating the earnings risk resulting from changing levels and
implied volatilities of interest rates, foreign exchange rates, and
commodity and security prices;
o Liquidity risk, evaluating funding exposure;
o Commodities risk, evaluating earnings risk resulting from changing levels
and volatilities of commodity prices;
o Life Insurance, evaluating the risks that result from the underwriting,
sale, and reinsurance of life insurance policies;
34
<PAGE>
o Property & Casualty, evaluating the risks that result from the
underwriting, sale, and reinsurance of commercial, personal, and
performance bonds insurance policies;
o Equity and subordinated debt investment risk, monitored against portfolio
limits;
o Legal, evaluating vulnerability and business implications of legal issues;
and
o Technology, assessing vulnerability to the electronic environment.
The review is intended to provide Citigroup with a view of the environment
in which it operates and of the risk inherent in its businesses. Based on this
review, the Windows on Risk Committee formulates recommendations and assigns
responsibility for recommended actions.
The following sections summarize the processes that were in place during
1999 for managing credit and market risks within Citigroup's major businesses.
As Citigroup's businesses become more closely integrated, it is expected that
these management processes will also be more closely integrated within the
overall framework provided by Windows on Risk.
THE CREDIT PROCESS
Within Citicorp, line management conducts the day-to-day credit process in
accordance with core policies established by the Credit Policy Committee which
are guided by the overall risk appetite and portfolio targets set by senior
management. Line management initiates and approves all extensions of credit and
is responsible for credit quality. Line managers must also establish
supplementary credit policies specific to each business, deploy the credit
talent needed, and monitor portfolio and process quality. The managers are
required to identify problem credits or programs as they develop, and to correct
deficiencies as needed through remedial management. Audit and Risk Review
conducts independent periodic examinations of both portfolio quality and the
credit process at the individual business level.
Citicorp's credit policies are organized around two basic
approaches--Credit Programs and Credit Transactions. Credit Programs, used
primarily for the Consumer businesses, focus on the decision to extend credit to
sets of customers with similar characteristics and/or product needs. Approvals
under this approach cover the expected level of aggregate exposure, the terms,
risk acceptance criteria, operating systems, and reporting mechanisms. This is a
cost-effective way of handling high-volume, small-dollar amount transactions.
Credit Programs are reviewed annually, with approvals tiered on the basis of
projected outstandings as well as the maturity and performance of the product.
Citicorp's Credit Transaction approach focuses on the decision to extend
credit to an individual customer or customer relationship. It starts with target
market definition and risk acceptance criteria, and requires detailed customized
financial analysis. Approval requirements for each decision are tiered based on
the transaction amount, the customer's aggregate facilities, credit risk
ratings, and the banking business serving the customer.
Credit Programs and Credit Transactions are approved by three line credit
officers, with one designated as responsible to ensure that all aspects of the
credit process are properly coordinated and executed. As the size or risk
increases, the three approvals may include one or two Senior Credit or
Securities Officers. These include over 500 of Citicorp's most experienced
lenders and underwriters appointed by the Credit Policy Committee, with their
designation reviewed annually. In addition, approvals from underwriting,
product, industry, or functional specialists may be required. At certain higher
levels of risk, Credit Policy Committee members as well as senior management
review individual credit decisions.
Within Salomon Smith Barney, the office of the Chief Credit Officer,
through established credit policies and control procedures, assesses, approves,
monitors, and coordinates the extension of credit. The office evaluates the
risk/return trade-offs as well as current and potential credit exposures to a
counterparty, or to groups of counterparties, that are related because of
industry, geographic, or economic characteristics. At Phibro Inc., a
wholly-owned subsidiary, the credit department determines the credit limits for
counterparties in its commodities-related activities.
Both Citicorp and Salomon Smith Barney manage credit exposure on derivative
and foreign exchange instruments as part of the overall extension of credit to
individual customer relationships, subject to the same credit approvals, limits,
and monitoring procedures used for other activities. The extension of credit in
a derivative or foreign exchange contract is the loss that could result if the
counterparty were to default. The current replacement cost of a derivative or
foreign exchange contract is equal to the amount, if any, of Citigroup's
unrealized gain on the contract. In the aggregate, for all contracts, this
represents a balance sheet exposure of $31.6 billion at December 31, 1999, which
is reflected in Trading Account Assets. See Note 7 of Notes to Consolidated
Financial Statements for additional details on the combined Citigroup exposures.
A substantial portion of the total balance sheet exposure is to counterparties
considered by Citigroup to be investment grade and under three years tenor. In
managing the credit risk associated with derivative and foreign exchange
contracts, the amount at risk is measured as the sum of the current replacement
cost (the balance sheet credit exposure) plus the potential increase in the
replacement cost over the remaining life of the instrument should market rates
change. The potential increase in replacement cost of a contract is estimated
based on a statistical simulation of values that would result from changing
market rates.
In the course of its insurance activities, TAP reinsures a portion of the
risks it underwrites in an effort to control its exposure to losses, stabilize
earnings and protect capital resources. TAP cedes to reinsurers a portion of
these risks and pays premiums based upon the risk and exposure of the policies
subject to such reinsurance. Reinsurance involves credit risk and is subject to
aggregate loss limits. Although the reinsurer is liable to TAP to the extent of
the reinsurance ceded, TAP remains primarily liable as the direct insurer on all
risks reinsured. TAP also holds collateral, including escrow funds and letters
of credit, under certain reinsurance agreements. TAP monitors the financial
condition of reinsurers on an ongoing basis, and reviews its reinsurance
arrangements periodically. Reinsurers are selected based on their financial
condition, business practices and the price of their product offerings. For
additional information concerning reinsurance, see Note 13 of Notes to
Consolidated Financial Statements.
35
<PAGE>
THE MARKET RISK MANAGEMENT PROCESS
Market risk encompasses liquidity risk and price risk, both of which arise in
the normal course of business of a global financial intermediary. Liquidity risk
is the risk that some entity, in some location and in some currency, may be
unable to meet a financial commitment to a customer, creditor, or investor when
due. Price risk is the risk to earnings that arises from changes in interest
rates, foreign exchange rates, equity and commodity prices, and in their implied
volatilities.
Citigroup's business and corporate oversight groups have well-defined
market risk management responsibilities. Within each business, a process is in
place to control market risk exposure. The risk management process includes the
establishment of appropriate market controls, policies and procedures,
appropriate senior management risk oversight with thorough risk analysis and
reporting, and independent risk management with capabilities to evaluate and
monitor risk limits. Management of this process begins with the professionals
nearest to Citigroup's customers, products, and markets, and extends up to the
senior executives who manage these businesses and to the country level. Market
risk management is an evolutionary process that integrates changes in markets,
products, and technologies into policies and practices. Periodic reviews are
conducted by Audit Risk and Review to ensure compliance with institutional
policies and procedures for the assessment, management, and control of market
risk.
Across Citigroup, price risk is measured using various tools, including
Earnings-at-Risk (EAR) and sensitivity analysis, which are applied to interest
rate risk in the non-trading portfolios and Value-at-Risk (VAR), stress and
scenario analysis which are applied to the trading portfolios.
Non-Trading Portfolios
Business units manage the potential earnings effect of interest rate movements
by managing the asset and liability mix, either directly or through the use of
derivative financial products. These include interest rate swaps and other
derivative instruments which are either designated and effective as hedges or
designated and effective in modifying the interest rate characteristics of
specified assets or liabilities. The utilization of derivatives is managed in
response to changing market conditions as well as to changes in the
characteristics and mix of the related assets and liabilities. Additional
information about non-trading derivatives is located in Note 22 of Notes to
Consolidated Financial Statements. Citigroup does not utilize instruments with
leverage features in connection with its risk management activities.
Price risk in the non-trading portfolios is measured using Earnings-at-Risk
within Citicorp (excluding CitiFinancial Credit Company). All other non-trading
portfolios measure price risk using sensitivity analysis.
At Citicorp, Earnings-at-Risk measures the discounted pretax earnings
impact over a specified time horizon of a specified shift in the interest rate
yield curve for the appropriate currency. The yield curve shift is statistically
derived as a two standard deviation change in a short-term interest rate over
the period required to defease the position (usually four weeks).
Earnings-at-Risk is calculated separately for each currency and reflects the
repricing gaps in the position, as well as option positions, both explicit and
embedded. As part of the annual planning process, limits are set for
Earnings-at-Risk on a business, country and total Citicorp basis, with exposures
reviewed on a regular basis by the Finance and Capital Committee in relation to
limits and the current interest rate environment.
Citicorp's primary non-trading price risk exposure is to movements in U.S.
dollar interest rates. As of December 31, 1999, the rate shift over a four-week
defeasance period applied to the U.S. dollar yield curve for purposes of
calculating Earnings-at-Risk was 45 basis points. Citicorp also has
Earnings-at-Risk in various other currencies; however, there are no significant
risk concentrations in any individual non-U.S. dollar currency. As of December
31, 1999, the rate shifts applied to these currencies for purposes of
calculating Earnings-at-Risk over a one-to four-week defeasance period ranged
from 20 to 1,781 basis points, depending on the currency.
The following table illustrates that, as of December 31, 1999, a 45 basis
point increase in the U.S. dollar yield curve would have a potential negative
impact on Citicorp's pretax earnings of approximately $166 million for 2000, and
approximately $177 million for the total five-year period 2000-2004. A two
standard deviation increase in non-U.S. dollar interest rates would have a
potential negative impact on Citicorp's pretax earnings of approximately $119
million for 2000, and approximately $278 million for the five-year period
2000-2004.
Citicorp Earnings-at-Risk (impact on pretax earnings)
Assuming a U.S. Assuming a Non-U.S.
Dollar Rate Move of Dollar Rate Move of(1)
-------------------- ---------------------
Two Standard Two Standard
Deviations Deviations(2)
In Millions of -------------------- ---------------------
Dollars at December 31, 1999 Increase Decrease Increase Decrease
- ----------------------------------------------------------------------------
Overnight to three months $ (70) $ 75 $ (18) $ 18
Four to six months (44) 50 (30) 30
Seven to twelve months (52) 53 (71) 72
- ----------------------------------------------------------------------------
Total overnight
to twelve months (166) 178 (119) 120
- ----------------------------------------------------------------------------
Year two (67) 66 (125) 126
Year three (19) 13 (34) 34
Year four 23 (28) (15) 16
Year five 57 (70) (12) 12
Effect of discounting (5) 10 27 (27)
- ----------------------------------------------------------------------------
Total $(177) $ 169 $(278) $ 281
============================================================================
(1) Primarily results from Earnings-at-risk in Singapore dollar, Hong Kong
dollar and Thai baht.
(2) Total assumes a two standard deviation increase or decrease for every
currency, not taking into account any covariance between currencies.
The table above also illustrates that Citicorp's risk profile in the one-to
three-year time horizon was directionally similar, but generally tends to
reverse in subsequent periods. This reflects the fact that the majority of the
36
<PAGE>
derivative instruments utilized to modify repricing characteristics as described
above will mature within three years. Additional detail regarding these
derivative instruments may be found in Note 22 of Notes to Consolidated
Financial Statements.
The following table summarizes Citicorp's worldwide Earnings-at-Risk over
the next 12 months from changes in interest rates and illustrates that
Citicorp's pretax earnings in its non-trading activities over the next 12 months
would be reduced by an increase in interest rates and would benefit from a
decrease in interest rates.
Citicorp Twelve Month Earnings-at-Risk
(impact on pretax earnings)
<TABLE>
<CAPTION>
U.S. Dollar Non-U.S. Dollar
---------------------------- -----------------------------
In Millions of
Dollars at December 31, 1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assuming a
two standard
deviation rate
Increase $(166) $(148) $(180) $(119) $ (93) $ (25)
Decrease 178 156 211 120 93 25
==============================================================================================
</TABLE>
Interest rate swaps and similar instruments effectively modify the
repricing characteristics of certain consumer and commercial loan portfolios,
deposits, and long-term debt. Excluding the effects of these instruments,
Citicorp's Earnings-at-Risk over the next twelve months in its non-trading
activities would be as follows:
Citicorp Twelve Month Earnings-at-Risk
(excluding effect of derivatives)
U.S. Dollar Non-U.S. Dollar
---------------------- ----------------------
In Millions of
Dollars at December 31, 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------
Assuming a
two standard
deviation rate
Increase $ (30) $ 10 $ 64 $(120) $ (94) $ (26)
Decrease 42 (3) (44) 121 94 27
===============================================================================
During 1999, Citicorp's U.S. dollar Earnings-at-Risk for the following 12
months assuming a two standard deviation increase in rates would have had a
potential negative impact ranging from approximately $73 million to $166 million
in the aggregate at each month end, compared with a range from $65 million to
$173 million during 1998 and a range from $142 million to $209 million during
1997. The U.S. dollar Earnings-at-Risk experienced during 1999 was comparable to
1998 and relatively lower than 1997 primarily due to a reduction in the level of
received fixed swaps. A two standard deviation increase in non-U.S. dollar
interest rates for the following twelve months would have had a potential
negative impact ranging from approximately $95 million to $121 million in the
aggregate at each month end during 1999, compared with a range from $53 million
to $98 million during 1998 and a range from $15 million to $33 million during
1997. The higher non-U.S. dollar Earnings-at-Risk primarily reflected the higher
interest rate volatility seen across the Asia Pacific region.
Other Non-Trading Portfolios
The table below reflects the estimated decrease in the fair value of financial
instruments held in other non-trading portfolios, as a result of a 100 basis
point increase in interest rates (including the effect of derivatives).
In Millions of Dollars at December 31, 1999(1) 1998(1)
- -----------------------------------------------------------------------------
Assets
Investments $2,594 $2,841
Net consumer finance receivables 184 256
- -----------------------------------------------------------------------------
Liabilities
Long-term debt $ 493 $ 497
Contractholder funds 427 415
Redeemable securities of subsidiary trusts 314 127
=============================================================================
(1) Includes CitiFinancial Credit Company.
A significant portion of the liabilities, e.g. insurance policy and claims
reserves, are not financial instruments and are excluded from the above
sensitivity analysis. Corresponding changes in fair value of these accounts,
based on the present value of estimated cash flows, would materially mitigate
the impact of the net decrease in values implied above. The analysis also
excludes all financial instruments, including long-term debt, identified with
trading activities. The analysis reflects the estimated gross change in value
resulting from a change in interest rates only and is not comparable to the
Earnings-at-Risk used for the Citicorp non-trading portfolios or the
Value-at-Risk used for the trading portfolios, described on page 38.
37
<PAGE>
Trading Portfolios
A tool for measuring the price risk of trading activities is the Value-at-Risk
method, which estimates the potential pretax loss in market value that could
occur over a one day holding period, at a 99% confidence level. The
Value-at-Risk method incorporates the market factors to which the market value
of the trading position is exposed (interest rates, foreign exchange rates,
equity and commodity prices, and their implied volatilities), the sensitivity of
the position to changes in those market factors, and the volatilities and
correlation of those factors. The Value-at-Risk measurement includes the foreign
exchange risks that arise in traditional banking businesses as well as in
explicit trading positions. In addition to Value-at-Risk, stress and scenario
analysis are also applied to the trading portfolios.
The level of exposure taken depends on the market environment and
expectations of future price and market movements, and will vary from period to
period. For Citicorp's major trading centers, the aggregate pretax Value-at-Risk
in the trading portfolios was $24 million at December 31, 1999. Daily exposures
at Citicorp averaged $18 million in 1999 and ranged from $14 million to $24
million. At Salomon Smith Barney the aggregate pretax Value-at-Risk in the
trading portfolios was $23 million at December 31, 1999. Quarterly exposures at
Salomon Smith Barney averaged $39 million in 1999 and ranged from $17 million to
$72 million.
The following table summarizes Value-at-Risk in the trading portfolios as of
December 31, 1999 and 1998 along with the averages.
<TABLE>
<CAPTION>
Citicorp Salomon Smith Barney
---------------------------------------- ----------------------------------------
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
In Millions of Dollars 1999 Average 1998 Average 1999 Average 1998 Average
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest rate $ 15 $ 13 $ 13 $ 16 $ 20 $ 37 $ 75 $ 67
Foreign exchange 17 9 7 8 -- 5 3 17
Equity 11 9 5 7 6 5 15 9
All other (primarily commodity) 2 1 1 1 8 10 11 11
Covariance adjustment (21) (14) (11) (14) (11) (18) (33) (34)
- ----------------------------------------------------------------------------------------------------------------------
Total $ 24 $ 18 $ 15 $ 18 $ 23 $ 39 $ 71 $ 70
======================================================================================================================
</TABLE>
The table below provides the range of Value-at-Risk in the trading portfolios
that was experienced during 1999 and 1998.
<TABLE>
<CAPTION>
Citicorp Salomon Smith Barney
--------------------------- ---------------------------
1999 1998 1999 1998
-----------------------------------------------------------
In Millions of Dollars Low High Low High Low High Low High
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest rate 9 18 10 25 17 71 62 75
Foreign exchange 5 17 3 16 -- 13 3 26
Equity 5 16 4 13 1 16 5 15
All other (primarily commodity) 1 3 1 5 5 16 9 12
===============================================================================================
</TABLE>
MANAGEMENT OF CROSS-BORDER RISK
Cross-border risk is the risk that Citigroup will be unable to obtain payment
from customers on their contractual obligations as a result of actions taken by
foreign governments such as exchange controls, debt moratoria, and restrictions
on the remittance of funds. Citigroup manages cross-border risk as a part of the
Windows on Risk process described on page 34.
Except as described below for cross-border resale agreements and the
netting of certain long and short securities positions, the following table
presents total cross-border outstandings and commitments on a regulatory basis
in accordance with Federal Financial Institutions Examination Council ("FFIEC")
guidelines. In regulatory reports under FFIEC guidelines, cross-border resale
agreements are presented based on the domicile of the issuer of the securities
that are held as collateral. However, for purposes of the following table,
cross-border resale agreements are presented based on the domicile of the
counterparty because the counterparty has the legal obligation for repayment.
Similarly, under FFIEC guidelines, long securities positions are required to be
reported on a gross basis. However, for purposes of the following table, certain
long and short securities positions are presented on a net basis consistent with
internal cross-border risk management policies, reflecting a reduction of risk
from offsetting positions.
38
<PAGE>
Cross-Border Outstandings and Commitments
Total cross-border outstandings include cross-border claims on third parties as
well as investments in and funding of local franchises. Countries with FFIEC
outstandings greater than 0.75% of Citigroup assets at December 31, 1999 or 1998
include:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998(1)
-------------------------------------------------------------------------------- ---------------------
Cross-Border Claims on Third Parties Investments
-------------------------------------------- in and
Trading and Cross-Border Funding Total Cross- Total Cross-
Short-Term Resale of Local Border Commit- Border Commit-
In Billions of Dollars Claims(2) Agreements All Other Total Franchises Outstandings ments(3) Outstandings ments(3)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United Kingdom $ 5.1 $12.2 $ 2.2 $19.5 $ -- $19.5 $15.5 $10.4 $ 8.9
Germany 7.4 3.0 0.5 10.9 -- 10.9 3.7 16.0 1.4
Japan 2.6 4.9 2.3 9.8 -- 9.8 0.1 9.1 0.1
France 5.5 1.7 0.6 7.8 0.1 7.9 2.2 7.7 1.1
Italy 5.9 0.9 0.3 7.1 -- 7.1 0.4 6.7 0.3
Mexico 1.9 0.1 1.8 3.8 0.6 4.4 0.1 4.3 0.2
Brazil 1.1 -- 1.7 2.8 1.0 3.8 0.1 3.9 0.1
Spain 1.2 0.4 0.1 1.7 1.5 3.2 0.6 3.2 0.4
Sweden 1.5 0.2 0.4 2.1 0.1 2.2 0.9 3.4 0.9
================================================================================================================================
</TABLE>
(1) Reclassified to conform to the current year's presentation.
(2) Trading and short-term claims include cross-border debt and equity
securities held in the trading account, trade finance receivables, net
revaluation gains on foreign exchange and derivative contracts, and other
claims with a maturity of less than one year.
(3) Commitments (not included in total cross-border outstandings) include
legally binding cross-border letters of credit and other commitments and
contingencies as defined by the FFIEC.
Total cross-border outstandings under FFIEC guidelines, including
cross-border resale agreements based on the domicile of the issuer of the
securities that are held as collateral, and long securities positions reported
on a gross basis, at December 31, 1999, 1998, and 1997 were (in billions) the
United Kingdom ($8.7, $7.9, and $6.5), Germany ($14.9, $17.4, and $15.1), Japan
($10.5, $14.4, and $12.7), France ($7.7, $8.7, and $9.5), Italy ($10.2, $8.7,
and $15.9), Mexico ($5.1, $5.9, and $6.4), Brazil ($4.9, $4.5, and $7.3), Spain
($3.8, $3.8, and $6.0), and Sweden ($2.3, $3.7, and $5.9), respectively.
Cross-border commitments (in billions) at December 31, 1997 were $7.8 for
the United Kingdom, $1.7 for Germany, $1.1 for Japan, $0.6 for France, $0.5 for
Italy, $0.6 for Mexico, $0.1 for Brazil, $0.4 for Spain, and $0.7 for Sweden.
The sector percentage allocation for bank, public, and private cross-border
claims on third parties under FFIEC guidelines at December 31, 1999 was United
Kingdom (23%, 12%, and 65%), Germany (25%, 51%, and 24%), Japan (8%, 41%, and
51%), France (36%, 26%, and 38%), Italy (9%, 81%, and 10%), Mexico (1%, 57%, and
42%), Brazil (16%, 45%, and 39%), Spain (24%, 46%, and 30%), and Sweden (24%,
39%, and 37%), respectively.
39
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Citigroup services its obligations primarily with dividends and advances that it
receives from subsidiaries. The subsidiaries' dividend paying abilities are
limited by certain covenant restrictions in credit agreements and/or by
regulatory requirements. Citigroup believes it will have sufficient funds to
meet current and future commitments. Each of Citigroup's major operating
subsidiaries finances its operations on a basis consistent with its
capitalization and ratings.
Citigroup, Citicorp, TAP, and The Travelers Insurance Company (TIC) issue
commercial paper directly to investors. CCC, which had previously issued
commercial paper, became an indirect subsidiary of Citicorp on August 4, 1999
and, thereafter, ceased such issuance. Citigroup and Citicorp, both of which are
bank holding companies, maintain combined liquidity reserves of cash,
securities, and unused bank lines of credit at least equal to their combined
outstanding commercial paper. TAP and TIC each maintains unused credit
availability under their bank lines of credit at least equal to the amount of
outstanding commercial paper.
Borrowings under bank lines of credit may be at interest rates based on
LIBOR, CD rates, the prime rate, or bids submitted by the banks. Each company
pays its banks commitment fees for its lines of credit.
Citicorp, Salomon Smith Barney, and some of their nonbank subsidiaries have
credit facilities with Citicorp's subsidiary banks, including Citibank, N.A.
Borrowings under these facilities must be secured in accordance with Section 23A
of the Federal Reserve Act.
Citigroup Inc. (Citigroup)
Citigroup and TIC have an agreement with a syndicate of banks to provide $1.0
billion of revolving credit, to be allocated to either of Citigroup or TIC. The
participation of TIC in this agreement is limited to $250 million. The revolving
credit facility consists of a five-year revolving credit facility that expires
in June 2001. At December 31, 1999, all of the facility was allocated to
Citigroup. Under this facility, the Company is required to maintain a certain
level of consolidated stockholders' equity (as defined in the agreement). The
Company exceeded this requirement by approximately $30.6 billion at December 31,
1999. Citigroup also has $300 million in 364-day facilities which expire in the
third quarter of 2000. At December 31, 1999 there were no borrowings outstanding
under either of these facilities.
Citigroup is subject to risk-based capital guidelines issued by the Board
of Governors of the Federal Reserve System (FRB). These guidelines are used to
evaluate capital adequacy based primarily on the perceived credit risk
associated with balance sheet assets, as well as certain off-balance sheet
exposures such as unused loan commitments, letters of credit, and derivative and
foreign exchange contracts. The risk-based capital guidelines are supplemented
by a leverage ratio requirement.
Citigroup Ratios
At Year-End 1999 1998
- -------------------------------------------------------------------------------
Tier 1 capital 9.64% 8.68%
Total capital (Tier 1 and Tier 2) 12.43 11.43
Leverage(1) 6.80 6.03
Common stockholders' equity 6.66 6.04
===============================================================================
(1) Tier 1 capital divided by adjusted average assets.
Citigroup maintained a strong capital position during 1999. Total capital
(Tier 1 and Tier 2) amounted to $61.4 billion at December 31, 1999, representing
12.43% of net risk-adjusted assets. This compares to $55.0 billion and 11.43% at
December 31, 1998. Tier 1 capital of $47.6 billion at December 31, 1999
represented 9.64% of net risk-adjusted assets, compared to $41.8 billion and
8.68% at December 31, 1998. Citigroup's leverage ratio was 6.80% at December 31,
1999 compared to 6.03% at December 31, 1998. See Note 17 of Notes to
Consolidated Financial Statements.
Components of Capital Under Regulatory Guidelines
In Millions of Dollars at Year-End 1999 1998
- -------------------------------------------------------------------------------
Tier 1 Capital
Common stockholders' equity $ 47,761 $ 40,395
Perpetual preferred stock 1,925 2,313
Mandatorily redeemable securities of
subsidiary trusts 4,920 4,320
Minority interest(1) 1,501 1,602
Less: Net unrealized gains on securities
available for sale(2) (2,545) (1,359)
Intangible assets:
Goodwill (4,209) (3,764)
Other intangible assets (1,655) (1,620)
50% investment in certain subsidiaries(3) (107) (110)
- -------------------------------------------------------------------------------
Total Tier 1 capital 47,591 41,777
- -------------------------------------------------------------------------------
Tier 2 Capital
Allowance for credit losses(4) 6,178 6,024
Qualifying debt(5) 6,728 7,296
Unrealized marketable equity securities gains(2) 990 21
Less: 50% investment in certain subsidiaries(3) (107) (110)
- -------------------------------------------------------------------------------
Total Tier 2 capital 13,789 13,231
- -------------------------------------------------------------------------------
Total capital (Tier 1 and Tier 2) $ 61,380 $ 55,008
===============================================================================
Net risk-adjusted assets(6) $ 493,672 $ 481,208
===============================================================================
(1) Primarily related to Travelers Property Casualty Corp.
(2) Tier 1 capital excludes unrealized gains and losses on debt securities
available for sale in accordance with regulatory risk-based capital
guidelines. The federal bank regulatory agencies permit institutions to
include in Tier 2 capital up to 45% of pretax net unrealized holding gains
on available-for-sale equity securities with readily determinable fair
values.
(3) Represents investment in certain overseas insurance activities and
unconsolidated banking and finance subsidiaries.
(4) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is
deducted from risk-adjusted assets.
(5) Includes qualifying senior and subordinated debt in an amount not exceeding
50% of Tier 1 capital, and subordinated capital notes subject to certain
limitations.
(6) Includes risk-weighted credit equivalent amounts, net of applicable
bilateral netting agreements, of $32.8 billion for interest rate, commodity
and equity derivative contracts and foreign exchange contracts, as of
December 31, 1999, compared to $37.3 billion as of December 31, 1998.
Market risk-equivalent assets included in net risk-adjusted assets amounted
to $43.1 billion and $51.5 billion at December 31, 1999 and 1998,
respectively. Net risk-adjusted assets also includes the effect of other
off-balance sheet exposures such as unused loan commitments and letters of
credit and reflects deductions for intangible assets and any excess
allowance for credit losses.
40
<PAGE>
Common stockholders' equity increased a net $7.4 billion during the year to
$47.8 billion at December 31, 1999, representing 6.66% of assets, compared to
$40.4 billion and 6.04% at year-end 1998. The increase in common stockholders'
equity during the year principally reflected net income of $9.9 billion and $3.4
billion related to the issuance of shares pursuant to employee benefit plans,
change in unrealized gains on investment securities and conversion of redeemable
preferred stock and other activity, partially offset by treasury stock acquired
of $3.9 billion and dividends declared on common and preferred stock of $2.0
billion. The increase in the common stockholders' equity ratio during the year
reflected the above items, partially offset by the increase in total assets.
During 1999, preferred stock redemptions included $200 million Series J
perpetual preferred stock, $63 million Series O perpetual preferred stock, and
$125 million Series S perpetual preferred stock. In October 1999, the remaining
140,000 shares ($140 million redemption value) of Citigroup's Series I
Cumulative Convertible Preferred Stock was converted into 9.4 million shares of
common stock. On February 15, 2000, Citigroup redeemed its Series T perpetual
preferred stock for $150 million.
All of the mandatorily redeemable securities of subsidiary trusts (trust
securities) outstanding at December 31, 1999 and 1998 qualify as Tier 1 capital.
The amount outstanding at year-end 1999 includes $2.3 billion of
parent-obligated securities and $2.62 billion of subsidiary-obligated
securities. The increase in trust securities outstanding during 1999 of $600
million represents parent company-obligated securities.
Citigroup's subsidiary depository institutions are subject to the
risk-based capital guidelines issued by their respective primary federal bank
regulatory agencies, which are generally similar to the FRB's guidelines. At
December 31, 1999, all of Citigroup's subsidiary depository institutions were
"well capitalized" under the federal bank regulatory agencies' definitions.
From time-to-time, the FRB and the Federal Financial Institutions
Examination Council propose amendments to, and issue interpretations of,
risk-based capital guidelines and reporting instructions. Such proposals or
interpretations could, if implemented in the future, affect reported capital
ratios and net risk-adjusted assets.
Citicorp
Management of liquidity at Citicorp is the responsibility of the Corporate
Treasurer. The Country Corporate Officer and the Country Treasurer ensure that
all funding obligations in each country are met when due. The Country Treasurer
is appointed by the Corporate Treasurer.
The in-country forum for liquidity issues is the Asset/Liability Management
Committee (ALCO), which includes senior executives within each country. The ALCO
reviews the current and prospective funding requirements for all businesses and
legal entities within the country, as well as the capital position and balance
sheet. All businesses within the country are represented on the committee with
the focal point being the Country Treasurer.
Each Country Treasurer must prepare a liquidity plan at least annually that
is approved by the Country Corporate Officer, the Regional Treasurer, and the
Corporate Treasurer. The liquidity profile is monitored on an on-going basis and
reported monthly. Limits are established on the extent to which businesses in a
country can take liquidity risk. The size of the limit depends on the depth of
the market, experience level of local management, the stability of the
liabilities, and liquidity of the assets.
Regional Treasurers generally have responsibility for monitoring liquidity
risk across a number of countries within a defined geography. They are also
available for consultation and special approvals, especially in unusual or
volatile market conditions.
Citicorp's assets and liabilities are diversified across many currencies,
geographic areas, and businesses. Particular attention is paid to those
businesses which for tax, sovereign risk, or regulatory reasons cannot be freely
and readily funded in the international markets.
A diversity of funding sources, currencies, and maturities is used to gain
a broad access to the investor base. Citicorp's deposits, which represent 67%
and 64% of total funding at December 31, 1999 and 1998, respectively, are
broadly diversified by both geography and customer segments.
Stockholder's equity, which grew $1.4 billion during the year to $26.0
billion at year-end 1999, continues to be an important component of the overall
funding structure. In addition, long-term debt is issued by Citicorp and its
subsidiaries. Total Citicorp long-term debt outstanding at year-end 1999 was
$26.4 billion, compared with $26.8 billion at year-end 1998. Asset
securitization programs remain an important source of liquidity. Loans
securitized during 1999 included $7.6 billion of U.S. credit cards, $7.8 billion
of U.S. consumer mortgages, and $0.4 billion of non-U.S. consumer loans. As
credit card securitization transactions amortize, newly originated receivables
are recorded on Citicorp's balance sheet and become available for asset
securitization. In 1999, the scheduled amortization of certain credit card
securitization transactions made available $4.0 billion of new receivables. In
addition, $6.4 billion of credit card securitization transactions are scheduled
to amortize during 2000.
Citicorp is a legal entity separate and distinct from Citibank, N.A. and
its other subsidiaries and affiliates. There are various legal limitations on
the extent to which Citicorp's banking subsidiaries may extend credit, pay
41
<PAGE>
dividends or otherwise supply funds to Citicorp. The approval of the Office of
the Comptroller of the Currency is required if total dividends declared by a
national bank in any calendar year exceed net profits (as defined) for that year
combined with its retained net profits for the preceding two years. In addition,
dividends for such a bank may not be paid in excess of the bank's undivided
profits. State-chartered bank subsidiaries are subject to dividend limitations
imposed by applicable state law.
Citicorp's national and state-chartered bank subsidiaries can declare
dividends to their respective parent companies in 2000, without regulatory
approval, of approximately $3.6 billion, adjusted by the effect of their net
income (loss) for 2000 up to the date of any such dividend declaration. In
determining whether and to what extent to pay dividends, each bank subsidiary
must also consider the effect of dividend payments on applicable risk-based
capital and leverage ratio requirements as well as policy statements of the
federal regulatory agencies that indicate that banking organizations should
generally pay dividends out of current operating earnings. Consistent with these
considerations, Citicorp estimates that its bank subsidiaries can distribute
dividends to Citicorp of approximately $3.0 billion of the available $3.6
billion, adjusted by the effect of their net income (loss) up to the date of any
such dividend declaration.
Citicorp also receives dividends from its nonbank subsidiaries. These
nonbank subsidiaries are generally not subject to regulatory restrictions on
their payment of dividends except that the approval of the Office of Thrift
Supervision (OTS) may be required if total dividends declared by a savings
association in any calendar year exceed amounts specified by that agency's
regulations.
Citicorp is subject to risk-based capital and leverage guidelines issued by
the FRB.
Citicorp Ratios
At Year-End 1999 1998(1)
- -----------------------------------------------------------------------------
Tier 1 capital 8.11% 8.59%
Total capital (Tier 1 and Tier 2) 12.10 12.40
Leverage(2) 6.83 6.88
Common stockholder's equity 6.70 6.94
=============================================================================
(1) Restated to include CitiFinancial Credit Company.
(2) Tier 1 capital divided by adjusted average assets.
Citicorp maintained a strong capital position during 1999. Total capital
(Tier 1 and Tier 2) amounted to $37.4 billion at December 31, 1999, representing
12.10% of net risk-adjusted assets. This compares with $35.6 billion and 12.40%
at December 31, 1998. Tier 1 capital of $25.0 billion at year-end 1999
represented 8.11% of net risk-adjusted assets, compared with $24.7 billion and
8.59% at year-end 1998. The Tier 1 capital ratio at year-end 1999 was within
Citicorp's target range of 8.00% to 8.30%. See Note 17 of Notes to Consolidated
Financial Statements.
CitiFinancial Credit Company (CCC)
At December 31, 1999, CCC had committed and available revolving credit
facilities of $3.4 billion, consisting of five-year facilities which expire in
2002. At December 31, 1999, there were no borrowings outstanding under these
facilities. In connection with the August 4,1999 reorganization of CCC as a
subsidiary of Citicorp, Citicorp guaranteed various debt obligations of CCC,
including those arising under these facilities. Under this facility, Citicorp is
required to maintain a certain level of consolidated stockholder's equity (as
defined in the agreement). At December 31, 1999, this requirement was exceeded
by approximately $10.3 billion.
Travelers Property Casualty Corp. (TAP)
TAP has a five-year revolving credit facility in the amount of $250 million with
a syndicate of banks that expires in December 2001. Under this facility TAP is
required to maintain a certain level of consolidated stockholders' equity (as
defined in the agreement). At December 31, 1999, this requirement was exceeded
by approximately $4.8 billion. At December 31, 1999, there were no borrowings
outstanding under this facility.
TAP's insurance subsidiaries are subject to various regulatory restrictions
that limit the maximum amount of dividends available to be paid to their parent
without prior approval of insurance regulatory authorities. Dividend payments to
TAP from its insurance subsidiaries are limited to $1.2 billion in 2000 without
prior approval of the Connecticut Insurance Department.
Salomon Smith Barney Holdings Inc. (Salomon Smith Barney)
Salomon Smith Barney's total assets were $224 billion at December 31,1999,
compared to $212 billion at year-end 1998. Due to the nature of Salomon Smith
Barney's trading activities it is not uncommon for asset levels to fluctuate
from period to period. Approximately 35% of these assets represent trading
securities, commodities, and derivatives used for proprietary trading and to
facilitate customer transactions, and approximately 49% of these assets were
related to collateralized financing transactions where securities are bought,
borrowed, sold, and lent in generally offsetting amounts. A significant portion
of the remainder of the assets represented receivables from brokers, dealers,
clearing organizations, and customers that relate to securities transactions in
the process of being settled. The carrying values of the majority of Salomon
Smith Barney's securities inventories are adjusted daily to reflect current
prices. See Notes 1, 5, 6, 7, 8, and 22 of Notes to the Consolidated Financial
Statements for a further description of these assets.
Salomon Smith Barney's assets are financed through a number of sources
including long and short-term unsecured borrowings, the financing transactions
described above, and payables to brokers, dealers, and customers. The highly
liquid nature of these assets provides Salomon Smith Barney with flexibility in
financing and managing its business. Salomon Smith Barney monitors and evaluates
the adequacy of its capital and borrowing base on a daily basis in order to
allow for flexibility in its funding, to maintain liquidity, and to ensure that
its capital base supports the regulatory capital requirements of its
subsidiaries.
Salomon Smith Barney funds its operations through the use of secured and
unsecured short-term borrowings, long-term borrowings and TruPS.(R) Secured
short-term financing, including repurchase agreements and secured
42
<PAGE>
loans, is Salomon Smith Barney's principal funding source. Unsecured short-term
borrowings provide a source of short-term liquidity and are also utilized as an
alternative to secured financing when they represent a cheaper funding source.
Sources of short-term unsecured borrowings include commercial paper, unsecured
bank borrowings and letters of credit, deposit liabilities, promissory notes,
and corporate loans.
At December 31, 1999, Salomon Smith Barney had a $1.5 billion revolving
credit agreement with a bank syndicate that extends through May 2001, and a $3.5
billion, 364-day revolving credit agreement that extends through May 2000.
Salomon Smith Barney may borrow under its revolving credit facilities at various
interest rate options (LIBOR, CD, or base rate) and compensates the banks for
the facilities through commitment fees. Under these facilities Salomon Smith
Barney is required to maintain a certain level of consolidated adjusted net
worth (as defined in the agreement). At December 31, 1999, this requirement was
exceeded by approximately $3.5 billion. At December 31, 1999, there were no
borrowings outstanding under either facility. Salomon Smith Barney also has
substantial borrowing arrangements consisting of facilities that it has been
advised are available, but where no contractual lending obligation exists. These
arrangements are reviewed on an ongoing basis to ensure flexibility in meeting
short-term requirements.
Unsecured term debt is a significant component of Salomon Smith Barney's
long-term capital. Long-term debt totaled $18.0 billion at December 31, 1999 and
$19.1 billion at December 31,1998. Salomon Smith Barney utilizes interest rate
swaps to convert the majority of its fixed rate long-term debt used to fund
inventory-related working capital requirements into variable rate obligations.
Long-term debt issuances denominated in currencies other than the U.S. dollar
that are not used to finance assets in the same currency are effectively
converted to U.S. dollar obligations through the use of cross-currency swaps and
forward currency contracts. The average remaining maturity of Salomon Smith
Barney's long-term debt was 3.25 years at December 31, 1999 and 4.0 years at
December 31, 1998. See Note 11 of Notes to the Consolidated Financial Statements
for additional information regarding debt and an analysis of the impact of
interest rate swaps on debt.
Salomon Smith Barney's borrowing relationships are with a broad range of
banks, financial institutions and other firms from which it draws funds. The
volume of borrowings generally fluctuates in response to changes in the level of
financial instruments, commodities and contractual commitments, customer
balances, the amount of reverse repurchase transactions outstanding, and
securities borrowed transactions. As Salomon Smith Barney's activities increase,
borrowings generally increase to fund the additional activities. Availability of
financing can vary depending upon market conditions, credit ratings, and the
overall availability of credit to the securities industry. Salomon Smith Barney
seeks to expand and diversify its funding mix as well as its creditor sources.
Concentration levels for these sources, particularly for short-term lenders, are
closely monitored both in terms of single investor limits and daily maturities.
Salomon Smith Barney monitors liquidity by tracking asset levels,
collateral and funding availability to maintain flexibility to meet its
financial commitments. As a policy, Salomon Smith Barney attempts to maintain
sufficient capital and funding sources in order to have the capacity to finance
itself on a fully collateralized basis in the event that access to unsecured
financing was temporarily impaired. Salomon Smith Barney's liquidity management
process includes a contingency funding plan designed to ensure adequate
liquidity even if access to unsecured funding sources is severely restricted or
unavailable. This plan is reviewed periodically to keep the funding options
current and in line with market conditions. The management of this plan includes
an analysis that is utilized to determine the ability to withstand varying
levels of stress, which could impact Salomon Smith Barney's liquidation horizons
and required margins. In addition, Salomon Smith Barney monitors its leverage
and capital ratios on a daily basis.
The Travelers Insurance Company (TIC)
At December 31, 1999, TIC had $27.0 billion of life and annuity product deposit
funds and reserves. Of that total, $13.8 billion is not subject to discretionary
withdrawal based on contract terms. The remaining $13.2 billion is for life and
annuity products that are subject to discretionary withdrawal by the
contractholder. Included in the amount that is subject to discretionary
withdrawal are $2.1 billion of liabilities that are surrenderable with market
value adjustments. Also included are an additional $4.9 billion of the life
insurance and individual annuity liabilities which are subject to discretionary
withdrawals, and have an average surrender charge of 4.6%. In the payout phase,
these funds are credited at significantly reduced interest rates. The remaining
$6.2 billion of liabilities are surrenderable without charge. More than 12.7% of
these relate to individual life products. These risks would have to be
underwritten again if transferred to another carrier, which is considered a
significant deterrent against withdrawal by long-term policyholders. Insurance
liabilities that are surrendered or withdrawn are reduced by outstanding policy
loans, and related accrued interest prior to payout.
Scheduled maturities of guaranteed investment contracts (GICs) in 2000,
2001, 2002, 2003, and thereafter are $2.75 billion, $864.2 million, $667.4
million, $491.1 million, and $1.92 billion, respectively. At December 31, 1999,
the interest rates credited on GICs had a weighted average rate of 5.77%.
TIC is subject to various regulatory restrictions that limit the maximum
amount of dividends available to its parent without prior approval of the
Connecticut Insurance Department. A maximum of $679 million of statutory surplus
is available in 2000 for such dividends without Department approval.
Insurance Industry--Risk Based Capital
The National Association of Insurance Commissioners (NAIC) adopted risk-based
capital (RBC) requirements for life insurance companies and for property and
casualty insurance companies. The RBC requirements are to be used as minimum
capital requirements by the NAIC and states to identify companies that merit
further regulatory action. The formulas have not been designed to differentiate
among adequately capitalized companies that operate with levels of capital
higher than RBC requirements. Therefore, it is inappropriate and ineffective to
use the formulas to rate or to rank such companies. At December 31, 1999 and
1998, all of the Company's life and property & casualty companies had adjusted
capital in excess of amounts requiring any regulatory action.
43
<PAGE>
REPORT OF MANAGEMENT
The management of Citigroup is responsible for the preparation and fair
presentation of the financial statements and other financial information
contained in this annual report. The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles appropriate
in the circumstances. Where amounts must be based on estimates and judgments,
they represent the best estimates and judgments of management. The financial
information appearing throughout this annual report is consistent with that in
the financial statements.
The management of Citigroup is also responsible for maintaining effective
internal control over financial reporting . Management establishes an
environment that fosters strong controls, and it designs business processes to
identify and respond to risk. Management maintains a comprehensive system of
controls intended to ensure that transactions are executed in accordance with
management's authorization, assets are safeguarded, and financial records are
reliable. Management also takes steps to see that information and communication
flows are effective and to monitor performance, including performance of
internal control procedures.
Citigroup's accounting policies and internal control are under the general
oversight of the Board of Directors, acting through the Audit Committee of the
Board. The Committee is composed entirely of directors who are not officers or
employees of Citigroup. The Committee reviews reports by internal audit covering
its extensive program of audits and business risk reviews worldwide. In
addition, KPMG LLP, independent auditors, are engaged to audit Citigroup's
financial statements.
KPMG LLP obtains and maintains an understanding of Citigroup's internal
control and procedures for financial reporting and conducts such tests and other
auditing procedures as it considers necessary in the circumstances to express
the opinion in its report that follows. KPMG LLP has free access to the Audit
Committee, with no members of management present, to discuss its audit and its
findings as to the integrity of Citigroup's financial reporting and the
effectiveness of internal control.
Management recognizes that there are inherent limitations in the
effectiveness of any system of internal control, and accordingly, even effective
internal control can provide only reasonable assurance with respect to financial
statement preparation. However, management believes that Citigroup maintained
effective internal control over financial reporting as of December 31, 1999.
/s/ John S. Reed /s/ Sandford I. Weill
John S. Reed Sanford I. Weill
Chairman and Co-Chief Chairman and Co-Chief
Executive Officer Executive Officer
/s/ Heidi G. Miller
Heidi G. Miller
Chief Financial Officer
INDEPENDENT AUDITOR'S REPORT
[LOGO]
KPMG
The Board of Directors and Stockholders
Citigroup Inc.:
We have audited the accompanying consolidated statement of financial position of
Citigroup Inc. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Citigroup
Inc. and subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, in 1999
the Company changed its methods of accounting for insurance-related assessments,
accounting for insurance and reinsurance contracts that do not transfer
insurance risk, and accounting for the costs of start-up activities.
/s/ KPMG LLP
New York, New York
January 18, 2000
44
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME Citigroup Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
In Millions, Except Per Share Amounts 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Loan interest, including fees $ 23,172 $ 22,928 $ 20,765
Other interest and dividends 21,728 23,311 21,336
Insurance premiums 10,441 9,850 8,995
Commissions and fees 12,723 11,918 11,211
Principal transactions 5,160 1,780 4,231
Asset management and administration fees 4,164 2,292 1,715
Realized gains from sales of investments 557 840 995
Other income 4,060 3,512 3,058
- ---------------------------------------------------------------------------------------------------------------------------
Total revenues 82,005 76,431 72,306
Interest expense 24,768 27,495 24,524
- ---------------------------------------------------------------------------------------------------------------------------
Total revenues, net of interest expense 57,237 48,936 47,782
- ---------------------------------------------------------------------------------------------------------------------------
Provisions for benefits, claims, and credit losses
Policyholder benefits and claims 8,671 8,365 7,714
Provision for credit losses 2,837 2,751 2,197
- ---------------------------------------------------------------------------------------------------------------------------
Total provisions for benefits, claims, and credit losses 11,508 11,116 9,911
- ---------------------------------------------------------------------------------------------------------------------------
Operating expenses
Non-insurance compensation and benefits 14,536 13,336 12,942
Insurance underwriting, acquisition, and operating 3,289 3,274 3,236
Restructuring-related items and merger-related costs (88) 795 1,718
Other operating expenses 12,044 11,146 9,225
- ---------------------------------------------------------------------------------------------------------------------------
Total operating expenses 29,781 28,551 27,121
- ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes, minority interest and cumulative effect of accounting changes 15,948 9,269 10,750
Provision for income taxes 5,703 3,234 3,833
Minority interest, net of income taxes 251 228 212
- ---------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting changes 9,994 5,807 6,705
- ---------------------------------------------------------------------------------------------------------------------------
Cumulative effect of accounting changes (127) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 9,867 $ 5,807 $ 6,705
===========================================================================================================================
Basic earnings per share
Income before cumulative effect of accounting changes $ 2.95 $ 1.66 $ 1.91
Cumulative effect of accounting changes (0.04) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 2.91 $ 1.66 $ 1.91
===========================================================================================================================
Weighted average common shares outstanding 3,333.9 3,363.6 3,371.9
- ---------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share
Income before cumulative effect of accounting changes $ 2.86 $ 1.62 $ 1.83
Cumulative effect of accounting changes (0.03) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 2.83 $ 1.62 $ 1.83
===========================================================================================================================
Adjusted weighted average common shares outstanding 3,443.5 3,472.8 3,536.6
===========================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
45
<PAGE>
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Citigroup Inc. and Subsidiaries
<TABLE>
<CAPTION>
December 31,
----------------------
In Millions of Dollars 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents (including segregated cash and other deposits) $ 14,158 $ 13,837
Deposits at interest with banks 13,429 11,643
Investments 113,126 105,176
Federal funds sold and securities borrowed or purchased under agreements to resell 112,655 94,831
Brokerage receivables 22,973 21,413
Trading account assets 109,155 119,845
Loans, net
Consumer 148,715 132,255
Commercial 95,491 89,703
- -------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income 244,206 221,958
Allowance for credit losses (6,679) (6,617)
- -------------------------------------------------------------------------------------------------------------------------
Total loans, net 237,527 215,341
Reinsurance recoverables 9,704 9,492
Separate and variable accounts 23,118 15,820
Other assets 61,092 61,243
- -------------------------------------------------------------------------------------------------------------------------
Total assets $ 716,937 $ 668,641
=========================================================================================================================
Liabilities
Non-interest-bearing deposits in U.S. offices $ 19,492 $ 17,058
Interest-bearing deposits in U.S. offices 48,584 44,169
Non-interest-bearing deposits in offices outside the U.S. 12,021 10,856
Interest-bearing deposits in offices outside the U.S. 180,994 156,566
- -------------------------------------------------------------------------------------------------------------------------
Total deposits 261,091 228,649
Federal funds purchased and securities loaned or sold under agreements to repurchase 92,591 81,025
Brokerage payables 15,744 21,055
Trading account liabilities 91,104 94,584
Contractholder funds and separate and variable accounts 41,335 33,037
Insurance policy and claims reserves 43,822 43,990
Investment banking and brokerage borrowings 13,719 14,040
Short-term borrowings 17,086 16,112
Long-term debt 47,092 48,671
Other liabilities 38,747 40,450
Citigroup or subsidiary obligated mandatorily redeemable securities of
subsidiary trusts holding solely junior subordinated debt securities of--Parent 2,300 1,700
--Subsidiary 2,620 2,620
- -------------------------------------------------------------------------------------------------------------------------
Stockholders' equity
Preferred stock ($1.00 par value; authorized shares: 30 million), at aggregate liquidation value 1,925 2,313
Common stock ($.01 par value; authorized shares: 6.0 billion),
issued shares: 1999--3,612,385,458 shares and 1998--3,603,106,368 shares 36 36
Additional paid-in capital 10,036 8,893
Retained earnings 43,865 35,971
Treasury stock, at cost: 1999--244,860,127 shares and 1998--216,143,199 shares (7,627) (4,789)
Accumulated other changes in equity from nonowner sources 1,907 781
Unearned compensation (456) (497)
- -------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 49,686 42,708
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 716,937 $ 668,641
=========================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
46
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Citigroup Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
Amounts
--------------------------------------
In Millions of Dollars Except Shares in Thousands 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred stock at aggregate liquidation value
Balance, beginning of year $ 2,313 $ 3,353 $ 3,203
Issuance of preferred stock -- -- 1,000
Redemption or retirement of preferred stock (388) (1,040) (850)
- -----------------------------------------------------------------------------------------------------------------------
Balance, end of year 1,925 2,313 3,353
- -----------------------------------------------------------------------------------------------------------------------
Common stock and additional paid-in capital
Balance, beginning of year 8,929 12,496 14,940
Conversion of redeemable preferred stock to common stock 140 293 140
Exercise of common stock warrants -- 131 14
Employee benefit plans 1,028 531 756
Retirement of treasury stock -- (4,497) (3,347)
Other (25) (25) (7)
- -----------------------------------------------------------------------------------------------------------------------
Balance, end of year 10,072 8,929 12,496
- -----------------------------------------------------------------------------------------------------------------------
Retained earnings
Balance, beginning of year 35,971 32,002 26,989
Net income 9,867 5,807 6,705
Common dividends (1,824) (1,622) (1,409)
Preferred dividends (149) (216) (283)
- -----------------------------------------------------------------------------------------------------------------------
Balance, end of year 43,865 35,971 32,002
- -----------------------------------------------------------------------------------------------------------------------
Treasury stock, at cost
Balance, beginning of year (4,789) (6,595) (7,073)
Issuance of shares pursuant to employee benefit plans and other 1,063 408 578
Treasury stock acquired (3,906) (3,085) (3,447)
Retirement of treasury stock -- 4,497 3,347
Other 5 (14) --
- -----------------------------------------------------------------------------------------------------------------------
Balance, end of year (7,627) (4,789) (6,595)
- -----------------------------------------------------------------------------------------------------------------------
Accumulated other changes in equity from nonowner sources
Balance, beginning of year 781 1,057 662
Net change in unrealized gains and losses on investment securities, net of tax 1,186 (333) 547
Foreign currency translations adjustment, net of tax (60) 57 (152)
- -----------------------------------------------------------------------------------------------------------------------
Balance, end of year 1,907 781 1,057
- -----------------------------------------------------------------------------------------------------------------------
Unearned compensation
Balance, beginning of year (497) (462) (305)
Net issuance of restricted stock (380) (420) (467)
Restricted stock amortization 421 385 310
- -----------------------------------------------------------------------------------------------------------------------
Balance, end of year (456) (497) (462)
- -----------------------------------------------------------------------------------------------------------------------
Total common stockholders' equity and common shares outstanding 47,761 40,395 38,498
- -----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity $ 49,686 $ 42,708 $ 41,851
=======================================================================================================================
Summary of changes in equity from nonowner sources
Net income $ 9,867 $ 5,807 $ 6,705
Other changes in equity from nonowner sources, net of tax 1,126 (276) 395
- -----------------------------------------------------------------------------------------------------------------------
Total changes in equity from nonowner sources $ 10,993 $ 5,531 $ 7,100
=======================================================================================================================
<CAPTION>
Year Ended December 31,
-------------------------------------
Shares
-------------------------------------
In Millions of Dollars Except Shares in Thousands 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred stock at aggregate liquidation value
Balance, beginning of year 8,475 14,831 20,231
Issuance of preferred stock -- -- 4,000
Redemption or retirement of preferred stock (1,525) (6,356) (9,400)
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of year 6,950 8,475 14,831
- ---------------------------------------------------------------------------------------------------------------------
Common stock and additional paid-in capital
Balance, beginning of year 3,603,106 3,769,020 3,994,712
Conversion of redeemable preferred stock to common stock 9,367 19,781 9,367
Exercise of common stock warrants -- 15,195 1,670
Employee benefit plans -- 33 --
Retirement of treasury stock -- (200,888) (236,754)
Other (88) (35) 25
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of year 3,612,385 3,603,106 3,769,020
- ---------------------------------------------------------------------------------------------------------------------
Retained earnings
Balance, beginning of year
Net income
Common dividends
Preferred dividends
- --------------------------------------------------------------------------------
Balance, end of year
- --------------------------------------------------------------------------------
Treasury stock, at cost
Balance, beginning of year (216,143) (349,136) (546,116)
Issuance of shares pursuant to employee benefit plans and other 57,888 27,047 75,035
Treasury stock acquired (86,770) (94,246) (114,809)
Retirement of treasury stock -- 200,888 236,754
Other 165 (696) --
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of year (244,860) (216,143) (349,136)
- ---------------------------------------------------------------------------------------------------------------------
Accumulated other changes in equity from nonowner sources
Balance, beginning of year
Net change in unrealized gains and losses on investment securities, net of tax
Foreign currency translations adjustment, net of tax
- --------------------------------------------------------------------------------
Balance, end of year
- --------------------------------------------------------------------------------
Unearned compensation
Balance, beginning of year
Net issuance of restricted stock
Restricted stock amortization
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of year
- ---------------------------------------------------------------------------------------------------------------------
Total common stockholders' equity and common shares outstanding 3,367,525 3,386,963 3,419,884
- ---------------------------------------------------------------------------------------------------------------------
Total stockholders' equity
=====================================================================================================================
Summary of changes in equity from nonowner sources
Net income
Other changes in equity from nonowner sources, net of tax
- ---------------------------------------------------------------------------------------------------------------------
Total changes in equity from nonowner sources
=====================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
47
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS Citigroup Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
In Millions of Dollars 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 9,867 $ 5,807 $ 6,705
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred policy acquisition costs and value of insurance in force 1,613 1,509 1,424
Additions to deferred policy acquisition costs (1,961) (1,784) (1,685)
Depreciation and amortization 1,714 1,470 1,218
Deferred tax provision (benefit) 485 (194) (1,430)
Provision for credit losses 2,837 2,751 2,197
Change in trading account assets 10,690 60,243 (22,730)
Change in trading account liabilities (3,480) (32,568) 13,008
Change in Federal funds sold and securities purchased under agreements to resell (17,824) 25,136 (10,849)
Change in Federal funds purchased and securities sold under agreements to repurchase 11,566 (51,078) 18,536
Change in brokerage receivables net of brokerage payables (6,871) 2,506 (1,291)
Change in insurance policy and claims reserves (168) 208 381
Net gain on sale of securities (557) (840) (995)
Venture capital activity (863) (698) (475)
Restructuring-related items and merger-related costs (88) 795 1,718
Cumulative effect of accounting changes, net of tax 127 -- --
Other, net 2,067 (8,977) 2,021
- ----------------------------------------------------------------------------------------------------------------------------
Total adjustments (713) (1,521) 1,048
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 9,154 4,286 7,753
- ----------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Change in deposits at interest with banks (1,786) 1,406 (1,401)
Change in loans (112,500) (165,237) (117,921)
Proceeds from sales of loans 87,391 146,477 104,119
Purchases of investments (90,007) (88,229) (78,594)
Proceeds from sales of investments 48,612 45,717 46,927
Proceeds from maturities of investments 35,126 33,819 23,026
Other investments, primarily short-term, net (1,009) (427) (501)
Capital expenditures on premises and equipment (1,572) (1,805) (1,533)
Proceeds from sales of premises and equipment, subsidiaries and
affiliates, and other real estate owned 1,885 764 1,164
Business acquisitions (2,150) (3,890) (1,618)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (36,010) (31,405) (26,332)
- ----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Dividends paid (1,973) (1,846) (1,692)
Issuance of common stock 758 418 434
Issuance of preferred stock -- -- 1,000
Issuance of mandatorily redeemable securities of subsidiary trusts 600 1,325 450
Redemption of preferred stock (388) (1,040) (850)
Treasury stock acquired (3,906) (3,085) (3,447)
Stock tendered for payment of withholding taxes (496) (520) (384)
Issuance of long-term debt 8,644 14,295 15,333
Payments and redemptions of long-term debt (9,819) (12,307) (10,713)
Change in deposits 32,442 29,528 14,166
Change in short-term borrowings including investment banking and
brokerage borrowings 699 (304) 6,636
Contractholder fund deposits 5,933 4,422 3,544
Contractholder fund withdrawals (5,028) (2,579) (2,757)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 27,466 28,307 21,720
- ----------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (289) 31 (688)
- ----------------------------------------------------------------------------------------------------------------------------
Change in cash and cash equivalents 321 1,219 2,453
Cash and cash equivalents at beginning of period 13,837 12,618 10,165
- ----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 14,158 $ 13,837 $ 12,618
============================================================================================================================
Supplemental disclosure of cash flow information
Cash paid during the period for income taxes $ 3,673 $ 2,860 $ 3,917
Cash paid during the period for interest 23,613 26,292 23,016
Non-cash investing activities--transfers to other real estate owned 468 350 395
============================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
48
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Citigroup Inc. and Subsidiaries
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. The consolidated financial statements include the
accounts of Citigroup and its subsidiaries (the Company). Twenty-to-fifty
percent-owned affiliates, other than investments of designated venture capital
subsidiaries, are accounted for under the equity method, and the pro rata share
of their income (loss) is included in other income. Income from investments in
less than twenty percent-owned companies is generally recognized when dividends
are received. Gains and losses on disposition of branches, subsidiaries,
affiliates, and other investments and charges for management's estimate of
impairment in their value that is other than temporary, such that recovery of
the carrying amount is deemed unlikely, are included in other income. Goodwill
and other intangible assets are amortized over their estimated useful lives,
subject to periodic review for impairment that is other than temporary. If it is
determined that enterprise level goodwill is unlikely to be recovered,
impairment is measured on a discounted cash flow basis. Minority interest
principally represents the interest in Travelers Property Casualty Corp. (TAP)
not held by the Company, and is included in other liabilities. The Company
recognizes a gain or loss in the consolidated statement of income when a
subsidiary issues its own stock to a third party at a price higher or lower than
the Company's proportionate carrying amount.
Foreign currency translation. Assets and liabilities denominated in non-U.S.
dollar currencies are translated into U.S. dollar equivalents using year-end
spot foreign exchange rates. Revenues and expenses are translated monthly at
amounts which approximate weighted average exchange rates, with resulting gains
and losses included in income. The effects of translating operations with a
functional currency other than the U.S. dollar are included in stockholders'
equity along with related hedge and tax effects. The effects of translating
operations with the U.S. dollar as the functional currency, including those in
highly inflationary environments, are included in other income along with
related hedge effects. Hedges of foreign currency exposures include forward
currency contracts and designated issues of non-U.S. dollar debt.
Risks and uncertainties. The preparation of the consolidated financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and cash equivalents include cash on hand and due from banks, cash
segregated under federal and brokerage regulations, cash deposited with clearing
organizations and short-term highly liquid investments with maturities of three
months or less when purchased, other than those held for sale in the ordinary
course of business. Cash flows from risk management activities are classified in
the same category as the related assets and liabilities.
Investments include fixed maturity and equity securities. Fixed maturities
includes bonds, notes and redeemable preferred stocks, as well as certain
loan-backed and structured securities subject to prepayment risk. Equity
securities include common and non-redeemable preferred stocks. Fixed maturities
classified as "held to maturity" represent securities that the Company has both
the ability and the intent to hold until maturity and are carried at amortized
cost. Fixed maturity securities classified as "available for sale" and
marketable equity securities are carried at fair values, based primarily on
quoted market prices or if quoted market prices are not available, discounted
expected cash flows using market rates commensurate with the credit quality and
maturity of the investment, with unrealized gains and losses and related hedge
effects reported in a separate component of stockholders' equity, net of
applicable income taxes. Declines in fair value that are determined to be other
than temporary are charged to earnings. Accrual of income is suspended on fixed
maturities that are in default, or on which it is likely that future interest
payments will not be made as scheduled. Fixed maturities subject to prepayment
risk are accounted for using the retrospective method, where the principal
amortization and effective yield are recalculated each period based on actual
historical and projected future cash flows. Realized gains and losses on sales
of investments are included in earnings on a specific identified cost basis.
Citigroup's venture capital subsidiaries include subsidiaries registered as
Small Business Investment Companies and other subsidiaries that engage
exclusively in venture capital activities. Venture capital investments are
carried at fair value, with changes in fair value recognized in other income.
The fair values of publicly-traded securities held by these subsidiaries are
generally based upon quoted market prices. In certain situations, including
thinly-traded securities, large-block holdings, restricted shares or other
special situations, the quoted market price is adjusted to produce an estimate
of the attainable fair value for the securities. For securities held by these
subsidiaries that are not publicly traded, estimates of fair value are made
based upon review of the investee's financial results, condition, and prospects,
together with comparisons to similar companies for which quoted market prices
are available.
49
<PAGE>
Securities borrowed and securities loaned are recorded at the amount of cash
advanced or received. With respect to securities loaned, the Company receives
cash collateral in an amount in excess of the market value of securities loaned.
The Company monitors the market value of securities borrowed and loaned on a
daily basis with additional collateral obtained as necessary.
Repurchase and resale agreements are treated as collateralized financing
transactions and are carried at the amounts at which the securities will be
subsequently reacquired or resold, including accrued interest, as specified in
the respective agreements. The Company's policy is to take possession of
securities purchased under agreements to resell. The market value of securities
to be repurchased and resold is monitored, and additional collateral is obtained
where appropriate to protect against credit exposure.
Trading account assets and liabilities include securities, commodities and
derivatives and are recorded at either market value or, when market prices are
not readily available, fair value, which is determined under an alternative
approach, such as matrix or model pricing. Obligations to deliver securities
sold but not yet purchased are also valued at market and included in trading
account liabilities. The determination of market or fair value considers various
factors, including: closing exchange or over-the-counter market price
quotations; time value and volatility factors underlying options, warrants and
derivatives; price activity for equivalent or synthetic instruments;
counterparty credit quality; the potential impact on market prices or fair value
of liquidating the Company's positions in an orderly manner over a reasonable
period of time under current market conditions; and derivatives transaction
maintenance costs during that period. Interest expense on trading account
liabilities is reported as a reduction of interest revenues.
Commodities include physical quantities of commodities involving future
settlement or delivery, and related gains or losses are reported as principal
transactions.
Derivatives used for trading purposes include interest rate, currency,
equity, credit, and commodity swap agreements, options, caps and floors,
warrants, and financial and commodity futures and forward contracts. The fair
values (unrealized gains and losses) associated with derivatives are reported
net by counterparty, provided a legally enforceable master netting agreement
exists, and are netted across products and against cash collateral when such
provisions are stated in the master netting agreement. Derivatives in a net
receivable position, as well as options owned and warrants held, are reported as
trading account assets. Similarly, derivatives in a net payable position, as
well as options written and warrants issued, are reported as trading account
liabilities. Revenues generated from derivative instruments used for trading
purposes are reported as principal transactions and include realized gains and
losses as well as unrealized gains and losses resulting from changes in the
market or fair value of such instruments.
Commissions, underwriting and principal transactions revenues and related
expenses are recognized in income on a trade date basis.
Consumer loans includes loans managed by the Global Consumer business and the
Citibank Private Bank. Consumer loans are generally written off not later than a
predetermined number of days past due, or earlier in the event of bankruptcy.
The number of days is set at an appropriate level by loan product and by
country. The policy for suspending accruals of interest on consumer loans varies
depending on the terms, security and loan loss experience characteristics of
each product, and in consideration of write-off criteria in place.
Commercial loans represent loans managed by the Global Corporate and Investment
Bank. Commercial loans are identified as impaired and placed on a cash
(nonaccrual) basis when it is determined that the payment of interest or
principal is doubtful of collection, or when interest or principal is past due
for 90 days or more, except when the loan is well secured and in the process of
collection. Any interest accrued is reversed and charged against current
earnings, and interest is thereafter included in earnings only to the extent
actually received in cash. When there is doubt regarding the ultimate
collectibility of principal, all cash receipts are thereafter applied to reduce
the recorded investment in the loan. Impaired commercial loans are written down
to the extent that principal is judged to be uncollectible. Impaired
collateral-dependent loans where repayment is expected to be provided solely by
the underlying collateral and there are no other available and reliable sources
of repayment are written down to the lower of cost or collateral value.
Cash-basis loans are returned to an accrual status when all contractual
principal and interest amounts are reasonably assured of repayment and there is
a sustained period of repayment performance in accordance with the contractual
terms.
Lease financing transactions. Loans include the Company's share of aggregate
rentals on lease financing transactions and residual values net of related
unearned income. Lease financing transactions substantially represent direct
financing leases and also include leveraged leases. Unearned income is amortized
under a method which substantially results in an approximate level rate of
return when related to the unrecovered lease investment. Gains and losses from
sales of residual values of leased equipment are included in other income.
50
<PAGE>
Loans held for sale. Credit card receivables and mortgage loans originated for
sale are classified as loans held for sale, which are accounted for at the lower
of cost or market value in other assets with net credit losses charged to other
income.
Allowance for credit losses represents management's estimate of probable losses
inherent in the portfolio. This evaluation includes an assessment of the ability
of borrowers with foreign currency obligations to obtain the foreign exchange
necessary for orderly debt servicing. Attribution of the allowance is made for
analytical purposes only, and the entire allowance is available to absorb
probable credit losses inherent in the portfolio. Additions to the allowance are
made by means of the provision for credit losses. Credit losses are deducted
from the allowance, and subsequent recoveries are added. Securities received in
exchange for loan claims in debt restructurings are initially recorded at fair
value, with any gain or loss reflected as a recovery or charge-off to the
allowance, and are subsequently accounted for as securities available for sale.
Larger-balance, non-homogenous exposures representing significant
individual credit exposures are evaluated based upon the borrower's overall
financial condition, resources, and payment record; the prospects for support
from any financially responsible guarantors; and, if appropriate, the realizable
value of any collateral. The allowance for loan losses attributed to these loans
is established via a process which begins with estimates of probable loss
inherent in the portfolio based upon various statistical analyses. These
analyses consider historical and projected default rates and loss severities;
internal risk ratings; geographic, industry, and other environmental factors;
and model imprecision. Management also considers overall portfolio indicators
including trends in internally risk rated exposures, classified exposures,
cash-basis loans, and historical and forecasted write-offs; a review of
industry, geographic, and portfolio concentrations, including current
developments within those segments; and the current business strategy and credit
process including credit limit setting and compliance, credit approvals, loan
underwriting criteria, and loan workout procedures. Within the allowance for
credit losses, a valuation allowance is maintained for larger-balance,
non-homogenous loans that have been individually determined to be impaired. This
estimate considers all available evidence including, as appropriate, the present
value of the expected future cash flows discounted at the loan's contractual
effective rate, the secondary market value of the loan, the fair value of
collateral, and environmental factors.
Each portfolio of smaller balance, homogenous loans, including consumer
mortgage, installment, revolving credit and most other consumer loans, is
collectively evaluated for impairment. The allowance for loan losses attributed
to these loans is established via a process which begins with estimates of
probable losses inherent in the portfolio, based upon various statistical
analyses. These include migration analysis, in which historical delinquency and
credit loss experience is applied to the current aging of the portfolio,
together with analyses which reflect current trends and conditions. Management
also considers overall portfolio indicators including historical credit losses,
delinquent, non-performing and classified loans, and trends in volumes and terms
of loans; an evaluation of overall credit quality and the credit process,
including lending policies and procedures; consideration of economic,
geographical, product, and other environmental factors; and model imprecision.
Other real estate owned. Upon repossession, loans are adjusted if necessary to
the estimated fair value of the underlying collateral and transferred to Other
Real Estate Owned, which is reported in other assets net of a valuation
allowance for selling costs and net declines in value as appropriate.
Risk management activities--derivatives used for non-trading purposes. The
Company manages its exposures to market rate movements outside of its trading
activities by modifying the asset and liability mix, either directly or through
the use of derivative financial products including interest rate swaps, futures,
forwards, and purchased option positions such as interest rate caps, floors, and
collars. These end-user derivative contracts include qualifying hedges and
qualifying positions that modify the interest rate characteristics of specified
financial instruments. Derivative instruments not qualifying as end-user
positions are treated as trading positions and carried at fair value.
To qualify as a hedge, the swap, futures, forward, or purchased option
position must be designated as a hedge and be effective in reducing the market
risk of an existing asset, liability, firm commitment, or identified anticipated
transaction which is probable to occur. To qualify as a position modifying the
interest rate characteristics of an instrument, there must be a documented and
approved objective to synthetically alter the market risk characteristics of an
existing asset, liability, firm commitment or identified anticipated transaction
which is probable to occur, and the swap, forward or purchased option position
must be designated as such a position and effective in accomplishing the
underlying objective.
51
<PAGE>
The foregoing criteria are applied on a decentralized basis, consistent
with the level at which market risk is managed, but are subject to various
limits and controls. The underlying asset, liability, firm commitment or
anticipated transaction may be an individual item or a portfolio of similar
items.
The effectiveness of these contracts is evaluated on an initial and ongoing
basis using quantitative measures of correlation. If a contract is found to be
ineffective, it no longer qualifies as an end-user position and any excess gains
and losses attributable to such ineffectiveness as well as subsequent changes in
fair value are recognized in earnings.
End-user contracts are primarily employed in association with on-balance
sheet instruments accounted for at amortized cost, including loans, deposits,
and long-term debt, and with credit card securitizations. These qualifying
end-user contracts are accounted for consistent with the risk management
strategy as follows. Amounts payable and receivable on interest rate swaps and
options are accrued according to the contractual terms and included currently in
the related revenue and expense category as an element of the yield on the
associated instrument (including the amortization of option premiums). Amounts
paid or received over the life of futures contracts are deferred until the
contract is closed; accumulated deferred amounts on futures contracts and
amounts paid or received at settlement of forward contracts are accounted for as
elements of the carrying value of the associated instrument, affecting the
resulting yield.
End-user contracts related to instruments that are carried at fair value
are also carried at fair value, with amounts payable and receivable accounted
for as an element of the yield on the associated instrument. When related to
securities available for sale, fair value adjustments are reported in
stockholders' equity, net of tax.
If an end-user derivative contract is terminated, any resulting gain or
loss is deferred and amortized over the original term of the agreement provided
that the effectiveness criteria have been met. If the underlying designated
items are no longer held, or if an anticipated transaction is no longer likely
to occur, any previously unrecognized gain or loss on the derivative contract is
recognized in earnings and the contract is accounted for at fair value with
subsequent changes recognized in earnings.
Foreign exchange contracts which qualify under applicable accounting
guidelines as hedges of foreign currency exposures, including net capital
investments outside the U.S., are revalued at the spot rate with any forward
premium or discount recognized over the life of the contract in net interest
revenue. Gains and losses on foreign exchange contracts which qualify as a hedge
of a firm commitment are deferred and recognized as part of the measurement of
the related transaction, unless deferral of a loss would lead to recognizing
losses on the transaction in later periods.
Insurance premiums from long-duration contracts, principally life insurance, are
earned when due. Premiums from short-duration insurance contracts are earned
over the related contract period. Short-duration contracts include primarily
property and casualty, credit life and accident and health policies, including
estimated ultimate premiums on retrospectively rated policies. Benefits and
expenses are associated with premiums by means of the provision for future
policy benefits, unearned premiums and the deferral and amortization of policy
acquisition costs. Receivables related to retrospectively rated policies on
property-casualty business are reported in other assets.
Value of insurance in force, included in other assets, represents the
actuarially determined present value of anticipated profits to be realized from
life and accident and health business on insurance in force at the date of the
Company's acquisition of its insurance subsidiaries using the same assumptions
that were used for computing related liabilities where appropriate. The value of
insurance in force acquired prior to December 31, 1993 is amortized over the
premium paying periods in relation to anticipated premiums. The value of
insurance in force relating to the 1993 acquisition of The Travelers Corporation
(old Travelers) was the actuarially determined present value of the projected
future profits discounted at interest rates ranging from 14% to 18% for the
business acquired. The value of insurance in force is amortized over the
contract period using current interest crediting rates to accrete interest and
using amortization methods based on the specified products. Traditional life
insurance is amortized over the period of anticipated premiums; universal life
in relation to estimated gross profits; and annuity contracts employing a level
yield method. The value of insurance in force is reviewed periodically for
recoverability to determine if any adjustment is required.
Deferred policy acquisition costs, included in other assets, for the life
business represent the costs of acquiring new business, principally commissions,
certain underwriting and agency expenses and the cost of issuing policies.
Deferred policy acquisition costs for traditional life business are amortized
over the premium-paying periods of the related policies, in proportion to the
ratio of the annual premium revenue to the total anticipated premium revenue.
Deferred policy acquisition costs of other business lines are generally
amortized over the life of the insurance contract or at a constant rate based
upon the present value of estimated gross profits expected to be realized. For
certain property and casualty lines, acquisition costs (primarily commissions
and premium taxes) have been deferred to the extent recoverable from future
earned premiums and are amortized ratably over the terms of the related
policies. Deferred policy acquisition costs are reviewed to determine if they
are recoverable from future income, including investment income, and, if not
recoverable, are charged to expense. All other acquisition expenses are charged
to operations as incurred.
Separate and variable accounts primarily represent funds for which investment
income and investment gains and losses accrue directly to, and investment risk
is borne by, the contractholders. Each account has specific investment
objectives. The assets of each account are legally segregated and are not
subject to claims that arise out of any other business of the Company. The
assets of these accounts are generally carried at market value. Amounts assessed
to the contractholders for management services are included in revenues.
Deposits, net investment income and realized investment gains and losses for
these accounts are excluded from revenues, and related liability increases are
excluded from benefits and expenses.
52
<PAGE>
Insurance policy and claims reserves represent liabilities for future insurance
policy benefits. Insurance reserves for traditional life insurance, annuities,
and accident and health policies have been computed based upon mortality,
morbidity, persistency and interest rate assumptions (ranging from 2.5% to
10.0%) applicable to these coverages, including adverse deviation. These
assumptions consider Company experience and industry standards and may be
revised if it is determined that future experience will differ substantially
from that previously assumed. Property-casualty reserves include (1) unearned
premiums representing the unexpired portion of policy premiums, and (2)
estimated provisions for both reported and unreported claims incurred and
related expenses. The reserves are adjusted regularly based on experience.
In determining insurance policy and claims reserves, the Company performs a
continuing review of its overall position, its reserving techniques and its
reinsurance. Reserves for property-casualty insurance losses represent the
estimated ultimate cost of all incurred claims and claim adjustment expenses.
Since the reserves are based on estimates, the ultimate liability may be more or
less than such reserves. The effects of changes in such estimated reserves are
included in the results of operations in the period in which the estimates are
changed. Such changes may be material to the results of operations and could
occur in a future period.
Contractholder funds represent receipts from the issuance of universal life,
pension investment and certain individual annuity contracts. Such receipts are
considered deposits on investment contracts that do not have substantial
mortality or morbidity risk. Account balances are increased by deposits received
and interest credited and are reduced by withdrawals, mortality charges and
administrative expenses charged to the contractholders. Calculations of
contractholder account balances for investment contracts reflect lapse,
withdrawal and interest rate assumptions (ranging from 3.8% to 8.6%) based on
contract provisions, the Company's experience and industry standards.
Contractholder funds also include other funds that policyholders leave on
deposit with the Company.
Employee benefits expense includes prior and current service costs of pension
and other postretirement benefit plans, which are accrued on a current basis,
contributions and unrestricted awards under other employee plans, the
amortization of restricted stock awards, and costs of other employee benefits.
There are no charges to earnings upon the grant or exercise of fixed stock
options or the subscription for or purchase of stock under stock purchase
agreements. Compensation expense related to performance-based stock options is
recorded over the period to the estimated vesting dates. Upon issuance of
previously unissued shares under employee plans, proceeds received in excess of
par value are credited to additional paid-in capital. Upon issuance of treasury
shares, the difference between the proceeds received and the average cost of
treasury shares is recorded in additional paid-in capital.
Income taxes. Deferred taxes are recorded for the future tax consequences of
events that have been recognized in the financial statements or tax returns,
based upon enacted tax laws and rates. Deferred tax assets are recognized
subject to management's judgment that realization is more likely than not. The
Company and its wholly owned domestic non-life insurance subsidiaries file a
consolidated federal income tax return. The major life insurance subsidiaries
are included in their own consolidated federal income tax return.
Earnings per common share is computed after recognition of preferred stock
dividend requirements. Basic earnings per share is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period, excluding restricted stock. Diluted earnings per
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised and has been computed after
giving consideration to the weighted average dilutive effect of the Company's
convertible securities, common stock warrants, stock options and the shares
issued under the Company's Capital Accumulation Plan and other restricted stock
plans.
The Board of Directors on April 19, 1999 declared a three-for-two split in
Citigroup's common stock, which was paid in the form of a 50% stock dividend on
May 28, 1999. Prior year information has been restated to reflect the stock
split.
Accounting Changes
Insurance-related assessments. During the first quarter of 1999, the Company
adopted Statement of Position ("SOP") 97-3, "Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments." SOP 97-3 provides guidance for
determining when an entity should recognize a liability for guaranty-fund and
other insurance-related assessments, how to measure that liability, and when an
asset may be recognized for the recovery of such assessments through premium tax
offsets or policy surcharges. The initial adoption resulted in a cumulative
catch-up adjustment recorded as a charge to earnings of $135 million after-tax
and minority interest.
Deposit Accounting. During the first quarter of 1999, the Company adopted SOP
98-7, "Deposit Accounting: Accounting for Insurance and Reinsurance Contracts
That Do Not Transfer Insurance Risk." SOP 98-7 provides guidance on how to
account for insurance and reinsurance contracts that do not transfer insurance
risk and applies to all entities and all such contracts, except for
long-duration life and health insurance contracts. The method used to account
for such contracts is referred to as deposit accounting. The initial adoption
resulted in a cumulative catch-up adjustment recorded as a credit to earnings of
$23 million after-tax and minority interest.
Start-up costs. During the first quarter of 1999, the Company adopted SOP 98-5,
"Reporting on the Costs of Start-Up Activities." SOP 98-5 requires costs of
start-up activities and organization costs to be expensed as incurred. The
initial adoption resulted in a cumulative catch-up adjustment recorded as a
charge to earnings of $15 million after-tax.
53
<PAGE>
Asset management fees. For periods prior to 1999, asset management and
administration fees earned by Citicorp subsidiaries are classified as
commissions and fees in the consolidated statement of income.
Future Application of Accounting Standards
Derivatives and hedge accounting. In June 1998, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS
No. 133). In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities--Deferral of the Effective Date of FASB
Statement No. 133," which delayed the effective date of SFAS No. 133 to January
1, 2001 for calendar year companies such as the Company. The new standard will
significantly change the accounting treatment of end-user derivative and foreign
exchange contracts used by the Company and its customers. Depending on the
underlying risk management strategy, these accounting changes could affect
reported earnings, assets, liabilities, and stockholders' equity. As a result,
the Company and the customers to which it provides derivatives and foreign
exchange products will have to reconsider their risk management strategies,
since the new standard will not reflect the results of many of those strategies
in the same manner as current accounting practice. The Company continues to
evaluate the potential impact of implementing the new accounting standard, which
will depend, among other things, on the possibility of additional amendments and
interpretations of the standard prior to the effective date.
2. BUSINESS COMBINATIONS
Merger with Citicorp
On October 8, 1998, Citicorp merged with and into a newly formed, wholly owned
subsidiary of Travelers Group, Inc. (TRV) (the Merger). Following the Merger,
TRV changed its name to Citigroup Inc. (Citigroup). Under the terms of the
Merger, 1.698 billion shares (adjusted to reflect the three-for-two stock split
in May 1999) of Citigroup common stock were issued in exchange for all of the
outstanding shares of Citicorp common stock. The Merger was accounted for under
the pooling of interests method. Certain reclassifications and adjustments have
been recorded to conform the accounting policies and presentations of Citicorp
and Travelers.
Acquisition of Universal Card Services
On April 2, 1998, Citicorp completed its acquisition of Universal Card Services
from AT&T for $3.5 billion in cash. This purchase added $15 billion in customer
receivables and 13.5 million accounts. In addition, Citicorp entered into a
ten-year cobranding and joint marketing agreement with AT&T.
Merger with Salomon
On November 28, 1997, a newly formed, wholly owned subsidiary of TRV merged with
and into Salomon (the Salomon Merger). Under the terms of the Salomon Merger,
approximately 282.8 million shares (adjusted to reflect the three-for-two stock
split in May 1999) of Citigroup common stock were issued in exchange for all of
the outstanding shares of Salomon common stock. Thereafter, Smith Barney
Holdings Inc. (Smith Barney) was merged with and into Salomon to form Salomon
Smith Barney Holdings Inc. (Salomon Smith Barney). The Salomon Merger was
accounted for under the pooling of interests method.
3. BUSINESS SEGMENT INFORMATION
Citigroup is a diversified holding company whose businesses provide a broad
range of financial services to consumer and corporate customers around the
world. The Company's activities are conducted through Global Consumer, Global
Corporate and Investment Bank, Global Investment Management and Private Banking,
and Investment Activities.
The Global Consumer segment includes a global, full-service consumer
franchise encompassing, among other things, branch and electronic banking,
consumer lending services, investment services, credit and charge card services,
and life, auto and homeowners insurance. The businesses included in the
Company's Global Corporate and Investment Bank segment provide corporations,
governments, institutions, and investors in 100 countries and territories with a
broad range of financial products and services, including investment advice,
financial planning and retail brokerage services, banking and financial
services, and commercial insurance products. The Global Investment Management
and Private Banking segment offers a broad range of asset management products
and services from global investment centers around the world, including mutual
funds, closed-end funds, managed accounts, unit investment trusts, variable
annuities, and personalized wealth management services to institutional, high
net worth, and retail clients. The Investment Activities segment includes the
Company's venture capital activities, the realized investment gains and losses
related to certain corporate- and insurance-related investments, and the results
of certain investments in countries that refinanced debt under the 1989 Brady
Plan or plans of a similar nature. Corporate/Other includes net corporate
treasury results, and corporate staff and other corporate expenses.
54
<PAGE>
The following table presents certain information regarding these industry
segments:
<TABLE>
<CAPTION>
Total Revenues, Net Provision for
of Interest Expense(1) Income Taxes
In Millions of Dollars, Except --------------------------------- ------------------------------
Identifiable Assets in Billions 1999 1998(3) 1997(3) 1999 1998(3) 1997(3)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Global Consumer(4) $ 26,282 $ 23,004 $ 20,348 $ 2,458 $ 1,631 $ 1,447
Global Corporate and
Investment Bank(4) 27,355 22,360 23,819 2,871 1,262 1,690
Global Investment Management
and Private Banking 2,686 2,381 2,134 379 286 295
Corporate/Other (176) (132) (252) (360) (379) (238)
Investment Activities 1,090 1,323 1,733 355 434 639
- ------------------------------------------------------------------------------------------------------
Total $ 57,237 $ 48,936 $ 47,782 $ 5,703 $ 3,234 $ 3,833
======================================================================================================
<CAPTION>
Identifiable
Net Income (loss)(2) Assets at Year-End
In Millions of Dollars, Except ------------------------------ -------------------
Identifiable Assets in Billions 1999 1998(3) 1997(3) 1999 1998(3) 1997(3)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Global Consumer(4) $ 4,240 $ 2,708 $ 2,527 $237 $217 $186
Global Corporate and
Investment Bank(4) 5,069 2,395 3,034 429 415 478
Global Investment Management
and Private Banking 604 454 467 26 20 18
Corporate/Other (706) (583) (423) 14 9 6
Investment Activities 660 833 1,100 11 8 9
- ----------------------------------------------------------------------------------------
Total $ 9,867 $ 5,807 $ 6,705 $717 $669 $697
========================================================================================
</TABLE>
(1) Includes total revenues, net of interest expense in the United States of
$41.5 billion, $37.3 billion, and $34.4 billion in 1999, 1998, and 1997,
respectively. Total revenues, net of interest expense attributable to
individual foreign countries are not material to the total.
(2) For the 1999 period, Global Consumer, Global Corporate and Investment Bank,
Global Investment Management and Private Banking, and Corporate/Other
results reflect after-tax restructuring charges (credits) of $56 million,
($121) million, ($2) million, and $20 million, respectively. For the 1998
period, Global Consumer, Global Corporate and Investment Bank, Global
Investment Management and Private Banking, and Corporate/Other results
reflect after-tax restructuring-related charges (credits) and
merger-related costs of $403 million, ($26) million, $53 million, and $105
million, respectively. For the 1997 period, Global Consumer, Global
Corporate and Investment Bank, Global Investment Management and Private
Banking, and Corporate/Other results reflect after-tax
restructuring-related charges of $333 million, $664 million, $18 million,
and $31 million, respectively.
(3) Reclassified to conform to the 1999 presentation, including changes in
capital and tax allocations among the segments.
(4) Includes provisions for benefits, claims, and credit losses in the Global
Consumer results of $7.6 billion, $7.0 billion, and $6.3 billion, and in
the Global Corporate and Investment Bank results of $3.9 billion, $4.2
billion, and $3.7 billion for 1999, 1998, and 1997, respectively.
4. INVESTMENTS
In Millions of Dollars at Year-End 1999 1998
- --------------------------------------------------------------------------------
Fixed maturities, primarily available for sale at fair value $ 95,849 $ 91,547
Equity securities, primarily at fair value 7,795 4,574
Venture capital, at fair value 4,160 3,297
Short-term and other 5,322 5,758
- --------------------------------------------------------------------------------
$113,126 $105,176
================================================================================
The amortized cost and fair value of investments in fixed maturities and equity
securities at December 31, were as follows:
<TABLE>
<CAPTION>
1999
-----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
In Millions of Dollars at Year-End Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed maturity securities held to maturity,
principally mortgage-backed securities $ 33 $ 3 $ -- $ 36
- ---------------------------------------------------------------------------------------------------------
Fixed maturity securities available for sale
Mortgage-backed securities, principally obligations of
U.S. Federal agencies $14,165 $ 55 $ 485 $13,735
U.S. Treasury and Federal agency 7,082 36 120 6,998
State and municipal 13,733 255 499 13,489
Foreign government 25,565 522 326 25,761
U.S. corporate 24,386 200 698 23,888
Other debt securities(1) 9,083 3,015 153 11,945
- ---------------------------------------------------------------------------------------------------------
$94,014 $4,083 $ 2,281 $95,816
=========================================================================================================
Equity securities(1)(2) $ 5,594 $2,404 $ 203 $ 7,795
- ---------------------------------------------------------------------------------------------------------
Fixed maturity securities available for sale include:
Government of Brazil Brady Bonds $ 688 $ 302 $ -- $ 990
Government of Venezuela Brady Bonds 422 -- 91 331
=========================================================================================================
<CAPTION>
1998
-----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
In Millions of Dollars at Year-End Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fixed maturity securities held to maturity,
principally mortgage-backed securities $ 30 $ 6 $ -- $ 36
- ---------------------------------------------------------------------------------------------------------
Fixed maturity securities available for sale
Mortgage-backed securities, principally obligations of
U.S. Federal agencies $12,646 $ 350 $ 14 $12,982
U.S. Treasury and Federal agency 5,250 455 4 5,701
State and municipal 13,714 799 227 14,286
Foreign government 26,444 424 600 26,268
U.S. corporate 23,424 1,213 302 24,335
Other debt securities(1) 7,669 354 78 7,945
- ---------------------------------------------------------------------------------------------------------
$89,147 $3,595 $ 1,225 $91,517
=========================================================================================================
Equity securities(1)(2) $ 4,528 $ 311 $ 265 $ 4,574
- ---------------------------------------------------------------------------------------------------------
Fixed maturity securities available for sale include:
Government of Brazil Brady Bonds $ 660 $ 26 $ -- $ 686
Government of Venezuela Brady Bonds 478 -- 174 304
=========================================================================================================
</TABLE>
(1) Investments in convertible debt and common stock of Nikko Securities, Inc.,
are included in other debt securities and equity securities, respectively.
(2) Includes non-marketable equity securities carried at cost which are
reported in both the amortized cost and fair value columns.
55
<PAGE>
The accompanying table shows components of interest and dividends on
investments, realized gains and losses from sales of investments, and net gains
on investments held by venture capital subsidiaries.
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Taxable interest $6,770 $6,000 $5,486
Interest exempt from U.S. federal income tax 684 636 496
Dividends 250 159 144
- --------------------------------------------------------------------------------
Gross realized investments gains(1) $1,273 $1,507 $1,414
Gross realized investments losses(1) 716 667 419
- --------------------------------------------------------------------------------
Net realized and unrealized venture capital gains $ 816 $ 487 $ 749
which included:
Gross unrealized gains 999 709 612
Gross unrealized losses 587 412 82
================================================================================
(1) Includes net realized gains related to insurance subsidiaries sale of OREO
and mortgage loans of $215 million, $67 million, and $86 million in 1999,
1998, and 1997, respectively.
The following table presents the amortized cost, fair value, and average
yield on amortized cost of fixed maturity securities by contractual maturity
dates as of December 31, 1999:
Amortized Fair
In Millions of Dollars Cost Value Yield
- ------------------------------------------------------------------------------
U.S. treasury and federal agency(1)
Due within 1 year $ 2,980 $ 2,981 5.23%
After 1 but within 5 years 1,460 1,437 5.55
After 5 but within 10 years 2,167 2,142 6.65
After 10 years(2) 11,422 11,126 6.90
- ------------------------------------------------------------------------------
Total $18,029 $17,686 6.48
==============================================================================
State and municipal
Due within 1 year $ 80 $ 79 5.00%
After 1 but within 5 years 886 904 5.76
After 5 but within 10 years 2,831 2,859 5.33
After 10 years(2) 9,936 9,647 5.62
- ------------------------------------------------------------------------------
Total $13,733 $13,489 5.56
==============================================================================
All other(3)
Due within 1 year $13,923 $12,774 7.30%
After 1 but within 5 years 23,940 28,012 9.86
After 5 but within 10 years 11,730 11,423 7.58
After 10 years(2) 12,692 12,468 7.66
- ------------------------------------------------------------------------------
Total $62,285 $64,677 8.41
==============================================================================
(1) Includes mortgage-backed securities of U.S. federal agencies.
(2) Investments with no stated maturities are included as contractual
maturities of greater than 10 years. Actual maturities may differ due to
call or prepayment rights.
(3) Includes foreign government, U.S. corporate, mortgage-backed securities
issued by U.S. corporations, and other debt securities. Yields reflect the
impact of local interest rates prevailing in countries outside the U.S.
5. FEDERAL FUNDS, SECURITIES BORROWED, LOANED, AND SUBJECT TO REPURCHASE
AGREEMENTS
Federal funds sold and securities borrowed or purchased under agreements to
resell, at their respective carrying values, consisted of the following at
December 31:
In Millions of Dollars 1999 1998
- --------------------------------------------------------------------------------
Federal funds sold and resale agreements $76,675 $45,439
Deposits paid for securities borrowed 35,980 49,392
- --------------------------------------------------------------------------------
$112,655 $94,831
================================================================================
Federal funds purchased and securities loaned or sold under agreements to
repurchase, at their respective carrying values, consisted of the following at
December 31:
In Millions of Dollars 1999 1998
- --------------------------------------------------------------------------------
Federal funds purchased and repurchase agreements $81,375 $71,399
Deposits received for securities loaned 11,216 9,626
- --------------------------------------------------------------------------------
$92,591 $81,025
================================================================================
The resale and repurchase agreements represent collateralized financing
transactions used to generate net interest income and facilitate trading
activity. These instruments are collateralized principally by government and
government agency securities and generally have terms ranging from overnight to
up to a year. It is the Company's policy to take possession of the underlying
collateral, monitor its market value relative to the amounts due under the
agreements, and, when necessary, require prompt transfer of additional
collateral or reduction in the loan balance in order to maintain contractual
margin protection. In the event of counterparty default, the financing agreement
provides the Company with the right to liquidate the collateral held. Resale
agreements and repurchase agreements are reported net by counterparty, when
applicable, pursuant to FASB Interpretation 41, "Offsetting of Amounts Related
to Certain Repurchase and Reverse Repurchase Agreements" (FIN 41). Excluding the
impact of FIN 41, resale agreements totaled $122.4 billion and $100.2 billion at
December 31, 1999 and 1998, respectively.
Deposits paid for securities borrowed (securities borrowed) and deposits
received for securities loaned (securities loaned) are recorded at the amount of
cash advanced or received and are collateralized principally by government and
government agency securities, corporate debt and equity securities. Securities
borrowed transactions require the Company to deposit cash with the lender. With
respect to securities loaned, the Company receives cash collateral in an amount
generally in excess of the market value of securities loaned. The Company
monitors the market value of securities borrowed and securities loaned daily,
and additional collateral is obtained as necessary. Securities borrowed and
securities loaned are reported net by counterparty, when applicable, pursuant to
FIN 41. Excluding the impact of FIN 41, securities borrowed totaled $36.0
billion and $50.2 billion at December 31, 1999 and 1998, respectively.
56
<PAGE>
6. BROKERAGE RECEIVABLES AND BROKERAGE PAYABLES
The Company has receivables and payables for financial instruments purchased
from and sold to brokers and dealers and customers. The Company is exposed to
risk of loss from the inability of brokers and dealers or customers to pay for
purchases or to deliver the financial instrument sold, in which case the Company
would have to sell or purchase the financial instruments at prevailing market
prices. Credit risk is reduced to the extent that an exchange or clearing
organization acts as a counterparty to the transaction.
The Company seeks to protect itself from the risks associated with customer
activities by requiring customers to maintain margin collateral in compliance
with regulatory and internal guidelines. Margin levels are monitored daily, and
customers deposit additional collateral as required. Where customers cannot meet
collateral requirements, the Company will liquidate sufficient underlying
financial instruments to bring the customer into compliance with the required
margin level.
Exposure to credit risk is impacted by market volatility, which may impair
the ability of clients to satisfy their obligations to the Company. Credit
limits are established and closely monitored for customers and brokers and
dealers engaged in forward and futures and other transactions deemed to be
credit-sensitive.
Brokerage receivables and brokerage payables, which arise in the normal
course of business, consisted of the following at December 31:
In Millions of Dollars 1999 1998
- --------------------------------------------------------------------------------
Receivables from customers $20,451 $14,075
Receivables from brokers,
dealers and clearing organizations 2,522 7,338
- --------------------------------------------------------------------------------
Total brokerage receivables $22,973 $21,413
================================================================================
Payables to customers $12,323 $13,153
Payables to brokers,
dealers, and clearing organizations 3,421 7,902
- --------------------------------------------------------------------------------
Total brokerage payables $15,744 $21,055
================================================================================
7. TRADING ACCOUNT ASSETS AND LIABILITIES
Trading account assets and liabilities at market value consisted of the
following at December 31:
In Millions of Dollars 1999 1998
- --------------------------------------------------------------------------------
Trading Account Assets
U.S. Treasury and Federal agency securities $ 25,865 $ 24,729
State and municipal securities 2,121 3,165
Foreign government securities 9,243 21,240
Corporate and other debt securities 13,858 12,595
Derivative and other
contractual commitments(1) 31,646 37,431
Equity securities 11,910 7,291
Mortgage loans and
collateralized mortgage securities 5,663 6,082
Other 8,849 7,312
- --------------------------------------------------------------------------------
$109,155 $119,845
================================================================================
Trading Account Liabilities
Securities sold, not yet purchased $ 52,051 $ 53,228
Derivative and other contractual commitments(1) 39,053 41,356
- --------------------------------------------------------------------------------
$ 91,104 $ 94,584
================================================================================
(1) Net of master netting agreements and securitization.
The average fair value of derivative and other contractual commitments in
trading account assets during 1999 and 1998 was $36.8 billion and $39.6 billion,
respectively. The average fair value of derivative and other contractual
commitments in trading account liabilities during 1999 and 1998 was $38.9
billion and $39.4 billion, respectively. See Note 22 for a discussion of trading
securities, commodities, derivatives and related risks.
8. PRINCIPAL TRANSACTIONS REVENUES
Principal transactions revenues, consisting of realized and unrealized gains and
losses from trading activities, were as follows for the years ended December 31:
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Salomon Smith Barney(1)
Fixed income(2) $1,378 $(869) $1,882
Equities(3) 954 536 397
Commodities(4) 192 205 218
Other 38 15 7
- --------------------------------------------------------------------------------
2,562 (113) 2,504
- --------------------------------------------------------------------------------
Global Corporate Bank
Foreign exchange(5) 1,025 1,187 876
Derivatives(6) 771 379 259
Fixed income(7) 43 (57) 124
Other 165 (1) 153
- --------------------------------------------------------------------------------
2,004 1,508 1,412
- --------------------------------------------------------------------------------
Global Consumer and other 594 385 315
- --------------------------------------------------------------------------------
Total principal transactions revenues $5,160 $1,780 $4,231
================================================================================
(1) Includes SSB Asset Management principal transactions revenues.
(2) Includes revenues from government securities and corporate debt, municipal
securities, preferred stock, mortgage securities, and other debt
instruments. Also includes spot and forward trading of currencies and
exchange-traded and over-the-counter (OTC) currency options, options on
fixed income securities, interest rate swaps, currency swaps, swap options,
caps and floors, financial futures, OTC options, forward contracts on fixed
income securities, and revenues related to fixed income securities utilized
in arbitrage strategies.
(3) Includes revenues from common and convertible preferred stock, convertible
corporate debt, equity-linked notes, and exchange-traded and OTC equity
options and warrants. Also includes revenues on equity securities and
related derivatives utilized in arbitrage strategies.
(4) Includes revenues from the results of Phibro Inc. (Phibro), which trades
crude oil, refined oil products, natural gas, electricity, metals, and
other commodities.
(5) Includes revenues from foreign exchange spot, forward, and option
contracts.
(6) Includes revenues from interest rate and currency swaps, options, financial
futures, and equity and commodity contracts.
(7) Includes revenues from government and corporate debt, mortgage assets, and
other debt instruments.
57
<PAGE>
9. LOANS
In Millions of Dollars at Year-End 1999 1998
- -------------------------------------------------------------------------------
Consumer
In U.S. offices
Mortgage and real estate(1)(2) $ 37,261 $ 29,962
Installment, revolving credit, and other 51,570 47,869
- -------------------------------------------------------------------------------
88,831 77,831
- -------------------------------------------------------------------------------
In offices outside the U.S.
Mortgage and real estate(1)(3) 21,529 19,456
Installment, revolving credit, and other 39,306 36,048
Lease financing 475 484
- -------------------------------------------------------------------------------
61,310 55,988
- -------------------------------------------------------------------------------
150,141 133,819
Unearned income (1,426) (1,564)
- -------------------------------------------------------------------------------
Consumer loans, net of unearned income $ 148,715 $ 132,255
===============================================================================
Commercial
In U.S. offices
Commercial and industrial(4) $ 13,697 $ 12,452
Mortgage and real estate(1) 3,659 5,344
Lease financing 3,392 2,951
- -------------------------------------------------------------------------------
20,748 20,747
- -------------------------------------------------------------------------------
In offices outside the U.S.
Commercial and industrial(4) 60,652 55,828
Mortgage and real estate(1) 1,728 1,792
Loans to financial institutions 7,692 8,008
Governments and official institutions 3,250 2,132
Lease financing 1,648 1,386
- -------------------------------------------------------------------------------
74,970 69,146
- -------------------------------------------------------------------------------
95,718 89,893
Unearned income (227) (190)
- -------------------------------------------------------------------------------
Commercial loans, net of unearned income $ 95,491 $ 89,703
===============================================================================
(1) Loans secured primarily by real estate.
(2) Includes $3.4 billion in 1999 and $3.3 billion in 1998 of commercial real
estate loans related to community banking and private banking activities.
(3) Includes $2.9 billion in 1999 and $2.4 billion in 1998 of loans secured by
commercial real estate.
(4) Includes loans not otherwise separately categorized.
The following table presents information about impaired loans. Impaired
loans are those on which Citigroup believes it is not probable that it will be
able to collect all amounts due according to the contractual terms of the loan,
excluding smaller-balance homogeneous loans that are evaluated collectively for
impairment, and are carried on a cash basis. Valuation allowances for these
loans are estimated considering all available evidence including, as
appropriate, the present value of the expected cash flows discounted at the
loan's contractual effective rate, the secondary market value of the loan, the
fair value of collateral, and environmental factors. Amounts for 1998 have been
adjusted to a basis consistent with 1999.
In Millions of Dollars at Year-End 1999 1998
- --------------------------------------------------------------------------------
Impaired commercial loans $1,326 $1,536
Other impaired loans(1) 185 218
- --------------------------------------------------------------------------------
Total impaired loans(2) $1,511 $1,754
================================================================================
Impaired loans with valuation allowances $1,156 $1,210
Total valuation allowances(3) 344 360
================================================================================
During the year(4):
Average balance of impaired loans $1,689 $1,498
Interest income recognized on impaired loans 75 68
================================================================================
(1) Primarily commercial real estate loans related to community and private
banking activities.
(2) At year-end 1999, approximately 23% of these loans were measured for
impairment using the fair value of the collateral, with the remaining 77%
measured using the present value of the expected future cash flows,
discounted at the loan's effective interest rate, compared with
approximately 31% and 69%, respectively, at year-end 1998.
(3) Included in the allowance for credit losses.
(4) For the year ended December 31, 1997, the average balance of impaired loans
was $1.2 billion and interest income recognized on impaired loans was $62
million.
10. ALLOWANCE FOR CREDIT LOSSES
In Millions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
Allowance for credit losses
at beginning of year $6,617 $6,137 $5,743
Additions
Consumer provision for credit losses 2,489 2,367 2,225
Commercial provision for credit losses 348 384 (28)
- -------------------------------------------------------------------------------
Total provision for credit losses 2,837 2,751 2,197
- -------------------------------------------------------------------------------
Deductions
Consumer credit losses 2,950 2,735 2,604
Consumer credit recoveries (539) (497) (507)
- -------------------------------------------------------------------------------
Net consumer credit losses 2,411 2,238 2,097
- -------------------------------------------------------------------------------
Commercial credit losses 524 576 191
Commercial credit recoveries (117) (170) (219)
- -------------------------------------------------------------------------------
Net commercial credit losses (recoveries) 407 406 (28)
- -------------------------------------------------------------------------------
Other--net(1) 43 373 266
- -------------------------------------------------------------------------------
Allowance for credit losses at end of year $6,679 $6,617 $6,137
===============================================================================
(1) In 1999, primarily includes the addition of allowance for credit losses
related to acquisitions and foreign currency translation effects. In 1998,
reflects the addition of $320 million of credit loss reserves related to
the acquisition of the Universal Card portfolio. In 1997, $373 million was
restored to the allowance for credit losses that had previously been
attributed to credit card securitization transactions where the exposure to
credit losses was contractually limited to the cash flows from the
securitized receivables, $50 million attributable to standby letters of
credit and guarantees was reclassified to other liabilities, and $50
million attributable to derivative and foreign exchange contracts was
reclassified as a deduction from trading account assets.
58
<PAGE>
11. DEBT
Investment Banking and Brokerage Borrowings
Investment banking and brokerage borrowings and the corresponding weighted
average interest rates at December 31 are as follows:
1999 1998
----------------- ------------------
Weighted Weighted
Average Average
Interest Interest
In Millions of Dollars Balance Rate Balance Rate
- -------------------------------------------------------------------------------
Commercial paper $12,578 6.0% $10,493 5.3%
Bank borrowings 536 5.8% 556 5.1%
Other 605 2,991
- -------------------------------------------------------------------------------
$13,719 $14,040
===============================================================================
Investment banking and brokerage borrowings are short-term in nature and
include commercial paper, bank borrowings and other borrowings used to finance
SSB's operations, including the securities settlement process. Outstanding bank
borrowings include both U.S. dollar and non-U.S. dollar denominated loans. The
non-U.S. dollar loans are denominated in multiple currencies including the
Japanese yen, British pound, and European Monetary Unit. All commercial paper
outstanding at December 31, 1999 and 1998 was U.S. dollar denominated.
At December 31, 1999, Salomon Smith Barney Holdings Inc. (Salomon Smith
Barney) had a $1.5 billion revolving credit agreement with a bank syndicate that
extends through May 2001, and a $3.5 billion, 364-day revolving credit agreement
that extends through May 2000. Salomon Smith Barney may borrow under its
revolving credit facilities at various interest rate options (LIBOR, CD, or base
rate) and compensates the banks for the facilities through commitment fees.
Under these facilities SSB is required to maintain a certain level of
consolidated adjusted net worth (as defined in the agreements). At December 31,
1999, this requirement was exceeded by approximately $3.5 billion. At December
31, 1999, there were no borrowings outstanding under either facility.
Salomon Smith Barney also has substantial borrowing arrangements consisting
of facilities that it has been advised are available, but where no contractual
lending obligation exists.
Short-Term Borrowings
At December 31, short-term borrowings consisted of commercial paper and other
borrowings with weighted average interest rates as follows:
1999 1998
----------------- ------------------
Weighted Weighted
In Millions of Dollars Balance Average Balance Average
- -------------------------------------------------------------------------------
Commercial paper
Citigroup $ -- --% $ 991 5.40%
Citicorp 5,027 6.12 3,040 5.36
- -------------------------------------------------------------------------------
5,027 4,031
Other borrowings 12,059 8.28 12,081 12.14
- -------------------------------------------------------------------------------
$17,086 $16,112
===============================================================================
Citigroup, Citicorp, TAP, and TIC issue commercial paper directly to
investors. CitiFinancial Credit Company (CCC), which had previously issued
commercial paper, became an indirect subsidiary of Citicorp on August 4,1999
and, thereafter, ceased such issuance. Citigroup and Citicorp, both of which are
bank holding companies, maintain combined liquidity reserves of cash,
securities, and unused bank lines of credit at least equal to their combined
outstanding commercial paper. TAP and TIC each maintains unused credit
availability under their bank lines of credit at least equal to the amount of
outstanding commercial paper.
Borrowings under bank lines of credit may be at interest rates based on
LIBOR, CD rates, the prime rate or bids submitted by the banks. Each company
pays its banks commitment fees for its lines of credit.
Citicorp, Salomon Smith Barney, and some of their nonbank subsidiaries have
credit facilities with Citicorp's subsidiary banks, including Citibank, N.A.
Borrowings under these facilities must be secured in accordance with Section 23A
of the Federal Reserve Act.
Citigroup and TIC have an agreement with a syndicate of banks to provide
$1.0 billion of revolving credit, to be allocated to Citigroup and TIC. The
participation of TIC in this agreement is limited to $250 million. The revolving
credit facility consists of a five-year revolving credit facility that expires
in June 2001. At December 31, 1999, all of the facility was allocated to
Citigroup. Under this facility the Company is required to maintain a certain
level of consolidated stockholders' equity (as defined in the agreement). The
Company exceeded this requirement by approximately $30.6 billion at December 31,
1999. Citigroup also has $300 million in 364-day facilities that expire in the
third quarter of 2000. At December 31, 1999, there were no borrowings
outstanding under either of these facilities.
At December 31, 1999, CCC had committed and available revolving credit
facilities of $3.4 billion, consisting of five-year facilities which expire in
2002. At December 31, 1999, there were no borrowings outstanding under these
facilities. In connection with the August 4,1999 reorganization of CCC as a
subsidiary of Citicorp, Citicorp guaranteed various debt obligations of CCC,
including those arising under these facilities. Under this facility Citicorp is
required to maintain a certain level of consolidated stockholder's equity (as
defined in the agreement). At December 31, 1999, this requirement was exceeded
by approximately $10.3 billion.
TAP has a five-year revolving credit facility in the amount of $250 million
with a syndicate of banks that expires in December 2001. Under this facility TAP
is required to maintain a certain level of consolidated stockholders' equity (as
defined in the agreement). At December 31, 1999, this requirement was exceeded
by approximately $4.8 billion. At December 31, 1999, there were no borrowings
outstanding under this facility.
59
<PAGE>
Long-Term Debt
At December 31, long-term debt was as follows:
Weighted
Average
In Millions of Dollars Coupon Maturities 1999 1998
- --------------------------------------------------------------------------------
Citigroup Inc.
Senior Notes(1) 6.52% 2000-2028 $ 4,181 $ 2,422
Salomon Smith Barney
Holdings Inc.
Senior Notes 6.02% 2000-2026 17,970 19,092
Citicorp
Senior Notes 7.39% 2000-2025 16,708 17,515
Subordinated Notes 6.92% 2000-2035 7,360 8,359
Travelers Property
Casualty Corp.
Senior Notes 6.99% 2001-2026 850 1,250
The Travelers Insurance
Group Inc.(2) 23 33
- --------------------------------------------------------------------------------
Senior Notes 39,709 40,279
Subordinated Notes 7,360 8,359
Other 23 33
- --------------------------------------------------------------------------------
Total $47,092 $48,671
================================================================================
(1) Also includes $250 million of notes maturing in 2098.
(2) Principally 12% GNMA/FNMA-collateralized obligations.
The Company issues both U.S. dollar and non-U.S. dollar denominated fixed
and variable rate debt. The Company utilizes derivative contracts, primarily
interest rate swaps, to effectively convert a portion of its fixed rate debt to
variable rate debt. The maturity structure of the derivatives generally
corresponds with the maturity structure of the debt being hedged. At December
31, 1999, the Company entered into interest rate swaps to convert $21.1 billion
of its $29.9 billion of fixed rate debt to variable rate obligations. At
December 31, 1999, the Company's overall weighted average interest rate for
long-term debt was 6.71% on a contractual basis and 6.51% including the effects
of derivative contracts. In addition, the Company utilizes other derivative
contracts to manage the foreign exchange impact of certain debt issuances.
Aggregate annual maturities on long-term debt obligations (based on final
maturity dates) are as follows:
<TABLE>
<CAPTION>
In Millions of Dollars 2000 2001 2002 2003 2004 Thereafter
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Citigroup Inc. $ 650 $ -- $ 300 $ -- $ 750 $ 2,481
Salomon Smith Barney Holdings Inc. 3,508 2,731 3,571 3,334 1,635 3,191
Citicorp 3,849 3,350 3,516 2,572 1,519 9,262
Travelers Property Casualty Corp. -- 500 -- -- -- 350
The Travelers Insurance Group Inc. -- -- -- -- -- 23
- --------------------------------------------------------------------------------------------
$8,007 $6,581 $7,387 $5,906 $3,904 $15,307
============================================================================================
</TABLE>
12. INSURANCE POLICY AND CLAIMS RESERVES
At December 31, insurance policy and claims reserves consisted of the following:
In Millions of Dollars 1999 1998
- --------------------------------------------------------------------------------
Benefit and loss reserves:
Property-casualty(1) $28,055 $28,624
Accident and health 920 803
Life and annuity 9,400 9,398
Unearned premiums 4,949 4,702
Policy and contract claims 498 463
- --------------------------------------------------------------------------------
$43,822 $43,990
================================================================================
(1) Included at December 31, 1999 and 1998 are $1.5 billion and $1.3 billion,
respectively, of reserves related to workers' compensation that have been
discounted using an interest rate of 5%.
60
<PAGE>
The following table is a reconciliation of beginning and ending
property-casualty reserve balances for claims and claim adjustment expenses for
the years ended December 31:
<TABLE>
<CAPTION>
In Millions of Dollars 1999 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Claims and claim adjustment expense
reserves at beginning of year $28,624 $29,343 $29,967
Less reinsurance recoverables on
unpaid losses 7,861 7,937 8,151
- ------------------------------------------------------------------------------------------------------
Net balance at beginning of year 20,763 21,406 21,816
- ------------------------------------------------------------------------------------------------------
Provision for claims and claim adjustment
expenses for claims arising in current year 6,194 6,057 5,730
Estimated claims and claim adjustment
expenses for claims arising in prior years (242) (323) (492)
- ------------------------------------------------------------------------------------------------------
Total increases 5,952 5,734 5,238
- ------------------------------------------------------------------------------------------------------
Claims and claim adjustment expense payments for claims arising in:
Current year 2,573 2,352 1,944
Prior years 4,159 4,025 3,704
- ------------------------------------------------------------------------------------------------------
Total payments 6,732 6,377 5,648
- ------------------------------------------------------------------------------------------------------
Net balance at end of year 19,983 20,763 21,406
Plus reinsurance recoverables on
unpaid losses 8,072 7,861 7,937
- ------------------------------------------------------------------------------------------------------
Claims and claim adjustment expense
reserves at end of year $28,055 $28,624 $29,343
======================================================================================================
</TABLE>
The decreases in the claims and claim adjustment expense reserves in 1999
and 1998, from 1998 and 1997, respectively, were primarily attributable to net
payments of $504 million and $663 million, respectively, for environmental and
cumulative injury claims.
In 1999, estimated claims and claim adjustment expenses for claims arising
in prior years included approximately $205 million primarily relating to net
favorable development in certain Personal Lines coverages, predominantly
automobile coverages, and in certain Commercial Lines coverages, predominantly
in the general liability and commercial multi-peril lines of business. In
addition, in 1999 Commercial Lines experienced favorable loss development on
loss sensitive policies in the workers' compensation line; however, since the
business to which it relates is subject to premium adjustments, there was no
impact on results of operations.
In 1998, estimated claims and claim adjustment expenses for claims arising
in prior years included approximately $176 million primarily relating to net
favorable developments in certain Personal Lines coverages, predominantly
automobile coverages. In addition, in 1998 Commercial Lines experienced
favorable prior-year loss development on loss sensitive policies in the workers'
compensation line; however, since the business to which it relates is subject to
premium adjustments, there was no impact on results of operations.
In 1997, estimated claims and claim adjustment expenses for claims arising
in prior years included $154 million of net favorable development in certain
Personal Lines coverages and Commercial Lines coverages, predominantly
automobile coverages. In addition, in 1997 Commercial Lines experienced $122
million of favorable prior-year loss development in the workers' compensation
line; however, since the business to which it relates is subject to premium
adjustments, there was no impact on results of operations. Also in 1997, the
Company adopted newly prescribed statutory allocations of certain claim
adjustment expenses. The new allocations resulted in favorable prior-year loss
development of $216 million offset by an increase in the current accident year
provision of the same amount.
The property-casualty claims and claim adjustment expense reserves include
$1.503 billion and $1.818 billion for asbestos and environmental-related claims
net of reinsurance at December 31,1999 and 1998, respectively.
It is difficult to estimate the reserves for environmental and
asbestos-related claims due to the vagaries of court coverage decisions,
plaintiffs' expanded theories of liability, the risks inherent in major
litigation and other uncertainties. Conventional actuarial techniques are not
used to estimate such reserves.
For environmental claims, the Company estimates its financial exposure and
establishes reserves based upon an analysis of its historical claim experience
and the facts of the individual underlying claims. The unique facts presented in
each claim are evaluated individually and collectively. Due consideration is
given to the many variables presented in each claim.
The following factors are evaluated in projecting the ultimate reserve for
asbestos-related claims: available insurance coverage; limits and deductibles;
an analysis of each policyholder's potential liability; jurisdictional
involvement; past and projected future claim activity; past settlement values of
similar claims; allocated claim adjustment expense; potential role of other
insurance, and applicable coverage defenses, if any. Once the gross ultimate
exposure for indemnity and allocated claim adjustment expense is determined for
a policyholder by policy year, a ceded projection is calculated based on any
applicable facultative and treaty reinsurance and past ceded experience.
As a result of these processes and procedures, the reserves carried for
environmental and asbestos claims at December 31, 1999 are the Company's best
estimate of ultimate claims and claim adjustment expenses, based upon known
facts and current law. However, the conditions surrounding the final resolution
of these claims continue to change. Currently, it is not possible to predict
changes in the legal and legislative environment and their impact on the future
development of asbestos and environmental claims. Such development will be
impacted by future court decisions and interpretations as well as changes in
legislation applicable to such claims. Because of these future unknowns,
additional liabilities may arise for amounts in excess of the current reserves.
These additional amounts, or a range of these additional amounts, cannot now be
reasonably estimated, and could result in a liability exceeding reserves by an
amount that would be material to the Company's operating results in a future
period. However, the Company believes that it is not likely that these claims
will have a material adverse effect on the Company's financial condition or
liquidity.
The Company has a geographic exposure to catastrophe losses in certain
areas of the country. Catastrophes can be caused by various events including
hurricanes, windstorms, earthquakes, hail, severe winter weather, explosions and
fires, and the incidence and severity of catastrophes are inherently
unpredictable. The extent of losses from a catastrophe is a function of both the
total amount of insured exposure in the area affected by the event and the
severity of the event. Most catastrophes are restricted to small geographic
areas; however, hurricanes and earthquakes may produce significant damage in
large, heavily populated areas. The Company generally seeks to reduce its
exposure to catastrophes through individual risk selection and the purchase of
catastrophe reinsurance.
61
<PAGE>
13. REINSURANCE
The Company's insurance operations participate in reinsurance in order to limit
losses, minimize exposure to large risks, provide additional capacity for future
growth and effect business-sharing arrangements. Life reinsurance is
accomplished through various plans of reinsurance, primarily coinsurance,
modified coinsurance and yearly renewable term. Property-casualty reinsurance is
placed on both a quota-share and excess of loss basis. The property-casualty
insurance subsidiaries also participate as a servicing carrier for, and a member
of, several pools and associations. Reinsurance ceded arrangements do not
discharge the insurance subsidiaries as the primary insurer, except for cases
involving a novation.
Reinsurance amounts included in the Consolidated Statement of Income for
the years ended December 31 were as follows:
Gross Net
In Millions of Dollars Amount Ceded Amount
- --------------------------------------------------------------------------------
1999
Premiums
Property-casualty insurance $ 9,795 $ (1,620) $ 8,175
Life insurance 2,190 (314) 1,876
Accident and health insurance 444 (54) 390
- --------------------------------------------------------------------------------
$ 12,429 $ (1,988) $10,441
================================================================================
Claims incurred $ 9,510 $ (1,815) $ 7,695
================================================================================
1998
Premiums
Property-casualty insurance $ 9,579 $ (1,689) $ 7,890
Life insurance 1,915 (304) 1,611
Accident and health insurance 410 (61) 349
- --------------------------------------------------------------------------------
$ 11,904 $ (2,054) $ 9,850
================================================================================
Claims incurred $ 9,024 $ (1,560) $ 7,464
================================================================================
1997
Premiums
Property-casualty insurance $ 9,045 $ (1,751) $ 7,294
Life insurance 1,669 (279) 1,390
Accident and health insurance 373 (62) 311
- --------------------------------------------------------------------------------
$ 11,087 $ (2,092) $ 8,995
================================================================================
Claims incurred $ 8,226 $ (1,357) $ 6,869
================================================================================
Reinsurance recoverables, net of valuation allowance, at December 31
include amounts recoverable on unpaid and paid losses and were as follows:
In Millions of Dollars 1999 1998
- --------------------------------------------------------------------------------
Life business $1,228 $1,303
Property-casualty business:
Pools and associations 2,781 3,070
Other reinsurance 5,695 5,119
- --------------------------------------------------------------------------------
Total $9,704 $9,492
================================================================================
14. RESTRUCTURING-RELATED ITEMS AND MERGER-RELATED COSTS
In Millions of Dollars 1999 1998 1997
- --------------------------------------------------------------------------------
Restructuring charges $ 131 $ 1,122 $1,718
Changes in estimates (401) (392) --
Merger-related costs -- 65 --
Accelerated depreciation 182 -- --
- --------------------------------------------------------------------------------
Total $ (88) $ 795 $1,718
================================================================================
During 1999, Citigroup recorded restructuring charges of $131 million,
including additional severance charges of $49 million as a result of the
continuing implementation of 1998 restructuring initiatives, as well as $82
million of exit costs associated with new initiatives in the Global Consumer
business primarily related to the reconfiguration of certain branch operations
outside the U.S., the downsizing of certain marketing operations, and the exit
of a non-strategic business. These initiatives will be fully implemented during
2000. The charge included $62 million related to employee severance, $14 million
related to exiting leasehold and other contractual obligations, and $6 million
related to the write-down to estimated salvage value of assets available for
immediate disposal. The $62 million portion of the charge related to employee
severance reflects the costs of eliminating approximately 750 positions.
In 1998, Citigroup recorded a restructuring charge of $1.122 billion,
reflecting exit costs associated with business improvement and integration
initiatives to be implemented over a 12 to 18 month period. The charge included
$760 million related to employee severance for the elimination of approximately
11,900 positions, after considering attrition and redeployment within the
Company. Approximately 4,200 of these positions related to the United States.
The overall workforce reduction, net of anticipated rehires to fill relocated
positions, is expected to be approximately 10,400 positions worldwide. The
charge also included $327 million related to exiting leasehold and other
contractual obligations, and $35 million related to the write-down to estimated
salvage value of assets that were available for immediate disposal. Also
recorded in the 1998 fourth quarter were $65 million of merger-related costs
which included the direct and incremental costs of administratively closing the
Citicorp merger.
The implementation of these restructuring initiatives also caused certain
related premises and equipment assets to become redundant. The remaining
depreciable lives of these assets were shortened, and accelerated depreciation
charges of $182 million (in addition to normal scheduled depreciation on those
assets) were recognized over the shortened lives in 1999.
Of the $1.122 billion charge, $642 million in the Global Consumer business
included regional consolidation of call centers and other back office functions
worldwide, reduction of management layers, sales force restructuring,
integration of overlapping marketing and product management groups, and exiting
several non-strategic operations; $324 million in the Global Corporate and
Investment Bank business included rationalization of operations in countries
with multiple operations, consolidation of Citibank and Salomon Smith Barney
locations, integration of trading platforms, and exiting non-strategic
businesses; $87 million in the Global Investment Management and Private Banking
business included elimination of redundancies; and the remaining $69 million
included
62
<PAGE>
streamlining and integration of Corporate and other staff functions.
Approximately $507 million of the $1.122 billion charge related to operations in
the United States.
In 1997, Citigroup recorded restructuring charges of $1.718 billion, con
sisting of an $880 million restructuring charge related to cost-management
programs and customer service initiatives to improve operational efficiency and
productivity in the Citicorp businesses, and an $838 million charge related to
the Salomon Merger. The Citicorp charge included $487 million for severance
benefits (associated with approximately 9,000 positions expected to be reduced),
$245 million related to write-downs of equipment and premises which management
committed to dispose of, and $148 million of lease termination and other exit
costs. The Salomon Smith Barney charge included $161 million for severance
benefits (associated with approximately 1,900 positions expected to be reduced),
$663 million of costs associated with the planned abandonment of certain
facilities, premises, and other assets, principally those related to the Seven
World Trade Center lease, and $14 million of other costs related directly to the
Salomon Merger.
The status of the 1999, 1998, and 1997 restructuring initiatives is
summarized in the following table:
Restructuring Reserve Activity
Restructuring Initiatives
--------------------------------------------
1999 1998 1997 1997
In Millions of Dollars Citigroup Citigroup SSB Citicorp
- -------------------------------------------------------------------------------
Original charges $82 $1,122 $838 $880
Additional charges -- 49 -- --
--------------------------------------------
82 1,171 838 880
--------------------------------------------
Utilization(1)
1999 (31) (744) (99) (165)
1998 -- (69) (158) (357)
1997 -- -- (13) (284)
--------------------------------------------
(31) (813) (270) (806)
--------------------------------------------
Changes in estimates
1999 -- (151) (214) (36)
1998 -- -- (354) (38)
--------------------------------------------
-- (151) (568) (74)
- -------------------------------------------------------------------------------
Reserve balance at
December 31, 1999 $51 $ 207 $ -- $ --
===============================================================================
(1) Utilization amounts include translation effects on the restructuring
reserve.
The 1999 restructuring reserve utilization included $6 million related to
the write-down to estimated salvage value of assets available for immediate
disposal and $25 million that is legally obligated. At December 31, 1999,
approximately 60 gross staff positions have been eliminated under these
programs.
The 1998 restructuring reserve utilization included $35 million of non-cash
charges for equipment and premises write-downs as well as $743 million of
severance and other exit costs, occurring primarily in 1999 (of which $382
million related to employee severance and $146 million related to leasehold and
other exit costs have been paid in cash and $215 million is legally obligated),
together with translation effects. Through December 31, 1999, approximately
5,900 gross staff positions have been eliminated under these programs, occurring
primarily in 1999.
The utilization of 1997 restructuring reserves included $314 million of
non-cash charges for equipment and premises write-downs as well as $751 million
of severance and other exit costs (of which $499 million related to employee
severance and $184 million related to leasehold and other exit costs have been
paid in cash and $68 million is legally obligated), together with translation
effects. Approximately 7,300 gross staff positions have been eliminated under
these programs, including 1,700 positions in 1999, 4,950 positions in 1998, and
650 positions in 1997.
Changes in estimates are attributable to facts and circumstances arising
subsequent to an original restructuring charge. During 1999, changes in
estimates resulted in a $151 million reduction in the reserve for 1998
restructuring initiatives, attributable to lower than anticipated costs of
implementing certain projects and a reduction in the scope of certain
initiatives. Changes in estimates related to the 1997 restructuring initiatives
included $568 million of reductions related to the Salomon Smith Barney reserve,
primarily related to the Seven World Trade Center lease, and $74 million related
to the Citicorp reserve. Adjustments related to the Seven World Trade Center
lease during 1999 were attributable to the reassessment of space needed due to
the Citicorp merger, which indicated the need for increased occupancy and the
utilization of space previously considered excessive; adjustments during 1998
resulted from negotiations on a sublease which indicated that excess space could
be disposed of on terms more favorable than had been originally estimated. Other
changes in estimates are attributable to lower severance costs due to higher
than anticipated levels of attrition and redeployment within the Company, and
other unforeseen changes including those resulting from the Citicorp merger.
15. INCOME TAXES
In Millions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
Current
Federal $2,911 $2,081 $3,259
Foreign 1,961 1,022 1,539
State 346 325 465
- -------------------------------------------------------------------------------
5,218 3,428 5,263
- -------------------------------------------------------------------------------
Deferred
Federal 599 (149) (1,095)
Foreign (213) 104 (109)
State 99 (149) (226)
- -------------------------------------------------------------------------------
485 (194) (1,430)
- -------------------------------------------------------------------------------
Provision for income tax
before minority interest(1) 5,703 3,234 3,833
Provision for income tax on cumulative
effect of accounting changes (84) -- --
Income tax expense (benefit) reported in
stockholders' equity related to:
Foreign currency translation (3) 11 26
Securities available for sale 556 (175) 370
Employee stock plans (1,008) (701) (728)
Other (1) (1) 9
- -------------------------------------------------------------------------------
Income taxes before minority interest $5,163 $2,368 $3,510
===============================================================================
(1) Includes the effect of securities transactions resulting in a provision of
$195 million in 1999, $270 million in 1998, and $376 million in 1997.
63
<PAGE>
The reconciliation of the federal statutory income tax rate to the
Company's effective income tax rate applicable to income (before minority
interest and cumulative effect of accounting changes) for the years ended
December 31 was as follows:
1999 1998 1997
- ------------------------------------------------------------------------------
Federal statutory rate 35.0% 35.0% 35.0%
Limited taxability of investment income (1.5) (2.4) (1.7)
State income taxes, net of federal benefit 1.8 1.2 1.4
Other, net 0.5 1.1 1.0
- ------------------------------------------------------------------------------
Effective income tax rate 35.8% 34.9% 35.7%
==============================================================================
Deferred income taxes at December 31 related to the following:
In Millions of Dollars 1999 1998
- -------------------------------------------------------------------------------
Deferred tax assets
Credit loss deduction $2,312 $2,327
Differences in computing policy reserves 1,988 2,066
Unremitted foreign earnings 1,512 1,257
Deferred compensation 1,264 1,222
Employee benefits 645 865
Interest-related items 349 412
Foreign and state loss carryforwards 311 256
Other deferred tax assets 1,061 1,094
- -------------------------------------------------------------------------------
Gross deferred tax assets 9,442 9,499
Valuation allowance 314 394
- -------------------------------------------------------------------------------
Deferred tax assets after valuation allowance 9,128 9,105
- -------------------------------------------------------------------------------
Deferred tax liabilities
Investments (2,017) (1,244)
Deferred policy acquisition costs and value of
insurance in force (960) (858)
Leases (784) (648)
Investment management contracts (201) (218)
Other deferred tax liabilities (1,202) (1,116)
- -------------------------------------------------------------------------------
Gross deferred tax liabilities (5,164) (4,084)
- -------------------------------------------------------------------------------
Net deferred tax asset $3,964 $5,021
===============================================================================
Foreign pretax earnings approximated $4.7 billion in 1999, $2.4 billion in
1998, and $4.8 billion in 1997. As a U.S. corporation, Citigroup is subject to
U.S. taxation currently on all foreign pretax earnings earned by a foreign
branch. Pretax earnings of a foreign subsidiary or affiliate are taxed when
effectively repatriated. In addition, certain of Citigroup's U.S. income is
subject to foreign income tax where the payor of such income is domiciled
outside the United States. The Company provides income taxes on the
undistributed earnings of non-U.S. subsidiaries except to the extent that such
earnings are indefinitely invested outside the United States. At December 31,
1999, $1.3 billion of accumulated undistributed earnings of non-U.S.
subsidiaries was indefinitely invested. At the existing U.S. federal income tax
rate, additional taxes of $399 million would have to be provided if such
earnings were remitted.
Income taxes are not provided for on the Company's life insurance
subsidiaries' "policyholders' surplus account" because under current U.S. tax
rules such taxes will become payable only to the extent such amounts are
distributed as a dividend or exceed limits prescribed by federal law.
Distributions are not contemplated from this account, which aggregated $982
million (subject to a tax effect of $344 million) at December 31, 1999.
The 1999 net change in the valuation allowance related to deferred tax
assets was a decrease of $80 million primarily relating to the utilization of
tax carryforwards in foreign jurisdictions. The valuation allowance of $314
million includes $100 million to cover any capital losses on investments that
may exceed the capital gains able to be generated in the life insurance group's
consolidated federal income tax return based upon management's best estimate of
the character of the reversing temporary differences. Reversal of the valuation
allowance is contingent upon the recognition of future capital gains or a change
in circumstances which causes the recognition of the benefits to become more
likely than not. The initial recognition of any benefit produced by the reversal
of this portion of the valuation allowance will be recognized by reducing
goodwill. The remaining valuation allowance of $214 million at December 31, 1999
is primarily reserved for specific state and local, and foreign tax
carryforwards or tax law restrictions on benefit recognition in the U.S. federal
tax return and in the above jurisdictions.
Management believes that the realization of the recognized net deferred tax
asset of $3.964 billion is more likely than not based on existing carryback
ability and expectations as to future taxable income. The Company has reported
pretax financial statement income of approximately $12 billion, on average, over
the last three years and has generated federal taxable income exceeding $8
billion, on average, each year during this same period.
16. MANDATORILY REDEEMABLE SECURITIES OF SUBSIDIARY TRUSTS
The Company formed statutory business trusts under the laws of the state of
Delaware, which exist for the exclusive purposes of (i) issuing Trust Securities
representing undivided beneficial interests in the assets of the Trust; (ii)
investing the gross proceeds of the Trust securities in junior subordinated
deferrable interest debentures (subordinated debentures) of its parent; and
(iii) engaging in only those activities necessary or incidental thereto. These
subordinated debentures and the related income effects are eliminated in the
consolidated financial statements. Distributions on the mandatorily redeemable
securities of subsidiary trusts below have been classified as interest expense
in the Consolidated Statement of Income.
64
<PAGE>
The following tables summarize the financial structure of each of the Company's
subsidiary trusts at December 31, 1999:
<TABLE>
<CAPTION>
Common
Trust Securities Shares
with Distributions Issuance Securities Liquidation Coupon Issued
Guaranteed by Date Issued Value Rate to Parent
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dollars in Millions
Citigroup:
Citigroup Capital I Oct. 1996 16,000,000 $ 400 8.00% 494,880
Citigroup Capital II Dec. 1996 400,000 400 7.75% 12,372
Citigroup Capital III Dec. 1996 200,000 200 7.625% 6,186
Citigroup Capital IV Jan. 1998 8,000,000 200 6.85% 247,440
Citigroup Capital V Nov. 1998 20,000,000 500 7.00% 618,557
Citigroup Capital VI Mar. 1999 24,000,000 600 6.875% 742,269
------
Total Parent Obligated $2,300
- --------------------------------------------------------------------------------------------------------------------------
Subsidiaries:
Travelers P&C Capital I April 1996 32,000,000 $ 800 8.08% 989,720
Travelers P&C Capital II May 1996 4,000,000 100 8.00% 123,720
Salomon Inc Financing Trust I July 1996 13,800,000 345 9.25% 426,800
Salomon Smith Barney Holdings Inc. Capital I Jan. 1998 16,000,000 400 7.20% 494,880
Citicorp Capital I Dec. 1996 300,000 300 7.933% 9,000
Citicorp Capital II Jan. 1997 450,000 450 8.015% 13,500
Citicorp Capital III June 1998 9,000,000 225 7.10% 270,000
------
Total Subsidiary Obligated $2,620
==========================================================================================================================
<CAPTION>
Junior Subordinated Debentures Owned by Trust
---------------------------------------------
Trust Securities Redeemable
with Distributions by Issuer
Guaranteed by Amount Maturity Beginning
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dollars in Millions
Citigroup:
Citigroup Capital I $412 Sept. 30, 2036 Oct. 7, 2001
Citigroup Capital II 412 Dec. 1, 2036 Dec. 1, 2006
Citigroup Capital III 206 Dec. 1, 2036 Not redeemable
Citigroup Capital IV 206 Jan. 22, 2038 Jan. 22, 2003
Citigroup Capital V 515 Nov. 15, 2028 Nov. 15, 2003
Citigroup Capital VI 619 Mar. 15, 2029 Mar. 15, 2004
Total Parent Obligated
- ---------------------------------------------------------------------------------------------------------
Subsidiaries:
Travelers P&C Capital I 825 April 30, 2036 April 30, 2001
Travelers P&C Capital II 103 May 15, 2036 May 15, 2001
Salomon Inc Financing Trust I 356 June 30, 2026 June 30, 2001
Salomon Smith Barney Holdings Inc. Capital I 412 Jan. 28, 2038 Jan. 28, 2003
Citicorp Capital I 309 Feb. 15, 2027 Feb. 15, 2007
Citicorp Capital II 464 Feb. 15, 2027 Feb. 15, 2007
Citicorp Capital III 232 Aug. 15, 2028 Aug. 15, 2003
Total Subsidiary Obligated
=========================================================================================================
</TABLE>
In each case, the coupon rate on the debentures is the same as that on the
trust securities. Distributions on the trust securities and interest on the
debentures are payable quarterly, except for Citigroup Capital II and III and
Citicorp Capital I and II, on which distributions are payable semiannually.
SI Financing Trust I, a wholly owned subsidiary of Salomon Smith Barney,
issued TRUPS(R) units to the public. Each TRUPS(R) unit includes a security of
SI Financing Trust I, and a purchase contract that requires the holder to
purchase, in 2021 (or earlier if Salomon Smith Barney elects to accelerate the
contract), one depositary share representing a one-twentieth interest in a share
of the Company's 9.50% Cumulative Preferred Stock, Series L. Salomon Smith
Barney is obligated under the terms of each purchase contract to pay contract
fees of 0.25% per annum.
17. PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Redeemable Preferred Stock
At December 31, 1998 there were 140,000 shares of Series I cumulative
Convertible Preferred Stock (Series I Preferred) with a carrying value of $140
million included in other liabilities. Each share of Series I Preferred had a
redemption value of $1,000 and was convertible into 66.9079 shares of Citigroup
common stock. In October 1999, all of the outstanding shares of the Series I
Preferred were converted into 9.4 million shares of common stock.
Perpetual Preferred Stock
The following table sets forth the Company's perpetual preferred stock
outstanding at December 31:
<TABLE>
<CAPTION>
Redeemable, in Redemption Carrying Value (In Millions)
whole or in part Price Number of ---------------------------
Rate on or after(1) Per Share (2) Shares 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Series F(3) 6.365% June 16, 2007 $250 1,600,000 $ 400 $ 400
Series G(3) 6.213% July 11, 2007 $250 800,000 200 200
Series H(3) 6.231% September 8, 2007 $250 800,000 200 200
Series J(4) 8.08% March 31, 1998 $500 400,000 -- 200
Series K(4) 8.40% March 31, 2001 $500 500,000 250 250
Series M(3) 5.864% October 8, 2007 $250 800,000 200 200
Series O(5) Graduated August 15, 2004 $100 625,000 -- 63
Series Q(6) Adjustable May 31, 1999 $250 700,000 175 175
Series R(6) Adjustable August 31, 1999 $250 400,000 100 100
Series S(6) 8.30% November 15, 1999 $250 500,000 -- 125
Series T(6) 8.50% February 15, 2000 $250 600,000 150 150
Series U(6) 7.75% May 15, 2000 $250 500,000 125 125
Series V(6) Fixed/Adjustable February 15, 2006 $500 250,000 125 125
- -------------------------------------------------------------------------------------------------------------------------
$1,925 $2,313
=========================================================================================================================
</TABLE>
(1) Under various circumstances, the Company may redeem certain series of
preferred stock at times other than described above.
(2) Liquidation preference per share equals redemption price per share.
(3) Issued as depositary shares, each representing a one-fifth interest in the
corresponding series of preferred stock.
(4) Issued as depositary shares, each representing a one-twentieth interest in
the corresponding series of preferred stock.
(5) Also redeemable on any of the dividend repricing dates through August 15,
2004.
(6) Issued as depositary shares, each representing a one-tenth interest in the
corresponding series of preferred stock.
65
<PAGE>
All dividends on the Company's perpetual preferred stock are payable
quarterly and are cumulative. Only the holders of Series J and K Preferred Stock
have voting rights. Holders of Series J and K Preferred Stock are entitled to
three votes per share when voting together as a class with the Citigroup common
stock on all matters submitted to a vote of the Company's stockholders.
Dividends on Series Q and R Preferred Stock are payable at rates determined
quarterly by formulas based on interest rates of certain U.S. Treasury
obligations, subject to certain minimum and maximum rates as specified in the
certificates of designation. The weighted-average dividend rate on the Series Q
and R Preferred Stock was 4.76% for 1999.
Dividends on the Series V Preferred Stock are payable at 5.86% through
February 15, 2006, and thereafter at rates determined quarterly by a formula
based on certain interest rate indices, subject to a minimum rate of 6% and a
maximum rate of 12%. The rate of dividends on the Series V Preferred Stock is
subject to adjustment based upon the applicable percentage of the dividends
received deduction.
Citigroup redeemed Series J Preferred Stock in February 1999, Series O
Preferred Stock in August 1999, and Series S Preferred Stock in November 1999.
During the first quarter of 2000, Citigroup redeemed Series T Preferred
Stock.
Regulatory capital
Citigroup and Citicorp are subject to risk-based capital and leverage guidelines
issued by the Board of Governors of the Federal Reserve System (FRB), and their
U.S. insured depository institution subsidiaries, including Citibank, N.A., are
subject to similar guidelines issued by their respective primary regulators.
These guidelines are used to evaluate capital adequacy and include the required
minimums shown in the following table.
To be "well capitalized" under federal bank regulatory agency definitions,
a depository institution must have a Tier 1 ratio of at least 6%, a combined
Tier 1 and Tier 2 ratio of at least 10%, and a leverage ratio of at least 5%,
and not be subject to a directive, order, or written agreement to meet and
maintain specific capital levels. The regulatory agencies are required by law to
take specific prompt actions with respect to institutions that do not meet
minimum capital standards. As of December 31, 1999 and 1998, all of Citigroup's
U.S. insured subsidiary depository institutions were "well capitalized." At
December 31, 1999, regulatory capital as set forth in guidelines issued by the
U.S. federal bank regulators is as follows:
<TABLE>
<CAPTION>
Minimum Citibank,
In Millions of Dollars Requirement Citigroup Citicorp N.A.
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tier 1 capital $47,591 $25,034 $20,389
Total capital(1) 61,380 37,351 30,414
Tier 1 capital ratio 4.00% 9.64% 8.11% 8.25%
Total capital ratio(1) 8.00% 12.43% 12.10% 12.31%
Leverage ratio(2) 3.00%+ 6.80% 6.83% 6.53%
========================================================================================
</TABLE>
(1) Total capital includes Tier 1 and Tier 2.
(2) Tier 1 capital divided by adjusted average assets.
There are various legal limitations on the extent to which Citigroup's
banking subsidiaries may pay dividends to their parents. Citigroup's national
and state-chartered bank subsidiaries can declare dividends to their respective
parent companies in 2000, without regulatory approval, of approximately $3.6
billion, adjusted by the effect of their net income (loss) for 2000 up to the
date of any such dividend declaration. In determining whether and to what extent
to pay dividends, each bank subsidiary must also consider the effect of dividend
payments on applicable risk-based capital and leverage ratio requirements as
well as policy statements of the federal regulatory agencies that indicate that
banking organizations should generally pay dividends out of current operating
earnings. Consistent with these considerations, Citigroup estimates that its
bank subsidiaries can distribute dividends to Citigroup of approximately $3.0
billion of the available $3.6 billion, adjusted by the effect of their net
income (loss) up to the date of any such dividend declaration.
The property-casualty insurance subsidiaries' statutory capital and surplus
at December 31, 1999 and 1998 was $7.758 billion and $7.161 billion,
respectively. The life insurance subsidiaries' statutory capital and surplus at
December 31, 1999 and 1998 was $5.836 billion and $5.681 billion, respectively.
Statutory capital and surplus are subject to certain restrictions imposed by
state insurance departments as to the transfer of funds and payment of
dividends. The property-casualty insurance subsidiaries' net income for the
years ended December 31, 1999, 1998, and 1997 was $1.500 billion, $1.426
billion, and $1.158 billion, respectively. The life insurance subsidiaries' net
income for the years ended December 31, 1999 and 1998 was $988 million and $829
million, respectively, and for the year ended December 31, 1997 (which excluded
Citicorp Life Insurance Company) was $636 million. Statutory capital and surplus
and statutory net income are determined in accordance with statutory accounting
practices.
TIC is subject to various regulatory restrictions that limit the maximum
amount of dividends available to its parent without prior approval of the
Connecticut Insurance Department. A maximum of $679 million of statutory surplus
is available in 2000 for such dividends without the prior approval of the
Connecticut Insurance Department.
66
<PAGE>
TAP's insurance subsidiaries are subject to various regulatory restrictions
that limit the maximum amount of dividends available to be paid to their parent
without prior approval of insurance regulatory authorities. Dividend payments to
TAP from its insurance subsidiaries are limited to $1.2 billion in 2000 without
prior approval of the Connecticut Insurance Department.
Certain of the Company's U.S. and non-U.S. broker-dealer subsidiaries are
subject to various securities and commodities regulations and capital adequacy
requirements promulgated by the regulatory and exchange authorities of the
countries in which they operate. The principal regulated subsidiaries, their net
capital requirement or equivalent and excess over the minimum requirement as of
December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Excess over
Net Capital minimum
Subsidiary Jurisdiction or equivalent requirement
- ---------------------------------------------------------------------------------------------------------------------------
In Millions of Dollars
<S> <C> <C> <C>
Salomon Smith Barney Inc. U.S. Securities and Exchange Commission Uniform
Net Capital Rule (Rule 15c3-1) $3,204 $2,732
Salomon Brothers International Limited United Kingdom's Securities and Futures Authority 3,675 963
===========================================================================================================================
</TABLE>
18. CHANGES IN EQUITY FROM NONOWNER SOURCES
Changes in each component of "Accumulated Other Changes in Equity from Nonowner
Sources" for the three-year period ended December 31, 1999 are as follows:
Accumulated
Net Other
Unrealized Foreign Changes in
Gains on Currency Equity from
Investment Translation Nonowner
In Millions of Dollars Securities Adjustment Sources
- -------------------------------------------------------------------------------
Balance, Jan. 1, 1997 $1,145 $(483) $ 662
Unrealized gains on investment
securities, net of tax of $746 1,166 1,166
Less: Reclassification adjustment
for gains included in net
income, net of tax of ($376) (619) (619)
Foreign currency translation
adjustment, net of tax of $26 (152) (152)
- -------------------------------------------------------------------------------
Current period change 547 (152) 395
- -------------------------------------------------------------------------------
Balance, Dec. 31, 1997 1,692 (635) 1,057
Unrealized gains on investment
securities, net of tax of $95 237 237
Less: Reclassification adjustment
for gains included in net
income, net of tax of ($270) (570) (570)
Foreign currency translation
adjustment, net of tax of $11 57 57
- -------------------------------------------------------------------------------
Current period change (333) 57 (276)
- -------------------------------------------------------------------------------
Balance, Dec. 31, 1998 1,359 (578) 781
Unrealized gains on investment
securities, net of tax of $751 1,548 1,548
Less: Reclassification adjustment
for gains included in net
income, net of tax of ($195) (362) (362)
Foreign currency translation
adjustment, net of tax of ($3) (60) (60)
- -------------------------------------------------------------------------------
Current period change 1,186 (60) 1,126
- -------------------------------------------------------------------------------
Balance, Dec. 31, 1999 $2,545 $(638) $1,907
===============================================================================
19. EARNINGS PER SHARE
Earnings per share has been computed in accordance with the provisions of SFAS
No. 128. Shares have been adjusted to give effect to the three-for-two stock
split in Citigroup's common stock in May 1999. The following is a reconciliation
of the income and share data used in the basic and diluted earnings per share
computations for the years ended December 31:
In Millions, Except Per Share Amounts 1999 1998 1997
- -------------------------------------------------------------------------------
Income before cumulative effect
of accounting changes $ 9,994 $ 5,807 $ 6,705
Cumulative effect of accounting changes (127) -- --
Preferred dividends (149) (216) (279)
- -------------------------------------------------------------------------------
Income available to common stockholders
for basic EPS 9,718 5,591 6,426
Effect of dilutive securities 10 24 36
- -------------------------------------------------------------------------------
Income available to common stockholders
for diluted EPS $ 9,728 $ 5,615 $ 6,462
===============================================================================
Weighted average common shares
outstanding applicable to basic EPS 3,333.9 3,363.6 3,371.9
- -------------------------------------------------------------------------------
Effect of dilutive securities:
Options 75.6 60.3 78.6
Restricted stock 26.1 27.8 37.8
Convertible securities 7.9 17.7 37.8
Warrants -- 3.4 10.5
- -------------------------------------------------------------------------------
Adjusted weighted average common shares
outstanding applicable to diluted EPS 3,443.5 3,472.8 3,536.6
===============================================================================
Basic earnings per share
Income before cumulative effect
of accounting changes $ 2.95 $ 1.66 $ 1.91
Cumulative effect of accounting changes (0.04) -- --
- -------------------------------------------------------------------------------
Net income $ 2.91 $ 1.66 $ 1.91
===============================================================================
Diluted earnings per share
Income before cumulative effect
of accounting changes $ 2.86 $ 1.62 $ 1.83
Cumulative effect of accounting changes (0.03) -- --
- -------------------------------------------------------------------------------
Net income $ 2.83 $ 1.62 $ 1.83
===============================================================================
67
<PAGE>
During 1999, 1998, and 1997, weighted average options of 19.5 million
shares, 28.7 million shares and 12.8 million shares with weighted average
exercise prices of $48.71 per share, $41.71 per share, and $30.53 per share,
respectively, were excluded from the computation of diluted EPS because the
options' exercise price was greater than the average market price of the
Company's common stock.
20. INCENTIVE PLANS
The Company has adopted a number of compensation plans to attract, retain and
motivate officers and employees, to compensate them for their contributions to
the growth and profits of the Company, and to encourage employee stock
ownership. At December 31, 1999, approximately 290 million shares were available
for grant under Citigroup's stock option and restricted stock plans.
Stock Option Plans
The Company has a number of stock option plans that provide for the granting of
stock options to officers and employees. Options are granted at the fair market
value of Citigroup common stock at the time of grant for a period of ten years.
Generally, options granted under Travelers predecessor plans and options granted
since the date of the merger vest over a five-year period. Generally, 50% of the
options granted under Citicorp predecessor plans prior to the merger are
exercisable beginning on the third anniversary and 50% beginning on the fourth
anniversary of the date of grant. Certain of the plans also permit an employee
exercising an option to be granted new options (reload options) in an amount
equal to the number of common shares used to satisfy the exercise price and the
withholding taxes due upon exercise. The reload options are granted for the
remaining term of the related original option and vest after six months.
To further encourage employee stock ownership the Company's eligible
employees participate in either the WealthBuilder or CitiBuilder stock option
programs. Options granted under the WealthBuilder program vest over a five-year
period whereas options granted under the CitiBuilder program vest after five
years. These options do not have a reload feature.
Options granted in 1995 and 1996 included five-year performance-based stock
options granted to key Citicorp employees. Performance-based options granted in
1995 and 1996 were at prices ranging from equivalent Citigroup stock prices of
$17.30 to $18.70, equal to Citicorp market prices on the respective dates of
grant, and expire in 2000 and 2001. One-half of these options vested in 1996
when Citicorp's stock price reached an equivalent Citigroup stock price of
$26.67 per share, and the balance vested in 1997 when Citicorp's stock price
reached an equivalent Citigroup stock price of $30.67 per share.
During 1998, a group of key Citicorp employees was granted 9,510,000
performance-based stock options at an equivalent Citigroup strike price of
$32.17. These performance-based options vested in 1999 when Citigroup's stock
price reached $53.33 per share.
Vesting and expense related to performance-based options are summarized in
the following table (all options are equivalent Citigroup options).
1999 1998 1997
- --------------------------------------------------------------------------------
Options vested during the year 9,007,500 -- 8,976,563
After-tax expense recognized for
all grants (in millions of dollars) $68 $43 $45
Options unvested at year-end -- 9,075,000 --
================================================================================
The cost of performance-based options is measured as the difference between
the exercise price and market price required for vesting. This expense is
recognized over the period to the estimated vesting dates and in full for
options that have vested, by a charge to expense with an offsetting increase in
common stockholders' equity. All of the expense related to these grants has been
recognized.
Information with respect to stock option activity under Citigroup stock
option plans for the years ended December 31, 1999, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ --------------------------- ------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 307,044,077 $26.97 202,813,920 $18.65 217,266,464 $11.59
Granted-original 18,071,698 43.45 146,281,370(1) 32.60 52,479,821 29.28
Granted-reload 29,514,592 50.15 30,072,696 41.36 50,937,393 27.41
Forfeited (12,870,793) 25.97 (12,982,605) 23.83 (4,968,905) 18.32
Exercised (69,095,811) 24.89 (59,141,304) 20.20 (112,900,853) 13.98
- ------------------------------------------------------------------------------------------------------------------------------
Outstanding, end of year 272,663,763 $31.14 307,044,077 $26.97 202,813,920 $18.65
- ------------------------------------------------------------------------------------------------------------------------------
Exercisable at year end 82,354,408 72,836,012 66,947,117
==============================================================================================================================
</TABLE>
(1) Original grants in 1998 included approximately 97 million options granted
in November 1998 to retain key employees and to encourage stock ownership
in the newly merged Citigroup.
68
<PAGE>
The following table summarizes the information about stock options outstanding
under Citigroup stock option plans at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------- -----------------------
Weighted
Average Weighted Weighted
Contractual Average Average
Number Life Exercise Number Exercise
Range of Exercise Prices Outstanding Remaining Price Exercisable Price
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2.53--$ 9.99 17,483,787 3.2 years $ 6.59 15,323,385 $ 6.42
$10.00--$19.99 36,346,861 5.0 years 14.12 22,009,355 14.62
$20.00--$29.99 35,485,328 7.0 years 27.94 5,209,680 26.83
$30.00--$39.99 128,005,297 8.3 years 31.90 22,578,954 31.98
$40.00--$49.99 36,237,894 7.4 years 44.85 10,697,729 46.02
$50.00--$58.00 19,104,596 5.0 years 53.01 6,535,305 50.18
- ---------------------------------------------------------------------------------------------------------------------
272,663,763 7.0 years $31.14 82,354,408 $25.53
=====================================================================================================================
</TABLE>
The Restricted Stock Plans
The Company through its Capital Accumulation Plan and other restricted stock
programs, issues shares of Citigroup common stock in the form of restricted
stock to participating officers and employees. The restricted stock generally
vests after a two or three-year period. Except under limited circumstances,
during this period the stock cannot be sold or transferred by the participant,
who is required to render service during the restricted period. Participants may
elect to receive part of their awards in restricted stock and part in stock
options. Unearned compensation expense associated with the restricted stock
grants represents the market value of Citigroup common stock at the date of
grant and is recognized as a charge to income ratably over the vesting period.
Information with respect to restricted stock awards is as follows:
1999 1998 1997
- --------------------------------------------------------------------------------
Shares awarded 10,933,324 15,667,010 21,513,404
Weighted average fair market value
per share $38.02 $33.41 $23.19
After-tax compensation cost charged to
earnings (in millions of dollars) $269 $243 $188
================================================================================
In 1998 certain employees of SSB received Deferred Stock Awards (DSA's). A
DSA award is an unfunded promise to deliver shares at the end of a three-year
deferral period. It is comprised of a basic award representing a portion of the
participant's prior year incentive award, and an additional premium award
amounting to 33% of the basic award which vests one-third per year over a
three-year period. The entire award is forfeited if the participant leaves SSB
to join a competitor within three years after the award date. Participants may
elect to receive a portion of their award in the form of stock options. The
basic portion of the award is expensed in the bonus year that it was earned. The
expense associated with the additional 33% premium award is amortized over the
appropriate vesting period. After-tax expense of approximately $150 million was
recognized during 1998 for 1998 awards that were granted in January of 1999.
Savings Incentive Plan
Prior to 1999, eligible Citicorp employees received awards equal to 3% of their
covered salary. Employees had the option of receiving their award in cash or
deferring some or all of it in various investment funds. The Company granted an
additional award equal to the amount elected to be deferred by the employee. The
after-tax expense associated with the plan amounted to $68 million in 1998 and
$63 million in 1997.
During 1999, the CitiBuilder 401(k) plan replaced the Savings Incentive
Plan. Under the CitiBuilder 401(k) plan, eligible employees receive awards up to
3% of their total compensation deferred into the Citigroup common stock fund.
The after-tax expense associated with this plan amounted to $31 million in 1999.
Stock Purchase Plan
The 1997 offering under the Stock Purchase Plan allowed eligible employees of
Citicorp to enter into fixed subscription agreements to purchase shares at the
market value on the date of the agreements. Such shares could be purchased from
time to time through the expiration date. Shares of Citigroup's common stock
delivered under the Stock Purchase Plan were sourced from treasury shares.
Following is the share activity under the 1997 fixed-price offering for the
purchase of shares at the equivalent Citigroup price of $30.20 per share. The
1997 offering expired on June 30, 1999.
1999 1998 1997
- --------------------------------------------------------------------------------
Outstanding subscribed shares
at beginning of year 11,317,659 15,284,070 --
Subscriptions entered into -- -- 16,758,687
Shares purchased 10,324,229 2,585,958 952,560
Canceled or terminated 993,430 1,380,453 522,057
- --------------------------------------------------------------------------------
Outstanding subscribed shares
at end of year -- 11,317,659 15,284,070
================================================================================
69
<PAGE>
Pro Forma Impact of SFAS No. 123
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for its stock-based
compensation plans under which there is generally no charge to earnings for
employee stock option awards (other than performance-based options) and the
dilutive effect of outstanding options is reflected as additional share dilution
in the computation of earnings per share.
Alternatively, Financial Accounting Standards Board (FASB) rules would
permit a method under which a compensation cost for all stock awards would be
calculated and recognized over the service period (generally equal to the
vesting period). This compensation cost would be determined in a manner
prescribed by the FASB using option pricing models, intended to estimate the
fair value of the awards at the grant date. Earnings per share dilution would be
recognized as well.
Under both methods, an offsetting increase to stockholders' equity is
recorded equal to the amount of compensation expense charged.
Had the Company applied SFAS No. 123 in accounting for the Company's stock
option plans, net income and net income per share would have been the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
In Millions of Dollars, Except Per Share Amounts 1999 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Compensation expense
related to stock
option plans As reported $ 108 $ 70 $ 72
Pro forma 756 486 329
- ---------------------------------------------------------------------------------------
Net income As reported $9,867 $5,807 $6,705
Pro forma 9,437 5,522 6,516
- ---------------------------------------------------------------------------------------
Basic earnings per share As reported $ 2.91 $ 1.66 $ 1.91
Pro forma 2.78 1.57 1.85
- ---------------------------------------------------------------------------------------
Diluted earnings per share As reported $ 2.83 $ 1.62 $ 1.83
Pro forma 2.71 1.54 1.77
=======================================================================================
</TABLE>
The pro forma adjustments relate to stock options granted from 1995 through
1999, for which a fair value on the date of grant was determined using a
Black-Scholes option pricing model. No effect has been given to options granted
prior to 1995. The pro forma information above reflects the compensation expense
that would have been recognized under SFAS No. 123 for both Travelers and
Citicorp. The fair values of stock-based awards are based on assumptions that
were determined at the grant date.
SFAS No. 123 requires that reload options be treated as separate grants
from the related original grants. Under the Company's reload program, upon
exercise of an option, employees generally tender previously owned shares to pay
the exercise price and related tax withholding, and receive a reload option
covering the same number of shares tendered for such purposes. New reload
options are only granted if the Company's stock price has increased at least 20%
over the exercise price of the option being reloaded, and vest at the end of a
six-month period. Reload options are intended to encourage employees to exercise
options at an earlier date and to retain the shares so acquired, in furtherance
of the Company's long-standing policy of encouraging increased employee stock
ownership. The result of this program is that employees generally will exercise
options as soon as they are able and, therefore, these options have shorter
expected lives. Shorter option lives result in lower valuations using a
Black-Scholes option model. However, such values are expensed more quickly due
to the shorter vesting period of reload options. In addition, since reload
options are treated as separate grants, the existence of the reload feature
results in a greater number of options being valued.
Shares received through option exercises under the reload program are
subject to restrictions on sale. Discounts (as measured by the estimated cost of
protection) have been applied to the fair value of options granted to reflect
these sale restrictions.
Additional valuation and related assumption information for Citigroup
option plans, Travelers option plans (including options granted after the merger
date), and Citicorp option plans prior to the merger date are presented below.
<TABLE>
<CAPTION>
Citigroup
Option Plans Travelers Options Plans Citicorp Option Plans
------------ ----------------------- ---------------------
For options granted during 1999 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Weighted average fair value
Option $10.65 $7.21 $4.29 $8.59 $8.40
1998 performance option -- -- -- 6.41 --
1997 stock purchase offering -- -- -- -- $4.47
Weighted average expected life
Original grants 3 years 3 years 3 years 6 years 6 years
Reload grants 1 year 1 year 1 year -- --
1997 stock purchase offering -- -- -- -- 2 years
Valuation assumptions
Expected volatility 46.1% 37.0% 32.3% 25% 25%
Risk-free interest rate 5.17% 4.72% 5.75% 5.51% 6.30%
Expected annual dividends per share $0.63 $0.43 $0.31 $0.78 $0.73
Expected annual forfeitures 5% 5% 5% 5% 5%
====================================================================================================
</TABLE>
70
<PAGE>
21. RETIREMENT BENEFITS
The Company has several non-contributory defined benefit pension plans covering
substantially all U.S. employees and has various defined benefit pension
termination indemnity plans covering employees outside the United States. During
the 1999 first quarter, the U.S. defined benefit plan was amended to convert the
benefit formula for certain employees of Citicorp to a cash balance formula
effective January 1, 2000. Employees satisfying certain age and service
requirements remain covered by the prior final pay formula. The Company also
offers postretirement health care and life insurance benefits to certain
eligible U.S. retired employees, as well as to certain eligible employees
outside the United States. The following tables summarize the components of net
benefit expense recognized in the consolidated statement of income and the
funded status and amounts recognized in the consolidated balance sheet for the
Company's U.S. plans and significant plans outside the U.S.
Net Benefit Expense
<TABLE>
<CAPTION>
Postretirement
Pension Plans Benefit Plans(1)
-------------------------------------------------------- ------------------------
U.S. Plans Plans Outside U.S. U.S. Plans
-------------------------- ------------------------ ------------------------
In Millions of Dollars 1999 1998 1997 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Benefits earned during the year $228 $232 $197 $80 $76 $59 $ 7 $13 $12
Interest cost on benefit obligation 456 443 412 94 88 76 58 62 63
Expected return on plan assets (645) (557) (496) (87) (84) (65) (16) (14) (11)
Amortization of unrecognized:
Net transition (asset) obligation (17) (18) (21) 4 3 6 -- -- --
Prior service cost (6) 18 14 -- -- -- (4) -- (2)
Net actuarial loss (gain) 9 5 4 6 3 2 2 (6) (5)
Curtailment (gain) loss -- (15) -- -- 2 -- (29) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net benefit expense $25 $108 $110 $97 $88 $78 $18 $55 $57
===============================================================================================================================
</TABLE>
(1) For plans outside the U.S., net postretirement benefit expense totaled $13
million in 1999, $10 million in 1998, and $8 million in 1997.
71
<PAGE>
Prepaid Benefit Cost (Benefit Liability)
<TABLE>
<CAPTION>
Postretirement
Pension Plans Benefit Plans(3)
--------------------------------------------- ---------------
U.S. Plans(1) Plans Outside U.S.(2) U.S. Plans
------------------- ------------------- ---------------
In Millions of Dollars at Year-End 1999 1998 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $ 7,027 $ 6,248 $ 1,574 $ 1,281 $ 952 $ 915
Benefits earned during the year 228 232 80 76 7 13
Interest cost on benefit obligation 456 443 94 88 58 62
Plan amendments (236) 31 10 3 -- 3
Actuarial (gain) loss (1,070) 385 (14) 127 (110) 22
Benefits paid (299) (287) (96) (71) (61) (63)
Acquisitions -- -- 4 27 -- --
Expenses (9) (10) -- -- -- --
Curtailment -- (15) -- (7) (32) --
Settlements -- -- (5) -- -- --
Foreign exchange impact -- -- (121) 50 -- --
- -------------------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year $ 6,097 $ 7,027 $ 1,526 $ 1,574 $ 814 $ 952
=========================================================================================================================
Change in plan assets
Plan assets at fair value at beginning of year $ 7,404 $ 6,675 $ 1,210 $ 940 $ 191 $ 163
Actual return on plan assets 866 1,004 189 119 26 28
Company contributions 21 22 76 153 62 63
Employee contributions -- -- 4 5 -- --
Acquisitions -- -- -- 24 -- --
Settlements -- -- (5) -- -- --
Benefits paid (299) (287) (74) (58) (62) (63)
Expenses (9) (10) -- -- -- --
Foreign exchange impact -- -- (82) 27 -- --
- -------------------------------------------------------------------------------------------------------------------------
Plan assets at fair value at end of year $ 7,983 $ 7,404 $ 1,318 $ 1,210 $ 217 $ 191
=========================================================================================================================
Reconciliation of prepaid (accrued) benefit cost
and total amount recognized
Funded status of the plan $ 1,886 $ 377 $ (208) $ (364) $(597) $(761)
Unrecognized:
Net transition obligation (asset) 1 (16) 18 20 -- --
Prior service cost (124) 105 17 2 (10) (11)
Net actuarial (gain) loss (1,454) (153) (21) 107 (181) (59)
- -------------------------------------------------------------------------------------------------------------------------
Net amount recognized $ 309 $ 313 $ (194) $ (235) $(788) $(831)
=========================================================================================================================
Amounts recognized in the statement of financial
position consist of
Prepaid benefit cost $ 684 $ 646 $ 107 $ 76 $ -- $ --
Accrued benefit liability (416) (406) (320) (338) (788) (831)
Intangible asset 41 73 19 27 -- --
- -------------------------------------------------------------------------------------------------------------------------
Net amount recognized $ 309 $ 313 $ (194) $ (235) $(788) $(831)
=========================================================================================================================
</TABLE>
(1) For unfunded U.S. plans, the aggregate benefit obligation was $454 million
and $512 million, and the aggregate accumulated benefit obligation was $387
million and $393 million at December 31, 1999 and 1998, respectively.
(2) For plans outside the U.S., the aggregate benefit obligation was $524
million and $1.176 billion, and the fair value of plan assets was $145
million and $732 million at December 31, 1999 and 1998, respectively, for
plans whose benefit obligation exceeds plan assets. The aggregate
accumulated benefit obligation was $309 million and $308 million, and the
fair value of plan assets was $46 million and $3 million at December 31,
1999 and 1998, respectively, for plans whose accumulated benefit obligation
exceeds plan assets.
(3) For plans outside the U.S., the accumulated postretirement benefit
obligation was $82 million and $96 million and the postretirement benefit
liability was $20 million and $33 million at December 31, 1999 and 1998,
respectively.
72
<PAGE>
The expected long-term rates of return on assets used in determining the
Company's pension and postretirement expense are shown below.
1999 1998 1997
- -------------------------------------------------------------------------------
Rate of return on assets
U.S. plans 9.5% 9.0% to 9.5% 9.0%
Plans outside the U.S.(1) 3.5% to 12.5% 4.0% to 12.0% 4.5% to 13.0%
===============================================================================
(1) Excluding highly inflationary countries.
The principal assumptions used in determining pension and postretirement
benefit obligations for the Company's plans are shown in the following table.
At Year-End 1999 1998
- -------------------------------------------------------------------------------
Discount rate
U.S. plans 8.0% 6.75%
Plans outside the U.S.(1) 3.0% to 12.0% 3.0% to 12.0%
Future compensation increase rate
U.S. plans 4.5% 4.5%
Plans outside the U.S.(1) 2.5% to 12.0% 1.5% to 10.0%
Health care cost increase rate--U.S. plans
Following year 6.0% to 8.0% 7.0% to 11%
Decreasing to the year 2001 5.0% 5.0% to 5.5%
===============================================================================
(1) Excluding highly inflationary countries.
As an indicator of sensitivity, increasing the assumed health care cost
trend rate by 1% in each year would have increased the accumulated
postretirement benefit obligation as of December 31, 1999 by $27 million and the
aggregate of the benefits earned and interest components of 1999 net
postretirement benefit expense by $3 million. Decreasing the assumed health care
cost trend rate by 1% in each year would have decreased the accumulated
postretirement benefit obligation as of December 31, 1999 by $26 million and the
aggregate of the benefits earned and interest components of 1999 net
postretirement benefit expense by $3 million.
22. TRADING SECURITIES, COMMODITIES, DERIVATIVES, AND RELATED RISKS
Derivative and Foreign Exchange Contracts
<TABLE>
<CAPTION>
Notional Balance Sheet
Principal Amounts Credit Exposure(1)(2)
---------------------- ----------------------------
In Billions of Dollars at Year-End 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest rate products
Futures contracts $ 631.6 $ 998.1 $ -- $ --
Forward contracts 701.8 698.8 0.9 0.8
Swap agreements 3,401.2 3,181.4 8.9 15.6
Options 616.4 674.2 0.4 0.6
Foreign exchange products
Futures contracts 4.1 5.1 -- --
Forward contracts 1,401.1 1,644.0 7.4 9.1
Cross-currency swaps 166.6 132.4 2.9 2.0
Options 225.3 440.6 1.1 2.4
Equity products 144.2 163.5 9.3 6.1
Commodity products 34.9 20.0 0.4 0.6
Credit derivative products 46.0 28.7 0.3 0.2
- -----------------------------------------------------------------------------------------------
$ 31.6 $ 37.4
===============================================================================================
</TABLE>
(1) There is no balance sheet credit exposure for futures contracts because
they settle daily in cash, and none for written options because they
represent obligations (rather than assets) of Citigroup.
(2) The balance sheet credit exposure reflects $65.4 billion and $90.0 billion
of master netting agreements in effect at December 31, 1999 and December
31, 1998, respectively. Master netting agreements mitigate credit risk by
permitting the offset of amounts due from and to individual counterparties
in the event of counterparty default. In addition, Citibank has securitized
and sold net receivables, and the associated credit risk related to certain
derivative and foreign exchange contracts via Markets Assets Trust, which
amounted to $2.2 billion and $2.7 billion at December 31, 1999 and December
31, 1998, respectively.
Citigroup enters into derivative and foreign exchange futures, forwards,
options, and swaps, which enable customers to transfer, modify, or reduce their
interest rate, foreign exchange, and other market risks, and also trades these
products for its own account. In addition, Citigroup uses derivatives and other
instruments, primarily interest rate products, as an end-user in connection with
its risk management activities. Derivatives are used to manage interest rate
risk relating to specific groups of on-balance sheet assets and liabilities,
including investments, commercial and consumer loans, deposit liabilities,
long-term debt, and other interest-sensitive assets and liabilities, as well as
credit card securitizations, redemptions and sales. In addition, foreign
exchange contracts are used to hedge non-U.S. dollar denominated debt, net
capital exposures, and foreign exchange transactions. Through the effective use
of derivatives, Citigroup has been able to modify the volatility of its revenue
from asset and liability positions. Derivative instruments with leverage
features are not utilized in connection with risk management activities. The
preceding table presents the aggregate notional principal amounts of Citigroup's
outstanding derivative and foreign exchange contracts at December 31, 1999 and
1998, along with the related balance sheet credit exposure. The table includes
all contracts with third parties, including both trading and end-user positions.
73
<PAGE>
Futures and forward contracts are commitments to buy or sell at a future
date a financial instrument, commodity, or currency at a contracted price, and
may be settled in cash or through delivery. Swap contracts are commitments to
settle in cash at a future date or dates which may range from a few days to a
number of years, based on differentials between specified financial indices, as
applied to a notional principal amount. Option contracts give the purchaser, for
a fee, the right, but not the obligation, to buy or sell within a limited time,
a financial instrument or currency at a contracted price that may also be
settled in cash, based on differentials between specified indices.
Citigroup also sells various financial instruments that have not been
purchased (short sales). In order to sell securities short, the securities are
borrowed or received as collateral in conjunction with short-term financing
agreements and, at a later date, must be delivered (i.e. replaced) with like or
substantially the same financial instruments or commodities to the parties from
which they were originally borrowed.
Derivatives and short sales may expose Citigroup to market risk or credit
risk in excess of the amounts recorded on the balance sheet. Market risk on a
derivative, short sale, or foreign exchange product is the exposure created by
potential fluctuations in interest rates, foreign exchange rates, and other
values, and is a function of the type of product, the volume of transactions,
the tenor and terms of the agreement, and the underlying volatility. Credit risk
is the exposure to loss in the event of nonperformance by the other party to the
transaction and if the value of collateral held, if any, was not adequate to
cover such losses. The recognition in earnings of unrealized gains on these
transactions is subject to management's assessment as to collectibility.
Liquidity risk is the potential exposure that arises when the size of the
derivative position may not be able to be rapidly adjusted in times of high
volatility and financial stress at a reasonable cost.
End-User Interest Rate, Foreign Exchange, and Credit Derivative Contracts
<TABLE>
<CAPTION>
Notional Principal Amounts Percentage of 1999 Amount Maturing
-------------------------- ---------------------------------------------------------
Dec. 31, Dec. 31, Within 1 to 2 to 3 to 4 to After
In Billions of Dollars 1999 1998 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest rate products
Futures contracts $ 7.1 $ 28.6 100% --% --% --% --% --%
Forward contracts 3.3 6.5 100 -- -- -- -- --
Swap agreements 104.7 113.7 28 16 9 14 10 23
Option contracts 7.1 9.9 34 10 31 3 -- 22
Foreign exchange products
Futures and forward contracts 50.6 68.2 95 4 1 -- -- --
Cross-currency swaps 7.0 4.8 12 18 20 17 16 17
Credit derivative products 29.2 19.6 2 2 8 7 34 47
=========================================================================================================================
</TABLE>
End-User Interest Rate Swaps and Net Purchased Options as of December 31, 1999
<TABLE>
<CAPTION>
Remaining Contracts Outstanding--Notional Principal Amounts
-----------------------------------------------------------------
In Billions of Dollars at Year-End 1999 2000 2001 2002 2003 2004
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Receive fixed swaps $72.5 $60.3 $48.8 $41.5 $28.6 $18.5
Weighted-average fixed rate 6.3% 6.3% 6.3% 6.3% 6.4% 6.5%
Pay fixed swaps 15.6 12.1 9.2 7.3 5.9 5.4
Weighted-average fixed rate 5.9% 5.8% 5.9% 6.0% 6.0% 6.1%
Basis swaps 16.6 3.2 0.8 0.7 0.5 0.4
Purchased caps (including collars) 1.6 -- -- -- -- --
Weighted-average cap rate purchased 7.1% --% --% --% --% --%
Purchased floors 3.0 2.4 1.9 0.1 0.1 0.1
Weighted-average floor rate purchased 6.6% 6.6% 6.7% 5.8% 5.8% 5.8%
Written floors related to purchased caps (collars) 0.2 -- -- -- -- --
Weighted-average floor rate written 8.2% --% --% --% --% --%
Written caps related to other purchased caps(1) 2.3 2.3 2.1 1.7 1.5 1.5
Weighted-average cap rate written 9.8% 9.8% 9.8% 10.6% 10.7% 10.7%
- ------------------------------------------------------------------------------------------------------------------------
Three-month forward LIBOR rates(2) 6.0% 6.9% 7.1% 7.2% 7.3% 7.4%
========================================================================================================================
</TABLE>
(1) Includes written options related to purchased options embedded in other
financial instruments.
(2) Represents the implied forward yield curve for three-month LIBOR as of
December 31, 1999, provided for reference.
74
<PAGE>
The tables above provide data on the notional principal amounts and
maturities of end-user (non-trading) derivatives, along with additional data on
end-user interest rate swaps and net purchased option positions at year-end 1999
with three-month LIBOR forward rates included for reference. The tables are
intended to provide an overview of these components of the end-user portfolio,
but should be viewed only in the context of Citigroup's related assets and
liabilities. Contract maturities are related to the underlying risk management
strategy.
The majority of derivative positions used in Citigroup's asset and
liability management activities are established via intercompany transactions
with independently managed Citigroup dealer units, with the dealer acting as a
conduit to the marketplace.
Citigroup's utilization of these instruments is modified from time to time
in response to changing market conditions as well as changes in the
characteristics and mix of the related assets and liabilities. In this
connection, during 1999 interest rate futures, swaps, and options with a
notional principal amount of $14.6 billion were closed out which resulted in a
net deferred gain of approximately $92 million. Total unamortized net deferred
gains, including those from prior year close-outs, were approximately $184
million at December 31, 1999, which will be amortized into earnings over the
remaining life of the original contracts (approximately 29% in 2000, 20% in
2001, and 51% in subsequent years), consistent with the risk management
strategy.
23. CONCENTRATIONS OF CREDIT RISK
Concentrations of credit risk exist when changes in economic, industry or
geographic factors similarly affect groups of counterparties whose aggregate
credit exposure is material in relation to Citigroup's total credit exposure.
Although Citigroup's portfolio of financial instruments is broadly diversified
along industry, product, and geographic lines, material transactions are
completed with other financial institutions, particularly in the securities
trading, derivative, and foreign exchange businesses.
24. FAIR VALUE OF FINANCIAL INSTRUMENTS
Estimated Fair Value of Financial Instruments
<TABLE>
<CAPTION>
1999 1998
----------------------------------- ----------
Carrying Estimated
In Billions of Dollars at Year-End Value Fair Value Difference Difference
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets $688.5 $695.9 $ 7.4 $ 7.3
Liabilities 612.7 612.2 0.5 (1.4)
End-user derivative and foreign
exchange contracts 0.5 (0.6) (1.1) 2.1
Credit card securitizations -- 0.8 0.8 (0.6)
- ------------------------------------------------------------------------------------------
7.6 7.4
Deposits with no fixed maturity(1) 4.6 2.8
- ------------------------------------------------------------------------------------------
Total $12.2 $10.2
==========================================================================================
</TABLE>
(1) Represents the estimated excess fair value related to the expected time
period until runoff of existing deposits with no fixed maturity on the
balance sheet at year-end, without assuming any regeneration of balances,
based on the estimated difference between the cost of funds on these
deposits and the cost of funds from alternative sources. The increase
during 1999 was primarily due to higher spreads between the cost of funds
on the deposits and the cost of funds from alternative sources. Under
applicable requirements, excess fair values of these deposits are excluded
from amounts included under the Liabilities caption above and from the
following table, in which the estimated fair value is shown as being equal
to the carrying value.
Citigroup's financial instruments, as defined in accordance with applicable
requirements, include financial assets and liabilities recorded on the balance
sheet as well as off-balance sheet instruments such as derivative and foreign
exchange contracts and credit card securitizations. To better reflect
Citigroup's values subject to market risk and to illustrate the
interrelationships that characterize risk management strategies, the table above
also provides estimated fair value data for the expected time period until
runoff of existing deposits with no fixed maturity.
In the aggregate, estimated fair values exceeded the carrying values by
approximately $12.2 billion at December 31, 1999. Fair values vary from period
to period based on changes in a wide range of factors, including interest rates,
credit quality, and market perceptions of value, and as existing assets and
liabilities run off and new items are entered into. The changes from the prior
year are a result of an increase in the fair value of deposits with no fixed
maturity, credit card securitizations, long-term debt and deposits primarily due
to the higher interest rate environment in the U.S., offset by a decline in the
fair value of derivative contracts which were affected by the same interest rate
environment.
Additional detail is provided in the following table. In accordance with
applicable requirements, the disclosures exclude leases, affiliate investments,
and pension and benefit obligations, and contractholder funds amounts exclude
certain insurance contracts. Also in accordance with the applicable requirements
the disclosures exclude the effect of taxes, do not reflect any premium or
discount that could result from offering for sale at one time the entire
holdings of a particular instrument, as well as other expenses that would be
incurred in a market transaction. In addition, the table excludes the values of
nonfinancial assets and liabilities, as well as a wide range of franchise,
relationship, and intangible values, which are integral to a full assessment of
Citigroup's financial position and the value of its net assets.
The data represents management's best estimates based on a range of
methodologies and assumptions. The carrying value of short-term financial
instruments as well as receivables and payables arising in the ordinary course
of business, approximates fair value because of the relatively short period of
time between their origination and expected realization. Quoted market prices
are used for most investments, for loans where available, and for both trading
and end-user derivative and foreign exchange contracts, as well as for
liabilities, such as long-term debt, with quoted prices. For performing loans
where no quoted market prices are available, contractual cash flows are
discounted at quoted secondary market rates or estimated market rates if
available. Otherwise, sales of comparable loan portfolios or current market
origination rates for loans with similar terms and risk characteristics are
used. For loans with doubt as to collectibility, expected cash flows are
discounted using an appropriate rate considering the time of collection and a
premium for the uncertainty of the flows. The value of collateral is also
considered. For liabilities such as long-term debt without quoted market prices,
market borrowing rates of interest are used to discount contractual cash flows.
75
<PAGE>
Fair values of credit card securitizations reflect the various components
of these transactions but principally arise from fixed rates payable to
certificate holders. Under the applicable requirements, the estimated fair value
of deposits with no fixed maturity in the following table excludes the premium
values available in the market for such deposits, and the estimated value is
shown in the table as being equal to the carrying value.
<TABLE>
<CAPTION>
1999 1998
---------------------- ----------------------
Carrying Estimated Carrying Estimated
In Billions of Dollars at Year-End Value Fair Value Value Fair Value
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets and related
instruments
Investments $113.1 $113.1 $105.2 $105.2
Federal funds sold and securities
borrowed or purchased under
agreements to resell 112.7 112.7 94.8 94.8
Trading account assets 109.2 109.2 119.8 119.8
Loans(1) 232.0 239.4 210.5 217.9
Related derivatives 0.2 (0.3) 0.2 0.6
Other financial assets(2) 121.5 121.5 101.3 101.2
Credit card securitizations -- 0.8 -- (0.6)
Related derivatives -- (0.2) 0.1 0.5
- ---------------------------------------------------------------------------------------
Liabilities and related
instruments
Deposits 261.1 260.8 228.6 229.0
Related derivatives (0.2) -- (0.3) (0.6)
Federal funds purchased and
securities loaned or sold under
agreements to repurchase 92.6 92.6 81.0 81.0
Trading account liabilities 91.1 91.1 94.6 94.6
Contractholder funds
With defined maturities 5.0 4.7 3.3 3.3
Without defined maturities 10.1 10.3 10.4 10.2
Long-term debt 47.1 47.1 48.7 50.1
Related derivatives (0.1) 0.1 (0.1) (1.1)
Other financial liabilities(3) 105.7 105.6 92.8 92.6
Related derivatives -- -- 0.1 0.1
=======================================================================================
</TABLE>
(1) The carrying value of loans is net of the allowance for credit losses and
also excludes $5.5 billion and $4.8 billion of lease finance receivables in
1999 and 1998, respectively.
(2) Includes cash and cash equivalents, deposits at interest with banks,
brokerage receivables, reinsurance recoverables and separate and variable
accounts for which the carrying value is a reasonable estimate of fair
value, and the carrying value and estimated fair value of financial
instruments included in other assets on the Consolidated Statement of
Financial Position.
(3) Includes investment banking and brokerage borrowings, short-term
borrowings, brokerage payables, and separate and variable accounts for
which the carrying value is a reasonable estimate of fair value, and the
carrying value and estimated fair value of financial instruments included
in other liabilities on the Consolidated Statement of Financial Position.
The estimated fair values of loans reflect changes in credit status since
the loans were made, changes in interest rates in the case of fixed-rate loans,
and premium values at origination of certain loans. The estimated fair values of
Citigroup's loans, in the aggregate, exceeded carrying values (reduced by the
allowance for credit losses) by $7.4 billion at year-end 1999 and 1998. Within
these totals, estimated fair values exceeded carrying values for consumer loans
net of the allowance by $4.5 billion, a decline of $0.1 billion from year-end
1998, and for commercial loans net of the allowance by $2.9 billion, which was
an improvement of $0.1 billion from year-end 1998.
The decline in estimated fair values in excess of carrying values of
consumer loans is primarily due to the higher interest rate environment. The
improvement in estimated fair value over the carrying values for commercial
loans from year-end 1998 is a result of improved credit conditions in Latin
America and Asia.
The estimated fair value of credit card securitizations was $0.8 billion
more than their carrying value at December 31, 1999, which is $1.4 billion
higher than December 31, 1998, when the carrying value exceeded the estimated
fair value by $0.6 billion. This increase is due to the effects of a higher
interest rate environment on the fixed-rate investor certificates.
The estimated fair value of interest-bearing deposits was $0.3 billion less
than the carrying value at December 31, 1999, which was a result of higher
market interest rates since the deposits were taken.
For all derivative and foreign exchange contracts in the previous tables,
the gross difference between the fair value and carrying amount as of December
31, 1999 and 1998 was $0.4 billion and $2.5 billion, respectively, for contracts
whose fair value exceeds carrying value, and $1.5 billion and $0.4 billion at
December 31, 1999 and 1998, respectively, for contracts whose carrying value
exceeds fair value.
25. PLEDGED ASSETS AND COMMITMENTS
Pledged Assets
At December 31,1999, the approximate market values of securities sold under
agreements to repurchase and other assets pledged, excluding the impact of FIN
41, or pledged by the Company were as follows:
In Millions of Dollars 1999 1998
- --------------------------------------------------------------------------------
For securities sold under agreements to repurchase $141,298 $119,206
As collateral for securities borrowed of approximately
equivalent value 69,329 82,796
As collateral on bank loans 3,975 3,584
To clearing organizations or segregated under
securities laws and regulations 8,696 10,793
For securities loaned 11,995 7,752
Other 15,497 9,393
- --------------------------------------------------------------------------------
$250,790 $233,524
================================================================================
In addition, included in cash and cash equivalents at December 31, 1999 and
1998 is $2.421 billion and $2.358 billion, respectively, of cash segregated
under federal and other brokerage regulations or deposited with clearing
organizations.
At December 31, 1999 the Company had $2.2 billion of outstanding letters of
credit from banks to satisfy various collateral and margin requirements.
Lease Commitments
Rental expense (principally for offices and computer equipment) was $1.187
billion, $1.058 billion and $1.030 billion for the years ended December 31,
1999, 1998 and 1997, respectively.
Future minimum annual rentals under noncancellable leases, net of sublease
income, are as follows:
In Millions of Dollars at Year-End
- --------------------------------------------------------------------------------
2000 $ 904
2001 817
2002 691
2003 570
2004 500
Thereafter 2,936
- --------------------------------------------------------------------------------
$6,418
================================================================================
76
<PAGE>
The Company and certain of Salomon Smith Barney's subsidiaries together
have an option to purchase the buildings presently leased for Salomon Smith
Barney's executive offices and New York City operations at the expiration of the
lease term.
Loan Commitments
In Billions of Dollars at Year-End 1999 1998
- --------------------------------------------------------------------------------
Unused commercial commitments to make or purchase loans,
to purchase third-party receivables, and to provide
note issuance or revolving underwriting facilities $175.4 $132.6
Unused credit card and other consumer
revolving commitments $255.3 $227.8
================================================================================
The majority of unused commitments are contingent upon customers
maintaining specific credit standards. Commercial commitments generally have
floating interest rates and fixed expiration dates and may require payment of
fees. Such fees (net of certain direct costs) are deferred and, upon exercise of
the commitment, amortized over the life of the loan or, if exercise is deemed
remote, amortized over the commitment period. The table does not include
commercial letters of credit issued on behalf of customers and collateralized by
the underlying shipment of goods which totaled $5.3 billion at both December 31,
1999 and 1998.
Loans Sold with Credit Enhancements
<TABLE>
<CAPTION>
In Billions of Dollars at Year-End 1999 1998 Form of Credit Enhancement
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Residential mortgages and other
loans sold with recourse(1) $ 3.6 $ 6.1 Recourse obligation $1.8
in 1999 and $2.4 in 1998
GNMA sales/servicing agreements(2) 19.3 1.0 Secondary recourse
obligation
Securitized credit card receivables 49.0 44.3 Primarily net revenue over
the life of the transaction
=========================================================================================
</TABLE>
(1) Residential mortgages represent 74% of amounts in 1999 and 57% in 1998.
(2) Government National Mortgage Association sales/servicing agreements
covering securitized residential mortgages.
Citigroup and its subsidiaries are obligated under various credit
enhancements related to certain sales of loans or sales of participations in
pools of loans, summarized above.
Net revenue on securitized credit card receivables is collected over the
life of each sale transaction. The net revenue is based upon the sum of finance
charges and fees received from cardholders and interchange revenue earned on
cardholder transactions, less the sum of the yield paid to investors, credit
losses, transaction costs, and a contractual servicing fee, which is also
retained by certain Citigroup subsidiaries as servicers. As specified in certain
of the sale agreements, the net revenue collected each month is deposited in an
account, up to a predetermined maximum amount, and is available over the
remaining term of that transaction to make payments of yield, fees, and
transaction costs in the event that net cash flows from the receivables are not
sufficient. When the account reaches the predetermined amount, net revenue is
passed directly to the Citigroup subsidiary that sold the receivables. The
amount contained in these accounts is included in other assets and was $60
million at December 31, 1999 and $30 million at December 31, 1998. Net revenue
from securitized credit card receivables included in other income was $1.8
billion, $1.3 billion, and $559 million for the years ended December 31, 1999,
1998, and 1997, respectively.
Financial Guarantees
Financial guarantees are used in various transactions to enhance the credit
standing of Citigroup customers. They represent irrevocable assurances that
Citigroup will make payment in the event that the customer fails to fulfill its
obligations to third parties.
Citicorp issues financial standby letters of credit which are obligations
to pay a third-party beneficiary when a customer fails to repay an outstanding
loan or debt instrument, such as assuring payments by a foreign reinsurer to a
U.S. insurer, to act as a substitute for an escrow account, to provide a payment
mechanism for a customer's third-party obligations, and to assure payment of
specified financial obligations of a customer. Fees are recognized ratably over
the term of the standby letter of credit. The following table summarizes
financial standby letters of credit issued by Citicorp. The table does not
include securities lending indemnifications issued to customers, which are fully
collateralized and totaled $23.0 billion at December 31, 1999 and $11.1 billion
at December 31, 1998, and performance standby letters of credit.
<TABLE>
<CAPTION>
1999 1998
----------------------------------------- ------------
Expire Within Expire After Total Amount Total Amount
In Billions of Dollars at Year-End 1 Year 1 Year Outstanding Outstanding
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insurance, surety $ 1.6 $5.4 $ 7.0 $ 6.7
Options, purchased securities,
and escrow 0.6 0.1 0.7 0.8
Clean payment 2.3 1.0 3.3 2.3
Backstop state, county, and
municipal securities 0.1 0.2 0.3 0.5
Other debt related 6.3 2.5 8.8 6.5
- -------------------------------------------------------------------------------------------
Total(1) $10.9 $9.2 $20.1 $16.8
===========================================================================================
</TABLE>
(1) Total is net of cash collateral of $2.6 billion in 1999 and $2.0 billion in
1998. Collateral other than cash covered 21% of the total in 1999 and 27%
in 1998.
Other Commitments
Salomon Smith Barney and a principal broker-dealer subsidiary have each provided
a portion of a residual value guarantee in the amount of $586 million in
connection with the lease of the buildings occupied by Salomon Smith Barney's
executive offices and New York operations.
The Company makes commitments to fund partnership investments and transfers
receivables to third parties with recourse from time to time. The off-balance
sheet risks of these financial instruments were not significant at December 31,
1999 or 1998.
26. CONTINGENCIES
In the ordinary course of business, Citigroup and/or its subsidiaries are
defendants or co-defendants in various litigation matters, other than
environmental and asbestos property and casualty insurance claims as discussed
in Note 12. Although there can be no assurances, the Company believes, based on
information currently available, that the ultimate resolution of these legal
proceedings would not be likely to have a material adverse effect on its results
of operations, financial condition, or liquidity.
77
<PAGE>
27. CITIGROUP (PARENT COMPANY ONLY)
Condensed Statement of Income
Year Ended December 31,
-------------------------------
In Millions of Dollars 1999 1998 1997
- -------------------------------------------------------------------------------
Revenues $ 80 $ 29 $ 1
- -------------------------------------------------------------------------------
Expenses:
Interest 389 218 171
Other 133 158 143
- -------------------------------------------------------------------------------
Total 522 376 314
- -------------------------------------------------------------------------------
Pre-tax loss (442) (347) (313)
Income tax benefit 156 130 112
- -------------------------------------------------------------------------------
Loss before equity in net
income of subsidiaries (286) (217) (201)
Equity in net income of subsidiaries 10,153 6,024 6,906
- -------------------------------------------------------------------------------
Net income $ 9,867 $5,807 $6,705
===============================================================================
Condensed Statement of Financial Position
<TABLE>
<CAPTION>
December 31,
--------------------
In Millions of Dollars 1999 1998(1)
- ----------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash $ 855 $ --
Investments 1,763 107
Investment in and advances to:
Bank and bank holding company subsidiaries 28,310 24,686
Other subsidiaries 26,809 25,227
Cost of acquired businesses in excess of net assets 395 409
Other 205 193
- ----------------------------------------------------------------------------------
Total $58,337 $50,622
==================================================================================
Liabilities
Advances from and payables to subsidiaries $ 887 $ 2,078
Short-term borrowings -- 991
Junior subordinated debentures, held by subsidiary trusts 2,367 1,748
Long-term debt 4,181 2,422
Other liabilities 990 309
Redeemable preferred stock, held by subsidiary 226 226
Redeemable preferred stock--Series I -- 140
Stockholders' equity
Preferred stock ($1.00 par value; authorized shares:
30 million), at aggregate liquidation value 1,925 2,313
Common stock ($.01 par value; authorized shares:
6.0 billion; issued shares: 1999--3,612,385,458 shares
and 1998--3,603,106,368 shares) 36 36
Additional paid-in capital 10,036 8,893
Retained earnings 43,865 35,971
Treasury stock, at cost (1999--244,860,127 shares;
1998--216,143,199 shares) (7,627) (4,789)
Accumulated other changes in equity from
nonowner sources 1,907 781
Unearned compensation (456) (497)
- ----------------------------------------------------------------------------------
Stockholders' equity 49,686 42,708
- ----------------------------------------------------------------------------------
Total $58,337 $50,622
==================================================================================
</TABLE>
(1) Reclassified to conform to the 1999 presentation.
Condensed Statement of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
In Millions of Dollars 1999 1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 9,867 $ 5,807 $ 6,705
Adjustments to reconcile net income to cash
provided by operating activities:
Equity in net income of subsidiaries (10,153) (6,024) (6,906)
Dividends received from:
Bank and bank holding company
subsidiaries 4,625 16 198
Other subsidiaries 2,285 2,980 1,126
Other, net 1,998 1,034 4,220
- -----------------------------------------------------------------------------------
Net cash provided by operating activities 8,622 3,813 5,343
- -----------------------------------------------------------------------------------
Cash flows from investing activities
Capital contributions to subsidiary (321) (1,276) (521)
Change in investments (425) (1,130) 240
Advances to subsidiaries, net (1,206) -- --
- -----------------------------------------------------------------------------------
Net cash used in investing activities (1,952) (2,406) (281)
- -----------------------------------------------------------------------------------
Cash flows from financing activities
(Repayment of) proceeds from advances
from subsidiaries, net (1,197) 2,049 --
Dividends paid (1,973) (1,846) (1,692)
Issuance of common stock 758 418 434
Issuance of preferred stock -- -- 1,000
Redemption of preferred stock (388) (1,040) (850)
Stock tendered for payment of withholding taxes (496) (520) (384)
Treasury stock acquired (3,906) (3,085) (3,447)
Issuance of long-term debt 1,859 1,000 --
Issuance of junior subordinated debentures 619 722 --
Payments and redemptions of long-term debt (100) (250) (185)
Change in short-term borrowings (991) 991 --
Other, net -- 154 62
- -----------------------------------------------------------------------------------
Net cash used in financing activities (5,815) (1,407) (5,062)
- -----------------------------------------------------------------------------------
Change in cash and cash equivalents 855 -- --
Cash and cash equivalents at
beginning of period -- -- --
- -----------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 855 $ -- $ --
===================================================================================
Supplemental disclosure of cash
flow information
Cash paid during the period for interest $ 400 $ 202 $ 180
Cash received during the period for taxes 1,251 712 569
===================================================================================
</TABLE>
78
<PAGE>
28. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1999
----------------------------------------
In Millions of Dollars, Except Per Share Amounts Fourth Third Second First
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $20,951 $20,097 $20,436 $20,521
Total revenues, net of interest expense 14,766 14,021 14,380 14,070
Total provisions for benefits, claims, and credit losses 2,900 2,890 2,941 2,777
Total operating expenses 7,675 7,261 7,524 7,321
Income before income taxes, minority interest,
and cumulative effect of accounting changes 4,191 3,870 3,915 3,972
Provision for income taxes 1,499 1,379 1,402 1,423
Minority interest, net of income taxes 70 56 65 60
Income before cumulative effect of accounting changes 2,622 2,435 2,448 2,489
Cumulative effect of accounting changes(1) -- -- -- (127)
- ----------------------------------------------------------------------------------------------------
Net income $ 2,622 $ 2,435 $ 2,448 $ 2,362
- ----------------------------------------------------------------------------------------------------
Basic earnings per share(2) $ 0.78 $ 0.72 $ 0.72 $ 0.70
- ----------------------------------------------------------------------------------------------------
Diluted earnings per share(2) $ 0.75 $ 0.70 $ 0.70 $ 0.68
- ----------------------------------------------------------------------------------------------------
Common stock price per share(2)
High $58.250 $50.938 $51.750 $44.297
Low 42.063 41.188 40.125 32.672
Close 55.688 44.000 47.500 42.578
Dividends per share of common stock 0.140 0.140 0.140 0.120
====================================================================================================
<CAPTION>
1998
----------------------------------------
In Millions of Dollars, Except Per Share Amounts Fourth Third Second First
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $19,439 $17,594 $19,961 $19,437
Total revenues, net of interest expense 12,754 10,421 12,965 12,796
Total provisions for benefits, claims, and credit losses 2,899 2,925 2,703 2,589
Total operating expenses 8,793 6,339 6,680 6,739
Income before income taxes, minority interest,
and cumulative effect of accounting changes 1,062 1,157 3,582 3,468
Provision for income taxes 320 375 1,290 1,249
Minority interest, net of income taxes 65 53 52 58
Income before cumulative effect of accounting changes 677 729 2,240 2,161
Cumulative effect of accounting changes(1) -- -- -- --
- ----------------------------------------------------------------------------------------------------
Net income $ 677 $ 729 $ 2,240 $ 2,161
- ----------------------------------------------------------------------------------------------------
Basic earnings per share(2) $ 0.19 $ 0.20 $ 0.65 $ 0.62
- ----------------------------------------------------------------------------------------------------
Diluted earnings per share(2) $ 0.19 $ 0.20 $ 0.63 $ 0.60
- ----------------------------------------------------------------------------------------------------
Common stock price per share(2)
High $35.500 $48.625 $49.000 $42.250
Low 19.000 24.750 39.417 30.083
Close 33.125 25.000 40.417 40.000
Dividends per share of common stock 0.120 0.083 0.083 0.083
====================================================================================================
</TABLE>
(1) Accounting changes include the 1999 first quarter adoption of Statement of
Position (SOP) 97-3, "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments" of ($135) million; SOP 98-7, "Deposit
Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not
Transfer Insurance Risk" of $23 million; and SOP 98-5, "Reporting on the
Costs of Start-Up Activities" of ($15) million. See Note 1 of Notes to
Consolidated Financial Statements.
(2) Per share data have been adjusted to give effect to the three-for-two split
in Citigroup's common stock as discussed in Note 1 of Notes to Consolidated
Financial Statements.
Due to changes in the number of average shares outstanding, quarterly
earnings per share of common stock may not add to the totals for the years.
The fourth quarters of 1999 and 1998 include $51 million after-tax ($82
million pretax) and $703 million after-tax ($1.122 billion pretax),
respectively, of restructuring charges associated with business improvement and
integration initiatives, and in the 1998 fourth quarter, includes $65 million of
merger-related costs. The third quarter of 1999 includes a charge of $31 million
after-tax ($49 million pretax) related to severance. The fourth, third, and
first quarters of 1999 include credits for reductions of prior charges of $76
million after-tax ($122 million pretax), $41 million after-tax ($68 million
pretax), and $125 million after-tax ($211 million pretax), respectively. The
fourth and second quarters of 1998 include credits for reversals of prior
charges of $42 million after-tax ($68 million pretax) and $191 million after-tax
($324 million pretax), respectively. The 1999 fourth, third, second, and first
quarters also include $8 million after-tax ($13 million pretax), $25 million
after-tax ($41 million pretax), $29 million after-tax ($47 million pretax), and
$51 million after-tax ($81 million pretax), respectively, of accelerated
depreciation.
79
<PAGE>
FINANCIAL DATA SUPPLEMENT
Average Balances and Interest Rates, Taxable Equivalent Basis(1)(2)(3)
<TABLE>
<CAPTION>
Average Volume Interest Revenue % Average Rate
---------------------------- ---------------------- ----------------------
In Millions of Dollars 1999 1998 1997 1999 1998 1997 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents
In U.S. offices $ 3,038 $ 3,199 $ 2,416 $ -- $ 1 $ -- -- 0.03 --
In offices outside the U.S.(4) 917 1,087 1,114 13 21 16 1.42 1.93 1.44
- ---------------------------------------------------------------------------------------------------
Total 3,955 4,286 3,530 13 22 16 0.33 0.51 0.45
- ---------------------------------------------------------------------------------------------------
Deposits at interest with banks(4) 12,293 14,313 14,003 992 1,070 995 8.07 7.48 7.11
- ---------------------------------------------------------------------------------------------------
Investments
In U.S. offices
Taxable 63,351 59,254 57,661 4,130 3,731 3,828 6.52 6.30 6.64
Exempt from U.S. income tax 13,858 13,059 8,613 996 946 724 7.19 7.24 8.41
In offices outside the U.S.(4) 28,087 24,628 20,729 2,902 2,441 1,661 10.33 9.91 8.01
- ---------------------------------------------------------------------------------------------------
Total 105,296 96,941 87,003 8,028 7,118 6,213 7.62 7.34 7.14
- ---------------------------------------------------------------------------------------------------
Federal funds sold and securities borrowed
or purchased under agreements to resell
In U.S. offices 82,778 78,096 76,034 6,120 6,087 5,326 7.39 7.79 7.00
In offices outside the U.S.(4) 32,635 57,122 51,074 1,549 2,511 2,527 4.75 4.40 4.95
- ---------------------------------------------------------------------------------------------------
Total 115,413 135,218 127,108 7,669 8,598 7,853 6.64 6.36 6.18
- ---------------------------------------------------------------------------------------------------
Brokerage receivables
In U.S. offices 17,464 14,307 7,643 1,212 1,087 857 6.94 7.60 11.21
In offices outside the U.S.(4) 4,504 8,742 5,934 188 200 73 4.17 2.29 1.23
- ---------------------------------------------------------------------------------------------------
Total 21,968 23,049 13,577 1,400 1,287 930 6.37 5.58 6.85
- ---------------------------------------------------------------------------------------------------
Trading account assets(5)(6)
In U.S. offices 59,062 71,307 75,916 2,245 3,171 2,899 3.80 4.45 3.82
In offices outside the U.S.(4) 32,032 59,211 71,539 989 1,624 2,160 3.09 2.74 3.02
- ---------------------------------------------------------------------------------------------------
Total 91,094 130,518 147,455 3,234 4,795 5,059 3.55 3.67 3.43
- ---------------------------------------------------------------------------------------------------
Loans (net of unearned income)(7)
Consumer loans
In U.S. offices 78,726 71,068 65,652 8,211 7,820 7,250 10.43 11.00 11.04
In offices outside the U.S.(4) 57,341 51,664 51,274 6,377 6,384 6,308 11.12 12.36 12.30
- ---------------------------------------------------------------------------------------------------
Total consumer loans 136,067 122,732 116,926 14,588 14,204 13,558 10.72 11.57 11.60
- ---------------------------------------------------------------------------------------------------
Commercial loans
In U.S. offices
Commercial and industrial 13,474 11,539 10,670 1,141 942 916 8.47 8.16 8.58
Mortgage and real estate 4,238 6,017 6,386 414 616 678 9.77 10.24 10.62
Lease financing 3,087 2,958 3,048 201 189 205 6.51 6.39 6.73
In offices outside the U.S.(4) 71,970 64,639 50,791 6,832 6,981 5,411 9.49 10.80 10.65
- ---------------------------------------------------------------------------------------------------
Total commercial loans 92,769 85,153 70,895 8,588 8,728 7,210 9.26 10.25 10.17
- ---------------------------------------------------------------------------------------------------
Total loans 228,836 207,885 187,821 23,176 22,932 20,768 10.13 11.03 11.06
- ---------------------------------------------------------------------------------------------------
Other interest-earning assets 6,863 6,577 4,338 716 747 511 10.43 11.36 11.78
- ---------------------------------------------------------------------------------------------------
Total interest-earning assets 585,718 618,787 584,835 $45,228 $46,569 $42,345 7.72 7.53 7.24
====================================================
Non-interest-earning assets(5) 111,311 111,755 93,485
- ------------------------------------------------------------------------
Total assets $697,029 $730,542 $678,320
==============================================================================================================================
</TABLE>
(1) The taxable equivalent adjustment is based on the U.S. federal statutory
tax rate of 35%.
(2) Interest rates and amounts include the effects of risk management
activities associated with the respective asset and liability categories.
See Note 22 of Notes to Consolidated Financial Statements.
(3) For certain amounts associated with Travelers, monthly or quarterly
averages have been used as daily averages are unavailable.
(4) Average rates reflect prevailing local interest rates including
inflationary effects and monetary correction in certain countries.
(5) The fair value carrying amounts of derivative and foreign exchange
contracts are reported in non-interest earning assets and other
non-interest bearing liabilities.
(6) Interest expense on trading account liabilities of Salomon Smith Barney is
reported as a reduction of interest revenue.
(7) Includes cash-basis loans.
80
<PAGE>
Average Balances and Interest Rates, Taxable Equivalent Basis(1)(2)(3)
<TABLE>
<CAPTION>
Average Volume Interest Expense % Average Rate
---------------------------- ------------------------- ----------------------
In Millions of Dollars 1999 1998 1997 1999 1998 1997 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Liabilities
Deposits
In U.S. offices
Savings deposits(7) $ 33,422 $ 31,179 $ 27,149 $ 928 $ 919 $ 811 2.78 2.95 2.99
Other time deposits 11,566 10,997 12,302 265 498 610 2.29 4.53 4.96
In offices outside the U.S.(4) 169,138 149,982 128,546 9,519 10,229 8,192 5.63 6.82 6.37
- ------------------------------------------------------------------------------------------------------
Total 214,126 192,158 167,997 10,712 11,646 9,613 5.00 6.06 5.72
- ------------------------------------------------------------------------------------------------------
Federal funds purchased and securities loaned
or sold under agreements to repurchase
In U.S. offices 79,669 83,094 85,817 6,172 6,612 6,251 7.75 7.96 7.28
In offices outside the U.S.(4) 30,326 51,649 55,321 1,778 2,860 2,969 5.86 5.54 5.37
- ------------------------------------------------------------------------------------------------------
Total 109,995 134,743 141,138 7,950 9,472 9,220 7.23 7.03 6.53
- ------------------------------------------------------------------------------------------------------
Brokerage payables
In U.S. offices 13,421 11,555 6,103 219 264 155 1.63 2.28 2.54
In offices outside the U.S.(4) 3,309 13,454 5,394 3 24 57 0.09 0.18 1.06
- ------------------------------------------------------------------------------------------------------
Total 16,730 25,009 11,497 222 288 212 1.33 1.15 1.84
- ------------------------------------------------------------------------------------------------------
Trading account liabilities(5)(6)
In U.S. offices 28,409 34,037 44,881 54 165 147 0.19 0.48 0.33
In offices outside the U.S.(4) 21,754 40,178 42,882 31 112 178 0.14 0.28 0.42
- ------------------------------------------------------------------------------------------------------
Total 50,163 74,215 87,763 85 277 325 0.17 0.37 0.37
- ------------------------------------------------------------------------------------------------------
Investment banking and brokerage borrowings
In U.S. offices 11,656 13,554 8,259 663 587 543 5.69 4.33 6.57
In offices outside the U.S.(4) 593 1,773 3,369 86 151 104 14.50 8.52 3.09
- ------------------------------------------------------------------------------------------------------
Total 12,249 15,327 11,628 749 738 647 6.11 4.82 5.56
- ------------------------------------------------------------------------------------------------------
Short-term borrowings
In U.S. offices 9,449 9,641 7,663 542 669 578 5.74 6.94 7.54
In offices outside the U.S.(4) 6,782 5,948 5,101 1,104 951 713 16.28 15.99 13.98
- ------------------------------------------------------------------------------------------------------
Total 16,231 15,589 12,764 1,646 1,620 1,291 10.14 10.39 10.11
- ------------------------------------------------------------------------------------------------------
Long-term debt
In U.S. offices 43,932 44,440 41,394 2,545 2,812 2,568 5.79 6.33 6.20
In offices outside the U.S.(4) 4,480 3,528 4,448 491 347 412 10.96 9.84 9.26
- ------------------------------------------------------------------------------------------------------
Total 48,412 47,968 45,842 3,036 3,159 2,980 6.27 6.59 6.50
- ------------------------------------------------------------------------------------------------------
Mandatorily redeemable securities of
subsidiary trusts 4,920 3,687 2,958 368 295 236 7.48 8.00 7.98
- ------------------------------------------------------------------------------------------------------===========================
Demand deposits in U.S. offices 10,761 10,747 11,166
Other non-interest-bearing liabilities(5) 168,036 168,088 145,185
Redeemable preferred stock 105 246 403
Total stockholders' equity 45,301 42,765 39,979
- ------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $697,029 $730,542 $678,320 $24,768 $27,495 $24,524
=================================================================================================================================
NET INTEREST REVENUE AS A PERCENTAGE OF AVERAGE INTEREST-EARNING ASSETS
In U.S. offices(8) $345,829 $337,168 $318,353 $12,596 $11,730 $10,675 3.64 3.48 3.35
In offices outside the U.S.(8) 239,889 281,619 266,482 7,864 7,344 7,146 3.28 2.61 2.68
- ------------------------------------------------------------------------------------------------------
Total $585,718 $618,787 $584,835 $20,460 $19,074 $17,821 3.49 3.08 3.05
=================================================================================================================================
</TABLE>
(1) The taxable equivalent adjustment is based on the U.S. federal statutory
tax rate of 35%.
(2) Interest rates and amounts include the effects of risk management
activities associated with the respective asset and liability categories.
See Note 22 of Notes to Consolidated Financial Statements.
(3) For certain amounts associated with Travelers, monthly or quarterly
averages have been used as daily averages are unavailable.
(4) Average rates reflect prevailing local interest rates including
inflationary effects and monetary correction in certain countries.
(5) The fair value carrying amounts of derivative and foreign exchange
contracts are reported in non-interest earning assets and other
non-interest bearing liabilities.
(6) Interest expense on trading account liabilities of Salomon Smith Barney is
reported as a reduction of interest revenue.
(7) Savings deposits consist of Insured Money Market Rate accounts, NOW
accounts, and other savings deposits.
(8) Includes allocations for capital and funding costs based on the location of
the asset.
81
<PAGE>
Analysis of Changes in Net Interest Revenue
<TABLE>
<CAPTION>
1999 vs. 1998 1998 vs. 1997
------------------------------- -------------------------------
Increase (Decrease) Increase (Decrease)
Due to Change In: Due to Change In:
------------------- -------------------
Average Average Net Average Average Net
In Millions of Dollars on a Taxable Equivalent Basis (1) Volume Rate Change(2) Volume Rate Change(2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $ (3) $ (6) $ (9) $ -- $ 6 $ 6
- -----------------------------------------------------------------------------------------------------------------------------
Deposits at interest with banks(3) (159) 81 (78) 22 53 75
- -----------------------------------------------------------------------------------------------------------------------------
Investments
In U.S. offices 323 126 449 400 (275) 125
In offices outside the U.S.(3) 354 107 461 345 435 780
- -----------------------------------------------------------------------------------------------------------------------------
Total 677 233 910 745 160 905
- -----------------------------------------------------------------------------------------------------------------------------
Federal funds sold and securities borrowed or
purchased under agreements to resell
In U.S. offices 355 (322) 33 148 613 761
In offices outside the U.S.(3) (1,149) 187 (962) 282 (298) (16)
- -----------------------------------------------------------------------------------------------------------------------------
Total (794) (135) (929) 430 315 745
- -----------------------------------------------------------------------------------------------------------------------------
Brokerage receivables
In U.S. offices 225 (100) 125 571 (341) 230
In offices outside the U.S.(3) (127) 115 (12) 45 82 127
- -----------------------------------------------------------------------------------------------------------------------------
Total 98 15 113 616 (259) 357
- -----------------------------------------------------------------------------------------------------------------------------
Trading account assets(4)
In U.S. offices (502) (424) (926) (184) 456 272
In offices outside the U.S.(3) (819) 184 (635) (350) (186) (536)
- -----------------------------------------------------------------------------------------------------------------------------
Total (1,321) (240) (1,561) (534) 270 (264)
- -----------------------------------------------------------------------------------------------------------------------------
Loans--consumer
In U.S. offices 813 (422) 391 596 (26) 570
In offices outside the U.S.(3) 665 (672) (7) 48 28 76
- -----------------------------------------------------------------------------------------------------------------------------
Total 1,478 (1,094) 384 644 2 646
- -----------------------------------------------------------------------------------------------------------------------------
Loans--commercial
In U.S. offices 24 (15) 9 36 (88) (52)
In offices outside the U.S.(3) 746 (895) (149) 1,495 75 1,570
- -----------------------------------------------------------------------------------------------------------------------------
Total 770 (910) (140) 1,531 (13) 1,518
- -----------------------------------------------------------------------------------------------------------------------------
Total loans 2,248 (2,004) 244 2,175 (11) 2,164
- -----------------------------------------------------------------------------------------------------------------------------
Other interest-earning assets 32 (63) (31) 255 (19) 236
- -----------------------------------------------------------------------------------------------------------------------------
Total interest revenue 778 (2,119) (1,341) 3,709 515 4,224
=============================================================================================================================
Deposits
In U.S. offices 90 (314) (224) 95 (99) (4)
In offices outside the U.S.(3) 1,210 (1,920) (710) 1,433 604 2,037
- -----------------------------------------------------------------------------------------------------------------------------
Total 1,300 (2,234) (934) 1,528 505 2,033
- -----------------------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities loaned or
sold under agreements to repurchase
In U.S. offices (268) (172) (440) (203) 564 361
In offices outside the U.S.(3) (1,242) 160 (1,082) (201) 92 (109)
- -----------------------------------------------------------------------------------------------------------------------------
Total (1,510) (12) (1,522) (404) 656 252
- -----------------------------------------------------------------------------------------------------------------------------
Brokerage payables
In U.S. offices 39 (84) (45) 126 (17) 109
In offices outside the U.S.(3) (13) (8) (21) 40 (73) (33)
- -----------------------------------------------------------------------------------------------------------------------------
Total 26 (92) (66) 166 (90) 76
- -----------------------------------------------------------------------------------------------------------------------------
Trading account liabilities(4)
In U.S. offices (24) (87) (111) (41) 59 18
In offices outside the U.S.(3) (39) (42) (81) (11) (55) (66)
- -----------------------------------------------------------------------------------------------------------------------------
Total (63) (129) (192) (52) 4 (48)
- -----------------------------------------------------------------------------------------------------------------------------
Investment banking and brokerage borrowings
In U.S. offices (90) 166 76 271 (227) 44
In offices outside the U.S.(3) (135) 70 (65) (68) 115 47
- -----------------------------------------------------------------------------------------------------------------------------
Total (225) 236 11 203 (112) 91
- -----------------------------------------------------------------------------------------------------------------------------
Short-term borrowings
In U.S. offices (13) (114) (127) 140 (49) 91
In offices outside the U.S.(3) 135 18 153 127 111 238
- -----------------------------------------------------------------------------------------------------------------------------
Total 122 (96) 26 267 62 329
- -----------------------------------------------------------------------------------------------------------------------------
Long-term debt
In U.S. offices (32) (235) (267) 192 52 244
In offices outside the U.S.(3) 102 42 144 (89) 24 (65)
- -----------------------------------------------------------------------------------------------------------------------------
Total 70 (193) (123) 103 76 179
- -----------------------------------------------------------------------------------------------------------------------------
Mandatorily redeemable securities of subsidiary trusts 93 (20) 73 58 1 59
- -----------------------------------------------------------------------------------------------------------------------------
Total interest expense (187) (2,540) (2,727) 1,869 1,102 2,971
=============================================================================================================================
Net interest revenue $ 965 $ 421 $ 1,386 $ 1,840 $ (587) $ 1,253
=============================================================================================================================
</TABLE>
(1) The taxable equivalent adjustment is based on the U.S. federal statutory
tax rate of 35%.
(2) Rate/volume variance is allocated based on the percentage relationship of
changes in volume and changes in rate to the total net change.
(3) Changes in average rates reflect changes in prevailing local interest rates
including inflationary effects and monetary correction in certain
countries.
(4) Interest expense on trading account liabilities of Salomon Smith Barney is
reported as a reduction of interest revenue.
82
<PAGE>
Ratios
1999 1998 1997
- --------------------------------------------------------------------------------
Net income to average assets 1.42% 0.79% 0.99%
Return on common stockholders' equity(1) 22.49% 13.95% 17.49%
Return on total stockholders' equity(2) 21.75% 13.52% 16.70%
Total average equity to average assets 6.50% 5.85% 5.89%
Dividends declared per common
share as a percentage of income per
common share, assuming dilution 19.1% 22.8% 14.6%
================================================================================
(1) Based on income less total preferred stock dividends as a percentage of
average common stockholders' equity.
(2) Based on net income less redeemable preferred stock dividends as a
percentage of average total stockholders' equity.
Foregone Interest Revenue on Loans(1)
In U.S In Non-U.S. 1999
In Millions of Dollars Offices Offices Total
- --------------------------------------------------------------------------------
Interest revenue that would have been
accrued at original contractual rates(2) $111 $435 $546
Amount recognized as interest revenue(2) 45 101 146
- --------------------------------------------------------------------------------
Foregone interest revenue $ 66 $334 $400
================================================================================
(1) Relates to commercial cash-basis and renegotiated loans and consumer loans
on which accrual of interest had been suspended.
(2) Interest revenue in offices outside the U.S. may reflect prevailing local
interest rates, including the effects of inflation and monetary correction
in certain countries.
Loan Maturities and Sensitivity to Changes in Interest Rates
<TABLE>
<CAPTION>
Due Over 1
Within 1 but Within Over
In Millions of Dollars at Year-End Year 5 Years 5 Years Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maturities of the gross commercial
loan portfolio
In U.S. offices
Commercial and industrial loans $ 4,636 $ 6,705 $2,356 $13,697
Mortgage and real estate 552 1,156 1,951 3,659
Lease financing 761 1,689 942 3,392
In offices outside the U.S. 53,875 16,975 4,120 74,970
- ---------------------------------------------------------------------------------------------
Total commercial loan portfolio $59,824 $26,525 $9,369 $95,718
=============================================================================================
Sensitivity of loans due after one
year to changes in interest rates(1)
Loans at predetermined interest rates $ 6,356 $3,943
Loans at floating or adjustable interest rates 20,169 5,426
- ---------------------------------------------------------------------------------------------
Total $26,525 $9,369
=============================================================================================
</TABLE>
(1) Based on contractual terms. Repricing characteristics may effectively be
modified from time to time using derivative contracts. See Notes 22 and 24
of Notes to Consolidated Financial Statements.
Loans Outstanding
<TABLE>
<CAPTION>
In Millions of Dollars at Year-End 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer loans
In U.S. offices
Mortgage and real estate $ 37,261 $ 29,962 $ 28,084 $ 27,173 $ 25,862
Installment, revolving
credit, and other 51,570 47,869 42,415 41,489 37,321
- --------------------------------------------------------------------------------------------------
88,831 77,831 70,499 68,662 63,183
- --------------------------------------------------------------------------------------------------
In offices outside the U.S.
Mortgage and real estate 21,529 19,456 17,685 18,379 18,240
Installment, revolving
credit, and other 39,306 36,048 32,179 33,905 32,521
Lease financing 475 484 544 754 765
- --------------------------------------------------------------------------------------------------
61,310 55,988 50,408 53,038 51,526
- --------------------------------------------------------------------------------------------------
150,141 133,819 120,907 121,700 114,709
Unearned income (1,426) (1,564) (1,417) (1,532) (1,606)
- --------------------------------------------------------------------------------------------------
Consumer loans--net 148,715 132,255 119,490 120,168 113,103
- --------------------------------------------------------------------------------------------------
Commercial loans
In U.S. offices
Commercial and industrial 13,697 12,452 11,212 9,493 9,620
Mortgage and real estate 3,659 5,344 5,960 6,789 8,729
Lease financing 3,392 2,951 3,087 3,017 3,239
- --------------------------------------------------------------------------------------------------
20,748 20,747 20,259 19,299 21,588
- --------------------------------------------------------------------------------------------------
In offices outside the U.S.
Commercial and industrial 60,652 55,828 47,417 36,901 32,966
Mortgage and real estate 1,728 1,792 1,651 1,815 1,901
Loans to financial
institutions 7,692 8,008 6,480 4,837 4,229
Governments and official
institutions 3,250 2,132 2,376 2,252 2,180
Lease financing 1,648 1,386 1,092 1,294 1,098
- --------------------------------------------------------------------------------------------------
74,970 69,146 59,016 47,099 42,374
- --------------------------------------------------------------------------------------------------
95,718 89,893 79,275 66,398 63,962
Unearned income (227) (190) (159) (110) (169)
- --------------------------------------------------------------------------------------------------
Commercial loans--net 95,491 89,703 79,116 66,288 63,793
- --------------------------------------------------------------------------------------------------
Total loans--net of
unearned income 244,206 221,958 198,606 186,456 176,896
Allowance for credit
losses (6,679) (6,617) (6,137) (5,743) (5,561)
- --------------------------------------------------------------------------------------------------
Total loans--net of
unearned income
and allowance for
credit losses $ 237,527 $ 215,341 $ 192,469 $ 180,713 $ 171,335
==================================================================================================
</TABLE>
83
<PAGE>
Cash-Basis, Renegotiated, and Past Due Loans
In Millions of Dollars at Year-End 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
Commercial
cash-basis loans
Collateral dependent
(at lower of cost or
collateral value)(1) $ 241 $ 394 $ 258 $ 263 $ 779
Other 1,162 1,201 806 642 755
- --------------------------------------------------------------------------------
Total $1,403 $1,595 $1,064 $ 905 $1,534
================================================================================
Commercial
cash-basis loans
In U.S. offices $ 256 $ 463 $ 296 $ 292 $ 925
In offices outside the U.S. 1,147 1,132 768 613 609
- --------------------------------------------------------------------------------
Total $1,403 $1,595 $1,064 $ 905 $1,534
================================================================================
Commercial
renegotiated loans
In U.S. offices $ 16 $ -- $ 20 $ 264 $ 309
In offices outside the U.S. 43 45 39 57 112
- --------------------------------------------------------------------------------
Total $ 59 $ 45 $ 59 $ 321 $ 421
================================================================================
Consumer loans on which
accrual of interest had
been suspended
In U.S. offices(2) $ 724 $ 825 $1,009 $1,184 $1,466
In offices outside the U.S. 1,506 1,458 993 1,071 1,247
- --------------------------------------------------------------------------------
Total $2,230 $2,283 $2,002 $2,255 $2,713
================================================================================
Accruing loans 90 or more
days delinquent(3)
In U.S. offices(2) $ 732 $ 592 $ 633 $ 696 $ 499
In offices outside the U.S. 452 532 467 422 498
- --------------------------------------------------------------------------------
Total $1,184 $1,124 $1,100 $1,118 $ 997
================================================================================
(1) A cash-basis loan is defined as collateral dependent when repayment is
expected to be provided solely by the underlying collateral and there are
no other available and reliable sources of repayment, in which case the
loans are written down to the lower of cost or collateral value.
(2) Includes $12 million, $10 million, and $11 million of consumer loans on
which accrual of interest had been suspended and $22 million, $30 million,
and $27 million of accruing loans 90 or more days delinquent related to
loans held for sale at December 31, 1999, 1998 and 1997, respectively.
(3) Substantially all consumer loans of which $379 million, $267 million, $240
million, $239 million, and $208 million are government-guaranteed student
loans at December 31, 1999, 1998, 1997, 1996, and 1995, respectively.
Other Real Estate Owned and Assets
Pending Disposition
In Millions of Dollars at Year-End 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
Consumer(1) $204 $254 $275 $ 459 $ 535
Commercial(1) 486 488 690 1,303 941
Corporate/Other 14 8 8 6 5
- --------------------------------------------------------------------------------
Total $704 $750 $973 $1,768 $1,481
================================================================================
Assets pending disposition(2) $ 86 $100 $ 96 $ 160 $ 205
================================================================================
(1) Represents repossessed real estate, carried at lower of cost or collateral
value.
(2) Represents consumer residential mortgage loans that have a high
probability of foreclosure, carried at lower of cost or collateral value.
Details of Credit Loss Experience
<TABLE>
<CAPTION>
In Millions of Dollars 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for credit losses
at beginning of year $6,617 $6,137 $ 5,743 $ 5,561 $ 5,337
- -----------------------------------------------------------------------------------
Provision for credit losses
Consumer 2,489 2,367 2,225 2,207 1,935
Commercial 348 384 (28) (7) 241
- -----------------------------------------------------------------------------------
2,837 2,751 2,197 2,200 2,176
- -----------------------------------------------------------------------------------
Gross credit losses
Consumer(1)
In U.S. offices 1,680 1,726 1,736 1,562 1,347
In offices outside the U.S. 1,270 1,009 868 876 825
Commercial
Mortgage and real estate
In U.S. offices -- 13 21 27 118
In offices outside the U.S. 10 58 47 32 25
Governments and official
institutions outside the U.S. -- 3 -- -- 37
Loans to financial institutions
in offices outside the U.S. 11 97 7 12 11
Commercial and industrial
In U.S. offices 37 62 7 29 40
In offices outside the U.S. 466 343 109 159 137
- -----------------------------------------------------------------------------------
3,474 3,311 2,795 2,697 2,540
- -----------------------------------------------------------------------------------
Credit recoveries
Consumer(1)
In U.S. offices 245 235 273 257 260
In offices outside the U.S. 294 262 234 216 187
Commercial
Mortgage and real estate
In U.S. offices 12 83 47 88 26
In offices outside the U.S. 2 10 7 8 21
Governments and official
institutions outside the U.S. -- 10 36 81 52
Loans to financial institutions
in offices outside the U.S. 5 16 17 1 1
Commercial and industrial
In U.S. offices 5 21 58 44 80
In offices outside the U.S. 93 30 54 44 46
- -----------------------------------------------------------------------------------
656 667 726 739 673
- -----------------------------------------------------------------------------------
Net credit losses
In U.S. offices 1,455 1,462 1,386 1,229 1,139
In offices outside the U.S. 1,363 1,182 683 729 728
- -----------------------------------------------------------------------------------
2,818 2,644 2,069 1,958 1,867
- -----------------------------------------------------------------------------------
Other--net(2) 43 373 266 (60) (85)
- -----------------------------------------------------------------------------------
Allowance for credit losses
at end of year $6,679 $6,617 $ 6,137 $ 5,743 $ 5,561
===================================================================================
Net consumer credit losses $2,411 $2,238 $ 2,097 $ 1,965 $ 1,725
As a percentage of average
consumer loans 1.77 1.82 1.79 1.74 1.61
===================================================================================
Net commercial credit
losses (recoveries) $ 407 $ 406 $ (28) $ (7) $ 142
As a percentage of average
commercial loans 0.44 0.48 NM NM 0.23
===================================================================================
</TABLE>
(1) Consumer credit losses and recoveries primarily relate to revolving credit
and installment loans.
(2) In 1999, primarily includes the addition of allowance for credit losses
related to acquisitions and foreign currency translation effects. In 1998,
reflects the addition of $320 million of credit loss reserves related to
the acquisition of the Universal Card portfolio. In 1997, $373 million was
restored to the allowance for credit losses that had previously been
attributed to credit card securitization transactions where the exposure to
credit losses was contractually limited to the cash flows from the
securitized receivables, $50 million attributable to standby letters of
credit and guarantees was reclassified to other liabilities, and $50
million attributable to derivative and foreign exchange contracts was
reclassified as a deduction from trading account assets.
NM Not meaningful.
84
<PAGE>
Average Deposit Liabilities in Offices Outside the U.S.(1)
<TABLE>
<CAPTION>
1999 1998 1997
------------------------- ------------------------- -------------------------
Average Average Average Average Average Average
In Millions of Dollars at Year-End Balance Interest Rate Balance Interest Rate Balance Interest Rate
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Banks(2) $ 21,993 7.10% $ 18,559 8.46% $ 15,326 7.33%
Other demand deposits 38,798 3.14 33,466 3.49 31,833 2.99
Other time and savings deposits(2) 119,581 5.64 107,999 6.94 90,610 6.75
- ------------------------------------------------------------------------------------------------------------------------------
Total $180,372 5.28 $160,024 6.39 $137,769 5.95
==============================================================================================================================
</TABLE>
(1) Interest rates and amounts include the effects of risk management
activities, and also reflect the impact of the local interest rates
prevailing in certain countries. See Note 22 of Notes to Consolidated
Financial Statements.
(2) Primarily consists of time certificates of deposit and other time deposits
in denominations of $100,000 or more.
Maturity Profile of Time Deposits ($100,000 or more)
in U.S. Offices
In Millions of Dollars Under 3 Over 3 to 6 Over 6 to 12 Over 12
at Year-End 1999 Months Months Months Months
- -----------------------------------------------------------------------------
Certificates of deposit $5,289 $451 $640 $596
Other time deposits 620 225 110 82
=============================================================================
Short-Term and Other Borrowings(1)
<TABLE>
<CAPTION>
Federal Funds Purchased
and Securities Sold Under
Agreements to Repurchase Commercial Paper Other Funds Borrowed(2)
-------------------------------- -------------------------- ----------------------------
In Millions of Dollars 1999 1998 1997 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amounts outstanding
at year-end $ 92,591 $ 81,025 $132,103 $5,027 $4,031 $5,920 $12,059 $12,081 $8,108
Average outstanding
during the year 109,995 134,743 141,138 4,730 6,010 4,366 11,501 9,579 8,398
Maximum month-end
outstanding 129,112 163,421 170,110 6,375 9,393 6,090 16,405 12,081 9,949
- -------------------------------------------------------------------------------------------------------------------------------
Weighted-average interest rate
During the year(3) 7.23% 7.03% 6.53% 5.35% 5.57% 5.57% 12.11% 13.26% 12.47%
At year-end(4) 4.34% 4.94% 5.92% 6.12% 5.36% 5.71% 8.28% 12.14% 9.04%
===============================================================================================================================
<CAPTION>
Investment Banking and
Brokerage Borrowings
-----------------------------
In Millions of Dollars 1999 1998 1997
- ------------------------------------------------------------
<S> <C> <C> <C>
Amounts outstanding
at year-end $13,719 $14,040 $11,464
Average outstanding
during the year 12,249 15,327 11,628
Maximum month-end
outstanding 14,048 20,576 13,174
- ------------------------------------------------------------
Weighted-average interest rate
During the year(3) 6.11% 4.82% 5.56%
At year-end(4) 6.00% 4.59% 5.80%
============================================================
</TABLE>
(1) Original maturities of less than one year.
(2) Rates reflect the impact of local interest rates prevailing in countries
outside the United States.
(3) Interest rates include the effects of risk management activities. See Notes
11 and 22 of Notes to Consolidated Financial Statements.
(4) Based on contractual rates at year-end.
85
<PAGE>
Cross-Marketing
Citigroup has a number of distribution channels for the sale of the various
companies' products. Those distribution channels range from Travelers Property
Casualty agents to the Citibank branches; Citibank credit card representatives
to Primerica Financial Services (PFS) agents; and Salomon Smith Barney Financial
Consultants (SSB FCs) to CitiFinancial branches. The current cross-marketing
efforts include:
o PFS agents are marketing Salomon Smith Barney mutual funds, CitiFinancial
personal loans and Travelers Bank & Trust, fsb real-estate secured loans
($.A.F.E.(R) loans and $.M.A.R.T. loans(R)), and Travelers Life & Annuity
variable annuities.
o Investment employees at Citibank branches are marketing Travelers Life &
Annuity variable annuities and SSB Citi Asset Management Group mutual
funds.
o SSB FCs are marketing Travelers Life & Annuity annuities, Citibank mortgage
loans, including loans using SSB equities as the down payment, and SSB Citi
Asset Management Group mutual funds.
o The call centers for Citibank's credit card operation refer cardholders to
Travelers Property Casualty for auto and homeowners insurance, to
CitiFinancial for debt consolidation loans, and to Travelers Bank & Trust,
fsb for real-estate secured loans.
o Insurance agents representing Travelers Property Casualty refer customers
interested in student loans, credit cards, mortgage loans, commercial
leasing, and small business loans to Citibank.
o Salomon Smith Barney institutional sales representatives and Citibank
corporate relationship managers jointly market their transaction services,
asset management, lending and liquidity, trading, and underwriting
capabilities.
Property-Casualty Insurance Services-
Other Information
Selected Product Information
The following table sets forth by product line net written premiums for
Commercial Lines and Personal Lines for the year ended 1999. Many larger
National Accounts customers often demand service-type products, primarily for
workers' compensation coverage and to a lesser extent general liability and
commercial automobile coverages. These types of products include risk management
services such as claims settlement, loss control and engineering. Many of these
products generate fee income rather than net written premiums, and are not
reflected in the following table.
1999 Net Written Premiums
Amount of Percentage of
Net Written Total Net Written
In Millions of Dollars Premiums Premiums
- --------------------------------------------------------------------------------
Product Line
Commercial Lines
Commercial multi-peril $1,469 33.3%
Workers' compensation 1,078 24.4
Commercial automobile 724 16.4
Property 507 11.5
General liability 422 9.6
Fidelity, surety, and other 208 4.8
- -------------------------------------------------------------------------------
Total Commercial Lines $4,408 100.0%
- -------------------------------------------------------------------------------
Personal Lines
Automobile $2,369 62.3%
Homeowners and other 1,436 37.7
- -------------------------------------------------------------------------------
Total Personal Lines $3,805 100.0%
===============================================================================
Property and Casualty Reserves
Property and casualty claim reserves are established to account for the
estimated ultimate costs of claims and claim adjustment expenses for claims that
have been reported but not yet settled and claims that have been incurred but
not reported. The Company establishes reserves by line of business, coverage and
year.
The following table sets forth the year-end reserves from 1989 through
1999, and the subsequent changes in those reserves, presented on a historical
basis for the Company. The original estimates, cumulative amounts paid, and
reestimated reserves in the table for the years 1989-1995 have not been restated
to include the property-casualty insurance businesses acquired by the Company
from Aetna Services, Inc. in 1996 (Aetna P&C). Beginning in 1996, the table
includes the reserve activity of Aetna P&C. The data in the table is presented
in accordance with reporting requirements of the Securities and Exchange
Commission. Care must be taken to avoid misinterpretation by those unfamiliar
with such information or familiar with other data commonly reported by the
insurance industry. The following data is not accident year data, but rather a
display of 1989-1999 year-end reserves and the subsequent changes in those
reserves. For instance, the "cumulative deficiency or redundancy" shown in the
following table for each year represents the aggregate amount by which original
estimates of reserves as of that year-end have changed in subsequent years.
Accordingly, the cumulative deficiency for a year relates only to reserves at
that year-end and such amounts are not additive. Expressed another way, if the
original reserves at the end of 1989 included $4 million for a loss that is
finally settled in 1999 for $5 million, the $1 million deficiency (the excess of
the actual settlement of $5 million over the original estimate of $4 million)
would be included in the cumulative deficiencies in each of the years 1989-1998
shown in the following table.
Certain factors may distort the reestimated reserves and cumulative
deficiency or redundancy shown in the following table. For example, a
substantial portion of the cumulative deficiencies in each of the years
1989-1999 arises from claims on policies written prior to the mid-1970s
involving liability exposures such as environmental, asbestos, and other
cumulative injury claims. In the post-1984 period, the Company
86
<PAGE>
developed more stringent underwriting standards and policy exclusions and
significantly contracted or terminated the writing of such risks. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Environmental Claims, Asbestos Claims and Cumulative Injury Other
than Asbestos Claims." General conditions and trends that have affected the
development of these liabilities in the past will not necessarily recur in the
future.
Other factors that affect the data in the following table include the
discounting of workers' compensation reserves and the use of retrospectively
rated insurance policies. To the extent permitted under applicable accounting
practices, workers' compensation reserves are discounted to reflect the time
value of money, due to the relatively long time period over which these claims
are to be paid. Apparent deficiencies will continue to occur as the discount on
these workers' compensation reserves is accreted at the appropriate interest
rates. Also, a portion of National Accounts business is underwritten with
retrospectively rated insurance policies in which the ultimate loss experience
is primarily borne by the insured. For this business, increases in loss
experience result in an increase in reserves, and an offsetting increase in
amounts recoverable from insureds. Likewise, decreases in loss experience result
in a decrease in reserves, and an offsetting decrease in amounts recoverable
from these insureds. The amounts recoverable on these retrospectively rated
policies mitigate the impact of the cumulative deficiencies or redundancies but
are not reflected in the following table.
Because of these and other factors, it is difficult to develop a meaningful
extrapolation of estimated future redundancies or deficiencies in loss reserves
from the data in the following table. The differences between the reserves for
claims and claim adjustment expenses shown in the following table, which is
prepared in accordance with GAAP, and those reported in the annual statements of
the Company's subsidiaries filed with state insurance departments, which are
prepared in accordance with statutory accounting practices, were: $38 million,
$37 million and $31 million for the years 1999, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------
In Millions of Dollars 1989(1) 1990(1) 1991(1) 1992(1) 1993(1) 1994(1) 1995(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Reserves for Loss and Loss Adjustment
Expense Originally Estimated $ 8,947 $ 9,239 $ 9,406 $ 9,873 $10,190 $ 10,251 $ 10,102
Cumulative amounts paid as of
One year later 2,430 2,419 2,135 2,206 1,900 1,852 1,521
Two years later 3,992 3,932 3,584 3,554 3,221 2,888 2,809
Three years later 5,095 4,993 4,594 4,561 3,988 4,055 3,903
Four years later 5,878 5,755 5,375 5,160 4,941 4,933 4,761
Five years later 6,479 6,351 5,851 5,963 5,652 5,645
Six years later 6,966 6,746 6,547 6,576 6,260
Seven years later 7,304 7,325 7,090 7,116
Eight years later 7,822 7,812 7,582
Nine years later 8,258 8,267
Ten years later 8,678
Reserves reestimated as of
One year later 9,099 9,358 9,446 10,013 10,151 9,942 9,848
Two years later 9,220 9,470 9,755 10,112 10,116 9,766 9,785
Three years later 9,408 9,897 10,038 10,142 9,990 9,851 9,789
Four years later 9,953 10,325 10,154 10,148 10,153 9,883 9,735
Five years later 10,421 10,478 10,251 10,364 10,180 9,919
Six years later 10,616 10,614 10,495 10,399 10,231
Seven years later 10,755 10,870 10,524 10,467
Eight years later 11,019 10,905 10,605
Nine years later 11,043 10,988
Ten years later 11,133
- --------------------------------------------------------------------------------------------------------------------------------
Cumulative deficiency (redundancy) $ 2,186 $ 1,749 $ 1,199 $ 594 $ 41 $ (332) $ (367)
================================================================================================================================
Gross liability--end of year $13,805 $ 13,872 $ 14,715
Reinsurance recoverables 3,615 3,621 4,613
- --------------------------------------------------------------------------------------------------------------------------------
Net liability--end of year $10,190 $ 10,251 $ 10,102
================================================================================================================================
Gross reestimated liability--latest $14,026 $ 13,972 $ 14,357
Reestimated reinsurance recoverables--latest 3,795 4,053 4,622
- --------------------------------------------------------------------------------------------------------------------------------
Net reestimated liability--latest $10,231 $ 9,919 $ 9,735
================================================================================================================================
Gross cumulative deficiency (redundancy) $ 221 $ 100 $ (358)
================================================================================================================================
<CAPTION>
Year Ended December 31,
-------------------------------------------------
In Millions of Dollars 1996(2) 1997(2) 1998(2) 1999(2)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reserves for Loss and Loss Adjustment
Expense Originally Estimated $ 21,816 $ 21,406 $ 20,763 $19,983
Cumulative amounts paid as of
One year later 3,704 4,025 4,159
Two years later 6,600 6,882
Three years later 8,841
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Ten years later
Reserves reestimated as of
One year later 21,345 21,083 20,521
Two years later 21,160 20,697
Three years later 20,816
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Ten years later
- -----------------------------------------------------------------------------------------------
Cumulative deficiency (redundancy) $ (1,000) $ (709) $ (242)
===============================================================================================
Gross liability--end of year $ 29,967 $ 29,343 $ 28,624 $28,055
Reinsurance recoverables 8,151 7,937 7,861 8,072
- -----------------------------------------------------------------------------------------------
Net liability--end of year $ 21,816 $ 21,406 $ 20,763 $19,983
===============================================================================================
Gross reestimated liability--latest $ 29,065 $ 28,685 $ 28,503
Reestimated reinsurance recoverables--latest 8,249 7,988 7,982
- -----------------------------------------------------------------------------------------------
Net reestimated liability--latest $ 20,816 $ 20,697 $ 20,521
===============================================================================================
Gross cumulative deficiency (redundancy) $ (902) $ (658) $ (121)
===============================================================================================
</TABLE>
(1) Reflects reserves of Travelers P&C, excluding Aetna P&C reserves which were
acquired on April 2, 1996. Accordingly, the reserve development (net
reserves for loss and loss adjustment expense recorded at the end of the
year, as originally estimated, less net reserves reestimated as of
subsequent years) relates only to losses recorded by Travelers P&C and does
not include reserve development recorded by Aetna P&C.
(2) Includes Aetna P&C gross reserves of $16,775 million and net reserves of
$11,752 million acquired on April 2, 1996 and subsequent development
recorded by Aetna P&C.
87
<PAGE>
Property and Casualty Reinsurance
TAP reinsures a portion of the risks it underwrites in order to control its
exposure to losses, stabilize earnings, and protect capital resources. TAP cedes
to reinsurers a portion of these risks and pays premiums based upon the risk and
exposure of the policies subject to such reinsurance. Reinsurance involves
credit risk and is generally subject to aggregate loss limits. Although the
reinsurer is liable to TAP to the extent of the reinsurance ceded, TAP remains
primarily liable as the direct insurer on all risks reinsured. TAP also holds
collateral, including escrow funds and letters of credit, under certain
reinsurance agreements. TAP monitors the financial condition of reinsurers on an
ongoing basis, and reviews its reinsurance arrangements periodically. Reinsurers
are selected based on their financial condition, business practices, and the
price of their product offerings. For additional information concerning
reinsurance, see Note 13 of Notes to Consolidated Financial Statements.
TAP utilizes a variety of reinsurance agreements to control its exposure to
large property and casualty losses.
Net Retention Policy. The descriptions below relate to reinsurance arrangements
of TAP in effect at January 1, 2000. For third-party liability, including
automobile no-fault, the reinsurance agreements used by Commercial Accounts,
Construction, and Select Accounts limit the net retention to a maximum of $4
million per insured, per occurrence with a $5 million annual aggregate
deductible. Gulf Insurance Company, a wholly-owned subsidiary, in its specialty
lines of business utilizes various reinsurance mechanisms and has limited its
net retention to a maximum of $3.75 million per risk for any line of business.
For commercial property insurance, there is a $5 million maximum retention per
risk with 100% reinsurance coverage for risks with higher limits. The
reinsurance agreement in place for workers' compensation policies written by
Commercial Accounts, Construction, National Accounts, Select Accounts, and some
segments of Alternative Markets and Gulf Specialty covers 100% of each loss
between $1 million and $10 million. For National Accounts, reinsurance
arrangements are typically tiered, or layered, such that only levels of risk
acceptable to TAP are retained. Personal Lines retains the first $5 million of
umbrella policies and purchases facultative reinsurance for limits over $5
million. For personal property insurance, there is a $6 million maximum
retention per risk. For directors' and officers' liability, employment practices
liability and blended insurance, Bond Specialty retains up to $5 million per
risk. For surety protection, Bond Specialty has reinsurance coverage for 95% of
up to $50 million of liability in excess of $50 million of liability. The risk
tolerance of Bond Specialty varies by line of business and by risk. Bond
Specialty purchases an accident year aggregate cover attaching at a 40% loss
ratio to lower its exposure to large losses or loss frequency. The first layer
of the aggregate provides 96% of approximately $40 million and the second layer
provides 80% of approximately $35 million of reinsurance coverage in excess of a
$92 million retention.
Catastrophe Reinsurance. TAP utilizes reinsurance agreements with nonaffiliated
reinsurers to control its exposure to losses resulting from one occurrence. For
the accumulation of net property losses arising out of one occurrence,
reinsurance agreements cover 44% of total losses between $250 million and $750
million. For multiple workers' compensation losses arising from a single
occurrence, reinsurance agreements cover 100% of losses between $10 million and
$250 million and, for workers' compensation losses caused by property perils,
reinsurance agreements cover 44% of losses between $250 million and $750
million.
For the accumulation of net casualty losses arising out of one occurrence,
a casualty clash agreement covers 85% of losses between $10 million and $50
million.
Regulation and Supervision
Bank Holding Company Regulation. The Company is a bank holding company within
the meaning of the U.S. Bank Holding Company Act of 1956 (BHC Act) registered
with, and subject to examination by, the Federal Reserve Board (FRB). The
subsidiary depository institutions of the Company (the banking subsidiaries),
including its principal bank subsidiary, Citibank, N.A. (Citibank), are subject
to supervision and examination by their respective federal and state banking
authorities. The nationally chartered subsidiary banks, including Citibank, are
supervised and examined by the Office of the Comptroller of the Currency (OCC);
federal savings association subsidiaries are regulated by the Office of Thrift
Supervision (OTS); and state-chartered depository institutions are supervised by
the banking departments within their respective states (New York, Delaware, and
Utah), as well as the Federal Deposit Insurance Corporation (FDIC). The FDIC
also has back-up enforcement authority with respect to each of the banking
subsidiaries, the deposits of which are insured by the FDIC, up to applicable
limits. The Company also controls (either directly or indirectly) overseas
banks, branches, and agencies. In general, the Company's overseas activities are
regulated by the FRB and OCC, and are also regulated by supervisory authorities
of the host countries.
The Company's banking subsidiaries are also subject to requirements and
restrictions under federal, state, and foreign law, including requirements to
maintain reserves against deposits, restrictions on the types and amounts of
loans that may be made and the interest that may be charged thereon, and
limitations on the types of investments that may be made and the types of
services that may be offered. Various consumer laws and regulations also affect
the operations of the Company's banking subsidiaries.
88
<PAGE>
The activities of U.S. bank holding companies are generally limited to the
business of banking, managing or controlling banks, and other activities that
the FRB determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. In addition, under the
Gramm-Leach-Bliley Act (the GLB Act), which will become effective in most
significant respects on March 11, 2000, bank holding companies, such as the
Company, all of whose controlled depository institutions are "well capitalized"
and "well managed", as defined in Federal Reserve Regulation Y, and which obtain
satisfactory Community Reinvestment Act ratings, will have the ability to
declare themselves to be "financial holding companies" and engage in a broader
spectrum of activities than those generally permitted, including insurance
underwriting and brokerage (including annuities), and underwriting and dealing
securities without a revenue limit and without limits on the amounts of equity
securities it may hold in conducting its underwriting and dealing activities.
The Company anticipates that its declaration to become a financial holding
company will become effective shortly after the effective date of the GLB Act
and that as a result, it will be permitted to continue to operate its insurance
businesses as currently structured and, if it so determines, to expand those
businesses. Financial holding companies that do not continue to meet all of the
requirements for such status will, depending on which requirement they fail to
meet, face not being able to undertake new activities or acquisitions that are
financial in nature, or losing their ability to continue those activities that
are not generally permissible for bank holding companies. Under the BHC Act in
its current form, after two years from the date as of which the Company became a
bank holding company, the Company will be required to conform any activities
that are not considered to be closely related to banking or financial in nature
under the BHC Act. This two-year period may be extended by the FRB for three
additional one-year periods, upon application by the Company and finding by the
FRB that such an extension would not be detrimental to the public interest.
Section 20 of the Glass-Steagall Act, which prohibited a member bank of the
Federal Reserve System, such as Citibank, from being affiliated with a company
that is principally engaged in underwriting and dealing in securities, will be
repealed, effective March 11, 2000, as part of the GLB Act. Accordingly, the
Company will be permitted to operate without regard to revenue limits on
"ineligible" securities activities and to acquire other securities firms without
regard to such limits. The repeal of Section 20 will also permit the Company's
securities subsidiaries to organize, sponsor, distribute, and advise open-end
mutual funds in the United States, as well as outside the United States.
Under the BHC Act, nonbank acquisitions in the U.S. have generally been
limited to 5% of voting shares unless the FRB determines that the acquisition is
so closely related to banking as to be a proper incident to banking or managing
or controlling banks. Under the GLB Act, financial holding companies will be
able to make acquisitions in companies that engage in activities that are
financial in nature, both in the U.S. and outside of the United States. No prior
approval of the FRB will be required for such acquisitions, although it is
possible that the FRB will issue regulations imposing some limitations or
conditions on such acquisitions. In addition, under a new merchant banking
authority added by the GLB Act, financial holding companies will be authorized
to invest in companies that engage in activities that are not financial in
nature, as long as the financial holding company makes its investment with the
intention of limiting the investment in duration, does not manage the company on
a day-to-day basis, and the investee company does not cross-market with any of
the financial holding company's controlled depository institutions. This
authority applies to investments both in the U.S. and outside the United States.
It is possible that regulations interpreting and conditioning this authority may
be promulgated. Bank holding companies will also retain their authority, subject
to prior specific or general FRB consent, to acquire less than 20 percent of the
voting securities of a company that does not do business in the United States,
and 20 percent or more of the voting securities of any such company if the FRB
finds by regulation or order that its activities are usual in connection with
banking or finance outside the United States. In general, bank holding companies
that are not financial holding companies may engage in a broader range of
activities outside the United States than they may engage in inside the United
States, including sponsoring, distributing, and advising open-end mutual funds,
and underwriting and dealing in debt, and to a limited extent, equity
securities, subject to local country laws.
Subject to certain limitations and restrictions, a U.S. bank holding
company, with the prior approval of the FRB, may acquire an out-of-state bank.
Banks in states that do not prohibit out-of-state mergers may merge with the
approval of the appropriate federal bank regulatory agency. A national or state
bank may establish a de novo branch out of state if such branching is expressly
permitted by the other state. A federal savings association is generally
permitted to open a de novo branch in any state.
Outside the U.S., subject to certain requirements for prior FRB consent or
notice, the Company may acquire banks and Citibank may establish branches
subject to local laws and to U.S. laws prohibiting companies from doing business
in certain countries.
The Company's earnings and activities are affected by legislation, by
actions of its regulators, and by local legislative and administrative bodies
and decisions of courts in the foreign and domestic jurisdictions in which the
Company and its subsidiaries conduct business. For example, these include
limitations on the ability of certain subsidiaries to pay dividends to their
intermediate holding companies and on the abilities of those holding companies
to pay dividends to the Company (see Note 17 of Notes to Consolidated Financial
Statements). It is the policy of the FRB that bank holding companies should pay
cash dividends on common stock only out of income available over the past year
and only if prospective earnings retention is consistent with the organization's
expected future needs and financial condition. The policy provides that bank
holding companies should not maintain a level of cash dividends that undermines
the bank holding company's ability to serve as a source of strength to its
banking subsidiaries.
89
<PAGE>
Various federal and state statutory provisions limit the amount of
dividends that subsidiary banks and savings associations can pay to their
holding companies without regulatory approval. In addition to these explicit
limitations, the federal regulatory agencies are authorized to prohibit a
banking subsidiary or bank holding company from engaging in an unsafe or unsound
banking practice. Depending upon the circumstances, the agencies could take the
position that paying a dividend would constitute an unsafe or unsound banking
practice.
Numerous other federal and state laws also affect the Company's earnings
and activities including federal and state consumer protection laws. Legislation
may be enacted or regulation imposed in the U.S. or its political subdivisions,
or in any other jurisdiction in which the Company does business, to further
regulate banking and financial services or to limit finance charges or other
fees or charges earned in such activities. There can be no assurance whether any
such legislation or regulation will place additional limitations on the
Company's operations or adversely affect its earnings.
There are various legal restrictions on the extent to which a bank holding
company and certain of its nonbank subsidiaries can borrow or otherwise obtain
credit from banking subsidiaries or engage in certain other transactions with or
involving those banking subsidiaries. In general, these restrictions require
that any such transactions must be on terms that would ordinarily be offered to
unaffiliated entities and secured by designated amounts of specified collateral.
Transactions between a banking subsidiary and the holding company or any nonbank
subsidiary are limited to 10 percent of the banking subsidiary's capital stock
and surplus, and as to the holding company and all such nonbank subsidiaries in
the aggregate, to 20 percent of the bank's capital stock and surplus.
The Company's right to participate in the distribution of assets of any
subsidiary upon the subsidiary's liquidation or reorganization will be subject
to the prior claims of the subsidiary's creditors. In the event of a liquidation
or other resolution of an insured depository institution, the claims of
depositors and other general or subordinated creditors are entitled to a
priority of payment over the claims of holders of any obligation of the
institution to its stockholders, including any depository institution holding
company (such as the Company) or any stockholder or creditor thereof.
In the liquidation or other resolution of a failed U.S. insured depository
institution, deposits in U.S. offices and certain claims for administrative
expenses and employee compensation are afforded a priority over other general
unsecured claims, including deposits in offices outside the U.S., non-deposit
claims in all offices, and claims of a parent such as the Company. Such priority
creditors would include the FDIC, which succeeds to the position of insured
depositors.
A financial institution insured by the FDIC that is under common control
with a failed or failing FDIC-insured institution can be required to indemnify
the FDIC for losses resulting from the insolvency of the failed institution,
even if this causes the affiliated institution also to become insolvent. Any
obligations or liability owed by a subsidiary depository institution to its
parent company is subordinate to the subsidiary's cross-guarantee liability with
respect to commonly controlled insured depository institutions and to the rights
of depositors.
Under FRB policy, a bank holding company is expected to act as a source of
financial strength to each of its banking subsidiaries and commit resources to
their support. As a result of that policy, the Company may be required to commit
resources to its subsidiary banks in certain circumstances. However, under the
GLB Act, the FRB will not be able to compel a bank holding company to remove
capital from its regulated securities or insurance subsidiaries in order to
commit such resources to its subsidiary banks.
The Company and its U.S. insured depository institution subsidiaries are
subject to risk-based capital and leverage guidelines issued by U.S. regulators
for banks, savings associations, and bank holding companies. The regulatory
agencies are required by law to take specific prompt actions with respect to
institutions that do not meet minimum capital standards and have defined five
capital tiers, the highest of which is "well-capitalized." As of December 31,
1999, the Company's bank and thrift subsidiaries, including Citibank, were "well
capitalized." See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for capital analysis.
A bank is not required to repay a deposit at a branch outside the U.S. if
the branch cannot repay the deposit due to an act of war, civil strife, or
action taken by the government in the host country, unless the bank has
expressly agreed in writing to do so.
The GLB Act included the most extensive consumer privacy provisions ever
enacted by Congress. These provisions, among other things, require full
disclosure of the Company's privacy policy to consumers and mandate offering the
consumer the ability to "opt out" of having non-public customer information
disclosed to third parties. In addition, these provisions require the federal
banking regulators to adopt privacy regulations and permit the states to adopt
more extensive privacy protections through legislation or regulation. There can
be no assurance whether any such legislation or regulation will place additional
limitations on the Company's operations or adversely affect its earnings.
The earnings of the Company, Citibank, and their subsidiaries and
affiliates are affected by general economic conditions and the conduct of
monetary and fiscal policy by the U.S. government and by governments in other
countries in which they do business.
Legislation is from time to time introduced in Congress that may change
banking statutes and the operating environment of the Company and its banking
subsidiaries in substantial and unpredictable ways. The Company cannot determine
whether any such proposed legislation will be enacted, and if enacted, the
ultimate effect that any such potential legislation or implementing regulations
would have upon the financial condition or results of operations of the Company
or its subsidiaries.
90
<PAGE>
Insurance--State Regulation
The Company's insurance subsidiaries are subject to regulation in the various
states and jurisdictions in which they transact business. The regulation,
supervision and administration relate, among other things, to the standards of
solvency that must be met and maintained, the licensing of insurers and their
agents, the lines of insurance in which they may engage, the nature of and
limitations on investments, premium rates, restrictions on the size of risks
that may be insured under a single policy, reserves and provisions for unearned
premiums, losses and other obligations, deposits of securities for the benefit
of policyholders, approval of policy forms and the regulation of market conduct
including the use of credit information in underwriting as well as other
underwriting and claims practices. In addition, many states have enacted
variations of competitive rate-making laws which allow insurers to set certain
premium rates for certain classes of insurance without having to obtain the
prior approval of the state insurance department. State insurance departments
also conduct periodic examinations of the affairs of insurance companies and
require the filing of annual and other reports relating to the financial
condition of companies and other matters.
Although the Company is not regulated as an insurance company, it is the
owner, through various holding company subsidiaries, of the capital stock of its
insurance subsidiaries and as such is subject to state insurance holding company
statutes, as well as certain other laws, of each of the states of domicile of
its insurance subsidiaries. All holding company statutes, as well as certain
other laws, require disclosure and, in some instances, prior approval of
material transactions between an insurance company and an affiliate.
The Company's insurance subsidiaries are subject to various state statutory
and regulatory restrictions in each company's state of domicile, which limit the
amount of dividends or distributions by an insurance company to its
stockholders. See Note 17 of Notes to Consolidated Financial Statements.
The Company's property and casualty insurance subsidiaries are also
required to participate in various involuntary assigned risk pools, principally
involving workers' compensation and automobile insurance, which provide various
insurance coverages to individuals or other entities that otherwise are unable
to purchase such coverage in the voluntary market. Participation in these pools
in most states is generally in proportion to voluntary writings of related lines
of business in that state.
Many state insurance regulatory laws intended primarily for the protection
of policyholders contain provisions that require advance approval by state
agencies of any change in control of an insurance company that is domiciled (or,
in some cases, having such substantial business that it is deemed to be
commercially domiciled) in that state. "Control" is generally presumed to exist
through the ownership of 10% or more of the voting securities of a domestic
insurance company or of any company that controls a domestic insurance company.
In addition, many state insurance regulatory laws contain provisions that
require prenotification to state agencies of a change in control of a
nondomestic admitted insurance company in that state. Such requirements may
deter, delay or prevent certain transactions affecting the control of or the
ownership of the Company's common stock, including transactions that could be
advantageous to the stockholders of the Company.
Securities Regulation
Certain U.S. and non-U.S. subsidiaries are subject to various securities and
commodities regulations and capital adequacy requirements promulgated by the
regulatory and exchange authorities of the jurisdictions in which they operate.
The Company's registered broker-dealer subsidiaries are subject to the
Securities and Exchange Commission's (the SEC) net capital rule, Rule 15c3-1
(the Net Capital Rule), promulgated under the Exchange Act. These companies
compute net capital under the alternative method of the Net Capital Rule, which
requires the maintenance of minimum net capital, as defined. The Net Capital
Rule also limits the ability of broker-dealers to transfer large amounts of
capital to parent companies and other affiliates. Compliance with the Net
Capital Rule could limit those operations of the Company that require the
intensive use of capital, such as underwriting and trading activities and the
financing of customer account balances, and also could restrict Salomon Smith
Barney Holdings Inc's ability to withdraw capital from its broker-dealer
subsidiaries, which in turn could limit Salomon Smith Barney Holdings Inc's
ability to pay dividends and make payments on its debt. See Note 17 of Notes to
Consolidated Financial Statements. Certain of the Company's broker-dealer
subsidiaries are also subject to regulation in the countries outside of the U.S.
in which they do business. Such regulations include requirements to maintain
specified levels of net capital or its equivalent.
The Company is the indirect parent of investment advisers registered and
regulated under the Investment Advisers Act of 1940 who provide investment
advice to investment companies subject to regulation under the Investment
Company Act of 1940. Under these Acts, advisory contracts between the Company's
investment adviser subsidiaries and these investment companies (Affiliated
Funds) would automatically terminate upon an assignment of such contracts by the
investment adviser. Such an assignment would be presumed to have occurred if any
party were to acquire more than 25% of the Company's voting securities. In that
event, consent to the assignment from the shareholders of the Affiliated Funds
involved would be needed for the advisory relationship to continue. In addition,
subsidiaries of the Company and the Affiliated Funds are subject to certain
restrictions in their dealings with each other.
Competition
The Company and its subsidiaries are subject to intense competition in all
aspects of their businesses from both bank and non-bank institutions that
provide financial services and, in some of their activities, from government
agencies.
General Business Factors
In the judgment of the Company, no material part of the business of the Company
and its subsidiaries is dependent upon a single customer or group of customers,
the loss of any one of which would have a materially adverse effect on the
Company, and no one customer or group of affiliated customers accounts for as
much as 10% of the Company's consolidated revenues.
At December 31, 1999, the Company had approximately 108,800 full-time and
6,200 part-time employees in the United States and approximately 65,000
employees outside of the United States.
91
<PAGE>
Properties
The Company's executive offices are located in Citigroup Center, a 59-story
building located at 153 East 53rd Street of which one-third is owned by
Citibank. The Company and certain of its subsidiaries occupy all of such owned
space. Offices and other properties used by the Company's subsidiaries are
located throughout the United States and in various cities outside of the United
States.
The principal offices of Citicorp and Citibank are located at 399 Park
Avenue, New York, New York, a 39-story building of which two-thirds is owned by
Citibank. The Company occupies all of the space it owns in such building.
Citibank owns a building in Long Island City, New York and leases a building
located at 111 Wall Street in New York City, which are totally occupied by the
Company and certain of its subsidiaries.
The Company's property-casualty insurance subsidiaries lease 180 field
offices throughout the United States. The principal offices of TIC, TLAC, and
TAP are located in Hartford, Connecticut. All of such occupied space is owned by
TIC. TAP also rents space from Aetna Services, Inc. at CityPlace, located in
Hartford, Connecticut.
The Company's life insurance subsidiaries lease office space at
approximately 20 locations throughout the United States. TIC and/or The
Travelers Insurance Group Inc. lease two other buildings in Hartford,
Connecticut, most of which is subleased to third parties. TIC also owns a
building in Norcross, Georgia that is occupied by its information systems
department.
Salomon Smith Barney leases two buildings located at 388 and 390 Greenwich
Street in New York City. These leases, which expire in 2003, include a purchase
option with respect to the related properties. The principal offices of Salomon
Smith Barney are located at 388 Greenwich Street, New York, New York.
Other offices and certain warehouse space are owned, none of which is
material to the Company's financial condition or operations.
The Company believes its properties are adequate and suitable for its
business as presently conducted and are adequately maintained. For further
information concerning leases, see Note 25 of Notes to Consolidated Financial
Statements.
Legal Proceedings
In the ordinary course of business, Citigroup and its subsidiaries are
defendants or co-defendants in various litigation matters incidental to and
typical of the businesses in which they are engaged. These include civil
actions, arbitration proceedings and other matters in which the Company's
broker-dealer subsidiaries have been named, arising in the normal course of
business out of activities as a broker and dealer in securities, as an
underwriter of securities, as an investment banker or otherwise. These also
include numerous matters in which the Company's insurance subsidiaries are
named, arising in the normal course of their business. In the opinion of the
Company's management, the ultimate resolution of these legal proceedings would
not be likely to have a material adverse effect on the results of the Company
and its subsidiaries' operations, financial condition, or liquidity.
Executive Officers
The following information with respect to each executive officer of Citigroup is
set forth below as of March 10, 2000: name, age and the position held with
Citigroup.
Name Age Position and Office Held
- -----------------------------------------------------------------------------
Michael A. Carpenter 52 Co-Chief Executive Officer,
Global Corporate and Investment Bank
Paul J. Collins 63 Vice Chairman
Michael D'Ambrose 42 Senior Human Resources Officer
Jay S. Fishman 47 Chief Executive Officer,
Travelers Property Casualty Corp.
Edward D. Horowitz 52 e-Citi
Thomas W. Jones 50 Chairman and Chief Executive Officer,
Global Investment Management
and Private Banking Group
Robert I. Lipp 61 Chairman and Chief Executive Officer,
Global Consumer Business
Deryck C. Maughan 52 Vice Chairman
Victor J. Menezes 50 Co-Chief Executive Officer,
Global Corporate and Investment Bank
Heidi G. Miller 46 Chief Financial Officer
Charles O. Prince, III 50 General Counsel and Corporate Secretary
John S. Reed 61 Chairman and Co-Chief Executive Officer
William R. Rhodes 64 Vice Chairman
Robert E. Rubin 61 Member of the Office of the Chairman and
Chairman of the Executive Committee
Petros Sabatacakis 53 Senior Risk Officer
Todd S. Thomson 39 Chief Executive Officer,
Citibank Private Bank
Marc P. Weill 43 Citigroup Investments, Inc.
Sanford I. Weill 66 Chairman and Co-Chief Executive Officer
Robert B. Willumstad 54 Global Consumer Lending
- -----------------------------------------------------------------------------
Except as described below, each executive officer has been employed in such
position or in other executive or management positions within the Company for at
least five years.
Mr. D'Ambrose joined Citigroup in 1997, and was in charge of Executive
Resources of Citibank until September 1999. Prior to that time, he served as
Chief Operating Officer of Westwood One, Inc. and President and Chief Executive
Officer of Shadow Broadcast Services. Mr. Horowitz joined Citigroup in January
1997 and, prior to that time, was a Senior Vice President--Technology at Viacom,
Inc. and Chairman and Chief Executive Officer of Viacom Interactive Media. Mr.
Jones joined Citigroup in August 1997 and, prior to that time, he was Vice
Chairman, President, Chief Operating Officer, and a director of the Teachers
Insurance and Annuity Association--College Retirement Equities Fund. Mr. Rubin
joined Citigroup in October 1999 and served as Secretary of the Treasury of the
United States from 1995 to 1999. Mr. Sabatacakis joined Citigroup in August 1999
and prior to that time, was Senior Vice President--Financial Services for
American International Group. Previously, he was senior risk manager and head of
Global Treasury and Capital Markets at Chemical Bank. Mr. Thomson joined
Citigroup in July 1998 and, prior to that time, was Senior Vice President,
Strategic Planning and Business Development for GE Capital Services. Previously,
Mr. Thomson held management positions at Barents Group LLC and Bain and
Company.
92
<PAGE>
10-K CROSS-REFERENCE INDEX
This Annual Report and Form 10-K incorporate into a single document the
requirements of the accounting profession and the Securities and Exchange
Commission, including a comprehensive explanation of 1999 results.
Form 10-K
- --------------------------------------------------------------------------------
Item Number Page
Part I
1. Business.................................... 2-4, 6-43,
86-91
2. Properties.................................. 92
3. Legal Proceedings........................... 92
4. Submission of Matters to a Vote of
Security Holders............................ Not Applicable
- --------------------------------------------------------------------------------
Part II
5. Market for Registrant's Common Equity
and Related Stockholder Matters............. 79, 94-95
6. Selected Financial Data..................... 5
7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations............................... 6-43
7A. Quantitative and Qualitative Disclosures
About Market Risk........................... 34-38, 55-60,
73-77
8. Financial Statements and
Supplementary Data.......................... 44-85
9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure........................ Not Applicable
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Part III
10. Directors and Executive Officers
of the Registrant........................... 92*
11. Executive Compensation...................... **
12. Security Ownership of Certain Beneficial
Owners and Management....................... ***
13. Certain Relationships and
Related Transactions........................ ****
- --------------------------------------------------------------------------------
Part IV
14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K........................ 94
- --------------------------------------------------------------------------------
* For information regarding Citigroup Directors, see the material under
"Election of directors" in the definitive Proxy Statement for Citigroup's
Annual Meeting of Stockholders to be held on April 18, 2000, filed with the
SEC (the "Proxy Statement"), incorporated herein by reference.
** See the material under "Executive compensation" and "How we have done" of
the Proxy Statement, incorporated herein by reference.
*** See the material under the captions "About the annual meeting" and "Stock
ownership" of the Proxy Statement, incorporated herein by reference.
**** See the material under the captions "Election of directors" and "Executive
compensation" of the Proxy Statement, incorporated herein by reference.
None of the foregoing incorporation by reference shall include the information
referred to in Item 402(a)(8) of Regulation S-K.
93
<PAGE>
EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K
The following exhibits are either filed herewith or have been previously filed
with the Securities and Exchange Commission and are filed herewith by
incorporation by reference:
o Citigroup's Restated Certificate of Incorporation, as amended,
o Citigroup's By-Laws,
o Instruments Defining the Rights of Security Holders, Including Indentures,
o Material Contracts, including certain compensatory plans available only to
officers and/or directors,
o Statements re Computation of Ratios,
o Subsidiaries of the Registrant,
o Consents of Experts and Counsel,
o Powers of Attorney of Directors Armstrong, Belda, Bialkin, Derr, Deutch,
Jordan, Mark, Masin, Mecum, Parsons, Pearson, Rubin, Thomas, Woolard, and
Zankel,
o Financial Data Schedules
A more detailed exhibit index has been filed with the SEC. Stockholders may
obtain copies of that index, or any of the documents on that index by writing to
Citigroup, Corporate Governance, 425 Park Avenue, 2nd Floor, New York, New York
10043 or on the Internet @ http://www.sec.gov.
Financial Statements filed for Citigroup Inc. and Subsidiaries:
Consolidated Statement of Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Stockholders' Equity
Consolidated Statement of Cash Flows
The Company filed a Current Report on Form 8-K dated October 18, 1999,
reporting under Item 5 thereof the results of its operations for the quarter and
nine months ended September 30, 1999.
The Company filed a Current Report on Form 8-K dated October 26, 1999,
reporting under Item 5 thereof the election of Robert E. Rubin to the Company's
Board of Directors.
No other reports on Form 8-K were filed during the 1999 fourth quarter;
however, the Company filed a Current Report on Form 8-K dated January 18, 2000,
reporting under Item 5 thereof the results of its operations for the quarter and
year ended December 31, 1999, a Current Report on Form 8-K dated February 16,
2000, filing under Items 5 and 7 thereof the Company's 1998 Financial
Supplement, and a Current Report on Form 8-K dated February 28, 2000, reporting
under Items 5 and 7 thereof the retirement of John S. Reed, Chairman and
Co-Chief Executive Officer.
- --------------------------------------------------------------------------------
Securities and Exchange Commission
Washington, DC 20549
Form 10-K
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended December 31, 1999 Commission File Number 1-9924
Citigroup Inc.
Incorporated in the State of Delaware
IRS Employer Identification Number: 52-1568099
Address: 153 East 53rd Street
New York, New York 10043
Telephone: (212) 559-1000
- --------------------------------------------------------------------------------
Stockholder Information
Citigroup common stock is listed on the New York Stock Exchange and the Pacific
Exchange under the ticker symbol "C."
Citigroup Preferred Stocks Series F, G, H, K, M, Q, R, and U are also
listed on the New York Stock Exchange.
Annual Meeting
The annual meeting will be held at 9:00 a.m. on April 18, 2000, at Carnegie
Hall, 881 Seventh Avenue, New York, NY.
Transfer Agent
Stockholder address changes and inquiries regarding stock transfers, dividend
replacement, 1099-DIV reporting, and lost securities for common and preferred
stocks should be directed to:
Citibank Shareholder Services
P. O. Box 2502
Jersey City, NJ 07303-2502
Telephone No. (201) 536-8057
Toll-free No. (888) 250-3985
Facsimile No. (201) 324-3284
E-mail address: [email protected]
94
<PAGE>
Exchange Agent
Holders of Citicorp, Citigroup Preferred Stock Series J, S, and T, Salomon Inc,
The Travelers Corporation, or Travelers Group Preferred Stock Series A or D
should arrange to exchange their certificates by contacting:
Citibank Shareholder Services
P. O. Box 2502
Jersey City, NJ 07303-2502
Telephone No. (201) 536-8057
Toll-free No. (888) 250-3985
Facsimile No. (201) 324-3284
E-mail address: [email protected]
The 1999 Forms 10-K filed with the Securities and Exchange Commission for
the Company and certain subsidiaries, as well as Annual and Quarterly reports,
are available from Citigroup Document Services toll free at (877) 936-2737
(outside the United States at (718) 765-6460) or by writing to:
Citigroup Document Services
140 58th Street, Suite 5I
Brooklyn, NY 11220
To view or retrieve copies of this annual report and other Citigroup
financial reports on the Internet: http://www.citigroup.com or
http://www.sec.gov.
Securities Registered pursuant to Section 12(b)
and (g) of the Act
A list of Citigroup securities registered pursuant to Section 12(b) and (g) of
the Securities Exchange Act of 1934 is available from Citigroup Corporate
Governance, 425 Park Avenue, 2nd Floor, New York, New York 10043 or on the
Internet @ http://www.sec.gov.
As of February 7, 2000, Citigroup had 3,366,858,616 shares of common stock
outstanding.
As of February 7, 2000, Citigroup had approximately 95,700 common
stockholders of record. This figure does not represent the actual number of
beneficial owners of common stock because shares are frequently held in "street
name" by securities dealers and others for the benefit of individual owners who
may vote the shares.
Citigroup (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein nor in Citigroup's 2000 Proxy Statement incorporated by
reference in Part III of this Form 10-K.
The aggregate market value of Citigroup common stock held by non-affiliates
of Citigroup on February 7, 2000 was approximately $183 billion.
Certain information has been incorporated by reference as described herein
into Part III of this annual report from Citigroup's 2000 Proxy Statement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 10th day of March,
2000.
CITIGROUP INC.
(Registrant)
/s/ Heidi G. Miller
Heidi G. Miller
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities indicated on the 10th day of March, 2000.
Citigroup's Principal Executive Officers:
/s/ John S. Reed /s/ Sanford I. Weill
John S. Reed Sanford I. Weill
Citigroup's Principal Financial Officer:
/s/ Heidi G. Miller
Heidi G. Miller
Citigroup's Principal Accounting Officers:
/s/ Irwin R. Ettinger /s/ Roger W. Trupin
Irwin R. Ettinger Roger W. Trupin
The Directors of Citigroup (listed below) executed a power of attorney
appointing Heidi G. Miller their attorney-in-fact, empowering her to sign this
report on their behalf.
C. Michael Armstrong Dudley C. Mecum
Alain J.P. Belda Richard D. Parsons
Kenneth J. Bialkin Andrall E. Pearson
Kenneth T. Derr Robert E. Rubin
John M. Deutch Franklin A. Thomas
Ann Dibble Jordan Edgar S. Woolard, Jr.
Reuben Mark Arthur Zankel
Michael T. Masin
95
<PAGE>
CITIGROUP BOARD OF DIRECTORS
C. Michael Armstrong
Chairman and Chief Executive Officer AT&T Corp.
Alain J.P. Belda
President and Chief Executive Officer Alcoa Inc.
Kenneth J. Bialkin
Partner Skadden, Arps, Slate, Meagher & Flom LLP
Kenneth T. Derr
Chairman of the Board, Retired Chevron Corporation
John M. Deutch
Institute Professor Massachusetts Institute of Technology
Ann Dibble Jordan
Consultant
Reuben Mark
Chairman and Chief Executive Officer Colgate-Palmolive Company
Michael T. Masin
Vice Chairman and Director GTE Corporation Designated President and Vice
Chairman of Company to be formed by merger of GTE Corporation and Bell Atlantic
Dudley C. Mecum
Managing Director Capricorn Holdings, LLC
Richard D. Parsons
President Time Warner Inc.
Andrall E. Pearson
Chairman and Chief Executive Officer Tricon Global Restaurants, Inc.
John S. Reed
Chairman and Co-Chief Executive Officer Citigroup Inc.
Robert E. Rubin
Director, Member of the Office of the Chairman and Chairman of the Executive
Committee Citigroup Inc.
Franklin A. Thomas
Former President The Ford Foundation
Sanford I. Weill
Chairman and Co-Chief Executive Officer Citigroup Inc.
Edgar S. Woolard, Jr.
Former Chairman and Chief Executive Officer E.I. du Pont de Nemours and Company
Arthur Zankel
General Partner Zankel Capital Advisors, LLC
HONORARY DIRECTOR
The Honorable Gerald R. Ford
Former President of the United States
96
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- -------- ----------------------
3.01.1 Restated Certificate of Incorporation of Citigroup Inc. (the
"Company"), incorporated by reference to Exhibit 4.01 to the
Company's Registration Statement on Form S-3 filed December
15, 1998 (No. 333-68949).
3.01.2 Certificate of Designation of 5.321% Cumulative Preferred
Stock, Series YY, of the Company, incorporated by reference to
Exhibit 4.45 to Amendment No. 1 to the Company's Registration
Statement on Form S-3 filed January 22, 1999 (No. 333-68949).
3.02 Restated By-Laws of the Company effective October 26, 1999,
incorporated by reference to Exhibit 3.02 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1999 (File No. 1-9924).
10.01* Employment Protection Agreement, dated as of December 31,
1987, between the Company (as successor to Commercial Credit
Company ("CCC")) and Sanford I. Weill, incorporated by
reference to Exhibit 10.03 to CCC's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987 (File No. 1-6594).
10.02.1* Travelers Group Stock Option Plan (as amended and restated as
of April 24, 1996), incorporated by reference to Exhibit
10.02.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 (File No. 1-9924).
10.02.2* Amendment No. 14 to the Travelers Group Stock Option Plan,
incorporated by reference to Exhibit 10.01 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1996 (File No. 1-9924).
10.02.3* Amendment No. 15 to the Travelers Group Stock Option Plan
(effective July 23, 1997), incorporated by reference to
Exhibit 10.04 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1997 (File No.
1-9924) (the "Company's September 30, 1997 10-Q").
10.02.4*+ Amendment No. 16 to the Travelers Group Stock Option Plan.
<PAGE>
10.03.1* Travelers Group 1996 Stock Incentive Plan (as amended through
July 23, 1997), incorporated by reference to Exhibit 10.03 to
the Company's September 30, 1997 10-Q.
10.03.2*+ Amendment to Travelers Group 1996 Stock Incentive Plan (as
amended through July 23, 1997).
10.04* Travelers Group Inc. Retirement Benefit Equalization Plan (as
amended and restated as of January 2, 1996), incorporated by
reference to Exhibit 10.04 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 (File
No. 1-9924).
10.05* Citigroup Inc. Amended and Restated Compensation Plan for
Non-Employee Directors (as of October 20, 1998), incorporated
by reference to Exhibit 10.05 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998 (File
No. 1-9924).
10.06.1* Supplemental Retirement Plan of the Company, incorporated by
reference to Exhibit 10.23 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990 (File
No. 1-9924).
10.06.2* Amendment to the Company's Supplemental Retirement Plan,
incorporated by reference to Exhibit 10.06.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993 (File No. 1-9924).
10.07* Citigroup 1999 Executive Performance Plan (effective January
1, 1999), incorporated by reference to Annex B to Citigroup's
Proxy Statement dated March 8, 1999 (File No. 1-9924).
10.08.1* Travelers Group Capital Accumulation Plan (as amended through
July 23, 1997), incorporated by reference to Exhibit 10.02 to
the Company's September 30, 1997 10-Q.
10.08.2*+ Amendment to the Travelers Group Capital Accumulation Plan (as
amended through July 23, 1997).
10.09* The Travelers Inc. Deferred Compensation and Partnership
Participation Plan, incorporated by reference to Exhibit 10.31
to the Company's Annual Report on Form 10-K/A-1 for the fiscal
year ended December 31, 1994 (File No. 1-9924).
10.10* The Travelers Insurance Deferred Compensation Plan (formerly
The Travelers Corporation TESIP Restoration and Non-Qualified
Savings Plan) (as amended through December 10, 1998),
incorporated by reference
<PAGE>
to Exhibit 10.10 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 (File No. 1-9924).
10.11* The Travelers Corporation Directors' Deferred Compensation
Plan (as amended November 7, 1986), incorporated by reference
to Exhibit 10(d) to the Annual Report on Form 10-K of The
Travelers Corporation for the fiscal year ended December 31,
1986 (File No. 1-5799).
10.12.1* Travelers Property Casualty Corp. Capital Accumulation Plan
(as amended through July 23, 1997), incorporated by reference
to Exhibit 10.01 to the Quarterly Report on Form 10-Q of
Travelers Property Casualty Corp. for the fiscal quarter ended
September 30, 1997 (File No. 1-14328).
10.12.2*+ Amendment to the Travelers Property Casualty Corp. Capital
Accumulation Plan (as amended through July 23, 1997).
10.13* Letter Agreement, dated as of August 14, 1997, between the
Company and Thomas W. Jones, incorporated by reference to
Exhibit 10.01 to the Company's September 30, 1997 10-Q (File
No. 1-09924).
10.14.1* Salomon Inc Equity Partnership Plan for Key Employees (as
amended through March 25, 1998), incorporated by reference to
Exhibit 10.19 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 (File No. 1-9924).
10.14.2*+ Amendment to the Salomon Inc Equity Partnership Plan for Key
Employees (as amended through March 25, 1998).
10.15.1* Citicorp Executive Incentive Compensation Plan, incorporated
by reference to Citicorp's Registration Statement on Form S-8
filed April 25, 1988 (No. 2-47648).
10.15.2*+ Amendment to the Citicorp Executive Incentive Compensation
Plan.
10.16.1* Citicorp 1988 Stock Incentive Plan, incorporated by reference
to Exhibit 4 to Citicorp's Registration Statement on Form S-8
filed April 25, 1988 (No. 2-47648).
10.16.2*+ Amendment to the Citicorp 1988 Stock Incentive Plan.
10.17* 1994 Citicorp Annual Incentive Plan for Selected Executive
Officers, incorporated by reference to Exhibit 10 to
Citicorp's March 30, 1994 Form 10-Q (File No. 01-05378).
<PAGE>
10.18.1* Citicorp Deferred Compensation Plan, incorporated by reference
to Exhibit 10 to Citicorp's Registration Statement on Form S-8
filed February 15, 1996 (No. 333-0983).
10.18.2*+ Amendment to the Citicorp Deferred Compensation Plan.
10.19.1* Citicorp 1997 Stock Incentive Plan, incorporated by reference
to Citicorp's 1997 Proxy Statement filed February 26, 1997
(File No. 01-05378).
10.19.2*+ Amendment to the Citicorp 1997 Stock Incentive Plan.
10.20.1*+ Supplemental Executive Retirement Plan of Citicorp and
Affiliates (as amended and restated effective January 1,
1998).
10.20.2*+ First Amendment to the Supplemental Executive Retirement Plan
of Citicorp and Affiliates (as amended and restated effective
January 1, 1998).
10.21.1* Supplemental ERISA Compensation Plan of Citibank, N.A. and
Affiliates, as amended and restated, incorporated by reference
to Exhibit 10.(G) to Citicorp's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 (File No. 1-05378).
10.21.2*+ Amendment to the Supplemental ERISA Compensation Plan of
Citibank, N.A. and Affiliates, as amended and restated.
10.22* Supplemental ERISA Excess Plan of Citibank, N.A. and
Affiliates, as amended and restated, incorporated by reference
to Exhibit 10.(H) to Citicorp's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 (File No. 1-05378).
10.23* Directors' Deferred Compensation Plan, Restated May 1, 1988,
incorporated by reference to Exhibit 10.23 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998 (File No. 1-9924).
10.24*+ Letter Agreement, dated as of October 26, 1999, between the
Company and Robert E. Rubin.
10.25* Citigroup 1999 Stock Incentive Plan (effective April 30,
1999), incorporated by reference to Annex A to Citigroup's
Proxy Statement dated March 8, 1999 (File No. 1-9924).
12.01+ Computation of Ratio of Earnings to Fixed Charges.
21.01+ Subsidiaries of the Company.
<PAGE>
23.01+ Consent of KPMG LLP, Independent Auditors.
24.01+ Powers of Attorney.
27.01+ Financial Data Schedule.
99.01+ List of Securities Registered Pursuant to Section 12(b) of the
Securities Exchange Act of 1934.
- --------------
The total amount of securities authorized pursuant to any instrument
defining rights of holders of long-term debt of the Company does not exceed 10%
of the total assets of the Company and its consolidated subsidiaries. The
Company will furnish copies of any such instrument to the SEC upon request.
The financial statements required by Form 11-K for 1999 for the Company's
employee savings plans will be filed as an exhibit by amendment to this Form
10-K pursuant to Rule 15d-21 of the Securities Exchange Act of 1934, as amended.
Copies of any of the exhibits referred to above will be furnished at a
cost of $0.25 per page (although no charge will be made for the 1999 Annual
Report on Form 10-K) to security holders who make written request therefor to
Corporate Governance, Citigroup Inc., 425 Park Avenue, 2nd Floor, New York, New
York 10043.
--------------
* Denotes a management contract or compensatory plan or arrangement required to
be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
+ Filed herewith.
Exhibit 10.02.4
AMENDMENT NO. 16 TO THE
TRAVELERS GROUP STOCK OPTION PLAN
- --------------------------------------------------------------------------------
Section 9 (d) of the Travelers Group Stock Option Plan is hereby
amended to add the following sentence at the end of such Section:
"The value of any shares allowed to be withheld or tendered
for tax withholding may not exceed the amount allowed
consistent with fixed plan accounting in accordance with
generally accepted accounting principles."
Exhibit 10.03.2
AMENDMENT TO THE
TRAVELERS GROUP 1996 STOCK INCENTIVE PLAN
(AS AMENDED THROUGH JULY 23, 1997)
- --------------------------------------------------------------------------------
Section 17 of the Travelers Group 1996 Stock Incentive Plan is hereby
amended to add the following sentence at the end of such Section:
"The value of any shares allowed to be withheld or tendered
for tax withholding may not exceed the amount allowed
consistent with fixed plan accounting in accordance with
generally accepted accounting principles."
Exhibit 10.08.2
AMENDMENT TO THE
TRAVELERS GROUP CAPITAL ACCUMULATION PLAN
(AS AMENDED THROUGH JULY 23, 1997)
- --------------------------------------------------------------------------------
Section 2 (e) of the Travelers Group Capital Accumulation Plan is hereby
amended to add the following sentence at the end of such Section:
"The value of any shares allowed to be withheld or tendered
for tax withholding may not exceed the amount allowed
consistent with fixed plan accounting in accordance with
generally accepted accounting principles."
Exhibit 10.12.2
AMENDMENT TO THE
TRAVELERS PROPERTY CASUALTY CORP. CAPITAL ACCUMULATION PLAN
(AS AMENDED THROUGH JULY 23, 1997)
- --------------------------------------------------------------------------------
Section 10 (e) of the Travelers Property Casualty Corp. Capital
Accumulation Plan is hereby amended to add the following sentence at the end of
such Section:
"The value of any shares allowed to be withheld or tendered
for tax withholding may not exceed the amount allowed
consistent with fixed plan accounting in accordance with
generally accepted accounting principles."
Exhibit 10.14.2
AMENDMENT TO THE
SALOMON INC EQUITY PARTNERSHIP PLAN FOR KEY EMPLOYEES
(AS AMENDED THROUGH MARCH 25, 1998)
- --------------------------------------------------------------------------------
Section 17 (c) of the Salomon Inc Equity Partnership Plan for Key
Employees is hereby amended to add the following sentence at the end of such
Section:
"The value of any shares allowed to be withheld or tendered
for tax withholding may not exceed the amount allowed
consistent with fixed plan accounting in accordance with
generally accepted accounting principles."
Exhibit 10.15.2
AMENDMENT TO THE
CITICORP EXECUTIVE INCENTIVE COMPENSATION PLAN
- --------------------------------------------------------------------------------
Section 10.12 of the Citicorp Executive Incentive Compensation Plan is
hereby amended to add the following sentence at the end of such Section:
"The value of any shares allowed to be withheld or tendered
for tax withholding may not exceed the amount allowed
consistent with fixed plan accounting in accordance with
generally accepted accounting principles."
Exhibit 10.16.2
AMENDMENT TO THE
CITICORP 1988 STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
Section 7(e) of the Citicorp 1988 Stock Incentive Plan is hereby amended
to add the following sentence at the end of such Section:
"The value of any shares allowed to be withheld or tendered
for tax withholding may not exceed the amount allowed
consistent with fixed plan accounting in accordance with
generally accepted accounting principles."
Exhibit 10.18.2
AMENDMENT TO THE
CITICORP DEFERRED COMPENSATION PLAN
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Section 8.3 of the Citicorp Deferred Compensation Plan is hereby amended
to add the following sentence at the end of such Section:
"In the event the Company permits shares to be withheld or
tendered to satisfy any tax withholding obligations, the value
of any shares allowed to be withheld or tendered for tax
withholding may not exceed the amount allowed consistent with
fixed plan accounting in accordance with generally accepted
accounting principles."
Exhibit 10.19.2
AMENDMENT TO THE
CITICORP 1997 STOCK INCENTIVE PLAN
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Section 13 of the Citicorp 1997 Stock Incentive Plan is hereby amended to
add the following sentence at the end of such Section:
"The value of any shares allowed to be withheld or tendered
for tax withholding may not exceed the amount allowed
consistent with fixed plan accounting in accordance with
generally accepted accounting principles."
Exhibit 10.20.1
SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN OF CITICORP AND AFFILIATES
(As amended and restated effective January 1, 1998)
1. Purposes. The purposes of the Plan are to provide specified
retirement benefits to certain officers and senior executives of Citicorp and
its affiliates who are designated in accordance with the terms of the Plan and
who are members of a select group of management or highly compensated employees
within the meaning of Sections 201, 301 and 401 of ERISA.
2. Definitions and Rules of Construction.
(a) The following capitalized words have the meanings set forth
below:
"Approved Separation" means a termination of employment with
Citicorp and its affiliates other than for Gross Misconduct that occurs
(i) after the later of the Participant's completion of one Year of Service
and attaining Retirement Age or (ii) as a result of the Participant's
death while employed by Citicorp or one of its affiliates.
"Board" means the Board of Directors of Citicorp.
"Bonus Pay" means the Individual Variable Compensation Award paid to
a Participant.
"Chairman" means the Chairman of the Board.
"Code" means the Internal Revenue Code of 1986, as amended, and the
applicable rules and regulations thereunder.
"Committee" means the Personnel Committee of the Board or any
successor committee appointed for purposes of the Plan by the Board.
"Covered Compensation" of a Participant for a Plan Year shall mean
the amount of base salary and Bonus Pay taken into account under the Plan
in accordance with Sections 3 and 4.
"Covered Position" means a senior-level position with Citicorp or
one of its affiliates that is designated as such for a Plan Year by the
Committee.
"Current-Year Participant" means each Protected Participant and each
other Participant designated by the Committee whose Bonus Pay may be taken
into account under the Plan for the current Plan Year in accordance with
Sections 3 and 4.
"Effective Date" means January 1, 1998.
"Eligible Employee" means an employee of Citicorp or one of its
affiliates who (i) is an "executive officer" (within the meaning of Rule
3b-7 as promulgated under
<PAGE>
the Securities Exchange Act of 1934, as amended) of Citicorp or one of its
affiliates, (ii) has been designated by the Chairman and the Committee or
(iii) is employed in a Covered Position.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the applicable rules and regulations thereunder.
"Gross Misconduct" means (i) any conviction of a Participant of any
serious criminal offense, (ii) the willful failure or refusal of a
Participant to perform the material duties of the Participant's position
in a manner reasonably acceptable to the Committee, (iii) any intentional
or grossly negligent disclosure or misappropriation of confidential or
proprietary information of Citicorp or one of its affiliates by the
Participant, (iv) an act of fraud against Citicorp or one of its
affiliates by the Participant and (v) any other act or omission that the
Committee determines in good faith is a basis for terminating a
Participant's employment for cause.
"Non-U.S. Retirement Plan" means The Retirement Plan for Specified
Non-United States International Staff of Citibank, N.A. and Participating
Companies.
"Offset Plan" means each of (i) the Retirement Plan, (ii) the
Supplemental ERISA Excess Plan of Citibank, N.A. and Affiliates, (iii) the
Supplemental ERISA Compensation Plan of Citibank, N.A. and Affiliates,
(iv) the Non-U.S. Retirement Plan and (v) each Other Retirement Plan.
"Other Retirement Plan" means any other retirement plan, system or
program (i) (a) which is sponsored or maintained by Citicorp or one of its
affiliates or (b) to which Citicorp or one of its affiliates contributes,
including, without limitation, a retirement plan, system or program (other
than Social Security or a plan determined by the Committee to be a
counterpart thereto) sponsored, offered, maintained or mandated by a
government or other public jurisdiction and (ii) which provides retirement
or disability income to a Participant or the spouse or beneficiary
thereof; provided, however, that the term Other Retirement Plan does not
include any plan described in clauses (i) through (iv) of the definition
of Offset Plan.
"Participant" means an Eligible Employee who has an accrued benefit
under the Plan, and includes each Current-Year Participant and Protected
Participant.
"Plan" means the Supplemental Executive Retirement Plan of Citicorp
and Affiliates, as the same may be amended from time to time.
"Plan Year" means the calendar year.
"Prior Plan" means the Supplemental Executive Retirement Plan of
Citicorp and Affiliates, as amended and restated effective October 16,
1990 and as in effect immediately prior to the Effective Date. Benefits
accrued under the Prior Plan as of the Effective Date shall be paid under
the Plan.
<PAGE>
"Protected Participant" means an Eligible Employee that the
Committee determines to be either (i) identified as of October 16, 1990
under the Prior Plan or (ii) subject to an employment contract, offer
letter or similar agreement with Citicorp or one of its affiliates that
requires such Eligible Employee to participate in the Plan in accordance
with the terms in effect prior to the Effective Date.
"Retirement Age" means (i) for Participants who are eligible to
participate in the Retirement Plan or the Non-U.S. Retirement Plan, age
fifty-five, and (ii) for all other Participants, the earliest retirement
age under the Other Retirement Plan specified by the Committee for this
purpose and in which the Participant participates; provided, however, that
a Participant who becomes permanently disabled and who retires and
commences receiving retirement benefits as of a disability retirement date
under the Retirement Plan or the Non-U.S. Retirement Plan, as the case may
be, shall be deemed to have attained his Retirement Age for purposes of
the Plan as of the disability retirement date.
"Retirement Plan" means The Retirement Plan of Citibank, N.A. and
Participating Companies, as the same may be amended from time to time, and
any successor plan thereto.
"Year of Service" means a Year of Service as defined in Article I of
the Retirement Plan.
(b) As used herein, the masculine gender shall be deemed to
include the feminine gender, and the singular form of a word shall be deemed to
encompass the plural form, unless the context requires otherwise. Except as
otherwise provided herein, section references are to sections of the Plan.
3. Benefit Payable to Participants.
(a) Subject to the further provisions of this Section 3 and
Section 4, there shall be paid under the Plan on behalf of a Participant whose
employment with Citicorp and its affiliates ends in an Approved Separation, the
Retirement Benefit (as defined in Article I of the Retirement Plan) that would
have been paid on behalf of the Participant or, in the event of an Approved
Separation caused by the death of the Participant, the death benefit under
Article VI of the Retirement Plan that would have been paid to the Participant's
spouse, if the Retirement Plan:
(i) Included within the definitions of Compensation and
Average Compensation (as defined in Article I of the Retirement Plan) any
Bonus Pay paid to the Participant for each year that the Participant is a
Current-Year Participant; provided, however, that Bonus Pay relating to
service prior to 1991 shall be so included only in the case of
Participants who were members of the Policy Committee of Citicorp/Citibank
immediately prior to its discontinuance on October 16, 1990 and only for
bonuses payable pursuant to the Citicorp Executive Incentive Compensation
Plan; and
<PAGE>
(ii) Excluded the limitation on benefits imposed by Section
415 of the Code and the limitation imposed by Section 401(a)(17) of the
Code.
(b) The amount of the Plan benefit computed in accordance with
Section 3(a) shall be reduced by the benefits payable to or in respect of the
Participant under the Offset Plans. The offset contemplated by this Section 3(b)
shall not result in a benefit under the Plan of less than zero.
(c) If a Participant is not a participant in the Retirement
Plan, then the Non-U.S. Retirement Plan shall be substituted for the Retirement
Plan for purposes of Section 3(a) and the Participant's benefit under Section 3
shall be calculated in accordance with the corresponding provisions of the
Non-U.S. Retirement Plan, regardless of whether the Participant is eligible for
benefits under such plan.
(d) The payment of the benefits described above shall commence
at the same time and shall be paid in the same form as the retirement benefit
paid to a Participant (or the Participant's spouse or beneficiary, as the case
may be) under the Retirement Plan. In accordance with the procedures established
by the Committee for this purpose, the benefit of a Participant (or the spouse
or beneficiary thereof) who was not a participant in the Retirement Plan at the
time of such Participant's Approved Separation shall be paid at the time and in
the form that benefits are paid to such Participant (or to the spouse or
beneficiary thereof) under the Non-U.S. Retirement Plan (or, if the Participant
is not a participant in the Non-U.S. Retirement Plan, at the time and in the
form that benefits are paid to the Participant under the Other Retirement Plan
specified by the Committee for this purpose and in which the Participant
participates). The Committee may alter the payment provisions described in the
previous sentence on a case-by-case basis if the Committee determines that such
modification is in the best interests of Citicorp or one of its affiliates or if
such change is necessary to avoid adverse tax or other consequences to the
Participant or to Citicorp or one of its affiliates.
<PAGE>
(e) For purposes of this Section 3, the term "spouse" shall be
construed in accordance with the Retirement Plan or, if Section 3(c) applies to
a Participant, in accordance with the Non-U.S. Retirement Plan.
4. Committee Discretion with Respect to Continued
Participation and Bonus Pay.
(a) The Committee shall determine a Participant's status as a
Current-Year Participant separately for each Plan Year after 1997; provided,
however, that Section 4(c) (and not this sentence) shall apply to Protected
Participants. The Covered Compensation for a Current-Year Participant shall
include base salary and Bonus Pay in accordance with the provisions of Section
4(b). Covered Compensation shall only include base salary (and not Bonus Pay)
for Participants who are not Current-Year Participants for a given Plan Year.
The Committee shall also determine for each Plan Year the positions with
Citicorp and its affiliates that will be treated as Covered Positions for
purposes of the Plan for such year. Any determination by the Committee under
this Section 4(a) or Section 4(b) for a given Plan Year shall not be controlling
on the Committee's determination for any subsequent Plan Year.
(b) The amount of the Bonus Pay eligible to be taken into
account under the Plan for Current-Year Participants (other than Protected
Participants) for a given Plan Year after 1997 shall be specified by the
Committee. The Committee may establish separate limits for each Current-Year
Participant (other than a Protected Participant) or for separate classes of
Current-Year Participants (other than Protected Participants) in a given Plan
Year after 1997 and may establish different limits for Bonus Pay for each Plan
Year after 1997. The Committee may establish the limits described above
applicable to a Current-Year Participant at any time prior to the payment to the
Current-Year Participant of the Bonus Pay for the applicable Plan Year. Unless
the Committee determines otherwise, Covered Compensation shall not include the
amount of any signing bonus or similar-type payment paid to a Current-Year
Participant. For purposes of Section 3, Bonus Pay payable in respect of any part
of a Plan Year will not be annualized.
(c) The Covered Compensation of Protected Participants for
each Plan Year shall include base salary and Bonus Pay, and there shall be no
limit on the Bonus Pay taken into account under the Plan for Protected
Participants.
(d) For purposes of the provisions of Section 3(a), Covered
Compensation shall be taken into account under the Plan in the Plan Year for
which it is earned, regardless of whether such Covered Compensation is paid in a
later Plan Year (including, without limitation, where such delayed payment is a
result of a voluntary or mandatory deferral of Covered Compensation).
<PAGE>
5. Limitations and Other Conditions on Plan Benefits.
(a) If a Participant's employment with Citicorp and its
affiliates terminates under circumstances other than an Approved Separation,
then, unless the Committee determines otherwise, no benefits will be payable to
the Participant (or the Participant's spouse or beneficiary) under the Plan.
(b) Unless the Committee determines otherwise, a Participant
will immediately forfeit all benefits under the Plan if (i) the Participant's
employment with Citicorp or its affiliates is terminated for Gross Misconduct or
if the Participant engages in conduct after his termination of employment with
Citicorp and its affiliates that would have been a basis for the Participant's
termination of employment for Gross Misconduct if such Participant were then so
employed, (ii) the Participant's employment with Citicorp and its affiliates
ends in an Approved Separation and, following such separation, the Committee
becomes aware of conduct of the Participant prior to such separation that would
have been a basis for a termination of employment for Gross Misconduct or (iii)
the Committee determines in good faith that the Participant has breached a
material term of any agreement described in Section 5(c) on or after the
Participant's termination of employment.
(c) Prior to the payment of any benefits to a Participant,
Citicorp or its applicable affiliate shall enter into a written agreement with
the Participant (or spouse or beneficiary entitled to such payment) which
stipulates the amount and terms of payments to be made under this Plan. The
Committee may also condition the payment of benefits under the Plan on a
Participant delivering a written agreement to Citicorp and its affiliates which,
among other things, (i) contains a release of all claims that the Participant
(and the Participant's spouse, beneficiaries, heirs and assigns) may have
against Citicorp and its affiliates and their respective current and former
employees, officers, agents, directors and shareholders, (ii) sets forth an
agreement by the Participant not to compete with Citicorp and its affiliates or
to solicit the employees or customers and clients thereof for a specified period
of time determined by the Committee, (iii) contains provisions related to the
return of property of Citicorp and affiliates and an agreement by the
Participant not to disclose confidential or proprietary information and (iv)
sets forth such other terms as the Committee determines to be appropriate based
on the facts and circumstances involved.
(d) Benefits under the Plan shall be calculated in U.S.
dollars but may, if the Committee so determines, be paid in another currency in
accordance with procedures established by the Committee for this purpose. Where
retirement benefits under the Plan and any applicable Offset Plan are payable to
a Participant in different currencies, at different times or in different forms,
the Committee shall establish procedures to determine the manner and extent to
which the benefits and the other terms of the Offset Plan shall affect the
determination of the benefits under the Plan and the amount of the offset made
in accordance with Section 3(b). Any such determination by the Committee shall
be final and binding on all interested persons.
6. Administration.
<PAGE>
(a) The Plan shall be administered by the Committee. The
Committee shall have the authority to construe and interpret the terms of the
Plan, to promulgate rules for the orderly administration of the Plan, to
construe and interpret each agreement or documents issued under or related to
the Plan, to investigate and make factual determinations necessary or advisable
to administer or manage the Plan, and to take any such other action as the
Committee may determine to be necessary or advisable for the administration and
management of the Plan. All actions by the Committee shall be final and binding
on all interested persons.
(b) The Committee shall have the authority to appoint agents
to effect the administration of the Plan and may delegate its authority under
the Plan to one or more officers of Citicorp or one of its affiliates.
(c) In administering the Plan, the Committee shall maintain
sufficient records and lists to record each Participant (and the sub-categories
of Current-Year Participants and Protected Participants) and the amount of
Covered Compensation taken into account under the Plan for each Participant for
each Plan Year.
(d) To the fullest extent permitted by law, no member of the
Committee, no agent appointed by the Committee and no person to whom the
Committee delegates any authority under the Plan shall be held liable for any
act or failure to act in connection with the Plan.
7. Claims Procedure.
(a) A Participant may make a claim for benefits under this
Plan by filing a claim in writing with the Senior Human Resources Officer (or
such officer's delegate) or such other individual as may be appointed by the
Committee for this purpose from time to time (the "Claims Administrator").
Within ninety days after receipt of such claim, the Claims Administrator will
notify the Participant in writing as to whether the claim has been granted or
denied in whole or in part. If the claim is denied in whole or in part, the
written notification shall describe (i) the specific reason or reasons for
denying the claim, (ii) the specific reference to any Plan provisions upon which
such denial is based, (iii) a description of any additional material or
information necessary for the Participant to perfect the claim and an
explanation of why such material or information is necessary, and (iv) an
explanation of the review procedures described in Section 7(b).
<PAGE>
(b) Within sixty days after the claim has been denied, the
affected Participant may file a written request for review of the denied claim
with the Committee. The review of a denied claim shall be undertaken by the
Committee. Any decision by the Committee on review shall be in writing, shall
include specific reasons for the decision (including reference to any Plan
provisions on which the decision is based) and shall be written in a manner
calculated to be understood by the Participant. Such decision shall generally be
made not later than sixty days after receipt of the Participant's request for
review; provided, however, that, if the Committee or the Claims Administrator
determines that special circumstances require an extension of the review period,
the Committee shall have an additional sixty days to complete its review of the
claim and to communicate its conclusions to the Participant. Any such decision
to extend the review period shall be communicated in writing to the Participant
prior to the expiration of the initial sixty-day period.
(c) The decision of the Committee under Section 7(b) above
shall be final and binding under the Plan upon all interested persons.
8. Amendment and Termination.
(a) The Board or the Committee may amend, modify or terminate
this Plan at any time; provided, however, that no such amendment, modification
or termination shall adversely affect the benefits accrued by a Participant
prior to the date of such amendment, modification or termination.
(b) Minor or clarifying amendments to the Plan which (i) do
not increase benefits under the Plan and (ii) do not increase the cost of the
Plan to Citicorp and its affiliates may be adopted by any officer of Citicorp or
one of its affiliates to whom such amendment authority is delegated by the
Committee.
9. Miscellaneous.
(a) The Plan shall be an unfunded plan maintained by Citicorp
and its affiliates for the purpose of providing deferred compensation for a
select group of management or highly compensated employees within the meaning of
Sections 201, 301 and 401 of ERISA. Citicorp and its affiliates shall be under
no obligation to set aside any funds for the purpose of making payments under
this Plan. Any payments hereunder shall be made out of the general assets of
Citicorp and its affiliates.
(b) Nothing in the Plan shall in any way be construed as
giving any individual a right to be employed or to continue to be employed by
Citicorp and its affiliates. The Plan does not constitute a contract of
employment with any individual. Nothing in the Plan shall be construed in any
way as obligating Citicorp and its affiliates to provide benefits under the
Retirement Plan, the Non-U.S. Retirement Plan, or any Offset Plan to any person
who is not otherwise eligible to participate therein and receive benefits
therefrom in accordance with the terms thereof or to provide any benefits under
the Retirement Plan, the Non-U.S. Retirement Plan, or any Offset Plan which are
not otherwise contemplated by the express terms thereof. The
<PAGE>
Plan shall in no way be construed as an amendment to the Retirement Plan, the
Non-U.S. Retirement Plan or any Offset Plan. In no event shall the Plan be
construed as requiring or permitting the accrual or payment of duplicate
benefits or as requiring or permitting Covered Compensation or service with
Citicorp and its affiliates to be taken into account more than once in
calculating the total benefits payable under the Plan. Nothing in the Plan
should be construed as establishing a floor or minimum guaranteed benefit for
any Participant under the Plan.
(c) Section headings are included solely for convenience of
reference and are not to be considered in construing the meaning of the terms of
the Plan.
(d) To the extent not governed by ERISA or other United States
federal law, the Plan shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts to be performed entirely
within such State without regard to the choice of law provisions thereof.
Exhibit 10.20.2
FIRST AMENDMENT TO THE
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Supplemental Executive Retirement Plan of Citicorp and Affiliates, as
amended and restated effective January 1, 1998 (the "Plan"), is hereby
amended as follows:
1. The definition of Covered Compensation in Section 2(a) of the Plan
is amended by deleting the period (".") and adding at the end
thereof the following:
"; provided, however, that, for each Plan Year beginning
after 1998, a Participant's Covered Compensation for
such year may not exceed an amount determined in
accordance with the formula A x (1.06)N, where "A" is a
Participant's Target Cash Compensation for 1998 and "N"
is the difference that results from subtracting 1998
from the then current calendar year."
2. The definition of "Current-Year Participant" in Section 2(a) of the
Plan is amended by deleting the period (".") and adding at the end
thereof the following:
"; provided, however, that, for Plan Years beginning
after 1999, (i) only Protected Participants shall be
Current-Year Participants and (ii) unless the Committee
determines otherwise, no Eligible Employee other than a
Protected Participant shall earn additional benefits
under the Plan."
3. The definition of "Retirement Plan" in Section 2(a) of the Plan is
amended by deleting the words "as the same may be amended from time
to time, and any successor plan thereto." and replacing such words
with the following:
"as in effect on December 31, 1999."
4. Section 2(a) of the Plan is amended by adding after the definition
of "Retirement Plan" the following:
"Target Cash Compensation for 1998" means, with
respect to each Participant, the amount determined by
the Committee equal to the sum of the Participant's
annual rate of base salary as of December 31, 1998 and
target Bonus Pay for 1998."
5. Section 3(d) of the Plan is amended by adding at the end thereof the
following:
<PAGE>
"Anything in the Plan to the contrary notwithstanding,
benefits under the Plan shall not be payable in a lump
sum unless (i) the Participant participates after
December 31, 1999 in the tax qualified cash account
balance retirement plan which is the successor to the
Retirement Plan (the "CBP"), (ii) the Participant has
the right to elect to receive under the CBP the portion
of his Retirement Benefit accrued under the Retirement
Plan as of December 31, 1999 in a lump sum (the
"Pre-2000 Benefit") and (iii) at the time of the
Participant's retirement, the Participant elects under
the CBP to receive the Pre-2000 Benefit in a lump sum."
6. The Plan is amended by adding at the end thereof the following:
"10. Closed to New Participants. Anything in the
Plan to the contrary notwithstanding, unless the
Committee determines otherwise, effective as of December
31, 1999, the Plan shall be closed to new Participants."
7. This amendment to the Plan shall be effective as of January 1, 1999.
Except as amended hereby, the Plan shall remain in full force and
effect.
Exhibit 10.21.2
Amendment to the Supplemental ERISA Compensation Plan
of Citibank, N.A. and Affiliates, as amended and restated
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The first sentence of the Supplemental ERISA Compensation Plan of Citibank, N.A.
and Affiliates (the "Plan") is amended and restated as follows:
"The Purpose of this Plan is solely to provide benefits
to an individual whose participation in the Citigroup
Pension Plan (a/k/a Citibuilder Retirement Plan)
("Plan") is attributable to employment with an entity
which was a participating employer in the Retirement
Plan of Citibank, N.A. and Affiliates and a member of a
select group of management or highly compensated
employees for purposes of Sections 201, 301, and 401 of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")."
Section 2 of the Plan is amended by adding the following language:
"Notwithstanding the foregoing, for purposes of
computing the benefits under this Plan for individuals
whose benefit in the Retirement Plan is determined by
reference to the cash balance formula, compensation in
excess of $500,000 shall be disregarded."
Exhibit 10.24
October 26, 1999
PERSONAL AND CONFIDENTIAL
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Mr. Robert E. Rubin
Citigroup
153 East 53rd Street C 4th Floor
New York, NY 10043
Dear Bob:
We are pleased to offer you employment as Director, Chairman of the
Executive Committee of the Board of Directors and member of the Office of the
Chairman of Citigroup Inc. (together with its direct and indirect successors,
the "COMPANY" and, together with its subsidiaries, "CITIGROUP"). Your employment
will commence as soon as possible and will continue until terminated by you, by
the Company or by reason of your death.
Working with us in the newly constituted Office of the Chairman consisting
exclusively of you and the Chairmen of the Board of Directors of the Company,
you will participate in strategic managerial and operational matters of
Citigroup worldwide, but will not have line responsibilities or any other
reporting relationships.
Your compensation will consist of the following:
o Salary, paid in accordance with the Company's standard
policies in effect from time to time (currently semi-monthly),
at an annual rate of not less than $1.0 million.
o Guaranteed level of incentive compensation for calendar years
1999 (subject to proration as described below), 2000 and,
subject to any extraordinary circumstances drastically
negatively affecting Citigroup reported operating results and
in the event of such circumstances and results only to the
extent of any similar effect on total compensation (including
incentive compensation awards) made to the other members of
the Office of the Chairman, 2001 of not less than $14.0
million, of which up to 25% (or, to the extent the other
members of the Office of the Chairman are similarly affected,
an amount equal to 25% of total compensation) shall be paid to
you in the form of awards of restricted stock (or, at your
election, deferred stock and/or options) pursuant to the
Travelers Group Capital Accumulation Plan, as in effect from
time to time
<PAGE>
("CAP"), including the discounted price provisions thereof;
provided that the vesting period with respect to any such
awards shall be the period applicable to contemporary such
awards made to the other members of the Office of the
Chairman, but in no event more than three years. Such
incentive compensation shall be paid and awarded at the same
time as other such incentive compensation and awards made for
the respective year to senior executives of the Company, but
in no event later than paid or awarded to the other members of
the Office of the Chairman. Notwithstanding the foregoing, to
the extent necessary to avoid any loss of deduction with
respect thereto under Section 162(m) of the Internal Revenue
Code or any applicable successor provision, payment of such
incentive compensation (other than CAP awards) shall be
deferred as described in Schedule A attached hereto. Your
incentive compensation for the year 1999 will be a prorated
portion (i.e., 18.36%) of the foregoing annual guaranteed
amount. Incentive compensation with respect to any calendar
year after 2001 will be paid in accordance with the Citigroup
1999 Executive Performance Plan or any applicable successor
plan.
o A grant made to you on the date hereof of 1.5 million options
on Citigroup common stock, pursuant to the Citigroup 1999
Stock Incentive Plan ("SIP"), with an exercise price equal to
the closing market price (composite transactions) on October
25, 1999. In addition, an additional grant of 1.5 million
options of Citigroup common stock (or, if a stock split,
recapitalization or other event has occurred prior to such
additional grant, an amount of such options adjusted to
reflect such event) ("SECOND OPTION"), also pursuant to SIP
(as then in effect), with an exercise price equal to the
closing market price (composite transactions) on the day
before the date of grant, which will be made not later than
October 2000 by the Personnel, Compensation and Directors
Committee.
o All options granted to you shall have a term of not less than
ten years, shall vest and become exercisable at a rate of at
least 20% per year and the shares received upon exercise shall
be fully vested, except as required in connection with reload
eligibility or pursuant to CAP to the same extent in either
case as applicable to the other members of the Office of the
Chairman.
o In the event of a Change of Control, as defined in either CAP
or SIP, you will be accorded not less favorable treatment in
terms of compensation and awards under the Citigroup
compensation and benefit plans and arrangements, as applies to
the other members of the Office of the Chairman, and, in light
of your unique circumstances, you will also be entitled to
payments sufficient to reimburse you fully on an after-tax
basis
2
<PAGE>
for any tax under Section 4999 of the Internal Revenue Code or
any applicable successor provision, as well as any costs,
including professional fees, associated with determining and
resolving the application of such tax to you.
Notwithstanding anything to the contrary in CAP, SIP, the Citigroup 1999
Executive Performance Plan, any successor plans or any award agreements executed
pursuant to those plans, we have also agreed on the following provisions:
o If any of the events listed in Part A of Schedule B attached
hereto should occur, you shall be entitled to terminate your
employment by notice in writing delivered after you have had a
reasonable opportunity to evaluate such event and you will
receive (i) continued payment of salary through the later of
December 31, 2001 or 12 months following such date of
termination (the "SEVERANCE PERIOD"), (ii) continued payment
with respect to the Severance Period of incentive compensation
equal to the guaranteed incentive compensation for calendar
years 2000 and 2001 (if not already paid) and with respect to
any period after December 31, 2001 equal to the amount of
incentive compensation for the most recent calendar year
(prorated for a partial calendar year), (iii) the grant on a
fully vested basis, not later than October, 2000, of the
Second Option, if not previously granted, (iv) the immediate
lapse of all restrictions on and vesting of any restricted or
deferred stock, options or other awards made or received under
CAP, SIP or otherwise ("AWARDS"), (v) continued benefits
during the Severance Period and (vi) any payment due to you
under Schedule A attached hereto. In connection with the
foregoing, (a) any incentive compensation paid after the date
of termination will be paid without participation in CAP or
any similar program, (b) payments to you of incentive
compensation in respect of any year during the Severance
Period shall be made when similar payments are made to the
other members of the Office of the Chairman, but in no event
later than March 31 of the following year and will not be
subject to the deferred arrangement described above, (c) stock
options will be exercisable for two years following
termination of employment and (d) exercise of options
following the date of termination will not be eligible to
participate in reload grants.
o If any of the events listed in Part B of Schedule B attached
hereto should occur, then your employment will be
automatically terminated and you (or your estate) will receive
(i) payment of salary through the date of termination, (ii)
guaranteed unpaid incentive compensation prorated through the
date of termination and, if such termination occurs after
December 31, 2001, such incentive compensation payment shall
be based on the amount of incentive compensation for the most
recent
3
<PAGE>
calendar year and (iii) the immediate lapse of restrictions on
and vesting of all Awards and the grant on a fully vested
basis, not later than October 2000, of the Second Option if
not previously granted; and in this connection, clauses (a)
through (d) of the preceding paragraph shall also apply.
o If you leave employment for any reason other than a reason
specified in Schedule B attached hereto, you will receive no
continuing compensation or option vesting or exercisability
after the date of your leaving, including with respect to any
awards granted under CAP.
o Your rights, following any leaving, under any other programs
and policies of Citigroup shall be governed by the terms of
such programs and policies.
o Following any leaving of employment, you agree to maintain the
confidentiality of proprietary Citigroup information and to
not solicit any of our senior employees to leave their
employment for at least two years following the date of your
leaving.
o The provisions of CAP, SIP and any successor plans with
respect to the vesting, payment and exercisability of awards
thereunder and the treatment of such awards upon and following
termination of employment, including forfeiture and deferral
provisions, are superseded by the provisions of this letter to
the extent inconsistent herewith, except to the extent
consented to by you in writing.
4
<PAGE>
We have also agreed that, separate from your role with Citigroup and
notwithstanding anything to the contrary in any policy of the Company, including
the Citigroup Employee Handbook and the Citigroup Principles of Employment, you
will be free to continue your long personal history of involvement in public
policy issues and to engage in other charitable and civic activities; to serve
on corporate or advisory boards or in similar capacities, including with respect
to investment partnerships, (and to be compensated for the same); and to manage
your personal investments, provided that such separate activities do not
materially conflict with your new responsibilities at Citigroup.
Except as otherwise provided herein or as necessary and appropriate in
terms of governance, as a member of the Office of the Chairman, you will be
accorded the same status as the other members of the Office of the Chairman
(except with respect to non-material matters such as security and administrative
support). Thus, from the onset of your employment, you will be covered by the
same policies and be eligible to participate in the same compensation programs
and to receive the same benefits that have been or are enjoyed by other senior
executives and employees of Citigroup, including the other members of the Office
of the Chairman. Without limiting the foregoing, you will have the use of a
personal car and driver, as well as access to the Company's planes for your
business and personal needs to the same extent as the same are available to the
other members of the Office of the Chairman.
You will also be eligible to participate in a comprehensive employee
benefits program, which includes medical and dental coverage, life insurance,
disability insurance, retirement plan and 401(k) savings plan, in accordance
with their terms, most of which permit participation on the first day of your
employment.
This letter describes Citigroup's offer of employment. Any other
discussions that you have had with us are not part of our offer unless they are
described in this letter, CAP, the Citigroup 1999 Executive Performance Plan,
SIP, the Citigroup Employee Handbook or the Citigroup Principles of Employment
or are agreed upon in writing by you and the Company.
Welcome to Citigroup!
Sincerely,
/s/ John S. Reed /s/ Sanford I. Weill
- ---------------------- ------------------------
John S. Reed Sanford I. Weill
Agreed:
/s/ Robert E. Rubin Date: January 11, 2000
--------------------- ---------------------
<PAGE>
Schedule B
Schedule of Termination Events
Part A
o any failure by the Company to comply with any of the provisions of
the foregoing letter or the Trust Agreement, other than an isolated,
insubstantial and/or inadvertent failure not occurring in bad faith
and which is promptly remedied by the Company after receipt of
written notice thereof given by Mr. Rubin, including any diminution
of Mr. Rubin's position, including status, offices, titles,
reporting relationships or lack of meaningful participation in the
strategic managerial and operational matters of Citigroup worldwide
o any failure of the Company to nominate or recommend for election Mr.
Rubin as a Director, any failure of the shareholders of the Company
to so elect Mr. Rubin or any failure of the Board of Directors to
elect Mr. Rubin as Chairman of the Executive Committee of the Board
of Directors
o change in the composition of the Office of the Chairman to include
anyone other than Mr. Rubin and the Chairman or Chairmen of the
Board of Directors of the Company in office from time to time
o resignation with the written consent of the Company
o at the written request of the Company or following receipt of
written notice from the Company of termination of Mr. Rubin's
employment
o a relocation of Mr. Rubin's office more than 25 miles outside of
New York City
Part B
o retirement, for which Mr. Ruhin shall be eligible after completing 5
years of service with the Company, whereupon Mr. Rubin's combined
age and service shall be deemed to equal 75 for purposes of all
plans and programs of Citigroup (other than any pension plans
sponsored by the Company or any of its affiliates)
o death or disability
Exhibit 12.01
CITIGROUP, INC.
CALCULATION OF RATIO OF INCOME TO FIXED CHARGES
(In Millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
EXCLUDING INTEREST ON DEPOSITS: 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
FIXED CHARGES:
INTEREST EXPENSE (OTHER THAN
INTEREST ON DEPOSITS) 13,894 15,849 14,911 12,362 13,488
INTEREST FACTOR IN RENT EXPENSE 262 394 301 282 275
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 14,156 16,243 15,212 12,644 13,763
------ ------ ------ ------ ------
INCOME:
INCOME BEFORE TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 15,948 9,269 10,750 11,087 8,914
OTHER -- -- -- 1 --
FIXED CHARGES 14,156 16,243 15,212 12,644 13,763
------ ------ ------ ------ ------
TOTAL INCOME 30,104 25,512 25,962 23,732 22,677
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS 2.13 1.57 1.71 1.88 1.65
====== ====== ====== ====== ======
INCLUDING INTEREST ON DEPOSITS:
FIXED CHARGES:
INTEREST EXPENSE 24,768 27,495 24,524 21,336 22,390
INTEREST FACTOR IN RENT EXPENSE 262 394 301 282 275
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 25,030 27,889 24,825 21,618 22,665
------ ------ ------ ------ ------
INCOME:
INCOME BEFORE TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 15,948 9,269 10,750 11,087 8,914
OTHER -- -- -- 1 --
FIXED CHARGES 25,030 27,889 24,825 21,618 22,665
------ ------ ------ ------ ------
TOTAL INCOME 40,978 37,158 35,575 32,706 31,579
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
INCLUDING INTEREST ON DEPOSITS 1.64 1.33 1.43 1.51 1.39
====== ====== ====== ====== ======
</TABLE>
<PAGE>
CITIGROUP, INC.
CALCULATION OF RATIO OF INCOME TO FIXED CHARGES
INCLUDING PREFERRED STOCK DIVIDENDS
(In Millions)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
EXCLUDING INTEREST ON DEPOSITS: 1999 1998 1997 1996 1995
- ------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
FIXED CHARGES:
INTEREST EXPENSE (OTHER THAN
INTEREST ON DEPOSITS) 13,894 15,849 14,911 12,362 13,488
INTEREST FACTOR IN RENT EXPENSE 262 394 301 282 275
DIVIDENDS--PREFERRED STOCK 232 332 433 505 800
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 14,388 16,575 15,645 13,149 14,563
------ ------ ------ ------ ------
INCOME:
INCOME BEFORE TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 15,948 9,269 10,750 11,087 8,914
OTHER -- -- -- 1 --
FIXED CHARGES (EXCLUDING PREFERRED
STOCK DIVIDENDS) 14,156 16,243 15,212 12,644 13,763
------ ------ ------ ------ ------
TOTAL INCOME 30,104 25,512 25,962 23,732 22,677
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS 2.09 1.54 1.66 1.80 1.56
====== ====== ====== ====== ======
INCLUDING INTEREST ON DEPOSITS:
FIXED CHARGES:
INTEREST EXPENSE 24,768 27,495 24,524 21,336 22,390
INTEREST FACTOR IN RENT EXPENSE 262 394 301 282 275
DIVIDENDS--PREFERRED STOCK 232 332 433 505 800
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 25,262 28,221 25,258 22,123 23,465
------ ------ ------ ------ ------
INCOME:
INCOME BEFORE TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 15,948 9,269 10,750 11,087 8,914
OTHER -- -- -- 1 --
FIXED CHARGES (EXCLUDING PREFERRED
STOCK DIVIDENDS) 25,030 27,889 24,825 21,618 22,665
------ ------ ------ ------ ------
TOTAL INCOME 40,978 37,158 35,575 32,706 31,579
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
INCLUDING INTEREST ON DEPOSITS 1.62 1.32 1.41 1.48 1.35
====== ====== ====== ====== ======
</TABLE>
Exhibit 21.01
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Associated Madison Companies, Inc. Delaware
Mid-America Insurance Services, Inc. Georgia
PFS Services, Inc. Georgia
PFS Shareholder Services * Georgia
The Travelers Insurance Group Inc. Connecticut
The Prospect Company Delaware
One Twenty Five High Street Limited Partnership Massachusetts
Panther Valley, Inc. New Jersey
The Travelers Asset Funding Corporation Connecticut
The Travelers Insurance Company Connecticut
440 South LaSalle LLC Delaware
American Financial Life Insurance Company Texas
Carlton Arms of Bradenton Florida
Crest Funding Partners LP Delaware
Cripple Creek Venture Partner II L.P. * Colorado
Greenwich Street Capital Partners II, L.P. * Delaware
Greenwich Street Capital Partners, L.P. * Delaware
Greenwich Street Investments, L.L.C. Delaware
Greenwich Street Investments, L.P. New York
Greenwich Street Investments II, L.L.C. Delaware
Hollow Creek, L.L.C. Connecticut
Station Hill, L.L.C. Connecticut
Oakbrook Hotel Venture Illinois
Primerica Life Insurance Company Massachusetts
National Benefit Life Insurance Company New York
Primerica Financial Services (Canada) Ltd. Canada
</TABLE>
(1)
1 2 3 4 5 6 7 8 9 10 11 12 13
<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
PFSL Investments Canada Ltd. Canada
Primerica Life Insurance Company of Canada Canada
Primerica Client Services Inc. (Canada) Canada
Primerica Financial Services Ltd. Canada
Prospect/Nissei 190 Limited Partnership Illinois
190 S. LaSalle Associates Limited Partnership * Illinois
Ryan/Travelers Kierland, LLC Delaware
SSB Private Selections, LLC * Delaware
Salomon Smith Barney Private Selection Fund I, LLC New York
Tandem EGI/C Investments, L.P. * Delaware
The Greenwich Street Fund L.P. New York
The Plaza Corporation Connecticut
Keeper Holdings LLC * Delaware
The Copeland Companies (Holding Company) New Jersey
American Odyssey Funds Management, Inc. New Jersey
Copeland Associates, Inc. Delaware
Copeland Associates Agency of Ohio, Inc. Ohio
Copeland Associates of Alabama, Inc. Alabama
Copeland Associates of Montana, Inc. Montana
Copeland Associates of Nevada, Inc. Nevada
Copeland Equities, Inc. New Jersey
Donald F. Smith & Associates New Jersey
H.C. Copeland Associates, Inc. of Massachusetts Massachusetts
H.C. Copeland and Associates, Inc. of Texas Texas
Smith Annuity Services, Inc. New Jersey
Copeland Financial Services, Inc. New Jersey
</TABLE>
(2)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Copeland Mortgage Services, Inc. New Jersey
Travelers/Net Plus Insurance Agency, Inc. Massachusetts
Travelers/Net Plus, Inc. Connecticut
Travelers/Net Plus Agency of Ohio, Inc. Ohio
Tower Square Securities, Inc. Connecticut
Tower Square Securities Insurance Agency of Alabama, Inc. Alabama
Tower Square Securities Insurance Agency of Massachusetts
Massachusetts, Inc.
Tower Square Securities Insurance Agency of New New Mexico
Mexico, Inc.
Tower Square Securities Insurance Agency of Ohio, Inc. Ohio
Tower Square Securities Insurance Agency of Texas, Inc. Texas
Travelers Asset Management International Corporation New York
Travelers Distribution Company Delaware
Travelers Investment Advisers, Inc. Delaware
The Travelers Life and Annuity Company Connecticut
Travelers Annuity UK Investments, LLC Delaware
Travelers/Nissei 190 S. LaSalle Company Illinois
WT Equipment Partners LP Delaware
Tishman Speyer/Travelers Associates III, L.L.C. Delaware
TowerMark of New York New York
Travelers Highland Park, LLC Colorado
Highland Park Ventures, LLC Colorado
Travelers Insurance UK Investments, LLC Delaware
Travelers International Investments Ltd. Cayman Is.
Travelers Opportunity Fund I, LLC Delaware
Tishman Speyer/Travelers Associates Delaware
Travelers Opportunity Fund II, LLC Delaware
</TABLE>
(3)
1 2 3 4 5 6 7 8 9 10 11 12 13
<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Tishman Speyer/Travelers Real Estate Venture, L.P. Delaware
125 High Street, L.P. Delaware
TST 2010 N. First, L.L.C. Delaware
TST 375 Hudson, L.L.C. Delaware
TST 525 West Monroe, L.L.C. Delaware
TST 745 Atlantic, L.L.C. Delaware
TST Mountain Bay, L.L.C. Delaware
TST One Indiana, L.L.C. Delaware
TST Tower, L.L.C. Delaware
TST Wilshire, L.L.C. Delaware
Travelers Schaumberg Windy Point LLC Delaware
Windy Point of Schaumberg LLC Delaware
Travelers/NLI 190 South LaSalle Street, L.L.C. * Delaware
Travelers York Road LLC Delaware
York Road Properties LLC Delaware
Travko 1999-1, L.P. Texas
Tribeca Distressed Securities, L.L.C. * Delaware
Tribeca Management, L.L.C. Delaware
TriCounty Grove Florida
Umbrella Capital Company LLC Delaware
WT Equipment Partners LP Delaware
Travelers Mortgage Securities Corporation Delaware
Travelers Property Casualty Corp. ** Delaware
The Standard Fire Insurance Company Connecticut
AE Properties, Inc. California
AE Town and Country Limited Partnership Arizona
</TABLE>
(4)
1 2 3 4 5 6 7 8 9 10 11 12 13
<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Bayhill Associates California
Bayhill Restaurant II Associates California
Industry Land Development Company California
Industry Partners * California
Community Rehabilitation Investment Corporation Connecticut
Pratt Street, L.P. * Connecticut
The Automobile Insurance Company of Hartford, Connecticut Connecticut
TravCal Secure Insurance Company California
TravCal Indemnity Company California
Travelers Alpha Holdings, Inc. * Connecticut
TIMCO ALPHA I, LLC * Connecticut
Travelers Personal Security Insurance Company Connecticut
Travelers Property Casualty Insurance Company Connecticut
Travelers Property Casualty Insurance Company of Illinois Illinois
The Travelers Indemnity Company Connecticut
Commercial Insurance Resources, Inc. Delaware
Gulf Insurance Company Missouri
Atlantic Insurance Company Texas
Gulf Group Lloyds Texas
Gulf Insurance Holdings UK Limited England
Gulf Insurance Company U.K. Limited England
Gulf Underwriting Holdings Limited England
Gulf Risk Services, Inc. Delaware
Gulf Underwriters Insurance Company Missouri
Select Insurance Company Texas
Countersignature Agency, Inc. Florida
</TABLE>
(5)
1 2 3 4 5 6 7 8 9 10 11 12 13
<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Crest Funding Partners LP Delaware
Cripple Creek Venture Partner L.P. * Colorado
European GREIO/TINDC Real Estate Investments LLC Delaware
First Floridian Auto and Home Insurance Company Florida
First Trenton Indemnity Company New Jersey
Red Oak Insurance Company New Jersey
Midkiff Development Drilling Program, L.P. * Texas
Secure Affinity Agency, Inc. Delaware
The Charter Oak Fire Insurance Company Connecticut
The Phoenix Insurance Company Connecticut
Constitution State Service Company Montana
Constitution State Services LLC * Delaware
Phoenix UK Investments, LLC Connecticut
The Travelers Indemnity Company of America Connecticut
The Travelers Indemnity Company of Connecticut Connecticut
WT Equipment Partners LP Delaware
The Travelers Indemnity Company of Illinois Illinois
The Premier Insurance Company of Massachusetts Massachusetts
The Travelers Home and Marine Insurance Company Connecticut
The Travelers Indemnity Company of Missouri Missouri
The Travelers Lloyds Insurance Company Texas
The Travelers Marine Corporation California
TravCo Insurance Company Connecticut
Travelers Bond Investments, Inc. Connecticut
Travelers Foreign Bond Partnership * Connecticut
Travelers General Agency of Hawaii, Inc. Hawaii
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Travelers Medical Management Services Inc. Delaware
Triple T Diamond Gateway LLC Connecticut
WT Equipment Partners LP Delaware
TPC Investments, Inc. Connecticut
Travelers (Bermuda) Limited Bermuda
Travelers Casualty and Surety Company Connecticut
2677 Main Street Associates LLC Delaware
AE Development Group, Inc. Connecticut
Farmington Casualty Company Connecticut
Travelers MGA, Inc. Texas
Ponderosa Homes * Connecticut
T-W Master LLC Delaware
T-W Santa Clara LLC Delaware
TCS European Investments, Inc. Connecticut
TCS International Investments, Ltd. Cayman Islands
Travelers Casualty & Surety Company of Canada Canada
Travelers Casualty and Surety Company of America Connecticut
Travelers Casualty and Surety Company of Illinois Illinois
Travelers Casualty Company of Connecticut Connecticut
Travelers Casualty UK Investments, LLC Connecticut
Travelers Commercial Insurance Company Connecticut
Travelers Excess and Surplus Lines Company Connecticut
Travelers Lloyds of Texas Insurance Company Texas
Travelers Tribeca Investments, Inc. * New York
Tribeca Investments, L.L.C. * Delaware
Triple T Brentwood, L.L.C. Delaware
Travelers P&C Capital I Delaware
Travelers P&C Capital II Delaware
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Travelers P&C Capital III Delaware
Tribeca Alternative Strategies, Inc. Connecticut
Primerica Client Services, Inc. (USA) Delaware
Primerica Convention Services, Inc. Georgia
Primerica Finance Corporation Delaware
PFS Distributors, Inc. Georgia
PFS Investments Inc. Georgia
PFS T.A., Inc. Delaware
Primerica Financial Services Home Mortgages, Inc. Georgia
Primerica Financial Services Home Mortgages Limited Partnership of Arizona Delaware
Primerica Financial Services Home Mortgages Limited Partnership of North Carolina
North Carolina
Primerica Financial Services Home Mortgages Limited Partnership of Ohio Ohio
Primerica Financial Services, Inc. Nevada
Primerica Financial Insurance Services of Texas, Inc. Texas
Primerica Financial Services Agency of New York, Inc. New York
Primerica Financial Services Insurance Marketing of Idaho, Inc. Idaho
Primerica Financial Services Insurance Marketing of Maine, Inc. Maine
Primerica Financial Services Insurance Marketing of Nevada, Inc. Nevada
Primerica Financial Services Insurance Marketing of Pennsylvania, Inc. Pennsylvania
Primerica Financial Services Insurance Marketing of the Virgin Islands, Inc. U.S. Virgin Islands
Primerica Financial Services Insurance Marketing of Wyoming, Inc. Wyoming
Primerica Financial Services Insurance Marketing, Inc. Delaware
Primerica Financial Services of Alabama, Inc. Alabama
Primerica Financial Services of Arizona, Inc. Arizona
Primerica Financial Services of Kentucky, Inc. Kentucky
Primerica Financial Services of New Mexico, Inc. New Mexico
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Primerica Insurance Agency of Massachusetts, Inc. Massachusetts
Primerica Insurance Marketing Services of Puerto Rico, Inc. Puerto Rico
Primerica Insurance Services of Louisiana, Inc. Louisiana
Primerica Services, Inc. Georgia
SL&H Reinsurance, Ltd. Leeward Islands
Southwest Service Agreements, Inc. North Carolina
Southwest Warranty Corporation Florida
CCC Fairways, Inc. Delaware
Citigroup Capital I Delaware
Citigroup Capital II Delaware
Citigroup Capital III Delaware
Citigroup Capital IV Delaware
Citigroup Capital V Delaware
Citigroup Capital VI Delaware
Citigroup Capital VII Delaware
Citigroup Holdings Company Delaware
Citicorp Delaware
Citibank (Florida), National Association USA
Citibank Mortgage Corp. Florida
Citibank Commercial Properties, Inc. Florida
Income Service Group, Inc. Florida
Land Service Group, Inc. Florida
RRR Property Management, Inc. Florida
Thirteen Property Management, Inc. Florida
Citibank (Nevada), National Association U.S.A.
Citibank (New York State) New York
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citicorp Development Center, Inc. Delaware
Diners Club International Ltd. New York
Student Loan Corporation, The Delaware
Citibank (South Dakota), N.A. U.S.A.
CDC Holdings Inc. Delaware
Citicorp Diners Club Inc. Delaware
Citicorp Trust South Dakota South Dakota
CitiHousing, Inc. South Dakota
Citibank Delaware Delaware
Citibank Insurance Agency, Inc. New York
Citicorp Delaware Equity, Inc. Delaware
Fairfax Holdings, Inc. Delaware
Citicorp Del-Lease, Inc. Delaware
Citicorp Aircraft Management, Inc. Delaware
Citicorp Bankers Leasing Corporation Delaware
Bankers Leasing Corporation Massachusetts
BLC Corporation Utha
Citicorp Bankers Leasing Finance Corporation Delaware
Commetro Leasing, Inc. Delaware
Commonwealth Control, Inc. Delaware
Commonwealth Plan, Inc., The Massachusetts
Commonwealth System, Inc., The Massachusetts
Financial Leasing Corporation Massachusetts
Pacific Plan, Inc., The Massachusetts
Worcester Plan, Inc., The Massachusetts
CBL Capital Corporation Delaware
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citicorp Delaware Properties, Inc. Delaware
Citicorp Nevada Credit, Inc. Nevada
Citicorp Nevada Leasing, Inc. California
G.W.L. Leasing Company, Incorporated California
GXW Corporation California
Palm Defeasance Company Delaware
Citicorp Insurance Agency, Inc. Delaware
Citicorp Insurance Agency, Inc. Missouri
Citicorp Insurance Agency, Inc. California
Citicorp Life Insurance Company * Arizona
Citicorp Assurance Co. Delaware
First Citicorp Life Insurance Company New York
Citicorp Railmark, Inc. Delaware
Citicorp U.S. Holdings Netherlands, Inc. Delaware
Citicorp Holdings Netherlands B.V. Netherlands
Citibank, N.A. U.S.A.
399 Venture Partners, Inc. Delaware
Banco de Honduras S.A. Honduras
Camwil Lease, Inc. Delaware
Citicorp Investor Lease, Inc. Delaware
Citicorp Multilease (SEF), Inc. Delaware
Citi (Nominees) Limited Hong Kong
Citi Center Building Corporation Philippines
Citi Tower Building Corporation Philippines
CitiAch, Inc. * Delaware
Citibank (Channel Islands) Limited Channel Islands
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
CCIL (Nominees) Limited Channel Islands
CCIL Pension Scheme Trustees Limited Channel Islands
Citibank (Zaire) S.A.R.L. Congo
Citibank Consumers Nominee Pte. Ltd. Singapore
Citibank International USA
Citibank-Maghreb Morocco
Citibank Mortgage Reinsurance, Inc. Vermont
Citibank Chile Corredores de Seguros S.A. * Chile
Citibank Nominees (Ireland) Limited Ireland
Citibank Nominees Singapore Pte. Ltd. Singapore
Citibank Overseas Investment Corporation USA
Asia Pacific Technology Services Pte. Limited Singapore
Banco Citibank S.A. Brazil
Citibank-Corretora de Cambio, Titulos e Valores Mobiliarios Brazil
S.A.
Citibank-Distribuidora de Titulos e Valores Mobiliarios S.A. Brazil
Citibank Companhia Hipotecaria S.A. Brazil
Banco de Desarrollo Citicorp, S.A. Dominican Republic
Citinversiones de Titulos y Valores (Puesto de Bolsa) S.A. Dominican Republic
Berlin Real Estate B.V. Netherlands
CCSCI, Inc. Puerto Rico
Centaur Investment Corporation Delaware
Citi Chrematodotikes Misthosis S.A. Greece
Citi Inversiones, S.A. de C.V. El Salvador
Citi Valores de El Salvador S.A. de C.V. El Salvador
Citi Mutual Funds Management Company S.A. Greece
Citi-Info, S.A. de C.V. Mexico
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citi-Inmobiliaria e Inversiones, S.A. de C.V. Honduras
Citibank (Poland) S.A. Poland
Citibrokerage S.A. Poland
Citileasing Sp. z o.o. Poland
Citibank (Slovakia) a.s. Slovakia
Citibank a.s. Czech Republic
Citicorp Securities (CR), s.r.o. Czech Republic
Citibank Belgium S.A./N.V. Belgium
Citibank Berhad Malaysia
Citicorp Nominee (Malaysia) Sendirian Berhad Malaysia
Citicorp Nominees (Asing) Sdn. Bhd. Malaysia
Citicorp Nominees (Tempatan) Sdn. Bhd. Malaysia
Citibank Canada Canada
1084851 Ontario Inc. Canada
1169513 Ontario Inc. Canada
2490827 Nova Scotia Limited Canada
3121615 Canada Inc. Canada
Palace Place Limited Partnership Canada
3278662 Canada Inc. Canada
598299 Alberta Limited Canada
Avenida Place Shopping Centre Ltd. Canada
Bershaw & Company Canada
Chudleigh Funding Inc. Canada
Citibank Canada Investment Funds Limited Canada
Citibank Nominees Ltd. Canada
Citicorp Capital Investors Ltd. Canada
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
CitiFinancial Canada, Inc. Canada
Citibank Capital Corporation Cayman Is.
Citibank Colombia * Colombia
Cititrust Colombia S.A. Sociedad Fiduciaria * Colombia
Citibank-Colombia (Nassau) Limited Bahamas
Leasing Citibank S.A. Compania de Financiamiento Comercial * Colombia
Citibank Espana S.A. Spain
Cantabra de Aviacion, Sociedad Limitada Spain
Citi Operaciones A.I.E. * Spain
Citi Recovery, A.I.E. * Spain
Citibank Broker Correduria de Seguros S.A. Spain
Citiconsulting A.I.E. * Spain
Citigestion, Sociedad Gestora de Instituciones de Inversion Spain
Colectiva, S.A.
Citihouse, S.A. Spain
CITIPENSIONES, ENTIDAD GESTORA DE FONDOS DE PENSIONES, S.A. Spain
Citibank Finance Limited Singapore
Citibank Housing Finance Company Limited Pakistan
Citibank Investment and Securities Rt. Hungary
Citibank Investment Services Ireland Ltd. Ireland
Citi Institutional Liquidity Fund plc Ireland
Citibank Investment Services Limited Hong Kong
Citibank Investments Limited England
Channel Collections Limited England
CIB Properties Limited England
Citi Pensions & Trustees Limited England
Citibank International plc England
</TABLE>
(14)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citi-Immobilier S.A. France
Citibank, S.A. France
Citi Chanzy S.A. France
Citi Churchill S.A. France
Leadair Assurances France
Leadair Selection France
Vidacos Nominees Limited England
Citibank London Nominees Limited England
Citibank Pensions Trustees Ireland Ltd. Ireland
Citicorp Capital Limited England
Citicorp Trustee Company Limited England
Norwich Property Trust Limited England
Citicorporate Limited England
Citidealings Limited England
CitiFriends Nominee Limited England
CITILOANS PLC England
Citinet Limited England
Citivic Nominees Limited England
CUIM NOMINEE LIMITED England
N.C.B. Trust Limited England
National City Nominees Limited England
New York London Finance Co. Limited England
SNC CITI GESTION * France
SNC CITI MANAGEMENT * France
Citibank Malaysia (L) Limited Malaysia
CITIBANK MERCADO DE CAPITALES, CITIMERCA C.A. Venezuela
</TABLE>
(15)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citibank Nigeria Nigeria
Citibank Romania S.A. Romania
Citibank Rt. Hungary
European Commercial Bank Ltd. * Hungary
EKB Kereskedelmi es Szolgaltato Kft. Hungary
Citibank Securities Investment Trust Company Limited Taiwan
Citibank Shipping Bank S.A. Greece
Citibank T/O Russia
Citibank Tanzania Limited Tanzania
Citibank Trustees (Ireland), Limited Ireland
Citibank Uganda Limited Uganda
CitiCapital Limited Thailand
Citicard S.A. Argentina
CITICO, SGPS, Lda. * Portugal
Citibank Portugal, S.A. Portugal
Citicorp (B) Sdn. Bhd. Brunei
Citicorp Administradora de Inversiones S.A. Argentina
Citicorp Asesora de Seguros S.A. Argentina
Citicorp Capital Asia (Taiwan) Ltd. Taiwan
Citicorp Capital Asia Limited Bahamas
Citicorp China Investment Management (BVI) Limited British Virgin Is.
Citicorp China Investment Management Limited Hong Kong
CVC Asia Pacific Limited Hong Kong
Citicorp Capital Markets Sociedad Anonima Argentina
Citicorp Valores S.A. Sociedad de Bolsa * Argentina
Citicorp Capital Markets Uruguay S.A. Uruguay
</TABLE>
(16)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citicorp Capital Philippines, Inc. * Philippines
Citicorp Capital Sdn. Bhd. Malaysia
Citicorp Chile S.A. Chile
Citicorp Chile Administradora de Fondos de Inversion S.A. Chile
Citicorp Chile Administradora de Fondos Mutuos S.A. Chile
Citicorp Chile S.A. Corredores de Bolsa Chile
Citicorp Chile Servicios y Asesorias Limitada Chile
Empresa de Cobranzas y Verificaciones Afines S.A. Chile
Finauto S.A. Chile
Inversiones y Financiamientos Comerciales S.A. Chile
Sociedad Comercial Citibank Leasing S.A. Chile
Citicorp Commercial Finance (H.K.) Ltd. Hong Kong
Citicorp Credit Guam
Citicorp Deutschland Aktiengesellschaft Germany
CCD Immobilien Beteiligungs GmbH Germany
CCD Immobilien Beteiligungs GmbH & Co. Frankfurt Buero KG * Germany
CCD Immobilien Beteiligungs GmbH & Co. Frankfurt Hotel KG * Germany
Citibank Beteiligungen Aktiengesellschaft Germany
Citi Services GmbH Germany
Citibank Aktiengesellschaft * Germany
Citibank Privatkunden AG Germany
Citicorp Card Operations GmbH Germany
Citicorp Dienstleistungs GmbH Germany
Citicorp Kartenservice GmbH Germany
Citicorp Leasing (Deutschland) GmbH Germany
Achtundzwanzigste Gamma Trans Leasing Verwaltungs GmbH Germany
& Co. Finanzierungs-Management KG *
</TABLE>
(17)
1 2 3 4 5 6 7 8 9 10 11 12 13
<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Achtzehnte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG *
Beta Trans Leasing Verwaltungs GmbH Germany
Dreissigste Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG *
Dreiundzwanzigste Gamma Trans Leasing Verwaltungs GmbH & Germany
Co. Finanzierungs-Management KG *
Dritte Beta Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG *
Einunddreissigste Gamma Trans Leasing Verwaltungs GmbH & Germany
Co. Finanzierungs-Management KG *
Einundzwanzigste Gamma Trans Leasing Verwaltungs GmbH & Germany
Co. Finanzierungs-Management KG *
Fuenfte Beta Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG *
Fuenfundzwanzigste Gamma Trans Leasing Verwaltungs GmbH & Germany
Co. Finanzierungs-Management KG *
Gamma Trans Leasing Verwaltungs GmbH Germany
Dreizehnte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG
Elfte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG
Fuenfzehnte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG
Gamma Trans Leasing Verwaltungs GmbH & Co. Achte Germany
Finanzierungs-Management KG
Gamma Trans Leasing Verwaltungs GmbH & Co. Dritte Germany
Finanzierungs-Management KG
Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG
Gamma Trans Leasing Verwaltungs GmbH & Co. Fuenfte Germany
Finanzierungs-Management KG
Gamma Trans Leasing Verwaltungs GmbH & Co. Neunte Germany
Finanzierungs-Management KG
Gamma Trans Leasing Verwaltungs GmbH & Co. Sechste Germany
Finanzierungs-Management KG
Gamma Trans Leasing Verwaltungs GmbH & Co. Siebte Germany
Finanzierungs-Management KG
Gamma Trans Leasing Verwaltungs GmbH & Co. Vierte Germany
Finanzierungs-Management KG
Gamma Trans Leasing Verwaltungs GmbH & Co. Zweite Germany
Finanzierungs-Management KG
Sechzehnte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG
Siebzehnte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG
Vierzehnte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG
Zehnte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG
</TABLE>
(18)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Zwoelfte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG
Neunundzwanzigste Gamma Trans Leasing Verwaltungs GmbH & Germany
Co. Finanzierungs-Management KG *
Neunzehnte Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG *
Sechsundzwanzigste Gamma Trans Leasing Verwaltungs GmbH & Germany
Co. Finanzierungs-Management KG *
Siebenundzwanzigste Gamma Trans Leasing Verwaltungs GmbH & Germany
Co. Finanzierungs-Management KG *
Vierte Beta Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG *
Vierundzwanzigste Gamma Trans Leasing Verwaltungs GmbH & Germany
Co. Finanzierungs-Management KG *
Zwanzigste Gamma Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG *
Zweite Beta Trans Leasing Verwaltungs GmbH & Co. Germany
Finanzierungs-Management KG *
Zweiundzwanzigste Gamma Trans Leasing Verwaltungs GmbH & Germany
Co. Finanzierungs-Management KG *
Citicorp Operations Consulting GmbH Germany
Citifinanzberatung GmbH Germany
Citicorp Diners Club Switzerland Ltd. Switzerland
Citicorp European Service Center B.V. Netherlands
Citicorp Finance (India) Limited India
Citicorp Maruti Finance Ltd. India
Citicorp Finance & Securities (Thailand) Ltd. Thailand
Citicorp Finance International Ltd. Bermuda
Citicorp Finance Ireland Limited Ireland
Citicorp (Dublin) Finance Ireland
Citicorp Financial Services Corporation Puerto Rico
Citicorp Financial Services Limited Hong Kong
Citicorp Finanziaria S.p.A. Italy
Citicorp FSC I Ltd. Bermuda
Citicorp General Insurance Agency Corporation Taiwan
Citicorp Gulf Finance Ltd. United Arab Emirates
</TABLE>
(19)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citicorp Insurance Agency Co., Ltd. Taiwan
Citicorp International Limited Hong Kong
Citicorp International Securities Finance Ltd England
Citicorp International Securities Ltd England
Citicorp Inversora S.A. Gerente de Fondos Comunes de Inversion Argentina
Citicorp Investicni Spolecnost, a.s. Czech Republic
Citicorp Investment Bank (Singapore) Limited Singapore
Citicorp Investment Services Limited Hong Kong
Citicorp Leasing (Thailand) Limited Thailand
Citicorp Leasing Argentina S.A. Argentina
Citicorp Leasing International, Inc. Delaware
Citicorp Card Services, Inc. Delaware
Citicorp Credit, Inc. Japan
Citilease Company Ltd. Japan
Aarhus Aircraft Ltd. Japan
Alpha Aircraft Ltd. Japan
AMS Aircraft Ltd. Japan
Andromeda Citiaircraft Ltd. Japan
Arboga Aircraft Ltd. Japan
Arizona Aircraft Ltd. Japan
Arlanda Aircraft Ltd. Japan
Ascot Aircraft Ltd. Japan
Atlanta Aircraft Ltd. Japan
BALTIC AIRCRAFT LTD. Japan
Beta Aircraft Ltd. Japan
Birmingham Aircraft Ltd. Japan
</TABLE>
(20)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Bishop Aircraft Ltd. Japan
Boston Aircraft Ltd. Japan
Bristol Aircraft Ltd. Japan
Bromma Aircraft Ltd. Japan
Bunga Emas Ltd. Japan
California Aircraft Ltd. Japan
Cambridge Aircraft Ltd. Japan
Castle Aircraft Ltd. Japan
Charlie Aircraft Ltd. Japan
Chicago Aircraft Ltd. Japan
Colorado Aircraft Ltd. Japan
Condor Aircraft Ltd. Japan
Coventry Aircraft Ltd. Japan
Crane Aircraft Ltd. Japan
Crown Aircraft Ltd. Japan
Crux Leasing Co. Ltd. Japan
CSA ROBIN AIRCRAFT LTD. Japan
CSA SWAN AIRCRAFT LTD. Japan
Curie Aircraft Ltd. Japan
Daini Citiaircraft Ltd. Japan
Dallas Aircraft Ltd. Japan
Delta Aircraft Ltd. Japan
Denver Aircraft Ltd. Japan
Detroit Aircraft Ltd. Japan
Donau Aircraft Ltd. Japan
Durham Aircraft Ltd. Japan
</TABLE>
(21)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Eagle Aircraft Ltd. Japan
Echo Aircraft Ltd. Japan
Eiffel Aircraft Ltd. Japan
Elbe Aircraft Ltd. Japan
Elysee Aircraft Ltd. Japan
EMS Aircraft Ltd. Japan
ENNS Lease Co., Ltd. Japan
Epsilon Aircraft Ltd. Japan
Erie Aircraft Ltd. Japan
Europe Aircraft Ltd. Japan
Fairfield Aircraft Ltd. Japan
Florida Aircraft Ltd. Japan
Fornebu Aircraft Ltd. Japan
Foxtrot Aircraft Ltd. Japan
Gamma Aircraft Ltd. Japan
Goteborg Aircraft Ltd. Japan
Hague Aircraft Ltd. Japan
Havel Aircraft Ltd. Japan
Honolulu Aircraft Ltd. Japan
Houston Aircraft Ltd. Japan
Huron Aircraft Ltd. Japan
Huskvarna Aircraft Ltd. Japan
Illinois Aircraft Ltd. Japan
Indiana Aircraft Ltd. Japan
Isar Aircraft Ltd. Japan
Ithaca Aircraft Ltd. Japan
</TABLE>
(22)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Jota Aircraft Ltd. Japan
Jupiter Aircraft Ltd. Japan
King Aircraft Ltd. Japan
Knight Aircraft Ltd. Japan
LA Aircraft Ltd. Japan
Lahn Aircraft Ltd. Japan
Lambda Aircraft Ltd. Japan
LEONE LEASE LTD. Japan
Linden Citiaircraft Ltd. Japan
Liverpool Aircraft Ltd. Japan
Loire Aircraft Ltd. Japan
London Aircraft Ltd. Japan
Louvre Aircraft Ltd. Japan
Madrid Aircraft Ltd. Japan
Main Aircraft Ltd. Japan
Manchester Aircraft Ltd. Japan
Maple Aircraft Ltd. Japan
Marseilles Aircraft Ltd. Japan
Mette Aircraft Ltd. Japan
Miami Aircraft Ltd. Japan
Michigan Aircraft Ltd. Japan
Milwaukee Aircraft Ltd. Japan
Minnesota Aircraft Ltd. Japan
Molen Aircraft Ltd. Japan
Mosel Aircraft Ltd. Japan
Nashville Aircraft Ltd. Japan
</TABLE>
(23)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Neckar Aircraft Ltd. Japan
NS Cititrain Ltd. Japan
Oder Aircraft Ltd. Japan
Ohio Aircraft Ltd. Japan
Oregon Aircraft Ltd. Japan
Ottawa Aircraft Ltd. Japan
Oxford Aircraft Ltd. Japan
Paris Aircraft Ltd. Japan
Pegasus Leasing Co. Ltd. Japan
Phoenix Aircraft Ltd. Japan
Quebec Aircraft Ltd. Japan
Queen Aircraft Ltd. Japan
Rhein Aircraft Ltd. Japan
Rotter Aircraft Ltd. Japan
Saale Aircraft Ltd. Japan
Sakura FA Citiaircraft Ltd. Japan
Seagull Aircraft Ltd. Japan
Seattle Aircraft Ltd. Japan
Seine Aircraft Ltd. Japan
Sigma Aircraft Ltd. Japan
St. Louis Aircraft Ltd. Japan
Stamford Aircraft Ltd. Japan
Stockholm Aircraft Ltd. Japan
Tachibana FA Citiaircraft Ltd. Japan
Tampa Aircraft Ltd. Japan
Theta Aircraft Ltd. Japan
</TABLE>
(24)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Tokyo FA Citiaircraft Ltd. Japan
Toronto Aircraft Ltd. Japan
Uppsala Aircraft Ltd. Japan
Utrecht Aircraft Ltd. Japan
Vancouver Aircraft Ltd. Japan
VENUS AIRCRAFT LTD. Japan
Versailles Aircraft Ltd. Japan
Washington Aircraft Ltd. Japan
Windsor Aircraft Ltd. Japan
Zwolle Aircraft Ltd. Japan
Citicorp Menkul Kiymetler Anonim Sirketi Turkey
Citicorp Merchant Bank Limited Trinidad & Tobago
Citibank (Trinidad & Tobago) Limited Trinidad & Tobago
Citicorp Overseas Software Limited * India
Citicorp Brokerage (India) Limited India
Citicorp P.R. Mortgage, Inc. Puerto Rico
Citicorp Pension Management Ltd. Bahamas
CITICORP SECURITIES BOLIVIA S.A. Bolivia
Citicorp Securities International (RP) Inc. Philippines
Citicorp Financial Services and Insurance Brokerage Philippines
Philippines, Inc.
Veritas Holdings Limited British Virgin Islands
Citicorp Services Limited New Zealand
Advanced Futures Limited New Zealand
Citibank Global Asset Management Limited New Zealand
Citibank Nominees (New Zealand) Limited New Zealand
Citicorp Capital Markets New Zealand Limited New Zealand
</TABLE>
(25)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citicorp New Zealand Limited New Zealand
Future Technology Limited New Zealand
Optional Development Holdings Limited New Zealand
Seabird Limited New Zealand
Citicorp Servium S.A. Peru
Citicorp Peru S.A. Sociedad Agente de Bolsa * Peru
Citicorp Peru Sociedad Titulizadora S.A. Peru
Citileasing S.A. * Peru
Citicorp Subsahara Investments, Inc. Delaware
Citicorp Trade Services (Malaysia) Sendirian Berhad Malaysia
Citicorp Trustee (Singapore) Limited Singapore
Citicorp Ventures Philippines, Inc. Philippines
Citicredito S.A. Honduras
Citidatos S.A. Ecuador
Citifinance Limited Jamaica
Citimerchant Bank Limited Jamaica
Citinversiones, S.A. Guatemala
Citinvest S.p.A. Italy
Citilease, S.A. Belgium
Citilease Finansal Kiralama Anonim Sirketi Turkey
CitiLeasing (Hungary) Ltd. Hungary
Citileasing s.r.o. Czech Republic
Citinvest Casa de Bolsa Sociedad Anonima Paraguay
Citinvestment Chile Limited Bahamas
Citiportfolio Limited Channel Islands
CitiProperties (BVI) Limited British Virgin Is.
</TABLE>
(26)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
CitiRealty (BVI) Limited British Virgin Is.
CitiRealty (Hong Kong) Limited Hong Kong
CitiRealty China (BVI) Limited Tortola, Britisn Virgn Is.
Garden Road (BVI) Limited British Virgin Is.
CitiProperties (Hong Kong) Limited Hong Kong
CitiService S.p.A. Italy
Cititarjetas de Guatemala, S.A. Guatemala
Cititrust (Bahamas) Limited Bahamas
Albacore Investments, Ltd. Bahamas
Antares Associates Limited Bahamas
Astaire Associates Limited Bahamas
Beaconsfield Holdings Limited Bahamas
Cititrust Services Limited Bahamas
Donat Investments S.A. Bahamas
First National Nominees, Ltd. Bahamas
Hitchcock Investments S.A. Bahamas
Madeleine Investments S.A. Bahamas
Providence Associates, Ltd. Bahamas
Cititrust (Cayman) Limited Cayman Is.
Brennan Limited Switzerland
Buchanan Limited Switzerland
Tyler Limited Switzerland
Cititrust (Jersey) Limited Channel Islands
Secundus Nominees (Jersey) Limited Channel Islands
Tertius Nominees (Jersey) Limited Channel Islands
Cititrust (Kenya) Limited Kenya
</TABLE>
(27)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Cititrust (Switzerland) Limited Switzerland
Cititrust and Banking Corporation Japan
Citivalores de Honduras, S.A. Honduras
Citivalores, S.A. Guatemala
Citivalores, S.A. Panama
CJSC Citibank Kazakhstan Kazakhstan
CORPIFEXSA, Corporacion de Inversiones y Fomento de Exportaciones Ecuador
S.A.
Cititrading S.A. Casa de Valores Ecuador
Inmociti S.A. Ecuador
Corporacion Citibank G.F.C. S.A. Costa Rica
Asesores Corporativos de Costa Rica, S.A. Costa Rica
Citibank (Costa Rica) Sociedad Anonima Costa Rica
Citiseguros de Costa Rica, S.A. Costa Rica
Cititarjetas, S.A. Costa Rica
Citivalores Puesto de Bolsa, S.A. Costa Rica
Creinvest B.V. Netherlands
Decajo Finance ApS Denmark
Diners Club (Thailand) Limited, The Thailand
Diners Club Argentina S.A.C. y de T. Argentina
Diners Travel S.A.C. y de T. Argentina
Servicios Comerciales S.A.C.I.M. y F. Argentina
Diners Club Benelux S.A., The Belgium
Diners Club de Mexico S.A. de C.V. Mexico
Diners Club Deutschland GmbH Germany
Diners Club International (Hong Kong) Limited Hong Kong
Diners Club International (Taiwan) Limited Taiwan
</TABLE>
(28)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Diners Club of Greece, S.A. Greece
Diners Club Uruguay S.A. Uruguay
Fimen S.A. Belgium
Citicorp Insurance Services S.A./N.V. Belgium
Citibank Insurance Services S.A. Greece
FNC-Comercio e Participacoes Ltda. Brazil
Chelsea-Empreendimentos e Participacoes Limitada Brazil
Citi CP Mercantil S.A. Brazil
Citibank Leasing S.A.-Arrendamento Mercantil Brazil
Citicorp Corretora de Seguros S.A. Brazil
Mibrak S.A. Uruguay
FOFIP S.A. Uruguay
Foremost Investment Corporation Delaware
FREPERP 1 LLC Delaware
FREPERP 2 LLC Delaware
Grupo Financiero Citibank, S.A. de C.V. Mexico
Arrendadora Citibank, S.A. de C.V., Organizacion Auxiliar del Mexico
Credito, Grupo Financiero Citibank
Casa de Bolsa Citibank, S.A. de C.V., Grupo Financiero Citibank Mexico
Citibank Mexico, S.A., Grupo Financiero Citibank Mexico
Desarrolladora Mexicana de Inmuebles, S.A. de C.V. Mexico
Hacienda El Campanario, S.A. de C.V. Mexico
Imref S.A. de C.V. Mexico
Inmobiliaria Confia, S.A. de C.V. Mexico
Trust Number F193-4 Mexico
Hanseatic Real Estate B.V. * Netherlands
Inarco International Bank N.V. Aruba
</TABLE>
(29)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Interco (Intermediaciones Comerciales) S.A. Bolivia
International Finance Associates, B.V. Netherlands
Citicorp Investment Bank (The Netherlands) N.V. Netherlands
Citicorp Leasing Nederland, B.V. Netherlands
Inversiones Citicorp (R.D.), S.A. Dominican Republic
Inversiones y Adelantos, C.A. Venezuela
JSCB Citibank (Ukraine) Ukraine
Latin American Investment Bank Bahamas Limited Bahamas
Brazil Bond Trust New York
Citibrazil Bond Fund-Fundo de Renda Fixa Capital Brazil
Estrangeiro
Citibank Brazilian Annex VI Trust New York
Foreign Investment Fundo Renda Fixa Capital Estrangeiro Brazil
Matrix Ltd. Bermuda
Menara Citi Holding Company Sdn. Bhd. Malaysia
Nessus Investment Corporation Delaware
Citibank Limited Australia
Outsourcing Investments Pty. Limited Australia
Citicorp Capital Markets Australia Limited Australia
Citifutures Limited Australia
Citisecurities Limited Australia
Citicorp Equity Capital Limited Australia
Citicorp Group Superannuation Limited Australia
Citicorp Investments Limited * Australia
Citicorp Limited Australia
Citicorp General Insurance Limited Australia
Citicorp Life Insurance Limited Australia
</TABLE>
(30)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Margaret Street Nominees Pty. Limited Australia
Citicorp Nominees Pty. Limited Australia
Citicorp Regional Service Centre Pty. Ltd. Australia
Phinda Pty. Limited Australia
Remittance Collection Services Limited Australia
Tarwood Pty. Limited Australia
Diners Club Pty. Ltd. * Australia
Nostro Investment Corporation Delaware
P.T. Citicorp Finance Indonesia Indonesia
P.T. Citicorp Securities Indonesia Indonesia
Pavec Developments Limited Ireland
Premium Finance No. 3 C.V. Netherlands
Provencred 1 Cayman Islands
Provencred 2 Cayman Islands
Silefed S.R.L. Argentina
Repfin Ltda. Colombia
Citivalores S.A. Comisionista de Bolsa * Colombia
Compania Exportadora Cityexport S.A. * Colombia
Salomon Smith Barney Securities (Taiwan) Limited Taiwan
Scottish Provident (Irish Holdings) Limited Ireland
Tarjetas de Chile S.A. Chile
Universal Holdcorp, Inc. Delaware
Vialattea LLC Delaware
Buconero LLC Delaware
Yonder Investment Corporation Delaware
Citibank Premium Finance No. 1, Ltd. Channel Islands
</TABLE>
(31)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citibank Premium Finance No. 2, Ltd. Channel Islands
Citibank Strategic Technology Inc. Delaware
Citibank Zambia Limited Zambia
Citibureau Zambia Limited Zambia
CitiCal, Inc. California
One Sansome Street Associates California
Sansome Land Associates California
Citicorp Capital Investors, Limited Delaware
Citicorp Mezzanine Partners III, L.P. Delaware
CVC Capital Funding, Inc. Delaware
CVC Capital Funding, LLC Delaware
World Subordinated Debt Partners, L.P. Delaware
Citicorp Electronic Commerce, Inc. New York
Citicorp Finance Puerto Rico, Inc. Puerto Rico
Citicorp Financial Guaranty Holdings, Inc. Delaware
Citicorp Insurance Services, Inc. Delaware
Citicorp Interim Services, Inc. Delaware
ADV Eleven, Inc. Delaware
AZ Notes Corp. Arizona
Monaco Art Corp. New York
MBBT Corp. Florida
Mr Ables Inc. New York
Citicorp Investment Services Delaware
Citicorp Leasing, Inc. Delaware
ADV Three, Inc. Delaware
CM FSC II Limited Bermuda
</TABLE>
(32)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
CM FSC III Limited Bermuda
CM FSC IV, Ltd. Bermuda
CPI Leasing Corp. Connecticut
Citicorp Mortgage, Inc. Delaware
Citicorp Credit Services, Inc. (Maryland) Delaware
Citicorp Mortgage Securities, Inc. Delaware
EKS Corp. Delaware
Source One Mortgage Corporation Delaware
Central Pacific Mortgage Company California
CMC Insurance Agency, Inc. Michigan
SOMSC Services, Inc. Michigan
Citicorp Payment Services, Inc. Delaware
Citicorp Real Estate, Inc. Delaware
Citicorp Trust, N.A. (Florida) USA
Citicorp Trust, National Association USA
Citicorp USA, Inc. Delaware
Citicorp Venture Capital Ltd. New York
Haydon Corporation New Jersey
International Media Group California
Citiflight, Inc. Delaware
CitiMae, Inc. Delaware
Citipartners Services Group A.I.E. * Spain
Groupement d'Interet Economique "Paris Citicorp Center" * France
International Equity Investments, Inc. Delaware
Corporacion Inversora de Capitales S.R.L. Argentina
Celulosa Argentina S.A. Argentina
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Cartulinas Argentinas S.A. Argentina
Tissucel S.A. Argentina
Usina Bernal S.A. Argentina
525 Participacoes S.A. Brazil
Sweet River Fund Cayman Is.
Belapart S.A. Brazil
Opportunity Prime Fundo Mutuo de Investimento em Brazil
Acoes-Carteira Livre *
Eletron S.A. Brazil
Valetron S.A.. Brazil
Matin Realty, Inc. New York
Perennially Green, Inc. New York
R de VR Investments (Pty) Ltd. South Africa
Universal Card Services Corp. Delaware
Universal Bancorp Services, Inc. Delaware
Universal Bank, N.A. Delaware
Citicorp Banking Corporation Delaware
Citi Islamic Investment Bank Bahrain
Citi Islamic Portfolios S.A. Luxembourg
Citiacciones Flexible, S.A. de C.V., Sociedad de Inversion Comun * Mexico
Citiacciones Patrimonial, S.A. de C.V., Sociedad de Inversion Comun * Mexico
Citibank (Luxembourg) S.A. Luxembourg
Citibank (Switzerland) Switzerland
Citibank, Federal Savings Bank USA
Citibank Insurance Agency, Inc. Illinois
Citibank Mortgage Services, Inc. Florida
Citibank Service Corporation California
</TABLE>
(34)
1 2 3 4 5 6 7 8 9 10 11 12 13
<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citicorp Financial Services Corporation (D.C.) District of Columbia
Citicorp Insurance Agency, Inc. District of Columbia
First Savings Corporation Illinois
Holiday Harbor Management Corporation Florida
West Suburban Investments, Inc. Illinois
First Paddle Creek, Inc. Florida
West Florida Investments, Inc. Florida
West Suburban Investments, Inc. of California California
West Suburban Investments, Inc. of Colorado Colorado
Citicorp (Jersey) Limited Channel Islands
Citicorp Administradora de Inversiones S.A. Uruguay
Citicorp Capital Investors Europe Limited Delaware
Citicorp Community Development, Inc. New York
Mission Park Corporation Massachusetts
Citicorp Data Systems Incorporated Delaware
Citicorp Delaware Services, Inc. Delaware
Citicorp Funding, Inc. Delaware
Citicorp Global Holdings, Inc. Delaware
Citicorp Global Technology, Inc. Delaware
Citicorp Information Technology, Inc. Delaware
Citicorp Insurance USA, Inc. Vermont
Citicorp International Finance Corporation Delaware
Brazil Holdings Inc. Limited Bahamas
CHL Comercio e Participacoes Ltda. Brazil
Citicorp Mercantil-Participacoes e Investimentos S.A. Brazil
Citicorp International Insurance Company, Ltd. Bermuda
</TABLE>
(35)
1 2 3 4 5 6 7 8 9 10 11 12 13
<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citicorp International Technology, Inc. Delaware
Citicorp International Trading Company, Inc. Delaware
Advanx S.A. Uruguay
Citicom de Mexico, S.A. de C.V. Mexico
Citicorp International Trade Indemnity, Inc. New Jersey
Citicorp Marine Management, Inc. New Jersey
Citicorp International Trading Company (Bahamas) Ltd. Bahamas
Citicorp International Trading Company Argentina S.A. Argentina
Citicorp Trading S.A. Brazil
Comercializadora Citicorp, S.A. Dominican Republic
Esmeril Trading Lda Portugal
Marchante Trading Lda Portugal
Richemont Servicos Lda Portugal
Trevano Servicos e Gestao Lda Portugal
Turbante Comercio Internacional Lda Portugal
Vilacete Investimentos e Gestao Lda Portugal
Citicorp Investment Management (Luxembourg) S.A. Luxembourg
Citicorp Investment Partners, Inc. Delaware
Citicorp Securities Asia Pacific Limited Hong Kong
Citibank Global Asset Management (Asia) Limited Hong Kong
Citicorp Securities Investment Consulting Inc. Taiwan
Citicorp Strategic Technology Corporation Delaware
Trade Credit Management Company Limited England
Citicorp Trust Company (Maryland) Maryland
Citicorp Washington, Inc. District of Columbia
Citicurrencies S.A. Luxembourg
</TABLE>
(36)
1 2 3 4 5 6 7 8 9 10 11 12 13
<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
CitiDel, Inc. Delaware
CitiEmpresa, S.A. de C.V., Sociedad de Inversion en Instrumentos de Deuda Mexico
para Personas Morales
CitiFinancial Credit Company Delaware
American Health and Life Insurance Company Texas
Brookstone Insurance Company Vermont
CC Credit Card Corporation Delaware
CC Finance System Incorporated Delaware
Chesapeake Appraisal and Settlement Services Inc. Maryland
Chesapeake Appraisal and Settlement Services Agency of Ohio Inc. Ohio
Chesapeake West Escrow Services Inc. California
Citibank USA Delaware
CitiFinancial Alabama, Inc. Alabama
CitiFinancial Company Delaware
CitiFinancial Consumer Services, Inc. Delaware
CitiFinancial Corporation (CO) Colorado
CitiFinancial Management Corporation Maryland
CitiFinancial Mortgage Company Delaware
CitiFinancial Mortgage Securities Inc. Delaware
CitiFinancial of Virginia, Inc. Virginia
CitiFinancial Services, Inc. (CA) California
CitiFinancial Services, Inc. (DE) Delaware
CitiFinancial Services, Inc. (GA) Georgia
CitiFinancial Services, Inc. (MA) Massachusetts
CitiFinancial Services, Inc. (MN) Minnesota
CitiFinancial Services, Inc. (MO) Missouri
CitiFinancial Services, Inc. (OH) Ohio
</TABLE>
(37)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
CitiFinancial Services, Inc. (UT) Utah
CitiFinancial Services, Inc. (VA) Virginia
CitiFinancial, Inc. (HI) Hawaii
CitiFinancial, Inc. (IA) Iowa
CitiFinancial Corporation (DE) Delaware
CitiFinancial of Mississippi, Inc. Delaware
CitiFinancial, Inc. (KY) Kentucky
CitiFinancial Services, Inc. (KY) Kentucky
CitiFinancial, Inc. (MD) Maryland
CitiFinancial Services, Inc. (OK) Oklahoma
CitiFinancial, Inc. (NY) New York
CitiFinancial, Inc. (OH) Ohio
CitiFinancial, Inc. (SC) South Carolina
CitiFinancial, Inc. (TN) Tennessee
CitiFinancial, Inc. (WV) West Virginia
CitiFinancial, Inc. NC North Carolina
Commercial Credit Insurance Services, Inc. Maryland
Commercial Credit Insurance Agency (P&C) of Mississippi, Inc. Mississippi
Commercial Credit Insurance Agency of Alabama, Inc. Alabama
Commercial Credit Insurance Agency of Hawaii, Inc. Hawaii
Commercial Credit Insurance Agency of Kentucky, Inc. Kentucky
Commercial Credit Insurance Agency of Massachusetts, Inc. Massachusetts
Commercial Credit Insurance Agency of Nevada, Inc. Nevada
Commercial Credit Insurance Agency of New Mexico, Inc. New Mexico
Commercial Credit Insurance Agency of Ohio, Inc. Ohio
Commercial Credit International, Inc. Delaware
</TABLE>
(38)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Commercial Credit International Banking Corporation Oregon
Park Tower Holdings, Inc. Delaware
CC Retail Services, Inc. Delaware
Travelers Home Mortgage Services of Alabama, Inc. Delaware
Resource Deployment, Inc. Texas
Travelers Bank & Trust, fsb Delaware
Travelers Home Equity, Inc. North Carolina
CC Consumer Services of Alabama, Inc. Alabama
CC Home Lenders Financial, Inc. Georgia
CC Home Lenders, Inc. Ohio
CitiFinancial of West Virginia, Inc. West Virginia
CitiFinancial Services, Inc. (PA) Pennsylvania
CitiFinancial, Inc. (TX) Texas
Travelers Home Mortgage Services, Inc. North Carolina
Travelers Home Mortgage Services of Pennsylvania, Inc. Pennsylvania
Triton Insurance Company Missouri
World Service Life Insurance Company Colorado
Citilandmark S.A. Luxembourg
Citilife S.A./N.V. Belgium
Citifund Balance Greece
Citimarkets S.A. Luxembourg
CitiMortgages, Inc. Delaware
Citinvest S.A. Luxembourg
Citiplazo, S.A. de C.V., Sociedad de Inversion en Instrumentos Mexico
de Deuda *
Citiportfolios S.A. Luxembourg
Citirenta, S.A. de C.V., Sociedad de Inversion en Instrumentos de Mexico
Deuda
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citishare Corporation Delaware
Cititrust S.p.A.-Istituto Fiduciario Italy
Court Square Capital Limited Delaware
CrossMar, Inc. Delaware
Housing Securities, Inc. Delaware
Inversiones Citiminera S.A. Chile
Mortgage Capital Funding Inc. Delaware
Plantbrass Limited England
Universal Financial Corp. Utah
Citicorp Capital I Delaware
Citicorp Capital II Delaware
Citicorp Capital III Delaware
Citicorp Credit Services, Inc. Delaware
Citicorp National Services, Inc. Delaware
Citicorp North America, Inc. Delaware
ADV One, Inc. Delaware
Asset D Vehicle, Inc. Delaware
Citicorp Churchill Lease, Inc. Delaware
Citicorp Epic Finance, Inc. Delaware
Citicorp FSC II Ltd. Bermuda
Citicorp Global Lease, Inc. Delaware
Citicorp MT Aquarius Ship, Inc. Delaware
Citicorp MT Aries Ship, Inc. Delaware
Citicorp Sierra Lease, Inc. Delaware
Citicorp Translease, Inc. Delaware
CGI Capital, Inc. Delaware
</TABLE>
(40)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Citicorp Leasing (Alyeska), Inc. Delaware
Citicorp Lescaman, Inc. New York
Citicorp Petrolease, Inc. Delaware
Citicorp Tulip Lease, Inc. Delaware
CM Leasing Member 1995 Trust-A2 Delaware
Citimarlease (Burmah I), Inc. Delaware
Citimarlease (Burmah I), Inc. UTA (9/28/72) * Delaware
Citimarlease (Burmah Liquegas), Inc. Delaware
Citimarlease (Burmah Liquegas), Inc. UTA (9/28/72) * Delaware
Citimarlease (Burmah LNG Carrier), Inc. Delaware
Citimarlease (Burmah LNG Carrier), Inc. UTA (9/28/72) * Delaware
Citimarlease (Fulton), Inc. Delaware
Citimarlease (Whitney), Inc. Delaware
CM Leasing Member 1995 Trust-A1 Delaware
CM North America Holding Company * Canada
CM Leasing Company * Canada
CM Tulip Holding Company * Canada
ESSL 1, Inc. Delaware
ESSL 2, Inc. Delaware
FCL Ship One, Inc. Delaware
FCL Ship Three, Inc. Delaware
FCL Ship Two, Inc. Delaware
POP Trophy I Inc. New York
POP Trophy Inc. New York
S.P.L., Inc. Delaware
Science Defeasance Corp. Delaware
</TABLE>
(41)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
SOMANAD 1 LLC Delaware
SOMANAD 2 LLC Delaware
Citicorp Retail Services, Inc. Delaware
Citicorp Services Inc. New York
Citigroup Investments Inc. Delaware
Greenwich Street Capital Partners, Inc. Delaware
MRC Holdings, Inc. Delaware
Citigroup Management Corp. Delaware
Salomon Smith Barney Holdings Inc. New York
1345 Media Corp. Delaware
Corporate Realty Advisors, Inc. Delaware
Genesis Crude Oil, L.P. * Delaware
Genesis Pipeline TX, L.P. * Texas
Genesis Pipeline USA, L.P. * Texas
Genesis Energy, L.L.C. Delaware
Genesis Energy, L.P. Delaware
IPO Holdings Inc. Delaware
MLA 50 Corporation Delaware
Nextco Inc. Delaware
Phibro Energy Production, Inc. Delaware
Anglo-Suisse (U.S.S.R.) L.P. * Delaware
Phibro Energy Production G.P. Inc Delaware
Phibro Inc. Delaware
MC2 Technologies, Inc. Delaware
Phibro Commodities England
Phibro Energy Clearing, Inc. Delaware
</TABLE>
(42)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Phibro GmbH Switzerland
Phibro (Asia) Pte Ltd Singapore
Scanports Limited England
Turavent Oil AG Switzerland
Phibro Holdings Limited England
Phibro Futures and Metals Limited England
Scanports Shipping, Inc. Delaware
Phibro Power LLC Delaware
Phibro Resources Corp. Delaware
R-H Capital, Inc. Delaware
R-H/Travelers, L.P. * Delaware
R-H Capital Partners, L.P. Delaware
Salomon Brothers Holding Company Inc. Delaware
Citicorp Securities Services, Inc. Delaware
Grove Street Film Corp Delaware
Huwest Company Inc Delaware
Loan Participation Holding Corporation Delaware
Home Mortgage Access Corporation District of Columbia
Home MAC Government Financial Corporation District of Columbia
Home MAC Government Financial Corporation West District of Columbia
Home MAC Mortgage Securities Corporation District of Columbia
LT Investment I, LLC New York
LT Investment II, LLC New York
PB-SB Investments, Inc Delaware
PB-SB 1983 I New York
PB-SB 1983 III New York
</TABLE>
(43)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
PB-SB Ventures, Inc Delaware
PB-SB 1985 VII New York
PB-SB 1988 III New York
PB-SB 1988 VIII New York
PT Salomon Smith Barney Nusa Securities Indonesia
Salomon (International) Finance AG Switzerland
Salomon Brothers Asia Limited Hong Kong
Salomon Brothers Holdings GmbH * Switzerland
Salomon Contractuals Limited Cayman Is.
Salomon International Financial Products LLC Delaware
Salomon Brothers Overseas Inc Cayman Is.
Salomon Smith Barney Hong Kong Holdings Limited * Hong Kong
Salomon Brothers Asset Management Asia Pacific Limited Hong Kong
Salomon Smith Barney Hong Kong Futures, Limited Hong Kong
Salomon Smith Barney Hong Kong Nominee Limited * Hong Kong
Salomon Smith Barney Hong Kong Limited Hong Kong
Salomon-Shanghai Industrial Greater China Fund * Cayman Islands
Salomon Analytics Inc Delaware
Salomon Brothers Asia Capital Corp Ireland
Darkland International Limited Ireland
Ilshin No. 4 Venture Investment Partnership Korea
Solom International Limited Ireland
Salomon Brothers Asset Management (Ireland) Ltd Ireland
Salomon Brothers Asset Management Inc Delaware
SBAM G.P. Inc. Delaware
Salomon Brothers Asset Management Japan Ltd Japan
</TABLE>
(44)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
SSB Citi Asset Management Co., Ltd. * Japan
Salomon Brothers Capital Structure Arbitrage Fund I, L.P. * New York
Salomon Brothers Finance AG Switzerland
Salomon Brothers Housing Investment Inc Delaware
Salomon Brothers International Operations (Japan) Inc Delaware
Salomon Brothers International Operations (Jersey) Limited Channel Islands
Salomon Brothers International Operations (Overseas) Limited Channel Islands
Salomon Brothers International Operations Inc Delaware
Salomon Brothers Mortgage Securities II, Inc Delaware
Salomon Brothers Mortgage Securities III, Inc Delaware
Salomon Brothers Mortgage Securities VI, Inc Delaware
Salomon Brothers Mortgage Securities VII, Inc Delaware
Salomon Brothers Pacific Holding Company Inc Delaware
Salomon Brothers Properties Inc Delaware
Salomon Brothers Investments Inc Delaware
Salomon Brothers Real Estate Development Corp Delaware
Crow Wood Terrace Associates Georgia
Salomon Brothers Realty Corp New York
Liquidation Properties Holding Company Inc. New York
Liquidation Properties Inc. New York
MacA Inn LLC Delaware
Salomon Brothers Russia Holding Company Inc Delaware
ZAO Salomon Brothers Russia
Salomon Brothers Services Inc Delaware
Salomon Brothers Taiwan Limited Taiwan
Salomon Brothers Tosca Inc Delaware
</TABLE>
(45)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Salomon Capital Access for Savings Institutions, Inc. Delaware
Salomon Capital Access Corporation District of Columbia
Salomon Forex Inc Delaware
Salomon Brothers Finance Corporation Delaware
Salomon International LLC Delaware
Salomon Brothers Europe Limited * England
Ion Trading Systems Limited England
Salomon Brothers Eastern Europe Limited England
Salomon Brothers International Limited * England
Salomon Brothers Nominees Limited England
Salomon Brothers UK Equity Limited England
Salomon Brothers UK Limited * England
Wavendown Limited England
SSB Citi Asset Management Limited England
Salomon Northpoint Corp Delaware
Salomon Plaza Holdings Inc Delaware
Plaza Holdings Inc. Delaware
Salomon Brothers Finance Corporation and Co beschranthaftende KG * Germany
Salomon Brothers AG Germany
Salomon Brothers Kapitalanlage-Gesellschaft mbH Germany
Salomon Reinvestment Company, Inc Delaware
Salomon Smith Barney (Malaysia) Sdn Bhd Malaysia
Salomon Smith Barney Asia Pacific Limited Delaware
Salomon Smith Barney Australia Pty Ltd Australia
Salomon Smith Barney Australia Broker Holdings Pty Limited Australia
Salomon Smith Barney Australia Securities Pty Limited Australia
</TABLE>
(46)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Bowyang Nominees Pty Limited Australia
Calex Nominees Pty Limited Australia
Dervat Nominees Pty Limited Australia
Feta Nominees Pty Limited Australia
Gymkhana Nominees Pty Limited Australia
Salomon Smith Barney New Zealand Limited New Zealand
Palliser Nominees Limited New Zealand
Salomon Smith Barney Australia Capital Markets Pty Limited Australia
Salomon Smith Barney Australia Corporate Finance Pty Limited Australia
Salomon Smith Barney Australia Nominees No. 2 Pty Limited Australia
Salomon Smith Barney Australia Nominees Pty Limited Australia
Salomon Smith Barney Australia Superannuation Fund Pty Limited Australia
Salomon Smith Barney Canada Holding Company * Canada
Salomon Smith Barney Canada Inc. Canada
Salomon Smith Barney China Limited Hong Kong
Salomon Smith Barney Inc. New York
Salomon Smith Barney KEB Securities Co., Ltd. South Korea
Salomon Smith Barney/Travelers REF GP, LLC Delaware
Salomon Smith Barney/Travelers Real Estate Fund, L.P. Delaware
SBHU Life Agency, Inc. Delaware
Robinson-Humphrey Insurance Services Inc. Georgia
Robinson-Humphrey Insurance Services of Alabama, Inc. Alabama
Salomon Smith Barney Life Agency Inc. New York
SBHU Life Agency of Arizona, Inc. Arizona
SBHU Life Agency of Indiana, Inc. Indiana
SBHU Life Agency of Ohio, Inc. Ohio
</TABLE>
(47)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
SBHU Life Agency of Oklahoma, Inc. Oklahoma
SBHU Life Agency of Texas, Inc. Texas
SBHU Life Agency of Utah, Inc. Utah
SBHU Life Insurance Agency of Massachusetts, Inc. Massachusetts
SBS Insurance Agency of Hawaii, Inc. Hawaii
SBS Insurance Agency of Idaho, Inc. Idaho
SBS Insurance Agency of Maine, Inc. Maine
SBS Insurance Agency of Montana, Inc. Montana
SBS Insurance Agency of Nevada, Inc. Nevada
SBS Insurance Agency of Ohio, Inc. Ohio
SBS Insurance Agency of South Dakota, Inc. South Dakoba
SBS Insurance Agency of Wyoming, Inc. Wyoming
SBS Insurance Brokerage Agency of Arkansas, Inc. Arkansas
SBS Insurance Brokers of Kentucky, Inc. Kentucky
SBS Insurance Brokers of New Hampshire, Inc. New Hampshire
SBS Insurance Brokers of North Dakota, Inc. North Dakota
SBS Life Insurance Agency of Puerto Rico, Inc. Puerto Rico
SLB Insurance Agency of Maryland, Inc. Maryland
Smith Barney International Incorporated Oregon
Smith Barney Pacific Holdings, Inc. British Virgin Islands
Smith Barney Puerto Rico Inc. Puerto Rico
The Robinson-Humphrey Company, LLC Delaware
Patrimonia Foreign Fund 1 Funda de Renta Fixa Capital Estrangeiro Brazil
Salomon Smith Barney S.A. * France
Salomon Smith Barney Singapore Holdings Pte. Ltd. Singapore
</TABLE>
(48)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Salomon Smith Barney Singapore Futures Pte. Ltd. Singapore
Salomon Smith Barney Singapore Pte. Ltd. Singapore
Salomon Swapco Inc Delaware
SB Funding Corp. Delaware
SB Management Services Inc Delaware
SB Motel Corp. Delaware
SB Motel Mortgage Corp Delaware
Seven World Holdings LLC Delaware
Mosenergia Holdings Limited Cyprus
LLC Beloye Ozero * Russia
LLC Mudraya Sova * Russia
Seven World Technologies, Inc Delaware
SSB Irish Investor LLC Delaware
SSB Vehicle Securities Inc. Delaware
Structured Products Corp Delaware
TCEP Participation Corp. New York
TCP Corp. Delaware
Salomon Brothers Services GmbH Germany
SB Cayman Holdings I Inc. Delaware
Smith Barney Private Trust Company (Cayman) Limited * Cayman Is.
Greenwich (Cayman) I Limited Cayman Is.
Greenwich (Cayman) II Limited Cayman Is.
Greenwich (Cayman) III Limited Cayman Is.
SB Cayman Holdings II Inc. Delaware
SB Cayman Holdings III Inc. Delaware
Smith Barney Credit Services (Cayman) Ltd. * Cayman Is.
SB Cayman Holdings IV Inc. Delaware
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
SI Financing Trust I New York
Smith Barney (Ireland) Limited Ireland
Smith Barney Capital Services Inc. Delaware
Smith Barney Commercial Corp. Delaware
Smith Barney Europe Holdings, Ltd. England
Smith Barney Futures Management LLC Delaware
F-1000 Futures Fund L.P., Michigan Series I New York
F-1000 Futures Fund L.P., Michigan Series II New York
F-1000 Futures Fund L.P., Series IX New York
Hutton Investors Futures Fund, L.P. II Delaware
Salomon Smith Barney Global Diversified Futures Fund L.P. New York
SB/Michigan Futures Fund L.P. New York
Shearson Mid-West Futures Fund New York
Shearson Select Advisors Futures Fund L.P. Delaware
Smith Barney AAA Energy Fund L.P. New York
Smith Barney Diversified Futures Fund L.P. New York
Smith Barney Diversified Futures Fund L.P. II New York
Smith Barney Global Markets Futures Fund L.P. New York
Smith Barney Great Lakes Futures Fund L.P. New York
Smith Barney International Advisors Currency Fund L.P. New York
Smith Barney Mid-West Futures Fund LP II New York
Smith Barney Potomac Futures Fund L.P. New York
Smith Barney Principal Plus Futures Fund L.P. II New York
Smith Barney Principal Plus Futures Fund LP New York
Smith Barney Telesis Futures Fund L.P. New York
Smith Barney Tidewater Futures Fund L.P. New York
</TABLE>
(50)
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Smith Barney Westport Futures Fund L.P. New York
Smith Barney Global Capital Management, Inc. Delaware
Smith Barney Mortgage Capital Group, Inc. Delaware
Smith Barney Offshore, Inc. Delaware
Smith Barney Private Trust GmbH Switzerland
Smith Barney Risk Investors, Inc. Delaware
Smith Barney Consulting Partnership, LP Delaware
Smith Barney Investors L.P. Delaware
Smith Barney Securities Investment Consulting Co. Ltd. Taiwan
Smith Barney Venture Corp. Delaware
First Century Management Company New York
SSB Citi Fund Management LLC Delaware
SSB Greenwich Street Partners LLC Delaware
Salomon Smith Barney/Greenwich Street Capital Partners II, L.P. Delaware
SSB Private Management LLC Delaware
Salomon Smith Barney Hicks Muse Partners L. P. Delaware
Salomon Smith Barney Asset Management Australia Ltd. Australia
Smith Barney Management Company (Ireland) Limited Ireland
Smith Barney Strategy Advisers Inc. Delaware
SSB Keeper Holdings LLC Delaware
SSBH Capital I Delaware
SSBH Capital II Delaware
SSBH Capital III Delaware
SSBH Capital IV Delaware
Targets Trust I Delaware
Targets Trust II Delaware
</TABLE>
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<PAGE>
CITIGROUP INC. as of 31-Dec-1999
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 8 9 10 11 12 13 PLACE OF JURISDICTION
<S> <C>
Targets Trust III Delaware
The Travelers Investment Management Company Connecticut
Smith Barney Corporate Trust Company Delaware
Smith Barney Private Trust Bank of Michigan Michigan
Smith Barney Private Trust Company New York
Smith Barney Private Trust Company of Florida Florida
Smith Barney Private Trust Company of New Jersey New Jersey
Smith Barney Private Trust Company of Texas Texas
Travelers Auto Leasing Corporation Delaware
Travelers Group 401(k) Savings Plan New York
Travelers Group Diversified Distribution Services, Inc. Delaware
Travelers Group Exchange, Inc. Delaware
Travelers Group International Inc. Delaware
TRV Employees Investments, Inc. Delaware
TRV Employees Fund, L.P. Delaware
</TABLE>
- ------------------
* Indicates that the given subsidiary is partially owned by more than one
subsidiary of Citigroup Inc.
** Citigroup Inc. owns approximately 85% of Travelers Property Casualty Corp.
through The Travelers Insurance Group Inc.
(52)
1 2 3 4 5 6 7 8 9 10 11 12 13
Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Citigroup Inc.:
We consent to the incorporation by reference in the Registration Statements on:
o Form S-3 Nos. 33-49280, 33-55542, 33-56940, 33-68760, 33-51101,
33-52281, 33-54093, 33-62903, 33-63663, 333-04809, 333-12439,
333-27155, 333-42575, 333-44549, 333-68949 and 333-68989; and
o Form S-8 Nos. 33-32130, 33-43997, 33-59524, 33-28110, 33-43883,
33-21099, 33-29711, 33-47437, 33-39025, 33-40469, 33-38109,
33-50206, 33-51201, 33-51353, 33-51769, 33-51783, 33-52027,
33-52029, 33-64985, 333-02809, 333-02811, 333-12697,
333-25603, 333-38647, 333-41865, 333-56589, 333-65487,
333-77425 and 333-94905
of Citigroup Inc. of our report dated January 18, 2000, with respect to the
consolidated statement of financial position of Citigroup Inc. and subsidiaries
("Citigroup") as of December 31, 1999 and 1998, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each of
the years in the three-year period ended December 31, 1999, which report is
included in the annual report and Form 10-K of Citigroup Inc. for the year ended
December 31, 1999. Our report refers to changes, in 1999, in Citigroup's methods
of accounting for insurance-related assessments, accounting for insurance and
reinsurance contracts that do not transfer insurance risk, and accounting for
the costs of start-up activities.
/s/KPMG LLP
New York, New York
March 10, 2000
Exhibit 24.01
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ C. Michael Armstrong
- ------------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Alain J.P. Belda
- --------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Kenneth J. Bialkin
- ----------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Kenneth T. Derr
- -------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ John M. Deutch
- ------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Ann Dibble Jordan
- ---------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Reuben Mark
- ---------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Michael T. Masin
- --------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Dudley C. Mecum
- -------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Richard D. Parsons
- ----------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Andrall E. Pearson
- ----------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Robert E. Rubin
- -------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Franklin A. Thomas
- ----------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Edgar S. Woolard, Jr.
- -------------------------
(Signature)
<PAGE>
POWER OF ATTORNEY
Annual Report on Form 10-K
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of CITIGROUP
INC., a Delaware corporation (the "Company"), does hereby constitute and appoint
John S. Reed, Sanford I. Weill, Heidi G. Miller, Charles O. Prince, III and
Stephanie B. Mudick and each of them, to be my true and lawful attorneys-in-fact
and agents, each acting alone with full power of substitution and
re-substitution, to sign, in the name and on behalf of the undersigned as a
director of the Company, an Annual Report on Form 10-K of the Company for the
Company's fiscal year ended December 31, 1999, and all amendments thereto as
said attorneys-in-fact and agents may deem advisable or necessary and to file,
or cause to be filed, the same with all exhibits thereto (including this power
of attorney), and other documents in connection therewith with the Securities
and Exchange Commission, provided that such Annual Report on Form 10-K in final
form, and any amendment or amendments thereto and such other documents, be
approved by said attorneys-in-fact and agents or by any one of them; and the
undersigned does hereby grant unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully and to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents as of this 18th
day of January, 2000.
/s/ Arthur Zankel
- -----------------
(Signature)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CITIGROUP'S
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND ACCOMPANYING DISCLOSURES.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 14,158
<INT-BEARING-DEPOSITS> 13,429
<FED-FUNDS-SOLD> 112,655<F1>
<TRADING-ASSETS> 109,155
<INVESTMENTS-HELD-FOR-SALE> 113,126
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 244,206
<ALLOWANCE> 6,679<F2>
<TOTAL-ASSETS> 716,937
<DEPOSITS> 261,091
<SHORT-TERM> 17,086<F3>
<LIABILITIES-OTHER> 38,747
<LONG-TERM> 47,092
4,920
1,925
<COMMON> 36<F4>
<OTHER-SE> 47,725<F4>
<TOTAL-LIABILITIES-AND-EQUITY> 716,937
<INTEREST-LOAN> 23,172
<INTEREST-INVEST> 0<F5>
<INTEREST-OTHER> 21,728
<INTEREST-TOTAL> 44,900
<INTEREST-DEPOSIT> 0<F5>
<INTEREST-EXPENSE> 24,768
<INTEREST-INCOME-NET> 20,132
<LOAN-LOSSES> 2,837
<SECURITIES-GAINS> 557
<EXPENSE-OTHER> 12,044
<INCOME-PRETAX> 15,948
<INCOME-PRE-EXTRAORDINARY> 9,994
<EXTRAORDINARY> 0
<CHANGES> (127)<F6>
<NET-INCOME> 9,867
<EPS-BASIC> 2.91<F4>
<EPS-DILUTED> 2.83<F4>
<YIELD-ACTUAL> 3.49
<LOANS-NON> 3,633<F7>
<LOANS-PAST> 1,184<F8>
<LOANS-TROUBLED> 59
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,617
<CHARGE-OFFS> 3,474
<RECOVERIES> 656
<ALLOWANCE-CLOSE> 6,679<F2>
<ALLOWANCE-DOMESTIC> 0<F9>
<ALLOWANCE-FOREIGN> 0<F9>
<ALLOWANCE-UNALLOCATED> 0<F9>
<FN>
<F1> Includes securities borrowed or purchased under agreements to resell.
<F2> Allowance activity for 1999 includes $43MM in other changes, principally
foreign currency translation effects.
<F3> Commercial paper and other short-term borrowings.
<F4> The Board of Directors on April 19, 1999 declared a three-for-two split in
Citigroup's common stock, effective May 28, 1999. Current and prior year
information have been restated to reflect the stock split.
<F5> Not disclosed.
<F6> First quarter 1999 accounting changes include the adoption of Statement of
Position (SOP) 97-3, "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments" of $(135) million; SOP 98-7, "Deposit
Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not
Transfer Insurance Risk" of $23 million; and SOP 98-5, "Reporting on the
Costs of Start-Up Activities" of $(15) million.
<F7> Includes $1,403MM of cash-basis commercial loans and $2,230MM of consumer
loans on which accrual of interest has been suspended.
<F8> Accruing loans 90 or more days delinquent.
<F9> No portion of Citigroup's credit loss allowance is specifically allocated
to any individual loan or group of loans.
</FN>
</TABLE>
Exhibit 99.01
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class registered
- ------------------- ------------------------------
Common Stock, par value $ .01 New York Stock Exchange and
per share Pacific Exchange
Depositary Shares, each representing New York Stock Exchange
1/5th of a share of 6.365% Cumulative
Preferred Stock, Series F
Depositary Shares, each representing New York Stock Exchange
1/5th of a share of 6.213% Cumulative
Preferred Stock, Series G
Depositary Shares, each representing New York Stock Exchange
1/5th of a share of 6.231% Cumulative
Preferred Stock, Series H
Depositary Shares, each representing New York Stock Exchange
1/20th of a share of 8.40% Cumulative
Preferred Stock, Series K
Depositary Shares, each representing New York Stock Exchange
1/5th of a share of 5.864% Cumulative
Preferred Stock, Series M
Depositary Shares, each representing New York Stock Exchange
1/10th of a share of Adjustable Rate
Cumulative Preferred Stock, Series Q
Depositary Shares, each representing New York Stock Exchange
1/10th of a share of Adjustable Rate
Cumulative Preferred Stock, Series R
Depositary Shares, each representing New York Stock Exchange
1/10th of a share of 7 3/4% Cumulative
Preferred Stock, Series U
7 3/4% Notes Due June 15, 1999 New York Stock Exchange
8% Trust Securities of Subsidiary Trust New York Stock Exchange
(and registrant's guaranty with respect
thereto)
7 3/4% Trust Securities of Subsidiary Trust New York Stock Exchange
(and registrant's guaranty with respect
thereto)
<PAGE>
7 5/8% Trust Securities of Subsidiary Trust New York Stock Exchange
(and registrant's guaranty with respect
thereto)
6.850% Trust Securities (TRUPS(R)) of New York Stock Exchange
Subsidiary Trust (and registrant's guaranty
with respect thereto)
7% Trust Securities (TRUPS(R)) of New York Stock Exchange
Subsidiary Trust (and registrant's guaranty
with respect thereto)
6 7/8% Trust Securities (TRUPS(R)) of New York Stock Exchange
Subsidiary Trust (and registrant's guaranty
with respect thereto)
