<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-49442
PROSPECTUS SUPPLEMENT
(To prospectus dated November 21, 2000)
$20,750,000,000
CITIGROUP LOGO
MEDIUM-TERM SENIOR NOTES, SERIES D
MEDIUM-TERM SUBORDINATED NOTES, SERIES D
DUE NINE MONTHS OR MORE FROM THE DATE OF ISSUE
GENERAL TERMS OF SALE
The following terms will generally apply to the medium-term senior and
subordinated notes that we will sell from time to time using this prospectus
supplement and the attached prospectus. Citigroup will include information on
the specific terms for each note in a pricing supplement to this prospectus
supplement that Citigroup will deliver to prospective buyers of any note. The
maximum amount that Citigroup expects to receive from the sale of the notes is
between $20,724,062,500 and $20,542,500,000 after paying the agent commissions
of between $25,937,500 and $207,500,000.
<TABLE>
<S> <C> <C> <C>
MATURITY: 9 months or more from the INTEREST RATES: Fixed, floating, or zero
date of issue. coupon.
INDEXED NOTES: Payments of interest or RANKING: Senior notes are part of our
principal may be linked to senior indebtedness; and
the price of one or more subordinated notes are part
securities, currencies, of our subordinated
commodities or other goods. indebtedness.
REDEMPTION: Terms of specific notes may OTHER TERMS: You should review
permit or require redemption "Description of the Notes"
or repurchase at our option and the pricing supplement
or your option. for features that apply to
your notes.
RISKS: Index and currency risks may
exist.
</TABLE>
------------------------
CONSIDER CAREFULLY THE INFORMATION UNDER "RISK FACTORS" BEGINNING ON PAGE
S-3 OF THIS PROSPECTUS SUPPLEMENT.
Neither the Securities and Exchange Commission nor any state securities or
insurance commission has approved or disapproved of these securities or
determined if this prospectus supplement or any accompanying prospectus or
pricing supplement is truthful or complete. Any representation to the contrary
is a criminal offense.
These notes are not deposits or savings accounts but are unsecured debt
obligations of Citigroup Inc. These notes are not insured by the Federal Deposit
Insurance Corporation or any other governmental agency or instrumentality.
SALOMON SMITH BARNEY
December 14, 2000
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Risk Factors................................................ S-3
Important Currency Information.............................. S-6
Description of the Notes.................................... S-7
United States Federal Income Tax Considerations............. S-31
Plan of Distribution........................................ S-38
Legal Matters............................................... S-39
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Prospectus Summary.......................................... 1
Forward-Looking Statements.................................. 6
Citigroup Inc. ............................................. 7
Use of Proceeds and Hedging................................. 8
European Monetary Union..................................... 9
Description of Debt Securities.............................. 10
Description of Index Warrants............................... 17
Description of Capital Stock................................ 20
Description of Preferred Stock.............................. 23
Description of Depositary Shares............................ 26
Book-Entry Procedures and Settlement........................ 29
Plan of Distribution........................................ 30
ERISA Matters............................................... 32
Legal Matters............................................... 32
Experts..................................................... 32
</TABLE>
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RISK FACTORS
CHANGES IN EXCHANGE RATES AND EXCHANGE CONTROLS COULD RESULT IN A SUBSTANTIAL
LOSS TO YOU.
An investment in foreign currency notes, which are notes denominated in a
specified currency other than U.S. dollars, entails significant risks that are
not associated with a similar investment in a security denominated in U.S.
dollars. Similarly, an investment in an indexed note, on which all or a part of
any payment due is based on a currency other than U.S. dollars, has significant
risks that are not associated with a similar investment in non-indexed notes.
Such risks include, but are not limited to:
- the possibility of significant market changes in rates of exchange
between U.S. dollars and such specified currency;
- the possibility of significant changes in rates of exchange between U.S.
dollars and the specified currency resulting from official redenomination
relating to such specified currency; and
- the possibility of the imposition or modification of foreign exchange
controls by either the United States or foreign governments.
Such risks generally depend on factors over which Citigroup has no control and
which cannot be readily foreseen, such as
- economic events;
- political events; and
- the supply of, and demand for, the relevant currencies.
In recent years, rates of exchange between the U.S. dollar and some foreign
currencies in which Citigroup's notes may be denominated and between these
foreign currencies and other foreign currencies, have been volatile. This
volatility may be expected in the future. Fluctuations that have occurred in any
particular exchange rate in the past are not necessarily indicative, however, of
fluctuations that may occur in the rate during the term of any foreign currency
note. Depreciation of the specified currency of a foreign currency note against
U.S. dollars would result in a decrease in the effective yield of such foreign
currency note below its coupon rate and could result in a substantial loss to
the investor on a U.S. dollar basis.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a specified currency other than U.S. dollars at the time of payment of
principal, any premium, or interest on a foreign currency note. There can be no
assurance that exchange controls will not restrict or prohibit payments of
principal, any premium, or interest denominated in any such specified currency.
Even if there are no actual exchange controls, it is possible that such
specified currency would not be available to Citigroup when payments on such
note are due because of circumstances beyond the control of Citigroup. In this
event, Citigroup will make required payments in U.S. dollars on the basis
described in this prospectus supplement. You should consult your own financial
and legal advisors as to the risks of an investment in notes denominated in a
currency other than U.S. dollars. See "-- The Unavailability of Currencies Could
Result in a Substantial Loss to You" and "Description of the Notes -- Payment of
Principal and Interest" below.
The information set forth in this prospectus supplement is directed to
prospective purchasers of notes who are United States residents, except where
otherwise expressly noted in this prospectus supplement. Citigroup disclaims any
responsibility to advise prospective purchasers who are residents of countries
other than the United States regarding any matters that may affect the purchase
or holding of, or receipt of payments of principal, premium or interest on,
notes. Such persons should consult their advisors with regard to these matters.
Any pricing supplement relating to notes having a specified currency other than
U.S. dollars will contain a description of any material exchange controls
affecting such currency and any other required information concerning such
currency.
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THE UNAVAILABILITY OF CURRENCIES COULD RESULT IN A SUBSTANTIAL LOSS TO YOU.
Except as set forth below, if payment on a note is required to be made in a
specified currency other than U.S. dollars and such currency is --
- unavailable due to the imposition of exchange controls or other
circumstances beyond Citigroup's control;
- no longer used by the government of the country issuing such currency; or
- no longer used for the settlement of transactions by public institutions
of the international banking community --
then all payments on such note shall be made in U.S. dollars until such currency
is again available or so used. The amounts so payable on any date in such
currency shall be converted into U.S. dollars on the basis of the most recently
available market exchange rate for such currency or as otherwise indicated in
the applicable pricing supplement. Any payment on such note made under such
circumstances in U.S. dollars will not constitute an event of default under the
indenture under which such note shall have been issued.
If the specified currency of a note is officially redenominated, other than
as a result of European Monetary Union, such as by an official redenomination of
any such specified currency that is a composite currency, then the payment
obligations of Citigroup on such note will be the amount of redenominated
currency that represents the amount of Citigroup's obligations immediately
before the redenomination. The notes will not provide for any adjustment to any
amount payable under such notes as a result of
- any change in the value of the specified currency of such notes relative
to any other currency due solely to fluctuations in exchange rates; or
- any redenomination of any component currency of any composite currency,
unless such composite currency is itself officially redenominated.
For a description of European Monetary Union, see "European Monetary Union" in
the prospectus and any disclosure on European Monetary Union in an applicable
pricing supplement.
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, banks do
not generally offer non-U.S. dollar-denominated checking or savings account
facilities in the United States. Accordingly, payments on notes made in a
currency other than U.S. dollars will be made from an account at a bank located
outside the United States, unless otherwise specified in the applicable pricing
supplement.
JUDGMENTS IN A FOREIGN CURRENCY COULD RESULT IN A SUBSTANTIAL LOSS TO YOU.
The notes will be governed by, and construed in accordance with, the law of
New York State. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of New York State provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation. Any judgment awarded in such an action will be converted into U.S.
dollars at the rate of exchange prevailing on the date of the entry of the
judgment or decree.
CHANGES IN THE VALUE OF UNDERLYING ASSETS OF INDEXED NOTES COULD RESULT IN A
SUBSTANTIAL LOSS
TO YOU.
An investment in indexed notes may have significant risks that are not
associated with a similar investment in a debt instrument that:
- has a fixed principal amount;
- is denominated in U.S. dollars; and
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- bears interest at either a fixed rate or a floating rate based on
nationally published interest rate references.
The risks of a particular indexed note will depend on the terms of such
indexed note. Such risks may include, but are not limited to, the possibility of
significant changes in the prices of:
- the underlying assets;
- another objective price; and
- economic or other measures making up the relevant index.
Underlying assets could include:
- securities;
- currencies;
- intangibles;
- goods;
- articles; and
- commodities.
The risks associated with a particular indexed note generally depend on
factors over which Citigroup has no control and which cannot readily be
foreseen. These risks include:
- economic events;
- political events; and
- the supply of, and demand for, the underlying assets.
In recent years, currency exchange rates and prices for various underlying
assets have been highly volatile. Such volatility may be expected in the future.
Fluctuations in any such rates or prices that have occurred in the past are not
necessarily indicative, however, of fluctuations that may occur during the term
of any indexed note.
In considering whether to purchase indexed notes, you should be aware that
the calculation of amounts payable on indexed notes may involve reference to:
- an index determined by an affiliate of Citigroup; or
- prices that are published solely by third parties or entities which are
not regulated by the laws of the United States.
The risk of loss as a result of linking of principal or interest payments on
indexed notes to an index and to the underlying assets can be substantial. You
should consult your own financial and legal advisors as to the risks of an
investment in indexed notes.
------------------------
You should only rely on the information contained or incorporated by
reference in this prospectus supplement, the prospectus and any pricing
supplement. Citigroup has not, and the agent has not, authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. Citigroup is
not, and the agent is not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the prospectus, as
well as information Citigroup previously filed with the Securities and Exchange
Commission and incorporated by reference, is accurate as of the date of the
applicable document. Citigroup's business, financial condition, results of
operations and prospects may have changed since that date.
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IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each note in a currency specified by
Citigroup for such note. If requested by a prospective purchaser of a note
having a specified currency other than U.S. dollars, the agent may at its
discretion arrange for the exchange of U.S. dollars into such specified currency
to enable the purchaser to pay for such note. Each such exchange will be made by
the agent on the terms, conditions, limitations and charges that the agent may
from time to time establish in accordance with its regular foreign exchange
practice shall control the exchange. The purchaser must pay all costs of
exchange.
References in this prospectus supplement to "U.S. dollars," "U.S.$,"
"dollar" or "$" are to the lawful currency of the United States.
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DESCRIPTION OF THE NOTES
The following description of the particular terms of the Medium-Term Senior
Notes, Series D and Medium-Term Subordinated Notes, Series D supplements the
description of the general terms and provisions of the debt securities set forth
in the prospectus. If any specific information regarding the notes in this
prospectus supplement is inconsistent with the more general terms of the debt
securities described in the prospectus, you should rely on the information in
this prospectus supplement.
The pricing supplement for each offering of notes will contain the specific
information and terms for that offering. If any information in the pricing
supplement, including any changes in the method of calculating interest on any
note, is inconsistent with this prospectus supplement, you should rely on the
information in the pricing supplement. The pricing supplement may also add,
update or change information contained in the prospectus and this prospectus
supplement. It is important for you to consider the information contained in the
prospectus, this prospectus supplement and the pricing supplement in making your
investment decision.
GENERAL
Introduction. The senior notes are a series of senior debt securities
issued under Citigroup's senior debt indenture. The subordinated notes are a
series of subordinated debt securities issued under Citigroup's subordinated
debt indenture. At the date of this prospectus supplement, the notes offered
pursuant to this prospectus supplement are limited to an aggregate initial
public offering price or purchase price of up to $20,750,000,000 or its
equivalent in one or more foreign or composite currencies. This amount is
subject to reduction as a result of the sale of other securities under the
registration statement of which this prospectus supplement and the accompanying
prospectus form a part, or under a registration statement to which this
prospectus supplement and the accompanying prospectus also relate.
The amount of notes sold of either series will reduce the amount of notes
of the other series that may be sold. Citigroup reserves the right to withdraw,
cancel or modify the offer made by this prospectus supplement without notice.
The aggregate amount of notes may be increased from time to time to such larger
amount as may be authorized by Citigroup.
The U.S. dollar equivalent of the public offering price or purchase price
of a note having a specified currency other than U.S. dollars will be determined
on the basis of the market exchange rate. This market exchange rate will be the
noon buying rate in New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New York for such
specified currency on the applicable issue date. Such determination will be made
by Citigroup or its agent, as the exchange rate agent for the applicable series
of notes.
Ranking. The senior notes will constitute part of the senior indebtedness
of Citigroup and will rank on an equal basis with all other unsecured debt of
Citigroup other than subordinated debt. The subordinated notes will be
subordinate and junior in the right of payment, to the extent and in the manner
set forth in the subordinated debt indenture, to all senior indebtedness of
Citigroup. See "Description of Debt Securities -- Subordinated Debt" in the
prospectus.
On a consolidated basis, the aggregate principal amount of senior
indebtedness of Citigroup outstanding as of September 30, 2000 was approximately
$91.6 billion. This senior indebtedness consisted of approximately $51.4 billion
of term debt, approximately $26.6 billion of commercial paper and approximately
$13.6 billion of other short-term borrowings. These amounts do not reflect the
acquisition by Citigroup of Associates First Capital Corporation. The
acquisition was consummated via a merger of a subsidiary of Citigroup with and
into Associates First Capital Corporation on November 30, 2000.
Forms of Notes. The notes will be issued in fully registered form only,
without coupons. Each note will be issued initially as a book-entry note, which
will be a global security registered in the name of a nominee of DTC, as
depository, or such other depository named in the pricing supplement.
Alternatively, if specified in the applicable pricing supplement, each note will
be issued initially as a certificated note, which will be a certificate issued
in temporary or definitive form. Except as set forth in the prospectus under
"Book-Entry Procedures and Settlement," book-entry notes will not be issuable as
certificated notes. See "Book-Entry System" below.
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Denominations. Unless otherwise specified in the applicable pricing
supplement, the authorized denominations of notes denominated in U.S. dollars
will be $1,000 and any larger amount that is a whole multiple of $1,000. The
authorized denominations of notes that have a specified currency other than U.S.
dollars will be the approximate equivalents in the specified currency.
Maturity. Unless otherwise specified in the applicable pricing supplement,
each note will mature on a stated maturity date. Such stated maturity date will
be a business day more than nine months from its date of issue, as selected by
the purchaser and agreed to by Citigroup. The stated maturity date may be
extended at the option of Citigroup. Each note may also be redeemed at the
option of Citigroup, or repaid at the option of the holder, prior to its stated
maturity. Each note that has a specified currency of pounds sterling will mature
in compliance with the regulations the Bank of England may promulgate from time
to time.
Additional Information. The pricing supplement relating to a note will
describe the following terms:
- the specified currency for such note;
- whether such note
(1) is a fixed rate note;
(2) is a floating rate note;
(3) is an amortizing note, meaning that a portion or all the principal
amount is payable prior to stated maturity in accordance with a
schedule, by application of a formula, or based on an index; and/or
(4) is an indexed note on which payments of interest or principal may be
linked to the price of one or more securities, currencies,
commodities or other goods;
- the price at which such note will be issued, which will be expressed as a
percentage of the aggregate principal amount or face amount;
- the original issue date on which such note will be issued;
- the date of the stated maturity;
- if such note is a fixed rate note, the rate per annum at which such note
will bear any interest, and whether and the manner in which such rate may
be changed prior to its stated maturity;
- if such note is a floating rate note, relevant terms such as:
(1) the base rate;
(2) the initial interest rate;
(3) the interest reset period or the interest reset dates;
(4) the interest payment dates;
(5) any index maturity;
(6) any maximum interest rate;
(7) any minimum interest rate;
(8) any spread or spread multiplier; and
(9) any other terms relating to the particular method of calculating the
interest rate for such note and whether and how such spread or
spread multiplier may be changed prior to stated maturity;
- whether such note is a note issued originally at a discount;
- if such note is an amortizing note, the terms for repayment prior to
stated maturity;
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- if such note is an indexed note, in the case of an indexed rate note, the
manner in which the amount of any interest payment will be determined or,
in the case of an indexed principal note, its face amount and the manner
in which the principal amount payable at stated maturity will be
determined;
- whether such note may be redeemed at the option of Citigroup, or repaid
at the option of the holder, prior to stated maturity as described under
"Optional Redemption, Repayment and Repurchase" below and the terms of
its redemption or repayment;
- whether such note may have an optional extension beyond its stated
maturity as described under "Extension of Maturity" below;
- whether such note will be represented by a global security or a
certificate issued in definitive form;
- any special United States federal income tax consequences of the
purchase, ownership and disposition of a particular issuance of notes;
- whether such note is a renewable note, and, if so, its specific terms;
- the use of proceeds, if materially different than that disclosed in the
accompanying prospectus; and
- any other terms of such note provided in the accompanying prospectus to
be set forth in a pricing supplement or that are otherwise consistent
with the provisions of the indenture under which such note will be
issued.
As used in this prospectus supplement, business day means:
- for any note, any day that is not a Saturday or Sunday and that, in New
York City, is not a day on which banking institutions generally are
authorized or obligated by law or executive order to close;
- for LIBOR notes only, a London business day, which shall be any such day
on which dealings in deposits in the specified currency are transacted in
the London interbank market;
- for notes having a specified currency other than U.S. dollars only, other
than notes denominated in Euros, any day that, in the principal financial
center (as defined below) of the country of the specified currency, is
not a day on which banking institutions generally are authorized or
obligated by law to close; and
- for EURIBOR notes and notes denominated in Euros, a TARGET business day,
which shall be any day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer System is open.
As used above, a principal financial center means the capital city of the
country issuing the specified currency. However, for Australian dollars,
Canadian dollars, Deutsche marks, Dutch guilders, Italian lire and Swiss francs,
the principal financial center will be Sydney, Toronto, Frankfurt, Amsterdam,
Milan and Zurich, respectively.
PAYMENT OF PRINCIPAL AND INTEREST
Citigroup will pay the principal of, and any premium and interest on, each
note in the specified currency for such note. If the specified currency for a
note is other than U.S. dollars, Citigroup will, unless otherwise specified in
the applicable pricing supplement, arrange to convert all payments in respect of
such note into U.S. dollars in the manner described in the following paragraph.
The holder of a note having a specified currency other than U.S. dollars may, if
stated in the applicable pricing supplement and such note, elect to receive all
payments on such note in the specified currency by delivering a written notice
to the trustee for such note not later than fifteen calendar days prior to the
applicable payment date, except under the circumstances described under "Risk
Factors -- The Unavailability of Currencies Could Result in a Substantial Loss
to You" above. Such election will remain in effect until revoked by a written
notice to such trustee that is received not later than fifteen calendar days
prior to the applicable payment date. If an event of default has occurred or
Citigroup has given notice of redemption of a note, no such change of election
may be made.
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The amount of any U.S. dollar payment on a note having a specified currency
other than U.S. dollars will be determined by the exchange rate agent:
- based on the highest firm bid quotation expressed in U.S. dollars
received by the exchange rate agent at approximately 11:00 a.m., New York
City time, on the second business day preceding the applicable payment
date, or if no such rate is quoted on such date, the last date on which
such rate was quoted;
- from three, or if three are not available, then two, recognized foreign
exchange dealers in New York City, one or more of which may be the agent,
and another of which may be the exchange rate agent, that are selected by
the exchange rate agent; and
- by the quoting dealer for the purchase.
The exchange rate agent will also determine prior to settlement the
aggregate amount of the specified currency payable on a payment date for all
notes denominated in such specified currency. All currency exchange costs will
be deducted from payments to the holders of such notes. If no such bid
quotations are available, the payments will be made in the specified currency,
unless the specified currency is unavailable due to the imposition of exchange
controls or due to other circumstances beyond Citigroup's control. In that case,
such payments will be made as described under "Risk Factors -- The
Unavailability of Currencies Could Result in a Substantial Loss to You" above.
Unless otherwise specified in the applicable pricing supplement, U.S.
dollar payments of interest on notes, other than interest payable at stated
maturity, will be made, except as provided below, by check mailed to the
registered holders of such notes. In the case of global securities representing
book-entry notes, such payments of interest on notes will be made to a nominee
of the depositary. However, in the case of a note issued between a regular
record date and the related interest payment date, interest for the period
beginning on the original issue date for such note and ending on such interest
payment date generally will be paid to the holder on the next succeeding
interest payment date.
A holder of $10,000,000, or its equivalent in a specified currency other
than U.S. dollars, or more in aggregate principal amount of notes of like tenor
and term, will be entitled to receive such U.S. dollar payments by wire transfer
of immediately available funds. However, such a holder is entitled to receive
such payments only if the trustee receives written appropriate wire transfer
instructions for such notes not later than fifteen calendar days prior to the
applicable interest payment date. Unless otherwise specified in the applicable
pricing supplement, principal and any premium and interest payable at the stated
maturity of a note will be paid in immediately available funds upon surrender of
such note at the corporate trust office or agency of the trustee for such note
in New York City.
Unless otherwise specified in this prospectus supplement or the applicable
pricing supplement, any payment required to be made on a note on a date,
including the stated maturity date, that is not a business day for such note
need not be made on such date. A payment may be made on the next succeeding
business day with the same force and effect as if made on such date. No
additional interest will accrue as a result of such delayed payment.
Unless otherwise specified in the applicable pricing supplement, if the
principal of any OID note, other than an indexed note, is declared to be due and
payable immediately as a result of the acceleration of stated maturity, the
amount of principal due and payable relating to such note will be limited to the
aggregate principal amount of such note multiplied by the sum of (1) its issue
price, expressed as a percentage of the aggregate principal amount, plus (2) the
original issue discount amortized from the date of issue to the date of
declaration. Amortization will be calculated using the interest method, computed
in accordance with U.S. generally accepted accounting principles in effect on
the date of declaration.
The regular record date for any interest payment date for a floating rate
note, fixed rate note or an indexed rate note will be the date, whether or not a
business day, fifteen calendar days immediately preceding such interest payment
date.
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FIXED RATE NOTES
Each fixed rate note will bear interest from its original issue date, or
from the last interest payment date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable pricing supplement
until its principal amount is paid or made available for payment. However, as
described below under "Subsequent Interest Periods" and "Extension of Maturity,"
or as otherwise may be described in the applicable pricing supplement, the rate
of interest payable on fixed rate notes may be adjusted from time to time.
Unless otherwise set forth in the applicable pricing supplement, interest
on each fixed rate note will be payable semiannually in arrears on such dates as
set forth in the applicable pricing supplement, with each such day being an
interest payment date, and at stated maturity. Unless "accrue to pay" is
specified in the applicable pricing supplement or unless otherwise specified in
the applicable pricing supplement, if an interest payment date for any fixed
rate note would otherwise be a day that is not a business day, any payment
required to be made on such note on such date, including the stated maturity
date, may be made on the next succeeding business day with the same force and
effect as if made on such date. No additional interest will accrue as a result
of such delayed payment.
If in connection with any fixed rate note, "accrue to pay" is specified in
the applicable pricing supplement, and any interest payment date for such fixed
rate note would otherwise be a day that is not a business day, such interest
payment date will be postponed to the next succeeding business day. Any payment
of interest on such interest payment date will include interest accrued through
the day before such interest payment date. Unless otherwise specified in the
applicable pricing supplement, interest on fixed rate notes will be computed on
the basis of a 360-day year of twelve 30-day months or, in the case of an
incomplete month, the number of days elapsed.
FLOATING RATE NOTES
The initial interest period is the period from the original issue date to,
but not including, the first interest reset date. Each floating rate note will
bear interest at the initial interest rate set forth, or otherwise described, in
the applicable pricing supplement. The interest reset period is the period from
each interest reset date to, but not including, the following interest reset
date. The initial interest period and any interest reset period is an interest
period. The interest rate for each floating rate note will be determined based
on an interest rate basis, the base rate, plus or minus any spread, or
multiplied by any spread multiplier. A basis point or bp equals one-hundredth of
a percentage point. The spread is the number of basis points that may be
specified in the applicable pricing supplement as applicable to such note. The
spread multiplier is the percentage that may be specified in the applicable
pricing supplement as applicable to such note. As described below under
"Subsequent Interest Periods" and "Extension of Maturity," or as may otherwise
be specified in the applicable pricing supplement, the spread or spread
multiplier on floating rate notes may be adjusted from time to time.
The applicable pricing supplement will designate one of the following base
rates as applicable to a floating rate note:
- the CD Rate;
- the Commercial Paper Rate;
- the Federal Funds Rate;
- LIBOR;
- the Treasury Rate;
- the Prime Rate;
- the J.J. Kenny Rate;
- the Eleventh District Cost of Funds Rate;
- EURIBOR; or
- such other base rate as is set forth in the applicable pricing supplement
and in such note.
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The following terms are used in describing the various base rates.
The "index maturity" for any floating rate note is the period of maturity
of the instrument or obligation from which the base rate is calculated.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/H15/update or any
successor site or publication.
"Calculation date" means the date by which the calculation agent is to
calculate the interest rate for floating rate notes which will be the earlier of
(1) the tenth calendar day after the related rate determination date, or if any
such day is not a business day, the next succeeding business day or (2) the
business day preceding the applicable interest payment date or the stated
maturity.
As specified in the applicable pricing supplement, a floating rate note may
also have either or both of the following, which will be expressed as a rate per
annum on a simple interest basis:
- maximum interest rate, which will be a maximum limitation, or ceiling, on
the rate at which interest may accrue during any interest period; and/or
- minimum interest rate, which will be a minimum limitation, or floor, on
the rate at which interest may accrue during any interest period.
In addition to any maximum interest rate that may be applicable to any
floating rate note, the interest rate on a floating rate note will in no event
be higher than the maximum rate permitted by applicable law. The notes will be
governed by the law of New York State. As of the date of this prospectus
supplement, the maximum rate of interest under provisions of the New York penal
law, with a few exceptions, is 25% per annum on a simple interest basis. Such
maximum rate of interest only applies to obligations that are less than
$2,500,000.
Citigroup will appoint and enter into agreements with calculation agents to
calculate interest rates on floating rate notes. Unless otherwise specified in
the applicable pricing supplement, The Bank of New York will be the calculation
agent for each senior note that is a floating rate note and Bank One Trust
Company, N.A. (formerly the First National Bank of Chicago) will be the
calculation agent for each subordinated note that is a floating rate note. All
determinations of interest by the calculation agents will, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of the
floating rate notes.
The interest rate on each floating rate note will be reset on an interest
reset date, which means that the interest rate is reset daily, weekly, monthly,
quarterly, semiannually or annually, as specified in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement, the
interest reset dates will be as follows:
- in the case of floating rate notes that reset daily, each business day;
- in the case of floating rate notes that reset weekly, other than Treasury
Rate notes, the Wednesday of each week;
- in the case of Treasury Rate notes that reset weekly and except as
provided below under "Treasury Rate Notes," the Tuesday of each week;
- in the case of floating rate notes that reset monthly, other than
Eleventh District Cost of Funds Rate notes, the third Wednesday of each
month;
- in the case of floating rate notes that are Eleventh District Cost of
Funds Rate notes, the first calendar day of each month;
- in the case of floating rate notes that reset quarterly, the third
Wednesday of March, June, September and December of each year;
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- in the case of floating rate notes that reset semiannually, the third
Wednesday of each of two months of each year specified in the applicable
pricing supplement; and
- in the case of floating rate notes that reset annually, the third
Wednesday of one month of each year specified in the applicable pricing
supplement.
If an interest reset date for any floating rate note would fall on a day that is
not a business day, such interest reset date will be postponed to the next
succeeding business day. In the case of a LIBOR note or a EURIBOR note, if
postponement to the next business day would cause the interest reset date to be
in the next succeeding calendar month, the interest reset date will instead be
the immediately preceding business day. If an auction of direct obligations of
United States Treasury bills falls on a day that is an interest reset date for
Treasury Rate notes, the interest reset date will be the succeeding business
day.
Unless otherwise specified in the applicable pricing supplement and except
as set forth below, the rate of interest that goes into effect on any interest
reset date will be determined on a rate determination date preceding such
interest reset date, as further described below.
Unless otherwise specified in the applicable pricing supplement and except
as set forth in the next sentence, interest payable on floating rate notes will
be the interest accrued from and including the original issue date or the last
date to which interest has been paid, as the case may be, to but excluding the
applicable interest payment date. If the interest rate is reset daily or weekly,
interest payable on the notes will be the interest accrued from and including
the original issue date or the last date to which interest has been paid, as the
case may be, to but excluding the record date immediately preceding an interest
payment date that occurs any time prior to maturity.
Accrued interest on a floating rate note with more than one interest reset
date will be calculated by multiplying the principal amount of the note by an
accrued interest factor. If the floating rate note is an indexed principal note,
the face amount of the note will be multiplied by the accrued interest factor.
The accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. Unless otherwise specified in the applicable pricing supplement, the
interest factor for each such day will be computed by dividing the interest rate
in effect on such day by 360, in the case of CD Rate notes, Commercial Paper
Rate notes, Federal Funds Rate notes, LIBOR notes, Prime Rate notes, J.J. Kenny
Rate notes, Eleventh District Cost of Funds Rate notes and EURIBOR notes. In the
case of Treasury Rate notes, the interest factor for each such day will be
computed by dividing such interest rate by the actual number of days in the
year. The interest factor will be expressed as a decimal calculated to seven
decimal places without rounding. For purposes of making the foregoing
calculation, the interest rate in effect on any interest reset date will be the
applicable rate as reset on such date.
For all other floating rate notes, accrued interest will be calculated by
multiplying the principal amount of the note by the interest rate in effect
during the period for which accrued interest is being calculated. That product
is then multiplied by the quotient obtained by dividing the number of days in
the period for which accrued interest is being calculated by 360, in the case of
CD Rate notes, Commercial Paper Rate notes, Federal Funds Rate notes, LIBOR
notes, Prime Rate notes, J.J. Kenny Rate notes, Eleventh District Cost of Funds
Rate notes and EURIBOR notes. In the case of Treasury Rate notes, such product
is multiplied by the quotient obtained by dividing the number of days in the
period for which accrued interest is being calculated by the actual number of
days in the year.
Unless otherwise specified in the applicable pricing supplement, all
percentages resulting from any calculation of the rate of interest on a floating
rate note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward. All
currency amounts used in, or resulting from, such calculation on floating rate
notes will be rounded to the nearest one-hundredth of a unit. For purposes of
such rounding, .005 of a unit shall be rounded upward.
Unless otherwise indicated in the applicable pricing supplement and except
as provided below, interest will be payable as follows.
- In the case of floating rate notes that reset daily, weekly or monthly,
other than Eleventh District Cost of Funds Rate notes, interest will be
payable on the third Wednesday of each month or on the third
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Wednesday of March, June, September and December of each year, as
specified in the applicable pricing supplement.
- In the case of Eleventh District Cost of Funds Rate notes, interest will
be payable on the first calendar day of each March, June, September and
December.
- In the case of floating rate notes that reset quarterly, interest will be
payable on the third Wednesday of March, June, September, and December of
each year.
- In the case of floating rate notes that reset semiannually, interest will
be payable on the third Wednesday of each of two months of each year
specified in the applicable pricing supplement.
- In the case of floating rate notes that reset annually, interest will be
payable on the third Wednesday of one month of each year specified in the
applicable pricing supplement.
In each of these cases, interest will also be payable at maturity.
If an interest payment date for any floating rate note would fall on a day
that is not a business day, such interest payment date will be postponed to the
next succeeding business day. In the case of a LIBOR note or a EURIBOR note, if
postponement to the next business day would cause the interest payment date to
be in the next succeeding calendar month, the interest payment date will instead
be the immediately preceding business day.
If for any floating rate note, the applicable pricing supplement provides
that the note does not accrue to pay, and if an interest payment date for such
floating rate note would otherwise be a day that is not a business day, such
interest payment date will not be postponed. Any payment required to be made on
such floating rate note, however, may be made on the next succeeding business
day with the same force and effect as if made on the due date. No additional
interest will accrue as a result of such delayed payment.
Upon the request of the holder of any floating rate note, the calculation
agent for such note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next interest
reset date for such floating rate note.
CD Rate Notes. Each CD Rate note will bear interest for each interest
reset period at an interest rate equal to the CD Rate and any spread or spread
multiplier specified in such note and in the applicable pricing supplement.
The calculation agent will determine the CD Rate on each CD Rate
determination date. The CD Rate determination date is the second business day
prior to the interest reset date for each interest reset period for negotiable
certificates of deposit having the index maturity designated in the applicable
pricing supplement as published in H.15(519) under the heading "CDs (Secondary
Market)."
The following procedures will be followed if the CD Rate cannot be
determined as described above.
- If the above rate is not published prior to 3:00 p.m., New York City
time, on the calculation date pertaining to the CD Rate determination
date, then the CD Rate for such interest reset period will be the rate on
that date for negotiable certificates of deposit of the index maturity
designated in the applicable pricing supplement as published in the H.15
Daily Update.
- If by 3:00 p.m., New York City time, on the calculation date, the above
rate is not yet published in either H.15(519) or in the H.15 Daily
Update, then the CD Rate will be the arithmetic mean of the secondary
market offered rates as of 10:00 a.m., New York City time, on that date
of three leading nonbank dealers in negotiable U.S. dollar certificates
of deposit in New York City selected by the calculation agent for
negotiable certificates of deposit of major United States money center
banks of the highest credit standing, in the market for negotiable
certificates of deposit, with a remaining maturity closest to the index
maturity designated in the pricing supplement in a denomination of
$5,000,000.
- If the dealers selected by the calculation agent, however, are not
quoting offered rates as mentioned in the preceding sentence, the CD Rate
for such interest reset period will be the same as the CD Rate for the
immediately preceding interest reset period. If there was no such
interest reset period, the CD Rate will be the initial interest rate.
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CD Rate notes, like other notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
Commercial Paper Rate Notes. Each Commercial Paper Rate note will bear
interest for each interest reset period at an interest rate equal to the
Commercial Paper Rate and any spread or spread multiplier, specified in such
note and the applicable pricing supplement.
The calculation agent will determine the Commercial Paper Rate on each
Commercial Paper Rate determination date. The Commercial Paper Rate
determination date is the second business day prior to the interest reset date
for each interest reset period. The Commercial Paper Rate will be the money
market yield on that date of the rate for commercial paper having the index
maturity specified in the applicable pricing supplement, as such rate will be
published in H.15(519) under the heading "Commercial Paper -- Nonfinancial."
The following procedures will be followed if the Commercial Paper Rate
cannot be determined as described above.
- If such rate is not published prior to 3:00 p.m., New York City time, on
the calculation date pertaining to the Commercial Paper Rate
determination date, then the Commercial Paper Rate for such interest
reset period will be the money market yield on that date of the rate for
commercial paper of the specified index maturity as published in the H.15
Daily Update under the heading "Commercial Paper -- Nonfinancial."
- If by 3:00 p.m., New York City time, on such calculation date, the above
rate is not yet published in either H.15(519) or in the H.15 Daily
Update, then the Commercial Paper Rate for such interest reset period
will be the money market yield of the arithmetic mean of the offered
rates, as of 11:00 a.m., New York City time, on that date, of three
leading dealers of commercial paper in New York City selected by the
calculation agent for such Commercial Paper Rate note for commercial
paper of the specified index maturity placed for an industrial issuer
whose bonds are rated "AA" or the equivalent by a nationally recognized
rating agency.
- If the dealers selected by such calculation agent, however, are not
quoting offered rates as mentioned in the preceding sentence, the
Commercial Paper Rate for such interest reset period will be the same as
the Commercial Paper Rate for the immediately preceding interest reset
period. If there was no such interest reset period, the Commercial Paper
Rate will be the initial interest rate.
Money market yield will be calculated as follows:
<TABLE>
<S> <C> <C> <C>
D X 360
money market yield = ------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified index maturity.
Federal Funds Rate Notes. Each Federal Funds Rate note will bear interest
for each interest reset period at an interest rate equal to the Federal Funds
Rate and any spread or spread multiplier specified in such note and the
applicable pricing supplement.
The calculation agent will determine the Federal Funds Rate on each Federal
Funds Rate determination date. The Federal Funds Rate determination date is the
second business day prior to the interest reset date for such interest reset
period. The Federal Funds Rate will be the rate for Federal Funds as published
in H.15(519) under the heading "Federal Funds (Effective)."
The following procedures will be followed if the Federal Funds Rate cannot
be determined as described above.
- If the above rate is not published prior to 3:00 p.m., New York City
time, on the calculation date pertaining to the Federal Funds Rate
determination date, the Federal Funds Rate for such interest reset period
will be the rate on that date as published in the H.15 Daily Update under
the heading "Federal Funds/Effective Rate."
- If by 3:00 p.m., New York City time, on such calculation date the above
rate is not yet published in either H.15(519) or in the H.15 Daily
Update, then the Federal Funds Rate for such interest reset
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<PAGE> 16
period will be the rate on that date which the Federal Reserve Bank of
New York makes publicly available that is equivalent to the rate which
appears in H.15(519) under the heading "Federal Funds (Effective)."
- If such rate, however, is not made publicly available by the Federal
Reserve Bank of New York by 3:00 p.m., New York City time, on such
calculation date, the Federal Funds Rate for such interest reset period
will be the same as the Federal Funds Rate in effect for the immediately
preceding interest reset period. If there was no such interest reset
period, the Federal Funds Rate will be the initial interest rate.
In the case of a Federal Funds Rate note that resets daily, the interest
rate on such note for the period from and including a Monday to but excluding
the succeeding Monday will be reset by the calculation agent for such note on
such second Monday, or, if not a business day, on the next succeeding business
day, to a rate equal to the average of the Federal Funds Rates in effect for
each such day in such week.
LIBOR Notes. Each LIBOR note will bear interest for each interest reset
period at an interest rate equal to LIBOR and any spread or spread multiplier
specified in such note and the applicable pricing supplement.
The calculation agent will determine LIBOR on each LIBOR determination
date. The LIBOR determination date is the second London banking day prior to the
interest reset date for each interest reset period.
On a LIBOR determination date, the calculation agent will determine LIBOR
for each interest reset period as follows.
The calculation agent will determine the offered rates for deposits in the
specified currency for the period of the index maturity specified in the
applicable pricing supplement, commencing on such interest reset date, which
appears on the "designated LIBOR page" at approximately 11:00 a.m., London time,
on that date.
- If "LIBOR Telerate" is designated in the applicable pricing supplement,
"designated LIBOR page" means the display designated as page "3750" on
the Bridge Telerate Service, and LIBOR will be the relevant offered rate
determined by the calculation agent. If page "3750" on the Bridge
Telerate Service is replaced by another page, or if the Bridge Telerate
Service is replaced by a nominee of the British Bankers' Association,
then "LIBOR Telerate" means the replacement page or service selected to
display the London interbank offered rates of major banks.
- If "LIBOR Reuters" is designated in the applicable pricing supplement,
"designated LIBOR page" means the arithmetic mean determined by the
calculation agent of the two or more offered rates on the display
designated as page "LIBO" on the Reuters Monitor Money Rates Service. If
the LIBO page on such service is replaced by another page, or if the
Reuters Monitor Money Rates Service is replaced by a nominee of the
British Bankers' Association, then "LIBOR Reuters" means the arithmetic
mean determined by the calculation agent of the two or more offered rates
on the replacement page or service selected to display the London
interbank offered rates of major banks.
If LIBOR cannot be determined on a LIBOR determination date as described
above, then the calculation agent will determine LIBOR as follows.
- The calculation agent for such LIBOR note will select four major banks
in the London interbank market.
- The calculation agent will request that the principal London offices
of those four selected banks provide their offered quotations to prime
banks in the London interbank market at approximately 11:00 a.m.,
London time, on the LIBOR determination date. These quotations shall
be for deposits in the specified currency for the period of the
specified index maturity, commencing on such interest reset date.
Offered quotations must be based on a principal amount equal to at
least $1,000,000 or the approximate equivalent in the specified
currency that is representative of a single transaction in such market
at such time.
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(1) If two or more quotations are provided, LIBOR for such interest reset
period will be the arithmetic mean of such quotations.
(2) If less than two quotations are provided, the calculation agent will
select three major banks in New York City and follow the steps in the
two bullet points below.
- The calculation agent will then determine LIBOR for such interest
reset period as the arithmetic mean of rates quoted by those three
major banks in New York City to leading European banks at
approximately 11:00 a.m., New York City time, on such LIBOR
determination date. The rates quoted will be for loans in the
specified currency, for the period of the specified index maturity,
commencing on the interest reset date. Rates quoted must be based on a
principal amount of at least $1,000,000 or the approximate equivalent
in the specified currency that is representative of a single
transaction in such market at such time.
- If fewer than three New York City banks selected by the calculation
agent are quoting rates, LIBOR for such interest reset period will be
the same as for the immediately preceding interest reset period. If
there was no such interest reset period, the LIBOR Rate will be the
initial interest rate.
Treasury Rate Notes. Each Treasury Rate note will bear interest for each
interest reset period at an interest rate equal to the Treasury Rate and any
spread or spread multiplier, specified in such note and the applicable pricing
supplement.
Treasury Rate Notes other than Constant Maturity Treasury Rate Notes
Unless "Constant Maturity" is specified in the applicable pricing
supplement, the Treasury Rate for each interest reset period will be the rate
for the auction held on the Treasury Rate determination date for such interest
reset period of treasury securities as such rate appears on either Telerate page
56 or Telerate page 57 under the heading "AVGE INVEST YIELD." Treasury
securities are direct obligations of the United States that have the index
maturity specified in the applicable pricing supplement.
If the Treasury Rate cannot be determined as described above, the following
procedures will be followed in the order set forth below.
(1) If the Treasury rate is not published prior to 3:00 P.M., New York City
time on the calculation date pertaining to the Treasury Rate
determination date, then the Treasury Rate for the interest reset
period will be the auction average rate on the Treasury Rate
determination date as otherwise announced by the United States
Department of the Treasury. The auction average rate will be expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis.
(2) If the results of such auction are not published or reported as
provided in (1) above by 3:00 P.M., New York City time, on such
calculation date, or if no such auction is held on the Treasury Rate
determination date, then the Treasury Rate for such interest reset
period will be calculated by the calculation agent for such Treasury
Rate note. In this case, the Treasury Rate will be a yield to maturity
of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on the Treasury Rate
determination date, of three leading primary United States government
securities dealers selected by the calculation agent for the issue of
treasury securities with a remaining maturity closest to the specified
index maturity. The yield to maturity will be expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis.
(3) If the dealers selected by the calculation agent are not quoting bid
rates as mentioned in (2) above, then the Treasury Rate for such
interest reset period will be the same as the Treasury Rate for the
immediately preceding interest reset period. If there was no preceding
interest reset period, the Treasury Rate will be the initial interest
rate.
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<PAGE> 18
The Treasury Rate determination date for each interest reset period will be
the day of the week in which the interest reset date for such interest reset
period falls on which treasury securities would normally be auctioned.
Treasury securities are normally sold at auction on Monday of each week
unless that day is a legal holiday. In that case the auction is normally held on
the following Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is held on the
preceding Friday, such Friday will be the Treasury Rate determination date
pertaining to the interest reset period commencing in the next succeeding week.
If an auction date falls on any day that would otherwise be an interest reset
date for a Treasury Rate note, then that interest reset date will instead be the
business day immediately following the auction date.
Constant Maturity Treasury Rate Notes
If "Constant Maturity" is specified in the applicable pricing supplement,
the Treasury Rate for each interest reset period will be the rate displayed on
the designated CMT Telerate page under the caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately
3:45 P.M.," under the column for the designated CMT maturity index in the
following manner.
- If the designated CMT Telerate page is 7051, the Treasury Rate will be
the rate on the Constant Maturity Treasury Rate determination date.
- If the designated CMT Telerate page is 7052, the Treasury Rate will be
the average for the week or for the month, as specified in the applicable
pricing supplement, ended immediately preceding the week or month, as
applicable, in which the related Constant Maturity Treasury Rate
determination date occurs.
If such rate does not appear on such designated CMT Telerate page as
indicated above, the following procedures will be followed in the order set
forth below.
(1) If the rate is no longer displayed on the relevant page or is not
displayed by 3:00 P.M., New York City time on the related calculation
date, then the Treasury Rate for the Constant Maturity Treasury Rate
determination date will be such Treasury Constant Maturity Rate for the
designated CMT maturity index as published in the relevant H.15(519).
(2) If this rate is no longer published or is not published by 3:00 P.M.,
New York City time, on the related calculation date, then the Treasury
Rate on the Constant Maturity Treasury Rate determination date will be
the treasury constant maturity rate for the designated CMT maturity
index, or other United States Treasury rate for the designated CMT
maturity index, for the Constant Maturity Treasury Rate determination
date for such interest reset date as may then be published by either
the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury. The calculation agent will make the
determination as to which of such rates is comparable to the rate
formerly displayed on the designated CMT Telerate page and published in
the relevant H.15(519).
(3) If this information is not provided by 3:00 P.M., New York City time,
on the related calculation date, then the calculation agent will
calculate the Treasury Rate on the Constant Maturity Treasury Rate
determination date as follows.
- The Treasury Rate will be a yield to maturity based on the arithmetic
mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on the Constant Maturity
Treasury Rate determination date reported, according to their written
records, by three leading U.S. government securities dealers in New
York City, for Treasury notes. The Treasury notes will be the most
recently issued direct noncallable fixed rate obligations of the
United States, with an original maturity of approximately the
designated CMT maturity index and a remaining term to maturity of not
less than such designated CMT maturity index minus one year.
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<PAGE> 19
- The three government securities dealers referenced above will be
identified from five such dealers who are selected by the calculation
agent, one of which may be the agent, by eliminating the dealers with
the highest and lowest quotations, or in the event of equality, one of
the highest and/or lowest quotation, as the case may require.
- If three or four, but not five, of such dealers provide quotations as
described above, then the Constant Maturity Treasury Rate will be
based on the arithmetic mean of the offer prices obtained and neither
the highest nor the lowest of such quotes will be eliminated.
(4) If the calculation agent is unable to obtain three such Treasury note
quotations as described in (3) above, the Treasury Rate on such
Constant Maturity Treasury Rate determination date will be calculated
by the calculation agent as follows.
- The rate will be a yield to maturity based on the arithmetic mean of
the secondary market closing offer side prices as of approximately
3:30 P.M., New York City time, on the Constant Maturity Treasury Rate
determination date reported, according to their written records, by
three leading U.S. government securities dealers in New York City, for
Treasury notes with an original maturity of the number of years that
is the next highest to the designated CMT maturity index and a
remaining maturity closest to the index maturity specified in the
applicable pricing supplement, and in an amount that is representative
for a single transaction in that market at that time.
- If two Treasury notes with an original maturity, as described above,
have remaining terms to maturity equally close to the designated CMT
maturity index, the calculation agent will obtain quotations for the
Treasury note with the shorter remaining term to maturity and will use
such quotations to calculate the Treasury Rate as set forth above.
- The three government securities dealers referenced above will be
identified from five such dealers who are selected by the calculation
agent, one of which may be the agent, by eliminating the dealers with
the highest and lowest quotations, or in the event of equality, one of
the highest and/or lowest quotation, as the case may require.
- If three or four, but not five, of such dealers provide quotations as
described above, then the Treasury Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest
nor the lowest of such quotes will be eliminated.
(5) If fewer than three dealers selected by the calculation agent provide
quotations as described in (4) above, the Treasury Rate determined as
of the Constant Maturity Treasury Rate determination date will be the
Treasury Rate in effect on such Constant Maturity Treasury Rate
determination date.
"Designated CMT Telerate page" means the display on the Bridge Telerate
Service, or any successor service on the page specified in the applicable
pricing supplement, or any other page as may replace such page on that service,
or any successor service, for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519). If no such page is specified in the
applicable pricing supplement, the designated CMT Telerate page will be 7052,
for the most recent week.
"Designated CMT maturity index" means the original period to maturity of
the U.S. Treasury securities, either one, two, three, five, seven, ten, twenty
or thirty years, specified in the applicable pricing supplement for which the
Treasury Rate will be calculated. If no such maturity is specified in the
applicable pricing supplement, the designated CMT maturity index will be two
years.
The "Constant Maturity Treasury Rate determination date" will be the second
business day prior to the interest reset date for the applicable interest reset
period.
The CMT Rate for a Treasury security maturity as published as of any
business day is intended to be indicative of the yield of a U.S. Treasury
security having as of such business day a remaining term to maturity equivalent
to such maturity. The CMT Rate as of any business day is based upon an
interpolation by the U.S. Treasury of the daily yield curve of outstanding
Treasury securities. This yield curve, which relates the yield on
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<PAGE> 20
a security to its time to maturity, is based on the over-the-counter market bid
yields on actively traded Treasury securities. Such yields are calculated from
composites of quotations reported by leading U.S. government securities dealers,
which may include one or more of the calculation agents or other affiliates of
Citigroup. Certain constant maturity yield values are read from the yield curve.
Such interpolation from the yield curve provides a theoretical yield for a
Treasury security having ten years to maturity, for example, even if no
outstanding Treasury security has as of such date exactly ten years remaining to
maturity.
Prime Rate Notes. Prime Rate notes will bear interest at a rate equal to
the Prime Rate and any spread or spread multiplier specified in the Prime Rate
notes and the applicable pricing supplement.
The calculation agent will determine the Prime Rate for each interest reset
period on each Prime Rate determination date. The Prime Rate determination date
is the second business day prior to the interest reset date for each interest
reset period. The Prime Rate will be the rate made available and subsequently
published on that date in H.15(519) under the heading "Bank Prime Loan."
The following procedures will be followed if the Prime Rate cannot be
determined as described above.
- If the rate is not published prior to 9:00 A.M., New York City time, on
the related calculation date, then the Prime Rate will be the rate on the
Prime Rate determination date that is published in the H.15 Daily Update
under the heading "Bank Prime Loan."
- If the rate is not published prior to 3:00 P.M., New York City time, on
the related calculation date, in either of those sources, then the Prime
Rate will be the arithmetic mean of the rates of interest that appear on
the Reuters Screen USPRIME1 Page as such bank's prime rate or base
lending rate for the Prime Rate determination date.
- If fewer than four such rates appear on the Reuters Screen USPRIME1 Page,
then the calculation agent will select four major banks in New York City.
The Prime Rate will be the arithmetic mean of the prime rates quoted by
those four banks on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on the Prime Rate
determination date.
- If all four of the banks selected by the calculation agent do not provide
quotations, then the Prime Rate will be the arithmetic mean of four prime
rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on the Prime Rate
determination date. These Prime Rate quotes will be provided by the
selected banks and by a reasonable number of substitute domestic banks or
trust companies that the calculation agent will select that have total
equity capital of at least $500,000,000.
- If the banks or trust companies that the calculation agent selects do not
provide quotations as described above, then the Prime Rate will remain
the same as the Prime Rate in effect on the Prime Rate determination
date.
"Reuters Screen USPRIME1 page" means the display designated as page
"USPRIME1" on the Reuters Monitor Money Rates Service, or any successor service
or page, for the purpose of displaying prime rates or base lending rates of
major United States banks.
J.J. Kenny Rate Notes. J.J. Kenny Rate notes will bear interest at the
interest rates, calculated based on the J.J. Kenny Rate and any spread and/or
spread multiplier specified in the J.J. Kenny Rate notes and the applicable
pricing supplement.
The calculation agent will determine the J.J. Kenny Rate on each J.J. Kenny
Rate determination date. The J.J. Kenny Rate determination date is the second
business day prior to the interest reset date for each interest reset period.
The J.J. Kenny Rate will be the per annum rate on such date equal to the
index made available and subsequently published by Kenny Information Systems or
its successor. Such rate will be based upon 30-day yield evaluations at par of
bonds of not less than five "high grade" component issuers. The bonds evaluated
will be bonds on which the interest is excludable from gross income for federal
income tax purposes under the Internal Revenue Code of 1986. Kenny Information
Systems will select such issuers from time to time,
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including issuers of general obligation bonds. However, the bonds on which the
index is based will not include any bonds the interest on which may trigger an
"alternate minimum tax" or similar tax under the Code, unless such tax may be
imposed on all tax-exempt bonds.
The following procedure will be followed if the J.J. Kenny Rate cannot be
determined as described above.
If such rate is not made available by 3:00 P.M., New York City time, on the
calculation date pertaining to such J.J. Kenny Rate determination date, the J.J.
Kenny Rate will be the rate quoted by a successor indexing agent selected by
Citigroup. This rate will be equal to the prevailing rate for bonds included in
the highest short-term rating category by Moody's Investors Service, Inc. and
Standard & Poor's Corporation for issuers selected by such successor indexing
agent most closely resembling the "high grade" component issuers selected by
Kenny Information Systems. The bonds for which rates are quoted will be bonds
that may be tendered by their holders for purchase on not more than seven days'
notice and the interest on which:
- is variable on a weekly basis;
- is excludable from gross income for federal income tax purposes under the
Code; and
- does not give rise to an "alternate minimum tax" or similar tax under the
Code, unless all tax-exempt bonds give rise to such a tax.
However, if a successor indexing agent is not available, the J.J. Kenny Rate on
the J.J. Kenny Rate determination date will be the J.J. Kenny Rate for the
immediately preceding interest reset period. If there was no such interest reset
period, the J.J. Kenny Rate will be the initial interest rate.
Eleventh District Cost of Funds Rate Notes. Eleventh District Cost of
Funds Rate notes will bear interest at the interest rates, calculated based on
the Eleventh District Cost of Funds Rate and any spread and/or spread
multiplier, specified in the Eleventh District Cost of Funds Rate notes and the
applicable pricing supplement.
The calculation agent will determine the Eleventh District Cost of Funds
Rate on each Eleventh District Cost of Funds Rate determination date. The
Eleventh District Cost of Funds Rate determination date is the last working day
of the month immediately prior to each interest reset date for each interest
reset period on which the Federal Home Loan Bank of San Francisco publishes the
Eleventh District Cost of Funds Index.
The Eleventh District Cost of Funds Rate will be the rate equal to the
monthly weighted average cost of funds for the calendar month preceding such
Eleventh District Cost of Funds Rate determination date as set forth under the
caption "Eleventh District" on the Telerate page 7058. Such page will be deemed
to include any successor page, determined by the calculation agent, as of 11:00
A.M., San Francisco time, on the Eleventh District Cost of Funds Rate
determination date.
The following procedures will be followed if the Eleventh District Cost of
Funds Rate cannot be determined as described above.
- If the rate does not appear on Telerate page 7058 on any related Eleventh
District Cost of Funds Rate determination date, the Eleventh District
Cost of Funds Rate for the Eleventh District Cost of Funds Rate
determination date will be the Eleventh District Cost of Funds Rate
Index.
- If the FHLB of San Francisco fails to announce such rate for the calendar
month next preceding such Eleventh District Cost of Funds Rate
determination date, then the Eleventh District Cost of Funds Rate for
such date will be the Eleventh District Cost of Funds Rate in effect on
such Eleventh District Cost of Funds Rate determination date.
The "Eleventh District Cost of Funds Rate Index" will be the monthly
weighted average cost of funds paid by member institutions of the Eleventh
Federal Home Loan Bank District that the FHLB of San Francisco most recently
announced as the cost of funds for the calendar month preceding the date of such
announcement.
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EURIBOR Notes. Each EURIBOR note will bear interest for each interest
reset period at an interest rate equal to EURIBOR and any spread or spread
multiplier specified in such note and the applicable pricing supplement.
The calculation agent will determine EURIBOR on each EURIBOR determination
date. The EURIBOR determination date is the second TARGET business day prior to
the interest reset date for each interest reset period.
On a EURIBOR determination date, the calculation agent will determine
EURIBOR for each interest reset period as follows.
The calculation agent will determine the offered rates for deposits in
Euros for the period of the index maturity specified in the applicable pricing
supplement, commencing on such interest reset date, which appears on page 248 on
the Bridge Telerate Service or any successor service or any page that may
replace page 248 on that service which is commonly referred to as "Telerate Page
248" as of 11:00 a.m., Brussels time, on that date.
If EURIBOR cannot be determined on a EURIBOR determination date as
described above, then the calculation agent will determine EURIBOR as follows.
- The calculation agent for such EURIBOR note will select four major
banks in the Euro-zone interbank market.
- The calculation agent will request that the principal Euro-zone
offices of those four selected banks provide their offered quotations
to prime banks in the Euro-zone interbank market at approximately
11:00 a.m., Brussels time, on the EURIBOR determination date. These
quotations shall be for deposits in Euros for the period of the
specified index maturity, commencing on such interest reset date.
Offered quotations must be based on a principal amount equal to at
least $1,000,000 or the approximate equivalent in Euros that is
representative of a single transaction in such market at such time.
(1) If two or more quotations are provided, EURIBOR for such interest reset
period will be the arithmetic mean of such quotations.
(2) If less than two quotations are provided, the calculation agent will
select four major banks in the Euro-zone and follow the steps in the
two bullet points below.
- The calculation agent will then determine EURIBOR for such interest
reset period as the arithmetic mean of rates quoted by those four
major banks in the Euro-zone to leading European banks at
approximately 11:00 a.m., Brussels time, on such EURIBOR determination
date. The rates quoted will be for loans in Euros, for the period of
the specified index maturity, commencing on the interest reset date.
Rates quoted must be based on a principal amount of at least
$1,000,000 or the approximate equivalent in Euros that is
representative of a single transaction in such market at such time.
- If the banks so selected by the calculation agent are not quoting
rates as described above, EURIBOR for such interest reset period will
be the same as for the immediately preceding interest reset period. If
there was no such interest reset period, EURIBOR will be the initial
interest rate.
"Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the Treaty establishing
the European Community, as amended by the Treaty on European Union.
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Inverse Floating Rate Notes. Any floating rate note may be designated in
the applicable pricing supplement as an inverse floating rate note. In such an
event, unless otherwise specified in the applicable pricing supplement, the
interest rate on such floating rate note will be equal to:
- in the case of the period, if any, commencing on the issue date, or the
date on which such note otherwise begins to accrue interest if different
from the issue date, up to the first interest reset date, a fixed rate of
interest established by Citigroup as described in the applicable pricing
supplement; and
- in the case of each period commencing on an interest reset date, a fixed
rate of interest specified in the pricing supplement minus the interest
rate determined based on the base rate as adjusted by any spread and/or
spread multiplier.
However, on any inverse floating rate note, (1) the interest rate will not be
less than zero and (2) the interest rate in effect for the ten days immediately
prior to the date of maturity of such inverse floating rate note will be that in
effect on the tenth day preceding such date.
Floating/Fixed Rate Notes. The applicable pricing supplement may provide
that a note will be a floating rate note for a specified portion of its term and
a fixed rate note for the remainder of its term. In such an event, the interest
rate on such note will be determined as if it were a floating rate note and a
fixed rate note for each such respective period, all as specified in such
applicable pricing supplement.
SUBSEQUENT INTEREST PERIODS
The pricing supplement relating to each note will indicate whether
Citigroup has the option to reset the interest rate, or the spread, spread
multiplier, or method of calculation, as the case may be, for such note. If
Citigroup has the option to reset, the pricing supplement will also indicate the
optional reset date or dates on which such interest rate or such spread, spread
multiplier, or method of calculation, as the case may be, may be reset.
Citigroup shall notify the trustee whether or not it intends to exercise
such option relating to such note at least 45 but not more than 60 days prior to
an optional reset date for such note. Not later than 40 days prior to such
optional reset date, the trustee will mail to the holder of such note a reset
notice first class, postage prepaid, indicating whether Citigroup has elected to
reset the interest rate, or the spread, spread multiplier or method of
calculation, as the case may be.
If Citigroup elects to reset the interest rate, or the spread, spread
multiplier or method of calculation, as the case may be, the trustee will mail
to the holder in a manner described above a notice indicating such new interest
rate or such new spread, spread multiplier, or method of calculation, as the
case may be. The notice will also indicate any provisions for redemption during
the subsequent interest period. The subsequent interest period is the period
from such optional reset date to the next optional reset date or, if there is no
such next optional reset date, to the stated maturity of such note, including
the date or dates on which or the period or periods during which and the price
or prices at which such redemption may occur during such subsequent interest
period.
Upon the transmittal by the trustee of a reset notice to the holder of a
note, such new interest rate or such new spread, spread multiplier, and/or
method of calculation as the case may be, will take effect automatically. Except
as modified by the reset notice and as described below, such note will have the
same terms as prior to the transmittal of such reset notice.
Despite the foregoing, not later than 20 days prior to an optional reset
date for a note, Citigroup may, at its option, revoke the interest rate, or the
spread or spread multiplier, provided for in the reset notice relating to such
optional reset date and establish a higher interest rate, or a higher spread or
spread multiplier, as applicable, for the subsequent interest period commencing
on such optional reset date.
Citigroup can make such revocations by causing the trustee for such note to
mail notice of such higher interest rate or higher spread or spread multiplier,
as the case may be, first class, postage prepaid, to the holder of such note.
Such notice shall be irrevocable. All notes for which the interest rate or
spread or spread multiplier is reset on an optional reset date will bear such
higher interest rate, or higher spread or spread multiplier, as the case may be,
whether or not tendered for repayment.
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The holder of a note will have the option to elect repayment of such note
by Citigroup on each optional reset date at a price equal to the principal
amount of such note plus interest accrued to such optional reset date. In order
for a note to be repaid on an optional reset date, the holder of such note must
follow the procedures set forth below under "Optional Redemption, Repayment and
Repurchase" for optional repayment. However, the period for delivery of such
note or notification to the trustee for such note will be at least 25 but not
more than 35 days prior to such optional reset date. Further, a holder who has
tendered a note for repayment pursuant to a reset notice may, by written notice
to the trustee for such note, revoke any such tender for repayment until the
close of business on the tenth day prior to such optional reset date.
AMORTIZING NOTES
Citigroup may from time to time offer amortizing notes on which a portion
or all the principal amount is payable prior to stated maturity
- in accordance with a schedule;
- by application of a formula; or
- based on an index.
Further information concerning additional terms and conditions of any amortizing
notes, including terms for repayment of such notes, will be set forth in the
applicable pricing supplement.
INDEXED NOTES
Citigroup may from time to time offer indexed notes on which some or all
interest payments, in the case of an indexed rate note, and/or the principal
amount payable at stated maturity or earlier redemption or retirement, in the
case of an indexed principal note, is determined based on:
- the principal amount of such notes or, in the case of an indexed
principal note, the amount designated in the applicable pricing
supplement as the "face amount" of such indexed note; and
- an index, which may be based on
(1) prices, changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or
commodities;
(2) the application of a formula; or
(3) an index which shall be such other objective price, economic or
other measures as are described in the applicable pricing
supplement.
A description of the index used in any determination of an interest or principal
payment, and the method or formula by which interest or principal payments will
be determined based on such index, will be set forth in the applicable pricing
supplement.
If a fixed rate note, floating rate note or indexed rate note is also an
indexed principal note, the amount of any interest payment will be determined
based on the face amount of such indexed note unless specified otherwise in the
applicable pricing supplement. If an indexed note is also an indexed principal
note, the principal amount payable at stated maturity or any earlier redemption
or repayment of the indexed note may be different from the face amount.
If a third party is appointed to calculate or announce the index for a
particular indexed note, and the third party either (1) suspends the calculation
or announcement of such index or (2) changes the basis upon which such index is
calculated in a manner that is inconsistent with the applicable pricing
supplement, then Citigroup will select another third party to calculate or
announce the index. The agent or another affiliate of Citigroup may be either
the original or successor third party selected by Citigroup.
If for any reason such index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then any indexed interest payments or any indexed principal
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amount of such indexed note will be calculated in the manner set forth in the
applicable pricing supplement. Any determination by the selected third party
will be binding on all parties, except in the case of an obvious error.
Unless otherwise specified in the applicable pricing supplement, for the
purpose of determining whether holders of the requisite principal amount of
notes outstanding under the applicable indenture have made a demand or given a
notice or waiver or taken any other action, the outstanding principal amount of
indexed notes will be deemed to be the face amount stated on such notes. Unless
otherwise specified in the applicable pricing supplement, in the event of an
acceleration of the stated maturity of an indexed note, the principal amount
payable to the holder of such note upon acceleration will be the principal
amount determined based on the formula used to determine the principal amount of
such note on the stated maturity of such note, as if the date of acceleration
were the stated maturity.
An investment in indexed notes has significant risks, including wide
fluctuations in market value as well as in the amounts of payments due, that are
not associated with a similar investment in a conventional debt security. Such
risks depend on a number of factors including supply and demand for the
particular security, currency, commodity or other good or article to which the
note is indexed and economic and political events over which Citigroup has no
control.
Fluctuations in the price of any particular security or commodity, in the
rates of exchange between particular currencies or in particular indices that
have occurred in the past are not necessarily indicative, however, of
fluctuations in the price or rates of exchange that may occur during the term of
any indexed notes. Accordingly, prospective investors should consult their own
financial and legal advisors as to the risks of investment in indexed notes.
DUAL CURRENCY NOTES
Citigroup may from time to time offer dual currency notes on which
Citigroup has a one time option of making all payments of principal, any premium
and interest on such notes which are issued on the same day and have the same
terms, the payments on which would otherwise be made in the specified currency
of such notes, in the optional payment currency specified in the applicable
pricing supplement. Such option will be exercisable in whole but not in part on
an option election date, which will be any one of the dates specified in the
applicable pricing supplement. Information as to the relative value of the
specified currency compared to the optional payment currency will be set forth
in the applicable pricing supplement.
The pricing supplement for each issuance of dual currency notes will
specify, among other things,
- the specified currency;
- the optional payment currency; and
- the designated exchange rate.
Such designated exchange rate will be a fixed exchange rate used for
converting amounts denominated in the specified currency into amounts
denominated in the optional payment currency. The pricing supplement will also
specify the option election dates and interest payment dates for the related
issuance of dual currency notes. Each option election date will be a particular
number of days before an interest payment date or stated maturity, as set forth
in the applicable pricing supplement. Each option election date will be the date
on which Citigroup may select whether to make all scheduled payments due
thereafter in the optional payment currency rather than in the specified
currency.
If Citigroup makes such an election, the amount payable in the optional
payment currency will be determined using the designated exchange rate specified
in the applicable pricing supplement. If such election is made, notice of such
election will be mailed in accordance with the terms of the applicable tranche
of dual currency notes within two business days of the option election date.
Such notice will state (1) the first date, whether an interest payment date
and/or stated maturity, on which scheduled payments in the optional payment
currency will be made and (2) the designated exchange rate. Any such notice by
Citigroup, once given, may not be withdrawn. The equivalent value in the
specified currency of payments made after such an
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election may be less, at the then current exchange rate, than if Citigroup had
made such payment in the specified currency.
For United States federal income tax purposes, holders of dual currency
notes may need to comply with rules which differ from the general rules
applicable to holders of other types of notes offered by this prospectus
supplement. The United States federal income tax consequences of the purchase,
ownership and disposition of dual currency notes will be set forth in the
applicable pricing supplement.
RENEWABLE NOTES
Citigroup may from time to time offer renewable notes, which will mature on
an initial maturity date. Such initial maturity date will be an interest payment
date specified in the applicable pricing supplement occurring in, or prior to,
the twelfth month following the original issue date of such notes, unless the
term of all or any portion of any such notes is renewed in accordance with the
procedures described below.
The term of a renewable note may be extended to the interest payment date
occurring in the twelfth month, or, if a special election interval is specified
in the applicable pricing supplement, the last month in a period equal to twice
the special election interval elected by the holder after such renewal date.
Such an extension may be made on the initial renewal date. That date will be the
interest payment date occurring in the sixth month, unless a special election
interval is specified in the applicable pricing supplement, prior to the initial
maturity date of a renewable note and on the interest payment date occurring in
each sixth month, or in the last month of each special election interval, after
such initial renewal date which, together with the initial renewal date,
constitutes a renewal date.
If a holder does not elect to extend the term of any portion of the
principal amount of a renewable note during the specified period prior to any
renewal date, such portion will become due and payable on the new maturity date.
Such new maturity date will be the interest payment date occurring in the sixth
month, or the last month in the special election interval, after such renewal
date.
A holder of a renewable note may elect to renew the term of such renewable
note, or if so specified in the applicable pricing supplement, any portion of
such renewable note, by delivering a notice to such effect to the trustee or any
duly appointed paying agent at the corporate trust office of the trustee or
agency of the trustee in New York City. Such notice will be delivered not less
than 15 nor more than 30 days prior to such renewal date, unless another period
is specified in the applicable pricing supplement as the special election
period. Such election will be irrevocable and will be binding upon each
subsequent holder of such renewable note.
An election to renew the term of a renewable note may be exercised for less
than the entire principal amount of such renewable note only if so specified in
the applicable pricing supplement and only in such principal amount, or any
integral multiple in excess of such amount, that is specified in the applicable
pricing supplement. Despite the foregoing, the term of the renewable notes may
not be extended beyond the stated maturity specified for such renewable notes in
the applicable pricing supplement.
If the holder does not elect to renew the term, such renewable note must be
presented to the trustee, or any duly appointed paying agent. If such renewable
note is a certificate issued in definitive form, it must be presented to the
trustee as soon as practicable following receipt of such renewable note. The
trustee, or any duly appointed paying agent, will issue in exchange for such
note, in the name of such holder, a note. The note will be in a principal amount
equal to the principal amount of such exchanged renewable note for which no
election to renew such term was exercised, with terms identical to those
specified on such renewable note. However, such note will have a fixed,
nonrenewable stated maturity on the new maturity date.
If an election to renew is made for less than the full principal amount of
a holder's renewable note, the trustee, or any duly appointed paying agent, will
issue in exchange for such note in the name of such holder, a replacement
renewable note. The replacement renewable note will be in a principal amount
equal to the principal amount elected to be renewed of such exchanged renewable
note, with terms otherwise identical to such exchanged renewable note.
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EXTENSION OF MATURITY
The pricing supplement relating to each note will indicate whether
Citigroup has the option to extend the stated maturity of such note for an
extension period. Such an extension period is one or more periods of one to five
whole years, up to but not beyond the final maturity date set forth in such
pricing supplement.
Citigroup may exercise such option for a note by notifying the trustee for
such note at least 45 but not more than 60 days prior to the old stated maturity
of such note. Not later than 40 days prior to the old stated maturity of such
note, the trustee for such note will mail to the holder of such note an
extension notice, first class, postage prepaid. The extension notice will set
forth:
- the election of Citigroup to extend the stated maturity of such note;
- the new stated maturity;
- in the case of a fixed rate note, the interest rate applicable to the
extension period;
- in the case of a floating rate note, the spread, spread multiplier or
method of calculation applicable to the extension period; and
- any provisions for redemption during the extension period, including the
date or dates on which, or the period or periods during which, and the
price or prices at which, such redemption may occur during the extension
period.
Upon the mailing by such trustee of an extension notice to the holder of a
note, the stated maturity of such note will be extended automatically, and,
except as modified by the extension notice and as described in the next
paragraph, such note will have the same terms as prior to the mailing of such
extension notice. Despite the foregoing, not later than 20 days prior to the old
stated maturity of such note, Citigroup may, at its option, revoke the interest
rate, or the spread or spread multiplier, as the case may be, provided for in
the extension notice for such note and establish for the extension period a
higher interest rate, in the case of a fixed rate note, or a higher spread or
spread multiplier, in the case of a floating rate note.
Citigroup may so act by causing the trustee for such note to mail notice of
such higher interest rate or higher spread or spread multiplier, as the case may
be, first class, postage prepaid, to the holder of such note. Such notice will
be irrevocable. All notes for which the stated maturity is extended will bear
such higher interest rate, in the case of fixed rate notes, or higher spread or
spread multiplier, in the case of floating rate notes, for the extension period,
whether or not tendered for repayment.
If Citigroup extends the stated maturity of a note, the holder of such note
will have the option to elect repayment of such note by Citigroup on the old
stated maturity at a price equal to the principal amount of such note, plus
interest accrued to such date. In order for a note to be repaid on the old
stated maturity once Citigroup has extended its stated maturity, the holder of
such note must follow the procedures set forth below under "Optional Redemption,
Repayment and Repurchase" for optional repayment. The period for delivery of
such note or notification to the trustee for such note will be at least 25 but
not more than 35 days prior to the old stated maturity. A holder who has
tendered a note for repayment pursuant to an extension notice may give written
notice to the trustee for such note to revoke any such tender for repayment
until the close of business on the tenth day before the old stated maturity.
COMBINATION OF PROVISIONS
If so specified in the applicable pricing supplement, any note may be
required to comply with all of the provisions, or any combination of the
provisions, described above under "Subsequent Interest Periods," "Extension of
Maturity" and "Renewable Notes."
BOOK-ENTRY SYSTEM
Upon issuance, and unless the rules of DTC state otherwise, all book-entry
notes having the same original issue date and otherwise identical terms will be
represented by a single global security. Each global security representing
book-entry notes will be deposited with, or on behalf of, DTC and registered in
the name of a
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nominee of DTC. Book-entry notes will not be exchangeable for certificated notes
and, except under the circumstances described in the prospectus under
"Book-Entry Procedures and Settlement," will not otherwise be issuable as
certificated notes.
If an issue of notes is denominated in a currency other than the U.S.
dollar, Citigroup will make payments of principal and any interest in the
foreign currency in which the notes are denominated or in U.S. dollars. DTC has
elected to have all such payments of principal and interest in U.S. dollars
unless notified by any of its participants through which an interest in the
notes is held that it elects, in accordance with, and to the extent permitted
by, the applicable pricing supplement and the revelant note, to receive such
payment of principal or interest in the foreign currency. On or prior to the
third business day after the record date for payment of interest and twelve days
prior to the date for payment of principal, such participant will notify DTC of
(1) its election to receive all, or the specified portion, of such payment in
the foreign currency and (2) its instructions for wire transfer of such payment
to a foreign currency account.
A further description of DTC's procedures regarding global securities
representing book-entry notes is set forth in the prospectus under "Book-Entry
Procedures and Settlement." DTC has confirmed to Citigroup, the agent and the
trustee that it intends to follow such procedures.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The pricing supplement relating to each note will indicate either that (1)
such note cannot be redeemed prior to its stated maturity or (2) that such note
will be redeemable at the option of Citigroup, in whole or in part. The
applicable pricing supplement will also indicate (1) the optional redemption
date or dates on which such note may be redeemed and (2) the redemption price at
which, together with accrued interest to such optional redemption date, such
note may be redeemed on each such optional redemption date.
Unless otherwise specified in the applicable pricing supplement, at least
30 days prior to the date of redemption, such trustee will mail notice of such
redemption, first class, postage prepaid, to the holder of such note. Unless
otherwise specified in the applicable pricing supplement, Citigroup may exercise
such option relating to a redemption of a note in part only by notifying the
trustee for such note at least 45 days prior to any optional redemption date. In
the event of redemption of a note in part only, a new note or notes for the
unredeemed portion of such note or notes will be issued to the holder of such
note or notes upon the cancellation of such note or notes. The notes, other than
amortizing notes, may not be redeemed.
The pricing supplement relating to each note will also indicate whether the
holder of such note will have the option to elect repayment of such note by
Citigroup prior to its stated maturity. If so, such pricing supplement will
specify (1) the optional repayment date or dates on which such note may be
repaid and (2) the optional repayment price. Such optional repayment price is
the price at which, together with accrued interest to such optional repayment
date, such note may be repaid on each such optional repayment date.
In order for a note to be repaid, the trustee for such note must receive,
at least 30 but not more than 45 days prior to an optional repayment date:
(1) such note with the form entitled "Option to Elect Repayment" on the
reverse of such note duly completed; or
(2) a telegram, telex, facsimile transmission or letter from a member of a
national securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United
States setting forth:
- the name of the holder of such note;
- the principal amount of such note to be repaid;
- the certificate number or a description of the tenor and terms of such
note;
- a statement that the option to elect repayment is being exercised; and
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- a guarantee that the note to be repaid with the form entitled "Option
to Elect Repayment" on the reverse of the note duly completed will be
received by such trustee not later than five business days after the
date of such telegram, telex, facsimile transmission or letter.
If the guarantee procedure described in clause (2) above is followed, then
such note and form duly completed must be received by the trustee by such fifth
business day. Any tender of a note by the holder for repayment, except pursuant
to a reset notice or an extension notice, will be irrevocable. The repayment
option may be exercised by the holder of a note for less than the entire
principal amount of such note, provided, that the principal amount of such note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, such note will be canceled and a new note or notes for the
remaining principal amount will be issued in the name of the holder of such
repaid note.
If a note is represented by a global security, DTC's nominee will be the
holder of such note and, therefore, will be the only entity that can exercise a
right to repayment. In order to ensure that DTC's nominee will timely exercise a
right to repayment relating to a particular note, the beneficial owner of such
note must instruct the broker or other direct or indirect participant through
which it holds an interest in such note to notify DTC of its desire to exercise
a right to repayment. Different firms have different cut-off times for accepting
instructions from their customers. Accordingly, each beneficial owner should
consult the broker or other direct or indirect participant through which it
holds an interest in a note in order to ascertain the cut-off time by which such
an instruction must be given in order for timely notice to be delivered to DTC.
Except in the case of an optional redemption by Citigroup at a stated
redemption price provided for in the applicable pricing supplement, if Citigroup
redeems or repays a note that is an OID note other than an indexed note prior to
its stated maturity, then Citigroup will pay the amortized face amount of the
note as of the date of redemption or repayment regardless of anything else
stated in this prospectus.
The amortized face amount of a note on any date means the amount equal to:
- the issue price set forth on the face of the applicable pricing
supplement plus
- that portion of the difference between the issue price and the stated
principal amount of the note that has accrued by that date at
(1) the bond yield to maturity set forth on the face of the applicable
pricing supplement, or
(2) if so specified in the applicable pricing supplement, the bond yield
to call set forth on the face of the note.
These computations will be made in accordance with generally accepted United
States bond yield computation principles. However, the amortized face amount of
a note will never exceed its stated principal amount. The bond yield to call
listed on the face of a pricing supplement will be computed on the basis of:
- the first occurring optional redemption date with respect to such note
and
- the amount payable on such optional redemption date.
In the event that any such note is not redeemed on such first occurring optional
redemption date, the bond yield to call that applies to such note will be
recomputed on such optional redemption date on the basis of (1) the next
occurring optional redemption date and (2) the amount payable on such optional
redemption date. The bond yield to call will continue to be so recomputed on
each succeeding optional redemption date until the note is so redeemed.
Citigroup may at any time purchase notes at any price in the open market or
otherwise. Notes so purchased by Citigroup may, at the discretion of Citigroup,
be held, resold or surrendered to the trustee for such notes for cancellation.
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OTHER PROVISIONS
The terms in the applicable pricing supplement may modify any provisions
relating to:
- the determination of an interest rate basis;
- the specification of an interest rate basis;
- calculation of the interest rate applicable to, or the principal payable
at maturity on, any note;
- interest payment dates; or
- any other related matters.
DEFEASANCE
The defeasance provisions described in the prospectus will not be
applicable to the notes except as set forth in the applicable pricing
supplement.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTION
The following is a summary of the material United States federal income tax
considerations that may be relevant to a holder of a note. The summary is based
on:
- laws;
- regulations;
- rulings; and
- decisions now in effect,
all of which may change, possibly with retroactive effect. This summary deals
only with holders that will hold notes as capital assets. This summary does not
address tax considerations applicable to investors to whom special tax rules may
apply, including:
- banks;
- tax-exempt entities;
- insurance companies;
- regulated investment companies;
- common trust funds;
- dealers in securities or currencies;
- persons that will hold notes as a part of an integrated investment,
including a straddle or conversion transaction, comprised of a note and
one or more other positions; or
- United States holders (as defined below) that have a functional currency
other than the U.S. dollar.
Any special United States federal income tax considerations relevant to a
particular issue of notes, including any indexed notes, dual currency notes or
notes providing for contingent payments, will be provided in the applicable
pricing supplement. Purchasers of such notes should carefully examine the
applicable pricing supplement and should consult with their tax advisors with
respect to such notes.
Investors should consult their tax advisors in determining the tax
consequences to them of holding notes, including the application to their
particular situation of the United States federal income tax considerations
discussed below, as well as the application of state, local, foreign or other
tax laws.
As used in this prospectus supplement, the term United States holder means
a person who is
- a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision;
- an estate, if United States federal income taxation is applicable to the
income of such estate regardless of its source; or
- a trust if a United States court is able to exercise primary supervision
over the trust's administration and one or more United States persons
have the authority to control all of the trust's substantial decisions.
The term non-United States holder means a holder who is not a United States
holder. The term United States means the United States of America, including the
fifty states and the District of Columbia.
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UNITED STATES HOLDERS
Payments of Interest
Payments of qualified stated interest, as defined below under "Original
Issue Discount," on a note will be taxable to a United States holder as ordinary
interest income at the time that such payments are accrued or are received, in
accordance with the United States holder's method of tax accounting.
If such payments of interest are made relating to a note that is
denominated in a foreign currency, the amount of interest income realized by a
United States holder that uses the cash method of tax accounting will be the
U.S. dollar value of the specified currency payment based on the spot rate of
exchange on the date of receipt regardless of whether the payment in fact is
converted into U.S. dollars. A United States holder that uses the accrual method
of tax accounting will accrue interest income on the foreign currency note in
the relevant foreign currency and translate the amount accrued into U.S. dollars
based on:
- the average exchange rate in effect during the interest accrual period,
or portion thereof within such holder's taxable year; or
- at such holder's election, at the spot rate of exchange on (1) the last
day of the accrual period, or the last day of the taxable year within
such accrual period if the accrual period spans more than one taxable
year, or (2) the date of receipt, if such date is within five business
days of the last day of the accrual period.
Such election must be applied consistently by the United States holder to all
debt instruments from year to year and can be changed only with the consent of
the IRS. A United States holder that uses the accrual method of tax accounting
will recognize foreign currency gain or loss, which will be treated as ordinary
income or loss, on the receipt of an interest payment made relating to a foreign
currency note if the spot rate of exchange on the date the payment is received
differs from the rate applicable to a previous accrual of that interest income.
Purchase, Sale and Retirement of Notes
A United States holder's tax basis in a note generally will equal the cost
of such note to such holder
(1) increased by any amounts includible in income by the holder as OID and
market discount and
(2) reduced by any amortized premium and any payments other than payments
of qualified stated interest (each as described below) made on such
note.
In the case of a foreign currency note, the cost of such note to a United
States holder will generally be the U.S. dollar value of the foreign currency
purchase price on the date of purchase. In the case of a foreign currency note
that is traded on an established securities market, a United States holder
generally should determine the U.S. dollar value of the cost of such note by
translating the amount paid in foreign currency into its U.S. dollar value at
the spot rate of exchange (i) on the settlement date of the purchase in the case
of a United States holder using the cash method of tax accounting and (ii) on
the trade date, in the case of a United States holder using the accrual method
of tax accounting, unless such holder elects to use the spot rate applicable to
cash method United States holders. The amount of any subsequent adjustments to a
United States holder's tax basis in a foreign currency note in respect of OID,
market discount and premium denominated in a specified currency other than the
U.S. dollar will be determined in the manner described under "Original Issue
Discount," "Market Discount" and "Notes Purchased at a Premium" below. The
conversion of U.S. dollars to another specified currency and the immediate use
of such specified currency to purchase a foreign currency note generally will
not result in taxable gain or loss for a United States holder.
Upon the sale, exchange, retirement or other taxable disposition of a note,
a United States holder generally will recognize gain or loss equal to the
difference between (1) the amount realized on the disposition, less any accrued
qualified stated interest, which will be taxable as ordinary income, and (2) the
United States holder's adjusted tax basis in such note. If a United States
holder receives a specified currency other than the U.S. dollar in respect of
such disposition of a note, the amount realized will be the U.S. dollar value of
the specified currency received calculated at the spot rate of exchange on the
date of disposition of the note.
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In the case of a foreign currency note that is traded on an established
securities market, a United States holder that receives a specified currency
other than the U.S. dollar in respect of such disposition generally should
determine the amount realized (as determined on the trade date) by translating
that specified currency into its U.S. dollar value at the spot rate of exchange
(i) on the settlement date of the disposition in the case of a United States
holder using the cash method of tax accounting and (ii) on the trade date, in
the case of a United States holder using the accrual method of tax accounting,
unless such holder elects to use the spot rate applicable to cash method United
States holders. The election available to accrual basis United States holders in
respect of the purchase and sale of foreign currency notes traded on an
established securities market, discussed above, must be applied consistently by
the United States holder to all debt instruments from year to year and can be
changed only with the consent of the IRS.
Except as discussed below in connection with foreign currency gain or loss,
market discount and short-term notes, gain or loss recognized by a United States
holder on the sale, exchange, retirement or other taxable disposition of a note
will generally be long term capital gain or loss if the United States holder's
holding period for the note exceeded one year at the time of such disposition.
Gain or loss recognized by a United States holder on the sale, exchange,
retirement or other taxable disposition of a foreign currency note generally
will be treated as ordinary income or loss to the extent that the gain or loss
is attributable to changes in exchange rates during the period in which the
holder held such note.
Original Issue Discount
In General. Notes with a term greater than one year may be issued with OID
for United States federal income tax purposes. Such notes are called OID notes
in this prospectus supplement. United States holders generally must accrue OID
in gross income over the term of the OID notes on a constant yield basis,
regardless of their regular method of tax accounting. As a result, United States
holders generally will recognize taxable income in respect of an OID note in
advance of the receipt of cash attributable to such income.
OID generally will arise if the stated redemption price at maturity of the
note exceeds its issue price by more than a de minimis amount of 0.25% of the
note's stated redemption price at maturity multiplied by the number of complete
years to maturity. OID may also arise if a note has particular interest payment
characteristics, such as interest holidays, interest payable in additional
securities or stepped interest. For this purpose, the issue price of a note is
the first price at which a substantial amount of notes is sold for cash, other
than to bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers. The stated redemption
price at maturity of a note is the sum of all payments due under the note, other
than payments of qualified stated interest. The term qualified stated interest
generally means stated interest that is unconditionally payable in cash or
property, other than debt instruments of the issuer, at least annually during
the entire term of the OID note at a single fixed rate of interest or, under
particular conditions, based on one or more interest indices.
For each taxable year of a United States holder, the amount of OID that
must be included in gross income in respect of an OID note will be the sum of
the daily portions of OID for each day during such taxable year or any portion
of such taxable year in which such a United States holder held the OID note.
Such daily portions are determined by allocating to each day in an accrual
period a pro rata portion of the OID allocable to that accrual period. Accrual
periods may be of any length and may vary in length over the term of an OID
note. However, accrual periods may not be longer than one year and each
scheduled payment of principal or interest must occur on the first day or the
final day of a period.
The amount of OID allocable to any accrual period generally will equal (1)
the product of the OID note's adjusted issue price at the beginning of such
accrual period multiplied by its yield to maturity (as adjusted to take into
account the length of such accrual period), less (2) the amount, if any, of
qualified stated interest allocable to that accrual period. The adjusted issue
price of an OID note at the beginning of any accrual period will equal the issue
price of the OID note, as defined above, (1) increased by previously accrued OID
from prior accrual periods, and (2) reduced by any payment made on such note,
other than payments of qualified stated interest, on or before the first day of
the accrual period.
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Foreign Currency Notes. In the case of an OID note that is also a foreign
currency note, a United States holder should determine the U.S. dollar amount
includible in income as OID for each accrual period by
- calculating the amount of OID allocable to each accrual period in the
specified currency using the constant-yield method described above and
- translating the amount of the specified currency so derived at the
average exchange rate in effect during that accrual period, or portion of
such accrual period within a United States holder's taxable year, or, at
the United States holder's election (as described above under "Payments
of Interest"), at the spot rate of exchange on (1) the last day of the
accrual period, or the last day of the taxable year within such accrual
period if the accrual period spans more than one taxable year, or (2) on
the date of receipt, if such date is within five business days of the
last day of the accrual period.
All payments on an OID note, other than payments of qualified stated interest,
will generally be viewed first as payments of previously accrued OID, to the
extent thereof, with payments attributed first to the earliest accrued OID, and
then as payments of principal. Upon the receipt of an amount attributable to
OID, whether in connection with a payment of an amount that is not qualified
stated interest or the disposition of the OID note, a United States holder will
recognize ordinary income or loss measured by the difference between (1) the
amount received and (2) the amount accrued. The amount received will be
translated into U.S. dollars at the spot rate of exchange on the date of receipt
or on the date of disposition of the OID note. The amount accrued will be
determined by using the spot rate of exchange applicable to such previous
accrual.
Acquisition Premium. A United States holder that purchases an OID note for
an amount less than or equal to the remaining redemption amount, but in excess
of the OID note's adjusted issue price, generally is permitted to reduce the
daily portions of OID by a fraction. The numerator of such fraction is the
excess of the United States holder's adjusted tax basis in the OID note
immediately after its purchase over the OID note's adjusted issue price. The
denominator of such fraction is the excess of the remaining redemption amount
over the OID note's adjusted issue price. For purposes of this prospectus
supplement,
(1) "acquisition premium" means the excess of the purchase price paid by a
non-United States holder for an OID note over the OID note's adjusted
issue price; and
(2) "remaining redemption amount" means the sum of all amounts payable on
an OID note after the purchase date other than payments of qualified
stated interest.
The notes may have special redemption, repayment or interest rate reset
features, as indicated in the applicable pricing supplement. Notes containing
such features, in particular OID notes, may be subject to special rules that
differ from the general rules discussed above. Accordingly, purchasers of notes
with such features should carefully examine the applicable pricing supplement
and should consult their tax advisors relating to such notes.
Market Discount
If a United States holder purchases a note, other than a short-term note,
for an amount that is less than the note's stated redemption price at maturity
or, in the case of an OID note, for an amount that is less than the note's
revised issue price, i.e., the note's issue price increased by the amount of
accrued OID, the note will be considered to have market discount. The market
discount rules are subject to a de minimis rule similar to the rule relating to
de minimis OID, described above (in the second paragraph under "Original Issue
Discount"). Any gain recognized by the United States holder on the sale,
exchange, retirement or other taxable disposition of notes having market
discount generally will be treated as ordinary income to the extent of the
market discount that accrued on the note while held by such United States
holder.
Alternatively, the United States holder may elect to include market
discount in income currently over the life of the note. Such an election will
apply to market discount notes acquired by the United States holder on or after
the first day of the first taxable year to which such election applies and is
revocable only with the consent of the IRS. Market discount will accrue on a
straight-line basis unless the United States holder elects to accrue the market
discount on a constant-yield method. Such an election will apply to the note to
which it is
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made and is irrevocable. Unless the United States holder elects to include
market discount in income on a current basis, as described above, the United
States holder could be required to defer the deduction of a portion of the
interest paid on any indebtedness incurred or maintained to purchase or carry
the note.
Market discount on a foreign currency note will be accrued by a United
States holder in the specified currency. The amount includible in income by a
United States holder in respect of such accrued market discount will be the U.S.
dollar value of the amount accrued. This is generally calculated at the spot
rate of exchange on the date that the note is disposed of by the United States
holder. Any accrued market discount on a foreign currency note that is currently
includible in income will be translated into U.S. dollars at the average
exchange rate for the accrual period or portion of such accrual period within
the United States holder's taxable year.
Short-Term Notes
The rules set forth above also will generally apply to notes having
maturities of not more than one year from the date of issuance. Those notes are
called short-term notes in this prospectus supplement. Modifications apply to
these general rules.
First, none of the interest on a short-term note is treated as qualified
stated interest but instead is treated as part of the short-term note's stated
redemption price at maturity, thereby giving rise to OID. Thus, all short-term
notes will be OID notes. OID will be treated as accruing on a short-term note
ratably, or at the election of a United States holder, under a constant yield
method.
Second, a United States holder of a short-term note that uses the cash
method of tax accounting will generally not be required to include OID in
respect of the short-term note in income on a current basis. Such a United
States holder may not be allowed to deduct all of the interest paid or accrued
on any indebtedness incurred or maintained to purchase or carry such note until
the maturity of the note or its earlier disposition in a taxable transaction. In
addition, such a United States holder will be required to treat any gain
realized on a disposition of the note as ordinary income to the extent of the
holder's accrued OID on the note. A United States holder of a short-term note
using the cash method of tax accounting may, however, elect to accrue OID into
income on a current basis. In such case, the limitation on the deductibility of
interest described above will not apply. A United States holder using the
accrual method of tax accounting generally will be required to include OID on a
short-term note in income on a current basis.
Third, any United States holder of a short-term note, whether using the
cash or accrual method of tax accounting, can elect to accrue the acquisition
discount, if any, on the note on a current basis. If such an election is made,
the OID rules will not apply to the note. Acquisition discount is the excess of
the note's stated redemption price at maturity over the holder's purchase price
for the note. Acquisition discount will be treated as accruing ratably or, at
the election of the United States holder, under a constant-yield method based on
daily compounding.
As described above, the notes may have special redemption features. These
features may affect the determination of whether a note has a maturity of not
more than one year and thus is a short-term note. Purchasers of notes with such
features should carefully examine the applicable pricing supplement and should
consult their tax advisors in relation to such features.
Notes Purchased at a Premium
A United States holder that purchases a note for an amount in excess of the
remaining redemption amount will be considered to have purchased the note at a
premium and the OID rules will not apply to such holder. Such holder may elect
to amortize such premium, as an offset to interest income, using a constant-
yield method, over the remaining term of the note. Such election, once made,
generally applies to all debt instruments held or subsequently acquired by the
United States holder on or after the first taxable year to which the election
applies. Such election may be revoked only with the consent of the IRS. A United
States holder that elects to amortize such premium must reduce its tax basis in
a note by the amount of the premium amortized during its holding period. For a
United States holder that does not elect to amortize bond premium,
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the amount of such premium will be included in the United States holder's tax
basis when the note matures or is disposed of by the United States holder.
Therefore, a United States holder that does not elect to amortize premium and
holds the note to maturity will generally be required to treat the premium as
capital loss when the note matures.
Amortizable bond premium in respect of a foreign currency note will be
computed in the specified currency and will reduce interest income in the
specified currency. At the time amortized bond premium offsets interest income,
exchange gain or loss, which will be taxable as ordinary income or loss, will be
realized on the amortized bond premium on such note based on the difference
between (1) the spot rate of exchange on the date or dates such premium is
recovered through interest payments on the note and (2) the spot rate of
exchange on the date on which the United States holder acquired the note. See
"Original Issue Discount -- Acquisition Premium" above for a discussion of the
treatment of a note purchased for an amount less than or equal to the remaining
redemption amount but in excess of the note's adjusted issue price.
Information Reporting and Backup Withholding
Information returns may be required to be filed with the IRS relating to
payments made to particular United States holders of notes. In addition, United
States holders may be subject to a 31 percent backup withholding tax on such
payments if they do not provide their taxpayer identification numbers to the
trustee in the manner required, fail to certify that they are not subject to
backup withholding tax, or otherwise fail to comply with applicable backup
withholding tax rules. United States holders may also be subject to information
reporting and backup withholding tax with respect to the proceeds from a sale,
exchange, retirement or other taxable disposition of the notes.
NON-UNITED STATES HOLDERS
Under current United States federal income tax law:
- withholding of United States federal income tax will not apply to a
payment on a note to a non-United States holder, provided that,
(1) the holder does not actually or constructively own 10 percent or
more of the total combined voting power of all classes of stock of
Citigroup entitled to vote and is not a controlled foreign
corporation related to Citigroup through stock ownership and
(2) the beneficial owner provides a statement signed under penalties of
perjury that includes its name and address and certifies that it is
a non-United States holder in compliance with applicable
requirements, or, with respect to payments made after December 31,
2000, satisfies documentary evidence requirements for establishing
that it is a non-United States holder; and
- a non-United States holder will not be subject to United States federal
income tax on gain realized on the sale, exchange, retirement or other
taxable disposition of a note, unless, in the case of an individual, such
holder is present in the United States for 183 days or more in the
taxable year of the retirement or disposition and certain other
conditions are met.
Despite the above, a non-United States holder that is subject to United States
federal income taxation on a net income basis generally will be taxable under
the same rules that govern the taxation of a United States holder receiving or
accruing interest on a note or recognizing gain or loss on the sale, exchange,
retirement or other taxable disposition of a note. Special rules might also
apply to a non-United States holder that is a qualified resident of a country
with which the United States has an income tax treaty.
United States information reporting requirements and backup withholding tax
will not apply to payments on a note if the beneficial owner (1) certifies its
non-United States status under penalties of perjury and, for payments made after
December 31, 2000, also satisfies documentary evidence requirements for
establishing that it is a non-United States person, or (2) otherwise establishes
an exemption.
Information reporting requirements will not apply to any payment of the
proceeds of the sale of a note effected outside the United States by a foreign
office of a foreign broker, provided that such broker
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- derives less than 50% of its gross income for particular periods from the
conduct of a trade or business in the United States;
- is not a controlled foreign corporation for United States federal income
tax purposes; and
- for payments made after December 31, 2000, is not a foreign partnership
that, at any time during its taxable year is 50% or more, by income or
capital interest, owned by United States holders or is engaged in the
conduct of a United States trade or business.
Backup withholding tax will not apply to the payment of the proceeds of the
sale of a note effected outside the United States by a foreign office of any
broker. However, information reporting requirements will be applicable to such
payment unless (1) such broker has documentary evidence in its records that the
beneficial owner is a non-United States person and other conditions are met or
(2) the beneficial owner otherwise establishes an exemption.
Information reporting requirements and backup withholding tax will apply to
the payment of the proceeds of a sale of a note by the U.S. office of a broker,
unless the beneficial owner certifies its non-United States person status under
penalties of perjury or otherwise establishes an exemption.
For payments made after December 31, 2000, for purposes of applying the
above rules for non-United States holders to an entity that is treated as
fiscally transparent, e.g., a partnership or trust, the beneficial owner means
each of the ultimate beneficial owners of the entity.
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PLAN OF DISTRIBUTION
The notes are being offered on a continuous basis by Citigroup through
Salomon Smith Barney Inc., as agent. The agent has agreed to use its reasonable
efforts to solicit orders to purchase notes. The agent and Citigroup will sign a
distribution agreement. A form of distribution agreement has been filed as an
exhibit to the registration statement of which this prospectus supplement forms
a part. Citigroup will have the sole right to accept orders to purchase notes
and may reject proposed purchases in whole or in part. The agent will have the
right to reject any proposed purchase in whole or in part. Citigroup reserves
the right to withdraw, cancel or modify the offer made by this prospectus
supplement, the accompanying prospectus or any pricing supplement without
notice.
The following table summarizes the aggregate commissions or discounts
payable in connection with offerings of the notes. Commissions and discounts
will vary depending upon the stated maturity of the notes.
<TABLE>
<CAPTION>
PUBLIC AGENT'S PROCEEDS, BEFORE
OFFERING DISCOUNTS EXPENSES, TO
PRICE AND COMMISSIONS CITIGROUP
-------- --------------- ----------------
<S> <C> <C> <C>
Principal Amount..... $20,750,000,000 $25,937,500-$207,500,000 $20,724,062,500-$20,542,500,000
Total................ 100% .125%-1% 99.875%-99.000%
</TABLE>
Citigroup may also sell notes at a discount to the agent for its own
account or for resale to one or more purchasers at varying prices related to
prevailing market prices or at a fixed public offering price. After any initial
public offering of notes to be resold to purchasers at a fixed public offering
price, the public offering price and any concession or discount may be changed.
In addition, the agent may offer and sell notes purchased by it as principal to
other dealers. These notes may be sold at a discount which, unless otherwise
specified in the applicable pricing supplement, will not exceed the discount to
be received by the agent.
Notes sold by the agent to a dealer may be sold at a discount and, unless
otherwise specified in the applicable pricing supplement, the discount allowed
will not exceed the discount received by the agent from Citigroup. Unless
otherwise specified in the applicable pricing supplement, any note purchased by
the agent as principal will be purchased at 100% of the principal amount or face
amount less a percentage equal to the commission applicable to an agency sale of
a note of identical maturity. Citigroup reserves the right to sell notes
directly to investors on its own behalf and to enter into agreements similar to
the distribution agreement with other parties. No commission will be payable nor
will a discount be allowed on any sales made directly by Citigroup.
No note will have an established trading market when issued. Unless
otherwise specified in the applicable pricing supplement, the notes will not be
listed on any securities exchange. The agent may make a market in the notes, but
the agent is not obligated to do so. The agent may discontinue any market-making
at any time without notice, at its sole discretion. There can be no assurance of
the existence or liquidity of a secondary market for any notes, or that the
maximum amount of notes will be sold.
Citigroup estimates that its total expenses for the offering, excluding
underwriting commissions or discounts, will be approximately $9,635,000.
The agent, whether acting as agent or principal, may be deemed to be an
underwriter within the meaning of the Securities Act of 1933. Citigroup has
agreed to indemnify the agent against liabilities relating to material
misstatements and omissions, or to contribute to payments that the agent may be
required to make relating to these liabilities. Citigroup will reimburse the
agent for customary legal and other expenses, incurred by it in connection with
the offer and sale of the notes.
Unless otherwise specified in the applicable pricing supplement, payment of
the purchase price of the notes will be required to be made in immediately
available funds in New York City on the date of settlement.
Concurrently with the offering of notes through the agent as described in
this prospectus supplement, Citigroup may issue other securities under the
indenture referred to in the prospectus.
The broker-dealer subsidiaries of Citigroup, including Salomon Smith Barney
Inc., are members of the NASD and may participate in offerings of the notes.
Accordingly, offerings of the notes in which Citigroup's
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broker-dealer subsidiaries participate will conform with the requirements set
forth in Rule 2720 of the Conduct Rules of the NASD.
This prospectus supplement, the accompanying prospectus and the related
pricing supplement may be used by the agent or other affiliates of Citigroup in
connection with offers and sales of the notes offered by this prospectus
supplement in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. The agent or these other
affiliates may act as principal or agent in such transactions.
LEGAL MATTERS
Stephanie B. Mudick, Esq., Deputy General Counsel of Citigroup, 399 Park
Avenue, New York, New York 10043, will act as legal counsel to Citigroup. Ms.
Mudick beneficially owns, or has rights to acquire under Citigroup's employee
benefit plans, an aggregate of less than 1% of Citigroup's common stock. Dewey
Ballantine LLP, New York, New York, will act as legal counsel for the agent.
Dewey Ballantine LLP has from time to time acted as counsel for Citigroup and
its subsidiaries and may do so in the future. A member of Dewey Ballantine LLP
participating in this matter is the beneficial owner of an aggregate of less
than 1% of Citigroup's common stock.
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$20,750,000,000
[CITIGROUP LOGO]
MEDIUM-TERM SENIOR NOTES, SERIES D
MEDIUM-TERM SUBORDINATED NOTES, SERIES D
DUE NINE MONTHS OR MORE FROM THE DATE OF ISSUE
------------------------------
PROSPECTUS SUPPLEMENT
DECEMBER 14, 2000
(INCLUDING PROSPECTUS
DATED NOVEMBER 21, 2000)
------------------------------
SALOMON SMITH BARNEY
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