FINANCIAL INFORMATION
THE COMPANY 1
Global Consumer 1
Global Corporate 1
Global Investment Management and Private Banking 2
Investment Activities 2
Corporate/Other 2
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 4
Significant Accounting Policies 5
Future Application of Accounting Standards 6
Results of Operations 8
GLOBAL CONSUMER 9
Banking/Lending 10
Citibanking North America 10
Mortgage Banking 10
North America Cards 11
CitiFinancial 12
Insurance 13
Primerica Financial Services 13
Personal Lines 13
International Consumer 14
Western Europe 14
Japan 15
Asia 15
Latin America 16
Mexico 17
Central & Eastern Europe, Middle East & Africa 17
e-Consumer 18
Other Consumer 18
Global Consumer Outlook 19
GLOBAL CORPORATE 21
Corporate and Investment Bank 21
Emerging Markets Corporate Banking and Global Transaction Services 23
Commercial Lines 23
Global Corporate Outlook 27
GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING 29
Travelers Life and Annuity 29
The Citigroup Private Bank 30
Citigroup Asset Management 31
Global Investment Management and Private Banking Outlook 32
INVESTMENT ACTIVITIES 32
CORPORATE/OTHER 33
FORWARD-LOOKING STATEMENTS 33
MANAGING GLOBAL RISK 34
The Credit Risk Management Process 34
Consumer Credit Risk 34
Consumer Portfolio Review 35
Corporate Credit Risk 36
Global Corporate Portfolio Review 37
Reinsurance Risk 38
The Market Risk Management Process 38
Management of Cross-Border Risk 40
LIQUIDITY AND CAPITAL RESOURCES 41
Off-Balance Sheet Arrangements 42
Capital 44
GLOSSARY OF TERMS 48
REPORT OF MANAGEMENT 50
INDEPENDENT AUDITORS' REPORT 50
CONSOLIDATED FINANCIAL STATEMENTS 51
Consolidated Statement of Income 51
Consolidated Statement of Financial Position 52
Consolidated Statement of Changes in Stockholders' Equity 53
Consolidated Statement of Cash Flows 54
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS 55
FINANCIAL DATA SUPPLEMENT 87
Average Balances and Interest Rates,
Taxable Equivalent Basis-Assets 87
Average Balances and Interest Rates,
Taxable Equivalent Basis-Liabilities and
Stockholders' Equity 88
Analysis of Changes in Net Interest Revenue 89
Ratios 90
Foregone Interest Revenue on Loans 90
Loan Maturities and Sensitivity to Changes in Interest Rates 90
Loans Outstanding 90
Cash-Basis, Renegotiated, and Past Due Loans 91
Other Real Estate Owned and Other Repossessed Assets 91
Details of Credit Loss Experience 91
Average Deposit Liabilities in Offices Outside the U.S. 92
Maturity Profile of Time Deposits ($100,000 or more)
in U.S. Offices 92
Short-Term and Other Borrowings 92
10-K CROSS-REFERENCE INDEX 100
Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 101
CITIGROUP BOARD OF DIRECTORS 103
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THE COMPANY
Citigroup Inc. (Citigroup and, together with its subsidiaries, the Company) is a diversified global financial services holding company whose businesses provide a board range of financial services to consumer and corporate customers with 192 million customer accounts in over 100 countries and territories. Citigroup was incorporated in 1988 under the laws of the State of Delaware.
The Company's activities are conducted through Global Consumer, Global Corporate, Global Investment Management and Private Banking, and Investment Activities.
The Company has completed certain strategic business acquisitions during the past three years, details of which can be found in Note 2 to the Consolidated Financial Statements.
The Company is a bank holding company within the meaning of the U.S. Bank Holding Company Act of 1956 (BHC Act) registered with, and subject to examination by, the Federal Reserve Board (FRB). Certain of the Company's subsidiaries are subject to supervision and examination by their respective federal and state authorities. Additional information on the Company's regulation and supervision can be found within the Regulation and Supervision section beginning on page 95.
At December 31, 2001, the Company had approximately 145,000 full-time and 4,000 part-time employees in the United States and approximately 123,000 employees outside of the United States.
The periodic reports of Citicorp, Salomon Smith Barney Holdings Inc., Travelers Insurance Group Holdings Inc., The Student Loan Corporation (STU), The Travelers Insurance Company (TIC), and Travelers Life and Annuity Company (TLAC), subsidiaries of the Company that make filings pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act), provide additional business and financial information concerning those companies and their consolidated subsidiaries.
The principal executive offices of the Company are located at 399 Park Avenue, New York, New York 10043, telephone number 212-559-1000. Additional information is available on the Company's web site at (http://www.citigroup.com).
GLOBAL CONSUMER
Global Consumer delivers a wide array of banking, lending, insurance and investment services through a network of local branches, offices and electronic delivery systems, including ATMs, unmanned kiosks and the World Wide Web. The businesses of Global Consumer serve individual consumers as well as small businesses.
CITIBANKING NORTH AMERICA delivers banking, lending, and investment services through 445 branches and through Citibank Online, an enhanced Internet banking site on the World Wide Web.
The MORTGAGE BANKING business originates and services mortgages and student loans for customers across North America.
The NORTH AMERICA CARDS unit combines the operations of Citi Cards and Diners Club, whose products include MasterCard, VISA and private label credit and charge cards issued to customers across North America. At December 31, 2001, Citi Cards had 93 million accounts and $109 billion of managed receivables, which represented approximately 20% of the U.S. credit card receivables market. New accounts are acquired through multiple channels including direct marketing efforts, the Internet, and portfolio acquisitions.
CITIFINANCIAL provides community-based lending services through its branch network system, regional sales offices and cross-selling initiatives with other Citigroup businesses. As of December 31, 2001, CitiFinancial maintained 2,221 loan offices in North America that offer real estate-secured loans, unsecured and partially secured personal loans, auto loans and loans to finance consumer goods purchases. In addition, CitiFinancial, through certain subsidiaries and third parties, makes available various credit-related and other insurance products to its U.S. consumer finance customers.
The business operations of Primerica Financial Services (Primerica) involve the sale in North America of life insurance and other products manufactured by its affiliates, including Smith Barney mutual funds, CitiFinancial mortgages and personal loans and TIC annuity products. The Primerica sales force is composed of over 100,000 independent representatives. A great majority of the sales force works on a part-time basis.
Through Travelers Property Casualty Corp. (TPC), Global Consumer writes virtually all types of property and casualty insurance covering personal risks. The Personal Lines unit of TPC had approximately 5.4 million policies in force at December 31, 2001. The primary coverages are personal automobile and homeowners insurance sold to individuals, and are distributed through approximately 7,600 independent agencies located throughout the United States. Personal Lines also uses additional distribution channels, including sponsoring organizations such as employers' and consumer associations, and joint marketing arrangements with other insurers.
The INTERNATIONAL unit of Global Consumer provides full-service banking and community-based lending, including credit and charge cards, and investment services in Western Europe, Japan, Asia (excluding Japan), CEEMEA (Central & Eastern Europe, Middle East, & Africa), Latin America and Mexico, which includes the results of all operations of Banamex and Citibank Mexico, through more than 3,000 branches and offices in 52 countries and territories.
e-CONSUMER is the business responsible for developing and implementing Citigroup's Internet financial services products and e-commerce solutions. e-Consumer's mission is to build and deliver new forms of financial services that meet the changing needs of customers and to facilitate all aspects of e-commerce as it grows with the new digital economy.
GLOBAL CORPORATE
Global Corporate provides corporations, governments, institutions and investors in 100 countries and territories with a broad range of financial products and services, including investment advice, financial planning and retail brokerage services, banking and financial services and commercial insurance products.
Global Corporate, through the CORPORATE AND INVESTMENT BANK (CIB), delivers investment banking and commercial banking services in North America, Western Europe and Japan, and also includes investment banking services in the emerging markets. CIB delivers a full range of global capital market activities, including the underwriting and distribution of fixed income and equity securities for United States and foreign corporations and for state, local and other governmental and government-sponsored authorities. CIB also provides capital raising, advisory, research and other brokerage services to its customers, acts as a market-maker and executes securities and commodities futures brokerage transactions on all major United States and international exchanges on behalf of customers and for its own account. CIB also offers foreign exchange, structured products, derivatives, loans, leasing, and equipment finance products. CIB trades for its own account in various markets throughout the world and uses many different strategies involving a broad spectrum of financial instruments and derivative products.
Global Corporate is a major participant in foreign exchange and in the over-the-counter (OTC) market for derivative instruments involving a wide range of products, including interest rate, equity and currency swaps, caps and floors, options, warrants and other derivative products. It also creates and sells various types of structured securities.
Citibank has a long-standing presence in emerging markets, which includes all locations outside North America, Western Europe and Japan. Citigroup's EMERGING MARKETS CORPORATE BANKING AND GLOBAL TRANSACTION SERVICES (EM CORPORATE & GTS) business offers a wide array of banking and financial services products and services that help multinational and local companies fulfill their financial goals or needs. Citigroup's strategies focus on its plans to gain market share in selected priority emerging market countries and to establish Citibank as a local bank as well as a leading international bank. Citibank typically enters a country to serve global customers, providing them with cash management, trade services, short-term loans and foreign-exchange services. Then, Citibank offers project finance, fixed-income issuance and trading and, later, introduces securities custody, loan syndications and derivatives services. Finally, as a brand image is established and services for locally headquartered companies become significant, consumer banking services may be offered. The EM Corporate & GTS segment also includes the global results of cash management, securities custody and trade services.
TPC's COMMERCIAL LINES unit offers a broad array of property and casualty insurance and insurance-related services, which it distributes through approximately 6,300 brokers and independent agencies located throughout the United States. TPC is the third largest writer of commercial lines insurance in the U.S. based on 2000 direct written premiums published by A.M. Best Company. Commercial Lines is organized into five marketing and underwriting groups, each of which focuses on a particular client base or product grouping to provide products and services that specifically address clients' needs: National Accounts, primarily serving large national corporations; Commercial Accounts, serving mid-size businesses; Select Accounts, serving small businesses; Bond, providing specialty products which include surety bonds and executive liability; and Gulf, providing a variety of specialty coverages. Environmental, asbestos and other cumulative injury claims are segregated from other claims and are handled separately by TPC's Special Liability Group, a separate unit staffed by dedicated legal, claim, finance, and engineering professionals.
GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING
Global Investment Management and Private Banking is composed of TRAVELERS LIFE
AND ANNUITY, THE CITIGROUP PRIVATE BANK and CITIGROUP ASSET MANAGEMENT.
These businesses offer a broad range of life insurance, annuities, and asset management products and services from global investment centers around the world, including individual annuities, group annuities, individual life insurance products, corporate owned life insurance (COLI), mutual funds, closed-end funds, managed accounts, unit investment trusts, variable annuities, alternative investments, pension administration and personalized wealth management services distributed to institutional, high net worth and retail clients.
TRAVELERS LIFE AND ANNUITY (TLA) offers individual annuity, group annuity, individual life insurance and COLI products. The individual products include fixed and variable deferred annuities, payout annuities, and term and universal life insurance. These products are primarily distributed through Citigroup businesses, a nationwide network of independent agents and unaffiliated broker dealers. The COLI product is a variable universal life product distributed through independent specialty brokers. The group annuity products offered include institutional pension products, including guaranteed investment contracts, payout annuities, structured finance, and group annuities to U.S. employer-sponsored retirement and savings plans through direct sales and various intermediaries.
THE CITIGROUP PRIVATE BANK provides personalized wealth management services for high net worth clients through 90 offices in 31 countries and territories, generating fee and interest income from investment funds management and customer trading activity, trust and fiduciary services, custody services, and traditional banking and lending activities. Through its Private Bankers and Product Specialists, The Citigroup Private Bank leverages its extensive experience with clients' needs and its access to the breadth and depth of Citigroup to provide clients with comprehensive investment and banking services tailored to the way they create and manage their wealth and lifestyles in today's economy.
CITIGROUP ASSET MANAGEMENT includes Smith Barney Asset Management, Salomon Brothers Asset Management, and Citibank Asset Management along with the pension administration and insurance businesses of Global Retirement Services. Clients include private and public retirement plans, endowments, foundations, banks, central banks, insurance companies, other corporations, government agencies and high net worth and other individuals. Client relationships may be introduced through the cross marketing and distribution channels within Citigroup, through Citigroup Asset Management's own sales force or through independent sources.
INVESTMENT ACTIVITIES
The Company's INVESTMENT ACTIVITIES segment consists primarily of its venture
capital activities, realized investment gains and losses from certain insurance
related investments, results from certain proprietary investments, the results
of certain investments in countries that refinanced debt under the 1989 Brady
Plan or plans of a similar nature and since August 2001, the investment
portfolio related to Banamex.
CORPORATE/OTHER
CORPORATE/OTHER includes net corporate treasury results, corporate staff and
other corporate expenses, certain intersegment eliminations, and the remainder
of Internet-related development activities not allocated to the individual
businesses.
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA CITIGROUP INC. AND SUBSIDIARIES
IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS 2001 2000 1999 1998 1997
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TOTAL REVENUES $ 112,022 $111,826 $ 94,396 $ 85,925 $ 80,530
Total revenues, net of interest expense 80,057 75,188 65,722 55,233 53,231
Benefits, claims and credit losses 18,559 15,486 13,880 12,788 11,455
Operating expenses(1) 39,601 38,559 33,691 31,360 29,471
Income before cumulative effect of accounting 14,284 13,519 11,370 6,950 7,682
changes(1)
Cumulative effect of accounting changes (2) (158) -- (127) -- --
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NET INCOME $ 14,126 $ 13,519 $ 11,243 $ 6,950 $ 7,682
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EARNINGS PER SHARE(3)
Basic earnings per share:
Income before cumulative effect of
accounting changes $ 2.82 $ 2.69 $ 2.26 $ 1.35 $ 1.48
Net income 2.79 2.69 2.23 1.35 1.48
Diluted earnings per share:
Income before cumulative effect of
accounting changes 2.75 2.62 2.19 1.31 1.42
Net income 2.72 2.62 2.17 1.31 1.42
Dividends declared per common share (3)(4) 0.600 0.520 0.405 0.277 0.200
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AT DECEMBER 31,
Total assets $1,051,450 $902,210 $795,584 $740,336 $755,167
Total deposits 374,525 300,586 261,573 229,413 199,867
Long-Term debt 121,631 111,778 88,481 86,250 75,605
Mandatorily redeemable securities of subsidiary
trusts 7,125 4,920 4,920 4,320 2,995
Redeemable preferred stock -- -- -- 140 280
Common stockholders' equity 79,722 64,461 56,395 48,761 44,610
Total stockholders' equity 81,247 66,206 58,290 51,035 47,956
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Ratio of earnings to fixed charges and
preferred stock dividends 1.67x 1.56x 1.61x 1.34x 1.42x
Return on average common stockholders' equity(5) 19.7% 22.4% 21.5% 14.4% 17.5%
Common stockholders' equity to assets 7.58% 7.14% 7.09% 6.59% 5.91%
Total stockholders' equity to assets 7.73% 7.34% 7.33% 6.89% 6.35%
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INCOME ANALYSIS(6)
Total revenues, net of interest expense $ 80,057 $ 75,188 $ 65,722 $ 55,233 $ 53,231
Effect of securitization activities 3,568 2,459 2,707 2,364 1,734
Housing Finance unit charge(7) -- 47 -- -- --
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ADJUSTED REVENUES, NET OF INTEREST EXPENSE 83,625 77,694 68,429 57,597 54,965
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ADJUSTED OPERATING EXPENSES(8) 39,143 37,775 33,744 30,565 27,753
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Benefits, claims and credit losses 18,559 15,486 13,880 12,788 11,455
Effect of securitization activities 3,568 2,459 2,707 2,364 1,734
Housing Finance unit charge(7) -- (40) -- -- --
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ADJUSTED BENEFITS, CLAIMS AND CREDIT LOSSES 22,127 17,905 16,587 15,152 13,189
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Restructuring- and merger-related items (458) (759) 53 (795) (1,718)
Housing Finance unit charge(7) -- (112) -- -- --
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INCOME BEFORE TAXES, MINORITY INTEREST AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGES 21,897 21,143 18,151 11,085 12,305
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Provision for income taxes 7,526 7,525 6,530 3,907 4,411
Minority interest, net of income taxes 87 99 251 228 212
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INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGES 14,284 13,519 11,370 6,950 7,682
Cumulative effect of accounting changes(2) (158) -- (127) -- --
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NET INCOME $ 14,126 $ 13,519 $ 11,243 $ 6,950 $ 7,682
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(1) The years ended December 31, 2000, 1999, 1998 and 1997 include net
restructuring-related items (and in 2000 and 1998 merger related items) of
$458 million ($285 million after-tax), $759 million ($550 million
after-tax), ($53) million (($25) million after-tax), $795 million ($535
million after-tax) and $1,718 million ($1,046 million after-tax),
respectively. See Note 15 to the Consolidated Financial Statements.
(2) Accounting changes in 2001 include the adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative instruments and
Hedging Activities," as amended (SFAS 133), of ($42) million and Emerging
issues Task Force (EITF) issue No. 99-20. "Recognition of Interest Income
and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets" (EITF 99-20) of ($116) million. Accounting
changes in 1999 include the adoption of Statement of Position (SOP) 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments" of ($135) million; SOP 98-7, "Deposit Accounting: Accounting
for Insurance and Reinsurance Contracts That Do Not Transfer Insurance
Risk" of $23 million; and SOP 98-5, "Reporting on the Costs of Start-Up
Activities" of ($15) million. See Note 1 to the Consolidated Financial
Statements.
(3) All amounts have been adjusted to reflect stock splits.
(4) Amounts prior to 1999 represent Travelers' historical dividends per common
share.
(5) The return on average common stockholders' equity is calculated using net
income after deducting preferred stock dividend.
(6) The income analysis reconciles amounts shown in the Consolidated Statement
of Income on page 51 to the basis presented in the Management's Discussion
and Analysis of Financial Condition and Results of Operations section.
(7) The 2000 period includes charges associated with the discontinuation of
the loan origination operations of the Associates Housing Finance unit.
(8) Excludes restructuring- and merger-related items and the discontinuation of
Associates Housing Finance loan originations in 2000.
MANAGEMENT'S DISCUSSION AND ANALYSIS CITIGROUP INC. AND SUBSIDIARIES
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The year ended December 31, 2001 presented the Company with a challenging economic environment, a continued global recession, the September 11th terrorist attack, Enron's bankruptcy and severe economic turmoil in Argentina.
IMPACT FROM ARGENTINA'S POLITICAL AND ECONOMIC CHANGES
During the fourth quarter of 2001, Argentina underwent significant political and
economic changes. The government of Argentina implemented substantial economic
changes, including abandoning the country's fixed U.S. dollar-to-peso exchange
rate, as well as converting certain U.S. dollar-denominated consumer loans into
pesos. The Company recognized charges in the 2001 fourth quarter of $235 million
(pretax) related to write-downs of Argentine credit exposures and $235 million
(pretax) in losses related to the foreign exchange revaluation of the consumer
loan portfolio. Since year-end, the government announced additional steps,
including redenomination of substantially all of the remaining dollar
denominated loans and dollar denominated deposits into pesos, and new government
bonds, which in part are designed to compensate for the redenomination of
assets and liabilities into pesos. The Argentine government is attempting to
stabilize the economic environment. As these financial regulations and
implementation issues remain fluid, we are working with the Argentine government
and our customers and will continue to monitor conditions closely and assess the
financial impact. Financial results in 2002 are likely to be impacted. This
statement is a forward-looking statement within the meaning of the Private
Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
IMPACT FROM ENRON
As a result of the financial deterioration and eventual bankruptcy of Enron
Corporation in the fourth quarter of 2001, Citigroup's results were reduced by
$228 million (pretax) as a result of the write-down of Enron-related credit
exposure and trading positions, and the impairment of Enron-related investments.
We will continue to monitor this situation and its impact. This statement is a
forward-looking statement within the meaning of the Private Securities
Litigation Reform Act. See "Forward-Looking Statements" on page 33.
SEPTEMBER 11TH EVENTS
The September 11, 2001 terrorist attack financially impacted the Company in
several areas. After-tax losses recorded in the third quarter of 2001 related to
insurance claims (net of reinsurance impact) totaled $502 million. Revenues were
reduced due to the disruption to Citigroup's businesses and additional expenses
incurred as a result of the attack resulted in after-tax losses of approximately
$200 million. The Company also experienced significant property loss, for which
it is insured. The Company has recorded insurance recoveries up to the net book
value of the assets written off. Additional insurance recoveries will be booked
when they are realized. Losses attributable to insurance claims are based in
part on estimates by the Company of insurance losses and related reinsurance
recoverables. The associated reserves and related reinsurance recoverables
represent the estimated ultimate net costs of all incurred claims and claim
adjustment expenses. Since the reserve and related reinsurance recoverables are
based on estimates, the ultimate net liability may be more or less than such
amounts. This statement is a forward-looking statement within the meaning of the
Private Securities Litigation Reform Act. See "Forward-Looking Statements" on
page 33.
ACQUISITION OF BANAMEX
On August 6, 2001, Citicorp, an indirect wholly-owned subsidiary of Citigroup,
completed its acquisition of 99.86% of the issued and outstanding ordinary
shares of Grupo Financiero Banamex-Accival (Banamex), a leading Mexican
financial institution, for approximately $12.5 billion in cash and Citigroup
stock. Citicorp completed the acquisition by settling transactions that were
conducted on the Mexican Stock Exchange. On September 24, 2001, Citicorp became
the holder of 100% of the issued and outstanding ordinary shares of Banamex
following a share redemption by Banamex. The results of Banamex are included
from August 2001 forward within the Global Consumer-Mexico and Investment
Activities segments. Banamex's and Citicorp's banking operations in Mexico have
been integrated and conduct business under the "Banamex" brand name.
PLANNED INITIAL PUBLIC OFFERING AND TAX-FREE DISTRIBUTION OF TRAVELERS PROPERTY
CASUALTY CORP.
Citigroup announced that its wholly-owned subsidiary, Travelers Property
Casualty Corp. (TPC), intends to sell a minority interest in TPC in an
initial public offering and Citigroup intends to make a tax-free distribution
to its stockholders of such amount of the remainder of its interest in TPC so
that it will hold approximately 9.9% of the outstanding voting securities of TPC
following the initial public offering and tax-free distribution. The
distribution is expected to be concluded by year-end 2002.
Citigroup business units will continue to offer certain TPC products and
the two companies plan to enter into an agreement under which a Citigroup
subsidiary will provide investment advisory as well as certain back office and
data processing services to TPC during a transition period.
The distribution is subject to various regulatory approvals as well as a
private letter ruling from the Internal Revenue Service that the distribution
will be tax-free to Citigroup and its stockholders. Citigroup has no obligation
to consummate the distribution by the end of 2002 or at all, whether or not
these conditions are satisfied.
In February 2002, TPC declared two dividends of $1 billion and $3.7
billion.
Citigroup has offered to enter into an agreement that will provide that, in
the event that in any fiscal year TPC records asbestos-related income statement
charges in excess of $150 million (pretax), net of any reinsurance, Citigroup
will pay to TPC the amount of any such excess up to a cumulative aggregate of
$800 million, reduced by the tax effect of the highest Federal income tax rate
as applied to TPC. A portion of the gain expected to be realized as a result of
the offering will be deferred to offset any payments arising in connection with
this agreement.
These statements are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. See "Forward-looking Statements" on
page 33.
MANAGED BASIS REPORTING
The business segment discussions that follow include amounts reported in the
financial statements (owned basis) adjusted to reflect certain effects of
securitization activities, receivables held for securitization, and
receivables sold with servicing retained (managed basis). On a managed basis,
these earnings are reclassified and presented as if the receivables had
neither been held for securitization nor sold.
The income analysis on page 3 reconciles amounts shown in the Consolidated Statement of Income on page 51 to the basis presented in the business segment discussions.
SIGNIFICANT ACCOUNTING POLICIES
The Notes to the Consolidated Financial Statements contain a summary of
Citigroup's significant accounting policies, including a discussion of
recently-issued accounting pronouncements. Certain of these policies are
considered to be important to the portrayal of the Company's financial
condition, since they require management to make difficult, complex or
subjective judgments, some of which may relate to matters that are inherently
uncertain. These policies include valuation of financial instruments where no
ready market exists, determining the level of the allowance for credit losses
and insurance policy and claims reserves, and accounting for securitizations.
Additional information about these policies can be found in Note 1 to the
Consolidated Financial Statements.
The statements below contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act. See "Forward-Looking
Statements" on page 33.
VALUATION OF FINANCIAL INSTRUMENTS WITH NO READY MARKETS
Investments include fixed maturity and equity securities, derivatives,
investments in venture capital activities and other financial instruments.
Citigroup carries its investments at fair value if they are considered to be
available-for-sale or trading securities. For the substantial majority of our
portfolios, fair values are determined based upon externally verifiable model
inputs and quoted prices. All financial models which are used for updating the
firm's published financial statements, or for independent risk monitoring, must
be validated and periodically reviewed by qualified personnel independent of the
area that created the model. Changes in value of available-for-sale securities
are recognized in a component of stockholders' equity, unless the value is
impaired and the impairment is not considered to be temporary. Impairment losses
that are not considered temporary are recognized in earnings. The Company
conducts regular reviews to assess whether other-than-temporary impairment
exists. Deteriorating economic conditions--global, regional, or related to
specific issuers--could adversely affect these values. Changes in the fair value
of trading account assets and liabilities are recognized in earnings. Venture
capital subsidiaries also carry their investments at fair value with changes in
value recognized in earnings.
If available, quoted market prices provide the best indication of value. If quoted market prices are not available for fixed maturity securities, derivatives or commodities, the Company discounts the expected cash flows using market interest rates commensurate with the credit quality and maturity of the investment. Alternatively, matrix or model pricing may be used to determine an appropriate fair value. The determination of market or fair value considers various factors, including time value and volatility factors, underlying options, warrants, and derivatives; price activity for equivalent synthetic instruments; counterparty credit quality; the potential impact on market prices or fair value of liquidating the Company's positions in an orderly manner over a reasonable period of time under current market conditions; and derivative transaction maintenance costs during the period. Changes in assumptions could affect the fair values of investments.
For venture capital investments in publicly traded securities, fair value is generally based upon quoted market prices. In certain situations, including thinly traded securities, large block holdings, restricted shares or other special situations, the quoted market price is adjusted to produce an estimate of the attainable fair value for the securities. For investments that are not publicly traded, estimates of fair value are made based upon a review of the investee's financial results, condition and prospects and discounted cash flows, together with comparisons to similar companies for which quoted market prices are available. See discussion of trading account assets and liabilities, and investments in Summary of Significant Accounting Policies in Note 1 to the Consolidated Financial Statements.
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses represents management's estimate of probable
losses inherent in the portfolio. This evaluation process is subject to numerous
estimates and judgments. The frequency of default, risk ratings, and the loss
recovery rates, among other things, are considered in making this evaluation, as
are the size and diversity of individual large credits. Changes in these
estimates could have a direct impact on the provision and could result in a
change in the allowance.
Larger balance, non-homogeneous exposures representing significant individual credit exposures are evaluated based upon the borrower's overall financial condition, resources, and payment record; the prospects for support from any financially responsible guarantors; and, if appropriate, the realizable value of any collateral. The allowance for credit losses attributed to these loans is established via a process that begins with estimates of probable loss inherent in the portfolio based upon various statistical analyses. These analyses consider historical and projected default rates and loss severities; internal risk ratings; geographic, industry, and other environmental factors; and model imprecision. Management also considers overall portfolio indicators, including trends in internally risk-rated exposures, classified exposures, cash-basis loans, and historical and forecasted write-offs; and a review of industry, geographic, and portfolio concentrations, including current developments within those segments. In addition, management considers the current business strategy and credit process, including credit limit setting and compliance, credit approvals, loan underwriting criteria, and loan workout procedures.
Within the allowance for credit losses, amounts are specified for larger-balance, non-homogeneous loans that have been individually determined to be impaired. These reserves consider all available evidence, including, as appropriate, the present value of the expected future cash flows discounted at the loan's contractual effective rate, the secondary market value of the loan and the fair value of collateral.
Each portfolio of smaller balance, homogeneous loans, including consumer mortgage, installment, revolving credit and most other consumer loans, is collectively evaluated for impairment. The allowance for credit losses is established via a process that begins with estimates of probable losses inherent in the portfolio, based upon various statistical analyses. These include migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, together with analyses that reflect current trends and conditions. Management also considers overall portfolio indicators including historical credit losses, delinquent, non-performing and classified loans, and trends in volumes and terms of loans; an evaluation of overall credit quality and the credit process, including lending policies and procedures; economic, geographical, product, and other environmental factors; and model imprecision.
This evaluation includes an assessment of the ability of borrowers with foreign currency obligations to obtain the foreign currency necessary for orderly debt servicing.
During the year-ended December 31, 2001, there were increases in net credit losses, cash-basis loans and delinquency rates. If such experience continues, higher loss experience could result in the future. See discussions of Consumer Credit Risk and Corporate Credit Risk in Management's Discussion and Analysis for additional information.
INSURANCE POLICY AND CLAIMS RESERVES
Insurance policy and claims reserves represent liabilities for future insurance
policy benefits. Insurance reserves for traditional life insurance, annuities,
and accident and health policies have been computed based upon mortality,
morbidity, persistency and interest rate assumptions (ranging from 2.5% to 8.1%)
applicable to these coverages, including adverse deviation. These assumptions
consider Company experience and industry standards and may be revised if it is
determined that future experience will differ substantially from that previously
assumed. Property-casualty reserves include (1) unearned premiums representing
the unexpired portion of policy premiums and (2) estimated provisions for both
reported and unreported claims incurred and related expenses.
In determining insurance policy and claims reserves, the Company performs a continuing review of its overall position, its reserving techniques and its reinsurance. The reserves are also reviewed periodically by a qualified actuary employed by the Company. The Company maintains property and casualty loss reserves to cover the estimated ultimate unpaid liability for losses and loss adjustment expenses with respect to reported and unreported claims incurred as of the end of each accounting period. Reserves do not represent an exact calculation of liability, but instead represent estimates, generally utilizing actuarial projection techniques at a given accounting date. These reserve estimates are expectations of what the ultimate settlement and administration of claims will cost based on an assessment of facts and circumstances then known, review of historical settlement patterns, estimates of trends in claims severity, frequency, legal theories of liability and other factors. Variables in the reserve estimation process can be affected by both internal and external events, such as changes in claims handling procedures, economic inflation, legal trends and legislative changes. Many of these items are not directly quantifiable, particularly on a prospective basis. Additionally, there may be significant reporting lags between the occurrence of the insured event and the time it is actually reported to the insurer. Reserve estimates are continually refined in a regular ongoing process as historical loss experience develops and additional claims are reported and settled. Adjustments to reserves are reflected in the results of operations in the periods in which the estimates are changed. Because establishment of reserves is an inherently uncertain process involving estimates, currently established reserves may not be sufficient. If estimated reserves are insufficient, the Company will incur additional income statement charges, which could be material to our operating results in future periods.
Additional information on the uncertainties relating to environmental and asbestos claims and litigation can be found in the Commercial Lines section of Management's Discussion and Analysis. Additional information about Citigroup's insurance policy and claims reserves can be found in Note 13 to the Consolidated Financial Statements.
SECURITIZATIONS
Securitization is a process by which a legal entity issues certain securities
to investors, which securities pay a return based on the principal and interest
cash flows from a pool of loans or other financial assets. Citigroup securitizes
credit card receivables, mortgages, home equity loans, and auto loans that it
originated and/or purchased and certain other financial assets. After
receivables or loans are securitized, the Company continues to maintain account
relationships with credit card holders and certain mortgage and home equity and
auto loan customers. As a result, the Company continues to consider these
securitized assets to be part of the business it manages. Citigroup also assists
its clients in securitizing the clients' financial assets. Citigroup may provide
administrative, underwriting, liquidity facilities and/or other services to the
resulting securitization entities, and may continue to service the financial
assets sold to the securitization entity.
There are two key accounting determinations that must be made relating to securitizations. In the case where Citigroup originated or previously owned the financial assets transferred to the securitization entity, a decision must be made as to whether that transfer would be considered a sale for generally accepted accounting purposes. The second key determination to be made is whether the securitization entity should be considered a subsidiary of the Company and be consolidated into the Company's financial statements or whether the entity is sufficiently independent that it does not need to be consolidated. If the securitization entity's activities are sufficiently restricted to meet certain accounting requirements, the securitization entity is not consolidated by the seller of the transferred assets. Most of the Company's securitization transactions meet the criteria for sale accounting and nonconsolidation.
Additional information on the Company's securitization activities can be found in the Off-Balance Sheet Arrangements section on page 42 and Note 11 to the Consolidated Financial Statements.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
Effective July 1, 2001, the Company adopted the provisions of the Financial
Accounting Standards Board (FASB) Statement of Financial Accounting Standards
(SFAS) No. 141, "Business Combinations," and certain provisions of SFAS No. 142,
"Goodwill and Other Intangible Assets" as required for goodwill and intangible
assets resulting from business combinations consummated after June 30, 2001. The
new rules require that all business combinations initiated after June 30, 2001
be accounted for under the purchase method. The nonamortization provisions of
the new rules affecting goodwill and intangible assets deemed to have indefinite
lives are effective for all purchase business combinations completed after June
30, 2001.
On January 1, 2002, Citigroup adopted the remaining provisions of SFAS 142 when the rules became effective for calendar year companies. Under the new rules, effective January 1, 2002, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized, but will be subject to annual impairment tests. Other intangible assets will continue to be amortized over their useful lives.
Based on current levels of goodwill and an evaluation of the Company's intangible assets, which determined that certain intangible assets should be reclassified as goodwill and identified other intangible assets that have
indefinite lives, the nonamortization provisions of the new standards will reduce other expense by approximately $570 million and increase net income by approximately $450 million in 2002.
During 2002, the Company will perform the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002. It is not expected that the adoption of the remaining provisions of SFAS 142 will have a material effect on the financial statements as a result of these impairment tests.
TRANSFERS AND SERVICING OF FINANCIAL ASSETS
In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, a replacement
of FASB Statement No. 125" (SFAS 140). In July 2001, FASB issued Technical
Bulletin No. 01-1, "Effective Date for Certain Financial Institutions of Certain
Provisions of Statement 140 Related to the Isolation of Transferred Assets."
Certain provisions of SFAS 140 require that the structure for transfers of financial assets to certain securitization vehicles be modified to comply with revised isolation guidance for institutions subject to receivership by the Federal Deposit Insurance Corporation. These provisions will become effective for transfers taking place after December 31, 2001, with an additional transition period ending no later than September 30, 2006 for transfers to certain master trusts. It is not expected that these provisions will materially affect the financial statements. SFAS 140 also provides revised guidance for an entity to be considered a qualifying special purpose entity.
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
On January 1, 2002, Citigroup adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS 144), when the rule became
effective for calendar year companies. SFAS 144 establishes additional
criteria as compared to existing generally accepted accounting principles to
determine when a long-lived asset is held for sale. It also broadens the
definition of "discontinued operations," but does not allow for the accrual
of future operating losses, as was previously permitted.
The provisions of the new standard are generally to be applied prospectively. The provisions of SFAS 144 will affect the timing of discontinued operations treatment for the planned initial public offering and tax-free distribution of Travelers Property Casualty Corp.
BUSINESS FOCUS
The table below shows the core income (loss) for each of Citigroup's businesses
for the three years ended December 31:
IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA 2001 2000(1) 1999(1)
-----------------------------------------------------------------------------------------------------
GLOBAL CONSUMER
Citibanking North America $ 605 $ 496 $ 373
Mortgage Banking 353 297 249
North America Cards 2,133 1,787 1,436
CitiFinancial 1,126 810 761
-----------------------------------------------------------------------------------------------------
Total Banking/Lending 4,217 3,390 2,819
-----------------------------------------------------------------------------------------------------
Primerica Financial Services 512 492 452
Personal Lines 208 307 280
-----------------------------------------------------------------------------------------------------
Total Insurance 720 799 732
-----------------------------------------------------------------------------------------------------
Western Europe 483 384 312
Japan 928 729 494
Asia 611 550 352
Latin America 120 250 193
Mexico 346 56 83
Central & Eastern Europe,
Middle East & Africa 89 50 38
-----------------------------------------------------------------------------------------------------
Total Emerging Markets Consumer Banking 1,166 906 666
-----------------------------------------------------------------------------------------------------
Total International 2,577 2,019 1,472
-----------------------------------------------------------------------------------------------------
e-Consumer (77) (160) (110)
Other (71) (44) 62
-----------------------------------------------------------------------------------------------------
TOTAL GLOBAL CONSUMER 7,366 6,004 4,975
-----------------------------------------------------------------------------------------------------
GLOBAL CORPORATE
Corporate and Investment Bank 3,509 3,670 3,372
Emerging Markets Corporate Banking
and Global Transaction Services 1,644 1,403 882
Commercial Lines 691 1,093 884
-----------------------------------------------------------------------------------------------------
TOTAL GLOBAL CORPORATE 5,844 6,166 5,138
-----------------------------------------------------------------------------------------------------
GLOBAL INVESTMENT MANAGEMENT
AND PRIVATE BANKING
Travelers life and Annuity 821 777 623
The Citigroup Private Bank 378 323 269
Citigroup Asset Management 336 345 327
-----------------------------------------------------------------------------------------------------
TOTAL GLOBAL INVESTMENT MANAGEMENT AND
PRIVATE BANKING 1,535 1,445 1,219
-----------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES 530 1,383 650
-----------------------------------------------------------------------------------------------------
CORPORATE/OTHER (706) (858) (637)
-----------------------------------------------------------------------------------------------------
CORE INCOME 14,569 14,140 11,345
Restructuring- and merger-related
items, after-tax (285) (550) 25
Housing Finance unit charge, after-tax -- (71) --
Cumulative effect of accounting changes (158) -- (127)
-----------------------------------------------------------------------------------------------------
NET INCOME $ 14,126 $ 13,519 $ 11,243
=====================================================================================================
DILUTED EARNINGS PER SHARE
Core income $ 2.81 $ 2.74 $ 2.19
Net income $ 2.72 $ 2.62 $ 2.17
=====================================================================================================
|
(1) Reclassified to conform to the 2001 presentation.
RESULTS OF OPERATIONS
INCOME AND EARNINGS PER SHARE
Citigroup reported 2001 core income of $14.569 billion or $2.81 per diluted
share, both up 3% from $14.140 billion or $2.74 per diluted share in 2000. Core
income in 2001 excluded $285 million in after-tax restructuring-related items
and $158 million in after-tax charges reflecting the cumulative effect of
adopting SFAS 133 and EITF 99-20, as described in Notes 1 and 15 to the
Consolidated Financial Statements. Core income in 2000 excluded $621 million in
after-tax restructuring- and merger-related items. Core income of $11.345
billion or $2.19 per diluted share in 1999 excluded a release of $25 million
after-tax in restructuring-related items and an after-tax charge of $127 million
reflecting the cumulative effect of adopting several new accounting standards as
described in Notes 1 and 15 to the Consolidated Financial Statements.
Net income in 2001 was $14.126 billion or $2.72 per diluted share, both up 4% from $13.519 billion or $2.62 per diluted share in 2000. Net income in 2000 was up $2.276 billion or 20% from 1999. Core income return on common equity was 20.4% in 2001 compared to 23.5% for 2000 and 21.7% for 1999.
Global Consumer core income increased $1.4 billion or 23% in 2001 led by increases of $346 million or 19% in North America Cards, $316 million or 39% in CitiFinancial, $290 million in Mexico reflecting the August acquisition of Banamex, and $199 million or 27% in Japan. Global Corporate decreased $322 million or 5% in 2001 reflecting decreases in Commercial Lines and Corporate and Investment Bank, partially offset by 17% increase in EM Corporate & GTS. Global Investment Management and Private Banking improved $90 million or 6% in 2001, while Investment Activities decreased $853 million or 6.2% primarily due to lower venture capital results.
Core income growth of $2.8 billion or 25% in 2000 was led by Global Corporate which improved $1.0 billion or 20% from 1999, Global Consumer which increased $1.0 billion or 21%, Investment Activities which was up $733 million and Global Investment Management and Private Banking which improved $226 million or 19%.
REVENUES, NET OF INTEREST EXPENSE
Adjusted revenues, net of interest expense of $83.6 billion in 2001 were up $5.9
billion or 8% from 2000. Revenues in 2000 were up $9.3 billion or 14% from 1999.
Global Consumer revenues in 2001 were up $5.8 billion or 16% from 2000 to $41.3
billion, including increases of $3.4 billion or 18% in Banking/Lending $2.2
billion or 22% in International and $298 million or 5% in Insurance. Global
Consumer revenues in 2000 increased $2.9 billion or 9% from 1999 to $35.5
billion, led by Banking/Lending up $1.6 billion or 9% and the International
businesses, up $1.2 billion or 14%.
Global Corporate revenues of $34.3 billion in 2001 were up $818 million or 2% from 2000, led by increases of 11% in EM Corporate & GTS and 6% in Commercial Lines, partially offset by a 2% decrease in Corporate and Investment Bank. In 2000. Global Corporate revenues of $33.5 billion were up to $4.8 billion or 17% from 1999 reflecting increases in Corporate and Investment Bank of $3.3 billion or 20%, 16% in EM Corporate & GTS, and 10% in Commercial Lines.
Global Investment Management and Private Banking revenues increased $408 million or 6% in 2001, and $1.0 billion or 17% in 2000 reflecting continued growth in assets under management and business volumes for both years and the impact of acquisitions in 2000.
SELECTED REVENUE ITEMS
Net interest revenue as calculated from the Consolidated Statement of Income was
$34.6 billion in 2001, up $6.3 billion or 22% from 2000, which was up $2.0
billion or 8% from 1999 reflecting business volume growth in most markets and
the impact of acquisitions. Net interest revenue, adjusted for the effect of
securitization activity, of $40.7 billion was up $7.0 billion or 21% in 2001
and $1.6 billion or 5% in 2000.
Total commissions, asset management and administration fees, and other fee revenues of $21.3 billion were down $368 million or 2% in 2001 primarily reflecting decreases in over-the-counter securities and mutual fund commissions due to depressed market conditions, partially offset by the impact of acquisitions. Insurance premiums of $13.5 billion in 2001 were up $1.0 billion or 8% from year-ago levels and up $925 million or 8% in 2000 reflecting strong growth in Travelers Life & Annuity in both 2001 and 2000 and Commercial Lines in 2001.
Principal transactions revenues decreased in 2001, from $6.0 billion in 2000 and $5.2 billion in 1999 reflecting results in Corporate and Investment Bank. Realized gains from sales of investments of $578 million in 2001 were down from $806 million in 2000, but were up from $541 million in 1999. The increase in 2000 resulted from gains on the exchange of certain Latin America bonds, partially offset by losses in insurance-related investments. Other income of $4.5 billion in 2001 decreased $1.4 billion from 2000, which was up $1.2 billion from 1999. The 2001 decrease primarily reflected venture capital activity.
OPERATING EXPENSES
Adjusted operating expenses, which exclude restructuring- and merger-related
costs, grew $1.4 billion or 4% to $39.1 billion in 2001, and increased $4.0
billion or 12% from 1999 to 2000.
Global Corporate expenses were up $57 million in 2001, primarily attributable to higher expenses in Commercial Lines and EM Corporate & GTS, as a result of acquisitions, and other volume-related increases, and partially offset by lower production-related compensation and expense control initiatives in the Corporate and Investment Bank. Expenses increased in Global Consumer by 7% in 2001 and 8% in 2000 reflecting higher business volumes including acquisitions, partially offset in 2001 by savings resulting from the integration of Associates. Global Investment Management and Private Banking expenses increased 1% in 2001 and 16% in 2000, driven by acquisitions in 2001 and investments in sales and marketing activities, technology, and product development in both years.
RESTRUCTURING- AND MERGER-RELATED ITEMS
Restructuring-related items of $458 million ($285 million after-tax) in 2001
related primarily to severance and costs associated with the reduction of staff
primarily in the Global Corporate and Global Consumer businesses and the
acquisition of Banamex in the 2001 third quarter.
Restructuring-related items of $759 million ($550 million after-tax) in 2000 primarily related to the acquisition of Associates. Restructuring charges included the reconfiguration of branch operations, the exiting of certain activities, and the consolidation and integration of certain middle and back office functions. Also included in the costs were $177 million of merger-related items, which included legal, advisory and SEC filing fees, as well as other costs of administratively closing the acquisition.
HOUSING FINANCE UNIT CHARGE
Included in other operating expenses for 2000 is $71 million (after-tax) charge
associated with the discontinuation of the loan origination operations of the
Associates Housing Finance unit.
BENEFITS, CLAIMS AND CREDIT LOSSES
Adjusted benefits, claims and credit losses were $22.1 billion in 2001, up $4.2
billion or 24% from 2000, which was up $1.3 billion or 8% from 1999.
Policyholder benefits and claims increased 16% to $11.8 billion in 2001 and 11%
to $10.1 billion in 2000 primarily as a result of higher loss levels in
Commercial and Personal Lines and increased volume in Travelers Life & Annuity.
The adjusted provision for credit losses increased 34% to $10.4 billion in 2001
and 4% to $7.8 billion in 2000.
Global Consumer adjusted benefits, claims and credit losses of $13.0 billion were up 25% in 2001 and 3% in 2000. Managed net credit losses in 2001 were $8.9 billion and the related loss ratio was 2.89% compared with $6.8 billion and 2.48% in 2000 and $6.7 billion and 2.80% in 1999. The managed consumer loan delinquency ratio (90 days or more past due) was 2.37% at the end of 2001, up from 1.75% and 1.95% at the end of 2000 and 1999.
Global Corporate benefits, claims and credit losses increased to $6.5 billion from $5.2 billion in 2000, which was up from $4.3 billion in 1999, resulting from increases in Commercial Lines of $873 million and $362 million in Corporate and Investment Bank and $136 million in EM Corporate & GTS, primarily in Asia.
Commercial cash basis loans at December 31, 2001 and 2000 were $4.0 billion and $2.0 billion, respectively, while the commercial Other Real Estate Owned (OREO) portfolio totaled $220 million and $291 million, respectively. The increase in cash-basis loans was primarily related to the acquisition of Banamex, the transportation portfolio, and increases attributable to borrowers in the retail, telecommunication, energy and utility industries. The improvements in OREO were primarily related to the North America real estate portfolio.
GLOBAL CONSUMER
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $ 37,697 $ 32,999 $ 29,816 Effect of securitization activities 3,568 2,459 2,707 ------------------------------------------------------------------------------------------------ ADJUSTED REVENUES, NET OF INTEREST EXPENSE 41,265 35,458 32,523 ------------------------------------------------------------------------------------------------ Adjusted Operating expenses(2) 16,793 15,668 14,471 ------------------------------------------------------------------------------------------------ Provisions for benefits, claims and credit losses 9,382 7,895 7,346 Effect of securitization activities 3,568 2,459 2,707 ------------------------------------------------------------------------------------------------ Adjusted provisions for benefits, claims and credit losses 12,950 10,354 10,053 ------------------------------------------------------------------------------------------------ CORE INCOME BEFORE TAXES AND MINORITY INTEREST 11,522 9,436 7,999 Income taxes 4,102 3,394 2,953 Minority interest, after-tax 54 38 71 ------------------------------------------------------------------------------------------------ CORE INCOME 7,366 6,004 4,975 Restructuring-related items, after-tax (144) (144) (78) ------------------------------------------------------------------------------------------------ INCOME $ 7,222 $ 5,860 $ 4,897 ================================================================================================ |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
GLOBAL CONSUMER--which provides banking, lending, including credit and charge cards, and investment and personal insurance products and services to customers around the world--reported core income of $7.366 billion in 2001, up $1.362 billion or 23% from 2000, which, in turn, increased $1.029 billion or 21% from 1999. Banking/Lending core income increased $827 million or 24% in 2001 reflecting double-digit earnings growth in all businesses. Banking/Lending core income increased $571 million or 20% in 2000 marked by strong performances in North America Cards, Citibanking North America and Mortgage Banking. For the insurance businesses of Global Consumer, which include Primerica Financial Services and Personal Lines, core income decreased $79 million or 10% in 2001 primarily driven by catastrophe losses in Personal Lines associated with the terrorist attack of September 11th. For the insurance businesses of Global Consumer, core income grew $67 million or 9% in 2000 reflecting strong mutual fund sales and net investment income in Primerica Financial Services. The developed markets of Western Europe and Japan reported core income of $1.411 billion in 2001, up $298 million or 27% from 2000, which, in turn, grew $307 million or 38% from 1999 primarily reflecting the impact of acquisitions and higher business volumes. Core income in Emerging Markets Consumer increased $260 million or 29% in 2001 primarily reflecting the acquisition of Banamex, partially offset by translation losses in Latin America resulting from the re-denomination of certain consumer loans in Argentina. In 2000, core income in Emerging Markets Consumer increased $240 million or 36% reflecting strong performance in Asia and Latin America.
Income of $7.222 billion in 2001, $5.860 billion in 2000, and $4.897 billion in 1999 included restructuring-related charges of $144 million ($223 million pretax), $144 million ($223 million pretax) and $78 million ($120 million pretax), respectively. See Note 15 to the Consolidated Financial Statements for a discussion of restructuring-related items.
In 2000, Citigroup adopted the Federal Financial Institutions Examination Council's (FFIEC) revised Uniform Retail Classification and Account Management Policy, which provided guidance on the reporting of delinquent consumer loans and the timing of associated charge-offs for Citigroup's depository institution subsidiaries. The adoption of the policy resulted in additional net credit losses of approximately $90 million which were charged against the allowance for credit losses.
BANKING/LENDING
CITIBANKING NORTH AMERICA
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ----------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 2,714 $ 2,273 $ 2,121 Adjusted operating expenses(2) 1,651 1,423 1,417 Provision for credit losses 70 29 64 ----------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES 993 821 640 Income taxes 388 325 267 ----------------------------------------------------------------------------------------- CORE INCOME 605 496 373 Restructuring-related items, after-tax (3) 9 1 ----------------------------------------------------------------------------------------- INCOME $ 602 $ 505 $ 374 ========================================================================================= Average assets (in billions of dollars) $ 13 $ 9 $ 9 Return on assets 4.63% 5.61% 4.16% ========================================================================================= EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 4.65% 5.51% 4.14% ========================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
CITIBANKING NORTH AMERICA--which delivers banking, lending and investment services to customers through Citibank's branches and electronic delivery systems--reported core income of $605 million in 2001, up $109 million or 22% from 2000 primarily reflecting revenue growth, as well as the acquisition of the European America Bank (EAB). In July 2001, Citibanking North America completed the acquisition of EAB, as state-chartered bank that added $8.4 billion to end-of-period deposits, $4.4 billion to end-of-period loans and 78 branches at December 31, 2001. Core income of $496 million in 2000 grew $123 million or 33% from 1999 due to revenue growth and lower net credit losses. Income of $602 million in 2001, $505 million in 2000 and $374 million in 1999 included restructuring-related charges of $3 million ($5 million pretax) in 2001 and restructuring-related credits of $9 million ($15 million pretax) and $1 million ($2 million pretax) in 2000 and 1999 respectively.
As shown in the following table, Citibanking grew accounts, customer deposits and loans in both 2001 and 2000 reflecting, in part, the acquisition of EAB which added $4.0 billion to average customer deposits, $2.3 billion to average loan and 0.8 million to accounts in 2001.
IN BILLIONS OF DOLLARS 2001 2000 1999 ----------------------------------------------------------------- Accounts (IN MILLIONS) 7.7 6.7 6.3 Average customer deposits $ 52.4 $ 44.8 $ 42.4 Average loans $ 9.3 $ 7.0 $ 7.3 ================================================================= |
Revenues, net of interest expense, of $2.714 billion in 2001 increased $441 million or 19% from 2000 reflecting improved net funding and positioning spreads, the benefit of strong customer deposit growth and increased debit card fees, as well as the acquisition of EAB in July and a realized investment gain resulting from the disposition of an equity investment. Revenue growth in 2001 was partially offset by reduced investment product fees reflecting market conditions throughout the year. Revenues of $2.273 billion in 2000 grew $152 million or 7% from 1999 reflecting growth in deposits and spreads combined with increased investment product fees.
Adjusted operating expenses of $1.651 billion in 2001 increased $228 million or 16% from 2000 primarily due to the acquisition of EAB, higher advertising and marketing costs and investments in technology and staff. Expenses in 2000 were up slightly compared to 1999 primarily reflecting the impact of expense management initiatives.
The provision for credit losses was $70 million in 2001, up from $29 million in 2000 and $64 million in 1999. The net credit loss ratio was 1.03% in 2001 compared to 0.91% in 2000 and 1.22% in 1999. Loans delinquent 90 days or more were $96 million or 0.82% at December 31, 2001, compared to $35 million or 0.48% at December 31, 2000 and $55 million or 0.78% at December 31, 1999. The increases in the provision for credit losses and delinquencies in 2001 were mainly due to the acquisition of EAB and increases related to commercial market loans. Net credit losses are expected to increase from 2001 due to the inclusion of a full year's credit losses for EAB. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act See "Forward-Looking Statements" on page 33.
Average assets of $13 billion in 2001 increased $4 billion from 2000 primarily reflecting the acquisition of EAB. Return on assets was 4.65% in 2001 down from 5.51% in 2000. The decline in return on assets reflects the increase in loans associated with the addition of EAB.
MORTGAGE BANKING
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $ 1,037 $ 912 $ 819 Adjusted Operating expenses(2) 431 395 354 (Benefit) Provision for credit losses (12) 2 28 ------------------------------------------------------------------------------------------------ CORE INCOME BEFORE TAXES AND MINORITY INTEREST 618 515 437 Income taxes 238 196 169 Minority interest, after tax 27 22 19 ------------------------------------------------------------------------------------------------ CORE INCOME 353 297 249 Restructuring-related items, after tax (2) -- -- ------------------------------------------------------------------------------------------------ INCOME $ 351 $ 297 $ 249 ================================================================================================ Average assets (IN BILLIONS OF DOLLARS) $ 48 $ 40 $ 30 Return on assets 0.73% 0.74% 0.83% ================================================================================================ |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
MORTGAGE BANKING--which originates and services mortgages and student loans for customers across the United States--reported core income of $353 million in 2001, up $56 million or 19% from 2000 which, in turn, increased $48 million or 19% from 1999 reflecting growth in both the student loan and mortgage businesses. Income of $351 million in 2001 included restructuring-related items of $2 million ($3 million pretax).
As shown in the following table, accounts grew 7% in 2001 and 29% in 2000 primarily reflecting strong growth in student loans. Average on balance sheet loans grew 23% and 29% in 2001 and 2000, respectively. Growth in 2001 was driven by increases in student loans and mortgage loans held for sale. Growth in 2000 was driven by increases in variable rate mortgage loans, which are typically held in the portfolio rather than securitized, and student loans. Other serviced loans increased 13% in 2001 and 25% in 2000 primarily reflecting growth in originations and servicing portfolio acquisitions. Total originations were up significantly from 2000 reflecting increased mortgage refinancing activity due to lower interest rates.
IN BILLIONS OF DOLLARS 2001 2000 1999 ---------------------------------------------------------------------- Average loans-on balance sheet(1) $ 45.1 $ 36.8 $ 28.6 Other serviced loans 67.5 59.6 47.6 ---------------------------------------------------------------------- Total owned and serviced loans $ 112.6 $ 96.4 $ 76.2 Total originations $ 38.5 $ 25.5 $ 22.1 Accounts (IN MILLIONS) 4.8 4.5 3.5 ====================================================================== |
(1) Includes loans held for sale.
Revenues, net of interest expense, of $1.037 billion in 2001 grew $125 million or 14% from 2000 mainly due to higher mortgage securitization income and spread improvements in student loans, partially offset by lower servicing revenue. The decline in servicing revenue primarily reflected increased prepayment activity that was driven by lower interest rates. Revenues in 2000 increased $93 million or 11% from 1999 as loan growth and higher servicing income was partially offset by reduced spreads and lower securitization activity. Adjusted operating expenses increased $36 million or 9% in 2001 and grew $41 million or 12% in 2000 primarily reflecting additional business volumes.
The (benefit) provision for credit losses was ($12) million in 2001 compared to $2 million in 2000 and $28 million in 1999. The declines in the provision for credit losses in 2001 and 2000 principally reflect improvements in the quality of the mortgage portfolio. The adoption of revised FFIEC write-off policies in 2000 added $17 million to net credit losses, which were charged against the allowance for credit losses, and 4 basis points to the 2000 net credit loss ratio. The net credit loss ratio was 0.09% in 2001 compared to 0.16% (0.12% excluding the effect of FFIEC policy revision) in 2000 and 0.18% in 1999. Loans delinquent 90 days or more were $1.157 billion or 2.53% of loans at December 31, 2001, up from $846 million or 2.01% at December 31, 2000 and $707 million or 2.26% at December 31, 1999. The increase in delinquencies from 2000 mainly reflects a higher level of buybacks from GNMA pools where the credit risk is maintained by government agencies.
NORTH AMERICA CARDS
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) --------------------------------------------------------------------------------------- Total revenues, net of interest expense $ 9,574 $ 8,346 $ 7,157 Effect of securitization activities 3,454 2,410 2,707 --------------------------------------------------------------------------------------- ADJUSTED REVENUES, NET OF 13,028 10,756 9,864 INTEREST EXPENSE --------------------------------------------------------------------------------------- Adjusted operating expenses(2) 4,069 3,954 3,607 Adjusted provision for credit losses(3) 5,593 3,973 3,979 --------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES 3,366 2,829 2,278 Income taxes 1,233 1,042 842 --------------------------------------------------------------------------------------- CORE INCOME 2,133 1,787 1,436 Restructuring-related items after-tax 16 (57) 12 --------------------------------------------------------------------------------------- INCOME $ 2,149 $ 1,730 $ 1,448 ======================================================================================= Average assets (IN BILLIONS OF DOLLARS)(4) $ 48 $ 45 $ 35 Return on assets 4.48% 3.84% 4.14% ======================================================================================= EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets(4) 4.44% 3.97% 4.10% ======================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
(3) Adjusted for the effect of credit card securitization activities.
(4) Adjusted for the effect of securitization activities, managed average
assets, and the related return on assets, excluding restructuring-related
items for North America Cards were $108 billion and $1.98% in 2001,
compared to $98 billion and 1.82% and $86 billion and 1.67% in 2000 and
1999, respectively.
NORTH AMERICA CARDS--which includes Citi Cards (bankcards and private-label cards) and Diners Club--reported core income of $2.133 billion in 2001, up $346 million or 19% from 2000 which, in turn, increased $351 million or 24% from 1999, driven buy strong revenue growth that was partially offset by higher credit costs. Income of $2.149 billion in 2001, $1.730 billion in 2000 and $1.448 billion in 1999 included restructuring-related credits of $16 million ($26 million pretax) and $12 million ($19 million pretax) in 2001 and 1999, respectively, and restructuring-related charges of $57 million ($91 million pretax) in 2000.
As shown in the following table, on a managed basis, the Citi Cards portfolio experienced growth in 2001 of 6% in end-of-period receivables, 2% in accounts, 1% in cards in force and 1% in total sales. Growth in sales, accounts and cards in force in 2001 was negatively impacted by current economic conditions, as well as the impact of the events of September 11th. Increases in 2000 primarily reflect the impact of portfolio acquisitions.
IN BILLIONS OF DOLLARS 2001 2000 1999 ------------------------------------------------------------------------- Accounts (IN MILLIONS) 92.9 90.8 76.7 Cards in force (IN MILLIONS) 142 140 124 Total sales $ 218.5 $ 215.7 $ 183.1 End-of-period managed receivables $ 108.9 $ 103.2 $ 85.6 ========================================================================= |
Adjusted revenues, net of interest expense, of $13.028 billion in 2001 increased $2.272 billion or 21% from 2000 reflecting spread improvement due to lower cost of funds and repricing actions, combined with the benefit of receivable growth. Adjusted revenues of $10.756 billion in 2000 increased $892 million or 9% from 1999 primarily reflecting receivable growth, including portfolio acquisitions, and higher interchange fee revenues due to sales volume growth, partially offset by lower spreads.
Risk adjusted margin is a measure of profitability calculated as adjusted revenues less managed net credit losses divided by average managed loans. This measure is consistent with the goal of matching the revenues generated by the loan portfolio with the credit risk undertaken. As shown in the following table, Citi Cards risk adjusted margin of 6.98% decreased 6 basis points from 2000 as higher spreads were more than offset by higher net credit losses.
(IN BILLIONS OF DOLLARS) 2001 2000 1999 -------------------------------------------------------------------- Risk adjusted revenues (1) $ 7.1 $ 6.5 $ 5.6 Risk adjusted margin % (2) 6.98% 7.04% 7.06% ==================================================================== |
(1) Citi Cards adjusted revenues less managed net credit losses.
(2) Risk Adjusted revenues as a percentage of average managed loans.
Adjusted operating expenses of $4.069 billion in 2001 increased $115 million or 3% from 2000 as volume-related increases were partially offset by disciplined expense management. In 2000, adjusted operating expenses grew $347 million or 10% from 1999 reflecting acquisitions and increased target-marketing efforts in Citi Cards. Citi Cards adjusted operating expenses as a percentage of average managed loans were 3.69%, 4.00% and 4.20% in 2001, 2000 and 1999 respectively.
The adjusted provision for credit losses in 2001 was $5.593 billion compared with $3.973 billion in 2000 and $3.979 billion in 1999. Citi Cards managed net credit losses in 2001 were $5.556 billion and the related loss ratio was 5.44% compared with $3.921 billion and 4.28% in 2000 and $3.903 billion and 4.91% in 1999. The increase in net credit losses from the prior year reflects current U.S. economic conditions as well as a rise in bankruptcy filings. Citi Cards managed loans delinquent 90 days or more were $2.135 billion or 1.98% of loans at December 31, 2001 compared with $1.497 billion or 1.46% at December 31, 2000 and $1.285 billion or 1.51% at December 31, 1999. Net credit losses and the related ratio are expected to increase from 2001 as a result of continued economic weakness including rising bankruptcy filings, and delinquent loans. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act See "Forward-Looking Statements" on page 33.
CITIFINANCIAL
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ----------------------------------------------------------------------------------------- ADJUSTED REVENUES, NET OF INTEREST EXPENSE $ 5,634 $ 5,071 $ 4,600 Adjusted operating expenses(2) 2,006 2,256 1,980 Adjusted provisions for benefits, claims and credit losses 1,830 1,546 1,414 ----------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES 1,798 1,269 1,206 Income taxes 672 459 445 ----------------------------------------------------------------------------------------- CORE INCOME 1,126 810 761 Restructuring-related items, after-tax (19) (68) (2) ----------------------------------------------------------------------------------------- INCOME $ 1,107 $ 742 $ 759 ========================================================================================= Average managed assets (IN BILLIONS OF DOLLARS) $ 65 $ 56 $ 48 Return on managed assets 1.70% 1.33% 1.58% ========================================================================================= EXCLUDING RESTRUCTURING-RELATED ITEMS Return on managed assets 1.73% 1.45% 1.59% ========================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items
CITIFINANCIAL--which provides community-based lending services through its branch network, regional sales offices and cross-selling initiatives with other Citigroup businesses--reported core income of $1.126 billion in 2001, up $316 million or 39% from 2000 primarily reflecting strong growth in receivables, efficiencies resulting from the integration of Associates and lower cost of funds. Core income of $810 million in 2000 increased $49 million or 6% from 1999 primarily reflecting strong growth in receivables including the effects of acquisitions. Income of $1.107 billion in 2001, $742 million in 2000 and $759 million in 1999 included restructuring-related items of $19 million ($32 million pretax), $68 million ($105 million pretax) and $2 million ($3 million pretax), respectively.
As shown in the following table, managed receivables grew 9% in 2001 and 15% in 2000 resulting from higher volumes from CitiFinancial locations, the cross-selling of products through other Citigroup distribution channels, and in 2000, the impact of acquisitions. At December 31, 2001 and 2000, the portfolio consisted of 69% real estate-secured loans, compared with 68% at December 31, 1999. The average net interest margin of 7.99% in 2001 increased 20 basis points compared to 2000 as lower cost of funds was partially offset by continued growth in lower-risk real estate loans that have lower yields. The average net interest margin of 7.79% in 2000 decreased 54 basis points compared to 1999 due to growth in lower-risk real estate loans and higher cost of funds.
IN BILLIONS OF DOLLARS 2001 2000 1999 -------------------------------------------------------------------------------- END-OF-PERIOD MANAGED RECEIVABLES(1) Real estate secured loans--other $ 33.5 $ 32.9 $ 28.9 Real estate secured loans PFS sourced 7.8 5.2 3.8 Personal loans 9.7 9.9 10.0 Auto 6.5 4.6 2.5 Sales finance and other 2.7 2.7 2.9 -------------------------------------------------------------------------------- TOTAL $ 60.2 $ 55.3 $ 48.1 ================================================================================ Average net interest margin % 7.99% 7.79% 8.33% ================================================================================ |
(1) Excludes loans held for sale.
Adjusted revenues, net of interest expense, of $5.634 billion in 2001 increased $563 million or 11% from 2000 reflecting strong growth in receivables and lower cost of funds which was mainly due to a lower interest rate environment, partially offset by lower yields. Adjusted revenues in 2000 increased $471 million or 10% from 1999 primarily reflecting strong growth in receivables. Adjusted operating expenses of $2.006 billion in 2001 decreased $250 million or 11% from 2000 primarily reflecting efficiencies resulting from the integration of Associates, partially offset by volume-related increases. In 2000, adjusted operating expenses increased $276 million or 14% from 1999 reflecting higher business volumes, including the effects of acquisitions.
Adjusted provisions for benefits, claims and credit losses were $1.830 billion in 2001, up from $1.546 billion in 2000 and $1.414 billion in 1999. The net credit loss ratio of 2.70% in 2001 was up from 2.57% in 2000 and 2.66% in 1999. Net credit losses in 2001 include losses of $76 million from the sales of certain underperforming loans, which were charged against the allowance for credit losses and resulted in a 12 basis point increase in the net credit loss ratio. Loans delinquent 90 days or more were $2.002 billion or 3.32% of loans at December 31, 2001 up from $1.272 billion or 2.23% of loans at December 31, 2000 and $943 million or 1.96% at December 31, 1999. The increase in delinquencies in 2001 was primarily due to the alignment of
credit and collection policies in the Associates real estate portfolio to those at CitiFinancial combined with the impact of current U.S. economic conditions. Net credit losses and the related loss ratio are expected to increase from 2001 as a result of economic conditions and credit performance of the portfolios, including bankruptcy filings. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
INSURANCE
PRIMERICA FINANCIAL SERVICES
IN MILLIONS OF DOLLARS 2001 2000 1999 ----------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $1,979 $1,915 $1,775 Provision for benefits and claims 506 496 487 Adjusted operating expenses(1) 683 659 586 ----------------------------------------------------------------------------- CORE INCOME BEFORE TAXES 790 760 702 Income taxes 278 268 250 ----------------------------------------------------------------------------- CORE INCOME(2) 512 492 452 Restructuring-related items, after tax -- 1 -- ----------------------------------------------------------------------------- INCOME $ 512 $ 493 $ 452 ============================================================================= |
(1) Excludes restructuring-related items.
(2) Excludes investment gains/losses included in Investment Activities segment.
PRIMERICA FINANCIAL SERVICES--which sells life insurance as well as other products manufactured by the Company, including Salomon Smith Barney mutual funds, CitiFinancial mortgages and personal loans and Travelers Insurance Company annuity products--reported core income of $512 million in 2001 compared to $492 million in 2000 and $452 million in 1999. The 4% improvement in 2001 reflects strong net investment income and $.M.A.R.T.loan(R) sales, partially offset by lower mutual fund sales. The 9% improvement in 2000 reflects strong mutual fund sales and net investment income partially of offset by increased infrastructure investment including international expansion. Results in all periods continue in reflect success at cross-selling a range of products (particularly mutual funds, variable annuities and debt consolidation loans), growth in life insurance in force, improved investment income, and disciplined expense management.
Increases in production and cross-selling initiatives were achieved during 2001. Earned premiums net of reinsurance were $1.145 billion, $1.106 billion, and $1.071 billion in 2001, 2000, and 1999, respectively. Total face amount of issued term life insurance was $71.5 billion in 2001 compared to $67.4 billion in 2000 and $56.2 billion in 1999. The number of policies issued was 244,700 in 2001, compared to 234,700 in 2000 and 209,900 in 1999. The average face value per policy issued was $250,400 in 2001 compared to $245,000 in 2000 and $229,000 in 1999. Life insurance in force at year-end 2001 reached $434.8 billion, up from $412.7 billion at year-end 2000 and $394.9 billion at year-end 1999, and continued to reflect good policy persistency.
Primerica leverages its cross-selling efforts through the Financial Needs Analysis (FNA)--the diagnostic tool that enhances the ability of the Personal Financial Analysts to address client needs--to expand its business beyond life insurance by offering its clients a greater array of financial products and services, delivered personally through its sales force. During 2001, 470,000 FNAs were submitted. In addition, Primerica has traditionally offered mutual funds to clients as a means to invest the relative savings realized through the purchase of term life insurance as compared to traditional whole life insurance. Primerica sales of variable annuities, predominately underwritten by Travelers Life and Annuity, generated net written premiums and deposits of $924 million in 2001 compared to $1.057 billion in 2000 and $990 million in 1999. Cash advanced on loan products primarily underwritten by CitiFinancial was $3.87 billion in 2001 compared to $2.09 billion in 2000 and $1.92 billion in 1999. The increase in cash advanced reflects rate reductions implemented during 2001. Sales of mutual funds were $3.409 billion in 2001 compared to $4.220 billion in 2000 and $3.124 billion in 1999 reflecting a difficult market environment during 2001. During 2001, proprietary mutual funds accounted for 67% of Primerica's U.S. sales and 58% of Primerica's total sales, compared to 50% and 43% in 2000.
PERSONAL LINES
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ----------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $4,464 $4,230 $4,071 Claims and claim adjustment expenses 3,099 2,767 2,572 Adjusted operating expenses(2) 1,079 1,002 1,021 ----------------------------------------------------------------------------- INCOME BEFORE TAXES AND MINORITY INTEREST 286 461 478 Income taxes 78 138 144 Minority Interest, after-tax(3) -- 16 54 ----------------------------------------------------------------------------- CORE INCOME(4) 208 307 280 Restructuring-related items, after-tax (3) -- -- ----------------------------------------------------------------------------- INCOME $ 205 $ 307 $ 280 ============================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Includes restructuring-related items.
(3) See Note 2 to the Consolidated Financial Statements.
(4) Excludes investment gains/losses included in Investment Activities segment.
PERSONAL LINES- which writes property and casualty insurance covering personal risks--reported core income of $208 million in 2001 compared to $307 million in 2000 and $280 million 1999. The 2001 decrease reflects the impact of catastrophe losses of $42 million associated with the terrorist attack on September 11th, increased loss cost trends, including increased medical costs and auto repair costs, lower favorable prior-year reserve development and lower net investment income, partially offset by premium growth driven by improving rates. Also reflected in the 2001 results are the incremental earnings from the minority interest buyback. The 2000 results reflect increased net investment income, lower catastrophe losses, and the incremental earnings from the minority interest buyback, partially offset by increased loss cost trends and lower favorable prior-year reserve development. Included in the 1999 results is a charge related to curtailing the sale of TRAVELERS SECURE(R) auto and homeowners products.
The following table shows net written premiums by product line for the three years ended December 31:
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) -------------------------------------------------------------------------- Personal automobile $2,642 $2,408 $2,388 Homeowners and other 1,524 1,456 1,444 -------------------------------------------------------------------------- TOTAL NET WRITTEN PREMIUMS $4,166 $3,864 $3,832 ========================================================================== |
(1) Reclassified to conform to the 2001 presentation.
Personal Lines net written premiums for 2001 were $4.166 billion compared to $3.864 billion in 2000 and $3.832 billion in 1999. Net written premiums in 1999 included an adjustment associated with the termination
of a quota share reinsurance arrangement, which increased homeowners' premiums written by independent agents by $72 million. The increase in net written premiums in 2001 compared to 2000 reflects growth in target markets served by independent agents and growth in affinity group marketing and joint marketing arrangements, partially offset by continued emphasis on disciplined underwriting and risk management. Rate increases implemented in both the automobile and homeowners product lines were the primary contributors to the growth in net written premiums. The business retention ratio for 2001 was comparable to the 2000 ratio. The increase in net written premiums in 2000 compared to 1999, excluding the reinsurance adjustment, primarily reflects growth in target markets served by independent agents and growth in affinity group marketing and joint marketing arrangements and is partially offset by planned reductions in the TRAVELERS SECURE(R) auto and homeowners business, a mandated rate decrease in New Jersey and continued emphasis on disciplined underwriting and risk management. The business retention ratio for 2000 was moderately lower compared to the 1999 ratio reflecting planned reductions in the TRAVELERS SECURE(R) auto and homeowners business.
Catastrophe losses, net of taxes and reinsurance, were $86 million in 2001 compared to $54 million in 2000 and $79 million in 1999. Catastrophe losses in 2001 were primarily due to the terrorist attack on September 11th, Tropical Storm Allison and windstorms and hailstorms in Texas and the Midwest. Catastrophe losses in 2000 were primarily due to Texas, Midwest and Northeast windstorms and hailstorms and hailstorms in Louisiana and Texas. Catastrophe losses in 1999 were primarily due to Hurricane Floyd, windstorms and hailstorms on the East Coast and tornadoes in the Midwest and windstorms and ice storms in the Midwest and Northeast.
The Company, along with others in the industry, uses the combined ratio, which measures the total cost per $100 of premium production, as a measure of performance for Personal Lines. The statutory combined ratio for Personal Lines was 102.7% in 2001 compared to 99.8% in 2000 and 96.7% in 1999. The U.S. generally accepted accounting principles (GAAP) combined ratio for Personal Lines was 103.1% in 2001 compared to 99.5% in 2000 and 96.8% in 1999. GAAP combined ratios for Personal Lines differ from statutory combined ratios primarily due to the deferral and amortization of certain expenses for GAAP reporting purposes only.
The 2001 statutory and GAAP combined ratios include the impact of the terrorist attack September 11th. Excluding the impact of this event, the 2001 statutory and GAAP combined ratios would have been 101.2% and 101.6%, respectively. The 1999 statutory and GAAP combined ratios for Personal Lines include an adjustment associated with the termination of a quota share reinsurance arrangement. Excluding this adjustment, the 1999 statutory and GAAP combined ratios were 96.5% and 97.3%, respectively.
The increase in the 2001 statutory and GAAP combined ratios, excluding the related adjustment above, compared to the statutory and GAAP combined ratios for 2000 reflects increased loss cost trends and lower favorable prior-year reserve development, partially offset by the growth in premiums due to rate increases. The increase in the 2000 statutory and GAAP combined ratios compared to the statutory and GAAP combined ratios (excluding the premium adjustment) for 1999 was primarily due to increased loss cost trends and lower favorable prior-year reserve development, offset in part by the TRAVELERS SECURE(R) charge taken in 1999 and lower catastrophe losses.
INTERNATIONAL CONSUMER
WESTERN EUROPE
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ----------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 2,555 $ 2,388 $ 2,424 Adjusted operating expenses(2) 1,392 1,396 1,474 Provision for benefits, claims and credit losses 414 390 453 ----------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES 749 602 497 Income taxes 266 218 185 ----------------------------------------------------------------------------------- CORE INCOME 483 384 312 Restructuring-related items, after-tax (1) -- 2 ----------------------------------------------------------------------------------- INCOME $ 482 $ 384 $ 314 =================================================================================== Average assets (IN BILLIONS OF DOLLARS) $ 22 $ 21 $ 23 Return on assets 2.19% 1.83% 1.37% =================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
WESTERN EUROPE--Which provides banking, community-based lending, including credit and charge cards, and investment products and services--reported core income of $483 million in 2001, up $99 million or 26% from 2000 which, in turn, increased $72 million or 23% from 1999 primarily reflecting growth in the consumer finance, branch lending and credit card businesses, particularly in Germany, the U.K. and Spain. Income of $482 million in 2001 and $314 million in 1999 included a restructuring-related charge of $1 million ($2 million pretax) in 2001 and a restructuring-related credit of $2 million ($4 million pretax) in 1999.
As shown in the following table, the Western Europe business experienced growth of 7% in both average loans and customer deposits in 2001. Accounts were unchanged from 2000 as loan and deposit growth and the impact of acquisitions was offset by the sale of Diners Club franchises in the region. In 2000, customer deposit and loan volumes were reduced by the effect of foreign currency translation.
IN BILLIONS OF DOLLARS 2001 2000 1999 ----------------------------------------------------------------------------- Accounts (IN MILLIONS) 10.1 10.1 9.6 Average customer deposits $ 13.3 $ 12.4 $ 13.7 Average loans $ 18.0 $ 16.8 $ 17.3 ============================================================================= |
Revenues, net of interest expense, of $2.555 billion in 2001 increased $167 million or 7% from 2000 principally due to growth in consumer finance, branch lending and bankcard revenues, reflecting increased volumes and spreads, partially offset by the effects of the Diners Club sale and foreign currency translation as well as reduced investment product fees. Revenues in 2000 decreased $36 million as loan growth and higher investment product fees were more than offset by the adverse effect of foreign currency translation.
Adjusted operating expenses of $1.392 billion in 2001 declined $4 million from 2000 as costs associated with higher business volumes were more than offset by the effects of the Diners Club sale, foreign currency translation and management expense initiatives. Expenses in 2000 decreased $78 million or 5% from 1999 primarily reflecting lower regional office and technology expenses and the effect of foreign currency translation.
The provisions for benefits, claims and credit losses were $414 million in 2001, compared with $390 million in 2000 and $453 million in 1999. The adoption of revised FFIEC write-off policies in 2000 added $10 million to net credit losses, which were charged against the allowance for credit losses, and added 6 basis points to the net credit loss ratio. The net credit loss ratio was 1.88% in 2001, compared with 2.05% (1.99% excluding the effects of FFIEC policy revisions) in 2000 and 2.00% in 1999. Loans delinquent 90 days or more were $800 million or 4.21% of loans at December 31, 2001 down from $835 million or 4.78% at December 31, 2000 and $928 million or 5.39% at December 31, 1999. Net credit losses and the related loss ratio may increase from 2001 as a result of economic conditions, statutory changes in the region and future credit performance of the portfolios. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
JAPAN
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ---------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 3,382 $ 2,781 $ 1,930 Adjusted operating expenses(2) 1,282 1,151 817 Provision for credit losses 649 500 315 ---------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES 1,451 1,130 798 Income taxes 523 401 304 ---------------------------------------------------------------------------------------- CORE INCOME 928 729 494 Restructuring-related items, after tax (6) -- -- ---------------------------------------------------------------------------------------- INCOME $ 922 $ 729 $ 494 ======================================================================================== Average assets (IN BILLIONS OF DOLLARS) $ 20 $ 17 $ 13 Return on assets 4.61% 4.29% 3.80% ======================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
JAPAN--which provides banking, community-based lending, including credit cards, and investment products and services--reported core income of $928 million in 2001, up $199 million or 27% from 2000 which, in turn, increased $235 million or 48% from 1999 reflecting growth in the consumer finance business, including the impact of the acquisition of Unimat in September 2000. Income of $922 million in 2001 included a restructuring-related charge of $6 million ($12 million pretax).
As shown in the following table, the Japan business experienced strong growth in loans, customer deposits and accounts in both 2001 and 2000. Growth in 2000 benefited from the acquisitions of Diners Club and Unimat, which added approximately 0.6 million and 0.4 million to accounts and $0.5 billion and $0.4 billion to average loans, respectively. In 2001, average loans for Unimat were $1.5 billion.
IN BILLIONS OF DOLLARS 2001 2000 1999 ---------------------------------------------------------------------------- Accounts (IN MILLIONS) 5.2 4.8 3.3 Average customer deposits $ 14.9 $ 13.6 $ 11.4 Average loans $ 14.4 $ 11.6 $ 7.8 ============================================================================ |
Revenues, net of interest expense, of $3.382 billion in 2001 grew $601 million or 22% from 2000 which, in turn, were up $851 million or 44% from 1999 reflecting growth in business volumes, including the impact of acquisitions, and increased foreign exchange fees, partially offset by the impact of foreign currency translation, and, in 2001, reduced spreads. Adjusted operating expenses increased $131 million or 11% in 2001 and grew $334 million or 41% in 2000 reflecting costs associated with expansion efforts, including the impact of acquisitions and higher business volumes, partially offset by the effect of foreign currency translation.
The provision for credit losses in 2001 was $649 million, up from $500 million in 2000 and $315 million in 1999. The net credit loss ratio of 4.10% in 2001 increased from 3.50% in 2000 and 3.49% in 1999. The increases in net credit losses in 2001 and 2000 were primarily due to higher loan volumes, including the impact of acquisitions, and, in 2001 were primarily due to higher loan volumes, including the impact of acquisitions, and, in 2001, increased bankruptcy filings and deteriorating credit quality. Loans delinquent 90 days or more were $178 million or 1.24% of loans at December 31, 2001 up from $101 million or 0.73% at December 31, 2000 and $112 million or 1.19% at December 31, 1999. Net credit losses and the related ratio are expected to increase from 2001 as a result of continued increases in bankruptcy filings and higher unemployment rates in Japan. This is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
ASIA
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ----------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 2,201 $ 2,096 $ 1,847 Adjusted operating expenses(2) 969 971 944 Provision for benefits, claims and credit losses 268 273 341 ----------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES 964 852 562 Income taxes 353 302 210 ----------------------------------------------------------------------------------------- CORE INCOME 611 550 352 Restructuring related items, after-tax (3) (4) (13) ----------------------------------------------------------------------------------------- INCOME $ 608 $ 546 $ 339 ========================================================================================= Average assets (IN BILLIONS OF DOLLARS) $ 25 $ 27 $ 26 Return on assets 2.43% 2.02% 1.30% ========================================================================================= EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 2.44% 2.04% 1.35% ========================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
ASIA (excluding Japan)--which provides banking, lending, including credit and charge cards, and investment services to customers throughout the region-- reported core income of $611 million in 2001, up $61 million or 11% from 2000 reflecting growth across the region especially in deposits, investment product fees and cards. Core income in 2000 was up $198 million or 56% from 1999 reflecting growth across the region especially in deposits, investment product fees and cards, as well as lower credit costs. Income of $608 million in 2001, $546 million in 2000 and $339 million in 1999 included restructuring-related charges of $3 million ($4 million pretax), $4 million ($5 million pretax) and $13 million ($21 million pretax), respectively.
As shown in the following table, Asia accounts grew 20% in 2001 and 14% in 2000 primarily reflecting growth in the cards business across the region.
IN BILLIONS OF DOLLARS 2001 2000 1999 ------------------------------------------------------------------------------- Accounts (IN MILLIONS) 9.8 8.2 7.2 Average customer deposits $ 35.5 $ 34.7 $ 30.7 Average loans $ 21.3 $ 22.2 $ 21.7 =============================================================================== |
Revenues, net of interest expense, of $2.201 billion in 2001 increased $105 million or 5% from 2000 and in 2000 increased $249 million or 13% from 1999 reflecting continued growth across the region especially in deposits, investment product fees and cards.
Adjusted operating expenses in 2001 of $969 million decreased $2 million from 2000 reflecting expense control initiatives across the region, partially offset by increased costs associated with volume growth. Expenses in 2000 increased $27 million or 3% from 1999 reflecting increased variable compensation and increased marketing costs, partially offset by lower expenses in certain countries resulting from previously implemented restructuring initiatives.
The provisions for benefits, claims and credit losses in 2001 were $268 million compared with $273 million in 2000 and $341 million in 1999. The net credit loss ratio was 1.21% in 2001, compared with 1.16% in 2000 and 1.32% in 1999. Loans delinquent 90 days or more were $367 million or 1.73% of loans at December 31, 2001, compared with $335 million or 1.51% at December 31, 2000 and $442 million or 1.93% at December 31, 1999. The increases in the net credit loss ratio and delinquencies from 2000 reflect the weakening economic conditions in most countries across the region. Net credit losses and loans delinquent 90 days or more may increase from 2001 levels due to economic weakness in Asia, whose exporting economies have been impacted by the recession in the U.S. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
LATIN AMERICA
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $ 1,380 $ 1,656 $ 1,638 Adjusted operating expenses(2) 938 1,007 916 Provisions for benefits, claims and credit losses 299 298 436 ------------------------------------------------------------------------------------ CORE INCOME BEFORE TAXES 143 351 286 Income taxes 23 101 93 ------------------------------------------------------------------------------------ CORE INCOME 120 250 193 Restructuring related items, after-tax (19) (31) (27) ------------------------------------------------------------------------------------ INCOME $ 101 $ 219 $ 166 ==================================================================================== Average assets (IN BILLIONS OF DOLLARS) $ 8 $ 9 $ 10 Return on assets 1.26% 2.43% 1.66% ==================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 1.50% 2.78% 1.93% ==================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
LATIN AMERICA (excluding Mexico)--which provides banking, lending including credit and charge cards, and investment services to customers throughout the region--reported core income of $120 million in 2001, down $130 million or 52% from 2000 primarily reflecting translation losses associated with the re-denomination of certain consumer loans in Argentina. Core income in 2000 was up $57 million or 30% primarily reflecting lower credit costs and an increase in earnings from Creditcard, a 33%-owned Brazilian Card affiliate. Income of $101 million in 2001, $219 million in 2000, and $166 million in 1999 included restructuring-related charges of $19 million ($28 million pretax), $31 million ($45 million pretax), and $27 million ($40 million pretax), respectively.
As shown in the following table, Latin America accounts declined as decreases in deposits and loan products were partially offset by growth in banking-related insurance products and cards. Average customer deposits declined in 2001 reflecting continued weak economic conditions in Argentina and foreign currency translation effects. Average loans declined 13% in 2001 reflecting continued credit risk management initiatives and foreign currency translation effects. In 2000, the decline in average loans reflects the 2000 first quarter auto loan portfolio sale in Puerto Rico and credit risk management initiatives.
IN BILLIONS OF DOLLARS 2001 2000 1999 -------------------------------------------------------------------------------- Accounts (IN MILLIONS) 7.1 7.2 7.6 Average customer deposits $ 10.4 $ 10.6 $ 10.7 Average loans $ 6.0 $ 6.9 $ 7.7 ================================================================================ |
Revenues, net of interest expense, of $1.380 billion in 2001 decreased $276 million or 17% from 2000 primarily reflecting estimated translation losses of $235 million associated with the re-denomination of certain consumer loans in Argentina. In 2000, revenues of $1.656 billion increased $18 million from 1999 as higher Creditcard earnings were partially offset by business volume declines, including the effect of the auto loan portfolio sale in Puerto Rico.
Adjusted operating expenses of $938 million decreased $69 million or 7% from 2000 primarily reflecting expense rationalization initiatives across the region. Adjusted operating expenses of $1.007 billion in 2000 were up $91 million or 10% from 1999 primarily due to costs associated with new business initiatives and acquisitions in the region.
The provisions for benefits, claims and credit losses were $299 million in 2001 compared to $298 million in 2000 and $436 million in 1999. The adoption of revised FFIEC write-off policies in 2000 added $41 million to net credit losses, which were charged against the allowance for credit losses, and 61 basis points to the net credit loss ratio. The net credit loss ratio was 4.63% in 2001, as compared to 4.67% (4.06% excluding the effect of FFIEC policy revisions) in 2000, and 5.32% in 1999. The increase in the net credit loss ratio in 2001 primarily reflects deteriorating economic conditions in Argentina. The improvement in the net credit loss ratio in 2000, as compared to 1999, primarily reflects high write-offs in Argentina in 1999. Loans delinquent 90 days or more of $248 millions or 4.71% loans at December 31, 2001 increased from $235 million or 3.59% at December 31, 2000 and $303 million or 3.99% at December 31, 1999. The increase in loans delinquent 90 days or more primarily reflects deteriorating economic conditions in Argentina, partially offset by Puerto Rico's gradual liquidation of its auto loan portfolio. The decline in delinquent loans in 2000 from 1999 reflects additional write-offs related to the adoption of revised FFIEC policies as well as temporary improvements in Argentina during 2000. Net credit losses and loans delinquent 90 days or more are expected to increase from 2001 levels due to the economic crisis in Argentina and will be impacted by unemployment and the instability of prices. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
MEXICO
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ---------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 2,117 $ 603 $ 531 Adjusted operating expenses(2) 1,399 461 369 Provision for benefits, claims and credit losses 254 40 32 ---------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 464 102 130 Income taxes 91 46 47 Minority interest, after-tax 27 -- -- ---------------------------------------------------------------------------------------- CORE INCOME 346 56 83 Restructuring-related items, after-tax (90) -- ---------------------------------------------------------------------------------------- INCOME $ 256 $ 56 $ 83 ======================================================================================== Average assets (IN BILLIONS OF DOLLARS) $ 35 $ 9 $ 10 Return on assets 0.73% 0.62% 0.83% ======================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 0.99% 0.62% 0.83% ======================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
MEXICO--which includes the results of Banamex from August 2001, as well as Citigroup's legacy consumer banking corporate banking, and retirement services businesses in Mexico and provides a wide array of banking, insurance, and financial services products--reported core income of $346 million in 2001, up $290 million compared to 2000 primarily reflecting the acquisition of Banamex. Core income in 2000 was $56 million, down $27 million or 33% from 1999 primarily due to the loss of a subsidy from the Mexican government related to the Confia acquisition. Income of $256 million in 2001 includes a restructuring-related charge of $90 million ($139 million pretax).
On August 7, 2001, Citicorp completed its acquisition of Banamex. The transaction was accounted for as a purchase, therefore, five months of Banamex results are included in the Mexico results. Subsequently, Citibank Mexico's banking operations merged into Banamex with Banamex being the surviving entity. The business also successfully merged the Citibank branches onto the Banamex operating platform without customer disruption.
IN BILLIONS OF DOLLARS 2001 2000 1999 --------------------------------------------------------------- Accounts (IN MILLIONS) 16.1 1.7 1.4 Average customer deposits $ 14.3 $ 3.2 $ 4.0 Average loans: Consumer 2.6 0.3 0.3 Corporate 7.2 3.2 3.4 Government/government agencies 1.5 0.2 0.2 --------------------------------------------------------------- Total Average Loans $ 11.3 $ 3.7 $ 3.9 =============================================================== |
Revenues, net of interest expense, of $2.117 billion in 2001 increased $1.514 billion from 2000 primarily reflecting the acquisition of Banamex. Revenues reflect strong volume growth form the underlying customer deposit business combined with improvements in trading revenue primarily due to interest rate positioning, partially offset by declining spreads. The consumer business was impacted by lower interest rates that reduced spreads on deposits. In 2000, revenues, net of interest expense, increased $72 million or 14% from 1999 reflecting the Garante acquisition and strong trading revenues, partially offset by the loss of a subsidy from the Mexican government related to Confia.
Adjusted operating expenses of $1.399 billion in 2001 increased $938 million primarily reflecting the acquisition of Banamex. The business has initiated actions to rationalize headcount, branches, and systems. Since August 2001, headcount has been reduced by 4,079 and 77 branches have been closed. In 2000, adjusted operating expenses increased $92 million or 25% from 1999 primarily due to Confia systems consolidation expenses and the acquisition of Garante.
The provisions for benefits, claims and credit losses in 2001 were $254 million compared with $40 million in 2000 and $32 million in 1999. The consumer net credit loss ratio was 3.72% in 2001, compared with 3.67% in 2000 and 4.89% in 1999. Consumer loans delinquent 90 days or more were $523 million or 8.75% of loans in 2001 compared with $15 million or 5.17% of loans in 2000 and $17 million or 6.78% of loans in 1999 reflecting the acquisition of Banamex. Consumer loans delinquent 90 days or more primarily include mortgages.
Commercial cash-basis loans were $1.030 billion, $79 million, and $55 million at December 31, 2001, 2000 and 1999, respectively. The increase in 2001 reflects the acquisition of Banamex whose commercial cash-basis loans include exposures in steel, textile, food products and other industries.
Net credit losses, cash-basis loans, and loans delinquent 90 days or more may increase from 2001 levels, due to economic weakness in Mexico, whose exports have been impacted by the slowdown in the U.S. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
CENTRAL & EASTERN EUROPE, MIDDLE EAST & AFRICA
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ---------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 548 $ 438 $ 350 Adjusted operating expenses (2) 369 332 253 Provision for credit losses 39 33 35 ---------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES 140 73 62 Income taxes 51 23 24 ---------------------------------------------------------------------------------- CORE INCOME 89 50 38 Restructuring-related items after tax (1) 4 (17) ---------------------------------------------------------------------------------- INCOME $ 88 $ 54 $ 21 ================================================================================== Average assets (IN BILLIONS OF DOLLARS) $ 4 $ 3 $ 3 Return on assets 2.20% 1.80% 0.70% ================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 2.23% 1.67% 1.27% ================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
CENTRAL & EASTERN EUROPE, MIDDLE EAST & AFRICA (CEEMEA--including India and Pakistan)--which provides banking, lending, including credit and charge cards, and investment services to customers throughout the region--reported core income of $89 million in 2001, up $39 million or 78% from 2000, and in 2000 core income was up $12 million or 32% from 1999 reflecting continued growth in deposits, branch lending and cards across the region, including the impact of acquisitions. Income of $88 million in 2001 included restructuring-related charges of $1 million ($2 million pretax). Income of $54 million in 2000 included restructuring-related credits of $4 million ($5 million pretax). Income of $21 million in 1999 included restructuring-related charges of $17 million ($28 million pretax).
In June 2000, CEEMEA completed the acquisition of a majority interest in Bank Handlowy in Poland, whose consumer businesses are reported in this segment. In August 2000, CEEMEA completed the acquisition of ING's retails branches in Hungary.
As shown in the following table, CEEMEA reported 39% account growth in 2001 and 33% in 2000 primarily reflecting growth in customer deposits, cards and other lending, including the impact of acquisitions, as franchise growth efforts continue across the region.
IN BILLIONS OF DOLLARS 2001 2000 1999 ------------------------------------------------------------------------------ Accounts (IN MILLIONS) 3.9 2.8 2.1 Average customer deposits $ 5.9 $ 3.9 $ 3.5 Average loans $ 2.3 $ 1.9 $ 1.6 ============================================================================== |
Revenues, net of interest expense, of $548 million in 2001 increased $110 million or 25% from 2000 and in 2000 increased $88 million or 25% primarily reflecting growth in deposits, branch lending and cards across the region, including the impact of acquisitions, partially offset by weakness in Turkey.
Adjusted operating expenses of $369 million increased $37 million or 11% from 2000 and in 2000 increased $79 million or 31% from 1999 reflecting higher business volumes, acquisitions and franchise growth in the region.
The provision for credit losses was $39 million in 2001 compared with $33 million in 2000 and $35 million in 1999. The adoption of revised FFIEC write-off policies in 2000 added $3 million to net credit losses, which were charged against the allowance for credit losses, and 14 basis points to the net credit loss ratio. The net credit loss ratio was 1.70% in 2001, as compared to 1.95% in 2000 (1.81% excluding the effect of FFIEC policy revisions) and 1.96% in 1999 primarily due to lower net credit losses in Pakistan and India. Loans delinquent 90 days or more of $36 million or 1.41% of loans at December 31, 2001 increased from $32 million or 1.37% at December 31, 2000 primarily due to higher delinquent loans in Poland. Loans delinquent 90 days or more of $32 million or 1.37% at December 31, 2000 decreased from $46 million or 2.25% at December 31, 1999 primarily due to lower delinquent loans in Pakistan. Net credit losses and loans delinquent 90 days or more may increase from 2001 levels due to weakening global economic conditions. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
e-CONSUMER
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ----------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 176 $ 170 $ 108 Adjusted operating expenses(2) 305 426 285 ----------------------------------------------------------------------------- CORE LOSS BEFORE TAX BENEFITS (129) (256) (177) Income tax benefits (52) (96) (67) ----------------------------------------------------------------------------- CORE LOSS (77) (160) (110) Restructuring-related items, after-tax (8) -- -- ----------------------------------------------------------------------------- Loss $ (85) $(160) $(110) ============================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
e-CONSUMER--the business responsible for developing and implementing Global Consumer Internet financial services products and e-commerce solutions--reported a loss before restructuring-related items of $77 million in 2001, compared to losses of $160 million in 2000 and $110 million in 1999. The loss of $85 million in 2001 included restructuring-related items of $8 million ($13 million pretax).
Revenues, net of interest expense, in 2001 increased $6 million or 4% from 2000 primarily due to growth associated with both new and established product offerings, partially offset by lower realized investment gains. Revenues of $170 million in 2000 included gains related to the sale of Internet/e-commerce investments.
Adjusted operating expenses in 2001 declined $121 million or 28% from 2000 primarily due to the effect of initiatives discontinued in 2001 and 2000, partially offset by continued investment spending on Internet financial services and products. Expenses in 2000 increased $141 million or 49% from 1999 reflecting investment spending combined with charges related to the termination of certain contracts and other initiatives.
OTHER CONSUMER
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ---------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 50 $ 169 $ 445 Adjusted operating expenses (2) 220 235 448 Provisions for benefits, claims and credit losses (59) 7 (103) ---------------------------------------------------------------------------------- CORE INCOME (LOSS) BEFORE TAX BENEFITS (111) (73) 100 Income tax (benefits) (40) (29) 40 Minority interest, after-tax -- -- (2) ---------------------------------------------------------------------------------- CORE INCOME (LOSS) (71) (44) 62 Restructuring-related terms after tax (5) 2 (34) ---------------------------------------------------------------------------------- INCOME (LOSS) $ (76) $ (42) $ (28) ================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
OTHER CONSUMER--which includes certain treasury and unallocated staff functions, global marketing and other programs--reported losses before restructuring-related items of $71 million and $44 million in 2001 and 2000, respectively, compared to core income of $62 million in 1999. The increase in losses from 2000 was primarily due to lower treasury results, primarily reflecting a change in internal transfer pricing methodology, and lower foreign currency hedge gains. Income in 1999 was primarily due to gains resulting from the disposition of the Associates recreational vehicle finance operations (Fleetwood Credit Corporation) and the sale of certain non-strategic operations.
Losses of $76 million and $42 million in 2001 and 2000, respectively, included a restructuring-related charge of $5 million ($7 million pretax) in 2001 and a restructuring-related credit of $2 million ($3 million pretax) in 2000. Income of $28 million in 1999 included a restructuring-related charge of $34 million ($53 million pretax).
Revenues, expenses, and the provisions for benefits, claims and credit losses reflect offsets to certain line-item reclassifications reported in other Global Consumer operating segments. The 1999 revenues, expenses and provisions for benefits, claims and credit losses also include the results of certain private label cards and other businesses that were discontinued in 1999 and 2000.
GLOBAL CONSUMER OUTLOOK
The statements below are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. See "Forward-Looking Statements" on
page 33.
BANKING/LENDING
CITIBANKING NORTH AMERICA. The year ended December 31, 2001 was a year of continued success in both our core business momentum and the successful integration of EAB. Citibanking invested in programs and staff to improve operations and customer service while continuing to control overall expenses. In addition, Citibanking continues to emphasize its needs-based sales approach through Citipro, a complimentary financial analysis that assesses customers' needs and recommends appropriate financial products to meet those needs. The key elements to grow our earnings will be increasing sales productivity in the Financial Centers; increasing customer retention through focused marketing, cross selling and technology; streamlining processes and investing in appropriate technology to improve productivity and cost efficiency, which, in turn, will enhance price flexibility; and improving customer service and satisfaction.
MORTGAGE BANKING. In 2001, Mortgage Banking increased core income by 19% over 2000. Heavy refinancing activity in 2001 drove CitiMortgage origination volumes to a record $32.3 billion, 62% increase over 2000. Student Loans benefited in 2001 from lower cost of funds while growing its number one market share position by expanding sales capabilities and increasing Internet distribution. In 2002, core income should reflect continued improvement compared to 2001. With an expected decrease in refinance activity, CitiMortgage anticipates focusing on increasing market share in the stable purchase market, with a special emphasis on Citigroup referrals. CitiMortgage should also benefit from higher net servicing income as mortgage prepayment rates decline. Student Loans expects to benefit from its strengthened sales platform and continued low funding costs. Credit costs are anticipated to be comparable to 2001.
NORTH AMERICA CARDS. In 2001, the Cards business reported a record core income of $2.1 billion. Core income increased 19% for the year, driven by improved spreads, resulting from lower interest rates and repricing actions and contained expense levels, partially offset by higher credit costs. National bankruptcy filings increased 20% in 2001, due to the combination of pending legislative reform, higher unemployment and a weakened economy. In 2002, the Cards business is expected to deliver continued growth and consistent risk-adjusted revenue performance, despite the presence of a challenging environment which is expected to continue in 2002. Credit costs and delinquencies are expected to increase from 2001 levels as a result of economic conditions and credit performance of the portfolios.
CITIFINANCIAL. During 2001, CitiFinancial focused on the integration of the Associates businesses, including eliminating redundant, unprofitable branches or centers and conforming all underwriting and collection practices. The results of these efforts contributed to significant expense reductions and improved profitability. Real estate volume increased significantly primarily due to the success of the PFS-sourced business, which increased 50% to $7.8 billion in outstandings as of December 31, 2001. CitiFinancial continues to improve its cost structure and plans to pursue growth by expanding and developing new sales channels and diversifying its product offerings. As in the past, cross-selling opportunities among Citigroup affiliates will continue. Net credit losses and the related loss ratio are expected to increase from 2001 as a result of economic conditions and credit performance of the portfolios, including bankruptcy filings.
INTERNATIONAL
WESTERN EUROPE. The Western Europe region experienced strong growth in 2001 with expanded margins resulting from improved spreads and continued cost management. Business volumes in 2001 benefited from organic growth and acquisitions in the home equity and credit card businesses. Our strategic priorities - consumer finance, cards and wealth management - continue to show excellent growth opportunities in the markets in which we operate. Continued focus on distribution channels will ensure that customers can access our products in ways that are most convenient and comfortable for their individual needs. We expect that with continued product innovation and focused customer support we will continue to enhance our performance. Credit costs may increase from 2001 as result of economic conditions and statutory changes in the region.
JAPAN. Japan's increase in core income in 2001 reflected the impact of acquisitions and continued organic growth with over 500,000 new customers generated. The business began to experience deteriorating credit quality as unemployment rates and bankruptcy levels reached record highs in late 2001. We expected this deterioration to continue in 2002 as the Japanese economy continues to weaken.
ASIA. The region recorded improved financial performance in 2001, driven by growth in deposits, investment product fees and cards, combined with expense control initiatives. Credit costs may increase in 2002 reflecting the delayed effect of weak economic conditions in the region. The business focus in 2002 will be on continuing the revenue momentum to expand deposits, investment product fees and cards, combined with expense control initiatives and tight credit underwriting and collections.
MEXICO. Mexico experienced an increase in core income in 2001 primarily due to the acquisition of Banamex. In 2002, the business expects to continue its initiatives for significant expense rationalization combined with market share expansion. The Mexican economy has been negatively impacted by the slowdown of exports to the U.S. and the credit portfolio continues to be closely monitored.
LATIN AMERICA. In 2001, Argentina experienced continued recession ending the year in an economical and political crisis. The business was able to generate core income growth in its other countries through modest revenue growth combined with expense reduction initiatives and disciplined credit management. In 2002 delinquencies and net credit losses may increase due to continuing weak global economic conditions. We will continue to manage for moderate growth and cost management in the rest of our businesses across Latin America.
CENTRAL & EASTERN EUROPE, MIDDLE EAST & AFRICA. The business experienced strong growth in 2001 driven by growth in deposits, branch lending and cards across most countries in the region, including the impact of acquisitions. In 2002, the business expects continued market share expansion in established markets, build- out of new franchises in the Czech Republic and in Israel and continued focus on disciplined credit management.
e-CONSUMER. In 2001, the business entered into a strategic alliance with the Microsoft Network and continued to develop and refine existing product offerings including Citibank Online, C2it, MyCiti, and a strategic alliance with America Online. These efforts will continue in 2002 as the business seeks to extend Citigroup's ability to deliver financial services via the internet and improve cross-selling opportunities among Citigroup businesses. These activities should position Citigroup to grow with the digital economy and improve the performance and cost effectiveness of our customer service capabilities.
INSURANCE INDUSTRY
A variety of factors continue to affect the property and casualty insurance
market and the Company's core business outlook, including improvement in pricing
in the commercial lines marketplace as evidenced by price increases, a
continuing highly competitive personal lines marketplace, inflationary pressures
on loss cost trends including medical inflation and increasing auto loss costs,
asbestos-related developments and rising reinsurance and litigation costs.
The property and casualty insurance industry continues to be reshaped by consolidation and globalization. With respect to globalization, Citigroup formed CitiInsurance, the international arm of Citigroup's insurance activities, to capitalize on the strength of the Citigroup branch franchise and the extensive distribution strength of the Citigroup consumer business around the world. This unit expects to build on the progress already made in Southeast Asia during the last several years with the strategic alliance with Fubon Group, a diversified financial services company based in Taiwan.
Changes in the general interest rate environment affect the return received by the insurance subsidiaries on newly invested and reinvested funds. While a rising interest rate environment enhances the returns available, it reduces the market value of existing fixed maturity investments and the availability of gains on disposition. A decline in interest rates reduces the return available on investment of funds, but creates the opportunity for realized investment gains on disposition of fixed maturity investments.
As required by various state laws and regulations, the Company's insurance subsidiaries are subject to assessments from state-administered guaranty associations, second-injury funds and similar associations. Management believes that such assessments will not have a material impact on the Company's results of operations.
Certain social, economic, political, and litigation issues have led to an increased number of legislative and regulatory proposals aimed at addressing the cost and availability of certain types of insurance, as well as the claim and coverage obligations of insurers. While most of these provisions have failed to become law, these initiatives may continue as legislators and regulators try to respond to the public availability, affordability, and claim concerns. The resulting laws, if any, could adversely affect the Company's ability to write business with appropriate returns.
PRIMERICA. During the last few years, Primerica has instituted programs, including sales and product training, that are designed to maintain high compliance standards, increase the number of producing agents and customer contacts and, ultimately, increase production levels. Additionally, increased effort has been made to provide all Primerica customers full access to all Primerica marketed lines. Insurance in force continues to grow. A continuation of these trends could positively influence future operations. Primerica continues to expand cross selling with other Company subsidiaries.
PERSONAL LINES. Personal Lines strategy includes control of operating expenses to improve competitiveness and profitability, growth in sales primarily through independent agents and selective expansion of additional marketing channels to broaden distribution to a wider customer base. These growth strategies also provide opportunities to leverage the existing cost structure and achieve economies of scale. In addition, Personal Lines continues to take action to control its exposure to catastrophe losses, including limiting the writing of new homeowners business in certain markets and implementing price increases in certain hurricane-prone areas, and non-renewing policies in some hurricane-prone areas where acceptable returns are not being achieved, subject to restrictions imposed by insurance regulatory authorities.
The personal auto insurance marketplace remains highly competitive as some personal auto carriers have been reluctant to increase prices despite increases in loss cost trends due to inflationary pressures in medical costs and auto repair costs. These trends are expected to continue into 2002. Personal Lines will continue to emphasize underwriting discipline in this competitive marketplace and continue to pursue its strategy of increases in auto rates to offset increases in loss cost trends. Market conditions for homeowners insurance have remained stable with the industry experiencing modest rate increases. Personal Lines expects homeowners rate increases to continue in 2002. Homeowners loss cost trends continue to increase at modest levels reflecting inflationary pressures and the increased frequency of weather-related losses.
The Personal Lines insurance market shows indications of contraction as a result of the terrorist attack on September 11th. Several Personal Lines carriers have ceased writing new polices and are not renewing existing policies. As carriers exit markets and fail to renew policies, Personal Lines is well positioned within the independent agent's office to take advantage of this opportunity to properly underwrite and bind this new business.
GLOBAL CORPORATE
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) --------------------------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $34,297 $33,479 $28,688 Adjusted operating expenses(2) 18,869 18,812 16,233 Provisions for benefits, claims and credit losses 6,544 5,173 4,317 --------------------------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 8,884 9,494 8,138 Income taxes 3,014 3,260 2,831 Minority interest, after-tax 26 68 169 --------------------------------------------------------------------------------------------------------- CORE INCOME 5,844 6,166 5,138 Restructuring-related items, after-tax (137) (146) 121 --------------------------------------------------------------------------------------------------------- INCOME $ 5,707 $ 6,020 $ 5,259 ========================================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
Global Corporate serves corporations, financial institutions, governments, investors and other participants in capital markets throughout the world. It consists of the Corporate and Investment Bank (CIB), Emerging Markets Corporate Banking & Global Transaction Services (EM Corporate & GTS), and the Commercial Lines business of TPC. The CIB delivers a full range of financial services and products including investment banking, brokerage, research and advisory services, foreign exchange, structured products, derivatives, loans, leasing and equipment finance. EM Corporate & GTS offers a wide array of banking and financial services products in the emerging markets (excluding Mexico) and also includes the global operations of Transaction Services. TPC is one of the largest property and casualty insurers in the United States offering, among other products, workers' compensation, commercial multi-peril, commercial auto, other liability, fidelity and surety and property and other lines, which it distributes through independent agents and brokers.
Global Corporate reported core income of $5.844 billion in 2001, down $322 million or 5% from 2000. The decrease reflects declines in Commercial Lines, down $402 million to $691 million, and the CIB, down $161 million to $3.509 billion, partially offset by increases in EM Corporate & GTS, up $241 million to $1.644 billion. Commercial Lines decreased primarily due to the catastrophe losses associated with the terrorist attack of September 11th, increased loss costs trends including increased medical costs, auto repair costs and reinsurance costs and lower net investment income, partially offset by the benefit of rate increases, higher fee income and higher favorable prior-year reserve development. Also reflected in the 2001 results are the incremental earnings from the minority interest buyback. The decrease in the CIB was primarily due to lower income in global equities and private client, lower earnings from the investment in Nikko Cordial and higher credit losses, partially offset by strong growth in fixed income and expense control initiatives. The increase in EM Corporate & GTS primarily reflects higher trading-related revenues across all regions and expense control initiatives, partially offset by write-downs in Argentina.
Income of $5.707 billion in 2001 and $6.020 billion in 2000 included restructuring-related charges of $137 million ($222 million pretax) and $146 million ($172 million pretax), respectively. Income of $5.259 billion in 1999 included net restructuring-related credits of $121 million ($192 million pretax). See Note 15 to the Consolidated Financial Statements for a discussion of the restructuring-related items.
The businesses of Global Corporate are significantly affected by the levels of activity in the global capital markets which, in turn, are influenced by macro-economic and political policies and developments, among other factors, in the 100 countries in which the businesses operate. Global economic and market events can have both positive and negative effects on the revenue performance of the businesses and can affect credit performance. Losses on commercial lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly-defined business or loan type. Net credit losses and cash-basis loans may increase from the 2001 levels due to weak global economic conditions, sovereign or regulatory actions and other factors. The property and casualty insurance market will benefit from improvements in pricing, offset in part by competitive pressures, inflation in the cost of medical care, and litigation. This paragraph contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
CORPORATE AND INVESTMENT BANK
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) --------------------------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 19,406 $ 19,746 $ 16,500 Adjusted operating expenses(2) 12,846 13,268 10,990 Provision for and credit losses 1,117 755 193 --------------------------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 5,443 5,723 5,317 Income taxes 1,932 2,051 1,943 Minority interest, after-tax 2 2 2 --------------------------------------------------------------------------------------------------------- CORE INCOME 3,509 3,670 3,372 Restructuring-related items, after-tax (105) (94) 131 --------------------------------------------------------------------------------------------------------- INCOME $ 3,404 $ 3,576 $ 3,503 ========================================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring related items.
The CIB delivers a full range of financial services and products including investment banking, brokerage, research and advisory services, foreign exchange, structured products, derivatives, loans, leasing and equipment finance.
Core income was $3.509 billion in 2001 compared to $3.670 billion in 2000 and $3.372 billion in 1999. CIB core income decreased $161 million during 2001 primarily due to lower income in global equities and private client, lower earnings from the investment in Nikko Cordial and higher credit losses, partially offset by strong growth in fixed income and expense control initiatives. Core income of $3.670 billion in 2000 increased $298 million compared to 1999 primarily reflecting double-digit growth across most businesses, partially offset by increases in production-related expenses and the provision for credit losses, including the impact of acquisitions in 2000. Income of $3.404 billion in 2001 and $3.576 billion in 2000 included net restructuring-related charges of $105 million ($176 million pretax) and $94 million ($111 million pretax), respectively. Income of $3.503 billion in 1999 included net restructuring-related credits of $131 million ($208 million pretax).
On May 1, 2000, the CIB completed the acquisition of the global investment
banking business and related net assets of Schroders PLC (Schroders), including
all corporate finance, financial markets and securities activities. During the
second quarter of 2000, the CIB strengthened its position in the U.S. leasing
market through the purchase of Copelco.
Revenues, net of interest expense, decreased 2% in 2001 to $19.406 billion
from $19.746 billion in 2000 primarily reflecting decreases in global equities
and private client and lower earnings from the investment in Nikko Cordial,
partially offset by strong growth in fixed income. Revenues increased 20% to
$19.746 billion in 2000 from 1999 reflecting strong growth across all
businesses.
Revenues by category were as follows:
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) --------------------------------------------------------------------------------------------------------- Commissions and fees $ 3,702 $ 4,471 $ 3,721 Investment banking 4,519 4,098 3,353 Principal transactions 3,248 4,238 3,609 Asset management and administration fees(2) 2,035 2,169 1,641 Interest and dividend income, net 5,009 3,801 3,600 Other income 893 969 576 --------------------------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 19,406 $ 19,746 $ 16,500 ========================================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes the revenues of SSB Asset Management which are reported in the
Citigroup Asset Management segment.
Commissions and fees were $3.702 billion, $4.471 billion and $3.721 billion in 2001, 2000 and 1999, respectively. The 2001 decline primarily reflects decreases in over-the-counter securities and mutual fund commissions due to depressed market conditions. The 2000 increase reflects growth in sales of listed and over-the-counter securities along with increased mutual fund commissions and transaction services fees.
Investment banking revenues were $4.519 billion in 2001 compared to $4.098 billion in 2000 and $3.353 billion in 1999. Growth in 2001 was primarily due to increases in high-grade debt, structured products and high yield underwritings, partially offset by decreases in equity and unit trust underwriting and lower merger and acquisition fees. Growth in 2000 was primarily due to increases in equity and high-grade debt underwriting and in merger and acquisition fees, partially offset by a decline in high yield underwriting.
Principal transactions revenues were $3.248 billion in 2001, down $990 million or 23% from 2000 primarily reflecting decreases in global equities. Principal transactions revenues were $4.238 billion in 2000 compared to $3.609 billion in 1999 primarily reflecting increases in global equities, fixed income and foreign exchange.
Asset management and administration fees decreased $134 million in 2001 to $2.035 billion from $2.169 billion in 2000 primarily due to a decrease in average balances of assets under fee based management. Asset management and administration fees increased $528 million in 2000 from $1.641 billion in 1999 primarily due to strong growth in assets under fee-based management. These fees include results from assets managed by the Financial Consultants and other internally managed assets as well as those that are managed through the Consulting Group.
Net interest and divided income was $5.009 billion in 2001 compared to $3.801 billion in 2000 and $3.600 billion in 1999. The increase in 2001 was primarily due to wider spreads in fixed income, treasury and loans. The increase in 2000 was primarily due to the addition of Copelco.
Other income was $893 million in 2001 compared to $969 million in 2000 and $576 million in 1999. The 2001 decrease is primarily due to lower earnings from the investment in Nikko Cordial and the effect of a change in the presentation of intercompany balances that had the effect of reducing other income and other expense, partially offset by gains on the sale of the Associates Relocation and Canadian Fleet businesses and gains on sale of municipal bonds from the available-for-sale portfolio. Other income of $969 million in 2000 increased $393 million from 1999 primarily due to an increase in ownership in Nikko Cordial along with higher income from the Nikko SSB joint venture which began operations during the 1999 first quarter.
Total assets under fee-based management at December 31, were as follows:
IN BILLIONS OF DOLLARS 2001 2000 1999 --------------------------------------------------------------------------------------------------------- Financial consultant managed $ 54.9 $ 56.2 $ 43.6 Consulting group and internally managed 150.2 145.6 126.2 --------------------------------------------------------------------------------------------------------- TOTAL ASSETS UNDER FEE-BASED MANAGEMENT(1) $ 205.1 $ 201.8 $ 169.8 ========================================================================================================= |
(1) Includes assets managed jointly with Citigroup Asset Management.
Adjusted operating expenses were $12.846 billion in 2001 compared to $13.268 billion in 2000 and $10.990 billion in 1999. Adjusted operating expenses decreased 3% in 2001 compared to 2000 primarily due to lower compensation and benefits and other operating and administrative expenses. Compensation and benefits decreased primarily as a result of declines in production-related compensation and savings from restructuring actions initiated in 2001. Other operating and administrative expenses declined $374 million primarily due to tight expense controls and a change in the presentation of intercompany balances that had the effect of reducing other income and other expense. Adjusted operating expenses increased 21% in 2000 compared to 1999 primarily due to higher production-related compensation and benefits expense, including the impact of the acquisitions of Schroders and Copelco in the 2000 second quarter.
The provision for credit losses was $1.117 billion in 2001 compared to $755 million in 2000 and $193 million in 1999. The increase in 2001 was primarily due to higher net credit losses in the transportation leasing portfolio combined with higher net credit losses in the telecommunication, energy, retail and airline industries. The increase in 2000 compared to 1999 was due to losses on exposures to North American health care borrowers, additional provisions for the transportation portfolio, recoveries on real estate loans in 1999 and the inclusion of losses for Copelco, which was acquired in the second quarter of 2000.
Cash-basis loans were $1.525 billion, $776 million and $481 million at December 31, 2001, 2000 and 1999, respectively, reflecting increases in the transportation portfolio and borrowers in the telecommunication, energy, utility, and retail industries. The OREO portfolio totaled $64 million, $115 million and $156 million at December 31, 2001, 2000 and 1999, respectively. The improvements in OREO in 2001 and 2000 were primarily related to the North America real estate portfolio. Losses on commercial lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly-defined business or loan type. Net credit losses and cash-basis loans may increase from 2001 levels due to weak economic conditions in the U.S., Japan and Europe. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
EMERGING MARKETS CORPORATE BANKING AND GLOBAL TRANSACTION SERVICES
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) --------------------------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 6,928 $ 6,236 $ 5,373 Adjusted operating expenses(2) 4,037 3,845 3,612 Provisions for credit losses 300 164 329 --------------------------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 2,591 2,227 1,432 Income taxes 923 808 544 Minority interest, after-tax 24 16 6 --------------------------------------------------------------------------------------------------------- CORE INCOME 1,644 1,403 882 Restructuring-related items, after-tax (32) (11) (10) --------------------------------------------------------------------------------------------------------- INCOME $ 1,612 $ 1,392 $ 872 ========================================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
Citigroup's EM Corporate & GTS business offers a wide array of banking and financial services products in the emerging markets (excluding Mexico) and also includes the global operations of Transaction Services.
EM Corporate & GTS core income totaled $1.644 billion in 2001, up $241 million or 17% from 2000 primarily reflecting higher trading-related revenues across all regions and expense control initiatives, partially offset by write-downs in Argentina. The improvement in core income was driven by growth in Asia up 23% to $674 million, CEEMEA up 31% to $519 million and Latin America up 10% to $521 million. Core income in 2000 of $1.403 billion increased $521 million or 59% from 1999 primarily reflecting broad-based revenue growth, tight expense control management and improved credit in Asia. Income of $1.612 billion, $1.392 billion and $872 million in 2001, 2000 and 1999, respectively, included restructuring-related charges of $32 million ($46 million pretax), $11 million ($18 million pretax) and $10 million ($16 million pretax), respectively.
In June 2000, EM Corporate & GTS completed the acquisition of a majority interest in Bank Handlowy, a leading bank in Poland.
Revenues, net of interest expense, were $6.928 billion in 2001 compared to $6.236 billion in 2000. Revenue growth in 2001 was led by CEEMEA, up 22% from 2000, primarily due to the acquisition of Bank Handlowy along with growth in trading-related revenues and benefits from capital hedging activities. Asia revenues were up 13% in 2001 primarily due to growth in trading-related revenues and the impact of a building sale. Latin America revenues were up 14% in 2001 primarily reflecting growth in trading-related revenues and benefits from capital hedging activities, partially offset by fourth quarter write-downs in Argentina. Revenues of $6.236 billion in 2000 grew $863 million or 16% compared to 1999 primarily due to the acquisition of Bank Handlowy and growth in transaction services revenues in all regions.
Adjusted operating expenses increased 5% in 2001 to $4.037 billion from $3.845 billion in 2000 which, in turn, increased 6% from $3.612 billion in 1999 primarily reflecting the acquisition of Bank Handlowy and volume-related increases, partially offset by cost controls in all regions.
The provision for credit losses totaled $300 million, $164 million and $329 million in 2001, 2000 and 1999, respectively. The increase in 2001 is primarily due to fourth quarter write-downs in Argentina reflecting the deteriorating economic situation in that country. The decrease in 2000 primarily reflects improvements in Asia, mainly China, Indonesia, Australia and Thailand, and in CEEMEA.
Cash-basis loans (excluding Mexico, which is included in the Mexico Consumer segment) were $1.465 billion, $1.069 billion and $989 million at December 31, 2001, 2000 and 1999, respectively. The increase in 2001 primarily reflects increases in Latin America, mainly Argentina, and increases in Asia, mainly Australia and New Zealand. The increase in 2000 was primarily due to the acquisition of Bank Handlowy along with increases in Latin America, partially offset by improvements in Asia. Losses on commercial lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly defined business or loan type. Net credit losses and cash-basis loans may increase from the 2001 levels due to weakening global economic conditions, the economic crisis in Argentina, sovereign or regulatory actions and other factors. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
COMMERCIAL LINES
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ------------------------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 7,963 $ 7,497 $ 6,815 Claims and claim adjustment expenses 5,127 4,254 3,795 Adjusted operating expenses(2) 1,986 1,699 1,631 ------------------------------------------------------------------------------------------------------- INCOME BEFORE TAXES AND MINORITY INTEREST 850 1,544 1,389 Income taxes 159 401 344 Minority interest, after-tax(3) -- 50 161 ------------------------------------------------------------------------------------------------------- CORE INCOME(4) 691 1,093 884 Restructuring-related items, after-tax -- (41) -- ------------------------------------------------------------------------------------------------------- INCOME $ 691 $ 1,052 $ 884 ======================================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
(2) Includes restructuring-related items.
(3) See Note 2 to the Consolidated Financial Statements.
(4) Excludes investment gains/losses included in Investment Activities segment.
COMMERCIAL LINES--which offers a broad array of property and casualty insurance and insurance-related services through brokers and independent agencies--reported core income of $691 million in 2001 compared to $1.093 billion in 2000 and $884 million in 1999. The 2001 decrease compared to 2000 primarily reflects the impact of catastrophe losses of $448 million associated with the terrorist attack on September 11th, increased loss cost trends including increased medical costs, auto repair costs and reinsurance costs and lower net investment income, partially offset by the benefit of rate increases, higher fee income and higher favorable prior-year reserve development. Also reflected in the 2001 results are the incremental earnings from the minority interest buyback. The improvements in 2000 over 1999 reflect the incremental earnings from the minority interest buyback, rate increases, higher fee income, lower catastrophe losses, and higher net investment income and were partially offset by increased loss cost trends and lower favorable prior-year reserve development. Results for 2000 and 1999 also reflect benefits resulting from legislative actions that changed the manner in which certain states finance their workers' compensation second-injury funds, principally in the states of New York and Pennsylvania.
On May 31, 2000, the Company completed the acquisition of the surety business of Reliance Group Holdings, Inc. (Reliance Surety). In the third quarter of 2000, the Company purchased the renewal rights to a portion of Reliance Group Holdings, Inc.'s commercial lines middle-market book of business (Reliance Middle Market) and also acquired the renewal rights to
Frontier Insurance Group, Inc.'s (Frontier) environmental, excess and surplus lines casualty businesses and certain classes of surety business.
The following table shows net written premiums by market for the three years ended December 31:
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) --------------------------------------------------------------------------------------------------------- National accounts $ 419 $ 352 $ 488 Commercial accounts 2,947 2,851 2,373 Select accounts 1,713 1,575 1,494 Bond 590 487 207 Gulf 608 517 403 --------------------------------------------------------------------------------------------------------- TOTAL NET WRITTEN PREMIUMS $ 6,277 $ 5,782 $ 4,965 ========================================================================================================= |
(1) Reclassified to conform to the 2001 presentation.
Commercial Lines net written premiums were $6.277 billion in 2001 compared to $5.782 billion in 2000 and $4.965 billion in 1999. Included in Bond net written premiums in 2000 is an adjustment of $131 million due to a reinsurance transaction associated with the acquisition of the Reliance Surety business. The trend in net written premiums reflects the impact of an improving rate environment as evidenced by the continued favorable pricing on new and renewal business. Also contributing to the net written premium increases in 2001 were the full year impacts of the acquisition of the renewal rights for the Reliance Middle Market business in Commercial Accounts, the Reliance Surety acquisition in Bond and the acquisition of the renewal rights for the Frontier business in Gulf. The 2001 increase in National Accounts net written premiums is due to the purchase of less reinsurance reflecting the shift in business mix from guaranteed cost products to loss-sensitive products combined with the re-population of the involuntary pools. Also contributing to the net written premium increases in 2000 was the new business associated with the acquisition of the renewal rights from the Reliance Middle Market business in Commercial Accounts, the Reliance surety acquisition in Bond and the new business associated with the acquisition of the renewal rights for the Frontier business in Gulf. The net written premium decrease in National Accounts was primarily due to a shift of business mix from premium-based products to fee-based products.
National Accounts works with national and regional brokers providing insurance coverages and services, primarily workers' compensation, mainly to large corporations. National Accounts also includes the residual market business, which sells claims and policy management services to workers' compensation and automobile assigned risk plans and to self-insurance pools throughout the United States. New business in National Accounts for 2001 was marginally lower than in 2000 reflecting a disciplined approach to market opportunities. New business in 2000 was marginally lower than in 1999 reflecting the Company's disciplined approach to underwriting and risk management. National Accounts business retention ratio for 2001 was moderately lower than in 2000 primarily reflecting a focus on account profitability and an increase in lost business due to the renewal price increases in 2001. National Accounts business retention ratio for 2000 was moderately lower than 1999 reflecting an increase in lost business due to the renewal price increases in 2000.
Commercial Accounts serves primarily mid-sized businesses for casualty products and both large and mid-sized businesses for property products through a network of independent agents and brokers. Within Commercial Accounts, a dedicated construction unit exists as well as a unit which primarily writes coverages for the trucking industry. New premium business in Commercial Accounts for 2001 was moderately lower than in 2000 reflecting the acquisition of the renewal rights for the Reliance Middle Market business in 2000. New business in 2000 was significantly higher than in 1999 reflecting the impact of the acquisition of the Reliance Middle-Market renewal business. Commercial Accounts business retention ratio for 2001 was significantly lower than 2000 reflecting the continued disciplined approach to achieving acceptable levels of account profitability and an increase in lost business due to the renewal price increases in 2001. Commercial Accounts business retention ratio for 2000 was moderately lower than 1999 reflecting an increase in lost business due to the renewal price increases in 2000.
Select Accounts serves small businesses through a network of independent agents. For 2001, new business in Select Accounts was marginally lower than in 2000, while for 2000, new business was moderately higher than in 1999 reflecting the unusually low new business in 1999 resulting from the Company's selective underwriting policy in the highly competitive marketplace. The business retention ratio in 2001 was virtually the same as in 2000. Select Accounts business retention ratio for 2000 was moderately lower than in 1999 reflecting an increase in lost business due to renewal price increases in 2000.
Bond provides a variety of fidelity and surety bonds and executive liability coverages to clients of all sizes through independent agents and brokers.
Gulf markets products to national, mid-size and small customers and distributes them through both wholesale brokers and retail agents and brokers throughout the United States.
Catastrophe losses, net of tax and reinsurance, were $471 million in 2001 and $27 million in 1999. There were no catastrophe losses in 2000. Catastrophe losses in 2001 were primarily due to the terrorist attack on September 11th, Tropical Storm Allison and the Seattle earthquake. The 1999 catastrophe losses were primarily due to Hurricane Floyd and tornadoes in Oklahoma.
The Company, along with others in the industry, uses the combined ratio, which measures the total cost per $100 of premium production, as a measure of performance for Commercial Lines. The statutory combined ratio before policyholder dividends for Commercial Lines was 111.7% in 2001 compared to 104.1% in 2000 and 106.8% in 1999. The GAAP combined ratio before policyholder dividends for Commercial Lines was 110.9% in 2001 compared to 100.9% in 2000 and 103.8% in 1999. GAAP combined ratios for Commercial Lines differ from statutory combined ratios primarily due to the deferral and amortization of certain expenses for GAAP reporting purposes only.
The 2001 statutory and GAAP combined ratios include the impact of the terrorist attack on September 11th. Excluding the impact of this event, the 2001 statutory and GAAP combined ratio before policyholder dividends would have been 100.2% and 99.4%, respectively. The 2000 statutory and GAAP combined ratios include an adjustment associated with the acquisition of the Reliance Surety business. Excluding this adjustment, the 2000 statutory and GAAP combined ratios before policyholder dividends would have been 103.8% and 101.5%, respectively. The 1999 statutory combined ratio for Commercial Lines reflected the treatment of the commutation of an asbestos liability to an insured. Excluding this commutation, the statutory combined ratio before policyholder dividends for 1999 would have been 104.6%.
The decrease in the 2001 statutory and GAAP combined ratios before policyholder dividends, excluding the related adjustment above, compared to the 2000 statutory and GAAP combined ratios before policyholder dividends,
excluding the related adjustment above, was primarily due to premium growth related to rate increases, the full year impact of the ongoing business associated with the Reliance Surety acquisition, the purchase of the renewal rights for the Reliance Middle Market and Frontier businesses and higher favorable prior-year reserve development, partially offset by increased loss cost trends and catastrophe losses due to Tropical Storm Allison in the 2001 second quarter and the Seattle earthquake in the 2001 first quarter.
The improvement in the 2000 statutory and GAAP combined ratios before policyholder dividends, excluding the adjustments above, compared to the 1999 statutory and GAAP combined ratios before policyholder dividends, excluding the adjustments above, was primarily due to premium growth related to rate increases as well as the impact of the Reliance Surety acquisition and the purchase of the renewal rights for the Reliance Middle Market and Frontier businesses and lower catastrophe losses, partially offset by increased loss cost trends and lower favorable prior-year reserve development and a disproportionately smaller increase in expenses associated with the growth in premiums.
ENVIRONMENTAL CLAIMS
The Company continues to receive claims from insureds which allege that they are
liable for injury or damage arising out of their alleged disposition of toxic
substances. Mostly, these claims are due to various legislative as well as
regulatory efforts aimed an environmental remediation. For instance, the
Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA,
enacted in 1980 and later modified, enables private parties as well as federal
and state governments to take action with respect to releases and threatened
releases of hazardous substances. This Federal statute permits the recovery of
response costs from some liable parties and may require liable parties to
undertake their own remedial action. Liability under CERCLA may be joint and
several with other responsible parties.
The Company has been, and continues to be, involved in litigation involving insurance coverage issues pertaining to environmental claims. The Company believes that certain court decisions have interpreted the insurance coverage to be broader than the original intent of the insurers and insureds. These decisions often pertain to insurance policies that were issued by the Company prior to the mid-1970s. These decisions continue to be inconsistent and vary from jurisdiction to jurisdiction. Environmental claims when submitted rarely indicate the monetary amount being sought by the claimant from the insured, and the Company does not keep track of the monetary amount being sought in those few claims which indicate a monetary amount.
The Company's reserves for environmental claims are not established on a claim-by-claim basis. The Company carries an aggregate bulk reserve for all of the Company's environmental claims that are in dispute, until the dispute is resolved. This bulk reserves is established and adjusted based upon the aggregate volume of in-process environmental claims and the Company's experience in resolving those claims. At December 31, 2001, approximately 75% of the net environmental reserve, approximately $298 million, is carried in a bulk reserve and includes unresolved and incurred but not reported environmental claims for which the Company has not received any specific claims as well as for the anticipated cost of average litigation disputes relating to these claims. The balance, approximately 25% of the net environmental reserve, or approximately $98 million, consists of case reserves for resolved claims.
The Company's reserving methodology is preferable to one based on "identified claims" because the resolution of environmental exposures by the Company generally occurs by settlement on an insured-by-insured basis as opposed to a claim-by-claim basis. Generally, the settlement between the Company and the insured extinguishes any obligation the Company may have under any policy issued to the insured for past, present and future environmental liabilities as well as extinguishes any pending coverage litigation dispute with the insured. This form of settlement is commonly referred to as a "buy-back" of policies for future environmental liability. In addition, many of the agreements have also extinguished any insurance obligation which the Company may have for other claims, including but not limited to asbestos and other cumulative injury claims. Provisions of these agreements also include appropriate indemnities and hold harmless provisions to protect the Company. The Company's general purpose in executing these agreements is to reduce its potential environmental exposure and eliminate the risks presented by coverage litigation with the insured and related costs.
In establishing environmental reserves, the Company evaluates the exposure presented by each insured and the anticipated cost of resolution, if any, for each insured on a quarterly basis. In the course of this analysis, the Company considers the probable liability, available coverage, relevant judicial interpretations and historical value of similar exposures. In addition, the Company considers the many variables presented, such as the nature of the alleged activities of the insured at each site; the allegations of environmental harm at each site; the number of sites; the total number of potentially responsible parties at each site; the nature of environmental harm and corresponding remedy at each site; the nature of government enforcement activities at each site; the ownership and general use of each site; the overall nature of the insurance relationship between the Company and the insured, including the role of any umbrella or excess insurance the Company has issued to the insured; the involvement of other insurers; the potential for other available coverage, including the number of years of coverage; the role, if any, of non-environmental claims or potential non-environmental claims, in any resolution process; and the applicable law in each jurisdiction.
The following table displays activity for environmental losses and loss expenses and reserves for the years ended December 31:
ENVIRONMENTAL LOSSES
IN MILLIONS OF DOLLARS 2001 2000 1999 ------------------------------------------------------------------------------------------------------- BEGINNING RESERVES Direct $ 669 $ 801 $ 928 Ceded (111) (125) (96) ------------------------------------------------------------------------------------------------------- Net 558 676 832 INCURRED LOSSES AND LOSS EXPENSES Direct 58 75 139 Ceded (12) (11) (82) LOSSES PAID Direct 248 207 266 Ceded (40) (25) (53) ------------------------------------------------------------------------------------------------------- ENDING RESERVES Direct 479 669 801 Ceded (83) (111) (125) ------------------------------------------------------------------------------------------------------- Net $ 396 $ 558 $ 676 ======================================================================================================= |
Over the past three years, the Company has experienced a substantial reduction in the number of policyholders with pending coverage litigation disputes, a continued reduction in the number of policyholders tendering for the first time an environmental remediation-type claim to the company as well as a continued reduction in the number of policyholders with active environmental claims.
As of December 31, 2001, the number of policyholders with pending coverage litigation disputes pertaining to environmental claims was 216, approximately 11% less than the number pending as of December 31, 2000, and approximately 20% less than the number pending as of December 31, 1999. Also, in 2001, there were 134 policyholders tendering for the first time an environmental remediation-type claim to the company. This compares to 158 policyholders doing so in 2000 and 256 policyholders in 1999.
As of December 31, 2001, the Company has resolved the environmental liabilities presented by 5,595 of the 6,214 policyholders who have tendered environmental claims to the Company for approximately $1.88 billion (before reinsurance). This resolution comprises 90% of the policyholders who have tendered these claims. The Company generally has been successful in resolving its coverage litigation disputes and continues to reduce its potential exposure through favourable settlements with some insureds.
ASBESTOS CLAIMS AND LITIGATION
The Company believes that the property and casualty insurance industry has
suffered from judicial interpretations that have attempted to maximize insurance
availability for asbestos claims from both a coverage and liability standpoint
far beyond the intent of the contracting parties. These policies generally were
issued prior to 1980. The Company continues to receive asbestos claims alleging
insureds' liability from claimants' asbestos-related injuries. Since the
beginning of 2000, the Company has experienced an increase over prior years in
the number of asbestos claims being tendered to the Company and the Company
expects this trend to continue. This statement is a forward-looking statement
within the meaning of the Private Securities Litigation Reform Act. See
"Forward-Looking Statements" on page 33. Factors leading to these increases
include more intensive advertising by lawyers seeking asbestos claimants, the
increasing focus by plaintiffs on new and previously peripheral defendants and
an increase in the number of entities seeking bankruptcy protection as a result
of asbestos-related liabilities. In addition to contributing to the increase in
claims, the bankruptcy proceedings may have the effect of significantly
accelerating and increasing loss payments by insurers, including the Company.
Particularly during the last few months of 2001 and continuing into 2002, these
trends have both accelerated and become more visible.
Because each insured presents different liability and coverage issues, the Company evaluates those issues on an insured-by-insured basis. The Company's evaluations have not resulted in any meaningful data from which an average asbestos defense or indemnity payment may be determined.
In establishing the Company's asbestos reserve, the Company evaluates the exposure presented by each insured. In the course of the evaluation, the Company considers available insurance coverage, including the role of any umbrella or excess insurance the Company has issued to the insured; limits and deductibles; an analysis of each insured's potential liability; the jurisdictions involved; past and anticipated future claim activity; past settlement values of similar claims; allocated claim adjustment expense; potential role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and applicable coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a product/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim. Once the gross ultimate exposure for indemnity and allocated claim adjustment expense is determined for each insured by each policy year, the Company calculates a ceded reinsurance projection based on any applicable facultative and treaty reinsurance, as well as past ceded experience. Adjustments to the ceded projections also occur due to actual ceded claim experience and reinsurance collections.
The Company also compares its historical direct and net loss and expense paid experience, year-by-year, to assess any emerging trends, fluctuations or characteristics suggested by the aggregate paid activity. The comparison includes a review of the ratio of the ending direct and net reserves by last year's direct and net paid activity, also known as the survival ratio.
At December 31, 2001, approximately 81% or approximately $665 million, of the net asbestos reserve, represents incurred but not reported losses for which the Company has not received any specific claims. The balance, approximately 19% of the net asbestos reserve, or approximately $155 million, is for pending asbestos claims. As in the past, asbestos claims, when submitted, rarely indicate the monetary amount being sought by the claimant from the insured, and the Company does not keep track of the monetary amount being sought in those few claims that indicated a monetary amount. Based upon the Company's experience with asbestos claims, the duration period of an asbestos claim from the date of submission to resolution is approximately two years.
In general, the Company posts case reserves for pending asbestos claims within approximately thirty business days of receipt of these claims.
The following table displays activity for asbestos losses and loss expenses and reserves for the years ended December 31:
ASBESTOS LOSSES
IN MILLION OF DOLLARS 2001 2000 1999 ------------------------------------------------------------------------------------------------------- BEGINNING RESERVES Direct $ 1,005 $ 1,050 $ 1,252 Ceded (199) (223) (266) ------------------------------------------------------------------------------------------------------- Net 806 827 986 INCURRED LOSSES AND LOSS EXPENSES Direct 283 187 128 Ceded (94) (137) (71) LOSSES PAID Direct 242 232 330 Ceded (67) (161) (114) ------------------------------------------------------------------------------------------------------- ENDING RESERVES Direct 1,046 1,005 1,050 Ceded (226) (199) (223) ------------------------------------------------------------------------------------------------------- Net $ 820 $ 806 $ 827 ======================================================================================================= |
UNCERTAINTY REGARDING ADEQUACY OF ENVIRONMENTAL AND ASBESTOS RESERVES
It is difficult to estimate the reserves for environmental and asbestos-related claims due to the factors described above. Conventional actuarial techniques are not used to estimate these reserves.
As a result of the processes and procedures described above, the reserves carried for environmental and asbestos claims at December 31, 2001 are the Company's best estimate of ultimate claims and claim adjustment expenses based upon known facts and current law. However, the uncertainties surrounding the final resolution of these claims continue. These include, without limitation, the risks inherent in major litigation, any impact from the bankruptcy protection sought by various asbestos producers and other asbestos defendants, a further increase or decrease in asbestos and environmental claims which cannot now be anticipated, the role of any umbrella or excess policies the Company has issued for these claims, the resolution or adjudication of some disputes pertaining to the amount of available coverage for asbestos claims in a manner inconsistent with the Company's previous assessment of these claims, the number and outcome of direct actions against the Company, and unanticipated developments pertaining to the company's ability to recover reinsurance for environmental and asbestos claims. It is also not possible to predict changes in the legal and legislative environment and their impact on the future development of asbestos and environmental claims. This development will be affected by future court decisions and interpretations, as well as changes in applicable legislation.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the current related reserves. These additional amounts, or a range of these additional amounts, cannot now be reasonably estimated and could result in liability exceeding those reserves by an amount that could be material to the Company's operating results in future periods. However, in the opinion of the Company's management, it is not likely that these claims will have a material adverse effect on the Company's financial condition or liquidity.
CUMULATIVE INJURY OTHER THAN ASBESTOS (CIOTA) CLAIMS
CIOTA claims are generally submitted to the Company under general liability
policies and often involve an allegation by a claimant against an insured that
the claimant has suffered injuries as a result of long-term or continuous
exposure to potentially harmful products or substances. These potentially
harmful products or substances include, but are not limited to, lead paint,
pesticides, pharmaceutical products, silicone-based personal products, solvents,
latex gloves, silica, mold and other potentially harmful substances.
To the extent disputes exist between the Company and a policyholder regarding the coverage available for CIOTA claims, the Company resolves the disputes, where feasible, through settlement with the policyholder or through coverage litigation. Historically, the Company's experience has indicated that insureds with potentially significant environmental and/or asbestos exposures, may often have other CIOTA exposures or CIOTA claims pending with the Company. Due to this experience and the fact that settlement agreements with insureds may extinguish the Company's obligations for all claims, the Company evaluates and considers the environmental and asbestos reserves in conjunction with the CIOTA reserve. Generally, the terms of a settlement agreement set forth the nature of the Company's participation in resolving CIOTA claims and the scope of coverage to be provided by the Company, and contain the appropriate indemnities and hold harmless provisions to protect the Company. These settlements generally eliminate uncertainties for the Company regarding the risks extinguished, including the risk that losses would be greater than anticipated due to evolving theories of tort liability or unfavorable coverage determinations. The Company's approach also has the effect of determining losses at a date earlier than would have occurred in the absence of these settlement agreements. On the other hand, in cases where future developments are favorable to insurers, this approach could have the effect of resolving claims for amounts in excess of those that the Company ultimately would have paid had the claims not been settled in this manner.
At December 31, 2001, approximately 80%, or approximately $569 million, of the net CIOTA reserve, represents incurred but not reported losses for which the Company has not received any specific claims. The balance, approximately 20% of the net CIOTA reserve, or approximately $141 million, is for pending CIOTA claims.
The following table displays activity for CIOTA losses and loss expenses and reserves for the years ended December 31:
CIOTA LOSSES
IN MILLIONS OF DOLLARS 2001 2000 1999 ---------------------------------------------------------------------------- BEGINNING RESERVES Direct $ 1,079 $ 1,184 $ 1,346 Ceded (280) (313) (392) ---------------------------------------------------------------------------- Net 799 871 954 INCURRED LOSSES AND LOSS EXPENSES Direct (115) 27 (36) Ceded 70 (11) 28 LOSSES PAID Direct 71 132 126 Ceded (27) (44) (51) ---------------------------------------------------------------------------- ENDING RESERVES Direct 893 1,079 1,184 Ceded (183) (280) (313) ---------------------------------------------------------------------------- Net $ 710 $ 799 $ 871 ============================================================================ |
GLOBAL CORPORATE OUTLOOK
The statements below are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. See "Forward-Looking Statements" on
page 33.
Global Corporate is significantly affected by the levels of activity the global capital markets which, in turn, are influenced by macro-economic and political policies and developments, among other factors, in the 100 countries in which the businesses operate. Global economic and market events can have both positive and negative effects on the revenue and credit performance of the businesses.
Losses on commercial lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly defined business or loan type.
THE CORPORATE AND INVESTMENT BANK. In 2001, the Corporate and Investment Bank was impacted by the slowdown in capital markets activity combined with higher net credit losses from weakening economic conditions. Strong growth in fixed income and market share improvements mitigated weakness in global equities and private client. The business initiated several expense reduction initiatives.
In 2002, focus will continue on identifying problem credits early and taking appropriate remedial actions. Net credit losses and cash-basis loans may increase from 2001 levels due to weak economic conditions. Expense management initiatives may continue across the business. While initiatives
will continue to expend market share, revenue performance is dependent upon the timing and strength of a recovery in U.S. and global economic conditions.
EM CORPORATE & GTS. In 2001, EM Corporate & GTS reflected higher trading-related revenues across all regions and expense control initiatives, partially offset by write-downs in Argentina.
In 2001, Argentina experienced continued weakness ending the year in an economic and political crisis. The remaining countries were able to generate core income growth through modest revenue growth combined with expense reduction initiatives and disciplined credit management. In 2002, the business expects to focus on containing the negative fallout from Argentina's economic crisis. The remaining countries continue to be closely monitored for possible contagion.
In 2002, EM Corporate & GTS expects to continue to work on strategies to increase market share in priority countries through organic growth and selective acquisitions, combined with continued focus on expense control initiatives and disciplined credit management. The EM Corporate & GTS portfolio remains diversified across a number of geographies and industry groups. Citigroup continues to monitor the economic situation in emerging market countries closely and, where appropriate, adjusts exposures and strengthens risk management oversight. 2002 net credit losses and cash-basis loans may increase from the 2001 levels due to continuing weak global economic conditions, the economic crisis in Argentina, sovereign or regulatory actions and other factors.
COMMERCIAL LINES. In 2001, the trend of higher rates continued in Commercial Lines. Prices generally rose throughout the year, although some of the increases varied significantly by region and business segment. These increases were necessary to offset the impact of rising loss cost trends and the decline in profitability from the competitive pressures of the last several years. Since the terrorist attack on September 11th, there has been greater concern over the availability, terms and conditions, and pricing of reinsurance. As a result, the primary insurance market is expected to continue to see significant rate increases for some coverages.
In National Accounts, where programs include risk management services, such as claims settlement, loss control and risk management information services, generally offered in connection with a large deductible or self-insured program, and risk transfer, typically provided through a guaranteed cost or retrospectively rated insurance policy, pricing improved during 2001 and 2000. National Accounts has benefited from higher rates on both new and renewal business as evidenced by the improving profit margins earned on this business. National Accounts believes that pricing will continue to firm into 2002. However, National Accounts will continue to reject business that is not expected to produce acceptable returns. Included in National Accounts is service fee income for policy and claim administration of several states' Workers' Compensation Residual Market pools. After several years of depopulation, these pools are growing significantly as the primary market is firming. Premiums the Company services for these pools grew 76% in 2001 compared to 2000 and is expected to continue to grow significantly.
Commercial Accounts achieved double-digit price increases on renewal business during 2001 and 2000, improving the overall profit margin in this business and offsetting the impacts of rising loss cost inflation, medical inflation and reinsurance costs. Commercial Accounts will continue to seek significant rate increases in 2002, as pricing in some areas and business segments still has not improved to the point of producing acceptable returns.
In Select Accounts, the trends toward increased pricing on renewal business that started in late 1999 gained momentum in 2000 and continued to improve during 2001. Prices generally rose during this time frame while customer retention remained consistent with prior periods. Price increases varied significantly by region, industry and product. However, the ability of Select Accounts to achieve future rate increases is subject to regulatory constraints in some jurisdictions. Loss cost trends in Select Accounts also worsened in 2001, especially workers' compensation and property. The impact of these negative loss cost trends has been partially offset by a continued disciplined approach to underwriting and risk selection by the Company. The Company will continue to pursue business based on its ability to achieve acceptable returns.
Bond achieved significant growth in 2001 and 2000 with the acquisition of Reliance Surety, cementing a leadership position in the surety bond marketplace by broadening product and service capabilities. In addition, the expanding array of products and recognized expertise in the executive liability marketplace has enabled Bond to further enhance its product and customer diversification and profit opportunities. Bond's focus remains on underwriting and selling its products to customers that provide the greatest opportunity for profit. Bond is also focused on its efforts to cross-sell its expanding array of specialty products to existing customers of Commercial Lines and Personal Lines. In Bond, prices in both of its markets began to modestly increase in late 2001. In 2001, Bond and the industry have experienced an increase in claim frequency and severity in the recent accident years. This increase in claim frequency and severity has impacted the primary insurer and reinsurance capacity in the Company's marketplace. This decrease in capacity is expected to create opportunities for further price increases for all products in 2002, although the worsening loss cost trends and increased cost of reinsurance will offset some of the positive impact.
In Gulf, rate increases began in most lines of business in 2001 although specific increases varied significantly by region, industry and product. Improvement was most evident in the umbrella and excess and surplus lines of business, with lesser increases achieved in the professional liability lines of business. In most areas of the business, capacity has dissipated due to reinsurance constriction, which should lead to further rate increases throughout 2002. The favorable impact from rate improvement continues to be offset by rising loss costs.
Insurers generally, including the Company, are experiencing an increase in the number of asbestos-related claims due to, among other things, more intensive advertising by lawyers seeking asbestos claimants, the increasing focus by plaintiffs on new and previously peripheral defendants and an increase in the number of entities seeking bankruptcy protection as a result of asbestos-related liabilities. In addition to contributing to the increase in claims, the bankruptcy proceedings may have the effect of significantly accelerating and increasing loss payments by insurers, including the Company. Increasingly, policyholders have been asserting that their claims for asbestos-related insurance are not subject to aggregate limits on coverage and that each individual bodily injury claim should be treated as a separate occurrence under the policy. Particularly during the last few months of 2001 and continuing into 2002, the asbestos-related trends described above have both accelerated and become more visible. In addition, these claims and the related litigation could result in liability exceeding these reserves by an amount that could be material to our operating results in future periods.
GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ------------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 7,553 $ 7,145 $ 6,099 Adjusted operating expenses(2) 2,562 2,529 2,171 Provision for benefits, claims and credit losses 2,632 2,375 2,009 ------------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 2,359 2,241 1,919 Income taxes 823 793 700 Minority interest, after-tax 1 3 -- ------------------------------------------------------------------------------------------- CORE INCOME 1,535 1,445 1,219 Restructuring-related items, after-tax (7) (11) 2 ------------------------------------------------------------------------------------------- INCOME $ 1,528 $ 1,434 $ 1,221 =========================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Exclude restructuring-retained items.
Global Investment Management and Private Banking is comprised of Travelers Life and Annuity (TLA), The Citigroup Private Bank and Citigroup Asset Management. These businesses offer a broad range of life insurance, annuity and asset management products and services, including individual annuity, group annuity, individual life insurance products, COLI products, mutual funds, closed-end funds, managed accounts, unit investment trusts, variable annuities, pension administration and personalized wealth management services distributed to institutional, high net worth and retail clients.
Global Investment Management and Private Banking core income in 2001 increased to $1.535 billion, up $90 million or 6% from 2000. The 2001 increase in core income reflected increased customer activity across most products within The Citigroup Private Bank and higher business volumes and premiums within TLA, partially offset by lower core income in Asset Management primarily due to the impact of a charge in Argentina related to the exchange of Argentine debt for loans. Core income of $1.445 billion in 2000 was up $226 million or 19% from 1999. The 2000 increase in core income reflected increased business volumes, a strong capital base and strong investment income at TLA, continued customer revenue momentum within The Citigroup Private Bank along with the impact of the acquisitions of Siembra, Colfondos and Confia in Citigroup Asset Management. Income of $1.528 billion in 2001, $1.434 billion in 2000 and $1.221 billion in 1999 included restructuring charges of $7 million ($13 million pretax) and $11 million ($18 million pretax) in 2001 and 2000, respectively, and a restructuring credit of $2 million ($4 million pretax) in 1999.
TRAVELERS LIFE AND ANNUITY
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) -------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 4,088 $ 3,891 $ 3,394 Provision for benefits and claims 2,552 2,325 1,997 Total operating expenses 329 409 451 -------------------------------------------------------------------------------- INCOME BEFORE TAXES 1,207 1,157 946 Income taxes 386 380 323 -------------------------------------------------------------------------------- INCOME(2) $ 821 $ 777 $ 623 ================================================================================ |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes investments gains/losses included in Investment Activities segment.
Travelers Life and Annuity offers individual annuity, group annuity, and individual life insurance products and COLI products marketed by TIC and its wholly-owned subsidiary TLAC under the Travelers name. Among the range of individual products offered are fixed and variable deferred annuities, payout annuities and term, universal and variable life insurance. These products are primarily distributed through CitiStreet Retirement Services (CitiStreet) (formerly The Copeland Companies (Copeland)), a joint venture, Salomon Smith Barney Financial Consultants, Primerica, Citibank, and a nationwide network of independent agents and the growing outside broker dealer channel. The COLI product is a variable universal life product distributed through independent specialty brokers. The group products include institutional pensions, including guaranteed investment contracts (GICs), payout annuities, group annuities to employer-sponsored retirement and savings plans and structured finance transactions.
Income was $821 million in 2001 compared to $777 million in 2000 and $623 million in 1999. The improvement in 2001 compared to 2000 reflects operating expense reductions and a 3% net investment income growth, despite the declining markets. During 2001, TLA also achieved double-digit growth in individual life direct periodic premiums, group annuity net written premiums and deposits and account balances versus the prior year. The 25% improvement in 2000 reflects increased business volume, a strong capital base and particularly strong investment income versus the prior-year period. During 2000, this business continued strong individual annuity sales and achieved double-digit business volume growth in group annuity account balances and individual life net written premiums, reflecting growth in retirement savings and estate planning products and strong momentum from cross-selling initiatives. The continued growth in 2001 and 2000 reflects both greater popularity of these products with an aging American population and strong momentum from cross-selling initiatives. Total operating expenses decreased in 2001 compared to the prior-year period due to continued expense management and the absence of expenses related to the long-term care insurance business which was sold during the third quarter of 2000. The long-term care transaction also reduced the amount of premium revenue reported in 2001. Total operating expenses decreased in 2000 compared to the prior-year period due to the contribution of Copeland to the CitiStreet joint venture and the absence of certain one-time technology expenses in 1999. The increases in revenues was also mitigated by the contribution of Copeland.
The cross-selling initiatives of TLA products through Primerica, Citibank, Salomon Smith Barney Financial Consultants, and CitiStreet, as well as strong sales through various intermediaries, a nationwide network of independent agents and outside broker dealers, reflect the ongoing effort to build market share by strengthening relationships in key distribution channels.
On July 31, 2000, TIC sold 90% of its individual long-term care insurance business to General Electric Capital Assurance Company in the form of an indemnity reinsurance arrangement. Proceeds from the sale were $410 million, resulting in a deferred gain of approximately $150 million after-tax.
The following table shows net written premiums and deposits by product line, excluding long-term care insurance written premiums for the three years ended December 31:
IN MILLIONS OF DOLLARS 2001 2000 1999 ----------------------------------------------------------------------------- INDIVIDUAL ANNUITIES Fixed $ 2,120 $ 1,267 $ 1,008 Variable 4,000 5,025 4,265 Individual payout 59 80 78 GICs AND OTHER GROUP ANNUITIES 7,068 5,528 5,619 INDIVIDUAL LIFE INSURANCE Direct periodic premiums and deposits 652 511 409 Single premium deposits 208 98 84 Reinsurance (96) (83) (71) ----------------------------------------------------------------------------- Total $14,011 $ 12,426 $ 11,392 ============================================================================= |
The majority of the annuity business and a substantial portion of the life business written by TLA are accounted for as investment contracts, with the result that the premiums are considered deposits and are not included in revenues.
Individual annuity account balances and benefit reserves reached $30.0 billion at December 31, 2001, up from $29.4 billion at year-end 2000 and $27.9 billion at year-end 1999. Net written premiums and deposits decreased in 2001 to $6.179 billion from $6.372 billion in 2000 (down 3%). The decrease in individual annuity net written premiums and deposits was driven by a decline in variable annuity sales due to current market conditions, but was partially offset by significant fixed annuity sales increases over the prior-year period. Non-affiliated sales channels increased 32% allowing this business to increase market share despite lower sales. Net written premiums and deposits increased in 2000 to $6.372 billion from $5.351 billion in 1999 (up 19%). Both 2001 and 2000 continue to reflect the cross-selling initiatives at all of the Citigroup affiliates, and also reflect continued penetration of outside broker-dealer channels.
Group annuity account balances and benefit reserves reached $21.0 billion at December 31, 2001, up from $17.5 billion at year-end 2000 (up 20%), and $15.1 billion at year-end 1999. During both 2001 and 2000 the group annuity business experienced continued strong sales momentum in all products, particularly long-term liability and guaranteed investment contracts. Net written premiums and deposits (excluding the Company's employee pension plan deposits) in 2001 were $7.068 billion, compared to $5.528 billion in 2000 reflecting fixed GIC growth through structured finance transactions and long-term liability growth through the extension of structured settlement broker relationships and large case employer pension sales. Net written premiums and deposits were $5.619 billion in 1999 and reflected particularly strong structured finance transactions.
Direct periodic premiums and deposits for individual life insurance were $652 million in 2001 compared to $511 million in 2000 (up 28%), driven by independent agent high end estate planning and COLI sales, and $409 million in 1999. Life insurance in force was $75.0 billion at December 31, 2001, up from $66.9 billion at year-end and $60.6 billion at year-end 1999.
THE CITIGROUP PRIVATE BANK
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ---------------------------------------------------------------------------------------- TOTAL REVENUES, NET OF INTEREST EXPENSE $ 1,536 $ 1,409 $ 1,212 Adjusted operating expenses(2) 924 874 770 Provision for credit losses 23 24 12 ---------------------------------------------------------------------------------------- CORE INCOME BEFORE TAXES 589 511 430 Income taxes 211 188 161 ---------------------------------------------------------------------------------------- CORE INCOME 378 323 269 Restructuring-related items, after-tax (4) (5) 1 ---------------------------------------------------------------------------------------- INCOME $ 374 $ 318 $ 270 ======================================================================================== Average assets (IN BILLIONS OF DOLLARS) $ 26 $ 25 $ 20 Return on assets 1.44% 1.27% 1.35% ======================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 1.45% 1.29% 1.35% ======================================================================================== Client business volumes under management (IN BILLIONS OF DOLLARS) $ 158 $ 153 $ 140 ======================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
The Citigroup Private Bank provides personalized wealth management services for high net worth clients around the world. The Citigroup Private Bank core income was $378 million in 2001, up $55 million or 17% from 2000 primarily reflecting increased customer activity across most products, partially offset by increased investment spending in technology and front-end sales and servicing capabilities. Core income of $323 million in 2000 was up $54 million or 20% from 1999 primarily reflecting continued customer revenue momentum, partially offset by increased front-end expenses and a moderate increase in the provision for credit losses.
Client business volumes under management which include custody accounts, client assets under fee-based management and deposits and loans, were $158 billion at the end of the year, up 3% from $153 billion in 2000 reflecting strong growth in Asia and continued growth in the U.S., despite challenging market conditions.
Revenue, net of interest expense, were $1.536 billion in 2001, up $127 million or 9% from 2000, primarily driven by the impact of lower interest rates and higher investment product (fees and trading) revenues. The 2001 increase also reflects strong international growth in Japan and Asia, up 22% and 19%, respectively, from the prior-year period and continued growth in the North American region, up 12% from the prior-year period. Revenues in 2000 were $1.409 billion, up $197 million or 16% from 1999 reflecting increases in fee and interest-related products. The 2000 increase also reflects strong international growth in Japan, Asia and CEEMEA, up 40%, 23% and 19%, respectively, from the prior-year period and growth in the North American region, up 16% from the prior-year period.
Adjusted operating expenses of $924 million in 2001 were up $50 million or 6% from 2000 primarily reflecting continued investment spending in technology and front-end sales and servicing capabilities. Expenses were $874 million in 2000, up $104 million or 14% from 1999 primarily reflecting higher levels of bankers and product specialists hired to improve front-end sales and service capabilities.
The provision for credit losses was $23 million in 2001, compared to $24 million in 2000 and $12 million in 1999. The increase in the provision for credit losses in 2000 of $12 million primarily related to a loan in Europe. Net credit losses in 2001 remained at a nominal level of 0.06% of average loans outstanding, compared with 0.09% in 2000. Loans 90 days or more past due at year-end 2001 were $135 million or 0.53% of total loans outstanding, compared with 0.23% at the end of 2000 and 0.54% at the end of 1999.
Average assets of $26 billion in 2001 increased $1 billion or 4% from $25 billion in 2000, which, in turn, increased $5 billion or 25% from 1999. The increase in 2000 was primarily related to incremental margin lending and mortgage financing.
CITIGROUP ASSET MANAGEMENT
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $ 1,929 $ 1,845 $ 1,493 Adjusted operating expenses(2) 1,309 1,246 950 Provision for benefits, claims and credit losses 57 26 -- ------------------------------------------------------------------------------------------ CORE INCOME BEFORE TAXES AND MINORITY INTEREST 563 573 543 Income taxes 226 225 216 Minority interest, after-tax 1 3 -- ------------------------------------------------------------------------------------------ CORE INCOME 336 345 327 Restructuring, related items, after-tax (3) (6) 1 ------------------------------------------------------------------------------------------ INCOME $ 333 $ 339 $ 328 ========================================================================================== Assets under management (IN BILLIONS OF DOLLARS)(3)(4) $ 417 $ 400 $ 377 ========================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes restructuring-related items.
(3) Includes $31 billion, $30 billion, and $31 billion in 2001, 2000 and 1999,
respectively, for Citigroup Private Bank clients.
(4) Includes Unit Investment Trusts held in client accounts of $7 billion, $9
billion and $13 billion in 2001, 2000 and 1999, respectively, and $5 billion
in Emerging Markets Pension Administration assets under management in 2001.
Citigroup Asset Management is comprised of the substantial resources that are available through its three primary asset management business platforms--Smith Barney Asset Management, Salomon Brothers Asset Management and Citibank Asset Management--along with the pension administration business of Global Retirement Services. These businesses offer institutional, high net worth and retail clients a broad range of investment alternatives from investment centers located around the world. Products and services offered include mutual funds, closed-end funds, separately managed accounts, unit investment trusts, alternative investments, variable annuities (through affiliated and third party insurance companies), pension administration and insurance.
Core income of $336 million in 2001 was down $9 million or 3% compared to 2000 primarily reflecting a charge for Argentine debt securities exchanged for loans held in the Siembra insurance companies of Global Retirement Services, partially offset by growth in Citigroup Asset Management earnings. The Argentine debt securities were held in support of existing contractholders' liabilities. The Global Retirement Services business in Argentina, Siembra, includes pension administration and insurance companies. Core income of $345 million in 2000 was up $18 million or 6% compared to 1999 reflecting the impact of Latin American acquisitions in the Global Retirement Services business and growth in asset-based fee revenues, partially offset by increased expenses.
Assets under management rose to $417 billion as of December 31, 2001, up 4% from $400 billion in 2000 reflecting strong net flows that were partially offset by negative market activity and the transfer of $26 billion in retail Money Market assets to the SSB Bank Deposit Program. Institutional client assets of $185 billion as of December 31, 2001 were up 20% compared to a year ago reflecting an increase in institutional money market fund and long-term product flows, offset by negative market action and alternative investment volume growth. Retail client assets were $227 billion, down 6% from $242 billion in 2000. Retail client assets, excluding money markets and unit investment trusts, grew 9%, driven by strong net flows, partially offset by negative market action.
Sales of proprietary mutual funds and managed account products at SSB rose 33% to $28 billion in 2001 from the prior year primarily driven by growth in managed account products, and represented 59% of SSB's retail channel sales for the year. Sales of mutual and money funds through Global Consumer's banking network were $11 billion for the year, representing 53% of total sales, including $8 billion in International and $3 billion in the U.S., of which Primerica sold $2.0 billion of proprietary U.S. mutual and money funds in 2001, a 9% increase compared to 2000, representing 67% of Primerica's total sales. Institutional long-term product sales of $28 billion increased 40% over the prior year and include $14 billion of sales to Global Corporate clients.
Revenues, net of interest expense, increased $84 million or 5% to $1.929 billion in 2001. This was compared to $1.845 billion in 2000, which was up $352 million or 24% from 1999. The increase in 2001 was primarily due to the effects of positive net flows, the impact of acquisitions and a reduction in death and disability reinsurance premiums in the Global Retirement Services business, partially offset by the impact of lower market values of assets under management, the transfer of assets to the SSB Bank Deposit Program and the impact of the Siembra Argentina debt securities exchange. The increase in 2000 was primarily due to the impact of the acquisition of Siembra, Colfondos and Confia in the Global Retirement Services business, along with continued growth in asset-based fee revenues.
Adjusted operating expenses of $1.309 billion in 2001 increased $63 million or 5% from 2000. The increase in 2001 primarily represents the impact of Global Retirement Services acquisitions and other variable expenses related to revenue growth. Adjusted operating expenses of $1.246 billion in 2000 increased $296 million or 31% from 1999. The increase in 2000 was primarily due to the impact of acquisitions in the Global Retirement Services business, as well as continued investment in sales and marketing activities, technology and product development.
Provision for benefits, claims and credit losses of $57 million in 2001 increased $31 million from 2000, driven by reduced reinsurance levels on death and disability business and the Generar acquisition.
GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING OUTLOOK
The statements below are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. See "Forward-Looking Statements" on
page 33.
TRAVELERS LIFE AND ANNUITY should benefit from growth in the aging population which is becoming more focused on the need to accumulate adequate savings for retirement, to protect these savings and to plan for the transfer of wealth to the next generation. TLA is well positioned to take advantage of the favorable long-term demographic trends through its strong financial position, widespread brand name recognition and broad array of competitive life, annuity and retirement and estate planning products sold through established distribution channels.
However, competition in both product pricing and customer service is intensifying. While there has been some consolidation within the industry, other financial services organizations are increasingly involved in the sale and/or distribution of insurance products. Financial services reform is likely to have many effects on the life insurance industry and the results will take time to assess, however, heightened competition is expected. Also, the annuities business is interest rate and market sensitive, and swings in interest rates and equity markets could influence sales and retention of in-force policies. In order to strengthen its competitive position, TLA expects to maintain a current product portfolio, further diversify its distribution channels, and retain its financial position through strong sales growth and maintenance of an efficient cost structure.
PRIVATE BANKING AND ASSET MANAGEMENT. The businesses of Private Banking and Asset Management are affected by the economic outlook and market levels. The market for private banking and asset management services continues to be extremely attractive because the "wealth" segment has been growing faster than the overall market. While competition for this attractive and dynamic market segment is increasing, the global market is highly fragmented. This presents Private Banking and Asset Management with an extremely attractive business opportunity because it is one of the few providers that can claim to offer a full range of services on a global basis.
The Argentina economic and political crisis that occurred towards the end of 2001 impacted the Global Retirement Services business, which operates a portion of its business in Argentina. In 2002, the business will focus on containing the negative fallout from Argentina's economic crisis.
INVESTMENT ACTIVITIES
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $ 907 $ 2,309 $1,089 Total operating expenses 118 124 72 Provisions for credit losses -- 7 -- ------------------------------------------------------------------------------ INCOME BEFORE TAXES AND MINORITY INTEREST 789 2,178 1,017 Income taxes 264 805 356 Minority interest, after-tax (5) (10) 11 ------------------------------------------------------------------------------ INCOME $ 530 $ 1,383 $ 650 ============================================================================== |
(1) Reclassified to conform to the 2001 presentation.
Investment Activities comprises Citigroup's venture capital activities, realized investment gains (losses) from certain insurance-related investments, results from certain proprietary investments, the results of certain investments in countries that refinanced debt under the 1989 Brady Plan or plans of a similar nature, and since August 2001, the investment portfolio related to Banamex.
Revenues, net of interest expense, include $380 million, $2.042 billion and $809 million from proprietary investments, $59 million, $331 million and $78 million from LDC Debt Sales/Refinancing portfolios and $468 million, ($64) million and $202 million from net realized gains from insurance-related investments for the years ended 2001, 2000 and 1999, respectively.
Revenues, net of interest expense, in 2001 of $907 million decreased $1.402 billion from 2000 primarily reflecting lower venture capital results and current year impairment write-downs in insurance-related and other proprietary investments, partially offset by increased gains in insurance-related and other proprietary investments. Revenues, net of interest expense, in 2000 of $2.309 billion increased $1.220 billion from 1999 primarily reflecting increases in venture capital results and gains on the exchange of certain Latin American bonds. The 2000 first quarter included losses in insurance-related investments from repositioning activities designed to improve yields and maturity profiles, and write-downs in the refinancing portfolio.
Investments Activities results may fluctuate in the future as a result of market and asset-specific factors. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
CORPORATE/OTHER
IN MILLIONS OF DOLLARS 2001 2000(1) 1999(1) ------------------------------------------------------------------------------------------- ADJUSTED REVENUES, NET OF INTEREST EXPENSE(2) $ (397) $ (697) $ 30 Adjusted operating expenses(2) 801 642 797 Adjusted provision (credit) for benefits claims and credit losses(2) 1 (4) 208 ------------------------------------------------------------------------------------------- CORE LOSS BEFORE TAX BENEFITS AND MINORITY INTEREST (1,199) (1,335) (975) Income tax benefits (504) (477) (338) Minority interest, after-tax 11 -- - ------------------------------------------------------------------------------------------- CORE LOSS (706) (858) (637) Restructuring-related items and merger-related costs, after-tax 3 (249) (20) Housing Finance unit charge, after-tax -- (71) -- ------------------------------------------------------------------------------------------- LOSS $ (703) $(1,178) $ (657) =========================================================================================== |
(1) Reclassified to conform to the 2001 presentation.
(2) Excludes Housing Finance unit charge and restructuring-related items and
merger-related costs.
Corporate/Other includes net corporate treasury results, corporate staff and other corporate expenses, certain intersegment eliminations, the remainder of Internet-related development activities not allocated to the individual businesses and in 1999 and 2000, activities related to the Associates Housing Finance (AHF) unit. In January 2000, Associates announced its intention to discontinue the loan origination operations of its AHF unit. Prior to the announcement, AHF originated and serviced loans for manufactured homes.
Adjusted revenues in 2001 of ($397) million increased $300 million from 2000 due to lower net treasury costs primarily related to reduced rates and the impact of higher intersegment eliminations, partially offset by increased funding costs related to the Associates and Banamex acquisitions. Adjusted revenues in 2000 of ($697) million decreased $727 million from 1999 primarily reflecting the discontinuation of AHF activity, higher net treasury costs and the impact of lower intersegment eliminations. Adjusted operating expenses in 2001 of $801 million increased $159 million from 2000 primarily due to the impact of higher intersegment eliminations, as well as a $57 million fourth quarter pretax expense for the contribution of appreciated venture capital securities to Citigroup's Foundation, which had minimal impact on Citigroup's earnings after related tax benefits and investment gains, partially offset by a 2000 $108 million pretax expense for the contribution of appreciated venture capital securities to Citigroup's Foundation. Adjusted operating expenses in 2000 of $642 million decreased $155 million from 1999 primarily reflecting the discontinuation of AHF activity and decreases in certain unallocated corporate costs, intersegment eliminations, performance-based option expense and technology costs. The adjusted provision for benefits, claims and credit losses in 1999 primarily related to AHF.
The 2000 after-tax restructuring-related items and merger-related charges of $249 million ($346 million pretax) included exit costs incurred as a result of Citigroup's acquisition of Associates. See Note 15 to the Consolidated Financial Statements for a discussion of restructuring-related items. The 2000 after-tax Housing Finance unit charge of $71 million ($112 million pretax) included costs related to the discontinuation of AHF loan origination operations. The 1999 after-tax restructuring-related charge of $20 million related primarily to accelerated depreciation.
FORWARD-LOOKING STATEMENTS
Certain of the statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Many of these statements appear under the heading "Global Consumer Outlook," "Global Corporate Outlook," and "Global Investment Management and Private Banking Outlook." The Company's actual results may differ materially from those included in the forward-looking statements. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intent," "estimate," "may increase," "may fluctuate," and similar expressions or future or conditional verbs such as "will," "should," "would," and "could." These forward-looking statements involve risks and uncertainties including, but not limited to, weakening global economic conditions, the economic crisis in Argentina, higher unemployment rates and the continued increase in bankruptcy filings in Japan, sovereign or regulatory actions, and political conditions and developments; possible changes in estimated reserves for property and casualty insurance losses, an increase in the number of entities seeking bankruptcy protection as a result of asbestos-related liabilities, the changing trend in policyholders' claims with respect to aggregation limits and separate occurrence treatment, and environmental and asbestos claims and related litigation; the highly competitive nature of the personal-lines marketplace; inflationary pressures in medical costs and auto and home repair costs; asbestos-related developments including more intensive advertising by lawyer seeking asbestos claimants and the increasing focus by plaintiffs on new and previously peripheral defendants; rising reinsurance and litigation costs in the property and casualty insurance marketplace; proposed changes in laws and regulations on the cost and availability of certain types of insurance, as well as the claim and coverage obligations of insurers; assessments on insurance subsidiaries from state-administered guaranty associations, second-injury funds and similar associations; the amount of refinancing activity in mortgage banking; the effect of banking and financial services reforms, of rules governing the regulatory treatment of merchant banking investments, and of rules regarding the regulatory capital treatment of recourse, direct credit substitutes and residual interest in asset securitizations; possible amendments to, and interpretations of, risk-based capital guidelines and reporting instructions; the ability of states to adopt more extensive consumer privacy protections through legislation or regulation; the resolution of legal proceedings and related matters; and the Company's success in managing the costs associated with the expansion of existing distribution channels and developing new ones, and in realizing increased revenues from such distribution channels, including cross-selling initiatives and electronic commerce based efforts.
MANAGING GLOBAL RISK
The Citigroup Risk Management framework recognizes the wide range and diversity of global business activities by balancing strong corporate oversight with defined independent risk management functions at the business level. Included in this oversight is an assessment of the accounting and financial reporting risks across all businesses.
The risk management framework is grounded on the following seven principles, which apply universally across all businesses and all risk types:
- INTEGRATION OF BUSINESS AND RISK MANAGEMENT--Risk management is integrated within the business plan and strategy.
- RISK OWNERSHIP--All risks and resulting returns are owned and managed by an accountable business unit.
- INDEPENDENT OVERSIGHT--Risk limits are approved by both business management and independent risk management.
- POLICIES--All risk management policies are clearly and formally documented.
- RISK IDENTIFICATION AND MEASUREMENT--All risks are measured using defined methodologies, including stress testing.
- LIMITS AND METRICS--All risks are managed within a limit framework.
- RISK REPORTING--All risks are comprehensively reported across the organization.
The risk management functions at the corporate-level are responsible for establishing Citigroup risk management standards for the measurement, approval, reporting and limiting of risk, appointing independent risk managers at the business-level, approving business unit risk management policies, approving business risk-taking authority through the allocation of limits and capital, and reviewing, on an ongoing basis, major risk exposures and concentrations across the organization.
The independent risk managers at the business-level are responsible for establishing and implementing risk management policies and practices within their business, while ensuring ongoing consistency with Citigroup standards. The business risk managers have dual accountability--to the Citigroup Senior Risk Officer and to the head of their business unit.
The Citigroup Senior Risk Officer is responsible for reviewing material corporate-wide risks, and determining appropriate exposure levels and limits. Risks are regularly reviewed with the independent business risk managers, the Citigroup Management Committee, and as necessary, with committees of the Board of Directors. Reviews may include analysis of current exposure levels, trends in exposure levels, as well as assessments of the impact of "normal" market moves and sudden, severe market events. The scope of risks covered includes, but is not limited to:
- Corporate Credit Risk, including obligor exposures vis-a-vis limits, risk ratings, industry concentrations, and country cross-border risks;
- Consumer Credit Risk, including product concentrations, regional concentrations, and trends in portfolio performance;
- Counterparty pre-settlement risk in trading activities;
- Distribution and underwriting risks;
- Price Risk, including the earnings or economic impact of changes in the level and volatilities of interest rates, foreign exchange rates and commodity, debt and equity prices on trading portfolios and on investment portfolios;
- Liquidity Risk, including funding concentrations and diversification strategy;
- Risks resulting from the underwriting, sale and reinsurance of life insurance policies and property and casualty policies (commercial, personal and performance bonds); and
- Other risks, including legal, technology, operational and franchise, as well as specific matters identified and reviewed in the Audit and Risk Review.
The following sections summarize the process for managing credit and market risks within Citigroup's major businesses, and reflect the ongoing integration of businesses and risk management practices.
THE CREDIT RISK MANAGEMENT PROCESS
Credit risk is the potential for financial loss resulting from the failure of a
borrower or counterparty to honor its financial or contractual obligation.
Credit risk arises in many of the Company's business activities including
lending activities, sales and trading activities, derivatives activities,
securities transactions settlement activities, and when the Company acts as an
intermediary on behalf of its clients and other third parties. The credit risk
management process at Citigroup relies on corporate-wide standards to ensure
consistency and integrity, with business-specific policies and practices to
ensure applicability and ownership.
CONSUMER CREDIT RISK
Within the Global Consumer Group (GCG), business-specific credit risk policies
and procedures are derived from the following risk management framework:
- Each business must develop a plan, including risk/return tradeoffs, as well as risk acceptance criteria and policies appropriate to their activities;
- Senior Business Managers are responsible for managing risk/return tradeoffs in their business;
- Senior Business Managers, in conjunction with Senior Credit Officers, implement business-specific risk management policies and practices;
- Approval policies for a product or business are tailored to internal audit ratings, profitability and credit risk management performance;
- Independent credit risk management is responsible for establishing the GCG Policy, approving business-specific policies and procedures, monitoring business risk management performance, providing ongoing assessment of portfolio credit risks, and approving new products and new risks.
Citigroup's consumer loan portfolio is well diversified by both customer and product. Consumer loans comprise 62% of the total loan portfolio. These loans represent thousands of borrowers with relatively small individual balances. The loans are diversified with respect to the location of the borrower, with 67% originated in the United States and 33% originated from offices outside the United States. Mortgage and real estate loans constitute 44% of the total consumer loan portfolio and installment, revolving credit and other consumer loans constitute 56% of the portfolio.
CONSUMER PORTFOLIO REVIEW
In the consumer portfolio, credit loss experience is expressed in terms of
annualized net credit losses as a percentage of average loans. Pricing and
credit policies reflect the loss experience of each particular product. Consumer
loans are generally written-off no later than a predetermined number of days
past due on a contractual basis, or earlier in the event of bankruptcy. The
number of days is set at an appropriate level according to loan product and
country. The following table summarizes delinquency and net credit loss
experience in both the managed and on-balance sheet loan portfolios in terms of
loans 90 days or more past due, net credit losses, and as a percentage of
related loans.
CONSUMER LOAN DELINQUENCY AMOUNTS, NET CREDIT LOSSES, AND RATIOS
TOTAL AVERAGE
IN MILLIONS OF DOLLARS, EXCEPT LOANS 90 DAYS OR MORE PAST DUE(1) LOANS NET CREDIT LOSSES(1)
TOTAL AND AVERAGE LOAN AMOUNTS --------- ------------------------------- --------- ----------------------------------
IN BILLIONS 2001 2001 2000(2) 1999(2) 2001 2001 2000(2) 1999(2)
------------------------------------------------------------------------------------------------------------------------------
Citibanking North America $ 11.7 $ 96 $ 35 $ 55 $ 9.3 $ 96 $ 64 $ 90
RATIO 0.82% 0.48% 0.78% 1.03% 0.91% 1.22%
Mortgage Banking 45.7 1,157 846 707 45.1 40 59 52
RATIO 2.53% 2.01% 2.26% 0.09% 0.16% 0.18%
Citi Cards 107.7 2,135 1,497 1,285 102.1 5,556 3,921 3,903
RATIO 1.98% 1.46% 1.51% 5.44% 4.28% 4.91%
Other Cards 1.0 6 6 21 1.5 47 65 49
RATIO 0.61% 0.35% 1.31% 3.13% 3.76% 3.00%
CitiFinancial 60.2 2,002 1,272 943 58.7 1,583 1,338 1,189
RATIO 3.32% 2.23% 1.96% 2.70% 2.57% 2.66%
Western Europe 19.0 800 835 928 18.0 338 342 345
RATIO 4.21% 4.78% 5.39% 1.88% 2.05% 2.00%
Japan 14.4 178 101 112 14.4 589 406 270
RATIO 1.24% 0.73% 1.19% 4.10% 3.50% 3.49%
Asia (excluding Japan) 21.2 367 335 442 21.3 259 257 286
RATIO 1.73% 1.51% 1.93% 1.21% 1.16% 1.32%
Latin America 5.3 248 235 303 6.0 279 321 408
RATIO 4.71% 3.59% 3.99% 4.63% 4.67% 5.32%
Mexico 6.0 523 15 17 2.6 96 11 11
RATIO 8.75% 5.17% 6.78% 3.72% 3.67% 4.89%
CEEMEA 2.5 36 32 46 2.3 39 38 32
RATIO 1.41% 1.37% 2.25% 1.70% 1.95% 1.96%
The Citigroup Private Bank(3) 25.7 135 61 120 24.9 14 23 19
RATIO 0.53% 0.23% 0.54% 0.06% 0.09% 0.10%
Other 4.0 18 30 33 3.4 13 (12) 39
------------------------------------------------------------------------------------------------------------------------------
TOTAL MANAGED $ 324.4 $ 7,701 $ 5,300 $ 5,012 $ 309.6 $ 8,948 $ 6,833 $ 6,693
RATIO 2.37% 1.75% 1.95% 2.89% 2.48% 2.80%
------------------------------------------------------------------------------------------------------------------------------
Securitized receivables (68.4) (1,282) (1,012) (916) (63.8) (3,251) (2,228) (2,479)
Loans held for sale (11.9) (110) (110) (32) (14.2) (317) (182) (121)
------------------------------------------------------------------------------------------------------------------------------
CONSUMER LOANS $ 244.1 $ 6,309 $ 4,178 $ 4,064 $ 231.6 $ 5,380 $ 4,423 $ 4,093
RATIO 2.58% 1.83% 2.09% 2.32% 2.11% 2.24%
==============================================================================================================================
|
(1) The ratios of 90 days or more past due and net credit losses are calculated
based on end-of-period and average loans, respectively, both net of unearned
Income.
(2) Reclassified to conform to the 2001 presentation.
(3) The Citigroup Private Bank results are reported as part of the Global
Investment Management and Private Banking segment.
CONSUMER LOAN BALANCES, NET OF UNEARNED INCOME
END OF PERIOD AVERAGE
----------------------------- ----------------------------
IN BILLIONS OF DOLLARS 2001 2000 1999 2001 2000 1999
--------------------------------------------------------------------------------------------------
TOTAL MANAGED $ 324.4 $ 302.8 $ 257.2 $ 309.6 $ 275.5 $ 239.3
Securitized receivables (68.4) (60.6) (58.0) (63.8) (57.0) (51.0)
Loans held for sale (11.9) (13.3) (4.6) (14.2) (8.7) (5.5)
--------------------------------------------------------------------------------------------------
ON-BALANCE SHEET $ 244.1 $ 228.9 $ 194.6 $ 231.6 $ 209.8 $ 182.8
==================================================================================================
|
Citigroup's allowance for credit losses of $10.088 billion is available to absorb probable credit losses inherent in the entire portfolio. For analytical purposes only, the portion of Citigroup's allowance for credit losses attributed to the consumer portfolio was $5.169 billion at December 31, 2001, $4.946 billion at December 31, 2000 and $5.220 billion at December 31, 1999. The increase in the allowance for credit losses from 2000 was primarily due to the acquisitions of Banamex and EAB. The allowance as a percentage of loans on the balance sheet was 2.13% at December 31, 2001, down from 2.16% at
December 31, 2000 and 2.68% at December 31, 1999. The decline in the allowance as a percentage of loans primarily reflects the growth in consumer loans. On-balance sheet consumer loans of $244.1 billion grew $15 billion or 7% from December 31, 2000 primarily driven by the impact of the acquisitions of Banamex and EAB and growth in CitiFinancial, mostly real estate secured loans. On-balance sheet loans in Citi Cards declined in 2001 as growth in managed receivables was more than offset by increased securitization activity. In addition, loans in 2001 increased in Japan and Western Europe, mainly in consumer finance, and decreased in Asia and Latin America. The decline in Latin America loans primarily reflects reductions associated with the re-denomination of certain consumer loans in Argentina. The attribution of the allowance is made for analytical purposes only and may change from time to time. Consumer net credit losses and loans 90 days or more past due are expected to increase from 2001 levels as a result of portfolio growth and seasonal factors and as uncertain global economic conditions persist. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
IN MILLIONS OF DOLLARS 2001 2000 1999 ---------------------------------------------------------------------------- Allowance for credit losses $ 5,169 $ 4,946 $ 5,220 As a percentage of total consumer loans 2.13% 2.16% 2.68% ============================================================================ |
CORPORATE CREDIT RISK
For corporate clients and investment banking activities across the organization,
the credit process is grounded in a series of fundamental policies, including:
- Ultimate business accountability for managing credit risks;
- Joint business and independent risk management responsibility for establishing limits and risk management practices;
- Single center of control for each credit relationship that coordinates credit activities with that client, directly approves or consents to all extensions of credit to that client, reviews aggregate exposures, and ensures compliance with exposure limits;
- Portfolio limits, including obligor limits by risk rating and by maturity, to ensure diversification and maintain risk/capital alignment;
- A minimum two-authorized credit officer-signature requirement on extensions of credit-one from a sponsoring credit officer in the business and one from a credit officer in independent credit risk management;
- Uniform risk measurement standards, including risk ratings, which must be assigned to every obligor and facility in accordance with Citigroup standards; and
- Consistent standards for credit origination, measurement and documentation, as well as problem recognition, classification and remedial action.
These policies apply universally across corporate clients and investment banking activities in the Corporate and Investment Bank and Emerging Markets. Businesses that require tailored credit processes, due to unique or unusual risk characteristics in their activities, may only do so under a Credit Program that has been approved by independent credit risk management. In all cases, the above policies must be adhered to, or specific exceptions must be granted by independent credit risk management.
The Global Corporate credit portfolio is diversified by obligor, industry and geographic location.
The following table presents the Global Corporate credit portfolio before consideration of collateral by maturity at December 31, 2001 broken out by direct outstandings which include drawn loans, overdrafts, interbank placements, banker's acceptances and leases; unfunded commitments which include unused commitments to lend, letters of credit and financial guarantees:
GREATER
WITHIN THAN 1 YEAR GREATER TOTAL
IN BILLIONS 1 YEAR BUT WITHIN 5 THAN 5 YEARS EXPOSURE
--------------------------------------------------------------------
Direct outstandings $ 133 $ 54 $ 28 $ 215
Unfunded commitments 132 52 10 194
--------------------------------------------------------------------
Total $ 265 $ 106 $ 38 $ 409
====================================================================
|
CREDIT EXPOSURE ARISING FROM DERIVATIVES AND FOREIGN EXCHANGE
The Company measures and manages the credit exposure on its derivative and foreign exchange contracts taking into account both the current mark-to-market value of each contract plus a prudent estimate of its potential change in value over its life. The measurement of the potential future exposure for each credit facility is based on simulation of market rates and generally takes into account legally enforceable risk-mitigating agreements for each obligor such as netting and margining.
Under a margin agreement the Company obtains collateral from its counterparties, consisting primarily of cash or marketable securities which are revalued on a regular basis. The collateral reduces the measured exposure.
The current mark-to-market which is reported within the balance sheet credit exposure of $29.8 billion represents the current cost of replacing all contracts and is reported as a component of Trading Account Assets. The total exposure, which is used to manage counterparty risk, also includes a prudent estimate of the potential increase in the replacement cost of each credit facility. The simple sum of the maximum potential lifetime increase in replacement cost of all facilities is $101 billion. While the current mark-to-market and the maximum potential increase in replacement cost per credit facility for a single counterparty is a prudent number used to manage exposure, when summed across all facilities it materially overstates the potential loss that could occur at any one time.
PORTFOLIO MIX
The Global Corporate credit portfolio is geographically diverse by region. The following table shows direct outstandings, unfunded commitments, derivatives, and foreign exchange, measured as discussed above, by region:
DEC 31, 2001 DEC 31, 2000
-----------------------------------------------------------------
North America 46% 48%
Europe 22% 22%
Japan 3% 3%
Asia 9% 11%
Latin America 6% 7%
Mexico(1) 7% 2%
CEEMEA 6% 5%
Other 1% 2%
-----------------------------------------------------------------
TOTAL 100% 100%
=================================================================
|
(1) December 31, 2001 includes Banamex outstandings and unfunded commitments.
The Company attempts to maintain accurate and consistent risk ratings across the Global Corporate credit portfolio. This facilitates the comparison of credit exposures across all lines of business, geographic region and product. All internal risk ratings must be derived in accordance with the Corporate Risk Rating Policy. Any exception to the Policy must be approved by the Citigroup Senior Risk Officer. The Corporate Risk Rating Policy establishes standards for the derivation of obligor and facility risk ratings that are generally consistent with the approaches used by the major rating agencies.
Obligor risk ratings reflect an estimated probability of default for an obligor, and are derived through the use of validated statistical models, external rating agencies (under defined circumstances), or approved scoring or judgmental methodologies. Facility risk ratings are assigned, using the obligor risk rating, and then taken into consideration are factors that affect the loss-given default of the facility such as parent support, collateral or structure.
Internal obligor ratings equivalent to BBB- and above are considered investment grade. Ratings below the equivalent of BBB- are considered non-investment grade.
The following table presents the Global Corporate credit portfolio by internal obligor credit rating at December 31, 2001 and December 31, 2000, as a percentage of the total portfolio:
DIRECT OUTSTANDINGS AND
DERIVATIVES UNFUNDED COMMITMENTS
-------------------------------- -----------------------
2001 2000 2001 2000
------------------------------------------------------------
AAA/AA/A 75% 79% 42% 47%
BBB 15% 14% 29% 23%
BB/B 8% 6% 19% 18%
CCC or below - - 3% 2%
Unrated(1) 2% 1% 7% 10%
------------------------------------------------------------
100% 100% 100% 100%
============================================================
|
(1) Includes retail margin loans, as well as portfolios of recent acquisitions, which are in the process of conforming to Citigroup's risk rating methodology.
The Global Corporate credit portfolio is diversified by industry with a concentration only to the financial sector which includes banks, other financial institutions, investment banks and governments and central banks. The following table shows direct outstandings, unfunded commitments, derivatives and foreign exchange to the top thirteen industries as a percentage of the total commercial portfolio:
DEC. 31, DEC. 31,
2001 2000
--------------------------------------------------------------------------
Banks 14% 14%
Other financial institutions and investment banks 14% 11%
Governments and central banks 11% 7%
Telephone and cable 4% 5%
Insurance 4% 4%
Industrial machinery and equipment 4% 4%
Agricultural and food prep 4% 4%
Utilities 4% 4%
Freight transportation 3% 4%
Global information technology 3% 4%
Petroleum 3% 3%
Chemicals 2% 3%
Autos 2% 2%
Other industries(1) 28% 31%
--------------------------------------------------------------------------
TOTAL 100% 100%
==========================================================================
|
(1) Includes all other industries, none of which exceed 2% of total outstandings.
GLOBAL CORPORATE PORTFOLIO REVIEW
Commercial loans are identified as impaired and placed on a nonaccrual basis
when it is determined that the payment of interest or principal is doubtful of
collection or when interest or principal is past due for 90 days or more, except
when the loan is well secured and in the process of collection. Impaired
commercial loans are written down to the extent that principal is judged to be
uncollectible. Impaired collateral-dependent loans are written down to the lower
of cost or collateral value. The following table summarizes commercial
cash-basis loans and net credit losses:
IN MILLIONS OF DOLLARS 2001 2000 1999 ---------------------------------------------------------------------- CASH-BASIS LOANS AT YEAR-END Corporate and Investment Bank(1)(4) $ 1,525 $ 776 $ 481 EM Corporate & GTS 1,465 1,069 989 Mexico (2) 1,030 79 55 Insurance and Investment Activities (3) 21 46 55 ---------------------------------------------------------------------- TOTAL COMMERCIAL CASH-BASIS LOANS $ 4,041 $ 1,970 $ 1,580 ====================================================================== NET CREDIT LOSSES Corporate and Investment Bank (4) $ 1,261 $ 536 $ 145 EM Corporate & GTS 321 199 388 Mexico (2) 66 29 21 Insurance and Investment Activities (3) -- 7 -- ---------------------------------------------------------------------- TOTAL COMMERCIAL NET CREDIT LOSSES $ 1,648 $ 771 $ 554 ====================================================================== |
(1) Prior period cash-basis loans were restated to change the policy of the
Associates Commercial Leasing business for suspending accrual of interest on
past due loans to conform with other leasing businesses in the Corporate and
Investment Bank. The prior policy of placing loans that are 60 days or more
past due into cash-basis, was changed to 90 days or more past due.
(2) 2001 includes Banamex cash-basis loans and net-credit losses.
(3) Investment Activities results are reported in the Investment Activities
segment.
(4) In 1999, excludes amounts related to manufactured housing, as such loan
origination operations were discontinued in early 2000. Excluded cash-basis
loans and net-credit losses relating to manufactured housing were $55
million and $36 million, respectively.
Total commercial cash-basis loans were $4.041 billion, $1.970 billion and $1.580 billion at December 31, 2001, 2000 and 1999, respectively. Cash-basis loans in CIB were $1.525 billion, $776 million and $481 million at December 31, 2001, 2000 and 1999, respectively, reflecting increases in the transportation leasing portfolio and borrowers in the telecommunication, energy, utility, and retail industries. EM Corporate & GTS cash-basis loans were $1.465 billion, $1.069 billion and $989 million at December 31, 2001, 2000 and 1999, respectively. The increase in 2001 primarily reflects increases in Latin America, mainly Argentina, and increases in Asia, mainly Australia and New Zealand. The increase in 2000 was primarily due to the acquisition of Bank Handlowy along with increases in Latin America, partially offset by improvements in Asia. Mexico cash-basis loans were $1.030 billion, $79 million and $55 million at December 31, 2001, 2000 and 1999, respectively. The increase in 2001 reflects the acquisition of Banamex whose cash-basis loans include exposures in steel, textile, food products and other industries.
Total Other Repossessed Assets were $439 million, $292 million and $256 million at December 31, 2001, 2000 and 1999, respectively, primarily reflecting increases in repossessed transportation equipment and the acquisition of Banamex.
Total commercial loans outstanding at December 31, 2001 were $148 billion compared to $138 billion and $120 billion at December 31, 2000 and 1999, respectively.
Total commercial net credit losses of $1.648 billion in 2001 increased $877 million compared to 2000 primarily reflecting increases in CIB and EM Corporate & GTS. CIB net credit losses of $1.261 billion in 2001 were up $725 million compared to 2000 primarily reflecting higher net credit losses in the transportation portfolio combined with higher net credit losses in the telecommunication, energy, retail and airline industries. EM Corporate & GTS net credit losses of $321 million in 2001 increased $122 million from 2000 primarily due to write-downs in Argentina, partially offset by improvements in CEEMEA. Total commercial net credit losses increased $217 million in 2000 compared to 1999 primarily due to increases in CIB, partially offset by decreases in EM Corporate & GTS. The CIB increase in 2000 was due to write-offs on the transportation portfolio and North American health care borrowers, 1999 recoveries on real estate loans and the inclusion of losses for Copelco, which was acquired in the second quarter of 2000. The EM Corporate & GTS decrease in 2000 primarily reflects improvements in Asia, mainly China, Indonesia, Australia and Thailand, and in CEEMEA. For a further discussion of trends by business, see the business discussions on pages 21 to 23.
Citigroup's allowance for credit losses of $10.088 billion is available to absorb probable credit losses inherent in the entire portfolio. For analytical purposes only, the portion of Citigroup's allowance for credit losses attributed to the commercial portfolio was $4.919 billion at December 31, 2001 compared to $4.015 billion and $3.633 billion at December 31, 2000 and 1999, respectively. The increase in the allowance at December 31, 2001 primarily reflects the acquisition of Banamex. The increase in the allowance at December 31, 2000 primarily reflects additional provisions related to the transportation portfolio. Losses on commercial lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly-defined business or loan type. Commercial net credit losses and cash-basis loans may increase from the 2001 levels due to weakening global economic conditions, the economic crisis in Argentina, sovereign or regulatory actions and other factors. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
IN BILLIONS OF DOLLARS AT YEAR-END 2001 2000 1999 -------------------------------------------------------------------------- Commercial allowance for credit losses $ 4.919 $ 4.015 $ 3.633 As a percentage of total commercial loans 3.31% 2.90% 3.02% ========================================================================== |
REINSURANCE RISK
In the course of its insurance activities, TPC reinsures a portion of the risks
it underwrites in an effort to control its exposure to losses, stabilize
earnings and protect capital resources. TPC cedes to reinsurers a portion of
these risks and pays premiums based upon the risk and exposure of the policies
subject to such reinsurance. Reinsurance involves credit risk and is subject to
aggregate loss limits. Although the reinsurer is liable to TPC generally to the
extent of the reinsurance ceded, TPC remains primarily liable as the direct
insurer on all risks reinsured. TPC also holds collateral, including escrow
funds and letters of credit, under certain reinsurance agreements. TPC monitors
the financial condition of reinsurers on an ongoing basis, and reviews its
reinsurance arrangements periodically. Reinsurers are selected based on their
financial condition and business practices and the price of their product
offerings. For additional information concerning reinsurance, see Note 14 to the
Consolidated Financial Statements.
THE MARKET RISK MANAGEMENT PROCESS
Market risk at Citigroup--like credit risk--is managed through corporate-wide
standards and business policies and procedures.
- Market risks are measured in accordance with established standards to ensure consistency across businesses and the ability to aggregate like risks at the Citigroup-level.
- Each business is required to establish, and have approved by independent Market Risk Management, a market risk limit framework, including risk measures, limits and controls, that clearly defines approved risk profiles and is within the parameters of Citigroup's overall risk appetite.
- Businesses, working in conjunction with independent Market Risk Management, must ensure that market risks are independently measured, monitored and reported, to ensure transparency in risk-taking activities and integrity in risk reports.
In all cases, the businesses are ultimately responsible for the market risks that they take, and for remaining within their defined limits.
Market risk encompasses liquidity risk and price risk, both of which arise in the normal course of business of a global financial intermediary. Liquidity risk is the risk that some entity, in some location and in some currency, may be unable to meet a financial commitment to a customer, creditor, or investor when due. Liquidity Risk is discussed in the Liquidity and Capital Resources section.
Price risk is the risk to earnings that arises from changes in interest rates, foreign exchange rates, equity and commodity prices, and in their implied volatilities. Price risk arises in Non-Trading Portfolios, as well as in Trading Portfolios.
NON-TRADING PORTFOLIOS
Price risk in non-trading portfolios is measured predominantly through
Earnings-at-Risk and Factor Sensitivity techniques. These measurement techniques
are supplemented with additional tools, including stress testing and
cost-to-close analysis.
Business units manage the potential earnings effect of interest rate movements by managing the asset and liability mix, either directly or through the use of derivative financial products. These include interest rate swaps and other derivative instruments that are designated and effective as hedges. The utilization of derivatives is managed in response to changing market conditions as well as to changes in the characteristics and mix of the related assets and liabilities.
Earnings-at-Risk is the primary method for measuring price risk in Citigroup's non-trading portfolios (excluding the Insurance companies). Earnings-at-Risk measures the pretax earnings impact of a specified upward and downward parallel shift in the yield curve for the appropriate currency. The Earnings-at-Risk is calculated separately for each currency and reflects the repricing gaps in the position as well as option positions, both explicit and embedded. U.S. dollar exposures are calculated by multiplying the gap between interest sensitive items, including assets, liabilities, derivative instruments and other off-balance sheet instruments, by 100 basis points. Non-U.S. dollar exposures are calculated utilizing the statistical equivalent of a 100 basis point change in interest rates and assuming no correlation between exposures in different currencies.
Citigroup's primary non-trading price risk exposure is to movements in the U.S. dollar and Mexican peso interest rates. Citigroup also has
Earnings-at-Risk in various other currencies; however, there are no significant risk concentrations in any other individual non-U.S. dollar currency.
The following table illustrates the impact to Citigroup's pretax earnings from a 100 basis point increase or decrease in the U.S. dollar yield curve. As of December 31, 2001, the potential impact on pretax earnings over the next 12 months is a decrease of $241 million from an interest rate increase and an increase of $244 million from an interest rate decrease. This level of 12 month Earnings-at-Risk equates to less than 1.5% of Citigroup pretax earnings in 2001. The potential impact on pretax earnings for periods beyond the first 12 months is an increase of $898 million from an increase in interest rates and a decrease of $1,082 million from an interest rate decrease. The change in Earnings-at-Risk from the prior year reflects the growth in Citigroup's fixed funding, the change in mortgage prepayment characteristics in our portfolio, offset by the change in the asset/liability mix to reflect Citigroup's view of interest rates.
The statistical equivalent of a 100 basis point increase in Mexican peso interest rates would have a potential positive impact on Citigroup's pretax earnings of approximately $208 million for 2002 and a potential positive impact of $207 million for the years thereafter. The statistical equivalent of a 100 basis points decrease in Mexican peso interest rates would have a potential negative impact on Citigroup's pretax earnings of approximately $208 million for 2002 and potential negative impact of $207 million for the years thereafter. The change in Earnings-at-Risk from December 31, 2000 primarily represents the inclusion of Banamex's Mexican peso exposure.
Excluding the impact of changes in Mexican peso interest rates the statistical equivalent of a 100 basis point increase in other non-U.S. dollar interest rates would have a potential negative impact on Citigroup's pretax earnings of $275 million for 2002 and potential negative impact $236 million for the years thereafter. The statistical equivalent of a 100 basis point decrease in other non-U.S. dollar interest rates would have potential positive impact on Citigroup's pretax earnings of $278 million for 2002 and a potential positive impact of $250 million for the years thereafter. The sensitivity to rising rates in the other non-U.S. dollar Earnings-at-Risk from prior year reflects the change in the use of derivatives in managing the risk portfolio and the change in the asset/liability mix to reflect Citigroup's view of interest rates.
CITIGROUP EARNINGS-AT-RISK (IMPACT ON PRETAX EARNINGS)(1)
DECEMBER 31, 2001
------------------------------------------------------------------
U.S. DOLLAR MEXICAN PESO OTHER NON-U.S. DOLLAR
------------------------------------------------------------------
IN MILLIONS OF DOLLARS INCREASE DECREASE INCREASE DECREASE INCREASE DECREASE
------------------------------------------------------------------------------------------
Twelve months and less $ (241) $ 244 $ 208 $ (208) $ (275) $ 278
Thereafter 898 (1,082) 207 (207) (238) 250
------------------------------------------------------------------------------------------
Total $ 657 $ (838) $ 415 $ (415) $ (511) $ 528
==========================================================================================
December 31, 2001(2)
------------------------------------------------------------------
U.S. dollar Mexican peso Other non-U.S. dollar
------------------------------------------------------------------
IN MILLIONS OF DOLLARS Increase Decrease Increase Decrease Increase Decrease
------------------------------------------------------------------------------------------
Twelve months and less $ (243) $ 270 $ (9) $ 9 $ (178) $ 180
Thereafter 778 (883) (9) 9 (89) 106
------------------------------------------------------------------------------------------
Total $ 535 $ (613) $ (18) $ 18 $ (267) $ 286
==========================================================================================
|
(1) Excludes the Insurance Companies (see below).
(2) Prior year amounts have been restated to conform with the current period's
presentation.
INSURANCE COMPANIES
The table below reflects the estimated decrease in the fair value of financial
instruments held in the Insurance companies, as a result of a 100 basis point
increase in interest rates.
IN MILLIONS OF DOLLARS AT DECEMBER 31, 2001 2000 ----------------------------------------------------------------- ASSETS Investments $ 3,404 $ 2,715 ----------------------------------------------------------------- LIABILITIES Long-term debt $ 18 $ 28 Contractholder funds 775 542 Redeemable securities of subsidiary trusts 1 44 ================================================================= |
A significant portion of the Insurance companies' liabilities (e.g., insurance policy and claims reserves) are not financial instruments and are excluded from the above sensitivity analysis. Corresponding changes in fair value of these accounts, based on the present value of estimated cash flows, would materially mitigate the impact of the net decrease in values implied above. The analysis also excludes all financial instruments, including long-term debt, identified with trading activities. The analysis reflects the estimated gross change in value resulting from a change in interest rates only and is not comparable to the Earnings-at-Risk used for the Citigroup non-trading portfolios or the Value-at-Risk for the trading portfolios.
TRADING PORTFOLIOS
Price risk in trading portfolios is measured through a complementary set of
tools, including Factor Sensitivities, Value-at-Risk, and Stress Testing. Each
trading portfolio has its own market risk limit framework, encompassing these
measures and other controls, including permitted product lists and a new product
approval process for complete products, established by the business and approved
by independent market risk management.
Factor Sensitivities are defined as the change in the value of a position for a defined change in a market risk factor (e.g., the change in the value of a Treasury bill for a 1 basis point change in interest rates). It is the responsibility of independent market risk management to ensure that factor sensitivities are calculated, monitored and, in some cases, limited, for all relevant risks taken in a trading portfolio. Value-at-Risk estimates the potential decline in the value of a position or a portfolio, under normal market conditions, over a one-day holding period, at a 99% confidence level. The Value-at-Risk method incorporates the Factor Sensitivities of the trading portfolio with the volatilities and correlations of those factors.
Stress Testing is performed on trading portfolios on a regular basis, to estimate the impact of extreme market movements. Stress Testing is performed on individual trading portfolios, as well as on aggregations of portfolios and businesses, as appropriate. It is the responsibility of independent market risk management, in conjunction with the businesses, to develop stress scenarios, review the output of periodic stress testing exercises, and utilize the information to make judgments as to the ongoing appropriateness of exposure levels and limits.
New and/or complex products in trading portfolios are required to be reviewed and approved by the Capital Markets Approval Committee (CMAC). The CMAC is responsible for ensuring that all relevant risks are identified and understood, and can be measured, managed and reported in accordance with applicable business policies and practices. The CMAC is made up of senior representatives from market and credit risk management, legal, accounting, operations and other support areas, as required.
The level of price risk exposure at any given point in time depends on the market environment and expectations of future price and market movements, and will vary from period to period.
For Citigroup's major trading centers, the aggregate pretax Value-at-Risk in the trading portfolios was $54 million at December 31, 2001. Daily exposures averaged $63 million in 2001 and ranged from $39 million to $96 million.
The following table summarizes Value-at-Risk in the trading portfolios as of December 31 2001 and 2000, along with the averages.
DEC. 31, 2001 Dec. 31, 2000(1)
IN MILLIONS OF DOLLARS 2001 AVERAGE 2000(1) Average
----------------------------------------------------------------------------
Interest rate $ 44 $ 55 $ 53 $ 43
Foreign Exchange 9 12 11 10
Equity 10 15 24 20
All other (primarily commodity) 21 18 15 14
Covariance adjustment (30) (37) (39) (35)
----------------------------------------------------------------------------
$ 54 $ 63 $ 64 $ 52
============================================================================
|
(1) Prior-year information has been restated from that previously presented to reflect reorganizations and a change in assumptions made to reflect a more consistent view for managing price risk throughout the organization.
The table below provides the range of Value-at-Risk in the trading portfolios that was experienced during 2001 and 2000.
2001 2000(1)
-------------------------------
IN MILLIONS OF DOLLARS LOW HIGH LOW HIGH
----------------------------------------------------------------
Interest rate $ 33 $ 90 $ 32 $ 65
Foreign Exchange 6 22 5 26
Equity 9 53 10 51
All other (primarily commodity) 8 52 6 32
================================================================
|
(1) Prior-year information has been restated from that previously presented to reflect reorganizations and a change in assumptions made to reflect a more consistent view for managing price risk throughout the organization.
MANAGEMENT OF CROSS-BORDER RISK
Cross-border risk is the risk that Citigroup will be unable to obtain payment
from customers on their contractual obligations as a result of actions taken by
foreign governments such as exchange controls, debt moratoria, and restrictions
on the remittance of funds. Citigroup manages cross-border risk as part of the
risk management framework described on page 34.
Except as described below for cross-border resale agreements and the netting of certain long and short securities positions, the following table presents total cross-border outstandings and commitments on a regulatory basis in accordance with FFIEC guidelines. In regulatory reports under FFIEC guidelines, cross-border resale agreements are presented based on the domicile of the issuer of the securities that are held as collateral. However, for purposes of the following table, cross-border resale agreements are presented based on the domicile of the counterparty because the counterparty has the legal obligation for repayment. Similarly, under FFIEC guidelines, long securities positions are required to be reported on a gross basis. However, for purposes of the following table, certain long and short securities positions are presented on a net basis consistent with internal cross-border risk management policies, reflecting a reduction of risk from offsetting positions.
CROSS-BORDER OUTSTANDINGS AND COMMITMENTS
Total cross-border outstandings include cross-border claims on third parties as
well as investments in and funding of local franchises. Countries with FFIEC
outstandings greater than 0.75% of Citigroup assets for the respective periods
include:
DECEMBER 31, 2001
---------------------------------------------------------------------------------------------------
CROSS-BORDER CLAIMS ON THIRD PARTIES
-------------------------------------------------- NET INVESTMENTS
TRADING AND CROSS-BORDER IN AND FUNDING TOTAL CROSS-
SHORT-TERM RESALE OF LOCAL BORDER
IN BILLIONS OF DOLLARS CLAIMS(1) AGREEMENTS ALL OTHER TOTAL FRANCHISES OUTSTANDINGS COMMITMENTS(2)
-----------------------------------------------------------------------------------------------------------------------------
Germany $ 6.0 $ 5.8 $ 1.5 $ 13.3 $ 0.2 $ 13.5 $ 7.3
Mexico(3) 3.3 -- 5.6 8.9 3.4 12.3 0.6
United Kingdom 3.9 3.6 3.7 11.2 -- 11.2 16.8
France 5.1 3.8 1.5 10.4 0.5 10.9 8.7
Brazil 3.2 -- 2.8 6.0 4.7 10.7 0.3
Italy 5.3 1.4 1.2 7.9 1.8 9.7 2.4
Japan 2.9 3.5 1.5 7.9 -- 7.9 3.3
Canada 2.7 0.1 3.0 5.8 2.1 7.9 3.4
Netherlands 4.1 1.8 1.3 7.2 -- 7.2 3.0
=============================================================================================================================
December 31, 2001
---------------------------
Total cross
border
IN BILLIONS OF DOLLARS outstandings Commitments(2)
-------------------------------------------------------
Germany $ 12.4 $ 7.1
Mexico(3) 3.9 1.7
United Kingdom 10.9 15.4
France 13.4 8.4
Brazil 8.1 0.2
Italy 9.9 5.7
Japan 7.4 0.8
Canada 8.9 5.0
Netherlands 10.6 1.9
=======================================================
|
(1) Trading and short-term claims include cross-border debt and equity
securities held in the trading account, trade finance receivables, net
revaluation gains on foreign exchange and derivative contracts, and other
claims with a maturity of less than one year.
(2) Commitments (not included in total cross-border outstandings) include
legally binding cross-border letters of credit and other commitments and
contingencies as defined by the FFIEC.
(3) Increase from December 31, 2000 primarily represents inclusion of Banamex's
Mexican exposure.
Total cross-border outstandings under FFIEC guidelines, including cross-border resale agreements based on the domicile of the issuer of the securities that are held as collateral, and long securities positions reported on a gross basis, at December 31, 2001, 2000, and 1999 were (in billions): Germany ($19.5, $16.8, and $14.9), Mexico ($13.2, $4.7, and $5.2), the United Kingdom ($9.3, $9.6, and $8.8), France ($13.5, $13.5, and $7.9), Brazil ($11.9, $9.8, and $4.9), Italy ($12.8, $13.9, and $10.2), Japan ($6.5, $9.1, and $10.5), Canada ($8.9, $9.0, and $7.1), and the Netherlands ($6.9, $7.7, and $5.0), respectively.
Cross-border commitments (in billions) at December 31, 1999 were $3.7 for Germany, $0.1 for Mexico, $15.5 for the United Kingdom, $2.2 for France, $0.1 for Brazil, $0.4 for Italy, $0.1 for Japan, $2.1 for Canada, and $2.9 for the Netherlands.
The sector percentage allocation for bank, public, and private cross-border claims on third parties under FFIEC guidelines at December 31, 2001 was: Germany (17%, 59%, and 24%) Mexico (1%, 28%, and 71%), the United Kingdom (24%, 18%,and 58%), France (26%, 47%, and 27%), Brazil (14%, 25%, and 61%), Italy(13%, 72%, 15%), Japan (21%, 22%, and 57%), Canada (30%, 9%, and 61%), and the Netherlands (16%, 13%, and 71%), respectively.
LIQUIDITY AND CAPITAL RESOURCES
Citigroup's primary source of capital resources is its net earnings. Other sources include proceeds from the issuance of trust preferred securities, senior debt, subordinated debt and commercial paper. Citigroup can also generate funds by securitizing various financial assets including credit card receivables and other receivables generally secured by collateral such as automobiles and single-family residences.
Citigroup uses these capital resources to pay dividends to its stockholders, to repurchase its shares in the market pursuant to Board-of-Directors approved plans, to support organic growth, to make acquisitions and to service its debt obligations.
As a financial holding company, substantially all of Citigroup's net earnings are generated within its operating subsidiaries including Citibank, SSB, TIC and TPC. Each of these subsidiaries makes these funds available to Citigroup in the form of dividends. The subsidiaries' dividend paying abilities are limited by certain covenant restrictions in credit agreements and/or by regulatory requirements. Certain of these subsidiaries are also subject to rating agency requirements that also impact their capitalization levels.
During 2002, it is not anticipated that any restrictions on the subsidiaries' dividending capability will restrict Citigroup's ability to meet its obligations as and when they become due. It is also anticipated that during 2002 Citigroup will maintain its share repurchase program.
Citigroup announced that its wholly-owned subsidiary, Travelers Property Casualty Corp. (TPC), intends to sell a minority interest in TPC in an initial public offering and Citigroup intends to make a tax free distribution to its stockholders of such amount of the remainder of its interest in TPC so that it will hold approximately 9.9% of the outstanding voting securities of TPC following the initial public offering and tax-free distribution. The distribution is expected to be concluded by the year-end 2002. Citigroup is not obligated to conclude the distribution at that time or at all. The distribution of TPC, if it occurs, will be treated as a dividend to stockholders for accounting purposes that will reduce stockholders' equity by an amount in excess of $7 billion. This paragraph and the preceding paragraph contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
Citigroup, Citicorp and certain other subsidiaries issue commercial paper directly to investors. Citigroup and Citicorp, both of which are bank holding companies, maintain combined liquidity reserves of cash, securities and unused bank lines of credit to support their combined outstanding commercial paper.
Citigroup, has unutilized bilateral committed revolving credit facilities in the amount of $950 million that expire in 2002. Under these facilities, Citigroup is required to maintain a certain level of consolidated stockholders' equity (as defined in the agreements). Citigroup exceeded this requirement by approximately $56 billion at December 31, 2001.
Associates, a subsidiary of Citicorp has a combination of unutilized credit facilities of $6.8 billion as of December 31, 2001 which have maturities ranging from 2002 to 2005. All of these facilities are guaranteed by Citicorp. In connection with the facilities, Citicorp is required to maintain a certain level of consolidated stockholder's equity (as defined in the agreements). At December 31, 2001, this requirement was exceeded by approximately $49 billion. Citicorp has also guaranteed various debt obligations of Associates and CitiFinancial Credit Company (CCC), an indirect subsidiary of Citicorp.
Borrowings under bank lines of credit may be at interest rates based on LIBOR, CD rates, the prime rate, or bids submitted by the banks. Each company pays its banks facility fees for its lines of credit.
Citicorp, Salomon Smith Barney, and some of their nonbank subsidiaries have credit facilities with Citicorp's subsidiary banks, including Citibank, N.A. Borrowings under these facilities must be secured in accordance with Section 23A of the Federal Reserve Act.
The following table summarizes the maturity profile of the Company's consolidated contractual long-term debt payments and operating leases at December 31, 2001:
IN MILLIONS OF DOLLARS LONG-TERM DEBT OPERATING LEASES ----------------------------------------------------------------- 2002 $ 31,202 $1,079 2003 24,636 927 2004 16,305 761 2005 13,175 759 2006 10,045 488 Thereafter 26,268 2,654 ----------------------------------------------------------------- TOTAL $121,631 $6,668 ================================================================= |
MANAGEMENT OF LIQUIDITY
Management of liquidity at Citigroup is the responsibility of the Corporate
Treasurer. A uniform liquidity risk management policy exists for Citigroup and
its major operating subsidiaries. Under this policy, there is a single set of
standards for the measurement of liquidity risk in order to ensure consistency
across businesses, stability in methodologies and transparency of risk.
Management of liquidity at each operating subsidiary and/or country is performed
on a daily basis and is monitored by Corporate Treasury. Each major operating
subsidiary and/or country must prepare an annual liquidity and funding plan for
the approval by the Corporate Treasurer. Under the annual liquidity and funding
plan, liquidity limits, targets and ratios are established. Contingency Funding
Plans are prepared on a periodic basis for Citigroup and each major operating
subsidiary and country. These plans include stress testing of assumptions about
significant changes in key funding sources, credit ratings, contingent uses of
funding, and political and economic conditions in Emerging Markets countries.
Citigroup's funding sources are well-diversified across funding types and geography, a benefit of the strength of the global franchise. Funding for the Parent and its major operating subsidiaries includes a large geographically diverse retail and corporate deposit base, a significant portion of which is considered core. Other sources of funding include collateralized borrowings, securitizations (primarily credit card and mortgages), long-term debt, and purchased/wholesale funds. This funding is significantly enhanced by Citigroup's strong capital position. Each of Citigroup's major operating subsidiaries finances its operations on a basis consistent with its capitalization, regulatory structure and the operating environment in which its operates.
Other liquidity and capital resource considerations for Citigroup and its major operating facilities follow.
OFF-BALANCE SHEET ARRANGEMENTS
Citigroup and its subsidiaries are involved with several types of off-balance
sheet arrangements, including special purpose entities (SPEs), lines and letters
of credit, and loan commitments.
The principal uses of SPEs are to obtain sources of liquidity by securitizing certain of Citigroup's financial assets, to assist our clients in securitizing their financial assets, and to create other investment products for our clients.
SPEs may be organized as trusts, partnerships, or corporations. In a securitization, the company transferring assets to an SPE, converts those assets into cash before they would have been realized in the normal course of business. The SPE obtains the cash needed to pay the transferor for the assets received by issuing securities to investors in the form of debt instruments, certificates, commercial paper, and other notes of indebtedness. Investors usually have recourse to the assets in the SPE and often benefit from other credit enhancements, such as a cash collateral account, overcollateralization in the form of excess assets in the SPE, or a liquidity facility, such as a line of credit or asset purchase agreement. Accordingly, the SPE can typically obtain a more favorable credit rating from rating agencies, such as Standard and Poor's and Moody's Investors Service, than the transferor could obtain for its own debt issuances, resulting in less expensive financing costs. The transferor can use the cash proceeds from the sale to extend credit to additional customers or for other business purposes. The SPE may also enter into a derivative contract in order to convert the yield or currency of the underlying assets to match the needs of the SPE's investors or to limit the credit risk of the SPE. The Company may be the counterparty to any such derivative. The securitization process enhances the liquidity of the financial markets, may spread credit risk among several market participants, and makes new funds available to extend credit to consumers and commercial entities.
SECURITIZATION OF CITIGROUP'S ASSETS
Citigroup securitizes credit card receivable, mortgage, home equity and auto
loans, and certain other financial assets that it originates or purchases.
CREDIT CARD RECEIVABLES
Credit card receivables are securitized through a trust, which is established to
purchase the receivables. Citigroup sells receivables into the trust on a non-
recourse basis.
After securitization of credit card receivables, the Company continues to maintain credit card customer account relationships and provides servicing for receivables transferred to the SPE trusts. As a result, the Company considers both the securitized and unsecuritized credit card receivables to be part of the business it manages. The documents establishing the trusts generally require the Company to maintain an ownership interest in the trust. The Company also arranges for third parties to provide credit enhancement to the trusts, including cash collateral accounts, subordinated securities, and letters of credit. As specified in certain of the sale agreements, the net revenue with respect to the investors' interest collected by the trusts each month is accumulated up to a predetermined maximum amount, and is available over the remaining term of that transaction to make payments of interest to trust investors, fees, and transaction costs in the event that net cash flows from the receivables are not sufficient. If the net cash flows are insufficient, Citigroup's loss is limited to its retained interest. When the predetermined amount is reached, net revenue with respect to the investors' interest is passed directly to the Citigroup subsidiary that sold the receivables. Credit card securitizations are revolving securitizations; that is, as customers pay their credit card balances, the cash proceeds are used to replenish the receivables in the trust. Salomon Smith Barney is one of several underwriters that distribute securities issued by the trusts to investors. The Company relies on securitizations to fund about 60% of its Card business.
At December 31, 2001, total assets in the credit card trusts were $87 billion. Of that amount, $67 billion has been sold to investors via trust-issued securities, and the remaining seller's interest of $20 billion is recorded in Citigroup's Consolidated Statement of Financial Position as Consumer Loans. Citigroup retains credit risk on its seller's interests. Amounts receivable from the trusts were $1,098 million and amounts due to the trusts were $701 million at December 31, 2001. During the year-ended December 31, 2001, finance charges and interchange fees of $10.1 billion were collected by the trusts. Also for the year-ended December 31, 2001, the trusts recorded $6.5 billion in coupon interest paid to third-party investors, servicing fees, and other costs. Servicing fees of $1.2 billion were earned and an additional $3.6 billion of net cash flows were received by the Company in 2001.
MORTGAGES, HOME EQUITY AND AUTO LOANS
The Company provides a wide range of mortgage, home equity and auto loan products to a diverse customer base. In addition to providing a source of liquidity and less expensive funding, securitizing these assets also reduces the Company's credit exposure to the borrowers. In connection with the securitization of these loans, servicing rights entitle the Company to a future stream of cash flows based on the outstanding principal balances of the loans and the contractual servicing fee. Failure to service the loans in accordance with contractual servicing obligations may lead to a termination of the servicing rights and the loss of future servicing fees. In non-recourse servicing, the principal credit risk to the servicer arises from temporary advances of funds. In recourse servicing, the servicer agrees to share credit risk with owner of the mortgage loans, such as FNMA, FHLMC, GNMA, or with a private investor, insurer or guarantor. Our mortgage loan securitizations are primarily non-recourse, thereby effectively transferring the risk of future credit losses to the purchasers of the securities issued by the trust. Home equity loans may be revolving lines of credit under which borrowers have the right to draw on the line of credit up to their maximum amount for a specified number of years. In addition to servicing rights, the Company also retains a residual interest in its home equity, manufactures housing and auto loan securitizations, consisting of seller's interest and interest-only strips that arise from the calculation of gain or loss at the time assets are sold to the SPE.
At December 31, 2001, total loans securitized and outstanding were $85 billion. Servicing rights and other retained interests amounted to $3.2 billion at December 31, 2001. During the year ended December 31, 2001, the Company recognized $271 million of gains on securitizations of mortgage loans.
The following table summarizes certain cash flows received from and paid to securitization trusts during the year ended December 31, 2001:
2001
---------------------------------------------------------------------------------
IN BILLIONS OF DOLLARS CREDIT CARDS MORTGAGES(1) AND AUTO
---------------------------------------------------------------------------------
Proceeds from new securitizations $ 22.7 $34.8
Proceeds from collections reinvested
in new receivables 131.4 0.4
Servicing fees received 1.2 0.3
Cash flows received on retained
interests and other net cash flows 3.6 0.4
=================================================================================
|
(1) Includes mortgages and home equity loans.
SECURITIZATIONS OF CLIENT ASSETS
The Company acts as intermediary or agent for its corporate clients, assisting
them in obtaining sources of liquidity, by selling the clients' trade
receivables or other financial assets to an SPE.
The Company administers several third-party owned, special purpose, multi-seller finance companies that purchase pools of trade receivables, credit cards, and other financial assets from third-party clients of the Company. As administrator, the Company provides accounting, funding, and operations services to these conduits. The Company has no ownership interest in the conduits. The clients continue to service the transferred assets. The conduits' asset purchases are funded by issuing commercial paper and medium-term notes. Clients absorb the first losses of the conduit by providing collateral in the form of excess assets. The Company along with other financial institutions provides liquidity facilities, such as commercial paper back-stop lines of credit to the conduits. The Company also provides second loss enhancement in the form of letters of credit and other guarantees. All fees are charged on a market basis. At December 31, 2001, total assets in the conduits were $52 billion.
The Company also securitizes clients' debt obligations in transactions involving SPEs that issue collateralized debt obligations (CDOs). A majority of the transactions are on behalf of clients where the Company first purchases the assets at the request of the clients and warehouses them until the securitization transaction is executed. Other CDOs are structured where the underlying debt obligations are purchased directly in the open market or from issuers. Some CDOs have static unmanaged portfolios of assets, while other have a more actively managed portfolio of financial assets. The Company receives fees for structuring and distributing the CDO securities to investors.
CREATION OF OTHER INVESTMENT PRODUCTS
The Company packages and securitizes assets purchased in the financial
markets in order to create new security offerings, including hedge funds,
mutual funds, and other investment funds, for institutional and private bank
clients as well as retail customers, that match the clients' investment needs
and preferences. The SPEs may be credit-enhanced by excess assets in the
investment pool or by third party insurers assuming the risks of the
underlying assets, thus reducing the credit risk assumed by the investors and
diversifying investors' risk to a pool of assets as compared with investments
in individual assets. The Company typically manages the SPE for market-rate
fees. In addition, the Company may be one of several liquidity providers to
the SPE and may place the securities with investors. The Company has no
ownership interest in these entities.
CREDIT COMMITMENTS AND LINES OF CREDIT
The table below summarizes Citigroup's credit commitments. Further details are
included in the footnotes.
IN MILLIONS OF DOLLARS AT YEAR-END 2001 ------------------------------------------------------------------------------------- Financial standby letters of credit and foreign office guarantees $ 29,541 Performance standby letters of credit and foreign office guarantees 7,749 Commercial and similar letters of credit 5,681 One-to-four family residential mortgages 5,470 Revolving open-end loans secured by 1-4 family residential properties 7,107 Commercial real estate, construction and land development 1,882 Credit card lines(1) 387,396 Commercial and other consumer loan commitments(2) 210,909 ------------------------------------------------------------------------------------- Total $655,735 ===================================================================================== |
(1) Credit card lines are unconditionally cancelable by the issuer.
(2) Includes $138 billion with original maturity less than one year and
approximately $50 billion with original maturity of one-to-five years.
CAPITAL
CITIGROUP INC. (CITIGROUP)
Citigroup is subject to risk-based capital guidelines issued by the Board of
Governors of the Federal Reserve System (FRB). These guidelines are used to
evaluate capital adequacy based primarily on the perceived credit risk
associated with balance sheet assets, as well as certain off balance sheet
exposures such as unused loan commitments, letters of credit, and derivative and
foreign exchange contracts. The risk-based capital guidelines are supplemented
by leverage ratio requirement.
CITIGROUP RATIOS
AT YEAR END 2001 2000 ------------------------------------------------------------------------- Tier 1 capital 8.42% 8.38% Total capital (Tier 1 and Tier 2) 10.92 11.23 Leverage(1) 5.64 5.97 Common stockholders' equity 7.58 7.14 ========================================================================= |
(1) Tier 1 capital divided by adjusted average assets.
Citigroup maintained a strong capital position during 2001. Total capital (Tier 1 and Tier 2) amounted to $75.8 billion at December 31, 2001, representing 10.92% of risk-adjusted assets. This compares to $73.0 billion and 11.23% at December 31,2000. Tier 1 capital of $58.4 billion at December 31,2001 represented 8.42% of risk-adjusted assets, compared to $54.5 billion and 8.38% at December 31, 2000. Citigroup's leverage ratio was 5.64% at December 31,2001 compared to 5.97% at December 31, 2000. See Note 18 to the Consolidated Financial Statements.
COMPONENTS OF CAPITAL UNDER REGULATORY GUIDELINES
IN MILLIONS OF DOLLARS AT YEAR-END 2001 2000 ------------------------------------------------------------------------------------- TIER 1 CAPITAL Common stockholders' equity $ 79,722 $ 64,461 Qualifying perpetual preferred stock 1,400 1,745 Qualifying mandatorily redeemable securities of subsidiary trusts 6,725 4,920 Minority interest 803 334 Less: Net unrealized gains on securities available-for-sale(1) (852) (973) Accumulated net gains on cash flow hedges, net of tax (168) - Intangible assets: Goodwill (23,861) (11,972) Other intangible assets (4,944) (3,572) Net unrealized losses on available-for-sale equity securities, net of tax(1) - (68) 50% investment in certain subsidiaries(2) (72) (82) Other (305) (295) ------------------------------------------------------------------------------------- TOTAL TIER 1 CAPITAL 58,448 54,498 ------------------------------------------------------------------------------------- TIER 2 CAPITAL Allowance for credit losses(3) 8,694 8,140 Qualifying debt(4) 8,648 10,492 Unrealized marketable equity securities gain(1) 79 - Less: 50% investment in certain subsidiaries(2) (72) (82) ------------------------------------------------------------------------------------- TOTAL TIER 2 CAPITAL 17,349 18,550 ------------------------------------------------------------------------------------- TOTAL CAPITAL (TIER 1 AND TIER 2) $ 75,797 $ 73,048 ===================================================================================== RISK-ADJUSTED ASSETS(5) $694,035 $650,351 ===================================================================================== |
(1) Tier 1 capital excludes unrealized gains and losses on debt securities
available-for-sale in accordance with regulatory risk-based capital
guidelines. The Federal bank regulatory agencies permit institutions to
include in Tier 2 capital up to 45% of pretax net unrealized holding gains
on available-for-sale equity securities with readily determinable fair
values. Institutions are required to deduct from Tier 1 capital net
unrealized holding losses on available-for-sale equity securities with
readily determinable fair values, net of tax.
(2) Represents investment in certain overseas insurance activities and
unconsolidated banking and finance subsidiaries.
(3) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is
deducted from risk-adjusted assets.
(4) Includes qualifying senior and subordinated debt in an amount not exceeding
50% of Tier 1 capital, and subordinated capital notes subject to certain
limitations. The net decrease in qualifying debt during 2001 was due to
redemptions of subsidiary-obligated debt.
(5) Includes risk-weighted credit equivalent amounts, net of applicable
bilateral netting agreements, of $26.2 billion for interest rate, commodity
and equity derivative contracts and foreign exchange contracts, as of
December 31, 2001 compared to $27.7 billion as of December 31, 2000. Market
risk equivalent assets included in risk-adjusted asses amounted to $31.4
billion and $39.6 billion at December 31, 2001 and 2000, respectively.
Risk-adjusted assets also includes the effect of other off-balance sheet
exposures such as unused as unused loan commitments and letters of credit
and reflects deductions for intangible assets and any excess allowance for
credit losses.
Common stockholders' equity increased a net $15.3 billion during the year to $79.7 billion at December 31, 2001, representing 7.58% of assets, compared to $64.5 billion and 7.14% at year-end 2000. The increase in common stockholders' equity during the year principally reflected net income of $14.1 billion, $6.5 billion related to the issuance of shares to effect the Banamex acquisition, and $2.2 billion related to the issuance of shares pursuant to employee benefit plans and other activity, offset by dividends declared on common and preferred stock of $3.2 billion, treasury stock acquired of $3.0 billion, and $1.3 billion related to foreign currency translation adjustment and change in unrealized gains and losses on investment securities. The increase in the common stockholders' equity ration during the year reflected the above items, and was partially offset by the increase in total assets.
During the 2001 fourth quarter, the Board of Directors granted approval for the repurchase of an additional $5 billion of Citigroup common stock, continuing the Company's program of buying back its shares. Under its long-standing repurchase program, the Company buys back shares in the market from time to time.
During the 2001 fourth quarter, Citigroup redeemed its Series K cumulative preferred stock for $250 million.
On January 7, 2002, Citigroup redeemed for cash all outstanding shares of its Series U cumulative preferred stock. Because notice for redemption of these shares occurred prior to year-end, they did not qualify as Tier 1 Capital at December 31, 2001.
The total mandatorily redeemable securities of subsidiary trusts (trust securities) which qualify as Tier 1 capital at December 31, 2001 and 2000 were $6.725 billion and $4.92 billion, respectively. The amount outstanding at December 31,2001 includes $4.85 billion of parent-obligated securities and $2.275 billion of subsidiary-obligated securities, and at December 31, 2000 includes $2.30 billion of parent-obligated securities and $2.62 billion of subsidiary-obligated securities. On January 7, 2002, Citigroup redeemed for cash the $400 million Citigroup Capital 1 Trust Preferred Securities (16 million 8% Trust Preferred Securities at the redemption price of $25 per Preferred Security plus any accrued and unpaid distribution thereon). Because notice for redemption of these securities occurred prior to year end, they did not qualify as Tier 1 Capital at December 31, 2001.
Citigroup's subsidiary depository institutions are subject to the risk-based capital guidelines issued by their respective primary Federal bank regulatory agencies, which are generally similar to the FRB's guidelines. At December 31, 2001, all of Citigroup's subsidiary depository institutions were "well capitalized" under the Federal bank regulatory agencies' definitions.
On January 8, 2002, the FRB issued final rules that govern the regulatory treatment of merchant banking investments and certain similar equity investments, including investments made by venture capital subsidiaries, in nonfinancial companies held by bank holding companies with certain exclusions. The new rules impose a capital charge that would increase in steps as the banking organization's level of concentration in equity investments increases. An 8% Tier 1 capital deduction applies on covered investments that in the aggregate represent up to 15% of an organization's Tier 1 capital. For covered investments that aggregate more than 25% of the organization's Tier 1 capital, a top marginal charge of 25% applies. The rules are not expected to have significant impact on Citigroup.
In December 2001, the Basel Committee on Banking Supervision (Committee) announced that a new consultative package on the new Basel Capital Accord (new Accord) would not be issued in early 2002, as previously indicated. Instead, the Committee will first seek to complete a comprehensive impact assessment of the draft proposal, after which a new consultative package will be issued. The new Accord, which will apply to all "significant" banks, as well as to holding companies that are parents of banking groups, is still intended to be finalized by year-end 2002, with implementation of the new framework beginning in 2005. The Company is monitoring the status and progress of the proposed rule.
On November 29, 2001 the FRB issued final rules regarding the regulatory capital treatment of recourse, direct credit substitutes and residual interest in asset securitizations. The rules require a deduction from Tier 1 capital for the amount of credit-enhancing interest-only strips (a type of residual interest) that exceeds 25% of Tier 1 capital, as well as requiring dollar-for -dollar capital for residual interest not deducted for Tier 1 capital. These rules, which require adoption in the fourth quarter of 2002, are not expected to have a significant impact on Citigroup.
Additionally, from time to time, the FRB and the FFIEC propose amendments to, and issue interpretations of, risk-based capital guidelines and reporting instructions. Such proposals or interpretations could, if implemented in the future, affect reported capital ratios and net risk-adjusted assets. This paragraph and the preceding three paragraphs contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. See "Forward Looking Statements" on page 33.
CITICORP
The in-country forum for liquidity issues is the Asset/Liability Management
Committee (ALCO), which includes senior executives within each country. The ALCO
reviews the current and prospective funding requirements for all businesses and
legal entities within the country, as well as the capital position and balance
sheet. All businesses within the country are represented on the committee with
the focal point being the Country Treasurer. The Country Corporate Officer and
the Country Treasurer ensure that all funding obligations in each country are
met when due. The Citigroup Corporate Treasurer, in concert with the Country
Corporate Officer and the Regional Market Risk Manager, appoints the Country
Treasurer.
Each Country Treasurer must prepare a liquidity plan at least annually that is approved by the Country Corporate Officer, the Regional Treasurer, and the Citigroup Corporate Treasurer. The liquidity profile is monitored on an on-going basis and reported monthly. Limits are established on the extent to which businesses in a country can take liquidity risk. The size of the limit depends on the depth of the market, experience level of local management, the stability of the liabilities, and liquidity of the assets. Finally, the limits are subject to the evaluation of the entities' stress test results. Generally, limits are established such that in stress scenarios, entities need to be self-funded or providers of liquidity to Citicorp.
Regional Treasurers generally have responsibility for monitoring liquidity risk across a number of countries within a defined geography. They are also available for consultation and special approvals, especially in unusual or volatile market conditions.
Citicorp's assets and liabilities are diversified across many currencies, geographic areas, and business. Particular attention is paid to those businesses which for tax, sovereign risk, or regulatory reasons cannot be freely and readily funded in the international markets.
A diversity of funding sources, currencies, and maturities is used to gain a broad access to the investor base. Citicorp's deposits, which represent 59% of total funding at December 31, 2001 and 55% at December 31, 2000, are broadly diversified by both geography and customer segments.
Stockholders's equity, which grew $15.6 billion during the year to $63.5 billion at year-end 2001, continues to be an important component of the overall funding structure. In addition, long-term debt is issued by Citicorp and its subsidiaries. Total Citicorp long-term debt outstanding at year-end 2001 was $81.1 billion, compared with $80.3 billion at year-end 2000.
Asset securitization programs remain an important source of liquidity. Loans securitized during 2001 included $23.3 billion of U.S. credit cards and $24.3 billion of U.S. consumer mortgages. As credit card securitization transactions amortize, newly originated receivables are recorded on Citicorp's balance sheet and become available for asset securitization. In 2001, the scheduled amortization of certain credit card securitization transactions made available $11.6 billion of new receivables. In addition, at least $9.4 billion of credit card securitization transactions are scheduled to amortize during 2002.
Citicorp is a legal entity separate and distinct from Citibank, N.A. and its other subsidiaries and affiliates. There are various legal limitations on the extent to which Citicorp's banking subsidiaries may extend credit, pay dividends or otherwise supply funds to Citicorp. The approval of the Office of the Comptroller of the Currency is required if total dividends declared by a national bank in any calendar year exceed net profits (as defined) for that year combined with its retained net profits for the preceding two years. In addition, dividends for such a bank may not be paid in excess of the bank's undivided profits. State-chartered bank subsidiaries are subject to dividend limitations imposed by applicable state law.
Citicorp's national and state-chartered bank subsidiaries can declare dividends to their respective parent companies in 2002, without regulatory approval, of approximately $9.1 billion, adjusted by the effect of their net income (loss) for 2002 up to the date of any such dividend declaration. In determining whether and to what extent to pay dividends, each bank subsidiary must also consider the effect of dividend payments on applicable risk-based capital and leverage ratio requirements as well as policy statements of the Federal regulatory agencies that indicate that banking organizations should generally pay dividends out of current operating earnings. Consistent with these considerations, Citicorp estimates that its bank subsidiaries can distribute dividends to Citicorp, directly or through their parent holding company, of approximately $8.9 billion of the available $9.1 billion, adjusted by the effect of their net income (loss) up to the date of any such dividend declaration.
Citicorp also receives dividends from its nonbank subsidiaries. These nonbank subsidiaries are generally not subject to regulatory restrictions on their payment of dividends except that the approval of the Office of Thrift Supervision (OTS) may be required if total dividends declared by a savings association in any calendar year exceed amounts specified by that agency's regulations.
Citicorp is subject to risk-based capital and leverage guidelines issued by the FRB.
CITICORP RATIOS
AT YEAR-END 2001 2000 ----------------------------------------------------------------------- Tier 1 capital 8.33% 8.41% Total capital (Tier 1 and Tier 2) 12.41 12.29 Leverage(1) 6.85 7.54 Common stockholder's equity 9.81 8.68 ======================================================================= |
(1) Tier 1 capital divided by adjusted average assets.
Citicorp maintained a strong capital position during 2001. Total capital (Tier 1 and Tier 2) amounted to $62.9 billion at December 31,2001, representing 12.41% of risk-adjusted assets. This compares with $58.0 billion and 12.29% at December 31,2000. Tier 1 capital of $42.2 billion at year-end 2001 represented 8.33% of risk-adjusted assets, compared with $39.7 billion and 8.41% at year-end 2000. The Tier 1 capital ratio at year-end 2001 was above Citicorp's target range of 8.00% to 8.30%. See Note 18 to the Consolidated Financial Statements.
SALOMON SMITH BARNEY HOLDINGS INC.
(SALOMON SMITH BARNEY)
Salomon Smith Barney's total assets were $301 billion at December 31, 2001,
compared to $238 billion at year-end 2000. Due to the nature of Salomon Smith
Barney's trading activities, it is not uncommon for asset levels to fluctuate
from period to period. At December 31, 2001, approximately 35% of these assets
represent trading securities, commodities, and derivatives used for proprietary
trading and to facilitate customer transactions. Approximately 46% of these
assets were assets were related to collateralized financing transactions where
securities are bought, borrowed, sold, and lent in generally offsetting amounts.
A significant portion of the remainder of the assets represented receivables
from brokers, dealers, clearing organizations, and customers that relate to
securities transactions in the process of being settled. The carrying values of
the majority of Salomon Smith Barney's securities inventories are adjusted daily
to reflect current prices. See Notes 1,5,6,7,8, and 23 to the Consolidated
Financial Statements for a further description of these assets.
Salomon Smith Barney's assets are financed through a number of sources including long and short-term unsecured borrowings, the financing transactions described above, and payables to brokers, dealers, and customers. The highly liquid nature of these assets provides Salomon Smith Barney with flexibility in financing and managing its business. Salomon Smith Barney monitors and evaluates the adequacy of its capital and borrowing base on a daily basis in order to allow for flexibility in its funding, to maintain liquidity, and to ensure that its capital base supports the regulatory capital requirements of its subsidiaries.
Salomon Smith Barney funds its operations through the use of secured and unsecured short-term borrowings, long-term borrowing and TruPS(R). Secured short-term financing, including repurchase agreements and secured loans, is Salomon Smith Barney's principal funding source. Unsecured short-term borrowings provide a source of short-term liquidity and are also utilized as an alternative to secured financing when they represent a cheaper funding source. Sources of short-term unsecured borrowings include commercial paper, unsecured bank borrowings and letters of credit, deposit liabilities, promissory, notes, and corporate loans.
Salomon Smith Barney has a $5.0 billion 364-day committed uncollateralized revolving line of credit with unaffiliated banks that extends through May 21, 2002, with repayment on any borrowings due by May 21, 2004. Salomon Smith Barney may borrow under this revolving credit facility at various interest rate options (LIBOR or base rate) and compensates the banks for this facility through facility fees. Under this facility, Salomon Smith Barney is required to maintain a certain level of consolidated adjusted net worth (as defined in the agreement). At December 31, 2001, this requirement was exceeded by approximately $4.3 billion. At December 31, 2001, there were no borrowings outstanding under this facility. Salomon Smith Barney also has substantial borrowing arrangements consisting of facilities that it has been advised are available, but where no contractual lending obligation exists. These arrangements are reviewed on an ongoing basis to ensure flexibility in meeting short-term requirements.
Unsecured term debt is a significant component of Salomon Smith Barney's long-term capital. Long-term debt totaled $26.8 billion at December 31, 2001 and $19.7 billion at December 31, 2000. Salomon Smith Barney utilizes interest rate swaps to convert the majority of its fixed-rate long-term debt used to fund inventory-related working capital requirements into variable rate obligations. Long-term debt issuances denominated in currencies other than the U.S. dollar that are not used to finance assets in the same currency are effectively converted to U.S. dollar obligations through the use of cross-currency swaps and forward currency contracts.
Salomon Smith Barney's borrowing relationships are with a broad range of banks, financial institutions and other firms from which it draws funds. The volume of borrowings generally fluctuates in response to changes in the level of financial instruments, commodities and contractual commitments, customer balances, the amount of reverse repurchase transactions outstanding, and securities borrowed transactions. As Salomon Smith Barney's activities increase, borrowings generally increase to fund the additional activities. Availability of financing can vary depending upon market conditions, credit ratings, and the overall availability of credit to the securities industry. Salomon Smith Barney seeks to expand and diversify its funding mix as well as its creditor sources. Concentration levels for these sources, particularly for short-term lenders, are closely monitored both in terms of single investor limits and daily maturities.
Salomon Smith Barney monitors liquidity by tracking asset levels, collateral and funding availability to maintain flexibility to meet its financial commitments. As a policy, Salomon Smith Barney attempts to maintain sufficient capital and funding sources in order to have the capacity to finance itself on a fully collateralized basis in the event that access to unsecured financing was temporarily impaired. Salomon Smith Barney's liquidity management process includes a contingency funding plan designed to ensure adequate liquidity even if access to unsecured funding sources is severely restricted or unavailable. This plan is reviewed periodically to keep the funding options current and in line with market conditions. The management of this plan includes an analysis that is utilized to determine the ability to withstand varying levels of stress, which could impact Salomon Smith Barney's liquidation horizons and required margins. In addition, Salomon Smith Barney monitors its leverage and capital ratios on a daily basis.
TRAVELERS PROPERTY CASUALTY CORP. (TPC)
TPC's insurance subsidiaries are subject to various regulatory restrictions that
limit the maximum amount of dividends available to be paid to their parent
without prior approval of insurance regulatory authorities. A maximum of $1.0
billion is available by the end of 2002 for such dividends without prior
approval of the Connecticut Insurance Department. However, the payment of a
significant portion of this amount is likely to be subject to such approval
depending upon the amount and timing of the payments.
THE TRAVELERS INSURANCE COMPANY (TIC)
At December 31, 2001, TIC had $34.1 billion of life and annuity product deposit
funds and reserves. Of that total, $19.1 billion is not subject to discretionary
withdrawal based on contract terms. The remaining $15.0 billion is for life and
annuity products that are subject to discretionary withdrawal by the
contractholder. Included in the amount that is subject to discretionary
withdrawal is $4.2 billion of liabilities that is surrenderable with market
value adjustments. Also included is an additional $5.0 billion of the life
insurance and individual annuity liabilities which is subject to discretionary
withdrawals and an average surrender charge of 4.7%. In the payout phase, these
funds are credited at significantly reduced interest rates. The remaining $5.8
billion of liabilities is surrenderable without charge. More than 10.2% of this
relates to individual life products. These risks would have to be underwritten
again if transferred to another carrier, which is considered a significant
deterrent against withdrawal by long-term policyholders. Insurance liabilities
that are surrendered or withdrawn are reduced by outstanding policy loans, and
related accrued interest prior to payout.
Scheduled maturities of guaranteed investment contracts (GICs) in 2002, 2003, 2004, 2005 and thereafter are $3.972 billion,$1.441 billion, $1.141 billion, $965 million, and $3.832 billion, respectively. At December 31, 2001, the interest rates credited on GICs had a weighted average rate of 5.10%.
TIC is subject to various regulatory restrictions that limit the maximum amount of dividends available to its parent without prior approval of the Connecticut Insurance Department. A maximum of $586 million of statutory surplus is available by the end of the year 2002 for such dividends without the prior approval of the Connecticut Insurance Department.
INSURANCE INDUSTRY--RISK-BASED CAPITAL
The National Association of Insurance Commissioners (NAIC) adopted risk-based
capital (RBC) requirements for life insurance companies and for property and
casualty insurance companies. The RBC requirements are to be used as minimum
capital requirements by the NAIC and states to identify companies that merit
further regulatory action. The formulas have not been designed to differentiate
among adequately capitalized companies that operate with levels of capital
higher than RBC requirements. Therefore, it is inappropriate and ineffective to
use the formulas to rate or to rank such companies. At December 31, 2001 and
2000, all of the Company's life and property and casualty companies had adjusted
capital in excess of amounts requiring Company or any regulatory action.
GLOSSARY OF TERMS
ADJUSTED OPERATING EXPENSES--GAAP operating expenses excluding restructuring- and merger-related items.
ADJUSTED PROVISIONS FOR BENEFITS, CLAIMS AND CREDIT LOSSES--Provisions for benefits, claims and credit losses adjusted for the effect of securitization activities. See Adjusted Revenues.
ADJUSTED REVENUES--Reflects the reclassification of net credit losses on securitized receivables, where the Company continues to manage the receivables after they have been securitized, from other income to the adjusted provisions for benefits, claims and credit losses.
ANNUITY--A contract that pays a periodic benefit for the life of a person (the annuitant), the lives of two or more persons or for a specified period of time.
ASSETS UNDER MANAGEMENT--Assets held by Citigroup in a fiduciary capacity for clients. These assets are not included on Citigroup's balance sheet.
CASH BASIS LOANS--Loans on which interest payments are recorded when collected from the borrower. These are loans in which the borrower has fallen behind in interest payments, and are considered as nonaccrual assets. In situations where the lender reasonably expects that only a portion of the principal and interest owed ultimately will be collected, payments are credited directly to the outstanding principal.
CATASTROPHE--A severe loss, usually involving risks such as fire, earthquake, windstorm, explosion and other similar events.
CATASTROPHE LOSS--Loss and directly identified loss adjustment expenses from catastrophes.
CATASTROPHE REINSURANCE--A form of excess of loss property reinsurance which, subject to a specified limit, indemnifies the ceding company for the amount of loss in excess of a specified limit or indemnifies the coding company for the amount of loss in excess of a specified retention with respect to an accumulation of losses resulting from a catastrophic event.
CLAIM--Request by an insured for indemnification by an insurance company for loss incurred from an insured peril.
CLEAN LETTER OF CREDIT--An instrument issued by a bank on behalf of its customer which gives the beneficiary the right to draw funds upon the presentation of the letter of credit in accordance with its terms and conditions. Generally, they are issued to guarantee the performance of the customer or to act as a payment mechanism. Clean letters of credit, unlike commercial letters of credit, are not related to the shipment of goods and do not require the beneficiary to present shipping documents in order to receive payment from the bank.
COMBINED RATIO--The sum of the loss and LAE ratio, the underwriting expense ratio and, where applicable, the ratio of dividends to policyholders to net premiums earned. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.
COMMERCIAL LINES--The various kinds of property and casualty insurance that are written for businesses.
CORE INCOME--Net income excluding restructuring-related items and merger-related costs and cumulative effect of accounting changes or other non-recurring items, as specified.
CREDIT DEFAULT SWAP--An agreement between two parties whereby one party pays the other a fixed coupon over a specified term. The other party makes no payment unless a specified credit event such as a default occurs, at which time a payment is made and the swap terminates.
DEFERRED ACQUISITION COSTS--Primarily commissions and premium taxes, which vary with and are primarily related to the production of new insurance business that are deferred and amortized to achieve a matching of revenues and expenses when reported in financial statements prepared in accordance with GAAP.
DEFERRED TAX ASSET--An asset attributable to deductible temporary differences and carryforwards. A deferred tax asset is measured using the applicable enacted tax rate and provisions of the enacted tax law.
DEFERRED TAX LIABILITY--A liability attributable to taxable temporary differences. A deferred tax liability is measured using the applicable enacted tax rate and provisions of the enacted tax law.
DERIVATIVE--A contract or agreement whose value is derived from changes in interest rates, foreign exchange rates, prices of securities or commodities or financial or commodity indices.
DIRECT WRITTEN PREMIUMS--The amounts charged by a primary insurer to insureds in exchange for coverages provided in accordance with the terms of an insurance contract.
EARNED PREMIUMS OR PREMIUMS EARNED--That portion of property-casualty premiums written that applies to the expired portion of the policy term.
FEDERAL FUNDS--Non-interest bearing deposits held by member banks at the Federal Reserve Bank.
FOREGONE INTEREST--Interest on cash-basis loans that would have been earned at the original contractual rate if the loans were on accrual status.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)--Accounting rules and conventions defining acceptable practices in preparing financial statements in the United States of America. The Financial Accounting Standards Board (FASB), an independent self-regulatory organization, is the primary source of accounting rules.
LOSS ADJUSTMENT EXPENSES (LAE)--The expenses of settling claims, including legal and other fees and the portion of general expenses allocated to claim settlement costs.
LOSS AND LAE RATIO--For insurance company statutory accounting, it is the ratio of incurred losses and loss adjustment expenses to net earned premiums. For GAAP, it is the ratio of incurred losses and loss adjustment expenses reduced by an allocation of fee income to net earned premiums.
LOSSES AND LOSS ADJUSTMENT EXPENSES--The sum of losses incurred and loss adjustment expenses.
MANAGED BASIS REPORTING--Reporting, adjusted to reflect certain effects of securitization activities, receivables held for securitization, and receivables sold with servicing retained. On a managed basis, these earnings are reclassified and presented as if the receivables had neither been held for securitization nor sold.
MANAGED LOANS--Includes loans classified as Loans on the balance sheet plus loans held for sale which are included in other assets and securitized receivables, primarily credit card receivables.
MANAGED NET CREDIT LOSSES--Net credit losses adjusted for the effect of credit card securitizations. See Adjusted Revenues.
MINORITY INTEREST--When a parent owns a majority (but less than 100%) of a subsidiary's stock, the Consolidated Financial Statements must reflect the minority's interest in the subsidiary. The minority interest as shown in the Statement of Income is equal to the minority's proportionate share of the subsidiary's net income and, as included within other liabilities in the Statement of Financial Position, is equal to the minority's proportionate share of the subsidiary's net assets.
NET CREDIT LOSSES--Gross credit losses (write-offs) less gross credit recoveries.
NET CREDIT LOSS RATIO--Annualized net credit losses divided by average loans outstanding.
NET WRITTEN PREMIUMS--Direct written premiums plus assumed reinsurance premiums, less premiums ceded to reinsurers.
PERSONAL LINES--Types of property and casualty insurance written for individuals or families, rather than for businesses.
POOL--An organization of insurers or reinsurers through which particular types of risks are underwritten with premiums, losses and expenses being shared in agreed-upon percentages.
PREMIUMS--The amount charged during the year on policies and contracts issued, renewed or reinsured by an insurance company.
PROPERTY INSURANCE--Insurance that provides coverage to a person with an insurable interest in tangible property for that person's property loss, damage or loss of use.
REINSURANCE--A transaction in which a reinsurer (ASSUMING ENTERPRISE), for a consideration (PREMIUM), assumes all or part of a risk undertaken originally by another insurer (CEDING ENTERPRISE).
RETENTION--The amount of exposure an insurance company retains on any one risk or group of risks.
RETURN ON ASSETS--Annualized income (core or net) divided by average assets.
RETURN ON COMMON EQUITY--Annualized income (core or net) less preferred stock dividends, divided by average common equity.
RISK ADJUSTED REVENUE--Adjusted revenues less managed net credit losses.
RISK ADJUSTED MARGIN--Risk adjusted revenue as a percent of average managed loans.
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (REVERSE REPO AGREEMENTS)--An agreement between a seller and a buyer, generally of government or agency securities, whereby the buyer agrees to purchase the securities, and the seller agrees to repurchase them at an agreed upon price at a future date.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (REPURCHASE AGREEMENTS)--An agreement between a seller and a buyer, generally of government or agency securities, whereby the seller agrees to repurchase the securities at an agreed upon price at a future date.
STANDBY LETTER OF CREDIT--An obligation issued by a bank on behalf of a bank customer to a third party where the bank promises to pay the third party in the event of some defined failure by the bank's customer, usually, but not always, a failure to pay.
STATUTORY SURPLUS--As determined under Statutory Accounting Practices, the amount remaining after all liabilities, including loss reserves, are subtracted from all admitted assets. Admitted assets are assets of an insurer prescribed or permitted by a state to be recognized on the statutory balance sheet. Statutory surplus is also referred to as "surplus" or "surplus as regards policyholders" for statutory accounting purposes.
TIER 1 AND TIER 2 CAPITAL--Tier 1 capital includes common stockholders' equity (excluding certain components of other comprehensive income), qualifying perpetual preferred stock, mandatorily redeemable securities of subsidiary trusts, and minority interests that are held by others, less certain intangible assets. Tier 2 capital includes, among other items, perpetual preferred stock to the extent it does not qualify for Tier 1, qualifying senior and subordinated debt and subordinated capital notes, limited life preferred stock and the allowance for credit losses, subject to certain limitations.
UNEARNED COMPENSATION--The unamortized portion of a grant to employees of restricted stock measured at the market value on the date of grant. Unearned compensation is displayed as a reduction of stockholders' equity on the Consolidated Statement of Financial Position.
UNFUNDED COMMITMENTS--Legally binding agreements to provide financing at a future date.
REPORT OF MANAGEMENT
The management of Citigroup is responsible for the preparation and fair presentation of the financial statements and other financial information contained in this annual report. The accompanying financial statements have been prepared in conformity with generally accepted accounting principles appropriate in the circumstances. Where amounts must be based on estimates and judgements, they represent the best estimates and judgments of management. The financial information appearing throughout this annual report is consistent with that in the financial statements.
The management of Citigroup is also responsible for maintaining effective internal control over financial reporting. Management establishes an environment that fosters strong controls, and it designs business processes to identify and respond to risk. Management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with management's authorization, assets are safeguarded, and financial records are reliable. Management also takes steps to see that information and communication flows are effective and to monitor performance, including performance of internal control procedures.
Citigroup's accounting policies and internal control are under the general oversight of the Board of Directors, acting through the Audit Committee of the Board. The Committee is composed entirely of directors who are not officers or employees of Citigroup. The Committee reviews reports by internal audit covering its extensive program of audit and risk reviews worldwide. In addition, KPMG LLP, independent auditors, are engaged to audit Citigroup's financial statements.
KPMG LLP obtains and maintains an understanding of Citigroup's internal control and procedures for financial reporting and conducts such tests and other auditing procedures as it considers necessary in the circumstances to express the opinion in its report that follows. KPMG LLP has full access to the Audit Committee, with no members of management present, to discuss its audit and its findings as to the integrity of Citigroup's financial reporting and the effectiveness of internal control.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation. However, management believes that Citigroup maintained effective internal control over financial reporting as of December 31, 2001.
/s/ Sanford I. Weill /s/ Todd S. Thomson Sanford I. Weill Todd S. Thomson |
Chairman and Chief Financial Officer Chief Executive Officer
INDEPENDENT AUDITORS' REPORT
[KPMG LOGO]
The Board of Directors and Stockholders
Citigroup Inc.:
We have audited the accompanying consolidated statement of financial position of Citigroup Inc. and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Citigroup Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, in 2001 the Company changed its methods of accounting for derivative instruments and hedging activities, accounting for interest income and impairment on purchased and retained beneficial interests in securitized financial assets, and accounting for goodwill and intangible assets resulting from business combinations consummated after June 30, 2001. Also, as discussed in Note 1 to the consolidated financial statements, in 1999 the Company changed its methods of accounting for insurance-related assessments, accounting for insurance and reinsurance contracts that do not transfer insurance risk, and accounting for the costs of start-up activities.
/s/ KPMG LLP New York, New York January 17, 2002 |
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME CITIGROUP INC. AND SUBSIDIARIES
YEAR ENDED DECEMBER 31,
---------------------------------
IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS 2001 2000 1999
--------------------------------------------------------------------------------------------------------------
REVENUES
Loan interest including fees $ 39,616 $ 37,377 $ 33,018
Other Interest and dividends 26,949 27,562 21,971
Insurance premiums 13,460 12,429 11,504
Commissions and fees 15,944 16,363 13,229
Principal transactions 5,544 5,981 5,160
Asset management and administration fees 5,389 5,338 4,164
Realized gains from sales of investments 578 806 541
Other income 4,542 5,970 4,809
--------------------------------------------------------------------------------------------------------------
Total revenues 112,022 111,826 94,396
Interest expense 31,965 36,638 28,674
--------------------------------------------------------------------------------------------------------------
TOTAL REVENUES, NET OF INTEREST EXPENSE 80,057 75,188 65,722
--------------------------------------------------------------------------------------------------------------
BENEFITS, CLAIMS AND CREDIT LOSSES
Policyholder benefits and claims 11,759 10,147 9,120
Provision for credit losses 6,800 5,339 4,760
--------------------------------------------------------------------------------------------------------------
TOTAL BENEFITS, CLAIMS AND CREDIT LOSSES 18,559 15,486 13,880
--------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Non-insurance compensation and benefits 19,449 18,633 16,169
Insurance underwriting, acquisition, and operating 3,921 3,643 3,765
Restructuring- and merger related items 458 759 (53)
Other operating expenses 15,773 15,524 13,810
--------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 39,601 38,559 33,691
--------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES, MINORITY INTEREST AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGES 21,897 21,143 18,151
Provision for income taxes 7,526 7,525 6,530
Minority interest, net of income taxes 87 99 251
--------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 14,284 13,519 11,370
--------------------------------------------------------------------------------------------------------------
Cumulative effect of accounting changes (158) -- (127)
--------------------------------------------------------------------------------------------------------------
NET INCOME $ 14,126 $ 13,519 $ 11,243
==============================================================================================================
BASIC EARNINGS PER SHARE
Income before cumulative effect of accounting changes $ 2.82 $ 2.69 $ 2.26
Cumulative effect of accounting changes (0.03) -- (0.03)
--------------------------------------------------------------------------------------------------------------
NET INCOME $ 2.79 $ 2.69 $ 2.23
==============================================================================================================
Weighted average common shares outstanding 5,031.7 4,977.0 4,979.2
--------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE
Income before cumulative effect of accounting changes $ 2.75 $ 2.62 $ 2.19
Cumulative effect of accounting changes (0.03) -- (0.02)
--------------------------------------------------------------------------------------------------------------
NET INCOME $ 2.72 $ 2.62 $ 2.17
==============================================================================================================
Adjusted weighted average common shares outstanding 5,147.0 5,122.2 5,127.8
==============================================================================================================
|
See Notes to the Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CITIGROUP INC. AND SUBSIDIARIES
DECEMBER 31,
-----------------------
IN MILLIONS OF DOLLARS 2001 2000
-----------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks (including segregated cash and other deposits) $ 18,515 $ 14,621
Deposits at interest with banks 19,216 16,164
Federal funds sold and securities borrowed or purchased under agreements to resell 134,809 105,877
Brokerage receivables 35,155 25,696
Trading account assets (including $36,351 and $30,502 pledged to creditors at
December 31, 2001 and December 31, 2000, respectively) 144,904 132,513
Investments (including $15,475 and $3,354 pledged to creditors at
December 31, 2001 and December 31, 2000, respectively) 160,837 120,122
Loans, net of unearned income
Consumer 244,159 228,879
Commercial 147,774 138,143
-----------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income 391,933 367,022
Allowance for credit losses (10,088) (8,961)
-----------------------------------------------------------------------------------------------------------------------
Total loans, net 381,845 358,061
Reinsurance recoverables 12,373 10,716
Separate and variable accounts 25,569 24,947
Other assets 118,227 93,493
-----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,051,450 $ 902,210
=======================================================================================================================
LIABILITIES
Non-interest-bearing deposits in U.S. offices $ 23,054 $ 21,694
Interest-bearing deposits in U.S. offices 110,388 58,913
Non-interest-bearing deposits in offices outside the U.S. 18,779 13,811
Interest-bearing deposits in offices outside the U.S. 222,304 206,168
-----------------------------------------------------------------------------------------------------------------------
Total deposits 374,525 300,586
Federal funds purchased and securities loaned or sold under agreements to repurchase 153,511 110,625
Brokerage payables 32,891 15,882
Trading account liabilities 80,543 85,107
Contractholder funds and separate and variable accounts 48,932 44,884
Insurance policy and claims reserves 49,294 44,666
Investment banking and brokerage borrowings 14,804 18,227
Short-term borrowings 24,461 51,675
Long-term debt 121,631 111,778
Other liabilities 62,486 47,654
-----------------------------------------------------------------------------------------------------------------------
Citigroup or subsidiary obligated mandatorily redeemable securities of
subsidiary trusts holding solely junior subordinated debt securities of -Parent 4,850 2,300
-Subsidiary 2,275 2,620
-----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 970,203 836,004
-----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock ($1.00 par value; authorized shares: 30 million), at aggregate liquidation value 1,525 1,745
Common stock ($.01 par value; authorized shares: 15 billion),
issued shares: 2001--5,477,416,254 SHARES and 2000--5,351,143,583 shares 55 54
Additional paid-in capital 23,196 16,504
Retained earnings 69,803 58,862
Treasury stock, at cost: 2001--328,727,790 SHARES and 2000--328,921,189 shares (11,099) (10,213)
Accumulated other changes in equity from nonowner sources (844) 123
Unearned compensation (1,389) (869)
-----------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 81,247 66,206
-----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,051,450 $ 902,210
=======================================================================================================================
|
See Notes to the Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY CITIGROUP INC. AND SUBSIDIARIES
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
AMOUNTS SHARES
---------------------------------- ---------------------------------------
IN MILLIONS OF DOLLARS, EXCEPT SHARES IN THOUSANDS 2001 2000 1999 2001 2000 1999
----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK AT AGGREGATE LIQUIDATION VALUE
Balance, beginning of year $ 1,745 $ 1,895 $ 2,274 6,233 6,831 8,327
Redemption or retirement of preferred stock (250) (150) (379) (500) (598) (1,496)
Other(1) 30 -- -- 117 -- --
----------------------------------------------------------------------------------------------------------------------------------
Balance, end of year 1,525 1,745 1,895 5,850 6,233 6,831
----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year 16,558 15,361 14,210 5,351,144 5,350,977 5,338,223
Employee benefit plans 228 1,119 1,036 -- -- 381
Conversion of redeemable preferred stock to
common stock -- -- 140 -- -- 12,489
Other(2) 6,465 78 (25) 126,272 167 (116)
----------------------------------------------------------------------------------------------------------------------------------
Balance, end of year 23,251 16,558 15,361 5,477,416 5,351,144 5,350,977
----------------------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance, beginning of year 58,862 47,997 38,893
Net income 14,126 13,519 11,243
Common dividends (3,075) (2,535) (1,990)
Preferred dividends (110) (119) (149)
----------------------------------------------------------------------------------------
Balance, end of year 69,803 58,862 47,997
----------------------------------------------------------------------------------------
TREASURY STOCK, AT COST
Balance, beginning of year (10,213) (7,662) (4,829) (328,922) (326,918) (288,935)
Issuance of shares pursuant to employee
benefit plans 1,980 1,465 1,116 59,681 83,601 78,469
Treasury stock acquired (3,045) (4,066) (3,954) (64,184) (87,149) (116,697)
Other 179 50 5 4,697 1,544 245
----------------------------------------------------------------------------------------------------------------------------------
Balance, end of year (11,099) (10,213) (7,662) (328,728) (328,922) (326,918)
----------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED OTHER CHANGES IN EQUITY FROM
NONOWNER SOURCES
Balance, beginning of year 123 1,155 984
Cumulative effect of accounting changes, net of tax(3) 118 -- --
Net change in unrealized gains and losses on investment
securities, net of tax (222) (674) 214
Net change for cash flows hedges, net of tax 171 -- --
Net change in foreign currency translation adjustment,
net of tax (1,034) (358) (43)
----------------------------------------------------------------------------------------
Balance, end of year (844) 123 1,155
----------------------------------------------------------------------------------------
UNEARNED COMPENSATION
Balance, beginning of year (869) (456) (497)
Net issuance of restricted stock (1,133) (1,055) (380)
Restricted stock amortization 613 642 421
----------------------------------------------------------------------------------------------------------------------------------
Balance, end of year (1,389) (869) (456)
----------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKHOLDERS' EQUITY AND
COMMON SHARES OUTSTANDING 79,722 64,461 56,395 5,148,688 5,022,222 5,024,059
----------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 81,247 $ 66,206 $ 58,290
==================================================================================================================================
SUMMARY OF CHANGES IN EQUITY FROM
NONOWNER SOURCES
Net income $ 14,126 $ 13,519 $ 11,243
Other changes in equity from nonowner
sources, net of tax (967) (1,032) 171
----------------------------------------------------------------------------------------------------------------------------------
TOTAL CHANGES IN EQUITY FROM NONOWNER SOURCES $ 13,159 $ 12,487 $ 11,414
==================================================================================================================================
|
(1) Represents shares previously held by affiliates that have subsequently been
traded on the open market to third parties.
(2) In 2001, primarily includes $6.5 billion for the issuance of shares to
effect the Banamex acquisition.
(3) Refers to the adoption of SFAS 133 and the adoption of EITF 99-20 in 2001,
resulting in increases to equity from nonowner sources of $25 million and
$93 million, respectively.
See Notes to the Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS CITIGROUP INC. AND SUBSIDIARIES
YEAR ENDED DECEMBER 31,
-----------------------------------
IN MILLIONS OF DOLLARS 2001 2000 1999
----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 14,126 $ 13,519 $ 11,243
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of deferred policy acquisition costs and value of
insurance in force 2,062 1,676 1,613
Additions to deferred policy acquisition costs (2,592) (2,154) (1,961)
Depreciation and amortization 2,417 2,648 2,226
Deferred tax provision 1,014 1,537 598
Provision for credit losses 6,800 5,339 4,760
Change in trading account assets (12,391) (25,452) 9,928
Change in trading account liabilities (4,564) (5,393) (3,848)
Change in Federal funds sold and securities borrowed or purchased
under agreements to resell (28,932) 6,778 (17,824)
Change in Federal funds purchased and securities loaned or sold
under agreements to repurchase 39,834 18,034 11,566
Change in brokerage receivables net of brokerage payables 7,550 (1,033) (4,926)
Change in insurance policy and claims reserves 4,628 824 405
Net gains on sales of investments (578) (806) (541)
Venture capital activity 888 (1,044) (863)
Restructuring-related items and merger related costs 458 759 (53)
Cumulative effect of accounting changes, net of tax 158 -- 127
Other, net (4,300) (12,559) (1,227)
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TOTAL ADJUSTMENTS 12,452 (10,846) (20)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 26,578 2,673 11,223
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CASH FLOWS FROM INVESTING ACTIVITIES
Change in deposits at interest with banks (3,052) (3,898) (573)
Change in loans (34,787) (82,985) (120,970)
Proceeds from sales of loans 26,470 32,580 94,677
Purchases of investments (453,504) (103,461) (92,495)
Proceeds from sales of investments 403,078 67,561 49,678
Proceeds from maturities of investments 31,867 34,774 35,525
Other investments, primarily short-term, net (642) (3,086) 2,677
Capital expenditures on premises and equipment (1,774) (2,249) (1,750)
Proceeds from sales of premises and equipment, subsidiaries and
affiliates, and repossessed assets 1,802 1,232 3,437
Business acquisitions (7,067) (8,843) (6,321)
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NET CASH USED IN INVESTING ACTIVITIES (37,609) (68,375) (36,115)
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CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (3,185) (2,654) (2,139)
Issuance of common stock 875 958 758
Issuance of mandatorily redeemable securities of subsidiary trusts -- -- 600
Issuance of mandatorily redeemable securities of parent trusts 2,550 -- --
Redemption of mandatorily redeemable securities of subsidiary trusts (345) -- --
Redemption of preferred stock, net (220) (150) (388)
Treasury stock acquired (3,045) (4,066) (3,954)
Stock tendered for payment of withholding taxes (506) (593) (496)
Issuance of long-term debt 43,735 43,527 18,537
Payments and redemptions of long-term debt (34,795) (22,330) (18,835)
Change in deposits 39,398 39,013 32,160
Change in short-term borrowings including investment banking and
brokerage borrowings (32,091) 9,851 (580)
Contractholder fund deposits 8,363 6,077 5,933
Contractholder fund withdrawals (5,486) (4,758) (5,028)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 15,248 64,875 26,568
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS (323) (530) (98)
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Change in cash and due from banks 3,894 (1,357) 1,578
Cash and due from banks at beginning of period 14,621 15,978 14,400
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Cash and due from banks at end of period $ 18,515 $ 14,621 $ 15,978
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for income taxes $ 2,411 $ 5,357 $ 4,314
Cash paid during the period for interest 32,831 34,924 27,502
Non-cash investing activities--transfers to repossessed assets 445 820 862
Non-cash effects of accounting for the conversion of investments in
Nikko Securities Co., Ltd. -- 702 --
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See Notes to the Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CITIGROUP INC. AND SUBSIDIARIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of Citigroup and its subsidiaries (the Company). Twenty-to-fifty percent-owned affiliates, other than investments of designated venture capital subsidiaries, are accounted for under the equity method, and the pro rata share of their income (loss) is included in other income. Income from investments in less than twenty percent-owned companies is generally recognized when dividends are received. Gains and losses on disposition of branches, subsidiaries, affiliates, and other investments and charges for management's estimate of impairment in their value that is other than temporary, such that recovery of the carrying amount is deemed unlikely, are included in other income. On July 1, 2001 the Company adopted the provisions of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations," (SFAS 141) and certain provisions of SFAS No. 142, "Goodwill and Other Intangible Assets (SFAS 142), as required for goodwill and intangible assets resulting from business combinations consummated after June 30, 2001. Goodwill related to purchase acquisitions completed prior to June 30, 2001 is amortized on a straight-line basis over its estimated useful life through the end of the year, while goodwill related to purchase acquisitions completed after June 30, 2001, principally Banamex and EAB (as described in Note 2 to the Consolidated Financial Statements), is not amortized. On, January 1, 2002, Citigroup adopted the remaining provisions of SFAS 142 under which goodwill and intangible assets deemed to have indefinite useful lives will no longer be amortized, but will be subject to annual impairment tests. See Future Application of Accounting Standards in Note 1 to the Consolidated Financial Statements. Other intangible assets are amortized over their estimated useful lives, subject to periodic review for impairment that is other than temporary. Prior to the adoption of SFAS 141 and SFAS 142, if it was determined that enterprise level goodwill was unlikely to be recovered, impairment was measured on a discounted cash-flow basis. The Company recognizes a gain or loss in the Consolidated Statement of Income when a subsidiary issues its own stock to a third party at a price higher or lower than the Company's proportionate carrying amount.
Certain amounts in prior years have been reclassified to conform to the current year's presentation.
FOREIGN CURRENCY TRANSLATION. Assets and liabilities denominated in non-U.S. dollar currencies are translated into U.S. dollar equivalents using year-end spot foreign exchange rates. Revenues and expenses are translated monthly at amounts which approximate weighted average exchange rates, with resulting gains and losses included in income. The effects of translating operations with a functional currency other than the U.S. dollar are included in stockholders' equity along with related hedge and tax effects. The effects of translating operations with the U.S. dollar as the functional currency, including those in highly inflationary environments, are included in other income along with related hedge effects. Hedges of foreign currency exposures include forward currency contracts and designated issues of non-U.S. dollar debt.
USE OF ESTIMATES. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CASH FLOWS. Cash equivalents are defined as those amounts included in cash and due from banks. Cash flows from risk management activities are classified in the same category as the related assets and liabilities.
INVESTMENTS. Investments include fixed maturity and equity securities. Fixed maturities include bonds, notes and redeemable preferred stocks, as well as certain loan-backed and structured securities subject to prepayment risk. Equity securities include common and non-redeemable preferred stocks. Fixed maturities classified as "held to maturity" represent securities that the Company has both the ability and the intent to hold until maturity and are carried at amortized cost. Fixed maturity securities classified as "available-for-sale" and marketable equity securities are carried at fair values, based primarily on quoted market prices or if quoted market prices are not available, discounted expected cash flows using market rates commensurate with the credit quality and maturity of the investment, with unrealized gains and losses and related hedge effects reported in a separate component of stockholders' equity, net of applicable income taxes. Declines in fair value that are determined to be other than temporary are charged to earnings. Accrual of income is suspended on fixed maturities that are in default, or on which it is likely that future interest payments will not be made as scheduled. Fixed maturities subject to prepayment risk are accounted for using the retrospective method, where the principal amortization and effective yield are recalculated each period based on actual historical and projected future cash flows. Realized gains and losses on sales of investments are included in earnings on a specific identified cost basis.
Citigroup's venture capital subsidiaries include subsidiaries registered as Small Business Investment Companies and other subsidiaries that engage exclusively in venture capital activities. Venture capital investments are carried at fair value, with changes in fair value recognized in other income. The fair values of publicly-traded securities held by these subsidiaries are generally based upon quoted market prices. In certain situations, including thinly-traded securities, large-block holdings, restricted shares or other special situations, the quoted market price is adjusted to produce an estimate of the attainable fair value for the securities. For securities held by these subsidiaries that are not publicly traded, estimates of fair value are made based upon review of the investee's financial results, condition, and prospects, together with comparisons to similar companies for which quoted market prices are available.
SECURITIES BORROWED AND SECURITIES LOANED are recorded at the amount of cash advanced or received. With respect to securities loaned, the Company receives cash collateral in an amount in excess of the market value of securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis with additional collateral obtained as necessary. Interest received or paid is recorded in interest income or interest expense.
REPURCHASE AND RESALE AGREEMENTS are treated as collateralized financing transactions and are carried at the amounts at which the securities will be subsequently reacquired or resold, including accrued interest, as specified in the respective agreements. The Company's policy is to take possession of securities purchased under agreements to resell. The market value of securities to be repurchased and resold is monitored, and additional collateral is obtained where appropriate to protect against credit exposure.
TRADING ACCOUNT ASSETS AND LIABILITIES include securities, commodities and derivatives and are recorded at either market value or, when market prices are not readily available, fair value, which is determined under an alternative approach, such as matrix or model pricing. Obligations to deliver securities sold but not yet purchased are also valued at market and included in trading account liabilities. The determination of market or fair value considers various factors, including: closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options, warrants and derivatives; price activity for equivalent or synthetic instruments; counterparty credit quality; the potential impact on market prices or fair value of liquidating the Company's positions in an orderly manner over a reasonable period of time under current market conditions; and derivatives transaction maintenance costs during that period. Interest expense on trading account liabilities is reported as a reduction of interest revenues.
Commodities include physical quantities of commodities involving future settlement or delivery, and related gains or losses are reported as principal transactions.
Derivatives used for trading purposes include interest rate, currency, equity, credit, and commodity swap agreements, options, caps and floors, warrants, and financial and commodity futures and forward contracts. The fair value of derivatives is determined based upon liquid market prices evidenced by exchange traded prices, broker-dealer quotations or prices of other transactions with similarly rated counterparties. The fair value includes an adjustment for individual counterparty credit risk and other adjustments, as appropriate, to reflect liquidity and ongoing servicing costs. The fair values (unrealized gains and losses) associated with derivatives are reported net by counterparty, provided a legally enforceable master netting agreement exists, and are netted across products and against cash collateral when such provisions are stated in the master netting agreement. Derivatives in a net receivable position, as well as options owned and warrants held, are reported as trading account assets. Similarly, derivatives in a net payable position, as well as options written and warrants issued, are reported as trading account liabilities. Revenues generated from derivative instruments used for trading purposes are reported as principal transactions and include realized gains and losses as well as unrealized gains and losses resulting from changes in the market or fair value of such instruments.
COMMISSIONS, UNDERWRITING AND PRINCIPAL TRANSACTIONS revenues and related
expenses are recognized in income on a trade date basis.
CONSUMER LOANS includes loans managed by the Global Consumer business, The Citigroup Private Bank and consumer loans issued by Banamex in Mexico. Consumer loans are generally written off not later than a predetermined number of days past due primarily on a contractual basis, or earlier in the event of bankruptcy. The number of days is set at an appropriate level by loan product and by country. The policy for suspending accruals of interest on consumer loans varies depending on the terms, security and loan loss experience characteristics of each product, and in consideration of write-off criteria in place.
COMMERCIAL LOANS represent loans managed by Global Corporate and commercial loans issued by Banamex in Mexico. Commercial loans are identified as impaired and placed on a cash (nonaccrual) basis when it is determined that the payment of interest or principal is doubtful of collection, or when interest or principal is past due for 90 days or more, except when the loan is well secured and in the process of collection. Any interest accrued is reversed and charged against current earnings, and interest is thereafter included in earnings only to the extent actually received in cash. When there is doubt regarding the ultimate collectibility of principal, all cash receipts are thereafter applied to reduce the recorded investment in the loan. Impaired commercial loans are written down to the extent that principal is judged to be uncollectible. Impaired collateral-dependent loans where repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment are written down to the lower of cost or collateral value. Cash-basis loans are returned to an accrual status when all contractual principal and interest amounts are reasonably assured of repayment and there is a sustained period of repayment performance in accordance with the contractual terms.
LEASE FINANCING TRANSACTIONS. Loans include the Company's share of aggregate rentals on lease financing transactions and residual values net of related unearned income. Lease financing transactions substantially represent direct financing leases and also include leveraged leases. Unearned income is amortized under a method which results in an approximate level rate of return when related to the unrecovered lease investment. Gains and losses from sales of residual values of leased equipment are included in other income.
SECURITIZATIONS primarily include sales of credit card receivables, mortgages and home equity loans.
Revenue on securitized credit card receivables is recorded monthly as earned over the term of each securitization transaction, which may range up to 12 years. The revolving nature of the receivables sold and the monthly recognition of revenue result in a pattern of recognition that is similar to the pattern that would be experienced if the receivables had not been sold.
Net revenue on securitized credit card receivables is collected over the life of each sale transaction. The net revenue is based upon the sum of finance charges and fees received from cardholders and interchange revenue earned on cardholder transactions, less the sum of the yield paid to investors, credit losses, transaction costs, and a contractual servicing fee, which is also retained by certain Citigroup subsidiaries as servicers.
The Company retains a seller's interest in the credit card receivables transferred to the trust, which is not in securitized form. Accordingly, the seller's interest is carried on a historical cost basis and classified as consumer loans. Retained interests in securitized mortgage loans are classified as investments.
Servicing rights retained in the securitization of mortgage and home equity loans are measured by allocating the carrying value of the loans between the assets sold and the interest retained, based on the relative fair value at the date of the securitization. The fair market values are determined using either financial models, quoted market prices or sales of similar assets. Gain or loss on the sale of mortgage loans is recognized at the time of the securitizations. Mortgage servicing assets are amortized over the expected life of the loan and are evaluated periodically for impairment.
LOANS HELD FOR SALE. Credit card and other receivables and mortgage loans originated for sale are classified as loans held for sale, which are accounted for at the lower of cost or market value in other assets with net credit losses charged to other income.
ALLOWANCE FOR CREDIT LOSSES represents management's estimate of probable losses inherent in the portfolio. Attribution of the allowance is made for analytical purposes only, and the entire allowance is available to absorb probable credit losses inherent in the portfolio including unfunded commitments. Additions to the allowance are made by means of the provision for credit losses. Credit losses are deducted from the allowance, and subsequent recoveries are added. Securities received in exchange for loan claims in debt restructurings are initially recorded at fair value, with any gain or loss reflected as a recovery or charge-off to the allowance, and are subsequently accounted for as securities available-for-sale.
Larger-balance, non-homogenous exposures representing significant individual credit exposures are evaluated based upon the borrower's overall financial condition, resources, and payment record; the prospects for support from any financially responsible guarantors; and, if appropriate, the realizable value of any collateral. The allowance for credit losses attributed to these loans is established via a process which begins with estimates of probable loss inherent in the portfolio based upon various statistical analyses. These analyses consider historical and projected default rates and loss severities; internal risk ratings; geographic, industry, and other environmental factors; and model imprecision. Management also considers overall portfolio indicators including trends in internally risk-rated exposures, classified exposures, cash-basis loans, and historical and forecasted write-offs; and a review of industry, geographic, and portfolio concentrations, including current developments within those segments. In addition, management considers the current business strategy and credit process, including credit limit setting and compliance, credit approvals, loan underwriting criteria, and loan workout procedures. Within the allowance for credit losses, a valuation allowance is maintained for larger-balance, non-homogenous loans that have been individually determined to be impaired. This estimate considers all available evidence including, as appropriate, the present value of the expected future cash flows discounted at the loan's contractual effective rate, the secondary market value of the loan and the fair value of collateral.
Each portfolio of smaller balance, homogenous loans, including consumer mortgage, installment, revolving credit and most other consumer loans, is collectively evaluated for impairment. The allowance for credit losses attributed to these loans is established via a process that begins with estimates of probable losses inherent in the portfolio, based upon various statistical analyses. These include migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, together with analyses that reflect current trends and conditions. Management also considers overall portfolio indicators including historical credit losses, delinquent, non-performing and classified loans, and trends in volumes and terms of loans; an evaluation of overall credit quality and the credit process, including lending policies and procedures; consideration of economic, geographical, product, and other environmental factors; and model imprecision.
This evaluation includes an assessment of the ability of borrowers with foreign currency obligations to obtain the foreign currency necessary for orderly debt servicing.
REPOSSESSED ASSETS. Upon repossession, loans are adjusted, if necessary, to the estimated fair value of the underlying collateral and transferred to Repossessed Assets, which is reported in other assets net of a valuation allowance for selling costs and net declines in value as appropriate.
RISK MANAGEMENT ACTIVITIES-DERIVATIVES USED FOR NON-TRADING PURPOSES. The Company manages its exposures to market rate movements outside of its trading activities by modifying the asset and liability mix, either directly or through the use of derivative financial products including interest rate swaps, futures, forwards, and purchased option positions such as interest rate caps, floors, and collars as well as foreign exchange contracts. These end-user derivatives are carried at fair value in other assets or other liabilities.
To qualify as a hedge, the hedge relationship is designated and formally documented at inception detailing the particular risk management objective and strategy for the hedge which includes the item and risk that is being hedged, the derivative that is being used, as well as how effectiveness is being assessed. A derivative must be highly effective in accomplishing the objective of offsetting either changes in fair value or cash flows for the risk being hedged. The effectiveness of these hedging relationships is evaluated on a retrospective and prospective basis using quantitative measures of correlation. If a hedge relationship is found to be ineffective, it no longer qualifies as a hedge and any excess gains or losses attributable to such ineffectiveness, as well as subsequent changes in fair value, are recognized in other income.
The foregoing criteria are applied on a decentralized basis, consistent with the level at which market risk is managed, but are subject to various limits and controls. The underlying asset, liability, firm commitment or forecasted transaction may be an individual item or a portfolio of similar items.
For fair value hedges, in which derivatives hedge the fair value of assets, liabilities or firm commitments, changes in the fair value of derivatives are reflected in other income, together with changes in the fair value of the related hedged item. The net amount, representing hedge ineffectiveness, is reflected in current earnings. Citigroup's fair value hedges are primarily the hedges of fixed-rate long-term debt, loans and available for sale securities.
For cash flow hedges, in which derivatives hedge the variability of cash flows related to floating rate assets, liabilities or forecasted transactions, the accounting treatment depends on the effectiveness of the hedge. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, changes in the derivatives' fair value will not be included in current earnings but are reported as other changes in stockholders' equity from nonowner sources. These changes in fair value will be included in earnings of future periods when earnings are also affected by the variability of the hedged cash flows. To the extent these derivatives are not effective, changes in their fair values are immediately included in other income. Citigroup's cash flow hedges primarily include hedges of floating rate credit card receivables and loans, rollovers of commercial paper and foreign currency denominated funding. Cash flow hedges also include hedges of certain forecasted transactions up to a maximum tenor of 30 years, although a substantial majority of the maturities is under five years.
For net investment hedges, in which derivatives hedge the foreign currency exposure of a net investment in a foreign operation, the accounting treatment will similarly depend on the effectiveness of the hedge. The effective portion of the change in fair value of the derivative, including any forward premium or discount, is reflected in other changes in stockholders' equity from nonowner sources as part of the foreign currency translation adjustment.
Non-trading derivatives that are either hedging instruments that are carried at fair value or do not qualify as hedges are also carried at fair value with changes in value included either as an element of the yield or return on the hedged item or in other income.
For those hedge relationships that are terminated, hedge designations that are removed, or forecasted transactions that are no longer expected to occur, the hedge accounting treatment described in the paragraphs above is no longer applied. The end-user derivative is terminated or transferred to the trading account. For fair value hedges, any changes to the hedged item remain as part of the basis of the asset or liability and are ultimately reflected as an element of the yield. For cash flow hedges, any changes in fair value of the end-user derivative remain in other changes in stockholders' equity from nonowner sources and are included in earnings of future periods when earnings are also affected by the variability of the hedged cash flow. If the hedged relationship was discontinued or a forecasted transaction is not expected to occur when scheduled, any changes in fair value of the end-user derivative are immediately reflected in other income.
Prior to the adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), on January 1, 2001 (see Accounting Changes below), end-user derivatives designated in qualifying hedges were accounted for consistent with the risk management strategy as follows. Amounts payable and receivable on interest rate swaps and options were accrued according to the contractual terms and included in the related revenue and expense category as an element of the yield on the associated instrument (including the amortization of option premiums). Amounts paid or received over the life of futures contracts were deferred until the contract is closed; accumulated deferred amounts on futures contracts and amounts paid or received at settlement of forward contracts were accounted for as elements of the carrying value of the associated instrument, affecting the resulting yield. End-user contracts related to instruments carried at fair value were also carried at fair value, with amounts payable and receivable accounted for as an element of the yield on the associated instrument. When related to securities available-for-sale, fair value adjustments were reported in stockholders' equity, net of tax.
If an end-user derivative contract was terminated, any resulting gain or loss was deferred and amortized over the original term of the agreement provided that the effectiveness criteria had been met. If the underlying designated items were no longer held, or if an anticipated transaction was no longer likely to occur, any previously unrecognized gain or loss on the derivative contract was recognized in earnings and the contract was accounted for at fair value with subsequent changes recognized in earnings.
Foreign exchange contracts which qualified as hedges of foreign currency exposures, including net capital investments outside the U.S., were revalued at the spot rate with any forward premium or discount recognized over the life of the contract in interest revenue or interest expense. Gains and losses on foreign exchange contracts which qualified as a hedge of a firm commitment were deferred and recognized as part of the measurement of the related transaction, unless deferral of a loss would have led to recognizing losses on the transaction in later periods.
INSURANCE PREMIUMS from long-duration contracts, principally life insurance, are earned when due. Premiums from short-duration insurance contracts are earned over the related contract period. Short-duration contracts include primarily property and casualty, including estimated ultimate premiums on retrospectively rated policies, and credit life and accident and health policies.
VALUE OF INSURANCE IN FORCE, included in other assets, represents the actuarially determined present value of anticipated profits to be realized from life and accident and health business on insurance in force at the date of the Company's acquisition of its insurance subsidiaries using the same assumptions that were used for computing related liabilities where appropriate. The value of insurance in force acquired prior to December 31, 1993 is amortized over the premium paying periods in relation to anticipated premiums. The value of insurance in force relating to the 1993 acquisition of The Travelers Corporation was the actuarially determined present value of the projected future profits discounted at interest rates ranging from 14% to 18% for the business acquired. The value of insurance in force is amortized over the contract period using current interest crediting rates to accrete interest and using amortization methods based on the specified products. Traditional life insurance is amortized over the period of anticipated premiums; universal life in relation to estimated gross profits; and annuity contracts employing a level yield method. The value of insurance in force is reviewed periodically for recoverability to determine if any adjustment is required.
DEFERRED POLICY ACQUISITION COSTS, included in other assets, for the life insurance business represent the costs of acquiring new business, principally commissions, certain underwriting and agency expenses and the cost of issuing policies. Deferred policy acquisition costs for the traditional life business are amortized over the premium-paying periods of the related policies, in proportion to the ratio of the annual premium revenue to the total anticipated premium revenue. Deferred policy acquisition costs of other business lines are generally amortized over the life of the insurance contract or at a constant rate based upon the present value of estimated gross profits expected to be realized. For certain property and casualty lines, acquisition costs (primarily commissions and premium taxes) have been deferred to the extent recoverable from future earned premiums and are amortized ratably over the terms of the related policies. Deferred policy acquisition costs are reviewed to determine if they are recoverable from future income, including investment income, and, if not recoverable, are charged to expense. All other acquisition expenses are charged to operations as incurred.
SEPARATE AND VARIABLE ACCOUNTS primarily represent funds for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholders. Each account has specific investment objectives. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of the Company. The assets of these accounts are generally carried at market value. Amounts assessed to the contractholders for management services are included in revenues. Deposits, net investment income and realized investment gains and losses for these accounts are excluded from revenues, and related liability increases are excluded from benefits and expenses.
INSURANCE POLICY AND CLAIMS RESERVES represent liabilities for future insurance policy benefits. Insurance reserves for traditional life insurance, annuities, and accident and health policies have been computed based upon mortality, morbidity, persistency and interest rate assumptions (ranging from 2.5% to 8.1%) applicable to these coverages, including adverse deviation. These assumptions consider Company experience and industry standards and may be revised if it is determined that future experience will differ substantially from that previously assumed. Property-casualty reserves include (1) unearned premiums representing the unexpired portion of policy premiums, and (2) estimated provisions for both reported and unreported claims incurred and related expenses. The reserves are adjusted regularly based on experience.
In determining insurance policy and claims reserves, the Company performs a continuing review of its overall position, its reserving techniques and its reinsurance. The reserves are also reviewed periodically by a qualified actuary employed by the Company. Reserves for property-casualty insurance losses represent the estimated ultimate cost of all incurred claims and claim adjustment expenses. Since the reserves are based on estimates, the ultimate liability may be more or less than such reserves. The effects of changes in such estimated reserves are included in the results of operations in the period in which the estimates are changed. Such changes may be material to the results of operations and could occur in a future period.
CONTRACTHOLDER FUNDS represent receipts from the issuance of universal life, pension investment and certain individual annuity contracts. Such receipts are considered deposits on investment contracts that do not have substantial mortality or morbidity risk. Account balances are increased by deposits received and interest credited and are reduced by withdrawals, mortality charges and administrative expenses charged to the contractholders. Calculations of contractholder account balances for investment contracts reflect lapse, withdrawal and interest rate assumptions (ranging from 1.9% to 14.0%) based on contract provisions, the Company's experience and industry standards. Contractholder funds also include other funds that policyholders leave on deposit with the Company.
EMPLOYEE BENEFITS EXPENSE includes prior and current service costs of pension and other postretirement benefit plans, which are accrued on a current basis, contributions and unrestricted awards under other employee plans, the amortization of restricted stock awards, and costs of other employee benefits. There are no charges to earnings upon the grant or exercise of fixed stock options or the subscription for or purchase of stock under stock purchase agreements. Compensation expense related to performance-based stock options granted in prior periods was recorded over the periods to the vesting dates. Upon issuance of previously unissued shares under employee plans, proceeds received in excess of par value are credited to additional paid-in capital. Upon issuance of treasury shares, the difference between the proceeds received and the average cost of treasury shares is recorded in additional paid-in capital.
INCOME TAXES. Deferred taxes are recorded for the future tax consequences of events that have been recognized in the financial statements or tax returns, based upon enacted tax laws and rates. Deferred tax assets are recognized subject to management's judgment that realization is more likely than not. The Company and its wholly owned domestic non-life insurance subsidiaries file a consolidated Federal income tax return. The major life insurance subsidiaries are included in their own consolidated Federal income tax return. Associates filed separate consolidated Federal income tax returns prior to the merger.
EARNINGS PER COMMON SHARE is computed after recognition of preferred stock dividend requirements. Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period, excluding restricted stock. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised and has been computed after giving consideration to the weighted average dilutive effect of the Company's convertible securities, common stock warrants, stock options and the shares issued under the Company's Capital Accumulation Plan and other restricted stock plans.
ACCOUNTING CHANGES
ADOPTION OF EITF 99-20. During the second quarter of 2001, the Company adopted Emerging Issues Task Force (EITF) Issue No. 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets" (EITF 99-20). EITF 99-20 provides new guidance regarding income recognition and identification and determination of impairment on certain asset-backed securities. The initial adoption resulted in a cumulative adjustment of $116 million after-tax, recorded as a charge to earnings, and an increase of $93 million included in other changes in stockholders' equity from nonowner sources.
DERIVATIVES AND HEDGE ACCOUNTING. On January 1, 2001, Citigroup adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." These new rules changed the accounting treatment of derivative contracts (including foreign exchange contracts) that are employed to manage risk outside of Citigroup's trading activities, as well as certain derivative instruments embedded in other contracts. SFAS 133 requires that all derivatives be recorded on the balance sheet at their fair value. The treatment of changes in the fair value of derivatives depends on the character of the transaction, including whether it has been designated and qualifies as part of a hedging relationship. The majority of Citigroup's derivatives are entered into for trading purposes and were not impacted by the adoption of SFAS 133. The cumulative effect of adopting SFAS 133 at January 1, 2001 was an after-tax charge of $42 million included in net income and an increase of $25 million included in other changes in stockholders' equity from nonowner sources.
BUSINESS COMBINATIONS. Effective July 1, 2001, the Company adopted the provisions of SFAS No. 141, "Business Combinations," and certain provisions of SFAS No. 142, "Goodwill and Other Intangible Assets" as required for goodwill and intangible assets resulting from business combinations consummated after June 30, 2001. The new rules require that all business combinations initiated after June 30, 2001 be accounted for under the purchase method. The nonamortization provisions of the new rules affecting goodwill and intangible assets deemed to have indefinite lives are effective for all purchase business combinations completed after June 30, 2001.
INSURANCE-RELATED ASSESSMENTS. During the first quarter of 1999, the Company adopted Statement of Position ("SOP") 97.3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments." SOP 97-3 provides guidance for determining when an entity should recognize a liability for guaranty-fund and other insurance-related assessments, how to measure that liability, and when an asset may be recognized for the recovery of such assessments through premium tax offsets or policy surcharges. The initial adoption resulted in a cumulative adjustment recorded as a charge to earnings of $135 million after-tax and minority interest.
DEPOSIT ACCOUNTING. During the first quarter of 1999, the Company adopted SOP 98-7, "Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk." SOP 98-7 provides guidance on how to account for insurance and reinsurance contracts that do not transfer insurance risk and applies to all entities and all such contracts, except for long-duration life and health insurance contracts. The method used to account for such contracts is referred to as deposit accounting. The initial adoption resulted in a cumulative adjustment recorded as a credit to earnings of $23 million after-tax and minority interest.
START-UP COSTS. During the first quarter of 1999, the Company adopted SOP 98-5, "Reporting on the Costs of Start-Up Activities." SOP 98-5 requires costs of start up activities and organization costs to be expensed as incurred. The initial adoption resulted in a cumulative adjustment recorded as a charge to earnings of $15 million after-tax.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
On January 1, 2002, Citigroup adopted the remaining provisions of SFAS 142, when
the rules became effective for calendar year companies. Under the new rules,
effective January 1, 2002, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized, but will be subject to annual
impairment tests. Other intangible assets will continue to be amortized over
their useful lives.
Based on current levels of goodwill and an evaluation of the Company's intangible assets, which determined that certain intangible assets should be reclassified as goodwill and identified as other intangible assets that have indefinite lives, the nonamortization provisions of the new standards will reduce other expense by approximately $570 million and increase net income by approximately $450 million in 2002.
During 2002, the Company will perform the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002. It is not expected that the adoption of the remaining provisions of SFAS 142 will have a material effect on the financial statements as a result of these impairment tests.
TRANSFERS AND SERVICING OF FINANCIAL ASSETS
In September 2000, FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, a replacement
of FASB Statement No. 125" (SFAS 140). In July 2001, FASB issued Technical
Bulletin No. 01-1, "Effective Date for Certain Financial Institutions of Certain
Provisions of Statement 140 Related to the Isolation of Transferred Assets."
Certain provisions of SFAS 140 require that the structure for transfers of financial assets to certain securitization vehicles be modified to comply with revised isolation guidance for institutions subject to receivership by the Federal Deposit Insurance Corporation. These provisions are effective for transfers taking place after December 31, 2001, with an additional transition period ending no later than September 30, 2006 for transfers to certain master trusts. It is not expected that these provisions will materially affect the financial statements. SAFS 140 also provides revised guidance for an entity to be considered a qualifying special purpose entity.
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
On January 1, 2002, Citigroup adopted No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS 144), when the rule became effective for
calendar year companies. SFAS 144 establishes additional criteria as compared
to existing generally accepted accounting principles to determine when a
long-lived asset is held for sale. It also broadens the definition of
"discontinued operations," but does not allow for the accrual of future
operating losses, as was previously permitted.
The provisions of the new standard are generally to be applied prospectively. The provisions of SFAS 144 will affect the timing of discontinued operations treatment for the planned initial public offering and tax-free distribution of Travelers Property Casualty Corp.
2. BUSINESS DEVELOPMENTS
PLANNED INITIAL PUBLIC OFFERING AND TAX-FREE DISTRIBUTION OF TRAVELERS
PROPERTY CASUALTY CORP.
Citigroup announced that its wholly-owned subsidiary, Travelers Property
Casualty Corp. (TPC), intends to sell a minority interest in TPC in an
initial public offering and Citigroup intends to make a tax-free distribution
to its stockholders of such amount of the remainder of its interest in TPC so
that it will hold approximately 9.9% of the outstanding voting securities of
TPC following the initial public offering and tax-free distribution.
The distribution is subject to various regulatory approvals as well as a private letter ruling from the Internal Revenue Service that the distribution will be tax-free to Citigroup and its stockholders. Citigroup has no obligation to consummate the distribution, whether or not these conditions are satisfied.
ACQUISITION OF BANAMEX
On August 6, 2001, Citicorp completed its acquisition of 99.86% of the issued
and outstanding ordinary shares of Grupo Financiero Banamex-Accival (Banamex), a
leading Mexican financial institution, for approximately $12.5 billion in cash
and Citigroup stock. Citicorp completed the acquisition by settling transactions
that were conducted on the Mexican Stock Exchange. On September 24, 2001,
Citicorp became the holder of 100% of the issued and outstanding ordinary shares
of Banamex following a share redemption by Banamex. Banamex's and Citicorp's
banking operations in Mexico have been integrated and conduct business under the
"Banamex" brand name.
ACQUISITION OF EAB
On July 17, 2001, Citibank completed its acquisition of European American Bank
(EAB), a New York state-chartered bank, for $1.6 billion plus the assumption of
$350 million in EAB preferred stock.
ACQUISITION OF ASSOCIATES
On November 30, 2000, Citigroup Inc., completed its acquisition of Associates
First Capital Corporation (Associates). The acquisition was consummated
through a merger of a subsidiary of Citigroup with and into Associates (with
Associates as the surviving corporation) pursuant to which each share of
Associates common stock became a right to receive .7334 of a share of
Citigroup Inc. common stock (534.5 million shares). Subsequent to the
acquisition, Associates was contributed to and became a wholly-owned
subsidiary of Citicorp and Citicorp issued a full and unconditional guarantee
of the outstanding long-term debt securities and commercial paper of
Associates. Associates' debt securities and commercial paper will no longer
be separately rated. The acquisition was accounted for as a pooling of
interests.
ACQUISITION OF TRAVELERS PROPERTY CASUALTY CORP.
MINORITY INTEREST
During April 2000, a subsidiary of the Company completed a cash tender offer to
purchase all of the outstanding shares of Travelers Property Casualty Corp. not
previously owned.
3. BUSINESS SEGMENT INFORMATION
Citigroup is a diversified bank-holding company whose businesses provide a broad range of financial services to consumer and corporate customers around the world. The Company's activities are conducted through Global Consumer, Global Corporate, Global Investment Management and Private Banking, and Investment Activities. These segments reflect the characteristics of its products and services and the clients to which those products or services are delivered.
The Global Consumer segment includes a global, full-service consumer franchise encompassing, among other things, branch and electronic banking, consumer lending services, investment services, credit and charge card services, and auto and homeowners insurance. The businesses included in the Company's Global Corporate segment provide corporations, governments, institutions, and investors in over 100 countries and territories with a broad range of financial products and services, including investment advice, financial planning and retail brokerage services, banking and financial services, and commercial insurance products. The Global Investment Management and Private Banking segment offers a broad range of life insurance, annuity and asset management products and services from global investment centers around the world, including individual annuity, group annuity, individual life insurance products, COLI products, mutual funds, closed-end funds, managed accounts, unit investment trusts, variable annuities, pension administration, and personalized wealth management services distributed to institutional, high net worth, and retail clients. The Investment Activities segment includes the Company's venture capital activities, realized investment gains and losses from certain insurance-related investments, results from certain proprietary investments and the results of certain investments in countries that refinanced debt under the 1989 Brady Plan or plans of a similar nature. Corporate/Other includes net corporate treasury results, corporate staff and other corporate expenses, certain intersegment eliminations, and the remainder of Internet-related development activities not allocated to the individual businesses. The accounting policies of these reportable segments are the same as those disclosed in Note 1 to the Consolidated Financial Statements.
The following table presents certain information regarding these segments:
TOTAL REVENUES, NET PROVISION FOR
OF INTEREST EXPENSE(1) INCOME TAXES
IN MILLIONS OF DOLLARS, EXCEPT --------------------------------- ---------------------------------
IDENTIFIABLE ASSETS IN BILLIONS 2001 2000 1999 2001 2000 1999
---------------------------------------------------------------------------------------------------------------
Global Consumer $ 37,697 $ 32,999 $ 29,816 $ 4,023 $ 3,315 $ 2,911
Global Corporate 34,297 33,479 28,688 2,929 3,234 2,902
Global Investment Management
and Private Banking 7,553 7,145 6,099 817 786 702
Investment Activities 907 2,309 1,089 264 805 356
Corporate/Other (397) (744) 30 (507) (615) (341)
---------------------------------------------------------------------------------------------------------------
Total $ 80,057 $ 75,188 $ 65,722 $ 7,526 $ 7,525 $ 6,530
===============================================================================================================
IDENTIFIABLE
NET INCOME (LOSS)(2)(3)(4) ASSETS AT YEAR-END
IN MILLIONS OF DOLLARS, EXCEPT --------------------------------- ---------------------------------
IDENTIFIABLE ASSETS IN BILLIONS 2001 2000 1999 2001 2000 1999
---------------------------------------------------------------------------------------------------------------
Global Consumer $ 7,222 $ 5,860 $ 4,897 $ 357 $ 275 $ 235
Global Corporate 5,707 6,020 5,259 572 506 449
Global Investment Management
and Private Banking 1,528 1,434 1,221 99 93 83
Investment Activities 530 1,383 650 9 11 11
Corporate/Other (861) (1,178) (784) 14 17 18
---------------------------------------------------------------------------------------------------------------
TOTAL $ 14,126 $ 13,519 $ 11,243 $ 1,051 $ 902 $ 796
===============================================================================================================
|
(1) Includes total revenues, net of interest expense in the United States of
$55.4 billion, $53.3 billion, and $47.5 billion in 2001, 2000, and 1999,
respectively. Includes total revenues, net of interest expense in Mexico of
$2.1 billion, $603 million, and $531 million in 2001, 2000, and 1999,
respectively. There were no other individual foreign countries that were
material to total revenues, net of interest expense.
(2) For 2001, Global Consumer, Global Corporate, Global Investment Management
and Private Banking, and Corporate/Other results reflect after-tax
restructuring-related charges (credits) of $144 million, $137 million, $7
million, and ($3) million, respectively. For 2000, Global Consumer, Global
Corporate, Global Investment Management and Private Banking, and
Corporate/Other results reflect after-tax restructuring-related charges and
merger-related costs of $144 million, $146 million, $11 million, and $320
million, respectively. The 2000 results also reflect after-tax Housing
Finance unit charges in Corporate/Other. For 1999, Global Consumer, Global
Corporate, Global Investment Management and Private Banking, and
Corporate/Other results reflect after-tax restructuring-related charges
(credits) of $78 million, ($121) million, ($2) million, and $20 million,
respectively.
(3) Includes provision for benefits, claims and credit losses in the Global
Consumer results of $9.4 billion, $7.9 billion, and $7.3 billion, in the
Global Corporate results of $6.5 billion, $5.2 billion, and $4.3 billion, in
the Global Investment Management and Private Banking results of $2.6
billion, $2.4 billion, and $2.0 billion, and in the Corporate/Other results
of $1 million, $36 million, and $208 million for 2001, 2000, and 1999,
respectively. Includes provision for credit losses in the Investment
Activities results of $7 million in 2000.
(4) For 2001, Corporate/Other includes after-tax charges of $42 million and
$116 million for the cumulative effect of accounting changes related to the
implementation of SFAS 133 and EITF 99 20, respectively. For 1999,
Corporate/Other includes after-tax charges (credits) of $135 million, ($23)
million, and $15 million for the cumulative effect of accounting changes
related to the implementation of SOP 97-3, SOP 98-7, and SOP 98-5,
respectively. See Note 1 to the Consolidated Financial Statements.
4. INVESTMENTS
IN MILLIONS OF DOLLARS AT YEAR-END 2001 2000
-------------------------------------------------------------------------------------------
Fixed maturities, primarily available for sale at fair value $ 139,344 $ 99,484
Equity securities, primarily at fair value 7,577 6,652
Venture capital, at fair value 4,316 5,204
Short-term and other 9,600 8,782
-------------------------------------------------------------------------------------------
$ 160,837 $ 120,122
===========================================================================================
|
The amortized cost and fair value of investments in fixed maturities and equity securities at December 31, were as follows:
2001
---------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
IN MILLIONS OF DOLLARS AT YEAR-END COST GAINS LOSSES VALUE
------------------------------------------------------------------------------------------
FIXED MATURITY SECURITIES HELD TO MATURITY,
PRINCIPALLY MORTGAGE-BACKED
SECURITIES(1) $ 26 $ -- $ -- $ 26
------------------------------------------------------------------------------------------
FIXED MATURITY SECURITIES AVAILABLE FOR
SALE
Mortgage-backed securities, principally
obligations of U.S. Federal agencies $ 28,614 $ 438 $ 250 $ 28,802
U.S. Treasury and Federal agencies 6,136 62 85 6,113
State and municipal 16,712 441 152 17,001
Foreign government(2) 44,942 266 79 45,129
U.S. corporate 30,097 843 591 30,349
Other debt securities 11,516 554 146 11,924
------------------------------------------------------------------------------------------
138,017 2,604 1,303 139,318
------------------------------------------------------------------------------------------
TOTAL FIXED MATURITIES $ 138,043 $ 2,604 $ 1,303 $ 139,344
==========================================================================================
EQUITY SECURITIES(3) $ 7,401 $ 400 $ 224 $ 7,577
==========================================================================================
2000
---------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
IN MILLIONS OF DOLLARS AT YEAR-END cost gains losses value
------------------------------------------------------------------------------------------
FIXED MATURITY SECURITIES HELD TO MATURITY,
PRINCIPALLY MORTGAGE-BACKED
SECURITIES(1) $ 28 $ -- $ -- $ 28
------------------------------------------------------------------------------------------
FIXED MATURITY SECURITIES AVAILABLE FOR
SALE
Mortgage-backed securities, principally
obligations of U.S. Federal agencies $ 16,196 $ 329 $ 211 $ 16,314
U.S. Treasury and Federal agencies 5,680 171 15 5,836
State and municipal 15,314 730 141 15,903
Foreign government(2) 25,934 148 154 25,928
U.S. corporate 25,143 589 547 25,185
Other debt securities 9,633 763 106 10,290
------------------------------------------------------------------------------------------
97,900 2,730 1,174 99,456
------------------------------------------------------------------------------------------
TOTAL FIXED MATURITIES $ 97,928 $ 2,730 $ 1,174 $ 99,484
==========================================================================================
EQUITY SECURITIES(3) $ 6,757 $ 340 $ 445 $ 6,652
==========================================================================================
|
(1) Recorded or amortized cost.
(2) Increase primarily relates to inclusion of Banamex portfolio of Mexican
government securities.
(3) Includes non-marketable equity securities carried at cost, which are
reported in both the amortized cost and fair value columns.
The accompanying table shows components of interest and dividends on investments, realized gains and losses from sales of investments, and net gains on investments held by venture capital subsidiaries:
IN MILLIONS OF DOLLARS 2001 2000 1999 --------------------------------------------------------------------- Taxable interest $ 5,687 $ 6,743 $ 6,916 Interest exempt from U.S. Federal income tax 827 762 688 Dividends 263 393 306 --------------------------------------------------------------------- Gross realized investment gains(1) $ 2,070 $ 2,008 $ 1,273 Gross realized investment losses(1) 1,492 1,202 732 --------------------------------------------------------------------- Net realized and unrealized ventures capital gains which $ 393 $ 1,850 $ 816 included: Gross unrealized gains 782 1,752 999 Gross unrealized losses 613 618 587 --------------------------------------------------------------------- |
(1) Includes net realized gains related to insurance subsidiaries' sale of OREO and mortgage loans of $8 million, $74 million, and $215 million in 2001, 2000, and 1999, respectively.
The following table presents the amortized cost, fair value, and average yield on amortized cost of fixed maturity securities by contractual maturity dates as of December 31, 2001:
AMORTIZED FAIR
IN MILLIONS OF DOLLARS COST VALUE YIELD
--------------------------------------------------------------------------------
U.S. TREASURY AND FEDERAL AGENCIES(1)
Due within 1 year $ 1,422 $ 1,426 2.81%
After 1 but within 5 years 2,038 2,086 4.42
After 5 but within 10 years 1,651 1,679 5.69
After 10 years(2) 24,255 24,266 6.36
--------------------------------------------------------------------------------
TOTAL $ 29,366 $ 29,457 6.02%
================================================================================
STATE AND MUNICIPAL
Due within 1 year $ 128 $ 130 5.47%
After 1 but within 5 years 995 1,035 5.43
After 5 but within 10 years 3,431 3,519 5.07
After 10 years(2) 12,158 12,317 5.44
--------------------------------------------------------------------------------
TOTAL $ 16,712 $ 17,001 5.36%
================================================================================
ALL OTHER(3)
Due within 1 year $ 18,628 $ 18,775 5.78%
After 1 but within 5 years 36,529 37,118 7.17
After 5 but within 10 years 17,669 17,847 7.33
After 10 years(2) 19,139 19,146 8.27
--------------------------------------------------------------------------------
TOTAL $ 91,965 $ 92,886 7.15%
================================================================================
|
(1) Includes mortgage-backed securities of U.S. Federal agencies.
(2) Investments with no stated maturities are included as contractual maturities
of greater than 10 years. Actual maturities may differ due to call or
prepayment rights.
(3) Includes foreign government, U.S. corporate, mortgage-backed securities
issued by U.S. corporations, and other debt securities. Yields reflect the
impact of local interest rates prevailing in countries outside the U.S.
5. FEDERAL FUNDS, SECURITIES BORROWED, LOANED, AND SUBJECT TO REPURCHASE AGREEMENTS Federal funds sold and securities borrowed or purchased under agreements to resell, at their respective carrying values, consisted of the following at December 31:
IN MILLIONS OF DOLLARS 2001 2000
--------------------------------------------------------------------------------
Federal funds sold and resale agreements $ 89,472 $ 69,087
Deposits paid for securities borrowed 45,337 36,790
--------------------------------------------------------------------------------
$ 134,809 $ 105,877
================================================================================
|
Federal funds purchased and securities loaned or sold under agreements to repurchase, at their respective carrying values, consisted of the following at December 31:
IN MILLIONS OF DOLLARS 2001 2000
--------------------------------------------------------------------------------
Federal funds purchased and repurchase agreements $ 137,649 $ 94,397
Deposits received for securities loaned 15,862 16,228
--------------------------------------------------------------------------------
$ 153,511 $ 110,625
================================================================================
|
The resale and repurchase agreements represent collateralized financing transactions used to generate net interest income and facilitate trading activity. These instruments are collateralized principally by government and government agency securities and generally have terms ranging from overnight to up to a year. It is the Company's policy to take possession of the underlying collateral, monitor its market value relative to the amounts due under the agreements, and, when necessary, require prompt transfer of additional collateral or reduction in the balance in order to maintain contractual margin protection. In the event of counterparty default, the financing agreement provides the Company with the right to liquidate the collateral held. Resale agreements and repurchase agreements are reported net by counterparty, when applicable, pursuant to FASB Interpretation 41, "Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements" (FIN 41). Excluding the impact of FIN 41, resale agreements totaled $141.2 billion and $118.9 billion at December 31, 2001 and 2000, respectively.
Deposits paid for securities borrowed (securities borrowed) and deposits received for securities loaned (securities loaned) are recorded at the amount of cash advanced or received and are collateralized principally by government and government agency securities, corporate debt and equity securities. Securities borrowed transactions require the Company to deposit cash with the lender. With respect to securities loaned, the Company receives cash collateral in an amount generally in excess of the market value of securities loaned. The Company monitors the market value of securities borrowed and securities loaned daily, and additional collateral is obtained as necessary. Securities borrowed and securities loaned are reported net by counterparty, when applicable, pursuant to FAS Interpretation 39, "Offsetting of Amounts Related to Certain Contracts" (FIN 39).
6. BROKERAGE RECEIVABLES AND BROKERAGE PAYABLES The Company has receivables and payables for financial instruments purchased from and sold to brokers and dealers and customers. The Company is exposed to risk of loss from the inability of brokers and dealers or customers to pay for purchases or to deliver the financial instrument sold, in which case the Company would have to sell or purchase the financial instruments at prevailing market prices. Credit risk is reduced to the extent that an exchange or clearing organization acts as a counterparty to the transaction.
The Company seeks to protect itself from the risks associated with customer activities by requiring customers to maintain margin collateral in compliance with regulatory and internal guidelines. Margin levels are monitored daily, and customers deposit additional collateral as required. Where customers cannot meet collateral requirements, the Company will liquidate sufficient underlying financial instruments to bring the customer into compliance with the required margin level.
Exposure to credit risk is impacted by market volatility, which may impair the ability of clients to satisfy their obligations to the Company. Credit limits are established and closely monitored for customers and brokers and dealers engaged in forward and futures and other transactions deemed to be credit sensitive.
Brokerage receivables and brokerage payables, which arise in the normal course of business, consisted of the following at December 31:
IN MILLIONS OF DOLLARS 2001 2000 -------------------------------------------------------------------------------- Receivables from customers $ 19,660 $ 23,142 Receivables from brokers, dealers, and clearing organizations 15,495 2,554 -------------------------------------------------------------------------------- TOTAL BROKERAGE RECEIVABLES $ 35,155 $ 25,696 ================================================================================ Payables to customers $ 16,876 $ 13,564 Payables to brokers, dealers, and clearing organizations 16,015 2,318 -------------------------------------------------------------------------------- TOTAL BROKERAGE PAYABLES $ 32,891 $ 15,882 ================================================================================ |
7. TRADING ACCOUNT ASSETS AND LIABILITIES Trading account assets and liabilities, at market value, consisted of the following at December 31:
IN MILLIONS OF DOLLARS 2001 2000
--------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS
U.S. Treasury and Federal agency securities $ 46,218 $ 30,939
State and municipal securities 4,517 2,439
Foreign government securities 12,450 13,308
Corporate and other debt securities 21,318 17,046
Derivatives(1) 29,762 35,177
Equity securities 15,619 17,174
Mortgage loans and collateralized mortgage securities 6,869 6,024
Other 8,151 10,406
--------------------------------------------------------------------------------
$ 144,904 $ 132,513
================================================================================
TRADING ACCOUNT LIABILITIES
Securities sold, not yet purchased $ 51,815 $ 48,489
Derivatives(1) 28,728 36,618
--------------------------------------------------------------------------------
$ 80,543 $ 85,107
================================================================================
|
(1) Net of master netting agreements.
8. TRADING RELATED REVENUE Trading related revenue consists of principal transactions revenues and net interest revenue associated with trading activities. Principal transactions revenues consist of realized and unrealized gains and losses from trading activities. The following table presents trading related revenue for the years ended December 31:
IN MILLIONS OF DOLLARS 2001 2000 1999 ---------------------------------------------------------------------------- GLOBAL CORPORATE Fixed income(1) $ 4,007 $ 2,531 $ 2,306 Equities(2) 882 1,720 1,273 Foreign exchange(3) 1,464 1,103 1,115 All other(4) 197 308 499 ---------------------------------------------------------------------------- Total Global Corporate 6,550 5,662 5,193 GLOBAL CONSUMER AND OTHER 826 782 584 ---------------------------------------------------------------------------- TOTAL TRADING RELATED REVENUE $ 7,376 $ 6,444 $ 5,777 ============================================================================ |
(1) Includes revenues from government securities and corporate debt, municipal
securities, preferred stock, mortgage securities, and other debt
instruments. Also includes spot and forward trading of currencies and
exchange-traded and over-the-counter (OTC) currency options, options on
fixed income securities, interest rate swaps, currency swaps, swap options,
caps and floors, financial futures, OTC options and forward contracts on
fixed income securities.
(2) Includes revenues from common and convertible preferred stock, convertible
corporate debt, equity-linked notes, and exchange-traded and OTC equity
options and warrants.
(3) Includes revenues from foreign exchange spot, forward, option and swap
contracts.
(4) Primarily includes revenues from the results of Phibro Inc. (Phibro), which
trades crude oil, refined oil products, natural gas, electricity, metals,
and other commodities. Also includes revenues related to arbitrage
strategies.
The following table reconciles principal transactions revenues on the Consolidated Statement of Income to trading related revenue for the years ended December 31:
IN MILLIONS OF DOLLARS 2001 2000 1999 ----------------------------------------------------------------------------- Principal transactions $ 5,544 $ 5,981 $ 5,160 Net interest revenue 1,832 463 617 ----------------------------------------------------------------------------- TOTAL TRADING RELATED REVENUE $ 7,376 $ 6,444 $ 5,777 ============================================================================= |
9. LOANS
IN MILLIONS OF DOLLARS AT YEAR-END 2001 2000
--------------------------------------------------------------------------------
CONSUMER
In U.S. offices
Mortgage and real estate(1)(2) $ 80,099 $ 73,166
Installment, revolving credit, and other 84,367 78,017
--------------------------------------------------------------------------------
164,466 151,183
--------------------------------------------------------------------------------
In offices outside the U.S.
Mortgage and real estate(1)(3) 27,703 24,988
Installment, revolving credit, and other 54,276 55,515
Lease financing 391 427
--------------------------------------------------------------------------------
82,370 80,930
--------------------------------------------------------------------------------
246,836 232,113
Unearned income (2,677) (3,234)
--------------------------------------------------------------------------------
CONSUMER LOANS, NET OF UNEARNED INCOME $ 244,159 $ 228,879
================================================================================
COMMERCIAL
In U.S. offices
Commercial and industrial(4) $ 32,431 $ 37,220
Lease financing 18,518 14,864
Mortgage and real estate(1) 2,784 3,490
--------------------------------------------------------------------------------
53,733 55,574
--------------------------------------------------------------------------------
In offices outside the U.S.
Commercial and industrial(4) 76,459 69,111
Mortgage and real estate(1) 2,859 1,720
Loans to financial institutions 10,163 9,559
Lease financing 3,788 3,689
Governments and official institutions 4,033 1,952
--------------------------------------------------------------------------------
97,302 86,031
--------------------------------------------------------------------------------
151,035 141,605
Unearned income (3,261) (3,462)
--------------------------------------------------------------------------------
COMMERCIAL LOANS, NET OF UNEARNED INCOME $ 147,774 $ 138,143
================================================================================
|
(1) Loans secured primarily by real estate.
(2) Includes $4.9 billion in 2001 and $3.7 billion in 2000 of commercial real
estate loans related to community banking and private banking activities.
(3) Includes $2.5 billion in 2001 and $2.7 billion in 2000 of loans secured by
commercial real estate.
(4) Includes loans not otherwise separately categorized.
Impaired loans are those on which Citigroup believes it is not probable that it will be able to collect all amounts due according to the contractual terms of the loan, excluding smaller-balance homogeneous loans that are evaluated collectively for impairment, and are carried on a cash basis. Valuation allowances for these loans are estimated considering all available evidence including, as appropriate, the present value of the expected future cash flows discounted at the loan's contractual effective rate, the secondary market value of the loan and fair value of collateral. The following table presents information about impaired loans.
IN MILLIONS OF DOLLARS AT YEAR-END 2001 2000 1999 ---------------------------------------------------------------------------------------------- Impaired commercial loans $ 3,572 $ 1,847 $ 1,551 Other impaired loans(1) 339 100 185 ---------------------------------------------------------------------------------------------- Total impaired loans(2) $ 3,911 $ 1,947 $ 1,736 ============================================================================================== Impaired loans with valuation allowances $ 3,500 $ 1,583 $ 1,381 Total valuation allowances(3) 915 480 411 ============================================================================================== During the year: Average balance of impaired loans $ 3,098 $ 1,858 $ 1,898 Interest income recognized on impaired loans 98 97 85 ============================================================================================== |
(1) Primarily commercial real estate loans related to community and private
banking activities.
(2) At year-end 2001, approximately 17% of these loans were measured for
impairment using the fair value of the collateral, compared with
approximately 25% at year-end 2000.
(3) Included in the allowance for credit losses.
For the loan portfolios where the Company continues to manage loans after they have been securitized, the following table presents the total loan amounts managed, the portion of those portfolios securitized, and delinquencies (loans which are 90 days or more past due) at December 31, 2001 and 2000, and credit losses, net of recoveries, for the years ended December 31, 2001 and 2000:
2001 2000
----------------------------------------------------------------------------------------------
HOME EQUITY Home equity
CREDIT CARD AND AUTO Credit card and auto
MANAGED LOANS RECEIVABLES LOANS receivables loans
----------------------------------------------------------------------------------------------
IN BILLIONS OF DOLLARS
Principal amounts, at year-end:
Total managed $ 108.7 $ 27.4 $ 104.0 $ 33.0
Securitized amounts (67.1) (1.3) (57.0) (3.6)
-----------------------------------------------------------------------------------------------
ON-BALANCE SHEET(1) $ 41.6 $ 26.1 $ 47.0 $ 29.4
-----------------------------------------------------------------------------------------------
IN MILLIONS OF DOLLARS
Delinquencies, at year-end:
Total managed $ 2,141 $ 1,174 $ 1,503 $ 794
Securitized amounts (1,268) (14) (925) (87)
-----------------------------------------------------------------------------------------------
ON-BALANCE SHEET(1) $ 873 $ 1,160 $ 578 $ 707
-----------------------------------------------------------------------------------------------
IN MILLIONS OF DOLLARS
Credit losses, net of recoveries,
for the year ended December 31:
Total managed $ 5,603 $ 720 $ 3,986 $ 619
Securitized amounts (3,140) (111) (2,216) (12)
-----------------------------------------------------------------------------------------------
ON-BALANCE SHEET(1) $ 2,463 $ 609 $ 1,770 $ 607
===============================================================================================
|
(1) Includes loans held for sale.
10. ALLOWANCE FOR CREDIT LOSSES
IN MILLIONS OF DOLLARS 2001 2000 1999 ---------------------------------------------------------------------------------------------- ALLOWANCE FOR CREDIT LOSSES AT BEGINNING OF YEAR $ 8,961 $ 8,853 $ 8,596 Additions Consumer provision for credit losses 5,316 4,345 4,169 Commercial provision for credit losses 1,484 994 591 ---------------------------------------------------------------------------------------------- TOTAL PROVISION FOR CREDIT LOSSES 6,800 5,339 4,760 ---------------------------------------------------------------------------------------------- Deductions Consumer credit losses 6,233 5,352 4,862 Consumer credit recoveries (853) (929) (769) ---------------------------------------------------------------------------------------------- NET CONSUMER CREDIT LOSSES 5,380 4,423 4,093 ---------------------------------------------------------------------------------------------- Commercial credit losses 2,055 906 746 Commercial credit recoveries(1) (407) (135) (156) ---------------------------------------------------------------------------------------------- NET COMMERCIAL CREDIT LOSSES 1,648 771 590 ---------------------------------------------------------------------------------------------- Other net(2) 1,355 (37) 180 ---------------------------------------------------------------------------------------------- ALLOWANCE FOR CREDIT LOSSES AT END OF YEAR $ 10,088 $ 8,961 $ 8,853 ============================================================================================== |
(1) Includes amounts received under credit default swaps purchased from third
parties.
(2) Includes the addition of credit loss reserves related to the acquisitions of
Banamex and EAB in 2001. Also includes the addition of allowance for credit
losses related to other acquisitions and the impact of foreign currency
translation effects.
11. SECURITIZATION ACTIVITY Citigroup and its subsidiaries securitize primarily credit card receivables, mortgages, home equity loans and auto loans.
After securitizations of credit card receivables, the Company continues to maintain credit card customer account relationships and provides servicing for receivables transferred to the trust. The Company also provides credit enhancement to the trust using cash collateral accounts. As specified in certain of the sale agreements, the net revenue collected each month is accumulated up to a predetermined maximum amount, and is available over the remaining term of that transaction to make payments of yield, fees, and transaction costs in the event that net cash flows from the receivables are not sufficient. When the predetermined amount is reached net revenue is passed directly to the Citigroup subsidiary that sold the receivables.
The Company provides a wide range of mortgage and home equity products to a diverse customer base. In connection with these loans, the servicing rights entitle the Company to a future stream of cash flows based on the outstanding principal balances of the loans and the contractual servicing fee. Failure to service the loans in accordance with contractual requirements may lead to a termination of the servicing rights and the loss of future servicing fees. In non-recourse servicing, the principal credit risk to the servicer is the cost of temporary advances of funds. In recourse servicing, the servicer agrees to share credit risk with the owner of the mortgage loans such as FNMA or FHLMC or with a private investor, insurer or guarantor. Losses on recourse servicing occur primarily when foreclosure sale proceeds of the property underlying a defaulted mortgage or home equity loan are less than the outstanding principal balance and accrued interest of such mortgage loan and the cost of holding and disposing of the underlying property.
The following table summarizes certain cash flows received from and paid to securitization trusts during the year-ended December 31:
2001 2000
-----------------------------------------------------------------------------------------
MORTGAGES(1) Mortgages(1)
AND AUTO and auto
IN MILLIONS OF DOLLARS CREDIT CARDS LOANS Credit cards loans
-----------------------------------------------------------------------------------------
Proceeds from new securitizations $ 22.7 $ 34.8 $ 9.1 $ 18.3
Proceeds from collections
reinvested in new receivables 131.4 0.4 127.2 0.2
Servicing fees received 1.2 0.3 1.0 0.3
Cash flows received on
retained interests and
other net cash flows 3.6 0.4 2.8 0.4
=========================================================================================
|
(1) Includes mortgages and home equity loans.
For the years ended December 31, 2001 and 2000, the Company recognized $271 million and $142 million, respectively, of gains on securitizations of mortgages, home equity loans and auto loans.
Key assumptions used for mortgages during the year-ended December 31, 2001 in measuring the fair value of retained interests at the date of sale or securitization follow:
-------------------------------------------------------------------------------- Discount rate 5.0% to 15.0% Constant payment rate 6.9% to 40.0% Anticipated net credit losses 0.02% to 5.0% ================================================================================ |
As required by SFAS 140, the effect of two negative changes in each of the key assumptions used to determine the fair value of retained interests must be disclosed. The negative effect of each change in each assumption must be calculated independently, holding all other assumptions constant. Because the key assumptions may not in fact the independent, the net effect of simultaneous adverse changes in the key assumptions may be less than the sum of the individual effects shown below.
At December 31, 2001, for mortgages, auto loans and manufactured housing loans, the key assumptions, presented by product groups, and the sensitivity of the fair value of retained interests to two adverse changes in each of the key assumptions were as follows:
IN MILLIONS OF DOLLARS -------------------------------------------------------------------------------- Carrying value of retained interests $ 3,222.1 -------------------------------------------------------------------------------- Discount rate 5.0% to 15.0%; 15.0%; 13.0% +10% $ (100.8) +20% $ (195.4) -------------------------------------------------------------------------------- Constant payment rate 12.0% to 40.0%; 14.1% to 19.3%; 10.5% +10% $ (116.3) +20% $ (220.7) -------------------------------------------------------------------------------- Anticipated net credit losses 0.04% to 5.0%; 6.7% to 14.0%; 13.1% +10% $ (60.6) +20% $ (122.0) ================================================================================ |
12. DEBT
INVESTMENT BANKING AND BROKERAGE BORROWINGS
Investment banking and brokerage borrowings and the corresponding weighted
average interest rates at December 31 are as follows:
2001 2000
------------------------- ------------------------
WEIGHTED Weighted
AVERAGE average
INTEREST interest
IN MILLIONS OF DOLLARS BALANCE RATE Balance rate
-------------------------------------------------------------------------------
Commercial paper $ 13,858 1.9% $ 16,705 6.6%
Bank borrowings 565 2.5% 429 5.7%
Other 381 6.2% 1,093 6.0%
-------------------------------------------------------------------------------
$ 14,804 $ 18,227
-------------------------------------------------------------------------------
|
Investment banking and brokerage borrowings are short-term in nature and include commercial paper, bank borrowings and other borrowings used to finance Salomon Smith Barney Holdings Inc.'s (Salomon Smith Barney's) operations, including the securities settlement process. Outstanding bank borrowings include both U.S. dollar and non-U.S. dollar denominated loans. The non-U.S. dollar loans are denominated in multiple currencies including the Japanese yen, German mark, and U.K. sterling. All commercial paper outstanding at December 31, 2001 and 2000 was U.S. dollar denominated. Also included in other are deposit liabilities and other short-term obligations.
At December 31, 2001, Salomon Smith Barney had a $5.0 billion, 364-day committed uncollateralized revolving line of credit with unaffiliated banks that extends through May 21, 2002, with repayment on any borrowings due by May 21, 2004. Salomon Smith Barney may borrow under its revolving credit facilities at various interest rate options (LIBOR or base rate) and compensates the banks for the facility through facility fees. Under this facility, Salomon Smith Barney is required to maintain a certain level of consolidated adjusted net worth (as defined in the agreement). At December 31, 2001, this requirement was exceeded by approximately $4.3 billion. At December 31, 2001, there were no borrowings outstanding under this facility.
Salomon Smith Barney also has substantial borrowing arrangements consisting of facilities that it has been advised are available, but where no contractual lending obligation exists.
SHORT-TERM BORROWINGS
At December 31, short-term borrowings consisted of commercial paper and other
borrowings with weighted average interest rates as follows:
2001 2000
----------------------- ----------------------
WEIGHTED Weighted
IN MILLIONS OF DOLLARS BALANCE AVERAGE Balance average
-----------------------------------------------------------------------------------
COMMERCIAL PAPER
Citigroup $ 481 1.84% $ 496 6.61%
Citicorp and Subsidiaries 12,215 1.99% 37,656 5.34%
-----------------------------------------------------------------------------------
12,696 38,152
OTHER BORROWINGS 11,765 3.44% 13,523 8.76%
-----------------------------------------------------------------------------------
$ 24,461 $ 51,675
===================================================================================
|
Citigroup, Citicorp and certain other subsidiaries issue commercial paper directly to investors. Citigroup and Citicorp, both of which are bank holding companies, maintain combined liquidity reserves of cash, securities, and unused bank lines of credit to support their combined outstanding commercial paper.
Borrowings under bank lines of credit may be at interest rates based on LIBOR, CD rates, the prime rate or bids submitted by the banks. Each company pays its banks commitment fees for its lines of credit.
Citicorp, Salomon Smith Barney and some of their nonbank subsidiaries have credit facilities with Citicorp's subsidiary banks, including Citibank, N.A. Borrowings under these facilities must be secured in accordance with Section 23A of the Federal Reserve Act.
Citigroup has unutilized bilateral committed revolving credit facilities in the amount of $950 million that expire in 2002. Under these facilities the Company is required to maintain a certain level of consolidated stockholders' equity (as defined in the agreements). The Company exceeded this requirement by approximately $56 billion at December 31, 2001.
Associates, a subsidiary of Citicorp, has a combination of unutilized credit facilities of $6.8 billion as of December 31, 2001. These facilities, which have maturities ranging from 2002 to 2005, are all guaranteed by Citicorp. In connection with the facilities for Associates, Citicorp is required to maintain a certain level of consolidated stockholder's equity (as defined in the agreements). At December 31, 2001, this requirement was exceeded by approximately $49 billion. Citicorp has also guaranteed various other debt obligations of Associates and CitiFinancial Credit Company (CCC), an indirect subsidiary of Citicorp.
LONG-TERM DEBT
WEIGHTED
AVERAGE
IN MILLIONS OF DOLLARS COUPON MATURITIES 2001 2000
-------------------------------------------------------------------------------------------
CITIGROUP INC.
Senior Notes(1) 4.81% 2002-2030 $ 30,544 $ 13,947
Subordinated Notes 7.25% 2010 4,250 4,250
CITICORP AND SUBSIDIARIES
Senior Notes 6.28% 2002-2037 52,965 65,313
Subordinated Notes 6.97% 2002-2035 6,663 7,747
SALOMON SMITH BARNEY HOLDINGS INC.
Senior Notes(2)(3) 4.28% 2002-2029 26,813 19,652
TRAVELERS INSURANCE GROUP HOLDINGS INC.
Senior Notes 7.36% 2006-2026 380 850
TRAVELERS PROPERTY CASUALTY CORP.(4) 16 19
-------------------------------------------------------------------------------------------
Senior Notes 110,702 99,762
Subordinated Notes 10,913 11,997
Other 16 19
-------------------------------------------------------------------------------------------
TOTAL $ 121,631 $ 111,778
===========================================================================================
|
(1) Also includes $250 million of notes maturing in 2098.
(2) Also includes $1.45 billion of notes maturing between 2025 through 2097.
(3) Also includes subordinated debt of $124 million and $145 million at
December 31, 2001 and December 2000 respectively.
(4) Principally 12% GNMA/FNMA collateralized obligations.
The Company issues both U.S. dollar and non-U.S. dollar denominated fixed and variable rate debt. The Company utilizes derivative contracts, primarily interest rate swaps, to effectively convert a portion of its fixed rate debt to variable rate debt. The maturity structure of the derivatives generally corresponds with the maturity structure of the debt being hedged. At December 31, 2001, the Company has outstanding interest rate swaps which convert $51.5 billion of its $101.6 billion of fixed rate debt to variable rate obligations. At December 31, 2001, the Company's overall weighted average interest rate for long-term debt was 5.23% on a contractual basis and 4.99% including the effects of derivative contracts. In addition, the Company utilizes other derivative contracts to manage the foreign exchange impact of certain debt issuances.
Aggregate annual maturities on long-term debt obligations (based on final maturity dates) are as follows:
IN MILLIONS OF DOLLARS 2002 2003 2004 2005 2006 Thereafter
------------------------------------------------------------------------------------------------------------
Citigroup Inc. $ 5,722 $ 4,500 $ 5,050 $ 4,874 $ 4,000 $ 10,648
Salomon Smith Barney Holdings Inc. 5,030 8,163 4,982 2,193 2,143 4,302
Citicorp and Subsidiaries 20,450 11,973 6,273 6,108 3,752 11,072
Travelers Insurance Group Holdings Inc. -- -- -- -- 150 230
Travelers Property Casualty Corp. -- -- -- -- -- 16
------------------------------------------------------------------------------------------------------------
$ 31,202 $ 24,636 $ 16,305 $ 13,175 $ 10,045 $ 26,268
============================================================================================================
|
13. INSURANCE POLICY AND CLAIMS RESERVES At December 31, insurance policy and claims reserves consisted of the following:
IN MILLIONS OF DOLLARS 2001 2000
------------------------------------------------------------------------------------------------
Benefits and loss reserves:
Property-casualty(1) $ 29,792 $ 28,327
Life and annuity 10,987 9,966
Accident and health 1,271 1,074
Unearned premiums 6,681 4,836
Policy and contract claims 563 463
------------------------------------------------------------------------------------------------
$ 49,294 $ 44,666
================================================================================================
|
(1) Included at December 31, 2001 and 2000 are $1.4 billion of reserves related to workers' compensation that have been discounted using an interest rate of 5%.
The following table is a reconciliation of beginning and ending property- casualty reserve balances for claims and claim adjustment expenses for the years ended December 31:
IN MILLIONS OF DOLLARS 2001 2000 1999
--------------------------------------------------------------------------------------------------
CLAIMS AND CLAIM ADJUSTMENT EXPENSE
RESERVES AT BEGINNING OF YEAR $ 28,327 $ 28,776 $ 29,139
Less reinsurance recoverables on unpaid losses 8,405 8,409 7,987
--------------------------------------------------------------------------------------------------
Net balance at beginning of year 19,922 20,367 21,152
--------------------------------------------------------------------------------------------------
Provision for claims and claim adjustment
expenses for claims arising in current year 8,075 7,015 6,564
Estimated claims and claim adjustment expenses
for claims arising in prior years 2 (204) (281)
--------------------------------------------------------------------------------------------------
TOTAL INCREASES 8,077 6,811 6,283
--------------------------------------------------------------------------------------------------
Claims and claim adjustment expense
payments for claims arising in:
Current year 3,202 2,975 2,757
Prior years 4,606 4,281 4,311
--------------------------------------------------------------------------------------------------
TOTAL PAYMENTS 7,808 7,256 7,068
--------------------------------------------------------------------------------------------------
Net balance at end of year 20,191 19,922 20,367
Plus reinsurance recoverables on unpaid losses 9,601 8,405 8,409
--------------------------------------------------------------------------------------------------
CLAIMS AND CLAIM ADJUSTMENT EXPENSE
RESERVES AT END OF YEAR $ 29,792 $ 28,327 $ 28,776
==================================================================================================
|
The increase in the claims and claim adjustment expense reserve in 2001 from 2000 was primarily due to the impact of the terrorist attack on September 11th, 2001. Partially offsetting the above were net payments of $427 million in 2001 for environmental and cumulative injury claims. The decrease in the claims and claim adjustment expense reserves in 2000 from 1999 was primarily attributable to net payments of $341 million, for environmental and cumulative injury claims.
In 2001, estimated claims and claim adjustment expenses for claims arising in prior years included net favorable loss development on Commercial Lines loss sensitive policies in various lines; however, since the business to which it relates is subject to premium adjustments, there is no impact on results of operations. In addition, estimated claims and claim adjustment expenses for claims arising in prior years also included approximately $109 million of net unfavorable development, primarily related to certain Commercial Lines coverages, predominately in general liability, commercial auto liability, assumed reinsurance and specialty businesses, partially offset by favorable development in commercial multi-peril and other claim adjustment expenses.
In 2000, estimated claims and claim adjustment expenses for claims arising in prior years included approximately $76 million primarily relating to net favorable development in certain Commercial Lines coverages, predominantly in the commercial multi-peril line of business, and in certain Personal Lines coverages, predominately personal umbrella coverages. In addition, in 2000 Commercial Lines experienced favorable loss development on loss sensitive policies in various lines, however, since the business to which it relates is subject to premium adjustments, there is no impact on results of operations.
In 1999, estimated claims and claim adjustment expenses for claims arising in prior years included approximately $205 million primarily relating to net favorable development in certain Personal Lines coverages, predominantly automobile coverages, and in certain Commercial Lines coverages, predominantly in the general liability and commercial multi-peril lines of business. In addition, in 1999 Commercial Lines experienced favorable loss development on loss sensitive policies in the workers' compensation line; however, since the business to which it relates is subject to premium adjustments, there was no impact on results of operations.
The property-casualty claims and claims adjustment expense reserves include $1.216 billion and $1.364 billion for asbestos and environmental-related claims net of reinsurance at December 31, 2001 and 2000, respectively.
It is difficult to estimate the reserves for environmental and asbestos-related claims due to the vagaries of court coverage decisions, plaintiffs' expanded theories of liability, the risks inherent in major litigation and other uncertainties, including without limitation, those which are set forth below. Conventional actuarial techniques are not used to estimate such reserves.
In establishing environmental reserves, the Company evaluates the exposure presented by each insured and the anticipated cost of resolution, if any, for each insured on a quarterly basis. In the course of this analysis, the Company considers the probable liability, available coverage, relevant judicial interpretations and historical value of similar exposures. In addition, the Company considers the many variables presented, such as the nature of the alleged activities of the insured at each site; the allegations of environmental harm at each site; the number of sites; the total number of potentially responsible parties at each site; the nature of environmental harm and the corresponding remedy at each site; the nature of government enforcement activities at each site; the ownership and general use of each site; the overall nature of the insurance relationship between the Company and the insured, including the role of any umbrella or excess insurance the Company has issued to the insured; the involvement of other insurers; the potential for other available coverage, including the number of years of coverage; the role, if any, of non-environmental claims or potential non-environmental claims, in any resolution process; and the applicable law in each jurisdiction.
In establishing the Company's asbestos reserves, the Company evaluates the exposure presented by each insured. In the course of this evaluation, the Company considers available insurance coverage including the role of any umbrella or excess insurance issued by the Company to the insured; limits and deductibles; an analysis of each insured's potential liability; the jurisdictions involved; past and anticipated future claim activity; past settlement values of similar claims; allocated claim adjustment expense; potential role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and applicable
coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a product/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim. Once the gross ultimate exposure for indemnity and allocated claim adjustment expense is determined for each insured by each policy year, the Company calculates a ceded reinsurance projection based on any applicable facultative and treaty reinsurance, as well as past ceded experience. Adjustments to the ceded projections also occur due to actual ceded claim experience and reinsurance collections.
Historically, the Company's experience has indicated that insureds with potentially significant environmental and/or asbestos exposures often have other cumulative injury other than asbestos (CIOTA) exposures or CIOTA claims pending with the Company. Due to this experience and the fact that settlement agreements with insureds may extinguish the Company's obligations for all claims, the Company evaluates and considers the environmental and asbestos reserves in conjunction with the CIOTA reserve.
The Company also compares its historical direct and net loss and expense paid experience year-by-year, to assess any emerging trends, fluctuations or characteristics suggested by the aggregate paid activity. The comparison includes a review of the result derived from the division of the ending direct and net reserves by last year's direct and net paid activity, also known as the survival ratio.
The reserves carried for environmental and asbestos claims at December 31, 2001 are the Company's best estimate of ultimate claims and claim adjustment expenses based upon known facts and current law. However, the uncertainties surrounding the final resolution of these claims continue. These include, without limitation, the risks inherent in major litigation, including more aggressive asbestos litigation against insurers, including the Company, any impact from the bankruptcy protection sought by various asbestos producers and other asbestos defendants, a further increase or decrease in asbestos and environmental claims which cannot now be anticipated, the role of any umbrella or excess policies issued by the Company for such claims, whether or not an asbestos claim is a product/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim, the number and outcome of direct actions against the Company and unanticipated developments pertaining to the Company's ability to recover reinsurance for environmental and asbestos claims. It is also not possible to predict changes in the legal and legislative environment and their impact on the future development of asbestos and environmental claims. Such development will be affected by future court decisions and interpretations, as well as changes in applicable legislation. In addition, particularly during the last few months of 2001 and continuing into 2002, the asbestos-related trends described above have both accelerated and become more visible. These trends include, but are not limited to, the filing of additional claims, more aggressive litigation based on novel theories of liability and litigation against new and previously peripheral defendants, and developments in existing and pending bankruptcy proceedings.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the current related reserves. These additional amounts, or a range of these additional amounts, cannot now be reasonably estimated, and could result in a liability exceeding reserves by an amount that could be material to the Company's operating results in a future period. However, in the opinion of the Company's management, it is not likely that these claims will have a material adverse effect on the Company's financial condition or liquidity.
The Company has a geographic exposure to catastrophe losses in certain areas of the United States. Catastrophes can be caused by various events including hurricanes, windstorms, earthquakes, hail, severe winter weather, explosions and fires, and the incidence and severity of catastrophes are inherently unpredictable. The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most catastrophes are restricted to small geographic areas, however, hurricanes and earthquakes may produce significant damage in large, heavily populated areas. The Company generally seeks to reduce its exposure to catastrophes through individual risk selection and the purchase of catastrophe reinsurance.
14. REINSURANCE The Company's insurance operations participate in reinsurance in order to limit losses, minimize exposure to large risks, provide additional capacity for future growth and effect business-sharing arrangements. Life reinsurance is accomplished through various plans of reinsurance, primarily coinsurance, modified coinsurance and yearly renewable term. Property-casualty reinsurance is placed on both a quota-share and excess of loss basis. The property-casualty insurance subsidiaries also participate as a servicing carrier for, and a member of, several pools and associations. Reinsurance ceded arrangements do not discharge the insurance subsidiaries as the primary insurer, except for cases involving a novation.
Reinsurance amounts included in the Consolidated Statement of Income for the years ended December 31 were as follows:
GROSS NET
IN MILLIONS OF DOLLARS AMOUNT CEDED AMOUNT
--------------------------------------------------------------------------------
2001
PREMIUMS
Property-casually insurance $ 12,373 $ (1,920) $ 10,453
Life insurance 3,124 (343) 2,781
Accident and health insurance 505 (279) 226
--------------------------------------------------------------------------------
$ 16,002 $ (2,542) $ 13,460
================================================================================
CLAIMS INCURRED $ 14,269 $ (3,623) $ 10,646
================================================================================
2000
PREMIUMS
Property-casuality insurance $ 11,691 $ (1,795) $ 9,896
Life Insurance 2,550 (332) 2,218
Accident and health insurance 530 (215) 315
--------------------------------------------------------------------------------
$ 14,771 $ (2,342) $ 12,429
================================================================================
CLAIMS INCURRED $ 10,779 $ (1,895) $ 8,884
================================================================================
1999
PREMIUMS
Property-casualty insurance $ 10,960 $ (1,722) $ 9,238
Life insurance 2,190 (314) 1,876
Accident and health insurance 444 (54) 390
--------------------------------------------------------------------------------
$ 13,594 $ (2,090) $ 11,504
================================================================================
CLAIMS INCURRED $ 9,939 $ (1,913) $ 8,026
================================================================================
|
Reinsurance recoverables, net of valuation allowance, at December 31 include amounts recoverable on unpaid and paid losses and were as follows:
IN MILLION OF DOLLARS 2001 2000 -------------------------------------------------------------------------------- Life business $ 2,283 $ 2,028 Property-casuality business: Pools and associations 2,082 2,592 Other reinsurance 8,008 6,096 -------------------------------------------------------------------------------- TOTAL $ 12,373 $ 10,716 ================================================================================ |
15. RESTRUCTURING AND MERGER-RELATED ITEMS
IN MILLIONS OF DOLLARS 2001 2000 1999 -------------------------------------------------------------------------------- Restructuring charges $ 448 $ 579 $ 166 Changes in estimates (53) (65) (401) Accelerated depreciation 63 68 182 -------------------------------------------------------------------------------- Total restructuring-related Items 458 582 (53) Merger-related items -- 177 -- -------------------------------------------------------------------------------- TOTAL RESTRUCTURING AND MERGER-RELATED ITEMS $ 458 $ 759 $ (53) ================================================================================ |
During 2001, Citigroup recorded restructuring charges of $448 million. Of the $448 million, $319 million related to the downsizing of certain functions in the Global Corporate and Global Consumer businesses in order to align their cost structures with current market conditions and $129 million related to the acquisition of Banamex and the integration of its operations within the Global Consumer business. These restructuring charges were expensed and are included in "Restructuring-and merger-related items" in the Consolidated Statement of Income. In addition, a restructuring reserve of $112 million was recorded in connection with the acquisition of Banamex and recognized as a liability in the purchase price allocation of Banamex. The total Banamex reserves of $241 million include costs related to downsizings, the reconfiguration of branch operations in Mexico, and the integration of operations and operating platforms. These restructuring initiatives are expected to be implemented over the next year. The reserves included $423 million related to employee severance, $72 million related to exiting leasehold and other contractual obligations, and $65 million of asset impairment charges.
The $423 million related to employee severance reflects the cost of eliminating approximately 12,500 positions, including 4,200 in Citigroup's Global Consumer business and 3,600 in Banamex related to the acquisition, and 1,300 in the Global Consumer business and 3,400 in the Global Corporate business related to other restructuring initiatives. Approximately 3,200 of these positions were in the United States.
The 2001 restructuring reserve utilization included $65 million of asset impairment charges as well as $287 million of severance and other costs (of which $203 million of employee severance and $16 million of leasehold and other exit costs have been paid in cash and $68 is legally obligated), together with translation effects. Through December 31, 2001 approximately 8,600 gross staff positions have been eliminated under these programs.
During 2000, Citigroup recorded restructuring charges of $579 million, primarily consisting of exit costs related to the acquisition of Associates. The charges included $241 million related to employee severance, $154 million related to exiting leasehold and other contractual obligations, and $184 million of asset impairment charges.
Of the $579 million charge, $474 million related to the acquisition of Associates included the reconfiguration of certain branch operations, the exit from non-strategic businesses and from activities as mandated by Federal bank regulations, and the consolidation and integration of corporate, middle and back office functions. In the Global Consumer business, $51 million includes the reconfiguration of certain branch operations outside the U.S. and the downsizing and consolidation of certain back office functions in the U.S. Approximately $440 million of the $579 million charge related to operations in the United States.
The $241 million portion of the charge related to employee severance reflects the costs of eliminating approximately 5,800 positions, including approximately 4,600 in Associates and 700 in the Global Consumer business. Approximately 5,000 of these positions related to the United States. In 2000, an additional reserve of $23 million was recorded, $20 million of which related to the elimination of 1,600 non-U.S. positions of an acquired entity.
As of December 31, 2001, the 2000 restructuring reserve utilization included $184 million of asset impairment charges and $302 million of severance and other exit costs (of which $145 million of employee severance and $107 million of leasehold and other exit costs have been paid in cash and $50 million is legally obligated), together with translation effects. The remaining reserve for 2000 restructuring initiatives of $87 million at December 31, 2001 is expected to be substantially utilized by the end of the first quarter of 2002. Through December 31, 2001, approximately 5,450 staff positions have been eliminated under these programs.
During 2000, the Company also recorded $177 million of merger-related costs which included legal, advisory, and SEC filing fees, as well as other costs of administratively closing the acquisition of Associates.
In 1999, Citigroup recorded restructuring charges of $166 million, including additional severance charges of $49 million as a result of the continued implementation of 1998 restructuring initiatives, as well as $82 million of exit costs associated with new initiatives in the Global Consumer business primarily related to the reconfiguartion of certain branch operations outside the U.S., the downsizing of certain marketing operations, and the exit of a non-strategic business. The 1999 restructuring reserve was fully utilized at June 30, 2000.
The 1999 charge included $35 million of integration charges recorded by Associates (the Avco charge) related to its January 6, 1999 acquisition of Avco Financial Services, Inc. (Avco). In addition to the Avco charge, as part of the purchase price allocation of the Avco acquisition, Associates recorded a $146 million reserve at the time of the acquisition. This reserve was established to reflect the costs of exiting certain activities that would not be continued after the acquisition. The costs primarily consisted of severance costs and related expenses, lease termination costs and other contractual liabilities. The Avco reserve was fully utilized at December 31, 1999.
The implementation of these restructuring initiatives also caused certain related premises and equipment assets to become redundant. The remaining depreciable lives of these assets were shortened, and accelerated depreciation charges (in addition to normal scheduled depreciation on those assets) of $63 million, $68 million and $182 million were recognized in 2001, 2000 and 1999, respectively.
The status of the 2001, 2000, and 1999 restructuring initiatives is summarized in the following table.
RESTRUCTURING RESERVE ACTIVITY
RESTRUCTURING INITIATIVES
----------------------------------
IN MILLIONS OF DOLLARS 2001 2000 1999
------------------------------------------------------------------------
Original charges $ 448 $ 579 $ 117
------------------------------------------------------------------------
Acquisitions during:(1)
2001 112 -- --
2000 -- 23 --
1999 -- -- 146
------------------------------------------------------------------------
112 23 146
------------------------------------------------------------------------
Utilization during:(2)
2001 (352) (231) --
2000 -- (255) (51)
1999 -- -- (212)
------------------------------------------------------------------------
(352) (486) (263)
------------------------------------------------------------------------
Changes in estimates during:
2001 (18) (29) --
2000 -- -- --
1999 -- -- --
------------------------------------------------------------------------
(18) (29) --
------------------------------------------------------------------------
RESERVE BALANCE AT
DECEMBER 31, 2001 $ 190 $ 87 $ --
========================================================================
|
(1) Represents additions to restructuring liabilities arising from acquisitions.
(2) Utilization amounts include translation effects on the restructuring
reserve.
Changes in estimates are attributable to facts and circumstances arising subsequent to an original restructuring charge. Changes in estimates attributable to lower than anticipated costs of implementing certain projects and a reduction in the scope of certain initiatives during 2001 resulted in the reduction of the reserve for 2001 restructuring initiatives of $ 18 million, a reduction of $29 million for 2000 restructuring initiatives and a reduction of $6 million for 1998 and 1997 restructuring initiatives. During 2000 and 1999, changes in estimates resulted in reductions in the reserve for 1998 restructuring initiatives of $65 million and $151 million, respectively. Changes in estimates related to 1997 restructuring initiatives, which were fully utilized as of December 31, 1999, were $250 million in 1999, and were primarily related to the reassessment of space needed due to the Travelers and Citicorp merger, which indicated the need for increased occupancy and the utilization of space previously considered excessive.
16. INCOME TAXES
IN MILLIONS OF DOLLARS 2001 2000 1999
--------------------------------------------------------------------------------------------------------------------------------
CURRENT
Federal $3,649 $3,295 $3,350
Foreign 2,481 2,301 2,198
State 382 392 384
--------------------------------------------------------------------------------------------------------------------------------
6,512 5,988 5,932
--------------------------------------------------------------------------------------------------------------------------------
DEFERRED
Federal 757 1,231 631
Foreign 98 197 (134)
State 159 109 101
--------------------------------------------------------------------------------------------------------------------------------
1,014 1,537 598
--------------------------------------------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAX
BEFORE MINORITY INTEREST(1) 7,526 7,525 6,530
Provision (benefit) for income taxes on cumulative effect of accounting changes (93) -- (84)
Income tax expense (benefit) reported in Stockholders' equity related to:
Foreign currency translation (252) (108) (25)
Securities available for sale (71) (259) (28)
Employee stock plans (674) (1,400) (1,017)
Cash flow hedges 105 -- --
Other -- (24) (1)
--------------------------------------------------------------------------------------------------------------------------------
INCOME TAXES BEFORE MINORITY INTEREST $6,541 $5,734 $5,375
================================================================================================================================
|
(1) Includes the effect of securities transactions resulting in a provision of $202 million in 2001, $282 million in 2000, and $189 million in 1999.
The reconciliation of the Federal statutory income tax rate to the Company's effective income tax rate applicable to income (before minority interest and cumulative effect of accounting changes) for the years ended December 31 was as follows:
2001 2000 1999
------------------------------------------------------------------------------------
FEDERAL STATUTORY RATE 35.0% 35.0% 35.0%
Limited taxability of investment income (1.3) (1.2) (1.4)
State income taxes, net of Federal benefit 1.6 1.6 1.7
Other, net (0.9) 0.2 0.7
------------------------------------------------------------------------------------
EFFECTIVE INCOME TAX RATE 34.4% 35.6% 36.0%
====================================================================================
|
Deferred income taxes at December 31 related to the following:
IN MILLIONS OF DOLLARS 2001 2000 -------------------------------------------------------------------------------------------- DEFERRED TAX ASSETS Credit loss deduction $ 4,197 $ 2,981 Differences in computing policy reserves 1,787 1,956 Unremitted foreign earnings -- 2,031 Deferred compensation 1,413 1,234 Employee benefits 1,108 613 Interest related items 379 363 Foreign and state loss carryforwards 290 293 Other deferred tax assets 1,427 1,513 -------------------------------------------------------------------------------------------- Gross deferred tax assets 10,601 10,984 Valuation allowance 200 220 -------------------------------------------------------------------------------------------- DEFERRED TAX ASSETS AFTER VALUATION ALLOWANCE 10,401 10,764 -------------------------------------------------------------------------------------------- DEFERRED TAX LIABILITIES Unremitted foreign earnings (37) -- Investments (978) (1,534) Deferred policy acquisition costs and value of insurance in force (1,248) (1,102) Leases (1,792) (1,524) Intangibles (769) (354) Other deferred tax liabilities (1,697) (1,995) -------------------------------------------------------------------------------------------- GROSS DEFERRED TAX LIABILITIES (6,521) (6,509) -------------------------------------------------------------------------------------------- NET DEFERRED TAX ASSET $ 3,880 $ 4,255 ============================================================================================ |
Foreign pretax earnings approximated $8.1 billion in 2001, $6.9 billion in 2000, and $5.4 billion in 1999. As a U.S. corporation, Citigroup is subject to U.S. taxation currently on all foreign pretax earnings earned by a foreign branch. Pretax earnings of a foreign subsidiary or affiliate are subject to U.S. taxation when effectively repatriated. In addition, certain of Citigroup's U.S. income is subject to foreign income tax where the payor of such income is domiciled outside the United States. The Company provides income taxes on the undistributed earnings of non-U.S. subsidiaries except to the extent that such earnings are indefinitely invested outside the United States. At December 31, 2001, $2.0 billion of accumulated undistributed earnings of non-U.S. subsidiaries were indefinitely invested. At the existing U.S. Federal income tax rate, additional taxes of $565 million would have to be provided if such earnings were remitted.
Income taxes are not provided for on the Company's life insurance subsidiaries' "policyholders' surplus account" because under current U.S. tax rules such taxes will become payable only to the extent such amounts are distributed as a dividend or exceed limits prescribed by Federal law. Distributions are not contemplated from this account, which aggregated $982 million (subject to a tax of $344 million) at December 31, 2001.
The 2001 net change in the valuation allowance related to deferred tax assets was a decrease of $20 million primarily relating to state net operating losses. The valuation allowance of $200 million at December 31, 2001 is primarily related to specific state and local, and foreign tax carryforwards, or tax law restrictions on benefit recognition in the U.S. Federal tax return and in the above jurisdictions.
Management believes that the realization of the recognized net deferred tax asset of $3.880 billion is more likely than not based on existing carryback ability and expectations as to future taxable income. The Company has reported pretax financial statement income of approximately $20 billion, on average, over the last three years and has generated Federal taxable income exceeding $13 billion, on average, each year during this same period.
17. MANDATORILY REDEEMABLE SECURITIES OF SUBSIDIARY TRUSTS
The Company formed statutory business trusts under the laws of the state of
Delaware, which exist for the exclusive purpose of (i) issuing Trust Securities
representing undivided beneficial interests in the assets of the Trust; (ii)
investing the gross proceeds of the Trust Securities in junior subordinated
deferrable interest debentures (subordinated debentures) of its parent; and
(iii) engaging in only those activities necessary or incidental thereto. Upon
approval from the Federal Reserve, Citigroup has the right to redeem these
securities. These subordinated debentures and the related income effects are
eliminated in the consolidated financial statements. Distributions on the
mandatorily redeemable securities of subsidiary trusts below have been
classified as interest expense in the Consolidated Statement of Income.
The following tables summarize the financial structure of each of the Company's subsidiary trusts at December 31, 2001:
TRUST JUNIOR SUBORDINATED DEBENTURES OWNED BY TRUST SECURITIES COMMON --------------------------------------------- WITH SHARES REDEEMABLE BY DISTRIBUTIONS ISSUANCE SECURITIES LIQUIDATION COUPON ISSUED TO ISSUER GUARANTEED BY DATE ISSUED VALUE RATE PARENT AMOUNT MATURITY BEGINNING ----------------------------------------------------------------------------------------------------------------------------------- IN MILLIONS OF DOLLARS Citigroup: Citigroup Capital I Oct. 1996 16,000,000 $ 400 8.000% 494,880 $ 412 Sept. 30, 2036 Oct. 7, 2001 Citigroup Capital II Dec. 1996 400,000 400 7.750% 12,372 412 Dec. 1, 2036 Dec. 1, 2006 Citigroup Capital III Dec. 1996 200,000 200 7.625% 6,186 206 Dec. 1, 2036 Not redeemable Citigroup Capital IV Jan. 1998 8,000,000 200 6.850% 247,440 206 Jan. 22, 2038 Jan. 22, 2003 Citigroup Capital V Nov. 1998 20,000,000 500 7.000% 618,557 515 Nov. 15, 2028 Nov. 15, 2003 Citigroup Capital VI Mar. 1999 24,000,000 600 6.875% 742,269 619 Mar. 15, 2029 Mar. 15, 2004 Citigroup Capital VII July 2001 46,000,000 1,150 7.125% 1,422,681 1,186 July 31, 2031 July 31, 2006 Citigroup Capital VIII Sept. 2001 56,000,000 1,400 6.950% 1,731,959 1,443 Sept. 15, 2031 Sept. 17, 2006 ----------------------------------------------------------------------------------------------------------------------------------- Total parent obligated $4,850 =================================================================================================================================== Subsidiaries: Travelers P&C Capital I April 1996 32,000,000 $ 800 8.080% 989,720 $ 825 April 30, 2036 April 30, 2001 Travelers P&C Capital II May 1996 4,000,000 100 8.000% 123,720 103 May 15, 2036 May 15, 2001 Salomon Smith Barney Holdings Inc. Capital I Jan. 1998 16,000,000 400 7.200% 494,880 412 Jan. 28, 2038 Jan. 28, 2003 Citicorp Capital I Dec. 1996 300,000 300 7.933% 9,000 309 Feb. 15, 2027 Feb. 15, 2007 Citicorp Capital II Jan. 1997 450,000 450 8.015% 13,500 464 Feb. 15, 2027 Feb. 15, 2007 Citicorp Capital III June 1998 9,000,000 225 7.100% 270,000 232 Aug. 15, 2028 Aug. 15, 2003 ----------------------------------------------------------------------------------------------------------------------------------- Total subsidiary obligated $2,275 =================================================================================================================================== |
In each case, the coupon rate on the debentures is the same as that on the trust securities. Distributions on the trust securities and interest on the debentures are payable quarterly, except for Citigroup Capital II and III and Citicorp Capital I and II, on which distributions are payable semiannually.
On January 7, 2002, Citigroup redeemed, for cash, all of the Trust Preferred Securities of Citigroup Capital I at the redemption price of $25 per Preferred Security plus any accrued and unpaid distributions thereon.
18. PREFERRED STOCK AND STOCKHOLDERS' EQUITY
PERPETUAL PREFERRED STOCK
The following table sets forth the Company's perpetual preferred stock outstanding December 31:
REDEEMABLE, IN REDEMPTION CARRYING VALUE (IN MILLIONS OF DOLLARS)
WHOLE OR IN PART PRICE NUMBER OF --------------------------------------
RATE ON OR AFTER(1) PER SHARE(2) SHARES 2001 2000
------------------------------------------------------------------------------------------------------------------------------
Series F(6) 6.365% June 16, 2007 $ 250 1,600,000 $ 400 $ 397
Series G(6) 6.213% July 11, 2007 $ 250 800,000 200 181
Series H(3) 6.231% September 8, 2007 $ 250 800,000 200 200
Series K(4) 8.400% March 31, 2001 $ 500 500,000 -- 250
Series M(3) 5.864% October 8, 2007 $ 250 800,000 200 195
Series Q(6) Adjustable May 31, 1999 $ 250 700,000 175 172
Series R(5) Adjustable August 31, 1999 $ 250 400,000 100 100
Series U(5) 7.750% May 15, 2000 $ 250 500,000 125 125
Series V(5) Fixed/Adjustable February 15, 2006 $ 500 250,000 125 125
------------------------------------------------------------------------------------------------------------------------------
$1,525 $1,745
==============================================================================================================================
|
(1) Under various circumstances, the Company may redeem certain series of
preferred stock at times other than described above.
(2) Liquidation preference per share equals redemption price per share.
(3) Issued as depositary shares, each representing a one-fifth interest in a
share of the corresponding series of preferred stock.
(4) Issued as depositary shares, each representing a one-twentieth interest in a
share of the corresponding series of preferred stock.
(5) Issued as depositary shares, each representing a one-tenth interest in a
share of the corresponding series of preferred stock.
(6) Shares previously held by affiliates in 2001 have been subsequently traded
on the open market to third parties during the third quarter of 2001.
All dividends on the Company's perpetual preferred stock are payable quarterly and are cumulative. Citigroup redeemed Series K Preferred Stock in October 2001. In January 2002, Citigroup redeemed Series U Preferred Stock.
Dividends on Series Q and R Preferred Stock are payable at rates determined quarterly by formulas based on interest rates of certain U.S. Treasury obligations, subject to certain minimum and maximum rates as specified in the certificates of designation. The weighted-average dividend rate on the series Q and R Preferred Stock was 4.83% for 2001.
Dividends on the Series V Preferred Stock are payable at 5.86% through February 15, 2006, and thereafter at rates determined quarterly by a formula based on certain interest rate indices, subject to a minimum rate of 6% and a maximum rate of 12%. The rate of dividends on the Series V Preferred Stock is subject to adjustment based upon the applicable percentage of the dividends received deduction.
REGULATORY CAPITAL
Citigroup and Citicorp are subject to risk-based capital and leverage guidelines issued by the Board of Governors of the Federal Reserve System (FRB) and their U.S. Insured depository institution subsidiaries, including Citibank, N.A., are subject to similar guidelines issued by their respective primary regulators. These guidelines are used to evaluate capital adequacy and include the required minimums shown in the following table.
To be "well capitalized" under Federal bank regulatory agency definitions, a depository institution must have a Tier 1 ratio of at least 6%, a combined Tier 1 and Tier 2 ratio of at least 10%, and a leverage ratio of at least 5%, and not be subject to directive, order, or written agreement to meet and maintain specific capital levels. The regulatory agencies are required by law to take specific prompt actions with respect to institutions that do not meet minimum capital standards. As of December 31, 2001 and 2000, all of Citigroup's U.S. insured subsidiary depository institutions were "well capitalized. "At December 31, 2001, regulatory capital as set forth in guidelines issued by the U.S. Federal bank regulators is as follows:
MINIMUM CITIBANK,
IN MILLIONS OF DOLLARS REQUIREMENT CITIGROUP CITICORP N.A.
----------------------------------------------------------------------------
Tier 1 Capital $58,448 $42,188 $31,763
Total Capital(1) 75,797 62,871 46,778
Tier 1 capital ratio 4.00% 8.42% 8.33% 9.23%
Total capital ratio(1) 8.00% 10.92% 12.41% 13.60%
Leverage ratio(2) 3.00% 5.64% 6.85% 7.16%
============================================================================
|
(1) Total capital includes Tier 1 and Tier 2.
(2) Tier 1 capital divided by adjusted average assets.
There are various legal limitations on the extent to which Citigroup's banking subsidiaries may pay dividends to their parents. Citigroup's national and state-chartered bank subsidiaries can declare dividends to their respective parent companies in 2002, without regulatory approval, of approximately $9.1 billion adjusted by the effect of their net income (loss) for 2002 up to the date of any such dividend declaration. In determining whether and to what extent to pay dividends, each bank subsidiary must also consider the effect of dividend payments on applicable risk-based capital and leverage ratio requirements as well as policy statements of the Federal regulatory agencies that indicate that banking organizations should generally pay dividends out of current operating earnings. Consistent with these considerations, Citigroup estimates that its bank subsidiaries can distribute dividends to Citigroup of approximately $8.9 billion of the available $9.1 billion, adjusted by the effect of their net income (loss) up to the date of any such dividend declaration.
The property-casualty insurance subsidiaries' statutory capital and surplus at December 31, 2001 and 2000 was $7.687 billion and $7.634 billion, respectively. The life insurance subsidiaries' statutory capital and surplus at December 31, 2001 and 2000 was $6.188 billion and $6.079 billion, respectively. Statutory capital and surplus are subject to certain restrictions imposed by state insurance departments as to the transfer of funds and payment of dividends. The property-casualty insurance subsidiaries' statutory net income for the years ended December 31, 2001, 2000 and 1999 was $1.091 billion, $1.445 billion and $1.500 billion, respectively. The life insurance subsidiaries' statutory net income for the years ended December 31, 2001, 2000 and 1999 was $471 million, $1.090 billion and $988 million, respectively. Statutory capital and surplus and statutory net income are determined in accordance with statutory accounting practices.
TIC is subject to various regulatory restrictions that limit the maximum amount of dividends available to its parent without prior approval of the Connecticut Insurance Department. A maximum of $586 million of statutory surplus is available by the end of the year 2002 for such dividends without the prior approval of the Connecticut Insurance Department.
TPC's insurance subsidiaries are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid to their parent without prior approval of insurance regulatory authorities. A maximum of $1.0 billion is available by the end of 2002 for such dividends without prior approval of the Connecticut Insurance Department. However, the payment of a significant portion of this amount is likely to be subject to such approval depending upon the amount and timing of the payments.
Certain of the Company's U.S. and non-U.S. broker-dealer subsidiaries are subject to various securities and commodities regulations and capital adequacy requirements promulgated by the regulatory and exchange authorities of the countries in which they operate. The principal regulated subsidiaries, their net capital requirement or equivalent and excess over the minimum requirement as of December 31, 2001 are as follows:
EXCESS OVER
NET CAPITAL MINIMUM
SUBSIDIARY JURISDICTION OR EQUIVALENT REQUIREMENT
-------------------------------------------------------------------------------------------------
IN MILLIONS OF DOLLARS
Salomon Smith Barney Inc. U.S. Securities and
Exchange Commission Uniform
Net Capital rule (Rule 15c3-1) $3,474 $3,014
Salomon Brothers United Kingdom's Securities
International Limited and Futures Authority 2,757 768
=================================================================================================
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19. CHANGES IN EQUITY FROM NONOWNER SOURCES
Changes in each component of "Accumulated Other Changes in Equity from Nonowner Sources" for the three year period ended December 31, 2001 are as follows:
ACCUMULATED
NET UNREALIZED FOREIGN OTHER CHANGES
GAINS ON CURRENCY IN EQUITY FROM
INVESTMENT TRANSLATION CASH FLOW NONOWNER
IN MILLIONS OF DOLLARS SECURITIES ADJUSTMENT HEDGES SOURCES
----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 1, 1999 $1,433 $ (449) $ -- $ 984
Unrealized gains on investment Securities, net of tax of $161 566 -- -- 566
Less: Reclassification adjustment for gains included in net
income, net of tax of ($189) (352) -- -- (352)
Foreign currency translation adjustment, net of tax of ($25) -- (43) -- (43)
----------------------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE 214 (43) -- 171
----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 1,647 (492) -- 1,155
Unrealized gains on investment securities, net of tax of $23 (150) -- -- (150)
Less: Reclassification adjustment for gains included in net
income, net of tax of ($282) (524) -- -- (524)
Foreign currency translation adjustment, net of tax of ($108) -- (358) -- (358)
----------------------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE (674) (358) -- (1,032)
----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2000 973 (850) -- 123
Cumulative effect of accounting changes, net of tax of $70(1) 101 20 (3) 118
Unrealized gains on investment securities, net of tax of $71 154 -- -- 154
Less: Reclassification adjustment for gains included in net
income, net of tax of ($202) (376) -- -- (376)
Foreign currency translation adjustment, net of tax of ($263) -- (1,034) -- (1,034)
Cash flow hedges, net of tax of $106 -- -- 171 171
----------------------------------------------------------------------------------------------------------------------------------
CURRENT PERIOD CHANGE (121) (1,014) 168 (967)
----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2001 $ 852 $(1,864) $ 168 $ (844)
==================================================================================================================================
|
(1) Refers to the 2001 first quarter adoption of SFAS 133 and the 2001 second quarter adoption of EITF 99-20.
20. EARNINGS PER SHARE
The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations for the years ended December 31:
IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS 2001 2000 1999 ---------------------------------------------------------------------------------------------------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES $ 14,284 $ 13,519 $ 11,370 Cumulative effect of accounting changes (158) -- (127) Preferred dividends (110) (116) (149) ---------------------------------------------------------------------------------------------------- INCOME AVAILABLE TO COMMON STOCKHOLDERS FOR BASIC EPS 14,016 13,403 11,094 Effect of dilutive securities -- -- 10 ---------------------------------------------------------------------------------------------------- INCOME AVAILABLE TO COMMON STOCKHOLDERS FOR DILUTED EPS $ 14,016 $ 13,403 $ 11,104 ==================================================================================================== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING APPLICABLE TO BASIC EPS 5,031.7 4,977.0 4,979.2 ---------------------------------------------------------------------------------------------------- Effect of dilutive securities: Options 81.6 110.9 103.3 Restricted stock 32.6 33.2 34.8 Convertible securities 1.1 1.1 10.5 ---------------------------------------------------------------------------------------------------- ADJUSTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING APPLICABLE TO DILUTED EPS 5,147.0 5,122.2 5,127.8 ==================================================================================================== BASIC EARNINGS PER SHARE Income before cumulative effect of accounting changes $ 2.82 $ 2.69 $ 2.26 Cumulative effect of accounting changes (0.03) -- (0.03) ---------------------------------------------------------------------------------------------------- NET INCOME $ 2.79 $ 2.69 $ 2.23 ==================================================================================================== DILUTED EARNINGS PER SHARE Income before cumulative effect of accounting changes $ 2.75 $ 2.62 $ 2.19 Cumulative effect of accounting changes (0.03) -- (0.02) ---------------------------------------------------------------------------------------------------- NET INCOME $ 2.72 $ 2.62 $ 2.17 ==================================================================================================== |
During 2001, 2000 and 1999, weighted average options of 100.1 million shares, 28.1 million shares and 42.7 million shares with weighted average exercise prices of $52.76 per share, $58.32 per share, and $40.81 per share, respectively, were excluded from the computation of diluted EPS because the options' exercise price was greater than the average market price of the Company's common stock.
21. INCENTIVE PLANS
The Company has adopted a number of equity compensation plans under which it administers stock options, restricted/deferred stock and stock purchase programs to attract, retain and motivate officers and employees, to compensate them for their contributions to the growth and profits of the Company, and to encourage employee stock ownership. At December 31, 2001, approximately 450 million shares were authorized for grant under Citigroup's stock incentive plans.
STOCK OPTION PROGRAMS
The company has a number of stock option programs that provide for the granting of stock options to officers and employees. Options are granted at the fair market value of Citigroup common stock at the time of grant for a period of ten years. Generally, Citigroup option vest over a five-year period, including options granted under Travelers predecessor plans and options granted since the date of the merger. Generally, 50% of the options granted under Citicorp predecessor plans prior to the merger are exercisable beginning on the third anniversary and 50% beginning on the fourth anniversary of the date of grant. Generally, options granted under Associates predecessor plans vest over a three-year period. Certain options permit an employee exercising an option under certain conditions to be granted new options (reload options) in an amount equal to the number of common shares used to satisfy the exercise price and the withholding taxes due upon exercise. The reload options are granted for the remaining term of the related original option and vest after six months.
To further encourage employee stock ownership, the Company's eligible employees participate in WealthBuilder, Citibuilder, or the new Citigroup Ownership stock option programs. Commencing in 2001, new grants are made under the Citigroup Ownership Program. Options granted under the WealthBuilder and the Citigroup Ownership programs vest over a five-year period, whereas options granted under the CitiBuilder program vest after five years. These options do not have a reload feature.
During 1998, a group of key Citicorp employees were granted 12,680,000 performance-based stock options at an equivalent Citigroup strike price of $24.13. These performance-based options vested in 1999 when Citigroup's stock price reached $40.00 per share. The cost of performance-based options was measured as the difference between the exercise price and the market price required for vesting. After-tax expense recognized on these performance based options was $68 million in 1999. All of the expense related to these grants has been recognized.
Information with respect to stock option activity under Citigroup stock option plans for the years ended December 31, 2001, 2000 and 1999 is as follows:
2001 2000 1999
---------------------------- ----------------------------- ----------------------------
WEIGHTED Weighted Weighted
AVERAGE Average Average
EXERCISE Exercise Exercise
OPTIONS PRICE Options Price Options Price
----------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING, BEGINNING OF YEAR 372,547,412 $ 30.55 377,082,042 $23.69 419,060,809 $ 20.37
Granted original 57,366,507 52.77 86,287,613 43.57 29,869,276 34.46
Granted reload 13,655,748 49.99 57,637,033 49.50 39,352,789 37.61
Forfeited (21,544,911) 34.55 (20,672,028) 27.11 (18,106,937) 20.43
Exercised (57,602,949) 23.12 (127,787,248) 26.14 (93,093,895) 18.70
----------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING, END OF YEAR 364,421,807 $ 36.18 372,547,412 $30.55 377,082,042 $ 23.69
==================================================================================================================================
EXERCISABLE AT YEAR-END 164,268,613 118,330,975 113,813,418
==================================================================================================================================
|
The following table summarizes the information about stock options outstanding under Citigroup stock option plans at December 31, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------- -----------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
CONTRACTUAL AVERAGE AVERAGE
NUMBER LIFE EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING REMAINING PRICE EXERCISABLE PRICE
-------------------------------------------------------------------------------------------------------------------------
$ 0.03--$ 9.99 16,025,359 2.3 years $ 6.83 15,012,126 $ 6.72
$10.00--$19.99 13,439,499 4.3 years 14.26 11,977,180 14.26
$20.00--$29.99 123,660,877 6.0 years 23.60 65,974,043 23.42
$30.00--$39.99 30,524,889 7.1 years 33.77 10,956,980 33.52
$40.00--$49.99 91,055,480 7.7 years 45.49 27,506,605 46.58
$50.00--$59.99 89,612,050 7.1 years 53.49 32,772,216 54.09
$60.00--$60.93 103,653 7.3 years 60.93 69,463 60.93
-------------------------------------------------------------------------------------------------------------------------
364,421,807 6.6 years $ 36.18 164,268,613 $ 31.91
=========================================================================================================================
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THE RESTRICTED STOCK PROGRAM
The Company, primarily through its Capital Accumulation Program (CAP), issues shares of Citigroup common stock in the form of restricted stock to participating officers and employees. The restricted stock generally vests after a two- or three-year restricted period, during which time the stock cannot be sold or transferred by the participant and is subject to total or partial forfeiture if the participant's employment is terminated. Certain CAP participants may elect to receive part of their awards in CAP stock and part in stock options. The figures in the two previous tables include options granted under CAP. Unearned compensation expense associated with the restricted stock grants represents the market value of Citigroup common stock at the date of grant and is recognized as a charge to income ratably over the vesting period. Information with respect to restricted stock awards is as follows:
2001 2000 1999
---------------------------------------------------------------------------------------------------
Shares awarded 26,018,414 27,989,280 14,577,765
Weighted average fair market value per share $ 43.60 $ 40.66 $ 28.52
After-tax compensation cost charged to earnings $ 397 $ 417 $ 269
(IN MILLIONS OF DOLLARS)
===================================================================================================
|
CITIGROUP 401(k)
Under the Citigroup 401(k) plan, eligible employees receive awards up to 3% of their total compensation deferred into the Citigroup common stock fund. The after-tax expense associated with this plan amounted to $32 million in 2001, $29 million in 2000 and $31 million in 1999.
STOCK PURCHASE PROGRAM
Stock Purchase Program offerings, which are administered under the Citigroup 2000 Stock Purchase Plan and the Citicorp 1997 Stock Incentive Plan allow eligible employees of Citigroup to enter into fixed subscription agreements to purchase shares in the future at the market value on the date of the agreements. Subject to certain limits, enrolled employees are permitted to make one purchase prior to the expiration date. The purchase price of the shares is paid with accumulated payroll deductions plus interest. Shares of Citigroup's common stock to be delivered under the Stock Purchase Program may be sourced from authorized and unissued or treasury shares. The original offering under the Citigroup Stock Purchase Program was in August 2000. In 2001, three additional offerings were made to new employees in March, July and November 2001.
A previous offering under the 1997 Stock Purchase Plan allowed eligible employees of Citicorp to enter into fixed subscription agreements to purchase shares at the market value on the date of the agreements. Such shares could be purchased from time to time through the expiration date. Shares of Citigroup's common stock delivered under the Stock Purchase Plan were sourced from treasury shares.
Following is the share activity under the August 2000 and 1997 fixed-price offerings for the purchase of shares at the equivalent Citigroup price of $52.92 and $22.65 per share, respectively. The fixed-price offerings for the purchase of shares for the offerings made in March, July and November 2001 were $44.98, $50.21 and $45.52, respectively. The 1997 offering expired on June 30, 1999. All current offerings will expire in September 2002.
2001 2000 1999
--------------------------------------------------------------------------------------------------
OUTSTANDING SUBSCRIBED SHARES AT THE BEGINNING OF YEAR 24,081,663 -- 15,090,212
Subscriptions entered into 2,981,557 24,618,050 --
Shares purchased 76,361 1,647 13,765,639
Canceled or terminated 5,725,549 534,740 1,324,573
--------------------------------------------------------------------------------------------------
OUTSTANDING SUBSCRIBED SHARES AT END OF YEAR 21,261,310 24,081,663 --
==================================================================================================
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PRO FORMA IMPACT OF SFAS NO. 123
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations in accounting for its stock-based compensation plans under which there is generally no charge to earnings for employee stock option awards (other than performance based options) and the dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.
Alternatively, FASB rules would permit a method under which a compensation cost for all stock awards would be calculated and recognized over the service period (generally equal to the vesting period). This compensation cost would be determined in a manner prescribed by FASB using option pricing models, intended to estimate the fair value of the awards at the grant date. Earnings per share dilution would be recognized as well.
Under both methods, an offsetting increase to stockholders' equity is recorded equal to the amount of compensation expense charged.
Had the Company applied SFAS No. 123 in accounting for the Company's stock option plans, net income and net income per share would have been the pro forma amounts indicated below:
IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS 2001 2000 1999
--------------------------------------------------------------------------------------------------------------
Compensation expense
related to stock
option plans As reported $ -- $ -- $ 108
Pro forma 862 919 818
--------------------------------------------------------------------------------------------------------------
Net income As reported $ 14,126 $ 13,519 $ 11,243
Pro forma 13,566 12,931 10,782
--------------------------------------------------------------------------------------------------------------
Basic earnings per share As reported $ 2.79 $ 2.69 $ 2.23
Pro forma 2.68 2.57 2.11
--------------------------------------------------------------------------------------------------------------
Diluted earnings per share As reported $ 2.72 $ 2.62 $ 2.17
Pro forma 2.61 2.50 2.05
==============================================================================================================
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The pro forma adjustments relate to stock options granted from 1995 through 2001, for which a fair value on the date of grant was determined using a Black-Scholes option pricing model. No effect has been given to options granted prior to 1995. The fair values of stock-based awards are based on assumptions that were determined at the grant date.
SFAS No. 123 requires that reload options be treated as separate grants from the related original grants. Under the Company's reload program, upon exercise of an option, employees tender previously owned shares to pay the exercise price and surrender shares otherwise to be received for related tax withholding, and receive a reload option covering the same number of shares tendered for such purposes. Reload options vest at the end of a six-month period. Reload options are intended to encourage employees to exercise options at an earlier date and to retain the shares so acquired, in furtherance of the Company's long-standing policy of encouraging increased employee stock ownership. The result of this program is that employees generally will exercise options as soon as they are able and, therefore, these options have shorter expected lives. Shorter option lives result in lower valuations using a Black Scholes option model. However, such values are expensed more quickly due to the shorter vesting period of reload options. In addition, since reload options are treated as separate grants, the existence of the reload feature results in a greater number of options being valued.
Shares received through option exercises under the reload program are subject to restrictions on sale. Discounts (as measured by the estimated cost of protection) have been applied to the fair value of options granted to reflect these sale restrictions.
Additional valuation and related assumption information for Citigroup option plans is presented below:
FOR OPTIONS GRANTED DURING 2001 2000 1999 ------------------------------------------------------------------------------- WEIGHTED AVERAGE FAIR VALUE Option $ 11.69 $ 9.94 $ 10.65 ------------------------------------------------------------------------------- WEIGHTED AVERAGE EXPECTED LIFE Original grants 3 years 3 years 3 years Reload grants 1 year 1 year 1 year ------------------------------------------------------------------------------- VALUATION ASSUMPTIONS Expected volatility 38.76% 41.35% 46.1% Risk-free interest rate 4.63% 6.17% 5.17% Expected annual dividends per share $ 0.92 $ 0.76 $ 0.47 Expected annual forfeitures 5% 5% 5% =============================================================================== |
22. RETIREMENT BENEFITS
The Company has several non-contributory defined benefit pension plans covering substantially all U.S. employees and has various defined benefit pension termination indemnity plans covering employees outside the United States. The U.S. defined benefit plan provides benefits under a cash balance formula. Employees satisfying certain age and service requirements remain covered by a prior final pay formula. The Company also offers postretirement health care and life insurance benefits to certain eligible U.S. retired employees, as well as to certain eligible employees outside the United States. The following tables summarize the components of net benefit expense recognized in the Consolidated Statement of Income and the funded status and amounts recognized in the consolidated balance sheet for the Company's U.S. plans and significant plans outside the United States.
NET BENEFIT EXPENSE
PENSION PLANS POST RETIREMENT BENEFIT PLANS(1)
--------------------------------------------------------------- -----------------------------
U.S. PLANS PLANS OUTSIDE U.S. U.S. PLANS
----------------------------- ------------------------------- -------------------------------
IN MILLIONS OF DOLLARS 2001 2000 1999 2001 2000 1999 2001 2000 1999
--------------------------------------------------------------------------------------------------------------------------------
Benefits earned during the
year $ 232 $ 238 $ 264 $ 116 $ 95 $ 89 $ 6 $ 12 $ 16
Interest cost on benefit
obligation 544 527 494 190 102 98 73 73 68
Expected return on plan
assets (795) (757) (688) (185) (106) (90) (20) (18) (10)
Amortization of unrecognized:
Net transition (asset)
obligation -- 1 (17) 9 5 4 -- -- --
Prior service cost (18) (9) (6) -- -- -- (2) (5) (5)
Net actuarial loss (gain) 3 (29) 14 5 (1) 6 (3) (9) 2
Curtallment (gain) loss (5) -- -- 6 -- -- (39) (29) (29)
--------------------------------------------------------------------------------------------------------------------------------
NET (BENEFIT) EXPENSE $ (39) $ (29) $ 61 $ 141 $ 95 $ 107 $ 15 $ 24 $ 36
================================================================================================================================
|
(1) For plans outside the U.S., net postretirement benefit expense totaled $42 million in 2001, $13 million in 2000, and $13 million in 1999.
PREPAID BENEFIT COST (BENEFIT LIABILITY)
POSTRETIREMENT
PENSION PLANS BENEFIT PLANS(3)
-------------------------------------- -----------------
PLANS OUTSIDE
U.S. PLANS(1) U.S.(2) U.S. PLANS
----------------- --------------- -----------------
IN MILLIONS OF DOLLARS AT YEAR END 2001 2000 2001 2000 2001 2000
-------------------------------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 7,382 $ 6,630 $ 1,794 $ 1,632 $ 1,015 $ 946
Benefits earned during the year 232 238 116 95 6 12
Interest cost on benefit obligation 544 527 188 102 73 73
Plan amendments (166) 1 -- (5) -- (3)
Actuarial (gain) loss 221 327 104 109 28 95
Benefits paid (389) (351) (128) (68) (82) (77)
Acquisitions 10 24 559 59 -- --
Expenses (16) (14) -- -- -- --
Curtailment 5 -- 1 (8) (22) (31)
Settlements -- -- 1 (8) -- --
Foreign exchange impact -- -- (70) (114) -- --
-------------------------------------------------------------------------------------------------------
BENEFIT OBLIGATION AT END OF YEAR $ 7,823 $ 7,382 $ 2,565 $ 1,794 $ 1,018 $ 1,015
=======================================================================================================
CHANGE IN PLAN ASSETS
Plan assets at fair value at beginning
of year $ 8,478 $ 8,630 $ 1,421 $ 1,421 $ 218 $ 217
Actual return on plan assets (238) 102 333 17 (6) 1
Company contributions 379 71 139 104 82 77
Employee contributions -- -- 8 4 -- --
Acquisitions 10 32 388 47 -- --
Settlements -- -- (5) (5) -- --
Benefits paid (389) (351) (128) (68) (82) (77)
Expenses (16) (14) -- -- -- --
Foreign exchange impact -- -- (57) (99) -- --
-------------------------------------------------------------------------------------------------------
PLAN ASSETS AT FAIR VALUE AT END OF YEAR $ 8,224 $ 8,478 $ 2,099 $ 1,421 $ 212 $ 218
=======================================================================================================
RECONCILLATION OF PREPAID (ACCRUED)
BENEFIT COST AND TOTAL AMOUNT
RECOGNIZED
Funded status of the plan $ 401 $ 1,096 $ 446 $ (373) $ (806) $ (797)
Unrecognized:
Net transition obligation (asset) -- -- 24 26 -- --
Prior service cost (245) (114) 10 8 (8) (26)
Net actuarial (gain) loss 655 (589) 289 148 (30) (88)
-------------------------------------------------------------------------------------------------------
NET AMOUNT RECOGNIZED $ 811 $ 393 $ (143) $ (191) $ (844) $ (911)
=======================================================================================================
AMOUNTS RECOGNIZED IN THE STATEMENT OF
FINANCIAL POSITION CONSIST OF
Prepaid benefit cost $ 1,300 $ 848 $ 174 $ 131 -- $ --
Accrued benefit liability (554) (513) (401) (365) (844) (911)
Intangible asset 65 58 84 43 -- --
-------------------------------------------------------------------------------------------------------
NET AMOUNT RECOGNIZED $ 811 $ 393 $ (143) $ (191) $ (844) $ (911)
=======================================================================================================
|
(1) For unfunded U.S. plans, the aggregate benefit obligation was $547 million,
and $537 million, and the aggregate accumulated benefit obligation was $512
million and $475 million at December 31, 2001 and 2000, respectively.
(2) For plans outside the U.S., the aggregate benefit obligation was $2.378
billion and $1.175 billion, and the fair value of plan assets was $1,877
billion and $700 million at December 31, 2001 and 2000, respectively, for
plans whose benefit obligation exceeds plan assets. The aggregate
accumulated benefit obligation was $670 million and $440 million, and the
fair value of plan assets was $324 million and $167 million at December
31, 2001 and 2000, respectively, for plans whose accumulated benefit
obligation exceeds plan assets.
(3) For plans outside the U.S., the accumulated postretirement benefit
obligation was $524 million and $88 million and the postretirement benefit
liability was $519 million and $44 million at December 31, 2001 and 2000,
respectively.
The expected long-term rates of return on assets used in determining the Company's pension and postretirement expense are shown below:
2001 2000 1999
-----------------------------------------------------------------------------
RATE OF RETURN ON ASSETS
U.S. plans 9.5% 9.0% to 9.5% 9.0% to 9.5%
Plans outside the U.S.(1) 3.0% to 12.0% 2.5% to 12.0% 2.5% to 12.5%
=============================================================================
|
(1) Excluding highly inflationary countries.
The principal assumptions used in determining pension and postretirement benefit obligations for the Company's plans are shown in the following table.
AT YEAR END 2001 2000 -------------------------------------------------------------------------------- DISCOUNT RATE U.S. plans 7.25% 7.5% Plans outside the U.S.(1) 2.5% to 12.0% 2.5% to 12.0% FUTURE COMPENSATION INCREASE RATE U.S. plans 4.0% to 6.0% 4.0% to 6.5% Plans outside the U.S.(1) 2.5% to 12.0% 2.5% to 12.0% HEALTH CARE COST INCREASE RATE -- U.S.PLANS Following year 7.0% to 8.0% 7.0% to 8.5% Decreasing to the year 2005 5.0% to 5.5% 5.0% ================================================================================ |
(1) Excluding highly inflationary countries.
As an indicator of sensitivity, increasing the assumed health care cost trend rate by 1% each year would have increased the accumulated postretirement benefit obligation as of December 31, 2001 by $38 million and the aggregate of the benefits earned and interest components of 2001 net postretirement benefit expense by $5 million. Decreasing the assumed health care cost trend rate by 1% in each year would have decreased the accumulated postretirement benefit obligation as of December 31, 2001 by $35 million and the aggregate of the benefits earned and interest components of 2001 net postretirement benefit expense by $4 million.
23. DERIVATIVES AND OTHER ACTIVITIES The following table summarizes certain information related to the Company's hedging activities for the year ended December 31, 2001:
YEAR ENDED DECEMBER 31,
IN MILLIONS OF DOLLARS 2001
------------------------------------------------------------------------------------
FAIR VALUE HEDGES:
Hedge ineffectiveness recognized in earnings $ 168
Net gain excluded from assessment of effectiveness 85
CASH FLOW HEDGES:
Hedge ineffectiveness recognized in earnings 20
Amount excluded from assessment of effectiveness --
NET INVESTMENT HEDGES:
Net gain included in foreign currency translation
adjustment within accumulated other changes in
equity from nonowner sources 432
====================================================================================
|
Additionally, $313 million of net gains is expected to be reclassified from accumulated other changes in equity from nonowner sources within twelve months from December 31, 2001.
The accumulated other changes in equity from nonowner sources from cash flow hedges for 2001 can be summarized as follows (net of taxes):
YEAR ENDED DECEMBER 31,
IN MILLIONS OF DOLLARS 2001
-----------------------------------------------------------------------------------
Beginning balance(1) $ (3)
Net gains from cash flow hedges 315
Net amounts reclassified to earnings (144)
-----------------------------------------------------------------------------------
Ending balance $ 168
===================================================================================
|
(1) Results from the cumulative effect of accounting change for cash flow hedges.
Citigroup enters into derivative and foreign exchange futures, forwards, options and swaps, which enable customers to transfer, modify or reduce their interest rate, foreign exchange and other market risks, and also trades these products for its own account. In addition, Citigroup uses derivatives and other instruments, primarily interest rate products, as an end-user in connection with its risk management activities. Derivatives are used to manage interest rate risk relating to specific groups of on balance sheet assets and liabilities, including investments, commercial and consumer loans, deposit liabilities, long-term debt and other interest-sensitive assets and liabilities, as well as credit card securitizations, redemptions and sales. In addition, foreign exchange contracts are used to hedge non U.S. dollar denominated debt, net capital exposures and foreign exchange transactions.
Futures and forward contracts are commitments to buy or sell at a future date a financial instrument, commodity or currency at a contracted price and may be settled in cash or through delivery. Swap contracts are commitments to settle in cash at a future date or dates which may range from a few days to a number of years, based on differentials between specified financial indices, as applied to a notional principal amount. Option contracts give the purchaser, for a fee, the right, but not the obligation, to buy or sell within a limited time, a financial instrument or currency at a contracted price that may also be settled in cash, based on differentials between specified indices.
Citigroup also sells various financial instruments that have not been purchased (short sales). In order to sell securities short, the securities are borrowed or received as collateral in conjunction with short-term financing agreements and, at a later date, must be delivered (i.e. replaced) with like or substantially the same financial instruments or commodities to the parties from which they were originally borrowed.
Derivatives and short sales may expose Citigroup to market risk or credit risk in excess of the amounts recorded on the balance sheet. Market risk on a derivative, short sale or foreign exchange product is the exposure created by potential fluctuations in interest rates, foreign exchange rates and other values, and is a function of the type of product, the volume of transactions, the tenor and terms of the agreement, and the underlying volatility. Credit risk is the exposure to loss in the event of nonperformance by the other party to the transaction and if the value of collateral held, if any, was not adequate to cover such losses. The recognition in earnings of unrealized gains on these transactions is subject to management's assessment as to collectibility. Liquidity risk is the potential exposure that arises when the size of the derivative position may not be able to be rapidly adjusted in times of high volatility and financial stress at a reasonable cost.
24. CONCENTRATIONS OF CREDIT RISK Concentrations of credit risk exist when changes in economic, industry or geographic factors similarly affect groups of counterparties whose aggregate credit exposure is material in relation to Citigroup's total credit exposure. Although Citigroup's portfolio of financial instruments is broadly diversified along industry, product, and geographic lines, material transactions are completed with other financial institutions, particularly in the securities trading, derivative, and foreign exchange businesses.
25. FAIR VALUE OF FINANCIAL INSTRUMENTS
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The table presents the carrying value and fair value of Citigroup's financial
instruments, as defined in accordance with applicable requirements. Accordingly,
as required, the disclosures exclude leases, affiliate investments, and pension
and benefit obligations. Contractholder funds amounts exclude certain insurance
contracts. Also as required, the disclosures exclude the effect of taxes, do not
reflect any premium or discount that could result from offering for sale at one
time the entire holdings of a particular instrument, the excess fair value
associated with deposits with no fixed maturity, as well as other expenses
that would be incurred in a market transaction. In addition, the table excludes
the values of nonfinancial assets and liabilities, as well as a wide range of
franchise, relationship, and intangible values, which are integral to a full
assessment of Citigroup's financial position and the value of its net assets.
The data represents management's best estimates based on a range of methodologies and assumptions. The carrying value of short-term financial instruments as well as receivables and payables arising in the ordinary course of business, approximates fair value because of the relatively short period of time between their origination and expected realization. Quoted market prices are used for most investments, for loans where available, and for both trading and end-user derivatives, as well as for liabilities, such as long-term debt, with quoted prices. For performing loans where no quoted market prices are available, contractual cash flows are discounted at quoted secondary market rates or estimated market rates if available. Otherwise, sales of comparable loan portfolios or current market origination rates for loans with similar terms and risk characteristics are used. For loans with doubt as to collectibility, expected cash flows are discounted using an appropriate rate considering the time of collection and a premium for the uncertainty of the flows. The value of collateral is also considered. For liabilities such as long-term debt without quoted market prices, market borrowing rates of interest are used to discount contractual cash flows.
Fair values of credit card securitizations reflect the various components of these transactions but principally arise from fixed rates payable to certificate holders. Under the applicable requirements, the estimated fair value of deposits with no fixed maturity in the following table excludes the premium values available in the market for such deposits, and the estimated value is shown in the table as being equal to the carrying value.
2001 2000
-------------------- ---------------------
CARRYING ESTIMATED Carrying Estimated
IN BILLIONS OF DOLLARS AT YEAR-END VALUE FAIR VALUE value fair value
------------------------------------------------------------------------------------------------------
ASSETS AND RELATED INSTRUMENTS
Investments $ 160.8 $ 160.8 $ 120.1 $ 120.1
Federal funds sold and
securities borrowed or
purchased under
agreements to resell 134.8 134.8 105.9 105.9
Trading account assets 144.9 144.9 132.5 132.5
Loans(1) 359.1 374.6 338.1 351.1
Other financial assets(2) 156.6 156.3 138.2 138.6
======================================================================================================
LIABILITIES AND RELATED INSTRUMENTS
Deposits 374.5 374.2 300.6 300.7
Federal funds purchased and securities loaned
or sold under agreements to repurchase 153.5 153.5 110.6 110.6
Trading account liabilities 80.5 80.5 85.1 85.1
Contractholder funds
With defined maturities 9.5 10.0 6.7 6.7
Without defined maturities 10.6 10.3 10.1 9.9
Long-term debt 121.6 124.3 111.8 112.3
Other financial liabilities(3) 132.5 132.5 148.2 147.8
======================================================================================================
|
(1) The carrying value of loans is net of the allowance for credit losses and
also excludes $22.7 billion and $20.0 billion of lease finance receivables
in 2001 and 2000, respectively.
(2) Includes cash and due from banks, deposits at interest with banks,
brokerage receivables, reinsurance recoverables and separate and variable
accounts for which the carrying value is a reasonable estimate of fair
value, and the carrying value and estimated fair value of financial
instruments included in other assets on the Consolidated Statement of
Financial Position.
(3) Includes brokerage payables, separate and variable accounts, investment
banking and brokerage borrowings, short-term borrowings, for which the
carrying value is a reasonable estimate of fair value, and the carrying
value and estimated fair value of financial instruments included in other
liabilities on the Consolidated Statement of Financial Position.
Fair values vary from period to period based on changes in a wide range of factors, including interest rates, credit quality, and market perceptions of value, and as existing assets and liabilities run off and new items are entered into.
The estimated fair values of loans reflect changes in credit status since the loans were made, changes in interest rates in the case of fixed-rate loans, and premium values at origination of certain loans. The estimated fair values of Citigroup's loans, in the aggregate, exceeded carrying values (reduced by the allowance for credit losses) by $15.5 billion at year-end 2001 and $13.0 billion in 2000. Within these totals, estimated fair values exceeded carrying values for consumer loans net of the allowance by $10.9 billion, an increase of $1.5 billion from year-end 2000, and for commercial loans net of the allowance by $4.6 billion, which was an increase of $1.0 billion from year-end 2000. The increase in estimated fair values in excess of carrying values of consumer loans and commercial loans is primarily due to the lower interest rate environment in 2001.
The estimated fair value of credit card securitizations, which are included with other financial assets in the table above, was $0.3 billion less than their carrying value at December 31, 2001, which is $0.6 billion less than December 31, 2000, when the estimated fair value exceeded the carrying value by $0.3 billion. This decrease is due to the effects of a lower interest rate environment on the fixed-rate investor certificates.
For 2001, all end-user derivative contracts, which are included in other assets and other liabilities in the previous table, are carried at fair value. At December 31, 2000 the gross difference between the fair value and carrying
amount was $0.8 billion for contracts whose fair value exceeds carrying value, and $0.5 billion for contracts whose carrying value exceeds fair value.
26. PLEDGED ASSETS, COLLATERAL AND COMMITMENTS
PLEDGED ASSETS
At December 31, 2001 and 2000 the approximate market values of securities sold
under agreements to repurchase and other assets pledged, excluding the impact of
FIN 39 and FIN 41 were as follows:
IN MILLIONS OF DOLLARS 2001 2000
------------------------------------------------------------------------------------------------
For securities sold under agreements to repurchase $ 183,814 $ 161,909
As collateral for securities borrowed of
approximately equivalent value 44,340 41,149
As collateral on bank loans 154 225
To clearing organizations or segregated under
securities laws and regulations 12,834 10,427
For securities loaned 17,562 21,226
Other 43,054 41,520
------------------------------------------------------------------------------------------------
$ 301,758 $ 276,456
================================================================================================
|
In addition, included in cash and due from banks at December 31, 2001 and 2000 is $5.3 billion and $2.7 billion, respectively, of cash segregated under Federal and other brokerage regulations or deposited with clearing organizations.
At December 31, 2001 the Company had $975 million of outstanding letters of credit from banks to satisfy various collateral and margin requirements.
COLLATERAL
At December 31, 2001 and 2000, the approximate market value of collateral
received by the Company that may be sold or repledged by the Company, excluding
amounts netted in accordance with FIN 39 and FIN 41, was $245.0 billion and
$236.6, respectively. This collateral was received in connection with resale
agreements, securities borrowings and loans, derivative transactions, and
margined broker loans.
At December 31, 2001 and 2000, a substantial portion of the collateral received by the Company had been sold or repledged in connection with repurchase agreements, securities sold, not yet purchased, securities borrowings and loans, pledges to clearing organizations, segregation requirements under securities laws and regulations, derivative transactions, and bank loans.
In addition, at December 31, 2001 and 2000, the Company had pledged $47.5 billion and $47.5 billion, respectively, of collateral that may not be sold or repledged by the secured parties.
LEASE COMMITMENTS
Rental expense (principally for offices and computer equipment) was $1.7
billion, $1.5 billion and $1.4 billion for the years ended December 31, 2001,
2000 and 1999, respectively.
Future minimum annual rentals under noncancelable leases, net of sublease income, are as follows:
IN MILLIONS OF DOLLARS AT YEAR-END
-----------------------------------------------------------
2002 $ 1,079
2003 927
2004 761
2005 759
2006 488
Thereafter 2,654
-----------------------------------------------------------
$ 6,668
===========================================================
|
The Company and certain of Salomon Smith Barney's subsidiaries together have an option to purchase the buildings presently leased for Salomon Smith Barney's executive offices and New York City operations at the expiration of the lease term.
LOAN COMMITMENTS
IN MILLIONS OF DOLLARS AT YEAR-END 2001 2000 ----------------------------------------------------------------------------------------------------- One to four family residential mortgages $ 5,470 $ 2,456 Revolving open-end loans secured by 1-4 family residential properties 7,107 6,164 Commercial real estate, construction and land development 1,882 1,130 Credit card lines 387,396 347,383 Commercial and other consumer loan commitments(1) 210,909 197,415 ----------------------------------------------------------------------------------------------------- Total $ 612,764 $ 554,728 ===================================================================================================== |
(1) Includes commercial commitments to make or purchase loans, to purchase third-party receivables, and to provide note issuance or revolving underwriting facilities.
The majority of unused commitments are contingent upon customers maintaining specific credit standards. Commercial commitments generally have floating interest rates and fixed expiration dates and may require payment of fees. Such fees (net of certain direct costs) are deferred and, upon exercise of the commitment, amortized over the life of the loan or, if exercise is deemed remote, amortized over the commitment period. The table does not include commercial letters of credit issued on behalf of customers and collateralized by the underlying shipment of goods which totaled $5.7 billion and $6.8 billion at December 31, 2001 and 2000.
LOANS SOLD WITH CREDIT ENHANCEMENTS
AMOUNTS
--------------------
IN BILLIONS OF DOLLARS AT YEAR-END 2001 2000 FORM OF CREDIT ENHANCEMENT
-----------------------------------------------------------------------------------------------------
Residential mortgages and other
loans sold with recourse(1) $ 7.7 $ 10.4 2001: Recourse obligation of
$3.5, and put options as
described below 2000; Recourse
obligation of $5.1, and put
options as described below.
-----------------------------------------------------------------------------------------------------
GNMA sales/servicing agreements(2) 13.4 16.1 Secondary recourse obligation
-----------------------------------------------------------------------------------------------------
Securitized credit card receivables 66.8 57.0 Includes net revenue over the
life of the transaction. Also
includes other recourse
obligations of $1.0 in 2001 and
2000.
=====================================================================================================
|
(1) Residential mortgages represent 57% of amounts in 2001 and 71% in 2000.
(2) Government National Mortgage Association sales/servicing agreements
covering securitized residential mortgages.
Citigroup and its subsidiaries are obligated under various credit enhancements related to certain sales of loans or sales of participations in pools of loans, as summarized above.
Net revenue on securitized credit card receivables is collected over the life of each sale transaction. The net revenue is based upon the sum of finance charges and fees received from cardholders and interchange revenue earned on cardholder transactions, less the sum of the yield paid to investors, credit losses, transaction costs, and a contractual servicing fee, which is also retained by certain Citigroup subsidiaries as servicers. As specified in certain of the sale agreements, the net revenue collected each month is accumulated up to a predetermined maximum amount, and is available over the remaining term of that transaction to make payments of yield, fees, and transaction costs in the event that net cash flows from the receivables are not sufficient. When the predetermined amount is reached, net revenue is passed directly to the Citigroup subsidiary that sold the receivables. The amount contained in these accounts is included in other assets and was $139 million at December 31, 2001 and $66 million at December 31, 2000. Net revenue from securitized credit card receivables included in other revenue was $2.1 billion, $2.4 billion, and $2.1 billion for the years ended December 31, 2001, 2000, and 1999, respectively.
Various put options were written during 2000 and 1999 which require Citigroup to purchase, upon request of the holders, securities issued in certain securitization transactions in order to broaden the investor base and improve execution in connection with the securitizations. The put option at year-end 2001 is exercisable in October of each year beginning in October 2000, with respect to an aggregate of up to approximately $2 billion principal amount of certificates backed by manufactured housing contract receivables, of which approximately $133 million was exercised in 2000. If exercised, the Company will be obligated to purchase the certificates or notes at par plus accrued interest. Two option contracts from 2000 that were exercised in 2001 were the following: a put option, exercisable at any time after June 15, 2000, with respect to an aggregate of up to approximately $1 billion principal amount of notes secured by home equity loan receivables only to the extent the securitization trust cannot meet its obligation under a separate put option by the trust which is exercisable at any time after March 15, 2000; and a put option, originally exercisable at any time after September 15, 2000, the exercise of which had been extended to April 12, 2001, with respect to an aggregate of up to approximately $1.25 billion of notes secured by home equity loan receivables only to the extent the notes are not purchased by the securitization trust pursuant to a separate put option issued by the trust and exercisable at any time after June 15, 2000. The aggregate amortized amount of these options was approximately $1.4 billion at December 31, 2001 and $3.4 billion at December 31, 2000. The Company has recorded liabilities totaling approximately $6 million at December 31, 2001 and $17 million at December 31, 2000 in connection with these options. Subsequent to their initial issuance, such options are marked to market with the fluctuation being reflected in the Consolidated Statement of Income.
FINANCIAL GUARANTEES
Financial guarantees are used in various transactions to enhance the credit
standing of Citigroup customers. They represent irrevocable assurances, subject
to the satisfaction of certain conditions, that Citigroup will make payment in
the event that the customer fails to fulfill its obligations to third parties.
Citicorp issues financial standby letters of credit which are obligations to pay a third-party beneficiary when a customer fails to repay an outstanding loan or debt instrument, such as assuring payments by a foreign reinsurer to a U.S. insurer, to act as a substitute for an escrow account, to provide a payment mechanism for a customer's third-party obligations, and to assure payment of specified financial obligations of a customer. Fees are recognized ratably over the term of the standby letter of credit. The following table summarizes financial standby letters of credit issued by Citicorp. The table does not include securities lending indemnifications issued to customers, which are fully collateralized and totaled $19.9 billion at December 31, 2001 and $15.5 billion at December 31, 2000, and performance standby letters of credit.
2001 2000
-------------------------------------------- ------------
IN BILLIONS OF DOLLARS AT YEAR-END Expire within Expire after TOTAL AMOUNT Total amount
1 year 1 year OUTSTANDING outstanding
------------------------------------------------------------------------------------------------------
Insurance, surety $ 2.8 $ 6.7 $ 9.5 $ 8.0
Options, purchased securities, and
escrow 0.3 0.1 0.4 0.3
Clean letters of credit 3.3 1.0 4.3 4.5
Backstop state, country, and
municipal securities -- -- -- 0.1
Other debt related 7.4 2.7 10.1 10.2
------------------------------------------------------------------------------------------------------
TOTAL(1) $ 13.8 $ 10.5 $ 24.3 $ 23.1
======================================================================================================
|
(1) Total is net of cash collateral of $2.2 billion in 2001 and $2.0 billion in 2000. Collateral other than cash covered 30% of the total in 2001 and 24% in 2000.
OTHER COMMITMENTS
Salomon Smith Barney and a principal broker-dealer subsidiary have each provided
a portion of a residual value guarantee in the amount of $77 million in
connection with the lease of the buildings occupied by Salomon Smith Barney's
executive offices and New York operations.
27. CONTINGENCIES In the ordinary course of business, Citigroup and/or its subsidiaries are defendants or co-defendants in various litigation matters, other than environmental and asbestos property and casualty insurance claims as discussed in Note 13 to the Consolidated Financial Statements. Although there can be no assurances, the Company believes, based on information currently available, that the ultimate resolution of these legal proceedings would not be likely to have a material adverse effect on its results of operations, financial condition, or liquidity.
28. CITIGROUP (PARENT COMPANY ONLY)
CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31,
---------------------------------
IN MILLIONS OF DOLLARS 2001 2000 1999
-------------------------------------------------------------------------------
REVENUES $ 54 $ 133 $ 80
-------------------------------------------------------------------------------
Expenses:
Interest 651 346 389
Other 267 255 133
-------------------------------------------------------------------------------
Total 918 601 522
-------------------------------------------------------------------------------
PRE-TAX LOSS (864) (468) (442)
Income tax benefit 348 167 156
-------------------------------------------------------------------------------
LOSS BEFORE EQUITY IN NET INCOME OF
SUBSIDIARIES (516) (301) (286)
Equity in net income of subsidiaries 14,642 13,820 11,529
-------------------------------------------------------------------------------
INCOME $ 14,126 $ 13,519 $ 11,243
===============================================================================
|
CONDENSED STATEMENT OF FINANCIAL POSITION
DECEMBER 31,
---------------------------------
IN MILLIONS OF DOLLARS 2001 2000
----------------------------------------------------------------------------------
ASSETS
Cash $ 27 $ 85
Investments 1,487 --
Investment in and advances to:
Bank and bank holding company subsidiaries 87,562 56,973
Other subsidiaries 33,060 30,431
Cost of acquired businesses in excess of net assets 368 381
Other 383 508
----------------------------------------------------------------------------------
TOTAL $ 122,887 $ 88,378
==================================================================================
LIABILITIES
Advances from and payables to subsidiaries $ 748 $ 270
Commercial paper 481 496
Junior subordinated debentures, held by subsidiary trusts 4,850 2,367
Long-term debt 34,794 18,197
Other liabilities 541 616
Redeemable preferred stock, held by subsidiary 226 226
STOCKHOLDER'S EQUITY
Preferred stock ($1.00 par value; authorized shares: 30
million), at aggregate liquidation value 1,525 1,745
Common stock
($.01 par value; authorized shares: 15 billion),
issued shares: 5,477,416,254 at December 31, 2001 and
5,351,143,583 at December 31, 2001 55 54
Additional paid in capital 23,196 16,504
Retained earnings 69,803 58,862
Treasury stock, at cost (2001--328,727,790 shares; and
2000--328,921,189 shares) (11,099) (10,213)
Accumulated other changes in equity from nonowner sources (844) 123
Unearned compensation (1,389) (869)
----------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY 81,247 66,206
----------------------------------------------------------------------------------
TOTAL $ 122,887 $ 88,378
==================================================================================
|
CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31,
------------------------------
IN MILLIONS OF DOLLARS 2001 2000 1999
-------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 14,126 $ 13,519 $ 11,243
Adjustments to reconcile net income to cash
provided by operating activities:
Equity in net income of subsidiaries (14,642) (13,820) (11,529)
Dividends received from:
Bank and bank holding company
subsidiaries 5,784 1,255 4,791
Other subsidiaries 2,325 1,535 2,285
Other, net (109) (240) 2,046
-------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,484 2,249 8,836
-------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital contributions to subsidiaries (6,250) (5,800) (321)
Change in investments (1,487) 1,763 (425)
Advances to subsidiaries, net (13,733) (6,523) (1,206)
-------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (21,470) (10,560) (1,952)
-------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (repayment of) advances from
subsidiaries, net 2,961 (617) (1,197)
Dividends paid (3,185) (2,654) (2,139)
Issuance of common stock 875 958 758
Redemption of preferred stock (250) (150) (388)
Stock tendered for payment of withholding taxes (506) (593) (496)
Treasury stock acquired (3,045) (4,066) (3,954)
Issuance of long-term debt 17,610 14,817 1,859
Issuance of junior subordinated debentures 2,483 -- 619
Payments and redemptions of long-term debt (3,000) (650) (100)
Change in short-term borrowings (15) 496 (991)
-------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 13,928 7,541 (6,029)
-------------------------------------------------------------------------------
Change in cash (58) (770) 855
Cash at beginning of period 85 855 --
-------------------------------------------------------------------------------
Cash at end of period $ 27 $ 85 $ 855
===============================================================================
Supplemental disclosure of cash flow
information
Cash paid during the period for interest $ 1,739 $ 510 $ 400
Cash received during the period for taxes 911 1,066 1,251
===============================================================================
|
29. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
2001 2000
--------------------------------- ----------------------------------------
IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS FOURTH THIRD SECOND FIRST Fourth Third Second First
----------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES $ 26,650 $ 27,714 $ 27,854 $ 29,804 $ 29,328 $ 28,624 $ 27,059 $ 26,815
Total revenues, net of interest expense 21,004 19,387 19,385 20,281 19,003 18,835 18,220 19,130
Total benefits, claims, and credit losses 5,209 4,983 4,166 4,201 4,288 3,760 3,753 3,685
Total operating expenses 9,985 9,523 9,592 10,501 10,282 9,620 9,290 9,367
INCOME BEFORE INCOME TAXES, MINORITY INTEREST, AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGES 5,810 4,881 5,627 5,579 4,433 5,455 5,177 6,078
Provision for income taxes 1,898 1,678 1,960 1,990 1,582 1,958 1,818 2,167
Minority Interest, net of income taxes 37 26 15 9 11 13 20 55
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 3,875 3,177 3,652 3,580 2,840 3,484 3,339 3,856
Cumulative effect of accounting changes(1) -- -- (116) (42) -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 3,875 $ 3,177 $ 3,536 $ 3,538 $ 2,840 $ 3,484 $ 3,339 $ 3,856
----------------------------------------------------------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE $ 0.75 $ 0.62 $ 0.70 $ 0.70 $ 0.57 $ 0.69 $ 0.67 $ 0.77
----------------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE $ 0.74 $ 0.61 $ 0.69 $ 0.69 $ 0.55 $ 0.67 $ 0.65 $ 0.75
----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK PRICE PER SHARE
High $ 51.190 $ 53.480 $ 53.550 $ 56.297 $ 57.125 $ 59.125 $ 50.156 $ 46.781
Low 41.750 36.360 42.700 40.600 44.500 45.422 42.000 35.813
Close 50.480 40.500 52.840 44.980 51.063 54.063 45.188 44.906
Dividends per share of common stock 0.160 0.160 0.140 0.140 0.140 0.140 0.120 0.120
==================================================================================================================================
|
(1) Accounting changes include the first quarter 2001 adoption of SFAS 133 and the second quarter 2001 adoption of EITF 99-20.
Due to averaging of shares, quarterly earnings per share may not add to the totals for the full-year totals. The fourth quarter of 2001 includes charges of $235 million (pretax) related to write-downs of Argentine credit exposures and $235 million (pretax) in losses related to the foreign exchange revaluation of the consumer loan portfolio. The 2001 fourth quarter also includes a $228 million (pretax) write down of Enron-related credit exposure and trading positions, and the impairment of Enron-related investments.
The third, second and first quarters of 2001 include $82 million after-tax ($129 million pretax), $129 million after-tax ($209 million pretax) and $66 million after-tax ($110 million pretax), respectively, of restructuring charges. The fourth, third, and second quarters of 2000 include $381 million after-tax ($538 million pretax), $15 million after-tax ($24 million pretax), $11 million after-tax ($17 million pretax), respectively, of restructuring charges, and in the 2000 fourth and third quarters, include $119 million after-tax ($143 million pretax) and $22 million after-tax ($34 million pretax), respectively, of merger related costs. The fourth quarter of 2000 includes a $135 million after-tax ($210 million pretax) transportation loss provision related to the truck loan and leasing portfolio. The first quarter of 2000 includes a $71 million after-tax ($112 million pretax) charge related to discontinuation of Associates Housing Finance loan originations. The fourth and second quarters of 2001 include credits for reductions of prior charges of $22 million after-tax ($35 million pretax) and $10 million after-tax ($18 million pretax), respectively. The fourth and second quarters of 2000 include credits for reductions of prior charges of $13 million after-tax ($22 million pretax) and $28 million after-tax ($43 million pretax), respectively. The 2001 fourth, third, second and first quarters also include $9 million after-tax ($14 million pretax), $3 million after-tax ($5 million pretax), $14 million after-tax ($22 million pretax), and $14 million after-tax ($22 million pretax), respectively, of restructuring-related accelerated depreciation. The 2000 fourth, third, second, and first quarters also include $4 million after-tax ($7 million pretax), $8 million after-tax ($12 million pretax), $19 million after-tax ($29 million pretax), and $12 million after-tax ($20 million pretax), respectively, of restructuring-related accelerated depreciation.
FINANCIAL DATA SUPPLEMENT
AVERAGE BALANCES AND INTEREST RATES, TAXABLE EQUIVALENT BASIS(1)(2)(3)
AVERAGE VOLUME INTEREST REVENUE %AVERAGE RATE
--------------------------- ---------------------------- ------------------------
IN MILLION OF DOLLARS 2001 2000 1999 2001 2000 1999 2001 2000 1999
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS
CASH AND DUE FROM BANKS
In U.S. offices $ 2,842 $ 3,338 $ 3,038 $ -- $ -- $ -- -- -- --
In offices outside the U.S.(4) 1,095 1,540 917 17 30 13 1.55 1.95 1.42
-----------------------------------------------------------------------------------------------------
Total 3,937 4,878 3,955 17 30 13 0.43 0.62 0.33
-----------------------------------------------------------------------------------------------------
DEPOSITS AT INTEREST WITH BANKS(4) 18,395 13,232 12,384 1,265 1,226 992 6.88 9.27 8.01
-----------------------------------------------------------------------------------------------------
FEDERAL FUNDS SOLD AND SECURITIES BORROWED
OR PURCHASED UNDER AGREEMENTS TO RESELL
In U.S. offices 104,150 96,807 82,778 7,082 8,654 6,120 6.80 8.94 7.39
In offices outside the U.S.(4) 34,087 30,615 32,635 1,798 1,817 1,549 5.27 5.93 4.75
-----------------------------------------------------------------------------------------------------
Total 138,237 127,422 115,413 8,880 10,471 7,669 6.42 8.22 6.64
-----------------------------------------------------------------------------------------------------
BROKERAGE RECEIVABLES
In U.S. offices 25,058 26,029 17,002 1,197 2,135 1,212 4.78 8.20 7.13
In offices outside the U.S.(4) 2,517 3,271 3,416 205 320 188 8.14 9.78 5.50
-----------------------------------------------------------------------------------------------------
Total 27,575 29,300 20,418 1,402 2,455 1,400 5.08 8.38 6.86
-----------------------------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS(5)(6)
In U.S. offices 81,241 63,723 58,052 3,685 3,181 2,245 4.54 4.99 3.87
In offices outside the U.S.(4) 37,304 36,571 30,948 1,787 1,340 989 4.79 3.66 3.20
-----------------------------------------------------------------------------------------------------
Total 118,545 100,294 89,000 5,472 4,521 3,234 4.62 4.51 3.63
-----------------------------------------------------------------------------------------------------
INVESTMENTS
In U.S. offices
Taxable 79,731 74,375 67,924 4,919 4,916 4,327 6.17 6.61 6.37
Exempt from U.S. income tax 16,050 14,747 14,297 1,213 1,057 1,000 7.56 7.17 6.99
In offices outside the U.S.(4) 38,822 29,623 28,262 2,557 2,169 2,907 6.59 7.32 10.29
-----------------------------------------------------------------------------------------------------
Total 134,603 118,745 110,483 8,689 8,142 8,234 6.46 6.86 7.45
-----------------------------------------------------------------------------------------------------
LOANS (NET OF UNEARNED INCOME)(7)
Consumer loans
In U.S. offices 151,837 134,624 113,773 17,353 15,797 13,321 11.43 11.73 11.71
In offices outside the U.S.(4) 79,782 75,200 68,984 10,187 9,708 8,984 12.77 12.91 13.02
-----------------------------------------------------------------------------------------------------
Total consumer loans 231,619 209,824 182,757 27,540 25,505 22,305 11.89 12.16 12.20
-----------------------------------------------------------------------------------------------------
Commercial loans
In U.S. offices
Commercial and industrial 36,330 32,472 27,443 2,759 2,649 2,325 7.59 8.16 8.47
Lease financing 14,364 11,792 8,758 1,339 1,045 682 9.32 8.86 7.79
Mortgage and real estate 3,140 3,598 6,518 278 361 730 8.85 10.03 11.20
In offices outside the U.S.(4) 91,867 79,812 73,565 7,706 7,821 6,980 8.39 9.80 9.49
-----------------------------------------------------------------------------------------------------
Total commercial loans 145,701 127,674 116,284 12,082 11,876 10,717 8.29 9.30 9.22
-----------------------------------------------------------------------------------------------------
TOTAL LOANS 377,320 337,498 299,041 39,622 37,381 33,022 10.51 11.08 11.04
-----------------------------------------------------------------------------------------------------
OTHER INTEREST-EARNING ASSETS 15,456 9,745 7,740 1,607 1,027 753 10.40 10.54 9.73
-----------------------------------------------------------------------------------------------------
TOTAL INTEREST-EARNING ASSETS 834,068 741,114 658,434 $ 66,954 $ 65,253 $ 55,317 8.03 8.80 8.40
==========================================================
Non interest earning assets(5) 149,171 135,538 118,641
----------------------------------------------------------------------
TOTAL ASSETS $983,239 $876,652 $ 777,075
===================================================================================================================================
|
(1) The taxable equivalent adjustment is based on the U.S. Federal statutory
tax rate of 35%.
(2) Interest rates and amounts include the effects of risk management
activities associated with the respective asset and liability categories.
See Note 23 to the Consolidated Financial Statements.
(3) Monthly or quarterly averages have been used by certain subsidiaries, where
daily averages are unavailable.
(4) Average rates reflect prevailing local interest rates including
inflationary effects and monetary correction in certain countries.
(5) The fair value carrying amounts of derivative and foreign exchange
contracts are reported in non-interest earning assets and other
non-interest bearing liabilities.
(6) Interest expense on trading account liabilities of Salomon Smith Barney is
reported as a reduction of interest revenue.
(7) Includes cash-basis loans.
AVERAGE BALANCES AND INTEREST RATES, TAXABLE EQUIVALENT BASIS(1)(2)(3)
AVERAGE VOLUME INTEREST EXPENSE % AVERAGE RATE
---------------------------------- ----------------------------- ------------------------
IN MILLIONS OF DOLLARS 2001 2000 1999 2001 2000 1999 2001 2000 1999
--------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
DEPOSITS
In U.S. offices
Savings deposits(7) $ 68,427 $ 36,252 $ 33,422 $ 1,676 $ 1,206 $ 928 2.45 3.33 2.78
Other time deposits 20,391 16,050 12,105 461 712 301 2.26 4.44 2.49
In offices outside the U.S.(4) 209,542 196,368 169,138 9,099 11,172 9,519 4.34 5.69 5.63
------------------------------------------------------------------------------------------------------
Total 298,360 248,670 214,665 11,236 13,090 10,748 3.77 5.26 5.01
------------------------------------------------------------------------------------------------------
FEDERAL FUNDS PURCHASED AND
SECURITIES LOANED OR SOLD UNDER
AGREEMENTS TO REPURCHASE
In U.S. offices 118,928 106,655 79,669 7,673 9,515 6,172 6.45 8.92 7.75
In offices outside the U.S.(4) 36,878 27,435 30,326 2,892 2,351 1,778 7.84 8.57 5.86
------------------------------------------------------------------------------------------------------
Total 155,806 134,090 109,995 10,565 11,866 7,950 6.78 8.85 7.23
------------------------------------------------------------------------------------------------------
BROKERAGE PAYABLES
In U.S. offices 22,632 18,275 11,852 236 282 219 1.04 1.54 1.85
In offices outside the U.S.(4) 1,851 1,926 1,675 12 25 3 0.65 1.30 0.18
------------------------------------------------------------------------------------------------------
Total 24,483 20,201 13,527 248 307 222 1.01 1.52 1.64
------------------------------------------------------------------------------------------------------
TRADING ACCOUNT LIABILITIES(5)(6)
In U.S. offices 23,544 20,711 28,409 37 39 54 0.16 0.19 0.19
In offices outside the U.S.(4) 24,773 22,696 21,150 12 17 31 0.05 0.07 0.15
------------------------------------------------------------------------------------------------------
Total 48,317 43,407 49,559 49 56 85 0.10 0.13 0.17
------------------------------------------------------------------------------------------------------
INVESTMENT BANKING AND BROKERAGE
BORROWINGS
In U.S. offices 13,651 16,970 11,656 669 1,188 663 4.90 7.00 5.69
In offices outside the U.S.(4) 679 539 593 71 58 86 10.46 10.76 14.50
------------------------------------------------------------------------------------------------------
Total 14,330 17,509 12,249 740 1,246 749 5.16 7.12 6.11
------------------------------------------------------------------------------------------------------
SHORT-TERM BORROWINGS
In U.S. offices 33,965 42,482 35,318 1,359 2,131 1,631 4.00 5.02 4.62
In offices outside the U.S.(4) 10,066 8,809 9,539 944 1,223 1,343 9.38 13.88 14.08
------------------------------------------------------------------------------------------------------
Total 44,031 51,291 44,857 2,303 3,354 2,974 5.23 6.54 6.63
------------------------------------------------------------------------------------------------------
LONG-TERM DEBT
In U.S. offices 114,372 84,658 79,392 5,827 5,679 4,802 5.09 6.71 6.05
In offices outside the U.S.(4) 10,029 10,402 9,548 572 662 776 5.70 6.36 8.13
------------------------------------------------------------------------------------------------------
Total 124,401 95,060 88,940 6,399 6,341 5,578 5.14 6.67 6.27
------------------------------------------------------------------------------------------------------
MANDATORILY REDEEMABLE SECURITIES OF
SUBSIDIARY TRUSTS 5,563 4,920 4,920 425 378 368 7.64 7.68 7.48
------------------------------------------------------------------------------------------------------==========================
Demand deposits in U.S. offices 8,293 9,998 10,761
Other non-interest bearing
liabilities(5) 186,870 189,977 173,852
TOTAL STOCKHOLDERS' EQUITY 72,785 61,529 53,750
------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $983,239 $876,652 $777,075 $31,965 $36,638 $28,674
================================================================================================================================
NET INTEREST REVENUE AS A
PERCENTAGE OF AVERAGE
INTEREST-EARNING ASSETS
In U.S. offices(8) $529,774 $471,277 $407,304 $22,400 $17,578 $16,543 4.23 3.73 4.06
In offices outside the U.S.(8) 304,294 269,837 251,130 12,589 11,037 10,100 4.14 4.09 4.02
------------------------------------------------------------------------------------------------------
TOTAL $834,068 $741,114 $658,434 $34,989 $28,615 $26,643 4.19 3.86 4.05
================================================================================================================================
|
(1) The taxable equivalent adjustment is based on the U.S. Federal statutory tax
rate of 35%.
(2) Interest rates and amounts include the effects of risk management activities
associated with the respective asset and liability categories. See note 23
to the Consolidated Financial Statements.
(3) Monthly or quarterly averages have been used by certain subsidiaries, where
daily averages are unavailable.
(4) Average rates reflect prevailing local interest rates including
inflationary effects and monetary correction in certain countries.
(5) The fair value carrying amounts of derivative and foreign exchange contracts
are reported in non-interest earning assets and other non-interest bearing
liabilities.
(6) Interest expense on trading account liabilities of Salomon Smith Barney is
reported as a reduction of interest revenue.
(7) Savings deposits consist of insured Money Market Rate accounts, NOW
accounts, and other savings deposits
(8) Includes allocations for capital and funding costs based on the location of
the asset.
ANALYSIS OF CHANGES IN NET INTEREST REVENUE
2001 vs. 2000 2000 vs. 1999
------------------------------------- ------------------------------------
INCREASE (DECREASE) Increase (decrease)
DUE TO CHANGE IN: due to change in:
------------------------ -----------------------
IN MILLIONS OF DOLLARS ON A AVERAGE AVERAGE NET Average Average Net
TAXABLE EQUIVALENT BASIS(1) VOLUME RATE CHANGE(2) volume rate change(2)
------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS $ (8) $ (5) $ (13) $ 11 $ 6 $ 17
------------------------------------------------------------------------------------------------------------
DEPOSITS AT INTEREST WITH
BANKS(3) 404 (365) 39 71 163 234
------------------------------------------------------------------------------------------------------------
FEDERAL FUNDS SOLD AND
SECURITIES BORROWED OR
PURCHASED UNDER AGREEMENTS TO
RESELL
In U.S. offices 619 (2,191) (1,572) 1,134 1,400 2,534
In offices outside the U.S.(3) 195 (214) (19) (100) 368 268
------------------------------------------------------------------------------------------------------------
Total 814 (2,405) (1,591) 1,034 1,768 2,802
------------------------------------------------------------------------------------------------------------
BROKERAGE RECEIVABLES
In U.S. offices (77) (861) (938) 719 204 923
In offices outside the U.S.(3) (67) (48) (115) (8) 140 132
------------------------------------------------------------------------------------------------------------
Total (144) (909) (1,053) 711 344 1,055
------------------------------------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS(4)
In U.S. offices 815 (311) 504 236 700 936
In offices outside the U.S.(3) 27 420 447 194 157 351
------------------------------------------------------------------------------------------------------------
Total 842 109 951 430 857 1,287
------------------------------------------------------------------------------------------------------------
INVESTMENTS
In U.S. offices 434 (275) 159 458 188 646
In offices outside the U.S.(3) 622 (234) 388 134 (872) (738)
------------------------------------------------------------------------------------------------------------
Total 1,056 (509) 547 592 (684) (92)
------------------------------------------------------------------------------------------------------------
LOANS--CONSUMER
In U.S. offices 1,976 (420) 1,556 2,447 29 2,476
In offices outside the U.S.(3) 586 (107) 479 803 (79) 724
------------------------------------------------------------------------------------------------------------
Total 2,562 (527) 2,035 3,250 (50) 3,200
------------------------------------------------------------------------------------------------------------
LOANS--COMMERCIAL
In U.S. offices 490 (169) 321 439 (121) 318
In offices outside the U.S.(3) 1,094 (1,209) (115) 606 235 841
------------------------------------------------------------------------------------------------------------
Total 1,584 (1,378) 206 1,045 114 1,159
------------------------------------------------------------------------------------------------------------
TOTAL LOANS 4,146 (1,905) 2,241 4,295 64 4,359
------------------------------------------------------------------------------------------------------------
OTHER INTEREST-EARNING ASSETS 594 (14) 580 207 67 274
------------------------------------------------------------------------------------------------------------
TOTAL INTEREST REVENUE 7,704 (6,003) 1,701 7,351 2,585 9,936
============================================================================================================
DEPOSITS
In U.S. offices 1,031 (812) 219 202 487 689
In offices outside the U.S.(3) 710 (2,783) (2,073) 1,548 105 1,653
------------------------------------------------------------------------------------------------------------
Total 1,741 (3,595) (1,854) 1,750 592 2,342
------------------------------------------------------------------------------------------------------------
FEDERAL FUNDS PURCHASED AND
SECURITIES LOANED OR SOLD
UNDER AGREEMENTS TO REPURCHASE
In U.S. offices 1,006 (2,848) (1,842) 2,310 1,033 3,343
In offices outside the U.S.(3) 754 (213) 541 (183) 756 573
------------------------------------------------------------------------------------------------------------
Total 1,760 (3,061) (1,301) 2,127 1,789 3,916
------------------------------------------------------------------------------------------------------------
BROKERAGE PAYABLES
In U.S. offices 58 (104) (46) 103 (40) 63
In offices outside the U.S.(3) (1) (12) (13) 1 21 22
------------------------------------------------------------------------------------------------------------
Total 57 (116) (59) 104 (19) 85
------------------------------------------------------------------------------------------------------------
TRADING ACCOUNT LIABILITIES(4)
In U.S. offices 5 (7) (2) (15) -- (15)
In offices outside the U.S.(3) 1 (6) (5) 3 (17) (14)
------------------------------------------------------------------------------------------------------------
Total 6 (13) (7) (12) (17) (29)
------------------------------------------------------------------------------------------------------------
INVESTMENT BANKING AND
BROKERAGE BORROWINGS
In U.S. offices (205) (314) (519) 348 177 525
In offices outside the U.S.(3) 15 (2) 13 (7) (21) (28)
------------------------------------------------------------------------------------------------------------
Total (190) (316) (506) 341 156 497
------------------------------------------------------------------------------------------------------------
SHORT-TERM BORROWINGS
In U.S. offices (384) (388) (772) 351 149 500
In offices outside the U.S.(3) 157 (436) (279) (102) (18) (120)
------------------------------------------------------------------------------------------------------------
Total (227) (824) (1,051) 249 131 380
------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT
In U.S. offices 1,709 (1,561) 148 332 545 877
In offices outside the U.S.(3) (23) (67) (90) 65 (179) (114)
------------------------------------------------------------------------------------------------------------
Total 1,686 (1,628) 58 397 366 763
------------------------------------------------------------------------------------------------------------
MANDATORILY REDEEMABLE
SECURITIES OF SUBSIDIARY TRUSTS 49 (2) 47 -- 10 10
------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 4,882 (9,555) (4,673) 4,956 3,008 7,964
------------------------------------------------------------------------------------------------------------
NET INTEREST REVENUE $2,822 $3,552 $6,374 $2,395 $ (423) $1,972
============================================================================================================
|
(1) The taxable equivalent adjustment is based on the U.S. Federal statutory tax
rate of 35%.
(2) Rate/volume variance is allocated based on the percentage relationship of
changes in volume and changes in rate to the total net change.
(3) Changes in average rates reflect changes in prevailing local interest rates
including inflationary effects and monetary correction in certain countries.
(4) Interest expense on trading account liabilities of Salomon Smith Barney is
reported as a reduction or interest revenue.
RATIOS
2001 2000 1999
----------------------------------------------------------------------------------------
Net income to average assets 1.44% 1.54% 1.45%
Return on common stockholders' equity(1) 19.72% 22.43% 21.47%
Return on total stockholders' equity(2) 19.41% 21.97% 20.92%
Total average equity to average assets 7.40% 7.02% 6.92%
Dividends declared per common share as a percentage of
income per common share, assuming dilution 22.1% 19.8% 18.7%
========================================================================================
|
(1) Based on net income less total preferred stock dividends as a percentage of
average common stockholders' equity.
(2) Based on income less preferred stock dividends as a percentage of average
total stockholders' equity
FOREGONE INTEREST REVENUE ON LOANS(1)
IN U.S. IN NON-U.S. 2001
IN MILLIONS OF DOLLARS OFFICES OFFICES TOTAL
-----------------------------------------------------------------------------------
Interest revenue that would have been
accrued at original contractual rates(2) $358 $516 $874
Amount recognized as interest revenue(2) 103 164 267
-----------------------------------------------------------------------------------
FOREGONE INTEREST REVENUE $255 $352 $607
===================================================================================
|
(1) Relates to commercial cash basis and loans and consumer loans on which
accrual of interest had been suspended.
(2) Interest revenue in offices outside the U.S. may reflect prevailing local
interest rates, including the effects of inflation and monetary correction
in certain countries.
LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
DUE OVER 1
WITHIN 1 BUT WITHIN OVER
IN MILLIONS OF DOLLARS AT YEAR-END YEAR 5 YEARS 5 YEARS TOTAL
------------------------------------------------------------------------------------------------------------
MATURITIES OF THE GROSS COMMERCIAL
LOAN PORTFOLIO
In U.S. offices
Commercial and industrial loans $ 7,734 $18,665 $ 6,032 $ 32,431
Mortgage and real estate 925 1,353 506 2,784
Lease financing 3,192 12,173 3,153 18,518
In offices outside the U.S. 60,073 28,517 8,712 97,302
------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL LOAN PORTFOLIO $71,924 $60,708 $18,403 $151,035
============================================================================================================
SENSITIVITY OF LOANS DUE AFTER ONE
YEAR TO CHANGES IN INTEREST RATES(1)
Loans at predetermined interest rates $28,602 $ 8,110
Loans at floating or adjustable
interest rates 32,106 10,293
------------------------------------------------------------------------------------------------------------
TOTAL $60,708 $18,403
============================================================================================================
|
(1) Based on contractual terms, Repricing characteristics may effectively be modified from time to time using derivative contracts. See Notes 23 and 25 to the Consolidated Financial Statements.
LOANS OUTSTANDING
IN MILLIONS OF DOLLARS AT YEAR-END 2001 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------
CONSUMER LOANS
In U.S. offices $ 80,099 $ 73,166 $ 59,376 51,381 $ 46,465
Mortgage and real estate
Installment, revolving credit, and other 84,367 78,017 63,374 60,564 57,340
------------------------------------------------------------------------------------------------------------
164,466 151,183 122,750 111,945 103,805
------------------------------------------------------------------------------------------------------------
In offices outside the U.S. 27,703 24,988 24,808 21,578 19,140
Mortgage and real estate
Installment, revolving credit, and other 54,276 55,515 50,293 42,375 34,989
Lease financing 391 427 475 484 544
------------------------------------------------------------------------------------------------------------
82,370 80,930 75,576 64,437 54,673
------------------------------------------------------------------------------------------------------------
246,836 232,113 198,326 176,382 158,478
Unearned income (2,677) (3,234) (3,757) (3,377) (3,432)
------------------------------------------------------------------------------------------------------------
CONSUMER LOANS--NET 244,159 228,879 194,569 173,005 155,046
------------------------------------------------------------------------------------------------------------
COMMERCIAL LOANS
In U.S. offices
Commercial and industrial 32,431 32,220 30,163 26,182 23,597
Lease financing 18,518 14,864 10,281 9,477 8,690
Mortgage and real estate 2,784 3,490 5,439 9,000 7,666
------------------------------------------------------------------------------------------------------------
53,733 55,574 45,883 44,659 39,953
------------------------------------------------------------------------------------------------------------
In offices outside the U.S.
Commercial and industrial 76,459 69,111 61,984 56,761 48,284
Mortgage and real estate 2,859 1,720 1,728 1,792 1,651
Loans to financial institutions 10,163 9,559 7,692 8,008 6,480
Lease financing 3,788 3,689 2,459 1,760 1,439
Governments and official institutions 4,033 1,952 3,250 2,132 2,376
------------------------------------------------------------------------------------------------------------
97,302 86,031 77,113 70,453 60,230
------------------------------------------------------------------------------------------------------------
151,035 141,605 122,996 115,112 100,183
Unearned income (3,261) (3,462) (2,664) (2,439) (2,186)
------------------------------------------------------------------------------------------------------------
COMMERCIAL LOANS--NET 147,774 138,143 120,332 112,673 97,997
------------------------------------------------------------------------------------------------------------
TOTAL LOANS--NET OF UNEARNED INCOME 391,933 367,022 314,901 285,678 253,043
Allowance for credit losses (10,088) (8,961) (8,853) (8,596) (8,087)
------------------------------------------------------------------------------------------------------------
TOTAL LOANS--NET OF UNEARNED INCOME AND ALLOWANCE
FOR CREDIT LOSSES $381,845 $358,061 $306,048 $277,082 $244,956
============================================================================================================
|
CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS
IN MILLIONS OF DOLLARS OF YEAR-END 2001 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------
COMMERCIAL CASH-BASIS LOANS
Collateral dependent (at lower of cost or collateral
value)(1) $ 699 $ 390 $ 473 $ 555 $ 398
Other(2) 3,342 1,580 1,162 1,201 806
------------------------------------------------------------------------------------------------------------
TOTAL $4,041 $1,970 $1,635 $1,756 $1,204
============================================================================================================
COMMERCIAL CASH-BASIS LOANS
In U.S. offices $1,315 $ 700 $ 476 $ 614 $ 432
In offices outside the U.S.(2) 2,726 1,270 1,159 1,142 772
------------------------------------------------------------------------------------------------------------
TOTAL $4,041 $1,970 $1,635 $1,756 $1,204
============================================================================================================
COMMERCIAL RENEGOTIATED LOANS
In U.S. offices $ 551 $ 634 $ 509 $ 532 $ 560
In offices outside the U.S. 130 151 98 96 77
------------------------------------------------------------------------------------------------------------
TOTAL $ 681 $ 785 $ 607 $ 628 $ 637
============================================================================================================
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST HAD BEEN
SUSPENDED
In U.S. offices $2,501 $1,797 $1,696 $1,751 $1,679
In offices outside the U.S.(2) 1,733 1,607 1,821 1,664 1,063
------------------------------------------------------------------------------------------------------------
TOTAL $4,234 $3,404 $3,517 $3,415 2,742
============================================================================================================
ACCRUING LOANS 90 OR MORE DAYS DELINQUENT(3)
In U.S. offices $1,822 $1,247 $ 874 $ 833 $ 871
In offices outside the U.S.(2) 776 385 452 532 467
------------------------------------------------------------------------------------------------------------
TOTAL $2,598 $1,632 $1,326 $1,365 $1,338
============================================================================================================
|
(1) A cash-basis loan is defined as collateral dependent when repayment is
expected to be provided solely by the underlying collateral and there are no
other available and reliable sources of repayment, in which case the loans
are written down to the lower of cost of collateral value.
(2) The December 31, 2001 balance includes Banamex loan data.
(3) Substantially all consumer loans of which $920 million,$503 million, $379
million, $267 million, and $240 million are government-guaranteed student
loans at December 31, 2001, 2000, 1999, 1998, and 1997, respectively.
OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS
IN MILLIONS OF DOLLARS OF YEAR-END 2001 2000 1999 1998 1997 ------------------------------------------------------------------------------------------------------------ OTHER REAL ESTATE OWNED Consumer(1) $393 $366 $332 $358 $ 356 Commercial(1) 220 291 511 514 716 Corporate/Other 8 8 14 8 8 ------------------------------------------------------------------------------------------------------------ TOTAL OTHER REAL ESTATE OWNED $621 $665 $857 $880 $1,080 ============================================================================================================ OTHER REPOSSESSED ASSETS(2) $439 $292 $256 $135 $ 126 ============================================================================================================ |
(1) Represents repossessed real estate, carried at lower of cost or fair value,
less costs to sell.
(2) Primarily commercial transportation equipment and manufactured housing,
carried at lower of cost or fair value, less costs to sell.
DETAILS OF CREDIT LOSS EXPERIENCE
IN MILLIONS OF DOLLARS 2001 2000 1999 1998 1997
------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES AT BEGINNING OF $ 8,961 $8,853 $8,596 $8,087 $7,306
YEAR
------------------------------------------------------------------------------------------------------------
PROVISION FOR CREDIT LOSSES
Consumer 5,316 4,345 4,169 3,753 3,523
Commercial 1,484 994 591 508 72
------------------------------------------------------------------------------------------------------------
6,800 5,339 4,760 4,261 3,595
------------------------------------------------------------------------------------------------------------
GROSS CREDIT LOSSES
CONSUMER(1)
In U.S. offices 4,185 3,413 3,063 3,057 3,011
In offices outside the U.S. 2,048 1,939 1,799 1,235 989
COMMERCIAL
Mortgage and real estate
In U.S. offices 13 10 59 40 33
In offices outside the U.S. 3 22 11 58 47
Governments and official
institutions outside the U.S. -- -- -- 3 --
Loans to financial institutions
In U.S. offices 10 -- -- -- --
In offices outside the U.S. -- -- 11 97 7
Commercial and industrial
In U.S. offices 1,378 563 186 125 70
In offices outside the U.S. 651 311 479 348 112
------------------------------------------------------------------------------------------------------------
8,288 6,258 5,608 4,963 4,269
------------------------------------------------------------------------------------------------------------
CREDIT RECOVERIES
CONSUMER(1)
In U.S. offices 435 526 413 427 450
In offices outside the U.S. 418 403 356 287 264
COMMERCIAL(2)
Mortgage and real estate
In U.S. offices 1 9 36 89 50
In offices outside the U.S. 1 1 2 10 7
Governments and official institutions outside the
U.S. -- 1 -- 10 36
Loans to financial institutions in offices
outside the U.S. 9 9 5 16 17
Commercial and industrial
In U.S. offices 262 45 19 36 72
In offices outside the U.S. 134 70 94 30 55
------------------------------------------------------------------------------------------------------------
1,260 1,064 925 905 951
------------------------------------------------------------------------------------------------------------
NET CREDIT LOSSES
In U.S. offices 4,888 3,406 2,840 2,670 2,542
In offices outside the U.S. 2,140 1,788 1,843 1,388 776
------------------------------------------------------------------------------------------------------------
7,028 5,194 4,683 4,058 3,318
------------------------------------------------------------------------------------------------------------
Other--net(3) 1,355 (37) 180 306 504
------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES AT END OF YEAR $10,088 $8,961 $8,853 $8,596 $8,087
============================================================================================================
Net consumer credit losses $ 5,380 $4,423 $4,093 $3,578 $3,286
As a percentage of average consumer loans 2.32% 2.11% 2.24% 2.23% 2.19%
============================================================================================================
Net commercial credit losses $ 1,648 $ 771 $ 590 $ 480 $ 32
As a percentage of average commercial loans 1.13% 0.60% 0.51% 0.45% 0.04%
============================================================================================================
|
(1) Consumer credit losses and recoveries primarily relate to revolving credit
and installment loans.
(2) Includes amounts received under credit default swaps purchased from third
parties.
(3) 2001 primarily includes the addition of allowance for credit losses
related to the acquistions of Banamex and EAB. Also includes the addition
of allowance for credit losses related to other acquisitions and the impact
of foreign currency translation effects. 1998 reflects the addition of
$320 million of credit loss reserves related to the acquisition of the
Universal Card portfolio. In 1997, $373 million was restored to the
allowance for credit losses that had previously been attributed to credit
card securitization transactions where the exposure to credit losses was
contractually limited to the cash flows from the securitized receivables,
$50 million attributable to standby letters of credit and guarantees was
reclassified to other liabilities, and $50 million attributable to
derivative and foreign exchange contracts was reclassified as a deduction
from trading account assets.
AVERAGE DEPOSIT LIABILITIES IN OFFICES OUTSIDE THE U.S.(1)
2001 2000 1999
--------------------------- ------------------------ ---------------------------
AVERAGE AVERAGE Average Average Average Average
IN MILLIONS OF DOLLARS AT YEAR-END BALANCE INTEREST RATE Balance Interest Rate Balance Interest Rate
------------------------------------------------------------------ ------------------------ ---------------------------
Banks(2) $ 24,039 6.39% $ 32,063 6.78% $ 21,993 7.10%
Other demand deposits 58,885 2.74 44,486 3.64 38,798 3.14
Other time and savings deposits(2) 141,392 4.35 132,325 5.57 119,581 5.64
-------------------------------------------------------------------------------------------------------------------------
TOTAL $224,316 4.14 $208,874 5.35 $180,372 5.28
=========================================================================================================================
|
(1) Interest rates and amounts include the effects of risk management
activities, and also reflect the impact of the local interest rates
prevailing in certain countries. See Note 23 to the Consolidated Financial
Statements.
(2) Primarily consists of time certificates of deposit and other time deposits
in denominations of $100,000 or more.
MATURITY PROFILE OF TIME DEPOSITS ($100,000 OR MORE) IN U.S. OFFICES
IN MILLIONS OF DOLLARS UNDER 3 OVER 3 TO 5 OVER 5 TO 12 OVER 12 AT YEAR-END 2001 MONTHS MONTHS MONTHS MONTHS ------------------------------------------------------------------------------------------------------------- Certificates of deposit $4,480 $793 $829 $1,798 Other time deposits 535 191 115 6,748 ============================================================================================================= |
SHORT-TERM AND OTHER BORROWINGS(1)
FEDERAL FUNDS PURCHASED
AND SECURITIES SOLD UNDER INVESTMENT BANKING AND
AGREEMENTS TO REPURCHASE COMMERCIAL PAPER OTHER FUNDS BORROWED(2) BROKERAGE BORROWINGS
------------------------------ ------------------------- ------------------------ ------------------------
IN MILLIONS OF
DOLLARS 2001 2000 1999 2001 2000 1999 2001 2000 1999 2001 2000 1999
------------------------------------------------------------------------------------------------------------------------------
Amounts
outstanding
at year-end $153,511 $110,625 $92,591 $12,696 $38,152 $31,018 $11,765 $13,523 $13,321 $14,804 $18,227 $13,719
Average
outstanding
during the year 155,806 134,090 109,995 30,524 37,837 32,769 13,507 13,454 12,088 14,330 17,509 12,249
Maximum month end
outstanding 172,763 154,543 129,112 35,825 43,037 38,018 16,331 15,478 17,666 18,840 21,701 14,048
------------------------------------------------------------------------------------------------------------------------------
WEIGHTED-AVERAGE
INTEREST RATE
During the year(3) 6.78% 8.85% 7.23% 3.58% 5.02% 4.75% 8.95% 10.82% 11.72% 5.16% 7.12% 6.11%
At year-end(4) 2.49% 5.78% 4.34% 1.98% 5.36% 5.69% 3.44% 8.76% 7.94% 2.03% 6.55% 6.00%
==============================================================================================================================
|
(1) Original maturities of less than one year.
(2) Rates reflect the impact of local interest rates prevailing in countries
outside the United States.
(3) Interest rates include the effects of risk management activities. See Notes
12 and 23 to the Consolidated Financial Statements.
(4) Based on contractual rates at year-end.
PROPERTY-CASUALTY INSURANCE SERVICES-OTHER INFORMATION
SELECTED PRODUCT INFORMATION
The following table sets forth by product line net written premiums (including
Associates) for Commercial Lines and Personal Lines for the year ended 2001.
Many National Accounts customers demand services, other than pure risk coverage,
primarily for workers' compensation and to a lesser extent general liability and
commercial automobile exposures. These types of services include risk management
services such as claims management, loss control and risk management information
services, and are generally offered in connection with a large deductible or
self-insured programs. These services generate fee income rather than net
written premiums, and are not reflected in the following table.
2001 NET WRITTEN PREMIUMS
AMOUNT OF PERCENTAGE OF
NET WRITTEN TOTAL NET WRITTEN
IN MILLIONS OF DOLLARS PREMIUMS PREMIUMS
------------------------------------------------------------------------------------
PRODUCT LINE
Commercial Lines
Commercial multi-peril $1,793 28.6%
Workers' compensation 1,033 16.5
Commercial automobile 1,133 18.0
Property 905 14.4
General liability 506 8.1
Fidelity and surety 907 14.4
-----------------------------------------------------------------------------------
TOTAL COMMERCIAL LINES $6,277 100.0%
-----------------------------------------------------------------------------------
Personal Lines
Automobile $2,642 63.4%
Homeowners and other 1,524 36.6
-----------------------------------------------------------------------------------
TOTAL PERSONAL LINES $4,166 100.0%
===================================================================================
|
PROPERTY AND CASUALTY RESERVES
Property and casualty claim reserves are established to account for the
estimated ultimate costs of claims and claim adjustment expenses for claims that
have been reported but not yet settled and claims that have been incurred but
not reported. The Company establishes reserves by major product line, coverage
and year.
The table on page 94 sets forth the year-end reserves for 1991 through 2001, and the subsequent changes in those reserves, presented on a historical basis for the Company. The original estimates, cumulative amounts paid, and reestimated reserves in the table for the years 1991-1995 have not been restated to include the property-casualty insurance businesses acquired by the Company from the Aetna Services, Inc. in 1996, (Aetna P&C). Beginning in 1996, the table includes the reserve activity of Aetna P&C. The data in the table is presented in accordance with reporting requirements of the Securities and Exchange Commission. Care must be taken to avoid misinterpretation by those unfamiliar with this information or familiar with other data commonly reported by the insurance industry. The following data is not accident year data, but rather a display of 1991-2001 year-end reserves and the subsequent changes in those reserves. For instance, the "cumulative deficiency or redundancy" shown in the table for each year represents the aggregate amount by which original estimates of reserves as of that year-end have changed in subsequent years. Accordingly, the cumulative deficiency for a year relates only to reserves at that year-end and those amounts are not additive. Expressed another way, if the original reserves at the end of 1991 included $4 million for a loss that is finally paid in 2001 for $5 million, the $1 million deficiency (the excess of the actual payment of $5 million over the original estimate of $4 million) would be included in the cumulative deficiencies in each of the years 1991-2000 shown in the table.
Various factors may distort the reestimated reserves and cumulative deficiency or redundancy shown in the table. For example, a substantial portion of the cumulative deficiencies shown in the table arise from claims on policies written prior to the mid-1970s involving liability exposures such as environmental, asbestos, and other cumulative injury claims. In the post-1984 period, the Company developed more stringent underwriting standards and policy exclusions and significantly contracted or terminated the writing of these risks. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Environmental Claims, Asbestos Claims and Litigation, Uncertainty Regarding Adequacy of Environmental and Asbestos Reserves and Cumulative Injury Other than Asbestos Claims." General conditions and trends that have affected the development of these liabilities in the past will not necessarily recur in the future.
Other factors that affect the data in the table include the discounting of workers' compensation reserves and the use of retrospectively rated insurance policies. To the extent permitted under applicable accounting practices, workers' compensation reserves are discounted to reflect the time value of money, due to the relatively long time period over which these claims are to be paid. Apparent deficiencies will continue to occur as the discount on these workers' compensation reserves is accreted at the appropriate interest rates. Also, a portion of National Accounts business is underwritten with retrospectively rated insurance policies in which the ultimate loss experience is primarily borne by the insured. For this business, increases in loss experience result in an increase in reserves, and an offsetting increase in amounts recoverable from insureds. Likewise, decreases in loss experience result in a decrease in reserves, and an offsetting decrease in amounts recoverable from these insureds. The amounts recoverable on these retrospectively rated policies mitigate the impact of the cumulative deficiencies or redundancies but are not reflected in the table.
Because of these and other factors, it is difficult to develop a meaningful extrapolation of estimated future redundancies or deficiencies in loss reserves from the data in the table. The differences between the reserves for claims and claim adjustment expenses shown in the table, which is prepared in accordance with GAAP, and those reported in the annual statements of the Company's subsidiaries filed with state insurance departments, which are prepared in accordance with statutory accounting practices, were: ($17) million, $9 million and $38 million, for the years 2001, 2000, and 1999, respectively.
The table below reflects Associates for all periods due to the acquisition being accounted for as a pooling of interest:
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
IN MILLIONS OF DOLLARS 1991(1) 1992(1) 1993(1) 1994(1) 1995(1) 1996(2) 1997(2) 1998(2) 1999(2) 2000(2) 2001(2)
---------------------------------------------------------------------------------------------------------------------------------
RESERVES FOR LOSS AND LOSS
ADJUSTMENT EXPENSE ORIGINALLY
ESTIMATED $ 9,421 $ 9,884 $10,205 $10,271 $10,124 $21,839 $21,426 $21,152 $20,367 $19,922 $20,191
CUMULATIVE AMOUNTS
PAID AS OF
One year later 2,144 2,215 1,907 1,861 1,529 3,714 4,033 4,311 4,281 4,606
Two years later 3,593 3,563 3,229 2,897 2,817 6,610 6,890 7,137 9,948
Three years later 4,603 4,571 3,996 4,064 3,911 8,851 8,858 9,308
Four years later 5,384 5,170 4,950 4,942 4,769 10,365 10,488
Five years later 5,860 5,973 5,662 5,655 5,330 11,659
Six years later 6,556 6,587 6,270 6,122 5,850
Seven years later 7,099 7,127 6,678 6,591
Eight years later 7,591 7,492 7,107
Nine years later 7,928 7,892
Ten years later 8,301
RESERVES REESTIMATED AS OF
One year later 9,457 10,023 10,162 9,954 9,860 21,359 21,094 20,868 20,163 19,924
Two years later 9,765 10,125 10,127 9,778 9,797 21,174 20,708 20,557 20,062
Three years later 10,050 10,155 10,002 9,864 9,800 20,829 20,428 20,365
Four years later 10,166 10,161 10,166 9,896 9,746 20,677 20,179
Five years later 10,263 10,378 10,193 9,932 9,722 20,440
Six years later 10,507 10,413 10,244 9,910 9,672
Seven years later 10,536 10,481 10,266 9,914
Eight years later 10,617 10,528 10,270
Nine years later 10,677 10,542
Ten years later 10,708
---------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE DEFICIENCY
(REDUNDANCY) $ 1,287 $ 658 $ 65 $ (357) $ (452) $(1,399) $(1,247) $ (787) $ (305) $ 2
=================================================================================================================================
Gross liability -- end of year $13,822 $13,894 $14,740 $29,992 $29,367 $29,139 $28,776 $28,327 $29,792
Reinsurance recoverables 3,617 3,623 4,616 8,153 7,941 7,987 8,409 8,405 9,601
---------------------------------------------------------------------------------------------------------------------------------
Net liability -- end of year $10,205 $10,271 $10,124 $21,839 $21,426 $21,152 $20,367 $19,922 $20,191
=================================================================================================================================
GROSS REESTIMATED LIABILITY -- $13,936 $13,820 $14,136 $28,424 $27,876 $28,354 $28,417 $28,525
LATEST
Reestimated reinsurance
recoverables -- latest 3,666 3,906 4,464 7,984 7,697 7,989 8,355 8,601
---------------------------------------------------------------------------------------------------------------------------------
NET REESTIMATED LIABILITY -- $10,270 $ 9,914 $ 9,672 $20,440 $20,179 $20,365 $20,062 $19,924
LATEST
=================================================================================================================================
GROSS CUMULATIVE DEFICIENCY $ 114 $ (74) $ (604) $(1,568) $(1,491) $ (785) $ (359) $ 198
(REDUNDANCY)
=================================================================================================================================
|
(1) Reflects reserves of Travelers P&C, excluding Aetna P&C reserves which were
acquired on April 2, 1996. Accordingly, the reserve development (net
reserves for loss and loss adjustment expense recorded at the end of the
year, as originally estimated, less net reserves reestimated as of
subsequent years) relates only to losses recorded by Travelers P&C and does
not include reserve development recorded by Aetna P&C.
(2) Includes Aetna P&C gross reserves of $16.775 billion and net reserves of
$11.752 billion acquired on April 2, 1996 and subsequent development
recorded by Aetna P&C.
PROPERTY AND CASUALTY REINSURANCE
TPC reinsures a portion of the risks it underwrites in order to control its
exposure to losses, stabilize earnings, and protect capital resources. TPC cedes
to reinsurers a portion of these risks and pays premiums based upon the risk and
exposure of the policies subject to this reinsurance. Reinsurance involves
credit risk and is generally subject to aggregate loss limits. Although the
reinsurer is liable to TPC to the extent of the reinsurance ceded, TPC remains
liable as the direct insurer on all risks reinsured. TPC also holds collateral,
including escrow funds and letters of credit, under certain reinsurance
agreements. TPC monitors the financial condition of reinsurers on an ongoing
basis, and reviews its reinsurance arrangements periodically. Reinsurers are
selected based on their financial condition, business practices, and the price
of their product offerings. For additional information concerning reinsurance,
see Note 14 to the Consolidated Financial Statements.
TPC utilizes a variety of reinsurance agreements to control its exposure to large property and casualty losses.
NET RETENTION POLICY. The descriptions below relate to reinsurance arrangements of TPC in effect after January 1, 2002. For third-party liability, including automobile no-fault, the reinsurance agreements used by Commercial Accounts limit the net retention to a maximum of $8.2 million per insured, per occurrence and those used by Select Accounts limits the net retention to a maximum of $6.4 million per insured, per occurrence. National Accounts utilizes reinsurance to limit net retained policy limits on third-party coverages to $6.0 million. Gulf utilizes various reinsurance mechanisms and has limited its net retention to a maximum of $5.5 million per risk for any line of business. For commercial property insurance, there is a $7.5 million maximum retention per risk with 100% reinsurance coverage for risks with higher limits. The reinsurance agreement in place for workers' compensation policies written by Commercial Accounts, National Accounts, Select Accounts, and some segments of the residual market business within National Accounts and Gulf cover 75% of each loss between $10 million and $20 million. Personal Lines retains the first $5 million of umbrella policies and purchases facultative reinsurance for limits over $5 million. For personal property insurance, there is a $6 million maximum retention per risk. For executive liability products such as errors and omissions liability, directors' and officers' liability, employment practices liability and blended insurance products, Bond generally retains from $2 million up to $5 million per risk. For surety protection Bond generally retains up to $29.7 million per principal which may be increased based on the type of obligation and other credit risk factors. Retention policies are reviewed on an ongoing basis.
CATASTROPHE REINSURANCE. TPC utilizes reinsurance agreements with nonaffiliated reinsurers to control its exposure to losses resulting from one occurrence. For the accumulation of net property losses arising out of one occurrence, reinsurance agreements cover 67% of total losses between $450 million and $750 million. For multiple workers' compensation losses arising from a single occurrence, reinsurance agreements cover 100% of losses between $20 million and $250 million and, for workers' compensation losses caused by property perils, reinsurance agreements cover 67% of losses between $450 million and $750 million. Risk and catastrophe coverages are reviewed at least quarterly and changes made when deemed appropriate.
REGULATION AND SUPERVISION
BANK HOLDING COMPANY REGULATION. The Company is a bank holding company within the meaning of the U.S. Bank Holding Company Act of 1956 (BHC Act) registered with, and subject to examination by, the Federal Reserve Board (FRB). The subsidiary depository institutions of the Company (the banking subsidiaries), including its principal bank subsidiary, Citibank, N.A. (Citibank), are subject to supervision and examination by their respective federal and state banking authorities. The nationally chartered subsidiary banks, including Citibank, are supervised and examined by the Office of the Comptroller of the Currency (OCC); Federal savings association subsidiaries are regulated by the Office of Thrift Supervision (OTS); and state-chartered depository institutions are supervised by the banking departments within their respective states (California, New York, Delaware, and Utah), as well as the Federal Deposit Insurance Corporation (FDIC). The FDIC also has back-up enforcement authority with respect to each of the banking subsidiaries, the deposits of which are insured by the FDIC, up to applicable limits. The Company also controls (either directly or indirectly) overseas banks, branches, and agencies. In general, the Company's overseas activities are regulated by the FRB and OCC, and are also regulated by supervisory authorities of the host countries.
The Company's banking subsidiaries are also subject to requirements and restrictions under federal, state, and foreign law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be made and the interest that may be charged thereon, and limitations on the types of investments that may be made and the types of services that may be offered. Various consumer laws and regulations also affect the operations of the Company's banking subsidiaries.
The activities of U.S. bank holding companies are generally limited to the business of banking, managing or controlling banks, and other activities that the FRB determines to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In addition, under the Gramm-Leach-Bliley Act (the GLB Act), which became effective in most significant respects on March 11, 2000, bank holding companies, such as the Company, all of whose controlled depository institutions are "well capitalized" and "well managed," as defined in Federal Reserve Regulation Y, and which obtain satisfactory Community Reinvestment Act ratings, have the ability to declare themselves to be "financial holding companies" and engage in a broader spectrum of activities, including insurance underwriting and brokerage (including annuities), and underwriting and dealing securities. The Company's declaration to become a financial holding company became effective on the first eligible date, and as a result, it is permitted to continue to
operate its insurance businesses as currently structured and, if it so determines, to expand those businesses. Financial holding companies that do not continue to meet all of the requirements for such status will, depending on which requirement they fail to meet, face not being able to undertake new activities or acquisitions that are financial in nature, or losing their ability to continue those activities that are not generally permissible for bank holding companies. Under the BHC Act, after two years from the date as of which the Company became a bank holding company, the Company was required to conform any activities that were not considered to be closely related to banking or financial in nature under the BHC Act. This two-year period may be extended by the FRB for three additional one-year periods, upon application by the Company and finding by the FRB that such an extension would not be detrimental to the public interest. The Company obtained such an extension with respect to several activities in October 2000 and October 2001.
Under the GLB Act, financial holding companies are able to make acquisitions in companies that engage in activities that are financial in nature, both in the U.S. and outside of the United States. No prior approval of the FRB is generally required for such acquisitions except for the acquisition of U.S. depository institutions and foreign banks. In addition, under merchant banking authority added by the GLB Act, financial holding companies are authorized to invest in companies that engage in activities that are not financial in nature, as along as the financial holding company makes its investment with the intention of limiting the investment in duration, does not manage the company on a day-to-day basis, and the investee company does not cross market with any of the financial holding company's controlled depository institutions. This authority applies to investments both in the U.S. and outside the United States. Regulations interpreting and conditioning this authority have been promulgated. Bank holding companies also retain their authority, subject to prior specific or general FRB consent, to acquire less than 20% of the voting securities of a company that does not do business in the United States, and 20% or more of the voting securities of any such company if the FRB finds by regulation or order that its activities are usual in connection with banking or finance outside the United States. In general, bank holding companies that are not financial holding companies may engage in a broader range of activities outside the United States than they may engage in inside the United States, including sponsoring, distributing, and advising open-end mutual funds, and underwriting and dealing in debt, and to a limited extent, equity securities, subject to local country laws.
Subject to certain limitations and restrictions, a U.S. bank holding company, with the prior approval of the FRB, may acquire an out-of-state bank. Banks in states that do not prohibit out-of-state mergers may merge with the approval of the appropriate Federal bank regulatory agency. A national or state bank may establish a de novo branch out of state if such branching is expressly permitted by the other state. A Federal savings association is generally permitted to open a de novo branch in any state.
Outside the U.S., subject to certain requirements for prior FRB consent or notice, the Company may acquire banks and Citibank may establish branches subject to local laws and to U.S. laws prohibiting companies from doing business in certain countries.
The Company's earnings and activities are affected by legislation, by actions of its regulators, and by local legislative and administrative bodies and decisions of courts in the foreign and domestic jurisdictions in which the Company and its subsidiaries conduct business. For example, these include limitations on the ability of certain subsidiaries to pay dividends to their intermediate holding companies and on the abilities of those holding companies to pay dividends to the Company (see Note 18 to the Consolidated Financial Statements). It is the policy of the FRB that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization's expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company's ability to serve as a source of strength to its banking subsidiaries.
Various federal and state statutory provisions limit the amount of dividends that subsidiary banks and savings associations can pay to their holding companies without regulatory approval. In addition to these explicit limitations, the Federal regulatory agencies are authorized to prohibit a banking subsidiary or bank holding company from engaging in an unsafe or unsound banking practice. Depending upon the circumstances, the agencies could take the position that paying a dividend would constitute an unsafe or unsound banking practice.
Numerous other federal and state laws also affect the Company's earnings and activities including federal and state consumer protection laws. Legislation may be enacted or regulation imposed in the U.S. or its political subdivisions, or in any other jurisdiction in which the Company does business, to further regulate banking and financial services or to limit finance charges or other fees or charges earned in such activities. There can be no assurance whether any such legislation or regulation will place additional limitations on the Company's operations or adversely affect its earnings. The preceding statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
There are various legal restrictions on the extent to which a bank holding company and certain of its nonbank subsidiaries can borrow or otherwise obtain credit from banking subsidiaries or engage in certain other transactions with or involving those banking subsidiaries. In general, these restrictions require that any such transactions must be on terms that would ordinarily be offered to unaffiliated entities and secured by designated amounts of specified collateral. Transactions between a banking subsidiary and the holding company or any nonbank subsidiary are limited to 10% of the banking subsidiary's capital stock and surplus, and as to the holding company and all such nonbank subsidiaries in the aggregate, to 20% of the bank's capital stock and surplus.
The Company's right to participate in the distribution of assets of any subsidiary upon the subsidiary's liquidation or reorganization will be subject to the prior claims of the subsidiary's creditors. In the event of a liquidation or other resolution of an insured depository institution, the claims of depositors and other general or subordinated creditors are entitled to a priority of payment over the claims of holders of any obligation of the institution to its stockholders, including any depository institution holding company (such as the Company) or any stockholder or creditor thereof.
In the liquidation or other resolution of a failed U.S. insured depository institution, deposits in the U.S. offices and certain claims for administrative expenses and employee compensation are afforded a priority over other general unsecured claims, including deposits in offices outside the U.S., non-deposit claims in all offices, and claims of a parent such as the Company. Such priority creditors would include the FDIC, which succeeds to the position of insured depositors.
A financial institution insured by the FDIC that is under common control with a failed or failing FDIC-insured institution can be required to indemnify the FDIC for losses resulting from the insolvency of the failed institution, even if the causes the affiliated institution also to become insolvent. Any obligations or liability owed by a subsidiary depository institution to its parent company is subordinate to the subsidiary's cross-guarantee liability with respect to commonly controlled insured depository institutions and to the rights of depositors.
Under FRB policy, a bank holding company is expected to act as a source of financial strength to each of its banking subsidiaries and commit resources to their support. As a result of that policy, the Company may be required to commit resources to its subsidiary banks in certain circumstances. However, under the GLB Act, the FRB is not able to compel a bank holding company to remove capital from its regulated securities or insurance subsidiaries in order to commit such resources to its subsidiary banks.
The Company and its U.S. insured depository institution subsidiaries are subject to risk-based capital and leverage guidelines issued by U.S. regulators for banks, savings associations, and bank holding companies. The regulatory agencies are required by law to take specific prompt actions with respect to institutions that do not meet minimum capital standards and have defined five capital tiers, the highest of which is "well-capitalized." As of December 31, 2001, the Company's bank and thrift subsidiaries, including Citibank, were "well-capitalized." See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 18 to the Consolidated Financial Statements for capital analysis.
A bank is not required to repay a deposit at a branch outside the U.S. if the branch cannot repay the deposit due to an act of war, civil strife, or action taken by the government in the host country, unless the bank has expressly agreed to do so in writing.
The GLB Act included the most extensive consumer privacy provisions ever enacted by Congress. These provisions, among other things, require full disclosure of the Company's privacy policy to consumers and mandate offering the consumer the ability to "opt out" of having non-public customer information disclosed to third parties. Pursuant to these provision, the Federal banking regulators have adopted privacy regulations. In addition, the states are permitted to adopt more extensive privacy protections through legislation or regulation. There can be no assurance whether any such legislation or regulation will place additional limitations on the Company's operations or adversely affect its earnings. The preceding statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 33.
The earnings of the Company, Citibank, and their subsidiaries and affiliates are affected by general economic conditions and the conduct of monetary and fiscal policy by the U.S. government and by governments in other countries in which they do business.
Legislation is from time to time introduced in Congress that may change banking statutes and the operating environment of the Company and its banking subsidiaries in substantial and unpredictable ways. The Company cannot determine whether any such proposed legislation will be enacted, and if enacted, the ultimate effect that any such potential legislation or implementing regulations would have upon the financial condition or results of operations of the Company or its subsidiaries.
INSURANCE - STATE REGULATION
The Company's insurance subsidiaries are subject to regulation in the various
states and jurisdictions in which they transact business. The regulation,
supervision and administration relate, among other things, to the standards of
solvency that must be met and maintained, the licensing of insurers and their
agents, the lines of insurance in which they may engage, the nature of and
limitations on investments, premium rates, restrictions on the size of risks
that may be insured under a single policy, reserves and provisions for unearned
premiums, losses and other obligations, deposits of securities for the benefit
of policyholders, approval of policy forms and the regulation of market conduct
including the use of credit information in underwriting as well as other
underwriting and claims practices. In addition, many states have enacted
variations of competitive rate-making laws which allow insurers to set certain
premium rates for certain classes of insurance without having to obtain the
prior approval of the state insurance department. State insurance departments
also conduct periodic examinations of the affairs of insurance companies and
require the filing of annual and other reports relating to the financial
condition of companies and other matters.
Although the Company is not regulated as an insurance company, it is the owner, through various holding company subsidiaries, of the capital stock of its insurance subsidiaries and as such is subject to state insurance holding company statutes, as well as certain other laws, of each of the states of domicile of its insurance subsidiaries. All holding company statutes, as well as certain other laws, require disclosure and, in some instances, prior approval of material transactions between an insurance company and an affiliate.
The Company's insurance subsidiaries are subject to various state statutory and regulatory restrictions in each company's state of domicile, which limit the amount of dividends or distributions by an insurance company to its stockholders. See Note 18 to the Consolidated Financial Statements.
The Company's property and casualty insurance subsidiaries are also required to participate in various involuntary assigned risk pools, principally involving workers' compensation and automobile insurance, which provide various insurance coverages to individuals or other entities that otherwise are unable to purchase such coverage in the voluntary market. Participation in these pools in most states is generally in proportion to voluntary writings of related lines of business in that state.
Many state insurance regulatory laws intended primarily for the protection of policyholders contain provisions that require advance approval by state agencies of any change in control of an insurance company that is domiciled (or, in some cases, having such substantial business that it is deemed to be commercially domiciled) in that state. "Control" is generally presumed to exist through the ownership of 10% or more the voting securities of a domestic insurance company or of any company that controls a domestic insurance company. In addition, many state insurance regulatory laws contain provisions that require prenotification to state agencies of a change in control of a nondomestic admitted insurance company in that state. Such requirements may deter, delay or prevent certain transactions affecting the control of or the ownership of the Company's common stock, including transactions that could be advantageous to the stockholders of the Company.
SECURITIES REGULATION
Certain U.S. and non-U.S. subsidiaries are subject to various securities and
commodities regulations and capital adequacy requirements promulgated by the
regulatory and exchange authorities of the jurisdictions in which they operate.
The Company's registered broker-dealer subsidiaries are subject to the Securities and Exchange Commission's (the SEC) net capital rule, Rule 15c3-1 (the Net Capital Rule), promulgated under the Exchange Act. The Net Capital Rule requires the maintenance of minimum net capital, as defined. The Net Capital Rule also limits the ability of broker-dealers to transfer large amounts of capital to parent companies and other affiliates. Compliance with the Net Capital Rule could limit those operations of the Company that require the intensive use of capital, such as underwriting and trading activities and the financing of customer account balances, and also could restrict Salomon Smith Barney Holdings Inc.'s ability to withdraw capital from its broker-dealer subsidiaries, which in turn could limit Salomon Smith Barney Holdings Inc.'s ability to pay dividends and make payments on its debt. See Notes 12 and 18 to the Consolidated Financial Statements. Certain of the Company's broker dealer subsidiaries are also subject to regulation in the countries outside of the U.S. in which they do business. Such regulations include requirements to maintain specified levels of net capital or its equivalent.
The Company is the indirect parent of investment advisers registered and regulated under the Investment Advisers Act of 1940 who provide investment advice to investment companies subject to regulation under the Investment Company Act of 1940. Under these Acts, advisory contracts between the Company's investment adviser subsidiaries and these investment companies (Affiliated Funds) would automatically terminate upon an assignment of such contracts by the investment adviser. Such an assignment would be presumed to have occurred if any party were to acquire more than 25% of the Company's voting securities. In that event, consent to the assignment from the stockholders of the Affiliated Funds involved would be needed for the advisory relationship to continue. In addition, subsidiaries of the Company and the Affiliated Funds are subject to certain restrictions in their dealings with each other.
COMPETITION
The Company and its subsidiaries are subject to intense competition in all
aspects of their businesses from both bank and non-bank institutions that
provide financial services and, in some of their activities, from government
agencies.
GENERAL BUSINESS FACTORS
In the judgment of the Company, no material part of the business of the Company
and its subsidiaries is dependent upon a single customer or group of customers,
the loss of any one of which would have a materially adverse effect on the
Company, and no one customer or group of affiliated customers accounts for as
much as 10% of the Company's consolidated revenues.
PROPERTIES
The Company's executive offices are located at 399 Park Avenue, New York, New
York. 399 Park Avenue is a 39-story building which is owned by Citibank and is
occupied by the Company and certain of its subsidiaries, including the principal
offices of Citicorp and Citibank. The Company and certain of its subsidiaries
occupy office space in the Citigroup Center (153 E. 53rd St., New York, NY)
under a long term lease. Citibank owns a building in Long Island City, New York
and leases a building located at 111 Wall Street in New York City, which are
totally occupied by the Company and certain of its subsidiaries.
The Company's property-casualty insurance subsidiaries lease 168 field offices throughout the United States. The principal offices of TIC, TLAC, and TPC are located in Hartford, Connecticut. The majority of such occupied space in Hartford is owned by TIC. TPC also rents space from Aetna Services, Inc. at CityPlace, located in Hartford, Connecticut.
The Company's life insurance subsidiaries lease office space at approximately 15 locations throughout the United States. TIC and/or The Travelers Insurance Group Inc. lease two other buildings in Hartford, Connecticut, most of which is subleased to third parties. TIC also owns a building in Norcross, Georgia that is occupied by its information systems department.
Salomon Smith Barney leases two building located at 388 and 390 Greenwich Street in New York City. These leases, which expire in 2008, include a purchase option with respect to the related properties. The principal offices of Salomon Smith Barney are located at 388 Greenwich Street, New York, New York.
Associates maintains its principal offices in Irving, Texas, in facilities which are, in part, owned and, in part, leased by it. Associates has office and branch sites for its business units throughout the United States, Canada, Asia (Japan, Taiwan, Philippines and Hong Kong), Europe and Latin America. The majority of these sites are leased and, although numerous, none is material to Associates' operations.
Other offices and certain warehouse space are owned, none of which is material to the Company's financial condition or operations.
The Company believes its properties are adequate and suitable for its business as presently conducted and are adequately maintained. For further information concerning leases, see Note 26 to the Consolidated Financial Statements.
LEGAL PROCEEDINGS
In the ordinary course of business, Citigroup and its subsidiaries are
defendants or co-defendants in various litigation matters incidental to and
typical of the businesses in which they are engaged. These include civil
actions, arbitration proceedings and other matters in which the Company's broker
dealer subsidiaries have been named, arising in the normal course of business
out of activities as a broker and dealer in securities, as an underwriter of
securities, as an investment banker or otherwise. These also include numerous
matters in which the Company's insurance subsidiaries are named, arising in the
normal course of their business. In the opinion of the Company's management, the
ultimate resolution of these legal proceedings would not be likely to have a
material adverse effect on the results of the Company and its subsidiaries'
operations, financial condition, or liquidity.
EXECUTIVE OFFICERS
The following information with respect to each executive officer of Citigroup is
set forth below as of March 8, 2002: name, age and the position held with
Citigroup.
NAME AGE POSITION AND OFFICE HELD
-------------------------------------------------------------------------------------
Sir Winfried F.W. Bischoff 60 Chairman, Citigroup Europe
Michael A. Carpenter 54 Chairman & CEO, Corporate
and Investment Bank and
Salomon Smith Barney
Thomas W. Jones 52 Chairman & CEO, Global Investment
Management & Private Banking Group;
Chairman & CEO, Citigroup
Asset Management
Sir Deryck C. Maughan 54 Vice Chairman; Chairman, Internet
Operating Group; Head, Citigroup
Mergers & Acquisitions; Chairman Cross-
Marketing Group; Chairman Citigroup Japan
Victor J. Menezes 52 Chairman & CEO, Citibank, N.A.
Charles O. Prince 52 Chief Operating Officer;
Corporate Secretary; Chief Operating
Officer, Emerging Markets
William R. Rhodes 66 Senior Vice Chairman Citigroup/Citicorp/
Citibank, N.A.
Robert E. Rubin 63 Director; Member, Office of the Chairman
Todd S. Thomson 41 Executive Vice President; Chief Financial
Officer; Head of Global Investments
Sanford I. Weill 68 Chairman & CEO
Robert B. Willumstad 56 President; Chairman & CEO,
Global Consumer
-------------------------------------------------------------------------------------
|
Except as described below, each executive officer has been employed in such position or in other executive or management positions within the Company for at least five years.
Sir Winfried Bischoff joined Citigroup in April 2000 upon the merger of J. Henry Schroder & Co. Ltd. with Salomon Smith Barney Holdings Inc. and, from 1995 until that time, he was Chairman and Group Chief Executive of J. Henry Schroder & Co. Ltd. Mr. Jones joined Citigroup in August 1997 and, prior to that time, he was Vice Chairman, President, Chief Operating Officer, and a director of the Teachers Insurance and Annuity Association - College Retirement Equities Fund. Mr. Rubin joined Citigroup in October 1999 and, prior to that time, served as Secretary of the Treasury of the United States from 1995 to 1999. Mr. Thomson joined Citigroup in July 1998 and, prior to that time, was Senior Vice President, Strategic Planning and Business Development for GE Capital Services. Previously, Mr. Thomson held management positions at Barents Group LLC and Bain and Company.
10-K CROSS-REFERENCE INDEX
This Annual Report and Form 10-k incorporate into a single document the requirements of the accounting profession and the Securities and Exchange Commission, including a comprehensive explanation of 2001 results.
FORM 10-K
------------------------------------------------------------------------
ITEM NUMBER PAGE
PART I
1. BUSINESS ............................... 1-2, 4-47
93-98
2. PROPERTIES ............................. 98
3. LEGAL PROCEEDINGS ...................... 99
4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS ...................... NOT APPLICABLE
------------------------------------------------------------------------
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS......... 86, 101-102
6. SELECTED FINANCIAL DATA ................ 3
7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.............................. 4-47
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK....................... 34-41, 63-68
81-84
8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA ..................... 51-94
9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.................... NOT APPLICABLE
------------------------------------------------------------------------
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT ...................... 99, 103*
11. EXECUTIVE COMPENSATION ................. **
12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT........ ***
13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS ................... ****
------------------------------------------------------------------------
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K ........ ....... 101
------------------------------------------------------------------------
|
* For information regarding Citigroup Directors, see the material under the caption "Election of Directors" in the definitive Proxy Statement for Citigroup's Annual Meeting of Stockholders to be held on April 10, 2002, filed with the SEC (the "Proxy Statement"), incorporated herein by reference. ** See the material under the captions "Executive Compensation" and "How We Have Done" in the Proxy Statement, incorporated herein by reference. *** See the material under the captions "About the Annual Meeting" and "Stock Ownership" in the Proxy Statement, incorporated herein by reference. **** See the material under the captions "Election of Directors" and "Executive Compensation" in the Proxy Statement, incorporated herein by reference. None of the foregoing incorporation by reference shall include the information referred to in item 402(a)(8) of Regulation S-K.
EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K
The following exhibits are either filed herewith or have been previously filed
with the Securities and Exchange Commission and are filed herewith by
incorporation by reference:
- Citigroup's Restated Certificate of Incorporation, as amended,
- Citigroup's By-Laws,
- Instruments Defining the Rights of Security Holders, Including Indentures,
- Material Contracts, including certain compensatory plans available only to
officers and/or directors,
- Statements re: Computation of Ratios,
- Subsidiaries of the Registrant,
- Consents of Experts and Counsel,
- Powers of Attorney of Directors Armstrong, Belda, Bialkin, Derr, Deutch, Harp
Helu, Hernandez Ramirez, Jordan, Lipp, Mark, Masin, Mecum, Parsons, Pearson,
Rubin, Thomas, and Zankel.
A more detailed exhibit index has been filed with the SEC. Stockholders may obtain copies of that index, or any of the documents on that index, by writing to Citigroup, Corporate Governance, 425 Park Avenue, 2nd Floor, New York, New York 10043, or on the Internet at http://www.sec.gov.
Financial Statements filed for Citigroup Inc. and Subsidiaries:
Consolidated Statement of Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Stockholders' Equity
Consolidated Statement of Cash Flows
On December 10, 2001, in connection with the August 2000 acquisition of the outstanding capital stock of AST Stock plan, Inc., the Company issued 88,013 shares of its common stock. No underwriters were used and the recipients of the Company's common stock were former stockholders or option holders of the acquired company. The shares of common stock issued on December 10, 2001 were issued in reliance upon an exemption from the registration requirements of the Securities Act of 1933 provided by Rule 506 of Regulation D thereof. The former stockholders and option holders of the acquired company made certain representations to the Company as to investment intent and that they possessed a sufficient level of financial sophistication. The shares issued on December 10, 2001 were subject to restrictions on transfer absent registration under the Securities Act of 1933, and no offers to sell the securities were made by any form of general solicitation or general advertisement. Subsequently, the Company registered the 88,013 shares for resale on a registration statement on Form S-3 declared effective by the SEC on January 7, 2002.
On October 18, 2001, the Company filed a Current Report on Form 8-K, dated October 17, 2001, reporting under item 5 thereof the results of its operations for the quarter ended September 30, 2001, and certain other selected financial data.
On October 29, 2001, the Company filed a Current Report on Form 8-K, dated October 26, 2001, (a) noting under Item 5 thereof that the Company had previously changed its operating segments presentation to include the various Associates businesses within the other existing operating segments of Citigroup, and (b) filing as an exhibit under Item 7 thereof the restated Historical Annual Supplement of Citigroup.
On December 19, 2001, the Company filed a Current Report on Form 8-K, dated December 19, 2001, reporting under Item 5 thereof the intention of its wholly-owned subsidiary, Travelers Property Casualty Corp. ("TPC"), to sell a portion of its equity in an initial public offering and the Company's intention to make a tax-free distribution of a portion of its interest in TPC to the Company's stockholders.
No other reports on Form 8-K were filed during the 2001 fourth quarter, however, on January 18, 2002, the Company filed a Current Report on Form 8-K, dated January 17 2002, reporting under Item 5 thereof the results of its operations for the quarter and year ended December 31, 2001, and certain other selected financial data.
On February 22, 2002, the Company filed a Current Report on Form 8-K, dated February 13, 2002, filing as exhibits under Item 7 thereof the Terms Agreement, dated February 13, 2002, and the Form of Note relating to the offer and sale of the Company's 6.00% Notes due February 21, 2012.
On March 7, 2002, the Company filed a Current Report on Form 8-K, dated February 27, 2002, filing as exhibits under Item 7 thereof the Terms Agreement, dated February 27, 2002, and the Form of Note relating to the offer and sale of the Company's 5.00% Notes due March 6, 2007.
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2001 Commission File Number 1 9924
STOCKHOLDER INFORMATION
Citigroup common stock is listed on the New York Stock Exchange and the Pacific
Exchange under the ticker symbol "C."
Citigroup Preferred Stock Series F, G, H, M, Q, and R are also listed on
the New York Stock Exchange.
ANNUAL MEETING
The annual meeting will be held at 9:00 a.m. on April 16, 2002, at Carnegie
Hall, 154 West 57th Street, New York, NY.
TRANSFER AGENT
Stockholder address changes and inquiries regarding stock transfers, dividend
replacement, 1099-DIV reporting, and lost securities for common and preferred
stocks should be directed to:
Citibank Stockholder Services
P.O. Box 2502
Jersey City, NJ 07303-2502
Telephone No. (201) 536-8057
Toll-free No. (888) 250-3985
Facsimile No. (201) 324-3284
E-mail address: Citibank@em.fcnbd.com
EXCHANGE AGENT
Holders of Associates First Capital Corporation, Citicorp or Salomon Inc common
stock, Citigroup Inc. Preferred Stock Series J, K, S, T, or U, Salomon Inc
Preferred Stock Series E or D, or Travelers Group Preferred Stock Series A or D
should arrange to exchange their certificates by contacting:
Citibank Stockholder Services
P.O. Box 2502
Jersey City, NJ 07303-2502
Telephone No. (201) 536-8057
Toll-free No. (888) 250-3985
Facsimile No. (201) 324-3284
E-mail address: Citibank@em.fcnbd.com
The 2001 Forms 10-K filed with the Securities and Exchange Commission for
the Company and certain subsidiaries, as well as Annual and Quarterly reports,
are available from Citigroup Document Services toll free at (877) 936-2737
(outside the United States at (718) 765-6514) or by writing to:
Citigroup Document Services
140 58th Street, Suite 5i
Brooklyn, NY 11220
Copies of this annual report and other Citigroup financial reports can be viewed or retrieved on the Internet at http://www.citigroup.com or http://www.sec.gov.
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) AND (g) OF THE ACT A list of Citigroup securities registered pursuant to Section 12(b) and (g) of the Securities Exchange Act of 1934 is available from Citigroup Corporate Governance, 425 Park Avenue, 2nd Floor, New York, New York 10043 or on the Internet at http://www.sec.gov.
As of February 4, 2002, Citigroup had 5,127,926,371 shares of common stock outstanding.
As of February 4, 2002, Citigroup had approximately 221,400 common stockholders of record. This figure does not represent the actual number of beneficial owners of common stock because shares are frequently held in "street name" by securities dealers and others for the benefit of individual owners who may vote the shares.
Citigroup (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein nor in Citigroup's 2002 Proxy Statement incorporated by reference in Part III of this Form 10-K.
The aggregate market value of Citigroup common stock held by non-affiliates of Citigroup on February 4, 2002, was approximately $227 billion.
Certain information has been incorporated by reference as described herein into Part III of this annual report from Citigroup's 2002 Proxy Statement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 8th day of March,
2002.
CITIGROUP INC.
(REGISTRANT)
/s/ Todd S. Thomson Todd S. Thomson Chief Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 8th day of March, 2002.
Citigroup's Principal Executive Officer:
/s/ Sanford I. Weill Sanford I. Weill Citigroup's Principal Financial Officer: /s/ Todd S. Thomson Todd S. Thomson Citigroup's Principal Accounting Officers: /s/ Irwin R. Ettinger /s/ William P. Hannon Irwin R. Ettinger William P. Hannon The Directors of Citigroup listed below executed a power of attorney appointing Todd S. Thomson their attorney-in-fact, empowering him to sign this report on their behalf. |
C. Michael Armstrong Reuben Mark Alain J. P. Belda Michael T. Masin Kenneth J. Bialkin Dudley C. Mecum Kenneth T. Derr Richard D. Parsons John M. Deutch Andrall E. Pearson Alfredo Harp Helu Robert E. Rubin Roberto Hernandez Ramirez Franklin A. Thomas Ann Dibble Jordan Arthur Zankel Robert I. Lipp /s/ Todd S. Thomson Todd S. Thomson, attorney-in-fact |
CITIGROUP BOARD OF DIRECTORS
C. MICHAEL ARMSTRONG
Chairman and Chief Executive Officer
AT&T Corp.
ALAIN J.P. BELDA
Chairman of the Board and Chief Executive Officer
Alcoa Inc.
KENNETH J. BIALKIN, ESQ.
Partner
Skadden, Arps, Slate, Meagher & Flom LLP
KENNETH T. DERR
Chairman of the Board, Retired
ChevronTexaco Corporation
JOHN M. DEUTCH
Institute Professor
Massachusetts Institute of Technology
ALFREDO HARP HELU
Chairman of the Board
Grupo Financiero Banamex
ROBERTO HERNANDEZ RAMIREZ
Chairman of the Board
Banco Nacional de Mexico
ANN DIBBLE JORDAN
Consultant
ROBERT I. LIPP
Chairman and Chief Executive Officer
Travelers Property Casualty Corp.
REUBEN MARK
Chairman and Chief Executive Officer
Colgate-Palmolive Company
MICHAEL T. MASIN
Vice Chairman and President
Verizon Communications Inc.
DUDLEY C. MECUM
Managing Director
Capricorn Holdings, LLC
RICHARD D. PARSONS
Co-Chief Operating Officer
AOL Time Warner Inc.
ANDRALL E. PEARSON
Founding Chairman
TRICON Global Restaurants, Inc.
ROBERT E. RUBIN
Member, Office of the Chairman
Citigroup Inc.
FRANKLIN A. THOMAS
Former President
The Ford Foundation
SANFORD I. WEILL
Chairman and Chief Executive Officer
Citigroup Inc.
ARTHUR ZANKEL
Managing Member
High Rise Capital Advisors, LLC
HONORARY DIRECTOR
THE HONORABLE
GERALD R. FORD
Former President of the United States
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
-------- ----------------------
3.01.1 Restated Certificate of Incorporation of Citigroup Inc. (the
"Company"), incorporated by reference to Exhibit 4.01 to the
Company's Registration Statement on Form S-3 filed December
15, 1998 (No. 333-68949).
3.01.2 Certificate of Designation of 5.321% Cumulative Preferred
Stock, Series YY, of the Company, incorporated by reference to
Exhibit 4.45 to Amendment No. 1 to the Company's Registration
Statement on Form S-3 filed January 22, 1999 (No. 333-68949).
3.01.3 Certificate of Amendment to the Restated Certificate of
Incorporation of the Company dated April 18, 2000,
incorporated by reference to Exhibit 3.01.3 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2000 (File No. 1-9924).
3.01.4 Certificate of Amendment to the Restated Certificate of
Incorporation of the Company dated April 17, 2001,
incorporated by reference to Exhibit 3.01.4 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2001 (File No. 1-9924).
3.01.5+ Certificate of Designation of 6.767% Cumulative Preferred
Stock, Series YYY, of the Company.
3.02 By-Laws of the Company, as amended, effective October 26,
1999, incorporated by reference to Exhibit 3.02 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1999 (File No. 1-9924).
10.01*+ Amended and Restated Employment Agreement, dated as of
November 16, 2001, between the Company and Sanford I. Weill.
10.02.1* Travelers Group Stock Option Plan (as amended and restated as
of April 24, 1996), incorporated by reference to Exhibit
10.02.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 (File No. 1-9924).
10.02.2* Amendment No. 14 to the Travelers Group Stock Option Plan,
incorporated by reference to Exhibit 10.01 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1996 (File No. 1-9924).
10.02.3* Amendment No. 15 to the Travelers Group Stock Option Plan
(effective July 23, 1997), incorporated by reference to
Exhibit 10.04 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1997 (File No.
1-9924) (the "Company's September 30, 1997 10-Q").
10.02.4* Amendment No. 16 to the Travelers Group Stock Option Plan,
incorporated by reference to Exhibit 10.02.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1999 (File No. 1-9924) (the "Company's 1999 10-K").
|
10.03.1* Travelers Group 1996 Stock Incentive Plan (as amended through
July 23, 1997), incorporated by reference to Exhibit 10.03 to
the Company's September 30, 1997 10-Q.
10.03.2* Amendment to Travelers Group 1996 Stock Incentive Plan (as
amended through July 23, 1997), incorporated by reference to
Exhibit 10.03.2 to the Company's 1999 10-K.
10.04* Travelers Group Inc. Retirement Benefit Equalization Plan (as
amended and restated as of January 2, 1996), incorporated by
reference to Exhibit 10.04 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 (File
No. 1-9924) (the "Company's 1998 10-K").
10.05*+ Citigroup Inc. Amended and Restated Compensation Plan for
Non-Employee Directors (as of December 31, 2001).
10.06.1* Supplemental Retirement Plan of the Company, incorporated by
reference to Exhibit 10.23 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990 (File
No. 1-9924).
10.06.2* Amendment to the Company's Supplemental Retirement Plan,
incorporated by reference to Exhibit 10.06.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993 (File No. 1-9924).
10.07* Citigroup 1999 Executive Performance Plan (effective January
1, 1999), incorporated by reference to Annex B to the
Company's Proxy Statement dated March 8, 1999 (File No.
1-9924).
10.08.1* Travelers Group Capital Accumulation Plan (as amended through
July 23, 1997), incorporated by reference to Exhibit 10.02 to
the Company's September 30, 1997 10-Q.
10.08.2* Amendment to the Travelers Group Capital Accumulation Plan (as
amended through July 23, 1997), incorporated by reference to
Exhibit 10.08.2 to the Company's 1999 10-K.
10.09* The Travelers Inc. Deferred Compensation and Partnership
Participation Plan, incorporated by reference to Exhibit 10.31
to the Company's Annual Report on Form 10-K/A-1 for the fiscal
year ended December 31, 1994 (File No. 1-9924).
10.10* The Travelers Insurance Deferred Compensation Plan (formerly
The Travelers Corporation TESIP Restoration and Non-Qualified
Savings Plan) (as amended through December 10, 1998),
incorporated by reference to Exhibit 10.10 to the Company's
1998 10-K.
|
10.11* The Travelers Corporation Directors' Deferred Compensation
Plan (as amended November 7, 1986), incorporated by reference
to Exhibit 10(d) to the Annual Report on Form 10-K of The
Travelers Corporation for the fiscal year ended December 31,
1986 (File No. 1-5799).
10.12* Letter Agreement, dated as of August 14, 1997, between the
Company and Thomas W. Jones, incorporated by reference to
Exhibit 10.01 to the Company's September 30, 1997 10-Q.
10.13.1* Salomon Inc Equity Partnership Plan for Key Employees (as
amended through March 25, 1998), incorporated by reference to
Exhibit 10.19 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 (File No. 1-9924).
10.13.2* Amendment to the Salomon Inc Equity Partnership Plan for Key
Employees (as amended through March 25, 1998), incorporated by
reference to Exhibit 10.14.2 to the Company's 1999 10-K.
10.14.1* Citicorp Executive Incentive Compensation Plan, incorporated
by reference to Citicorp's Registration Statement on Form S-8
filed April 25, 1988 (No. 2-47648).
10.14.2* Amendment to the Citicorp Executive Incentive Compensation
Plan, incorporated by reference to Exhibit 10.15.2 to the
Company's 1999 10-K.
10.15.1* Citicorp 1988 Stock Incentive Plan, incorporated by reference
to Exhibit 4 to Citicorp's Registration Statement on Form S-8
filed April 25, 1988 (No. 2-47648).
10.15.2* Amendment to the Citicorp 1988 Stock Incentive Plan,
incorporated by reference to Exhibit 10.16.2 to the Company's
1999 10-K.
10.16* 1994 Citicorp Annual Incentive Plan for Selected Executive
Officers, incorporated by reference to Exhibit 10 to
Citicorp's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1994 (File No. 1-5378).
10.17.1* Citicorp Deferred Compensation Plan, incorporated by reference
to Exhibit 10 to Citicorp's Registration Statement on Form S-8
filed February 15, 1996 (No. 333-0983).
10.17.2* Amendment to the Citicorp Deferred Compensation Plan,
incorporated by reference to Exhibit 10.18.2 to the Company's
1999 10-K.
|
10.17.3*+ Amendment to the Citicorp Deferred Compensation Plan
(effective as of September 28, 2001).
10.18.1* Citicorp 1997 Stock Incentive Plan, incorporated by reference
to Citicorp's 1997 Proxy Statement filed February 26, 1997
(File No. 1-5378).
10.18.2* Amendment to the Citicorp 1997 Stock Incentive Plan,
incorporated by reference to Exhibit 10.19.2 to the Company's
1999 10-K.
10.19.1* Supplemental Executive Retirement Plan of Citicorp and
Affiliates (as amended and restated effective January 1,
1998), incorporated by reference to Exhibit 10.20.1 to the
Company's 1999 10-K.
10.19.2* First Amendment to the Supplemental Executive Retirement Plan
of Citicorp and Affiliates (as amended and restated effective
January 1, 1998), incorporated by reference to Exhibit 10.20.2
to the Company's 1999 10-K.
10.20.1* Supplemental ERISA Compensation Plan of Citibank, N.A. and
Affiliates, as amended and restated, incorporated by reference
to Exhibit 10.(G) to Citicorp's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 (File No. 1-5378).
10.20.2* Amendment to the Supplemental ERISA Compensation Plan of
Citibank, N.A. and Affiliates, as amended and restated,
incorporated by reference to Exhibit 10.21.2 to the Company's
1999 10-K.
10.21* Supplemental ERISA Excess Plan of Citibank, N.A. and
Affiliates, as amended and restated, incorporated by reference
to Exhibit 10.(H) to Citicorp's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 (File No. 1-5378).
10.22.1* Citicorp Directors' Deferred Compensation Plan, Restated
May 1, 1988, incorporated by reference to Exhibit 10.23 to the
Company's 1998 10-K.
10.22.2*+ Amendment to the Citicorp Directors' Deferred Compensation
Plan (effective as of December 31, 2001).
10.23.1* Letter Agreement, dated as of October 26, 1999 (the "Letter
Agreement"), between the Company and Robert E. Rubin,
incorporated by reference to Exhibit 10.24 to the Company's
1999 10-K.
10.23.2*+ Amendment to the Letter Agreement, dated as of February 6,
2002, between the Company and Robert E. Rubin.
10.24* Citigroup 1999 Stock Incentive Plan (effective April 30,
1999), incorporated by reference to Annex A to the Company's
Proxy Statement dated March 8, 1999 (File No. 1-9924).
10.25* Form of Citigroup Directors' Stock Option Grant Notification,
incorporated by reference to Exhibit 10.26 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 2000 (File No. 1-9924) (the "Company's 2000 10-K").
10.26 Citigroup 2000 Stock Purchase Plan (effective May 1, 2000),
incorporated by reference to Annex B to the Company's Proxy
Statement dated March 17, 2000 (File No. 1-9924).
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10.27* Associates First Capital Corporation Incentive Compensation
Plan, incorporated by reference to Exhibit 10.8 to the
Associates First Capital Corporation ("Associates") Annual
Report on Form 10-K for the fiscal year ended December 31,
1997 (File No. 1-11637) (the "Associates' 1997 10-K").
10.28* Associates First Capital Corporation Deferred Compensation
Plan, incorporated by reference to Exhibit 4 to the
registration statement on Form S-8 filed by Associates on
March 31, 1998 (File No. 333-49049).
10.29* Associates First Capital Corporation Excess Benefit Plan,
incorporated by reference to Exhibit 10.17 to the registration
statement on Form S-1 filed by Associates on February 9, 1996
(File No. 333-00817).
10.30* Associates First Capital Corporation Supplemental Retirement
Income Plan, incorporated by reference to Exhibit 10.16 to the
registration statement on Form S-1 filed by Associates on
February 9, 1996 (File No. 333-00817).
10.31* Associates First Capital Corporation Long-Term Performance
Plan, incorporated by reference to Exhibit 10.12 to the
registration statement on Form S-1 filed by Associates on
February 9, 1996 (File No. 333-00817).
10.32* Associates First Capital Corporation Supplemental Executive
Welfare Plan, incorporated by reference to Exhibit 10.33 to
the Company's 2000 10-K.
10.33* Form of Restricted Stock Award Agreement issued under the
Associates Incentive Compensation Plan, incorporated by
reference to Exhibit 10.34 to the Company's 2000 10-K.
10.34* Form of Associates Incentive Compensation Plan Stock Option
Award Agreement - 2000, incorporated by reference to Exhibit
10.35 to the Company's 2000 10-K.
10.35* Letter Agreement, dated as of December 19, 2000, between the
Company and Robert I. Lipp, incorporated by reference to
Exhibit 10.38 to the Company's 2000 10-K.
12.01+ Calculation of Ratio of Income to Fixed Charges.
12.02+ Calculation of Ratio of Income to Fixed Charges Including
Preferred Stock Dividends.
21.01+ Subsidiaries of the Company.
23.01+ Consent of KPMG LLP, Independent Auditors.
24.01+ Powers of Attorney.
99.01+ List of Securities Registered Pursuant to Section 12(b) of the
Securities Exchange Act of 1934.
-------------
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The total amount of securities authorized pursuant to any instrument defining rights of holders of long-term debt of the Company does not exceed 10%
of the total assets of the Company and its consolidated subsidiaries. The Company will furnish copies of any such instrument to the SEC upon request.
The financial statements required by Form 11-K for 2001 for the Company's employee savings plans will be filed as an exhibit by amendment to this Form 10-K pursuant to Rule 15d-21 of the Securities Exchange Act of 1934, as amended.
Copies of any of the exhibits referred to above will be furnished at a cost of $0.25 per page (although no charge will be made for the 2001 Annual Report on Form 10-K) to security holders who make written request therefor to Corporate Governance, Citigroup Inc., 425 Park Avenue, 2nd Floor, New York, New York 10043.
Exhibit 3.01.5
CERTIFICATE OF DESIGNATION
of
6.767% CUMULATIVE PREFERRED STOCK, SERIES YYY
of
CITIGROUP INC.
pursuant to Section 151 of the
General Corporation Law of the State of Delaware
CITIGROUP INC., a Delaware corporation (the "Company"), hereby certifies that:
1. The Restated Certificate of Incorporation of the Company (the "Certificate of Incorporation") fixes the total number of shares of all classes of capital stock that the Company shall have the authority to issue at fifteen billion (15,000,000,000) shares of common stock, par value $.01 per share ("Common Stock") and thirty million (30,000,000) shares of preferred stock, par value $1.00 per share ("Preferred Stock").
2. The Certificate of Incorporation expressly grants to the Board of Directors of the Company (the "Board of Directors") authority to provide for the issuance of the shares of Preferred Stock in series, and to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.
3. Pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation, the Stock Committee of the Board of Directors, by action duly taken on February 26, 2002, adopted resolutions that provide for a series of Preferred Stock as follows:
RESOLVED, that an issue of a series of Preferred Stock is hereby provided for, and the number of shares to be included in such series is established, and the designation, powers, preference and rights, and qualifications, limitations or restrictions thereof, of such series are fixed, hereby as follows:
1. DESIGNATION AND NUMBER OF SHARES. The designation of such series shall be 6.767% Cumulative Preferred Stock, Series YYY (the "Series YYY Preferred Stock"), and the
number of shares constituting such series shall be 2,597. The number of authorized shares of Series YYY Preferred Stock may be reduced (but not below the number of shares thereof then outstanding) by further resolution duly adopted by the Board of Directors or the Stock Committee of the Board of Directors and by the filing of a certificate pursuant to the provisions of the General Corporation Law of the State of Delaware stating that such reduction has been so authorized, but the number of authorized shares of Series YYY Preferred Stock shall not be increased.
2. DIVIDENDS. Dividends on each share of Series YYY Preferred Stock shall be cumulative from the date of original issue of such share and shall be payable, when and as declared by the Board of Directors out of funds legally available therefor, in cash on February 27, May 27, August 27 and November 27 of each year, commencing May 27, 2002 (the "First Dividend Payment Date"), provided that if any such day is not a Business Day (as hereinafter defined), such dividend shall be paid on the next succeeding Business Day. "Business Day" means any day that is not a Saturday, Sunday or a legal holiday in New York.
Each quarterly period beginning on February 27, May 27, August 27 and November 27 in each year and ending on and including the day next preceding the first day of the next such quarterly period shall be a "Dividend Period." The amount of dividends payable for each Dividend Period other than the initial Dividend Period for each share of Series YYY Preferred Stock shall be $16,917.50 (or one-fourth of 6.767% of the Liquidation Preference (as defined in Section 7) for such share). If a share of Series YYY Preferred Stock is outstanding for less than an entire Dividend Period, the dividend payable on such share on the dividend payment date related to such Dividend Period shall be the product of $16,917.50 multiplied by the ratio (which shall not exceed one) that the number of days that such share was outstanding during such Dividend Period bears to the number of days in such Dividend Period.
Each dividend on the shares of Series YYY Preferred Stock shall be paid to the holders of record of shares of Series YYY Preferred Stock as they appear on the stock register of the Company on such record date, not more than 60 days nor less than 10 days preceding the payment date of such dividend, as shall be fixed in advance by the Board of Directors. Dividends on account of arrears
for any past Dividend Periods may be declared and paid at any time, without reference to any regular dividend payment date, to holders of record on such date, not exceeding 45 days preceding the payment date thereof, as may be fixed in advance by the Board of Directors.
If there shall be outstanding shares of any other class or series of preferred stock of the Company ranking on a parity as to dividends with the Series YYY Preferred Stock, the Company, in making any dividend payment on account of arrears on the Series YYY Preferred Stock or such other class or series of preferred stock, shall make payments ratably upon all outstanding shares of Series YYY Preferred Stock and such other class or series of preferred stock in proportion to the respective amounts of dividends in arrears upon all such outstanding shares of Series YYY Preferred Stock and such other class or series of preferred stock to the date of such dividend payment.
Holders of shares of Series YYY Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on such shares. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment that is in arrears.
3. REDEMPTION. The Series YYY Preferred Stock is not subject to any mandatory redemption pursuant to a sinking fund or otherwise. The Company, at its option, may redeem shares of Series YYY Preferred Stock, as a whole or in part, at any time or from time to time on or after February 27, 2022, at a price of $1,000,000 per share, plus accrued and accumulated but unpaid dividends thereon to but excluding the date fixed for redemption (the "Redemption Price").
If the Company shall redeem shares of Series YYY Preferred Stock pursuant to this Section 3, notice of such redemption shall be given by first class mail, postage prepaid, not less than 30 or more than 90 days prior to the redemption date, to each holder of record of the shares to be redeemed, at such holder's address as shown on the stock register of the Company. Each such notice shall state: (a) the redemption date; (b) the number of shares of Series YYY Preferred Stock to be redeemed and, if less than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (c) the Redemption Price; (d) the place or places where certificates for such shares are to be
surrendered for payment of the Redemption Price; and (e) that dividends on the shares to be redeemed will cease to accrue on such redemption date. Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Company in providing money for the payment of the Redemption Price) dividends on the shares of Series YYY Preferred Stock so called for redemption shall cease to accrue, and such shares shall no longer be deemed to be outstanding, and all rights of the holders thereof as stockholders of the Company (except the right to receive from the Company the Redemption Price) shall cease. Upon surrender in accordance with such notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors shall so require and the notice shall so state), the Company shall redeem such shares at the Redemption Price. If less than all the outstanding shares of Series YYY Preferred Stock are to be redeemed, the Company shall select those shares to be redeemed from outstanding shares of Series YYY Preferred Stock not previously called for redemption by lot or pro rata (as nearly as may be) or by any other method determined by the Board of Directors to be equitable.
The Company shall not redeem less than all the
outstanding shares of Series YYY Preferred Stock pursuant to this
Section 3, or purchase or acquire any shares of Series YYY Preferred
Stock otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of shares of Series YYY Preferred Stock,
unless full cumulative dividends shall have been paid or declared and
set apart for payment upon all outstanding shares of Series YYY
Preferred Stock for all past Dividend Periods, and unless all matured
obligations of the Company with respect to all sinking funds,
retirement funds or purchase funds for all series of Preferred Stock
then outstanding have been met.
4. SHARES TO BE RETIRED. All shares of Series YYY Preferred Stock redeemed or repurchased by the Company shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be reissued.
5. CONVERSION OR EXCHANGE. The holders of shares of Series YYY Preferred Stock shall not have any right to convert any such shares into or exchange any such shares for shares of any other class or series of capital stock of the Company.
6. VOTING. Except as otherwise provided in this
Section 6 or as otherwise required by law, the Series YYY Preferred
Stock shall have no voting rights.
If six quarterly dividends (whether or not consecutive) payable on shares of Series YYY Preferred Stock are in arrears at the time of the record date to determine stockholders for any annual meeting of stockholders of the Company, the number of directors of the Company shall be increased by two, and the holders of shares of Series YYY Preferred Stock (voting separately as a class with the holders of shares of any one or more other series of Preferred Stock upon which like voting rights have been conferred and are exercisable) shall be entitled at such annual meeting of stockholders to elect two directors of the Company, with the remaining directors of the Company to be elected by the holders of shares of any other class or classes or series of stock entitled to vote therefor. In any such election, holders of shares of Series YYY Preferred Stock shall have one vote for each share held.
At all meetings of stockholders at which holders of Preferred Stock shall be entitled to vote for directors as a single class, the holders of a majority of the outstanding shares of all classes and series of capital stock of the Company having the right to vote as a single class shall be necessary to constitute a quorum, whether present in person or by proxy, for the election by such single class of its designated directors. In any election of directors by stockholders voting as a class, such directors shall be elected by the vote of at least a plurality of shares held by such stockholders present or represented at the meeting. At any such meeting, the election of directors by stockholders voting as a class shall be valid notwithstanding that a quorum of other stockholders voting as one or more classes may not be present or represented at such meeting.
Any director who has been elected by the holders of shares of Series YYY Preferred Stock (voting separately as a class with the holders of shares of any one or more other series of Preferred Stock upon which like voting rights have been conferred and are exercisable) may be removed at any time, with or without cause, only by the affirmative vote of the holders of the shares at the time entitled to cast a majority of the votes entitled to be cast for the election of any such director at a special meeting of such holders called for that purpose, and any vacancy thereby created may be
filled by the vote of such holders. If a vacancy occurs among the directors elected by such stockholders voting as a class, other than by removal from office as set forth in the preceding sentence, such vacancy may be filled by the remaining director so elected, or his successor then in office, and the director so elected to fill such vacancy shall serve until the next meeting of stockholders for the election of directors.
The voting rights of the holders of the Series YYY Preferred Stock to elect directors as set forth above shall continue until all dividend arrearages on the Series YYY Preferred Stock have been paid or declared and set apart for payment. Upon the termination of such voting rights, the terms of office of all persons who may have been elected pursuant to such voting rights shall immediately terminate, and the number of directors of the Company shall be decreased by two.
Without the consent of the holders of shares entitled to cast at least two-thirds of the votes entitled to be cast by the holders of the total number of shares of Preferred Stock then outstanding, voting separately as a class without regard to series, with the holders of shares of Series YYY Preferred Stock being entitled to cast one vote per share, the Company may not:
(i) create any class of stock that shall have preference as to dividends or distributions of assets over the Series YYY Preferred Stock; or
(ii) alter or change the provisions of the Certificate of Incorporation (including any Certificate of Amendment or Certificate of Designation relating to the Series YYY Preferred Stock) so as to adversely affect the powers, preferences or rights of the holders of shares of Series YYY Preferred Stock;
PROVIDED, however, that if such creation or such alteration or change would adversely affect the powers, preferences or rights of one or more, but not all, series of Preferred Stock at the time outstanding, such alteration or change shall require consent of the holders of shares entitled to cast at least two-thirds of the votes entitled to be cast by the holders of all of the shares of all such series so affected, voting as a class.
7. LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or winding up of the Company, voluntary or involuntary, the holders of Series YYY Preferred Stock shall be entitled to receive out of the assets of the Company available for distribution to stockholders, before any distribution of assets shall be made to the holders of the Common Stock or of any other shares of stock of the Company ranking as to such distribution junior to the Series YYY Preferred Stock, a liquidating distribution in an amount equal to $1,000,000 per share (the "Liquidation Preference") plus an amount equal to any accrued and accumulated but unpaid dividends thereon to the date of final distribution. The holders of the Series YYY Preferred Stock shall not be entitled to receive the Liquidation Preference and such accrued dividends, however, until the liquidation preference of any other class of stock of the Company ranking senior to the Series YYY Preferred Stock as to rights upon liquidation, dissolution or winding up shall have been paid (or a sum set aside therefor sufficient to provide for payment) in full.
If, upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the assets available for distribution are insufficient to pay in full the amounts payable with respect to the Series YYY Preferred Stock and any other shares of stock of the Company ranking as to any such distribution on a parity with the Series YYY Preferred Stock, the holders of the Series YYY Preferred Stock and of such other shares shall share ratably in any distribution of assets of the Company in proportion to the full respective preferential amounts to which they are entitled.
After payment to the holders of the Series YYY
Preferred Stock of the full preferential amounts provided for in this
Section 7, the holders of the Series YYY Preferred Stock shall be
entitled to no further participation in any distribution of assets by
the Company.
Consolidation or merger of the Company with or into one or more other corporations, or a sale, whether for cash, shares of stock, securities or properties, of all or substantially all of the assets of the Company, shall not be deemed or construed to be a liquidation, dissolution or winding up of the Company within the meaning of this Section 7 if the preferences or special voting rights of the holders of shares of Series YYY Preferred Stock are not impaired thereby.
8. LIMITATION ON DIVIDENDS ON JUNIOR STOCK. So long as any Series YYY Preferred Stock shall be outstanding the Company shall not declare any dividends on the Common Stock or any other stock of the Company ranking as to dividends or distributions of assets junior to the Series YYY Preferred Stock (the Common Stock and any such other stock being herein referred to as "Junior Stock"), or make any payment on account of, or set apart money for, a sinking fund or other similar fund or agreement for the purchase, redemption or other retirement of any shares of Junior Stock, or make any distribution in respect thereof, whether in cash or property or in obligations or stock of the Company, other than a distribution of Junior Stock (such dividends, payments, setting apart and distributions being herein called "Junior Stock Payments"), unless the following conditions shall be satisfied at the date of such declaration in the case of any such dividend, or the date of such setting apart in the case of any such fund, or the date of such payment or distribution in the case of any other Junior Stock Payment:
(i) full cumulative dividends shall have been paid or declared and set apart for payment on all outstanding shares of Preferred Stock other than Junior Stock; and
(ii) the Company shall not be in default or in arrears with respect to any sinking fund or other similar fund or agreement for the purchase, redemption or other retirement of any shares of Preferred Stock other than Junior Stock;
PROVIDED, however, that any funds theretofore deposited in any sinking fund or other similar fund with respect to any Preferred Stock in compliance with the provisions of such sinking fund or other similar fund may thereafter be applied to the purchase or redemption of such Preferred Stock in accordance with the terms of such sinking fund or other similar fund regardless of whether at the time of such application full cumulative dividends upon shares of Series YYY Preferred Stock outstanding to the last dividend payment date shall have been paid or declared and set apart for payment by the Company.
9. RANKING OF STOCK OF THE COMPANY. In respect of the Series YYY Preferred Stock, any stock of any class or classes of the Company shall be deemed to rank:
(a) prior to the shares of Series YYY Preferred Stock, either as to dividends or upon liquidation, if the holders of such stock shall be entitled to either the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, as the case may be, in preference or priority to the holders of shares of the Series YYY Preferred Stock;
(b) on a parity with shares of the Series YYY Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates, redemption amounts per share or liquidation values per share or sinking fund provisions, if any, are different from those of the Series YYY Preferred Stock, if the holders of such stock shall be entitled to either the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, as the case may be, in proportion to their respective dividend rates or liquidation values, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of the Series YYY Preferred Stock, provided in any such case such stock does not rank prior to the Series YYY Preferred Stock; and
(c) junior to shares of the Series YYY Preferred Stock, as to dividends and upon liquidation, if such stock shall be Common Stock or if the holders of shares of the Series YYY Preferred Stock shall be entitled to receipt of dividends and of amounts distributable upon dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, as the case may be, in preference or priority to the holders of such stock.
The Series YYY Preferred Stock is on a parity with the 6.365% Cumulative Preferred Stock, Series F, 6.213% Cumulative Preferred Stock, Series G, 6.231% Cumulative Preferred Stock, Series H, 5.864% Cumulative Preferred Stock, Series M, Adjustable Rate Cumulative Preferred Stock, Series Q, Adjustable Rate Cumulative Preferred Stock, Series R, Fixed/Adjustable Rate Cumulative Preferred Stock, Series V, Cumulative Adjustable Rate Preferred Stock, Series Y and 5.321% Cumulative Preferred Stock, Series YY of the Company, heretofore authorized for issuance by the Company.
10. WAIVER, MODIFICATION AND AMENDMENT. Notwithstanding any other provisions relating to the Series YYY Preferred Stock, any of the rights or benefits of the holders of the Series YYY Preferred Stock may be waived, modified or amended with the consent of the holders of all of the then outstanding shares of the Series YYY Preferred Stock. Any such waiver, modification or amendment shall be deemed to have the same effect as satisfaction in full of any such right or benefit as though actually received by such holders.
Citigroup Inc. has caused this Certificate to be duly executed by its Deputy Treasurer this 27th day of February, 2002.
CITIGROUP INC.
By /s/ Firoz B. Tarapore
------------------------------
Firoz B. Tarapore
Deputy Treasurer
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Exhibit 10.01
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement is made and entered into as of November 16, 2001 by and between Citigroup Inc., a Delaware corporation (together with its direct and indirect successors, the "COMPANY"), and Sanford I. Weill ("WEILL").
WHEREAS, Commercial Credit Company, a predecessor to the Company ("CCC"), previously entered into an Employment Agreement with Weill dated as of December 31, 1987; and
WHEREAS, the Company and Weill desire to amend and restate such Employment Agreement (as so amended and restated, this "AGREEMENT") to provide for a continuing relationship.
NOW THEREFORE, the Company and Weill do hereby agree as follows:
1. EMPLOYMENT. The Company agrees to employ Weill on a full time basis as its Chairman of the Board and Chief Executive Officer. Weill shall have in such positions all of the duties, responsibilities and powers afforded to such officers under the Articles of Incorporation and By-laws of the Company, as in effect from time to time. Weill agrees to render the best services and efforts that he is capable of in connection with the performance of such duties and responsibilities.
2. PERSONAL ACTIVITIES OF WEILL. Notwithstanding anything to the contrary contained in this Agreement, nothing in this Agreement shall preclude Weill from devoting reasonable periods of time to: (i) serving as a director or member of a committee of any organization which does not involve a material conflict of interest with the interests of the Company; (ii) engaging in charitable and community activities; or (iii) managing his personal investments; PROVIDED, HOWEVER, that such activities do not interfere with the performance of his employment duties and responsibilities under this Agreement.
3. EMPLOYMENT TERM. The employment relationship created by this Agreement shall commence as of the date of this Agreement and shall continue until December 31, 2001. Such term shall automatically be renewed for successive one-year periods beginning January 1, 2002, unless either party gives written notice of non-renewal at least 60 days prior to any December 31 expiration (such term, including any automatic renewal thereof, the "EMPLOYMENT TERM").
4. EMPLOYMENT COMPENSATION.
(a) In consideration for all employment services rendered to the Company under this Agreement, the Company agrees to pay to Weill an annual salary at a rate to be determined from time to time by the Board of Directors of the Company or an authorized committee thereof (including any such determinations made prior to the effective date of this Agreement); PROVIDED that any reduction in such salary may only be made with the prior written consent of Weill. Such annual salary
shall be payable in accordance with the Company's regular payroll procedures.
(b) Weill shall be entitled to receive such incentive payments, on an annual and/or special basis, as may be determined from time to time by the Board of Directors of the Company or an authorized committee thereof (including any such determinations made prior to the effective date of this Agreement). Such incentive payments may but need not be part of incentive programs established generally for senior officers of the Company.
(c) Weill shall be entitled to participate in such employee benefit programs as may be determined from time to time by the Board of Directors of the Company or an authorized committee thereof (including any such determinations made prior to the effective date of this Agreement).
(d) (i) All stock options granted to Weill after
the date of this Agreement (including any
reload stock options) shall provide, and
(ii) all stock options held by Weill as of
the date of this Agreement shall be amended
to provide, that such options shall (x)
immediately vest on his Retirement (as
defined in Section 5(a) below) and (y)
subject to Section 7(b)(i)(y) below, remain
exercisable for their full respective terms
following any Retirement, except, in the
case of any stock options held as of the
date of this Agreement, if the same would
result in an accounting charge to the
Company, as determined by the Company's
outside accounting firm.
5. TERMINATION OF EMPLOYMENT.
(a) Method of Termination. The employment relationship created by this Agreement may be terminated prior to the end of the Employment Term as follows:
(i) By the Company, in the event of the death of Weill.
(ii) By the Company, in the event of the illness, physical or mental disability or other incapacity of Weill, if such incapacity or disability renders Weill unable to render those services to the Company which he is obligated to perform pursuant to the terms of this Agreement.
(iii) By the Company, upon the giving of at least 90 days prior written notice, in the event Weill refuses or neglects, in any material respect, to attend to the performance of his duties and responsibilities in accordance with the provisions of this Agreement (other than by reason of illness or disability as described in Section 5(a)(ii) above).
(iv) By the Company, for cause (meaning, for purposes hereof, fraud or the conviction of any crime constituting a felony), effective immediately.
(v) By the Company, upon the giving of at least 120 days prior written notice, without cause.
(vi) By Weill, upon the giving of at least 30 days prior written notice, in the event of a material breach by the Company of any of its obligations under this Agreement.
(vii) In the event of the written consent of both parties hereto, effective as of the date specified in such written consent.
Any termination of Weill's employment pursuant to Sections 5(a)(ii), 5(a)(v), 5(a)(vi) or 5(a)(vii) above or pursuant to a notice of non-renewal given by the Company as described in Section 3 above shall be deemed a "RETIREMENT" for purposes of this Agreement.
(b) Termination Compensation. The following provisions shall apply in the event of the termination of the employment relationship created by this Agreement:
(i) In the event of a termination pursuant to Section 5(a)(i) above, the Company shall pay to Weill (or his executor or administrator, as the case may be) the annual salary and employee benefits in effect immediately prior to such termination through the end of the year during which such termination occurs or for six months following such termination, whichever shall be greater, and such additional payments relating to incentive, death, retirement or other matters as may be determined to be appropriate by the Board of Directors of the Company or an authorized committee thereof. Any stock options held by Weill shall immediately vest and become exercisable, and any restrictions on shares of restricted stock held by Weill as of the date of such termination shall immediately lapse.
(ii) In the event of a termination pursuant to Section 5(a)(ii) above, subject to Weill's compliance with the covenants set forth in Section 7(a) below, the Company shall continue to pay to Weill (or his legal guardian, as the case may be) the annual salary and employee benefits in effect immediately prior to such termination through the end of the year during which such termination occurs or for six months following such termination, whichever shall be greater, and such additional payments relating to incentive, disability, retirement or other matters as may be determined to be appropriate by the Board of Directors of the Company or an authorized committee thereof. In addition, Weill shall have the rights regarding Retirement as described in Section 5(b)(vi) below.
(iii) In the event of a termination
pursuant to Sections 5(a)(iii) or
5(a)(iv) above or any termination
by Weill other than pursuant to
Section 5(a)(vi) above, the Company
shall pay to Weill his annual
salary and employee benefits in
effect immediately prior to such
termination through the effective
date of such termination. In
addition, Weill shall have such
rights, if any, to further vesting
and exercise of his stock options
or lapse of the restrictions on any
shares of his restricted stock as
are provided under the Company's
plan(s) under which such options or
stock were granted, as then
applicable.
(iv) In the event of a termination pursuant to Sections 5(a)(v) or 5(a)(vi) above, the Company shall, within 15 days after such termination, pay to Weill a lump sum amount in cash equal to the sum of (x) his annual salary in effect immediately prior to such termination through the effective date of such termination and (y) the amount paid as his annual bonus in respect of the Company's fiscal year prior to the fiscal year in which the effective date of such termination occurs, prorated for the period of his employment during the fiscal year in which the effective date of such termination occurs. In addition, Weill shall have the rights regarding Retirement as described in Section 5(b)(vi) below.
(v) In the event of a termination pursuant to Section 5(a)(vii) above or pursuant to a notice of non-renewal given by the Company as described in Section 3 above, Weill shall have the rights regarding Retirement as described in Section 5(b)(vi) below.
(vi) If a termination of Weill's employment is deemed a Retirement for purposes of this Agreement, then, commencing upon such Retirement and subject to Weill's compliance with the covenants set forth in Section 7(a) below, (x) the Company shall provide to Weill a supplemental pension benefit equal to a $350,000 lifetime annuity, with such actuarially equivalent alternative forms of benefit, such as joint and survivor annuities, but excluding lump sum, as permitted under and as calculated under the Primerica Corporation Supplemental Retirement Plan (as amended from time to time), (y) any stock options held by Weill as of the date of such Retirement shall be treated in accordance with their terms (including, without limitation, the terms specified in Section 4(d) above) and (z) any shares of restricted stock held by Weill as of the date of such Retirement shall be governed by the Company's plan(s) under which such stock was granted, as then applicable.
(vii) Weill shall not be obligated to mitigate any payments due from the Company under this Agreement or any damages he may suffer as a result of a breach or termination of this Agreement by the Company, and there shall be no set-off to any of the Company's obligations of payment under this Agreement for any reason whatsoever.
6. CONSULTING.
(a) Consulting. Weill agrees that for a period
of ten years following his Retirement
(unless such period is extended by the
parties hereto, or shortened by Weill's
death, his total and permanent inability to
provide the services set forth in this
Section 6(a) or his breach of any of the
covenants set forth in Section 7(a) below)
(such period, as may be so extended or
shortened, the "CONSULTING TERM"), when and
as requested by the Chief Executive Officer
of the Company and subject to his reasonable
availability, he shall provide consulting
services and advice to the Company and shall
participate in external activities and
events for the benefit of the Company for up
to 45 days per year.
(b) Fees and Expenses. In return for Weill's willingness to continue to help create value for the Company's shareholders during his Retirement, and in return for the foregoing commitments by Weill, the Company shall pay Weill, for consulting services performed and for participation in external activities or events at the request of the Chief Executive Officer of the Company, a daily fee, for the days Weill so renders services, equal to his daily salary rate at the time of his Retirement. The Company shall also reimburse Weill, upon the receipt of appropriate documentation, for reasonable expenses which he incurs in providing such services at the request of the Chief Executive Officer.
7. COVENANTS.
(a) Covenants. Commencing upon Retirement and for the remainder of his life, Weill agrees to the following covenants:
(i) Not to engage in any business in
which the Company or its affiliates
is engaged (including by performing
services for or soliciting to
perform services for, directly or
indirectly, either personally or as
an employee, agent, partner,
service member, stockholder,
investor, officer or director of,
or consultant to, any entity or
person) and not to otherwise engage
in conduct that is in material
competition with the Company or its
affiliates; IT BEING UNDERSTOOD
that for purposes of this Section
7(a)(i), Weill shall not be deemed
to be (x) engaged in the investment
management business or to be in
material competition with the
Company to the extent that he
manages assets, directly or
indirectly, for charitable or civic
causes, for himself and/or for a DE
MINIMIS number of family members
and personal friends; or (y) a
stockholder or investor in a
competing entity if his record and
beneficial ownership amount to not
more than 1% of the outstanding
capital stock of any company
subject to the periodic and other
reporting requirements of the
Securities Exchange Act of 1934, as
amended;
(ii) Not to, directly or indirectly, (x) hire or attempt to hire or induce any employee, agent, insurance agent, insurance broker, broker-dealer of the Company or it affiliates to be employed or perform services elsewhere (or solicit to perform services elsewhere) or (y) solicit the trade of any current or prospective customer or supplier of the Company or its affiliates;
(iii) Not to engage in conduct that is materially injurious to the Company or its affiliates, monetarily or otherwise;
(iv) Not to disclose or misuse any confidential information pertaining to the Company or its affiliates, except as is required to be disclosed by Weill (x) pursuant to judicial process, (y) to any government or agency or department of any government or (z) pursuant to applicable law;
(v) Not to disparage the Company or its affiliates or any of their respective officers or directors, products or services; and
(vi) To reasonably assist and cooperate with the Company or its affiliates in connection with the defense or prosecution of any claim that may be made against or by the Company or its affiliates, or in connection with any ongoing or future investigation or dispute or claim of any kind involving the Company or its affiliates (including through the appearance at any reasonably necessary proceeding or the execution of any reasonably necessary document), to the extent such claims, investigations or proceedings relate to services performed or required to be performed by Weill, pertinent knowledge possessed by Weill, or any act or omission by Weill;
PROVIDED, HOWEVER, that a departure from any of the foregoing covenants where such departure is inadvertent and isolated and is promptly cured upon written notice (if such departure is susceptible to cure) shall not constitute a breach of such covenant for purposes of this Agreement.
(b) Effect of a Breach.
(i) If it is determined that Weill has
breached any covenant set forth in
Section 7(a) above, then, in
addition to any right or remedy
that the Company has available
under any plan or other
compensation arrangement that is
applicable to Weill, Weill shall
(x) forfeit his remaining
supplemental pension benefit as
described in Section 5(b)(vi)
above; (y) forfeit the right to the
further continued exercise of stock
options as described in Section
4(d)(y) above; and (z) forfeit any
further perquisites as described in
Section 7(e) below.
(ii) In addition, the Company shall have
available, in addition to any other
right or remedy available, the
right to obtain an injunction from
any court of competent jurisdiction
restraining such breach and to
specific performance of such
covenant, except with respect to
any covenant as to which Weill may
and does "opt out" (as provided in
Section 7(c) below). Weill further
agrees that no bond or other
security will be required in
obtaining such equitable relief,
and he hereby consents to the
issuance of such injunction and to
the ordering of specific
performance; PROVIDED, HOWEVER,
that such consent shall neither
limit the right of Weill to contest
the validity or propriety of any
such determination nor create any
presumption that he has, in fact,
breached such covenant.
(c) "Opt-Out". After the expiration of ten years following Retirement, Weill may (in writing or by his actions) effectively "opt out" of the covenants set forth in Sections 7(a)(i), 7(a)(ii) or 7(a)(iii) above (for the avoidance of doubt, any such "opting out" shall not apply to any of the covenants set forth in Sections 7(a)(iv), 7(a)(v) or 7(a)(vi) above). Any such "opt out" shall be treated as if it were a breach for purposes of Section 7(b) above. Determination that Weill has, by his actions, "opted out" and therefore breached any of the covenants set forth in Section 7(a) above may only be made in accordance with Section 7(d) below.
(d) Determination of a Breach. For purposes of Sections 7(b)(i) and 7(c) above, determination that a breach of any of the covenants set forth in Section 7(a) above has occurred may only be made (x) by the Board of Directors of the Company and (y) after appropriate due process is afforded to Weill.
(e) Continued Perquisites. In consideration of and subject to Weill's compliance with his commitments set forth in Section 6(a) above and with the covenants set forth in Section 7(a) above, commencing upon Retirement and for the remainder of his life, Weill shall have access to and use of each of the following Company facilities and services comparable to those provided to him prior to his Retirement, on the same basis as such facilities and services were provided to him prior to his Retirement: Company aircraft, car and driver, office (in a location reasonably selected by the Board of Directors of the Company) and secretary and security arrangements. The Company's obligations set forth in this Section 7(e) shall apply irrespective of Weill's incapacitation subsequent to his Retirement to perform services under this Agreement.
8. MISCELLANEOUS.
(a) Amendment; Entire Agreement. Except as may be explicitly provided for in any other agreement between the Company and Weill which specifically references this Agreement and explicitly expresses an intention to amend, supplement or clarify this Agreement, this Agreement constitutes the entire understanding between the parties to this Agreement with respect to the subject matter of this Agreement and supersedes all previous oral and written negotiations, commitments, writings and understandings of the parties hereto with respect to the matters described in this Agreement.
(b) Governing law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the state of Delaware.
(c) Notices. All notices to be delivered pursuant to the provisions of this Agreement shall be given by telex or by notice in writing, hand delivered or sent by registered or certified mail, to the parties hereto at the following addresses:
To the Company:
Citigroup Inc.
399 Park Avenue
New York, New York 10043
Attention: Office of the General Counsel
or to such other address as the Company shall designate in a written notice to Weill from time to time; and
To Weill:
Sanford I. Weill
to such address as Weill
shall designate in a
written notice to the
Company from time to time.
All such notices shall be effective upon
delivery to the designated address.
(d) Severability. Each provision of this Agreement is intended to be severable. If any term or provision of this Agreement shall be determined by a court of competent jurisdiction to be illegal or invalid for any reason whatsoever then such provision shall be severed from this Agreement, shall not affect the validity of the remainder of this Agreement and shall be replaced by a provision reflecting, to the extent legally permissible, the original intent of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Employment Agreement as of the day and year first above written.
Agreed and accepted: CITIGROUP INC.
/s/ Sanford I. Weill /s/ Charles O. Prince, III
----------------------------------- -----------------------------------
Sanford I. Weill By: Charles O. Prince, III
Title: Corporate Secretary
WITNESS
/s/ Arthur Zankel
--------------------------------
Arthur Zankel
|
Exhibit 10.05
CITIGROUP INC.
AMENDED AND RESTATED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS (THE "PLAN")
(AS OF DECEMBER 31, 2001)
Section 1. ELIGIBILITY. Each member of the Board of Directors of Citigroup Inc. (the "Company") or one of its subsidiaries, if so designated by the Board of Directors, who is not an employee of the Company or any of its subsidiaries (an "Eligible Director") is eligible to participate in the Plan.
Section 2. ADMINISTRATION. The Plan shall be administered, construed and interpreted by the Board of Directors of the Company. Pursuant to such authorization, the Board of Directors shall have the responsibility for carrying out the terms of the Plan, including but not limited to the determination of the amount and form of payment of the annual retainer and any additional fees to be paid to all Eligible Directors (the "Annual Fixed Director Compensation"). To the extent permitted under the securities laws applicable to compensation plans including, without limitation, the requirements of Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or under the Internal Revenue Code of 1986, as amended (the "Code"), the Personnel, Compensation and Directors Committee of the Board of Directors, or a subcommittee of the Personnel, Compensation and Directors Committee, may exercise the discretion granted to the Board under the Plan, provided that the composition of such Committee or subcommittee shall satisfy the requirements of Rule 16b-3 under the Exchange Act, or any successor rule or regulation. The Board of Directors may also designate a plan administrator to manage the record keeping and other routine administrative duties under the Plan.
Section 3. STOCK OPTIONS. In addition to Annual Fixed Director Compensation, the Board of Directors may make an annual grant to Eligible Directors of options ("Annual Stock Option Grant") to purchase common stock of the Company par value $.01 per share ("Common Stock"). The Annual Stock Option Grant shall be made under, and pursuant to the terms and conditions of, the Citigroup 1999 Stock Incentive Plan or any successor plan.
Section 4. ANNUAL FIXED DIRECTOR COMPENSATION. Payment of Annual Fixed Director Compensation shall be made quarterly, on the first business day following the end of the quarter for which the compensation is payable, to each Eligible Director who served as a director during at least one-half of such quarter and who was a director on the last day of such quarter.
Each Eligible Director may elect to receive up to fifty percent (50%) of each quarterly payment of Annual Fixed Director Compensation in cash. The balance of each quarterly payment shall be paid in shares of common stock, par value $.01 of the Company ("Common Stock") or in the form of stock options, as each Eligible Director elects. Payment in stock options shall be under the same plan and pursuant to the same terms and conditions as the Annual Stock Option Grant. If
an Eligible Director does not elect to receive a percentage of his or her Annual Fixed Director Compensation in cash or stock options, such compensation shall be paid entirely in Common Stock.
The number of shares of the Company's Common Stock to be transferred to
the Eligible Director in respect of each quarterly installment of Annual Fixed
Director Compensation shall be determined in the manner set forth in paragraph
6(a), and such shares shall not be transferred or sold by such Eligible Director
for a period of six months following the date of grant.
Section 5. ELECTION TO DEFER.
(a) TIME OF ELECTION. As soon as practicable prior to the beginning of a calendar year, an Eligible Director may elect to defer the Common Stock component of Annual Fixed Director Compensation pursuant to the Plan by directing that such Common Stock which otherwise would have been payable in accordance with paragraph 4 above during such calendar year and succeeding calendar years shall be credited to a deferred compensation account (the "Director's Account"). Under a valid election, such deferred compensation shall be payable in accordance with paragraph 6(a) below. Any person who shall become an Eligible Director during any calendar year, and who was not an Eligible Director of the Company prior to the beginning of such calendar year, may elect, within thirty (30) days after his or her term begins, to defer payment of the Common Stock component of his or her Annual Fixed Director Compensation earned during the remainder of such calendar year and for succeeding calendar years. The cash component of Annual Fixed Director Compensation may not be deferred.
(b) FORM AND DURATION OF ELECTION. An election to defer the Common Stock component of Annual Fixed Director Compensation shall be made by written notice executed by the Eligible Director and filed with the Secretary of the Company. Such election shall continue until the Eligible Director terminates such election by subsequent written notice filed with the Secretary of the Company. Any such election to terminate deferral shall become effective for the calendar quarter following receipt of the election form by the Company and shall only be effective with respect to the Common Stock component of Annual Fixed Director Compensation payable for services rendered as an Eligible Director thereafter. Amounts credited to the Director's Account prior to the effective date of termination shall not be affected by such termination and shall be distributed only in accordance with the terms of the Plan.
(c) CHANGE OF ELECTION. An Eligible Director who has terminated his or her election to defer the Common Stock component of Annual Fixed Director Compensation hereunder may thereafter make another election in accordance with paragraph 5(a) to defer such compensation for the calendar year subsequent to the filing of such election and succeeding calendar years.
Section 6. THE DIRECTOR'S ACCOUNT. Shares of Common Stock that an Eligible Director has elected to defer under the Plan shall be credited to the Director's Account as follows:
(a) As of each date that a quarterly installment of the Annual Fixed Director Compensation would otherwise be payable, there shall be credited to the Director's Account the number of full shares of the Company's Common Stock obtained by multiplying the percentage such Eligible Director has elected to receive in shares of Common Stock by the total amount of Annual Fixed Director Compensation allocable to such calendar quarter, and then by dividing the result by the average of the closing price of the Company's Common Stock on the New York Stock Exchange Inc. on the last ten (10) trading days of the calendar quarter for which such Common Stock would otherwise be payable. If the applicable percentage of Annual Fixed Director Compensation for the calendar quarter is not evenly divisible by such average closing price of the Company's Common Stock, the balance shall be credited to the Director's Account in cash.
(b) At the end of each calendar quarter, there shall be credited to the Director's Account an amount equal to the cash dividends that would have been paid on the number of shares of Common Stock credited to the Director's Account as of the dividend record date, if any, occurring during such calendar quarter as if such shares had been shares of issued and outstanding Common Stock on such record date, and such amount shall be treated as reinvested in additional shares of Common Stock on the dividend payment date.
(c) Cash amounts credited to the Director's Account pursuant to subparagraphs (a) and (b) above shall accrue interest commencing from the date the cash amounts are credited to the Director's Account at a rate per annum to be determined from time to time by the Company. Amounts credited to the Director's Account shall continue to accrue interest until distributed in accordance with the Plan. An Eligible Director may be given the opportunity to make a written election to treat the existing cash balance and interest accrued thereon as invested in additional shares of Common Stock. The timing of the effectiveness of such election shall be subject to the Company's discretion.
(d) An Eligible Director shall not have any interest in the cash or Common Stock in his or her Director's Account until such cash or Common Stock is distributed in accordance with the Plan.
Section 7. DISTRIBUTION FROM ACCOUNTS.
(a) FORM OF ELECTION. At the time an Eligible Director makes an election to defer receipt of Annual Fixed Director Compensation pursuant to paragraphs 5(a) or 5(c), such Director shall also file with the Secretary of the Company a written election with respect to the distribution of the aggregate amount of cash and shares credited to the Director's Account pursuant to such election. An Eligible Director may elect to receive such amount in one lump-sum payment or in a number of approximately equal annual installments (provided the payout period does not exceed 15 years). The lump-sum payment or the first installment shall be paid as of (i) the first business day of any calendar year subsequent to the date the Annual Fixed Director Compensation would otherwise be payable, as specified by the Director, (ii) the first business day of the calendar quarter immediately following the cessation of the Eligible Director's service as a director of the Company or (iii) the earlier of (i) or (ii), as the Eligible Director may elect. Subsequent installments shall be
paid as of the first business day of each succeeding annual installment period until the entire amount credited to the Director's Account shall have been paid. A cash payment will be made with the final installment for any fraction of a share of Common Stock credited to the Director's Account.
(b) ADJUSTMENT OF METHOD OF DISTRIBUTION. An Eligible Director participating in the Plan may, prior to the beginning of any calendar year, file another written election with the Secretary of the Company electing to change the date and/or method of distribution of the aggregate amount of cash and shares of Common Stock to be credited to the Director's Account for services rendered as a director commencing with such calendar year. Amounts credited to the Director's Account prior to the effective date of such change (the "Prior Amounts") shall not be affected by such change and shall be distributed in accordance with the election then in effect with respect to the Prior Amounts, except as specified in this paragraph. An Eligible Director may elect to defer the date on which Prior Amounts are to be paid and/or extend the payout period if a written election to effect such change is filed with the Secretary of the Company at least one (1) year before such change is to take effect. An Eligible Director may also elect to accelerate the date on which the Prior Amounts are to be paid and/or shorten the payout period if a written election to effect such change is filed with the Secretary of the Company at least one (1) year before such change is to take effect. Notwithstanding the foregoing, in the event an Eligible Director suffers a severe financial hardship outside the control of such Director, as determined by the Company, the Eligible Director may elect to advance or defer the date of distribution of his or her Director's Account or change the method of distribution thereof.
(c) CHANGE OF CONTROL. Notwithstanding anything to the contrary contained herein, upon a "Change of Control" (as defined below), the full number of shares of Common Stock and cash in each Director's Account shall be immediately funded and be distributable on the later of the date six months and one day following the "Change of Control" or the distribution date(s) previously elected by an Eligible Director. For purposes of this Plan, a "Change of Control" shall mean the occurrence of any of the following, unless such occurrence shall have been approved or ratified by at least a two-thirds (2/3) vote of the Continuing Directors (defined below): (i) any person within the meaning of Sections 13(d) and 14(d) of the Exchange Act, shall have become the beneficial owner, within the meaning of Rule 13d-3 under the Exchange Act, of shares of stock of the Company having twenty-five percent (25%) or more of the total number of votes that may be cast for election of the directors of the Company; or (ii) there shall have been a change in the composition of the Board of Directors such that at any time a majority of the Board of Directors shall have been members of the Board for less than twenty-four (24) months, unless the election of each new director who was not a director at the beginning of the period was approved by a vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of such period, or who were approved as directors pursuant to the provisions of this paragraph (the "Continuing Directors").
Section 8. DISTRIBUTION ON DEATH. If an Eligible Director should die before all amounts credited to the Director's Account shall have been paid in accordance with the election referred to in paragraph 7, the balance in such Director's Account as of the date of such Director's death shall be
paid following such Director's death, in accordance with the method of payment elected by the Eligible Director, to the beneficiary designated in writing by such Director. Such balance shall be paid to the estate of the Eligible Director if (a) no such designation has been made or (b) the designated beneficiary shall have predeceased the Director and no further beneficiary designation has been made.
Section 9. MISCELLANEOUS.
(a) The right of an Eligible Director to receive any amount in the Director's Account shall not be transferable or assignable by such Director, except by will or by the laws of descent and distribution, and no part of such amount shall be subject to attachment or other legal process.
(b) Except as otherwise set forth herein, the Company shall not be required to reserve or otherwise set aside funds or shares of Common Stock for the payment of its obligations hereunder. The Company shall make available as and when required a sufficient number of shares of Common Stock to meet the requirements arising under the Plan.
(c) The establishment and maintenance of, or allocation and credits to, the Director's Account shall not vest in the Eligible Director or his beneficiary any right, title or interest in and to any specific assets of the Company. An Eligible Director shall not have any dividend or voting rights or any other rights of a stockholder (except as expressly set forth in paragraph 6(b) with respect to dividends and as provided in subparagraph 9(f) below) until the shares of Common Stock credited to a Director's Account are distributed. The rights of an Eligible Director to receive payments under this Plan shall be no greater than the right of an unsecured general creditor of the Company.
(d) The Plan shall continue in effect until terminated by the
Board of Directors. The Board of Directors may at any time amend or terminate
the Plan; provided, however, that (i) no amendment or termination shall impair
the rights of an Eligible Director with respect to amounts then credited to the
Director's Account; (ii) the provisions of the Plan relating to eligibility, the
amount and price of securities to be awarded, the timing of and the amount of
Annual Fixed Director Compensation awards and Annual Stock Option Grant shall
not be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code of 1986, as amended, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder; and
(iii) no amendment shall become effective without approval of the stockholders
of the Company if such stockholder approval is required to enable the Plan to
satisfy applicable state or Federal statutory or regulatory requirements.
(e) Each Eligible Director participating in the Plan will receive an annual statement indicating the amount of cash and number of shares of Common Stock credited to the Director's Account, as well as the number of outstanding stock options, as of the end of the preceding calendar year.
(f) If adjustments are made to outstanding shares of Common Stock as a result of stock dividends, stock splits, recapitalizations, mergers, consolidations and similar transactions, an appropriate adjustment shall be made in the number of shares of Common Stock credited to the Director's Account.
(g) Shares of Common Stock that may be granted under the Plan shall be subject to adjustment upon the occurrence of adjustments to the outstanding Common Stock described in paragraph 9(f) hereof.
(h) The validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Delaware.
(i) All claims and disputes between an Eligible Director and the Company arising out of the Plan shall be submitted to arbitration in accordance with the then current arbitration policy of the Company. Notice of demand for arbitration shall be given in writing to the other party and shall be made within a reasonable time after the claim or dispute has arisen. The award rendered by the arbitrator shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. The provisions of this Section 9(i) shall be specifically enforceable under applicable law in any court having jurisdiction thereof.
(j) If any term or provision of this Plan or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, then the remainder of the Plan, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision hereof shall be valid and be enforced to the fullest extent permitted by applicable law.
Exhibit 10.17.3
AMENDMENT TO THE CITICORP DEFERRED COMPENSATION PLAN
As of September 28, 2001 (except as otherwise expressly set forth below), the Citicorp Deferred Compensation Plan (the "Plan"), which became effective October 1995, is hereby amended as follows:
1. Effective November 1, 2000, the second sentence of paragraph 5.3 of the Plan was amended to read in its entirety as follows:
"As of November 1, 2000, the valuation date for determining credits to lump sum payments following Retirement and to installment payments shall be December 31 of the year preceding the year in which such payments will be made."
2. The third sentence of paragraph 6.2 of the Plan shall be amended to read in its entirety as follows:
"Payment of Mandatory Deferral Account Balances under this paragraph 6.2 shall not apply to any portion of the Mandatory Deferral Account for which the Participant elected, prior to January 1, 2000, a continuing deferral under paragraph 6.7."
3. The third sentence of paragraph 6.3.2 of the Plan, which reads "The
participant shall not be allowed to elect a continuing deferral under
Section 6.7," shall be deleted in its entirety.
4. The third sentence of paragraph 6.4 of the Plan, which reads "Neither the Participant nor the Participant's Beneficiary shall be allowed to elect a continuing deferral under paragraph 6.7," shall be deleted in its entirety.
5. The third sentence of paragraph 6.5 of the Plan, which reads "The Participant shall not be allowed to elect a continuing deferral under paragraph 6.7," shall be deleted in its entirety.
6. The third sentence of paragraph 6.6 of the Plan, which reads "The Participant shall not be allowed to elect a continuing deferral under paragraph 6.7," shall be deleted in its entirety.
7. Effective January 1, 2000, paragraph 6.7 of the Plan was deleted in its entirety and replaced with the following new paragraph 6.7:
"As of January 1, 2000, Participants may not elect to postpone distribution of the Mandatory Deferral Account Balance attributable to such deferred Variable Compensation Award by having such amount credited to a Voluntary Deferral Account."
8. Effective January 1, 2001, the following new paragraph 6.8 of the Plan was adopted:
"As of January 1, 2001, if a Participant is re-hired by the Corporation after leaving the Corporation for any reason, the Participant's account will be adjusted as of the re-hire date and the Participant's employment status in the Plan will be returned to active. The account will be adjusted by taking the current dollar value of the account by plan year and dividing it by the average of the high and low price of Citigroup common stock on the re-hire date in order to reassign stock units. However, if the calculation results in a higher number of stock units than the participant had upon termination, the account will be reinstated with the same number of stock units that the Participant had upon termination. Once stock units have been reassigned, the account will be credited with dividend equivalents on a quarterly basis and reflect the market performance of Citigroup common stock. The Corporation shall pay to the Participant the Mandatory Deferral Account Balance accrued as per the Normal Payment provisions in paragraph 6.2."
Exhibit 10.22.2
1. Section 5(d) of the Plan is hereby amended to add the following language at the end of such section:
Once an election has been made, a Director may thereafter defer or
accelerate the date on which deferred Compensation shall be paid or shall
commence to be paid if a written election to effect such change is filed
with the Secretary in the manner set forth in Section 10(f) at least one
(1) year before such change is to take effect.
2. The second sentence of Section 7(c) of the Plan is hereby deleted and the following language is hereby substituted in its place:
Such election shall be filed with the Secretary at least one (1) year prior to the date elected under Section 5(d).
3. Section 7(c) of the Plan is further amended to add the following language at the end of such Section:
Once an election has been made, a Director may thereafter extend or shorten the payout period if a written election to effect such change is filed with the Secretary in the manner set forth in Section 10(f) at least one (1) year before such change is to take effect.
4. Except as specifically modified herein, all of the terms and conditions of the Plan shall remain in full force and effect.
Exhibit 10.23.2
Citigroup Inc.
399 Park Avenue
New York, NY 10043
February 6, 2002
Robert E. Rubin
New York, NY
Dear Bob:
I am writing on behalf of Citigroup Inc. to confirm certain changes to your employment agreement dated October 26, 1999:
(i) the guaranty of a level of incentive compensation for 2001 is extended for 2002, and all of the provisions of the employment agreement relating to such incentive compensation (such as composition and manner of payment), including those designed to avoid the loss of deduction under Section 162(m) of the Internal Revenue Code, shall apply to such extended guaranty; and
(ii) the first paragraph under "Part B" of Schedule B is revised to read as follows:
"retirement, for which Mr. Rubin shall be eligible after reaching age 65, whereupon Mr. Rubin's combined age and service shall be deemed to equal 75 for purposes of all plans and programs of Citigroup (other than any pension plans sponsored by the Company or any of its affiliates)".
If the foregoing is consistent with our discussions, please sign in the space provided below.
Very truly yours,
Citigroup Inc.
By: /s/ Sanford I. Weill
-----------------------
Sanford I. Weill
|
Accepted and agreed
/s/ Robert E. Rubin --------------------------- Robert E. Rubin |
EXHIBIT 12.01
CITIGROUP INC.
CALCULATION OF RATIO OF INCOME TO FIXED CHARGES
(In Millions)
YEAR ENDED DECEMBER 31,
EXCLUDING INTEREST ON DEPOSITS: 2001 2000 1999 1998 1997
------ ------ ------ ------ ------
FIXED CHARGES:
INTEREST EXPENSE (OTHER THAN
INTEREST ON DEPOSITS) 20,262 23,253 17,764 18,997 17,645
INTEREST FACTOR IN RENT EXPENSE 444 416 292 417 321
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 20,706 23,669 18,056 19,414 17,966
------ ------ ------ ------ ------
INCOME:
INCOME BEFORE TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 21,897 21,143 18,151 11,085 12,305
FIXED CHARGES 20,706 23,669 18,056 19,414 17,966
------ ------ ------ ------ ------
TOTAL INCOME 42,603 44,812 36,207 30,499 30,271
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS 2.06 1.89 2.01 1.57 1.68
====== ====== ====== ====== ======
INCLUDING INTEREST ON DEPOSITS:
FIXED CHARGES:
INTEREST EXPENSE 31,965 36,638 28,674 30,692 27,299
INTEREST FACTOR IN RENT EXPENSE 444 416 292 417 321
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 32,409 37,054 28,966 31,109 27,620
------ ------ ------ ------ ------
INCOME:
INCOME BEFORE TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 21,897 21,143 18,151 11,085 12,305
FIXED CHARGES 32,409 37,054 28,966 31,109 27,620
------ ------ ------ ------ ------
TOTAL INCOME 54,306 58,197 47,117 42,194 39,925
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
INCLUDING INTEREST ON DEPOSITS 1.68 1.57 1.63 1.36 1.45
====== ====== ====== ====== ======
|
Note> On November 30, 2000, Citigroup Inc. completed its acquisition of Associates First Capital Corporation (Associates) in a transaction accounted for as a pooling of interests.
EXHIBIT 12.02
CITIGROUP INC.
CALCULATION OF RATIO OF INCOME TO FIXED CHARGES
INCLUDING PREFERRED STOCK DIVIDENDS
(In Millions)
YEAR ENDED DECEMBER 31,
EXCLUDING INTEREST ON DEPOSITS: 2001 2000 1999 1998 1997
------ ------ ------ ------ ------
FIXED CHARGES:
INTEREST EXPENSE (OTHER THAN
INTEREST ON DEPOSITS) 20,262 23,253 17,764 18,997 17,645
INTEREST FACTOR IN RENT EXPENSE 444 416 292 417 321
DIVIDENDS--PREFERRED STOCK 168 180 232 332 433
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 20,874 23,849 18,288 19,746 18,399
------ ------ ------ ------ ------
INCOME:
INCOME BEFORE TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 21,897 21,143 18,151 11,085 12,305
FIXED CHARGES (EXCLUDING PREFERRED
STOCK DIVIDENDS) 20,706 23,669 18,056 19,414 17,966
------ ------ ------ ------ ------
TOTAL INCOME 42,603 44,812 36,207 30,499 30,271
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS 2.04 1.88 1.98 1.54 1.65
====== ====== ====== ====== ======
INCLUDING INTEREST ON DEPOSITS:
FIXED CHARGES:
INTEREST EXPENSE 31,965 36,638 28,674 30,692 27,299
INTEREST FACTOR IN RENT EXPENSE 444 416 292 417 321
DIVIDENDS--PREFERRED STOCK 168 180 232 332 433
------ ------ ------ ------ ------
TOTAL FIXED CHARGES 32,577 37,234 29,198 31,441 28,053
------ ------ ------ ------ ------
INCOME:
INCOME BEFORE TAXES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 21,897 21,143 18,151 11,085 12,305
FIXED CHARGES (EXCLUDING PREFERRED
STOCK DIVIDENDS) 32,409 37,054 28,966 31,109 27,620
------ ------ ------ ------ ------
TOTAL INCOME 54,306 58,197 47,117 42,194 39,925
====== ====== ====== ====== ======
RATIO OF INCOME TO FIXED CHARGES
INCLUDING INTEREST ON DEPOSITS 1.67 1.56 1.61 1.34 1.42
====== ====== ====== ====== ======
|
Note> On November 30, 2000, Citigroup Inc. completed its acquisition of Associates First Capital Corporation (Associates) in a transaction accounted for as a pooling of interests.
Exhibit 21.01
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
ASSOCIATED MADISON COMPANIES, INC. Delaware
MID-AMERICA INSURANCE SERVICES, INC. Georgia
PFS SERVICES, INC. Georgia
PRIMERICA SHAREHOLDER SERVICES* Georgia
THE TRAVELERS INSURANCE GROUP INC. Connecticut
CITIINSURANCE INTERNATIONAL HOLDINGS INC. Delaware
CITIINSURANCE INTERNATIONAL LIFE HOLDINGS I INC. Delaware
CITIINSURANCE INTERNATIONAL LIFE HOLDINGS II INC. Delaware
CITIINSURANCE INTERNATIONAL PC HOLDINGS I INC. Delaware
CITIINSURANCE INTERNATIONAL PC HOLDINGS II INC. Delaware
THE PROSPECT COMPANY Delaware
PANTHER VALLEY, INC. New Jersey
THE TRAVELERS ASSET FUNDING CORPORATION Connecticut
THE TRAVELERS INSURANCE COMPANY Connecticut
190 S. LASALLE ASSOCIATES L.L.C.* Illinois
440 SOUTH LASALLE LLC Delaware
ADVANCE/VIRGINIA PORTFOLIO I LLC* Delaware
ADVANCE/CHEROKEE BUSINESS CENTER LLC* Delaware
ADVANCE/LOUDOUN PLAZA ONE LLC* Delaware
ADVANCE/OLD COURTHOUSE ROAD LLC* Delaware
AMERICAN FINANCIAL LIFE INSURANCE COMPANY Texas
CARLTON ARMS OF BRADENTON Florida
CREST FUNDING PARTNERS, L.P.* Delaware
CRIPPLE CREEK VENTURE PARTNER II, L.P.* Colorado
GREENWICH STREET CAPITAL PARTNERS, L.P.* Delaware
GREENWICH STREET INVESTMENTS, L.L.C. Delaware
GREENWICH STREET CAPITAL OFFSHORE FUND, LTD.* British Virgin Is.
GREENWICH STREET INVESTMENTS, L.P. New York
GRIPHON MARLINS INVESTORS LTD.* Florida
HOLLOW CREEK, L.L.C. Connecticut
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 1
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
STATION HILL, L.L.C. Connecticut
ONE FINANCIAL PLACE CORPORATION* Delaware
ONE FINANCIAL PLACE HOLDINGS, LLC* Delaware
ONE FINANCIAL PLACE, LP* Delaware
PLAZA LLC Connecticut
KEEPER HOLDINGS LLC* Delaware
CITISTREET LLC** Delaware
CITISTREET RETIREMENT SERVICES LLC New Jersey
AMERICAN ODYSSEY FUNDS MANAGEMENT LLC New Jersey
CITISTREET ASSOCIATES LLC Delaware
CITISTREET ADVISORS LLC New Jersey
CITISTREET ASSOCIATES AGENCY OF OHIO LLC Ohio
CITISTREET ASSOCIATES INSURANCE AGENCY OF MASSACHUSETTS LLC Massachusetts
CITISTREET ASSOCIATES OF ALABAMA LLC Alabama
CITISTREET ASSOCIATES OF HAWAII LLC Hawaii
CITISTREET ASSOCIATES OF MONTANA LLC Montana
CITISTREET ASSOCIATES OF TEXAS, INC. Texas
CITISTREET EQUITIES LLC New Jersey
COPELAND ASSOCIATES OF MONTANA, INC. Montana
CITISTREET FINANCIAL SERVICES LLC New Jersey
CITISTREET MORTGAGE SERVICES, INC. New Jersey
WELLSPRING RESOURCES, LLC Delaware
NETPLUS, LLC Connecticut
TRAVELERS ASSET MANAGEMENT INTERNATIONAL COMPANY LLC New York
TOWER SQUARE SECURITIES, INC. Connecticut
TOWER SQUARE SECURITIES INSURANCE AGENCY OF ALABAMA, INC. Alabama
TOWER SQUARE SECURITIES INSURANCE AGENCY OF MASSACHUSETTS, INC. Massachusetts
TOWER SQUARE SECURITIES INSURANCE AGENCY OF NEW MEXICO, INC. New Mexico
TOWER SQUARE SECURITIES INSURANCE AGENCY OF OHIO, INC. Ohio
TOWER SQUARE SECURITIES INSURANCE AGENCY OF TEXAS, INC. Texas
TRAVELERS DISTRIBUTION LLC Delaware
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 2
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
TRAVELERS INVESTMENT ADVISERS, INC. Delaware
PRIMERICA LIFE INSURANCE COMPANY Massachusetts
CITILIFE FINANCIAL LIMITED Ireland
NATIONAL BENEFIT LIFE INSURANCE COMPANY New York
PRIMERICA FINANCIAL SERVICES (CANADA) LTD. Canada
PFSL INVESTMENTS CANADA LTD. Canada
PRIMERICA LIFE INSURANCE COMPANY OF CANADA Canada
PRIMERICA CLIENT SERVICES INC. [CANADA] Canada
PRIMERICA FINANCIAL SERVICES LTD. Canada
RYAN/TRAVELERS KIERLAND, LLC Delaware
SSB PRIVATE SELECTIONS, LLC* Delaware
SALOMON SMITH BARNEY PRIVATE SELECTION FUND I, LLC* New York
THE TRAVELERS LIFE AND ANNUITY COMPANY Connecticut
TRAVELERS ANNUITY UK INVESTMENTS, LLC Delaware
TISHMAN SPEYER/TRAVELERS ASSOCIATES III, L.L.C. Delaware
TISHMAN SPEYER/TRAVELERS REAL ESTATE VENTURE III, L.L.C.* Delaware
TRAVELERS EUROPEAN INVESTMENTS LLC Connecticut
TRAVELERS HIGHLAND PARK, LLC Colorado
HIGHLAND PARK VENTURES, LLC Colorado
TRAVELERS INSURANCE UK INVESTMENTS, LLC Delaware
TRAVELERS INTERNATIONAL INVESTMENTS LTD. Cayman Is.
TRAVELERS OAKMONT LANE, LLC* Delaware
700 OAKMONT VENTURE LLC Delaware
TRAVELERS OPPORTUNITY FUND I, LLC Delaware
TISHMAN SPEYER/TRAVELERS ASSOCIATES Delaware
TRAVELERS OPPORTUNITY FUND II, LLC Delaware
TISHMAN SPEYER/TRAVELERS REAL ESTATE VENTURE, L.P.* Delaware
125 HIGH STREET, L.P.* Delaware
TST 375 HUDSON, L.L.C. Delaware
TST 525 WEST MONROE, L.L.C. Delaware
TST MOUNTAIN BAY, L.L.C. Delaware
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 3
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
TST ONE INDIANA, L.L.C. Delaware
TRAVELERS OPPORTUNITY FUND III ASSOCIATES, LLC* Delaware
TRAVELERS OPPORTUNITY FUND III, LLC* Delaware
TRAVELERS OPPORTUNITY FUND V (DOMESTIC), L.L.C.* Delaware
TISHMAN SPEYER/TRAVELERS U.S. REAL ESTATE VENTURE V, L.P.* Delaware
TRAVELERS OPPORTUNITY FUND V ASSOCIATES (DOMESTIC), L.L.C.* Delaware
TISHMAN SPEYER/TRAVELERS ASSOCIATES V (DOMESTIC), L.L.C.* Delaware
TRAVELERS SCHAUMBERG WINDY POINT LLC Delaware
WINDY POINT OF SCHAUMBERG LLC Delaware
TRAVELERS YORK ROAD LLC Delaware
YORK ROAD PROPERTIES LLC Delaware
TRIBECA DISTRESSED SECURITIES, L.L.C.* Delaware
TRIBECA MANAGEMENT, L.L.C. Delaware
TRICOUNTY GROVE Florida
UMBRELLA BEAR, INC. Florida
WT LEASING, INC. Delaware
TRAVELERS MORTGAGE SECURITIES CORPORATION Delaware
TRAVELERS PROPERTY CASUALTY CORP. Delaware
THE STANDARD FIRE INSURANCE COMPANY Connecticut
AE PROPERTIES, INC. California
BAYHILL RESTAURANT II ASSOCIATES California
INDUSTRY LAND DEVELOPMENT COMPANY California
INDUSTRY PARTNERS* California
COMMUNITY REHABILITATION INVESTMENT CORPORATION Connecticut
PRATT STREET, L.P.* Connecticut
STANDARD FIRE UK INVESTMENTS, LLC Delaware
THE AUTOMOBILE INSURANCE COMPANY OF HARTFORD, CONNECTICUT Connecticut
TRAVCAL SECURE INSURANCE COMPANY California
TRAVCAL INDEMNITY COMPANY California
TRAVELERS OPPORTUNITY FUND IV ASSOCIATES, L.L.C.* Delaware
TISHMAN SPEYER/TRAVELERS ASSOCIATES IV, L.L.C.* Delaware
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 4
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
TISHMAN SPEYER/TRAVELERS REAL ESTATE VENTURE IV, L.L.C.* Delaware
TRAVELERS OPPORTUNITY FUND IV, L.L.C.* Delaware
TRAVELERS OPPORTUNITY FUND V (INTERNATIONAL), L.L.C. Delaware
TRAVELERS OPPORTUNITY FUND V ASSOCIATES (INTERNATIONAL), L.L.C. Delaware
TST INTERNATIONAL FUND V, GP, LLC Delaware
TISHMAN SPEYER/TRAVELERS INTERNATIONAL REAL ESTATE VENTURE V, L.P.* Delaware
TRAVELERS PERSONAL SECURITY INSURANCE COMPANY Connecticut
TRAVELERS PROPERTY CASUALTY INSURANCE COMPANY Connecticut
TRAVELERS PROPERTY CASUALTY INSURANCE COMPANY OF ILLINOIS Illinois
THE TRAVELERS INDEMNITY COMPANY Connecticut
ASSOCIATES INSURANCE COMPANY Indiana
AFSC GENERAL AGENCY, INC. Texas
CAPCO GENERAL AGENCY, INC. [IL] Illinois
CAPCO GENERAL AGENCY, INC. [IN] Indiana
CAPCO GENERAL AGENCY, INC. [NY] New York
CAPCO GENERAL AGENCY, INC. [VA] Virginia
COMMERCIAL GUARANTY INSURANCE COMPANY Delaware
ASSOCIATES LLOYDS INSURANCE COMPANY Texas
BAP INVESTOR PINE, INC. Delaware
COMMERCIAL INSURANCE RESOURCES, INC. Delaware
GULF BROKERAGE SERVICES, INC. Delaware
GULF MARKETING SERVICES, INC. Delaware
THE OUTDOORSMAN AGENCY, INC. South Carolina
GULF INSURANCE COMPANY Connecticut
ATLANTIC INSURANCE COMPANY Texas
GULF GROUP LLOYDS Texas
GULF INSURANCE HOLDINGS UK LIMITED England
GULF INSURANCE COMPANY U.K. LIMITED England
GULF UNDERWRITING HOLDINGS LIMITED England
GULF UNDERWRITING LIMITED England
GULF RISK SERVICES, INC. Delaware
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 5
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
GULF UNDERWRITERS INSURANCE COMPANY Connecticut
SELECT INSURANCE COMPANY Texas
COUNTERSIGNATURE AGENCY, INC. Florida
CRIPPLE CREEK VENTURE PARTNER L.P.* Colorado
EUROPEAN GREIO/TINDC REAL ESTATE INVESTMENTS LLC Delaware
FIRST FLORIDIAN AUTO AND HOME INSURANCE COMPANY Florida
FIRST TRENTON INDEMNITY COMPANY New Jersey
RED OAK INSURANCE COMPANY New Jersey
GREIO ISLAMIC DEBT LLC* Delaware
SHARQ PROPERTY/ISLAMIC DEBT PARTNERSHIP* Delaware
GREIO ISLAMIC EQUITY LLC* Delaware
GATEHOUSE APARTMENTS, INC.* Delaware
GREIO AL-SOOR REALTY L.P.* Delaware
GATEHOUSE LEASEHOLD LLC* Delaware
HIGHPOINT INVESTORS LP* Delaware
HIGHPOINT TOWNHOMES, INC.* Delaware
GREIO ISLAMIC GP LLC* Delaware
HIGHPOINT OWNERS LP* Delaware
MIDKIFF DEVELOPMENT DRILLING PROGRAM, L.P.* Texas
SECURE AFFINITY AGENCY, INC. Delaware
THE CHARTER OAK FIRE INSURANCE COMPANY Connecticut
THE NORTHLAND COMPANY Minnesota
JUPITER HOLDINGS, INC. Minnesota
AMERICAN EQUITY INSURANCE COMPANY Arizona
AMERICAN EQUITY SPECIALTY INSURANCE COMPANY California
MENDOTA INSURANCE COMPANY Minnesota
MENDAKOTA INSURANCE COMPANY Minnesota
MENDOTA INSURANCE AGENCY, INC. Texas
NORTHLAND INSURANCE COMPANY Minnesota
NORTHFIELD INSURANCE COMPANY Missouri
NORTHLAND CASUALTY COMPANY Minnesota
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 6
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
NORTHLAND RISK MANAGEMENT SERVICES, INC. Minnesota
THE PHOENIX INSURANCE COMPANY Connecticut
CONSTITUTION STATE SERVICES LLC Delaware
PHOENIX UK INVESTMENTS, LLC Delaware
THE TRAVELERS INDEMNITY COMPANY OF AMERICA Connecticut
THE TRAVELERS INDEMNITY COMPANY OF CONNECTICUT Connecticut
THE TRAVELERS INDEMNITY COMPANY OF ILLINOIS Illinois
THE PREMIER INSURANCE COMPANY OF MASSACHUSETTS Massachusetts
THE TRAVELERS HOME AND MARINE INSURANCE COMPANY Connecticut
THE TRAVELERS LLOYDS INSURANCE COMPANY Texas
THE TRAVELERS MARINE CORPORATION California
TINDY RE INVESTMENTS INC. Connecticut
TRAVELERS EUROPEAN FUND ADVISOR LLC* Delaware
TRAVELERS EUROPEAN REAL ESTATE INVESTMENTS I, LLC* Delaware
TRAVELERS GENERAL REAL ESTATE MEZZANINE INVESTMENTS II, LLC* Delaware
CT MP II LLC Delaware
TRAVELERS LIMITED REAL ESTATE MEZZANINE INVESTMENTS I, LLC* Delaware
CT MEZZANINE PARTNERS I LLC Delaware
TRAVELERS LIMITED REAL ESTATE MEZZANINE INVESTMENTS II, LLC* Delaware
CT MEZZANINE PARTNERS II, L.P.* Delaware
TRAVCO INSURANCE COMPANY Connecticut
TRAVELERS BOND INVESTMENTS, INC. Connecticut
TRAVELERS COMMERCIAL CASUALTY COMPANY Connecticut
TRAVELERS FOREIGN BOND PARTNERSHIP* Connecticut
TRAVELERS GENERAL AGENCY OF HAWAII, INC. Hawaii
TRAVELERS INDEMNITY U.K. INVESTMENTS LLC Connecticut
TRAVELERS MEDICAL MANAGEMENT SERVICES INC. Delaware
TRIPLE T DIAMOND GATEWAY LLC Connecticut
WT EQUIPMENT PARTNERS, L.P.* Delaware
TPC INVESTMENTS INC. Connecticut
TRAVELERS (BERMUDA) LIMITED Bermuda
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 7
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
TRAVELERS ALTERNATIVE STRATEGIES, INC. Connecticut
TRAVELERS CASUALTY AND SURETY COMPANY Connecticut
AE DEVELOPMENT GROUP, INC. Connecticut
FARMINGTON CASUALTY COMPANY Connecticut
TRAVELERS ALPHA HOLDINGS, INC.* Connecticut
TIMCO ALPHA I, LLC* Connecticut
TRAVELERS MGA, INC. Texas
PONDEROSA HOMES* Connecticut
TCS EUROPEAN INVESTMENTS INC. Connecticut
TCS INTERNATIONAL INVESTMENTS LTD. Cayman Is.
TCSC RE INVESTMENTS INC. Connecticut
TRAVELERS CASUALTY & SURETY COMPANY OF CANADA Canada
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA Connecticut
TRAVELERS CASUALTY AND SURETY COMPANY OF ILLINOIS Illinois
TRAVELERS CASUALTY COMPANY OF CONNECTICUT Connecticut
TRAVELERS CASUALTY UK INVESTMENTS, LLC Connecticut
TRAVELERS COMMERCIAL INSURANCE COMPANY Connecticut
TRAVELERS EXCESS AND SURPLUS LINES COMPANY Connecticut
TRAVELERS LLOYDS OF TEXAS INSURANCE COMPANY Texas
TRAVELERS TRIBECA INVESTMENTS, INC. New York
TRIBECA INVESTMENTS, L.L.C.* Delaware
TRIPLE T BRENTWOOD, L.L.C. Delaware
TRAVELERS P&C CAPITAL I Delaware
TRAVELERS P&C CAPITAL II Delaware
TRAVELERS P&C CAPITAL III Delaware
PRIMERICA CLIENT SERVICES, INC. [USA] Delaware
PRIMERICA CONVENTION SERVICES, INC. Georgia
PRIMERICA FINANCE CORPORATION Delaware
PFS DISTRIBUTORS, INC. Georgia
PFS INVESTMENTS INC. Georgia
PFS T.A., INC. Delaware
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 8
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
PRIMERICA FINANCIAL SERVICES HOME MORTGAGES, INC. Georgia
PRIMERICA FINANCIAL SERVICES HOME MORTGAGES LIMITED PARTNERSHIP OF ARIZONA Delaware
PRIMERICA FINANCIAL SERVICES HOME MORTGAGES LIMITED PARTNERSHIP OF NORTH CAROLINA North Carolina
PRIMERICA FINANCIAL SERVICES HOME MORTGAGES LIMITED PARTNERSHIP OF OHIO Ohio
PRIMERICA FINANCIAL SERVICES HOME MORTGAGES LIMITED PARTNERSHIP OF TENNESSEE Tennessee
PRIMERICA FINANCIAL SERVICES, INC. Nevada
CITISOLUTIONS FINANCIAL LIMITED Ireland
PRIMERICA FINANCIAL INSURANCE SERVICES OF TEXAS, INC. Texas
PRIMERICA FINANCIAL SERVICES AGENCY OF NEW YORK, INC. New York
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF IDAHO, INC. Idaho
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF MAINE, INC. Maine
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF NEVADA, INC. Nevada
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF PENNSYLVANIA, INC. Pennsylvania
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF THE VIRGIN ISLANDS, INC. U.S. Virgin Is.
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING OF WYOMING, INC. Wyoming
PRIMERICA FINANCIAL SERVICES INSURANCE MARKETING, INC. Delaware
PRIMERICA FINANCIAL SERVICES OF ALABAMA, INC. Alabama
PRIMERICA FINANCIAL SERVICES OF ARIZONA, INC. Arizona
PRIMERICA FINANCIAL SERVICES OF KENTUCKY, INC. Kentucky
PRIMERICA FINANCIAL SERVICES OF NEW MEXICO, INC. New Mexico
PRIMERICA INSURANCE AGENCY OF MASSACHUSETTS, INC. Massachusetts
PRIMERICA INSURANCE MARKETING SERVICES OF PUERTO RICO, INC. Puerto Rico
PRIMERICA INSURANCE SERVICES OF LOUISIANA, INC. Louisiana
PRIMERICA SERVICES, INC. Georgia
SL&H REINSURANCE, LTD. St. Kitts & Nevis
SOUTHWEST SERVICE AGREEMENTS, INC. North Carolina
CCC FAIRWAYS, INC. Delaware
CITIGROUP CAPITAL I Delaware
CITIGROUP CAPITAL II Delaware
CITIGROUP CAPITAL III Delaware
CITIGROUP CAPITAL IV Delaware
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 9
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
CITIGROUP CAPITAL V Delaware
CITIGROUP CAPITAL VI Delaware
CITIGROUP HOLDINGS COMPANY Delaware
CITICORP Delaware
ASSOCIATES FIRST CAPITAL CORPORATION* Delaware
AFSC AGENCY OF ALABAMA, INC. Alabama
AFSC AGENCY, INC. [AK] Arkansas
AFSC AGENCY, INC. [AZ] Arizona
AFSC AGENCY, INC. [CA] California
AFSC AGENCY, INC. [DE] Delaware
AFSC AGENCY, INC. [HI] Hawaii
AFSC AGENCY, INC. [ID] Idaho
AFSC AGENCY, INC. [KY] Kentucky
AFSC AGENCY, INC. [LA] Louisiana
AFSC AGENCY, INC. [MS] Mississippi
AFSC AGENCY, INC. [MT] Montana
AFSC AGENCY, INC. [NC] North Carolina
AFSC AGENCY, INC. [NM] New Mexico
AFSC AGENCY, INC. [NV] Nevada
AFSC AGENCY, INC. [SD] South Dakota
AFSC AGENCY, INC. [VA] Virginia
AFSC AGENCY, INC. [WA] Washington
AFSC AGENCY, INC. [WY] Wyoming
ALLIED FINANCIAL SERVICES INSURANCE AGENCY, INC. Massachusetts
ASSOCIATES ASSET BACKED SECURITIES CORP. Delaware
ASSOCIATES AUTO CLUB SERVICES, INC. Indiana
ASSOCIATES AUTO CLUB SERVICES INTERNATIONAL, INC. Delaware
ASSOCIATES AUTOCLUB, SOCIEDAD DE RESPONSABILIDAD
LIMITADA DE CAPITAL VARIABLE Mexico
ASSOCIATES CAPITAL BANK, INC. Utah
ASSOCIATES CAPITAL CORPORATION OF CANADA Canada
CITICAPITAL COMMERCIAL CORPORATION Canada
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 10
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
---------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
---------------------------------------------------------------------------------------------------------------------------------
CITICAPITAL LIMITED Ontario, Canada
CITICAPITAL TECHNOLOGY FINANCE LTD. Canada
INSUREX CANADA, INC. Canada
PAYPLAN CANADA, INC. Canada
THE ASSOCIATES CORPORATION Delaware
CITICAPITAL COMMERCIAL LEASING CORPORATION Canada
CITIFINANCIAL CANADA, INC. Ontario, Canada
CITIFINANCIAL MORTGAGE CORPORATION [CAN] Ontario, Canada
CITIFINANCIAL MORTGAGE EAST CORPORATION Nova Scotia, Canada
CITIFINANCIAL SERVICES OF CANADA LTD. Canada
CITIFINANCIAL SERVICES OF CANADA EAST COMPANY Nova Scotia, Canada
HAMILTON DISCOUNT CORPORATION LIMITED Ontario, Canada
LONDON AND MIDLAND GENERAL INSURANCE COMPANY Canada
ASSOCIATES CORPORATION OF NORTH AMERICA [A TEXAS CORPORATION] Texas
ASSOCIATES CREDIT CARD SERVICES, INC. Delaware
ASSOCIATES CREDIT SERVICES, INC. Delaware
ASSOCIATES DIVERSIFIED SERVICES, INC. Delaware
ASSOCIATES FINANCIAL LIFE INSURANCE COMPANY Tennessee
ASSOCIATES FINANCIAL LIFE INSURANCE COMPANY OF TEXAS Texas
ASSOCIATES HOUSING FINANCE, LLC Delaware
ASSOCIATES INFORMATION SERVICES, INC. Delaware
ASSOCIATES INSURANCE AGENCY, INC. Nevada
ASSOCIATES INSURANCE GROUP, INC. Delaware
ASSOCIATES NATIONAL BANK (DELAWARE) USA
ASSOCIATES REAL ESTATE FINANCIAL SERVICES COMPANY, INC. Delaware
ASSOCIATES FIRST CAPITAL MORTGAGE CORPORATION Delaware
ASSOCIATES VENTURE CAPITAL, LLC Delaware
ATLANTIC GENERAL INSURANCE LIMITED Bermuda
ATLANTIC REINSURANCE LIMITED Bermuda
CAPCO GENERAL AGENCY, INC. [MI] Michigan
CAPITAL INSURANCE AGENCY, INC. Kentucky
-----------------------------------------------------------------------------------------------------------------------------------
* INDICATES THAT THE SUBSIDIARY IS PARTIALLY OWNED BY MORE THAN ONE SUBSIDIARY OF CITIGROUP INC. Page 11
** CITIGROUP OWNS 50% OF CITISTREET LLC IN JOINT VENTURE WITH STATE STREET CORPORATION
|
CITIGROUP INC. AS OF 31 DECEMBER 2001
-----------------------------------------------------------------------------------------------------------------------------------
PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
-----------------------------------------------------------------------------------------------------------------------------------
CITICAPITAL TRAILER RENTAL, INC. Delaware
CITICORP COMMERCE SOLUTIONS, INC. Delaware
CITIFINANCIAL CREDIT COMPANY Delaware
AMERICAN HEALTH AND LIFE INSURANCE COMPANY Texas
ARCADIA FINANCIAL LTD. Minnesota
ARCADIA 1992-B RECEIVABLES CAPITAL CORP. Delaware
ARCADIA FIRST GP INC. Delaware
ARCADIA RECEIVABLES CAPITAL CORP. Delaware
ARCADIA RECEIVABLES CONDUIT CORP. Delaware
ARCADIA RECEIVABLES FINANCE CORP. Delaware
ARCADIA RECEIVABLES FINANCE CORP. II Delaware
ARCADIA RECEIVABLES FINANCE CORP. III Delaware
ARCADIA RECEIVABLES FINANCE CORP. IV Delaware
ARCADIA RECEIVABLES FINANCE CORP. V Delaware
ARCADIA RECEIVABLES FINANCE CORP. VI Delaware
ARCADIA RECEIVABLES FINANCING CORPORATION Minnesota
ARCADIA RECEIVABLES MARKETING CORP. Minnesota
ARCADIA SECOND GP INC. Delaware
CC CREDIT CARD CORPORATION Delaware
CC FINANCE SYSTEM INCORPORATED Delaware
CHESAPEAKE APPRAISAL AND SETTLEMENT SERVICES INC. Maryland
CHESAPEAKE APPRAISAL AND SETTLEMENT SERVICES AGENCY OF OHIO INC. Ohio
CHESAPEAKE WEST ESCROW SERVICES INC. California
CITIBANK USA Delaware
CITIFINANCIAL ADMINISTRATIVE SERVICES, INC. Texas
CITIFINANCIAL ALABAMA, INC. Alabama
CITIFINANCIAL COMPANY Delaware
CITIFINANCIAL COMPANY 373, LLC Delaware
CITIFINANCIAL CONSUMER SERVICES, INC. Delaware
CITIFINANCIAL CORPORATION [CO] Colorado
CITIFINANCIAL CORPORATION 305, LLC Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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CITIFINANCIAL MANAGEMENT CORPORATION Maryland
CITIFINANCIAL MORTGAGE COMPANY, INC. New York
AHES REIT CORPORATION Delaware
ASSOCIATES HOME EQUITY RECEIVABLES CORP. Delaware
CITIFINANCIAL MORTGAGE SECURITIES INC. Delaware
CITIFINANCIAL MORTGAGE CONSUMER DISCOUNT COMPANY Pennsylvania
CITIFINANCIAL MORTGAGE INDUSTRIAL LOAN COMPANY Minnesota
CITIFINANCIAL MORTGAGE LOAN CORPORATION Florida
CITIFINANCIAL OF VIRGINIA, INC. Virginia
CITIFINANCIAL SERVICES, INC. [CA] California
CITIFINANCIAL SERVICES, INC. 203, LLC Delaware
CITIFINANCIAL SERVICES, INC. [DE] Delaware
CITIFINANCIAL SERVICES, INC. 309, LLC Delaware
CITIFINANCIAL SERVICES, INC. [GA] Georgia
CITIFINANCIAL SERVICES, INC. 311, LLC Delaware
CITIFINANCIAL SERVICES, INC. [MA] Massachusetts
CITIFINANCIAL SERVICES, INC. 224, LLC Delaware
CITIFINANCIAL SERVICES, INC. [MN] Minnesota
CITIFINANCIAL SERVICES, INC. 336, LLC Delaware
CITIFINANCIAL SERVICES, INC. [MO] Missouri
CITIFINANCIAL SERVICES, INC. 337, LLC Delaware
CITIFINANCIAL SERVICES, INC. [OH] Ohio
CITIFINANCIAL SERVICES, INC. 235, LLC Delaware
CITIFINANCIAL SERVICES, INC. [UT] Utah
CITIFINANCIAL SERVICES, INC. [VA] Virginia
CITIFINANCIAL SERVICES, INC. 356, LLC Delaware
CITIFINANCIAL, INC. [HI] Hawaii
CITIFINANCIAL, INC. 221, LLC Delaware
CITIFINANCIAL, INC. [IA] Iowa
CITIFINANCIAL CORPORATION [DE] Delaware
CITIFINANCIAL CORPORATION 216, LLC Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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CITIFINANCIAL, INC. 211, LLC Delaware
CITIFINANCIAL, INC. [KY] Kentucky
CITIFINANCIAL SERVICES, INC. [KY] Kentucky
CITIFINANCIAL SERVICES, INC. 478, LLC Delaware
CITIFINANCIAL, INC. 228, LLC Delaware
CITIFINANCIAL, INC. [MD] Maryland
CITIFINANCIAL SERVICES, INC. [OK] Oklahoma
CITIFINANCIAL SERVICES, INC. 344, LLC Delaware
CITIFINANCIAL, INC. 209, LLC Delaware
CITIFINANCIAL, INC. [NY] New York
CITIFINANCIAL, INC. 341, LLC Delaware
CITIFINANCIAL, INC. [OH] Ohio
CITIFINANCIAL, INC. 486, LLC Delaware
CITIFINANCIAL, INC. [SC] South Carolina
CITIFINANCIAL, INC. 218, LLC Delaware
CITIFINANCIAL, INC. [TN] Tennessee
CITIFINANCIAL, INC. 352, LLC Delaware
CITIFINANCIAL, INC. [WV] West Virginia
CITIFINANCIAL, INC. 359, LLC Delaware
CITIFINANCIAL, INC. NC North Carolina
CITIFINANCIAL, INC. NC 215, LLC Delaware
COMMERCIAL CREDIT INSURANCE SERVICES, INC. Maryland
COMMERCIAL CREDIT INSURANCE AGENCY (P&C) OF MISSISSIPPI, INC. Mississippi
COMMERCIAL CREDIT INSURANCE AGENCY OF ALABAMA, INC. Alabama
COMMERCIAL CREDIT INSURANCE AGENCY OF HAWAII, INC. Hawaii
COMMERCIAL CREDIT INSURANCE AGENCY OF KENTUCKY, INC. Kentucky
COMMERCIAL CREDIT INSURANCE AGENCY OF MASSACHUSETTS, INC. Massachusetts
COMMERCIAL CREDIT INSURANCE AGENCY OF NEVADA, INC. Nevada
COMMERCIAL CREDIT INSURANCE AGENCY OF NEW MEXICO, INC. New Mexico
COMMERCIAL CREDIT INSURANCE AGENCY OF OHIO, INC. Ohio
COMMERCIAL CREDIT INTERNATIONAL, INC. Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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COMMERCIAL CREDIT INTERNATIONAL BANKING CORPORATION Oregon
PARK TOWER HOLDINGS, INC. Delaware
CC RETAIL SERVICES, INC. Delaware
TRAVELERS HOME MORTGAGE SERVICES OF ALABAMA, INC. Delaware
RESOURCE DEPLOYMENT, INC. Texas
TRANSOUTH FINANCIAL CORPORATION South Carolina
TRANSOUTH FINANCIAL CORPORATION OF IOWA Iowa
TRANSOUTH MORTGAGE CORPORATION South Carolina
TRAVELERS BANK & TRUST, fsb Delaware
TRAVELERS HOME EQUITY, INC. North Carolina
CC CONSUMER SERVICES OF ALABAMA, INC. Alabama
CC HOME LENDERS FINANCIAL, INC. Georgia
CC HOME LENDERS, INC. Ohio
CITIFINANCIAL OF WEST VIRGINIA, INC. West Virginia
CITIFINANCIAL SERVICES, INC. [PA] Pennsylvania
CITIFINANCIAL SERVICES, INC. 384, LLC Delaware
CITIFINANCIAL, INC. [TX] Texas
TRAVELERS HOME MORTGAGE SERVICES, INC. North Carolina
TRAVELERS HOME MORTGAGE SERVICES OF PENNSYLVANIA, INC. Pennsylvania
TRITON INSURANCE COMPANY Missouri
VEROCHRIS CORPORATION Delaware
WORLD SERVICE LIFE INSURANCE COMPANY Colorado
FAMILY INSURANCE CORPORATION Wisconsin
FINANCIAL REASSURANCE COMPANY, LTD. Bermuda
FIRST FAMILY FINANCIAL SERVICES, INC. [DE] Delaware
FIRST INSURANCE AGENCY, INC. Kentucky
HURLEY STATE BANK South Dakota
MORCO GENERAL AGENCY, INC. Ohio
NORTHERN INSURANCE AGENCY, INC. Illinois
SECOND INSURANCE AGENCY, INC. Missouri
THE ASSOCIATES PAYROLL MANAGEMENT SERVICE COMPANY, INC. Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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THIRD INSURANCE AGENCY, INC. Kentucky
UNITED STATES AUTO CLUB, MOTORING DIVISION, INC. Indiana
WATCHGUARD REGISTRATION SERVICES, INC. Indiana
ASSOCIATES MEXICO HOLDINGS, LLC Delaware
GRUPO FINANCIERO ASSOCIATES, S.A. DE C.V. Mexico
ARRENDADORA FINANCIERA ASSOCIATES, S.A. DE C.V.,
ORGANIZACION AUXILIAR DEL CREDITO, GRUPO FINANCIERO Mexico
ASSOCIATES
ASSOCIATES SERVICIOS DE MEXICO, S.A. DE C.V. Mexico
CREDITO FAMILIAR, S.A. DE C.V., SOCIEDAD FINANCIERA DE
OBJETO LIMITADO, GRUPO FINANCIERO BBVA Mexico
SERVICIOS CORPORATIVOS CREDITO FAMILIAR, S.A. DE C.V. Mexico
HIPOTECARIA ASSOCIATES, S.A. DE C.V., SOCIEDAD FINANCIERA
DE OBJETO LIMITADO, GRUPO FINANCIERO Mexico
SERVICIOS DE CREDITO ASSOCIATES, S.A. DE C.V., SOCIEDAD
FINANCIERA DE OBJETO LIMITADO, GRUPO FINANCIERO Mexico
ASSOCIATES
SERVICIOS DE FACTORAJE ASSOCIATES, S.A. DE C.V.,
ORGANIZACION AUXILIAR DEL CREDITOR, GRUPO FINANCIERO Mexico
SOCIEDAD FINANCIERA ASSOCIATES, S.A. DE C.V., SOCIEDAD
FINANCIERA DE OBJETO LIMITADO, GRUPO FINANCIERO Mexico
ASSOCIATES
CITIBANK (NEVADA), NATIONAL ASSOCIATION USA
CITIBANK (NEW YORK STATE) New York
CITICORP DEVELOPMENT CENTER, INC. Delaware
DINERS CLUB INTERNATIONAL LTD. New York
STUDENT LOAN CORPORATION, THE Delaware
CITIBANK (SOUTH DAKOTA), N.A. USA
CDC HOLDINGS INC. Delaware
CITICORP DINERS CLUB INC. Delaware
CITICORP TRUST SOUTH DAKOTA South Dakota
CITIHOUSING, INC. South Dakota
CITIBANK DELAWARE Delaware
CITIBANK INSURANCE AGENCY, INC. New York
CITICORP DELAWARE EQUITY, INC. Delaware
FAIRFAX HOLDINGS, INC. Delaware
CITICORP DEL-LEASE, INC. Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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CITICORP AIRCRAFT MANAGEMENT, INC. Delaware
CITICORP BANKERS LEASING CORPORATION Delaware
BANKERS LEASING CORPORATION Massachusetts
BLC CORPORATION Utah
CITICORP BANKERS LEASING FINANCE CORPORATION Delaware
COMMETRO LEASING, INC. Delaware
COMMONWEALTH CONTROL, INC. Delaware
COMMONWEALTH PLAN, INC., THE Massachusetts
COMMONWEALTH SYSTEM, INC., THE Massachusetts
FINANCIAL LEASING CORPORATION Massachusetts
PACIFIC PLAN, INC., THE Massachusetts
WORCESTER PLAN, INC., THE Massachusetts
CBL CAPITAL CORPORATION Delaware
CITICORP DELAWARE PROPERTIES, INC. Delaware
CITICORP NEVADA CREDIT, INC. Nevada
CITICORP NEVADA LEASING, INC. California
G.W.L. LEASING COMPANY, INCORPORATED California
GXW CORPORATION California
PALM DEFEASANCE COMPANY Delaware
CITICORP INSURANCE AGENCY, INC. Delaware
CITICORP INSURANCE AGENCY OF NEVADA, INC. Nevada
CITICORP INSURANCE AGENCY, INC. Missouri
CITICORP INSURANCE AGENCY, INC. California
CITICORP LIFE INSURANCE COMPANY* Arizona
CITICORP ASSURANCE CO. Delaware
FIRST CITICORP LIFE INSURANCE COMPANY New York
CITICORP RAILMARK, INC. Delaware
CITICORP U.S. HOLDINGS NETHERLANDS, INC. Delaware
CITICORP HOLDINGS NETHERLANDS B.V. Netherlands
CITIBANK MORTGAGE CORP. Florida
CITIBANK COMMERCIAL PROPERTIES, INC. Florida
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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INCOME SERVICE GROUP, INC. Florida
LAND SERVICE GROUP, INC. Florida
RRR PROPERTY MANAGEMENT, INC. Florida
THIRTEEN PROPERTY MANAGEMENT, INC. Florida
CITIBANK, N.A. USA
399 VENTURE PARTNERS, INC. Delaware
AEL LEASING CO., INC. Pennsylvania
EAB LEASING CORP. Pennsylvania
AEL HOLDINGS, INC. Delaware
RESELLER FINANCE CORPORATION Delaware
ASSOCIATES INTERNATIONAL SERVICES, LLC Delaware
BALL (NOMINEE) & CO., L.L.C. Delaware
BANCO DE HONDURAS S.A. Honduras
BARNES & CO., L.L.C. Delaware
BENCO & CO., L.L.C. Delaware
BORDEN & CO., L.L.C. Delaware
C.A.R.D. REALTY CORP. New York
CAMWIL LEASE, INC. Delaware
CITICORP INVESTOR LEASE, INC. Delaware
CITICORP MULTILEASE (SEF), INC. Delaware
CITI (NOMINEES) LIMITED Hong Kong
CITI ARGENTINA (ABF) TRUST* Bahamas
CITI CENTER BUILDING CORPORATION* Philippines
CITI TOWER BUILDING CORPORATION Philippines
CITIACH, INC.* Delaware
CITIBANK AGENCIA DE VALORES S.A. Chile
CITIBANK (CHANNEL ISLANDS) LIMITED Channel Is.
CCIL (NOMINEES) LIMITED Channel Is.
CCIL PENSION SCHEME TRUSTEES LIMITED Channel Is.
CITIBANK (ZAIRE) S.A.R.L. Congo
CITIBANK CONSUMERS NOMINEE PTE. LTD. Singapore
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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CITIBANK CORREDORES DE SEGUROS LIMITADA* Chile
CITIBANK INTERNATIONAL USA
CITIBANK-MAGHREB Morocco
CITIBANK MORTGAGE REINSURANCE, INC. Vermont
CITIBANK NOMINEES (IRELAND) LIMITED Ireland
CITIBANK NOMINEES SINGAPORE PTE. LTD. Singapore
CITIBANK OVERSEAS INVESTMENT CORPORATION USA
ADMINISTRADORA DE FONDOS DE PENSIONES Y CESANTIAS S.A. COLFONDOS Colombia
ASIA PACIFIC TECHNOLOGY SERVICES PTE. LIMITED Singapore
ASSOCIATES INTERNATIONAL HOLDINGS CORPORATION New York
ACONA B.V. Netherlands
ASSOCIATES FINANCIAL CORPORATION LIMITED England & Wales
ASSOCIATES CAPITAL HOLDINGS LTD. England & Wales
ASSOCIATES CAPITAL CORPORATION plc England & Wales
ASSOCIATES (ISLE OF MAN) LIMITED England & Wales
ASSOCIATES CAPITAL (GUERNSEY) LIMITED Guernsey, Channel Is.
ASSOCIATES COMMERCIAL CORPORATION LIMITED England & Wales
ASSOCIATES COMMERCIAL CORPORATION LOCAVIA SA France
ASSOCIATES COMMERCIAL CORPORATION LOCAVIA SAS* France
EXMAT France
ASSOCIATES FLEET SERVICES LTD England & Wales
ASSOCIATES PRINT LIMITED England & Wales
PRESTIGE PROPERTY CO. LIMITED Guernsey, Channel Is.
STEEPLE FINANCE LIMITED Jersey, Channel Is.
ASSOCIATES LEASING LIMITED England & Wales
AVCO TRUST LTD.* England & Wales
CASTLE LOSS ADJUSTERS LIMITED* England & Wales
STEEPLE FINANCE (GUERNSEY) LIMITED* Guernsey, Channel Is.
AVCO LEASING LIMITED England & Wales
CUMBERLAND INSURANCE COMPANY LIMITED England & Wales
CUMBERLAND LIFE ASSURANCE CO. LIMITED Scotland
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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ASSOCIATES CREDIT CARD TAIWAN INC. Taiwan
ASSOCIATES FINANCE INC. Philippines
ASSOCIATES FINANCE OF VIRGIN ISLANDS, L.L.C. Delaware
ASSOCIATES FINANCE TAIWAN, INC. Taiwan
ASSOCIATES FINANCIAL SERVICES (ASIA) LIMITED Hong Kong
ERA MASTER LIMITED Hong Kong
ASSOCIATES FINANCIAL SERVICES (MAURITIUS) LLC* Mauritius
ASSOCIATES INDIA HOLDING COMPANY PRIVATE LIMITED India
ASSOCIATES INDIA FINANCIAL SERVICES PRIVATE LIMITED India
ASSOCIATES INTERNATIONAL HOLDINGS CORPORATION JAPAN, CO., LTD. Japan
ASSOCIATES INTERNATIONAL INVESTMENTS, INC. Delaware
UNIMAT LIFE, K.K.* Japan
ASSOCIATES WORLD CAPITAL CORPORATION Delaware
ASSOCIATES WORLD CREDIT CORPORATION Delaware
CITIGROUP INTERNATIONAL LUXEMBOURG LIMITED Luxembourg
ASSOCIATES FIRST CAPITAL B.V. Netherlands
CITICORP VERMOGENSVERWALTUNGS GMBH Germany
AVCO FINANCIAL SERVICES LIMITED United Kingdon
TRV/RCM CORP. Delaware
AIC ASSOCIATES CANADA HOLDINGS, INC. Ontario, Canada
TRV/RCM LP CORP. Delaware
AIC CORPORATION* Japan
AIC CARD SERVICES, INC. Japan
DIC FINANCE CO., LTD.* Japan
BANCO CITIBANK S.A. Brazil
CITIBANK-CORRETORA DE CAMBIO, TITULOS E VALORES MOBILIARIOS S.A. Brazil
CITIBANK-DISTRIBUIDORA DE TITULOS E VALORES MOBILIARIOS S.A. Brazil
CITIBANK COMPANHIA HIPOTECARIA S.A.* Brazil
BANCO DE DESARROLLO CITICORP, S.A. Dominican Republic
CITINVERSIONES DE TITULOS Y VALORES (PUESTO DE BOLSA) S.A. Dominican Republic
BANK HANDLOWY W WARSZAWIE S.A. Poland
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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BANK HANDLOWY INTERNATIONAL S.A. Luxembourg
BANK ROZWOJU CUKROWNICTWA S.A. Poland
BUDOWA CENTRUM PLAC TEATRALNY SP. z o.o. Poland
CITILEASING SP. z o.o. Poland
CUPRUM BANK S.A. Poland
DOM MAKLERSKI BANKU HANDLOWEGO S.A. Poland
HANDLOWY INVESTMENTS II S.a.r.l.* Luxembourg
HANDLOWY INVESTMENTS S.A.* Luxembourg
HANDLOWY INWESTYCJE II SP. z o.o. Poland
HANDLOWY INWESTYCJE SP. z o.o. Poland
HANDLOWY LEASING S.A.* Poland
HANDLOWY ZARZADZANIE AKTYWAMI S.A. Poland
PPTE DIAMENT S.A.* Poland
TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH BH S.A. Poland
TOWER SERVICE SP. z o.o. Poland
BERLIN REAL ESTATE B.V. Netherlands
CCSCI, INC. Puerto Rico
CENTAUR INVESTMENT CORPORATION Delaware
CITI INVERSIONES, S.A. DE C.V. El Salvador
ADMINISTRADORA DE FONDOS DE PENSIONES CONFIA, S.A.* El Salvador
CITI VALORES DE EL SALVADOR S.A. DE C.V. El Salvador
CITI MUTUAL FUNDS MANAGEMENT COMPANY S.A. Greece
CITI-INFO, S.A. DE C.V. Mexico
CITI-INMOBILIARIA E INVERSIONES, S.A. DE C.V. Honduras
CITIBANK (SLOVAKIA) A.S. Slovakia
CITIBANK A.S. Czech Republic
CITICORP SECURITIES (CR), s.r.o. Czech Republic
CITIBANK BELGIUM S.A./N.V. Belgium
CITIBANK BERHAD Malaysia
CITICORP NOMINEE (MALAYSIA) SENDIRIAN BERHAD Malaysia
CITICORP NOMINEES (ASING) SDN. BHD. Malaysia
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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CITICORP NOMINEES (TEMPATAN) SDN. BHD. Malaysia
CITIBANK CANADA Canada
1084851 ONTARIO INC. Canada
1169513 ONTARIO INC. Canada
2490827 NOVA SCOTIA LIMITED Canada
3121615 CANADA INC. Canada
PALACE PLACE LIMITED PARTNERSHIP Canada
3278662 CANADA INC. Canada
3590861 CANADA INC. Canada
598299 ALBERTA LIMITED Canada
AVENIDA PLACE SHOPPING CENTRE LTD. Canada
BERSHAW & COMPANY Canada
CHUDLEIGH FUNDING INC. Canada
CITIBANK CANADA INVESTMENT FUNDS LIMITED Canada
CITIBANK NOMINEES LTD. Canada
CITICORP CAPITAL INVESTORS LTD. Canada
CITICORP VENDOR FINANCE, LTD. Canada
CITIBANK CAPITAL CORPORATION Cayman Is.
CITIBANK COLOMBIA* Colombia
CITITRUST COLOMBIA S.A. SOCIEDAD FIDUCIARIA* Colombia
CITIBANK-COLOMBIA (NASSAU) LIMITED Bahamas
LEASING CITIBANK S.A. COMPANIA DE FINANCIAMIENTO COMERCIAL* Colombia
CITIBANK ESPANA S.A. Spain
CANTABRA DE AVIACION, SOCIEDAD LIMITADA Spain
CITI OPERACIONES A.I.E.* Spain
CITI RECOVERY, A.I.E.* Spain
CITIBANK BROKER CORREDURIA DE SEGUROS S.A. Spain
CITICONSULTING A.I.E.* Spain
CITIGESTION, SOCIEDAD GESTORA DE INSTITUCIONES DE
INVERSION COLECTIVA, S.A. Spain
CITIHOUSE, S.A. Spain
CITIPENSIONES, ENTIDAD GESTORA DE FONDOS DE PENSIONES, S.A. Spain
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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CITIBANK FINANCE LIMITED Singapore
CITIBANK HOLDINGS (FB) LLC Delaware
CITIBANK HOUSING FINANCE COMPANY LIMITED Pakistan
CITIBANK INVESTMENT SERVICES LIMITED Hong Kong
CITIBANK INVESTMENTS LIMITED* England
CHANNEL COLLECTIONS LIMITED England
CIB PROPERTIES LIMITED England
CITI PENSIONS & TRUSTEES LIMITED England
CITIBANK INTERNATIONAL plc England
CITI-IMMOBILIER S.A. France
CITIBANK TRUSTEES (IRELAND) LIMITED Ireland
CITIBANK, S.A. France
CITICORP VENDOR FINANCE (EUROPE) LTD England
COPELCO ASSET FINANCE LTD. England
COPELCO FINANCE SAS France
COPELCO LEASING GMBH Germany
CYBERMATCH LIMITED England & Wales
VIDACOS NOMINEES LIMITED England
CITIBANK LONDON NOMINEES LIMITED England
CITIBANK PENSIONS TRUSTEES IRELAND LTD. Ireland
CITICLIENT (CPF) NOMINEES LIMITED Wales
CITICLIENT NOMINEES NO 1 LIMITED Wales
CITICLIENT NOMINEES NO 2 LIMITED Wales
CITICLIENT NOMINEES NO 3 LIMITED Wales
CITICLIENT NOMINEES NO 4 LIMITED Wales
CITICLIENT NOMINEES NO 5 LIMITED Wales
CITICLIENT NOMINEES NO 6 LIMITED Wales
CITICLIENT NOMINEES NO 7 LIMITED Wales
CITICLIENT NOMINEES NO 8 LIMITED Wales
CITICLIENT (CPF) NOMINEES NO 2 LIMITED Wales
CITICORP CAPITAL LIMITED England
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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CITICORP TRUSTEE COMPANY LIMITED England
NORWICH PROPERTY TRUST LIMITED England
CITICORPORATE LIMITED England
CITIFRIENDS NOMINEE LIMITED England
CITIGROUP (UK) PENSION TRUSTEE LIMITED England
CITILOANS PLC England
CITINET LIMITED England
CITIVIC NOMINEES LIMITED England
CUIM NOMINEE LIMITED England
N.C.B. TRUST LIMITED England
NATIONAL CITY NOMINEES LIMITED England
SNC CITI GESTION* France
SNC CITI MANAGEMENT* France
CITIBANK IRELAND FINANCIAL SERVICES plc Ireland
CITIBANK INVESTMENT SERVICES IRELAND LTD. Ireland
CITICORP (DUBLIN) FINANCE Ireland
CITIBANK MALAYSIA (L) LIMITED Malaysia
CITIBANK MERCADO DE CAPITALES, C.A. CITIMERCA, CASA DE BOLSA Venezuela
CITIBANK NIGERIA Nigeria
CITIBANK ROMANIA S.A. Romania
CITIBANK RT. Hungary
CITICORP HUNGARY ADMINISTRATIVE SERVICES LTD.* Hungary
EKB KERESKEDELMI ES SZOLGALTATO KFT. Hungary
CITIBANK SECURITIES (TAIWAN) LIMITED Taiwan
CITIBANK SHIPPING BANK S.A. Greece
CITIBANK TANZANIA LIMITED Tanzania
CITIBANK UGANDA LIMITED Uganda
CITIBUSINESS-LEASING FINANCIAL SERVICES COMPANY LIMITED Hungary
CITICAPITAL LIMITED Thailand
CITICARD S.A. Argentina
CITICORP (B) SDN. BHD. Brunei
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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CITICORP ADMINISTRADORA DE INVERSIONES S.A. Argentina
CITICORP ASESORA DE SEGUROS S.A. Argentina
CITICORP CAPITAL KOREA LIMITED Korea
CITICORP CAPITAL ASIA (TAIWAN) LTD. Taiwan
CITICORP CAPITAL ASIA LIMITED Bahamas
CITICORP CHINA INVESTMENT MANAGEMENT (BVI) LIMITED British Virgin Is.
CITICORP CHINA INVESTMENT MANAGEMENT LIMITED Hong Kong
CVC ASIA PACIFIC LIMITED Hong Kong
CVC ASIA PACIFIC (AUSTRALIA) LIMITED Hong Kong
KYOBO CHOICE F-3 TRUST Korea
CITICORP CAPITAL MARKETS SOCIEDAD ANONIMA Argentina
CITICORP VALORES S.A. SOCIEDAD DE BOLSA* Argentina
CITICORP CAPITAL MARKETS URUGUAY S.A. Uruguay
CITICORP CAPITAL SDN. BHD. Malaysia
CITICORP COMMERCIAL FINANCE (H.K.) LTD. Hong Kong
CITICORP CREDIT Guam
CITICORP DEUTSCHLAND AKTIENGESELLSCHAFT* Germany
CCD IMMOBILIEN BETEILIGUNGS GMBH Germany
CITIBANK BETEILIGUNGEN AKTIENGESELLSCHAFT Germany
CITI SALES DIRECT GMBH Germany
CITIBANK AKTIENGESELLSCHAFT* Germany
CITIBANK PRIVATKUNDEN AG* Germany
CITICORP CARD OPERATIONS GMBH Germany
CITICORP DIENSTLEISTUNGS GMBH Germany
CITICORP KARTENSERVICE GMBH Germany
CITICORP LEASING (DEUTSCHLAND) GMBH Germany
ACHTUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
ACHTZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
DREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
EINUNDDREISSIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
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EINUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
FUENFUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
GAMMA TRANS LEASING VERWALTUNGS GMBH Germany
DREIUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG Germany
DREIZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG Germany
ELFTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG Germany
FUENFZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG Germany
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
ACHTE FINANZIERUNGS-MANAGEMENT KG Germany
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
DRITTE FINANZIERUNGS-MANAGEMENT KG Germany
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FUENFTE FINANZIERUNGS-MANAGEMENT KG Germany
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
NEUNTE FINANZIERUNGS-MANAGEMENT KG Germany
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
SECHSTE FINANZIERUNGS-MANAGEMENT KG Germany
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
SIEBTE FINANZIERUNGS-MANAGEMENT KG Germany
GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
VIERTE FINANZIERUNGS-MANAGEMENT KG Germany
SECHZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG Germany
VIERZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG Germany
ZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG Germany
ZWOELFTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG Germany
NEUNUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
NEUNZEHNTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
SECHSUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
SIEBENUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
VIERUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
ZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
ZWEIUNDZWANZIGSTE GAMMA TRANS LEASING VERWALTUNGS GMBH & CO.
FINANZIERUNGS-MANAGEMENT KG* Germany
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CITICORP OPERATIONS CONSULTING GMBH Germany
CITIFINANZBERATUNG GMBH Germany
CITICORP EUROPEAN SERVICE CENTER B.V. Netherlands
CITICORP FINANCE (INDIA) LIMITED India
CITICORP MARUTI FINANCE LTD. India
CITIFINANCIAL RETAIL SERVICES INDIA LIMITED India
CITICORP FINANCE (THAILAND) LTD. Thailand
CITICORP FINANCE INTERNATIONAL LTD. Bermuda
CITICORP FINANCIAL SERVICES CORPORATION Puerto Rico
CITICORP FINANCIAL SERVICES LIMITED Hong Kong
CITICORP FINANZIARIA S.p.A. Italy
CITICORP FSC I LTD. Bermuda
CITICORP GENERAL INSURANCE AGENCY CORPORATION Taiwan
CITICORP HOLDINGS (FB) LLC Delaware
CITICORP INSURANCE AGENCY CO., LTD. Taiwan
CITICORP INTERNATIONAL LIMITED Hong Kong
CITICORP INTERNATIONAL SECURITIES FINANCE LTD England
CITICORP INTERNATIONAL SECURITIES LTD England
CITICORP INVERSORA S.A. GERENTE DE FONDOS COMUNES DE INVERSION Argentina
CITICORP INVESTICNI SPOLECNOST, a.s. Czech Republic
CITICORP INVESTMENT BANK (SINGAPORE) LIMITED Singapore
CITICORP LEASING (THAILAND) LIMITED Thailand
CITICORP LEASING ARGENTINA S.A. Argentina
CITICORP LEASING INTERNATIONAL, INC. Delaware
CITICORP CARD SERVICES, INC. Delaware
CITICORP DINERS CLUB JAPAN KABUSHIKI KAISHA Japan
KABUSHIKI KAISHA DNC AGENCY Japan
CITICORP CREDIT, INC. Japan
CITILEASE COMPANY LTD. Japan
AARHUS AIRCRAFT LTD. Japan
ADAMS AIRCRAFT LTD. Japan
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ALPHA AIRCRAFT LTD. Japan
AMS AIRCRAFT LTD. Japan
ANDROMEDA CITIAIRCRAFT LTD. Japan
ANSON AIRCRAFT LTD. Japan
ARBOGA AIRCRAFT LTD. Japan
ARIZONA AIRCRAFT LTD. Japan
ARLANDA AIRCRAFT LTD. Japan
ASCOT AIRCRAFT LTD. Japan
BALTIC AIRCRAFT LTD. Japan
BETA AIRCRAFT LTD. Japan
BIRMINGHAM AIRCRAFT LTD. Japan
BISHOP AIRCRAFT LTD. Japan
BRISTOL AIRCRAFT LTD. Japan
BROMMA AIRCRAFT LTD. Japan
BUNGA EMAS LTD. Japan
CABOT AIRCRAFT LTD. Japan
CALIFORNIA AIRCRAFT LTD. Japan
CAMBRIDGE AIRCRAFT LTD. Japan
CHARLIE AIRCRAFT LTD. Japan
COLORADO AIRCRAFT LTD. Japan
CONDOR AIRCRAFT LTD. Japan
COVENTRY AIRCRAFT LTD. Japan
CROWN AIRCRAFT LTD. Japan
CRUX LEASING CO. LTD. Japan
CSA ROBIN AIRCRAFT LTD. Japan
CSA SWAN AIRCRAFT LTD. Japan
CURIE AIRCRAFT LTD. Japan
DAINI CITIAIRCRAFT LTD. Japan
DALLAS AIRCRAFT LTD. Japan
DELTA AIRCRAFT LTD. Japan
DENVER AIRCRAFT LTD. Japan
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DETROIT AIRCRAFT LTD. Japan
DONAU AIRCRAFT LTD. Japan
DRAKE AIRCRAFT LTD. Japan
EAGLE AIRCRAFT LTD. Japan
ECHO AIRCRAFT LTD. Japan
EIFFEL AIRCRAFT LTD. Japan
ELBE AIRCRAFT LTD. Japan
ELYSEE AIRCRAFT LTD. Japan
EMS AIRCRAFT LTD. Japan
ENNS LEASE CO., LTD. Japan
EPSILON AIRCRAFT LTD. Japan
ERIE AIRCRAFT LTD. Japan
EUROPE AIRCRAFT LTD. Japan
FAIRFIELD AIRCRAFT LTD. Japan
FLORIDA AIRCRAFT LTD. Japan
FORNEBU AIRCRAFT LTD. Japan
FOXTROT AIRCRAFT LTD. Japan
GAMMA AIRCRAFT LTD. Japan
GOTEBORG AIRCRAFT LTD. Japan
HAGUE AIRCRAFT LTD. Japan
HAVEL AIRCRAFT LTD. Japan
HONOLULU AIRCRAFT LTD. Japan
HOUSTON AIRCRAFT LTD. Japan
HUDSON AIRCRAFT LTD. Japan
HURON AIRCRAFT LTD. Japan
HUSKVARNA AIRCRAFT LTD. Japan
ILLINOIS AIRCRAFT LTD. Japan
INDIANA AIRCRAFT LTD. Japan
ISAR AIRCRAFT LTD. Japan
ITHACA AIRCRAFT LTD. Japan
JL BLADE LEASE CO., LTD. Japan
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JL BLITZ LEASE CO., LTD. Japan
JL CREST LEASE CO., LTD. Japan
JL ROUGE LEASE CO., LTD. Japan
JL SKYLINE LEASE CO., LTD. Japan
JOTA AIRCRAFT LTD. Japan
JUPITER AIRCRAFT LTD. Japan
KING AIRCRAFT LTD. Japan
KIRUNA AIRCRAFT LTD. Japan
KNIGHT AIRCRAFT LTD. Japan
KUSANAGI YUGEN KAISHA Japan
LA AIRCRAFT LTD. Japan
LAHN AIRCRAFT LTD. Japan
LAMBDA AIRCRAFT LTD. Japan
LEONE LEASE LTD. Japan
LINDEN CITIAIRCRAFT LTD. Japan
LIVERPOOL AIRCRAFT LTD. Japan
LOIRE AIRCRAFT LTD. Japan
LONDON AIRCRAFT LTD. Japan
LOUVRE AIRCRAFT LTD. Japan
MADRID AIRCRAFT LTD. Japan
MAIN AIRCRAFT LTD. Japan
MANCHESTER AIRCRAFT LTD. Japan
MAPLE AIRCRAFT LTD. Japan
MARSEILLES AIRCRAFT LTD. Japan
MERCURY YUGEN KAISHA Japan
MELLERY AIRCRAFT LTD. Japan
METTE AIRCRAFT LTD. Japan
MIAMI AIRCRAFT LTD. Japan
MICHIGAN AIRCRAFT LTD. Japan
MILWAUKEE AIRCRAFT LTD. Japan
MINNESOTA AIRCRAFT LTD. Japan
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PLACE OF
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MOSEL AIRCRAFT LTD. Japan
NASHVILLE AIRCRAFT LTD. Japan
NECKAR AIRCRAFT LTD. Japan
NS CITITRAIN LTD. Japan
ODER AIRCRAFT LTD. Japan
OHIO AIRCRAFT LTD. Japan
OREGON AIRCRAFT LTD. Japan
OXFORD AIRCRAFT LTD. Japan
PARIS AIRCRAFT LTD. Japan
PEGASUS LEASING CO. LTD. Japan
PHOENIX AIRCRAFT LTD. Japan
QUEBEC AIRCRAFT LTD. Japan
QUEEN AIRCRAFT LTD. Japan
RHEIN AIRCRAFT LTD. Japan
ROTTER AIRCRAFT LTD. Japan
SAALE AIRCRAFT LTD. Japan
SAKURA FA CITIAIRCRAFT LTD. Japan
SCOTT AIRCRAFT LTD. Japan
SEAGULL AIRCRAFT LTD. Japan
SEATTLE AIRCRAFT LTD. Japan
SIGMA AIRCRAFT LTD. Japan
ST. LOUIS AIRCRAFT LTD. Japan
STAMFORD AIRCRAFT LTD. Japan
STOCKHOLM AIRCRAFT LTD. Japan
TACHIBANA FA CITIAIRCRAFT LTD. Japan
TAMPA AIRCRAFT LTD. Japan
THETA AIRCRAFT LTD. Japan
TOKYO FA CITIAIRCRAFT LTD. Japan
TORONTO AIRCRAFT LTD. Japan
UPPSALA AIRCRAFT LTD. Japan
UTRECHT AIRCRAFT LTD. Japan
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VANCOUVER AIRCRAFT LTD. Japan
VERSAILLES AIRCRAFT LTD. Japan
WASHINGTON AIRCRAFT LTD. Japan
WINDSOR AIRCRAFT LTD. Japan
ZWOLLE AIRCRAFT LTD. Japan
CITICORP MERCHANT BANK LIMITED Trinidad & Tobago
CITIBANK (TRINIDAD & TOBAGO) LIMITED Trinidad & Tobago
CITICORP P.R. MORTGAGE, INC. Puerto Rico
CITICORP PENSION MANAGEMENT LTD. Bahamas
COMPANIA PREVISIONAL CITI S.A.* Argentina
EUROHOLDING SOCIEDAD ANONIMA S.A. Argentina
GENERAR ADMINISTRADORA DE FONDOS DE JUBILACIONES
Y PENSIONES S.A.* Argentina
SIEMBRA ADMINISTRADORA DE FONDOS DE JUBILACIONES Y PENSIONES S.A.* Argentina
CITICORP SECURITIES (JAPAN) LIMITED Cayman Is.
CITICORP SECURITIES (THAILAND) LTD. Thailand
CITICORP SECURITIES BOLIVIA S.A. Bolivia
CITICORP SECURITIES INTERNATIONAL (RP) INC. Philippines
CITICORP FINANCIAL SERVICES AND INSURANCE BROKERAGE PHILIPPINES, INC.* Philippines
VERITAS HOLDINGS LIMITED British Virgin Is.
CITICORP SERVICES (JAPAN) LTD. Cayman Is.
CITICORP SERVICES LIMITED New Zealand
ADVANCED FUTURES LIMITED New Zealand
CITIBANK GLOBAL ASSET MANAGEMENT LIMITED New Zealand
CITIBANK NOMINEES (NEW ZEALAND) LIMITED New Zealand
CITICORP NEW ZEALAND LIMITED New Zealand
FUTURE TECHNOLOGY LIMITED New Zealand
OPTIONAL DEVELOPMENT HOLDINGS LIMITED New Zealand
SEABIRD LIMITED New Zealand
TWOSTARZ TRUSTEE LIMITED New Zealand
CITICORP SERVIUM S.A. Peru
CITICORP PERU S.A. SOCIEDAD AGENTE DE BOLSA* Peru
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PLACE OF
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CITICORP PERU SOCIEDAD TITULIZADORA S.A.* Peru
CITILEASING S.A.* Peru
CITICORP SUBSAHARA INVESTMENTS, INC. Delaware
CITICORP TRADE SERVICES (MALAYSIA) SENDIRIAN BERHAD Malaysia
CITICORP TRUSTEE (SINGAPORE) LIMITED Singapore
CITICORP VENTURES PHILIPPINES, INC. Philippines
CITICREDITO S.A. Honduras
CITIDATOS S.A. Ecuador
CITIFINANCE LIMITED Jamaica
CITIMERCHANT BANK LIMITED Jamaica
CITIFINANCE S.A. Haiti
CITIGROUP CAPITAL FINANCE IRELAND LIMITED England
CITIGROUP PARTNERS UK* England
CITINVERSIONES, S.A. Guatemala
CITILEASE (KOREA) INC. Korea
CITILEASE FINANSAL KIRALAMA ANONIM SIRKETI Turkey
CITILEASING (HUNGARY) LTD. Hungary
CITILEASING EGYPT S.A.E. Egypt
CITILEASING s.r.o. Czech Republic
CITINVEST CASA DE BOLSA SOCIEDAD ANONIMA Paraguay
CITINVESTMENT CHILE LIMITED Bahamas
CITIPROPERTIES (BVI) LIMITED British Virgin Is.
CITIREALTY CHINA (BVI) LIMITED British Virgin Is.
CITISEGUROS PUERTO RICO, INC. Puerto Rico
CITISERVICE S.p.A. Italy
CITITRUST (BAHAMAS) LIMITED Bahamas
ALBACORE INVESTMENTS, LTD. Bahamas
ANTARES ASSOCIATES LIMITED Bahamas
ASTAIRE ASSOCIATES LIMITED Bahamas
BEACONSFIELD HOLDINGS LIMITED Bahamas
CITITRUST SERVICES LIMITED Bahamas
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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DONAT INVESTMENTS S.A. Bahamas
FIRST NATIONAL NOMINEES, LTD. Bahamas
HITCHCOCK INVESTMENTS S.A. Bahamas
MADELEINE INVESTMENTS S.A. Bahamas
PROVIDENCE ASSOCIATES, LTD. Bahamas
CITITRUST (CAYMAN) LIMITED Cayman Is.
BRENNAN LIMITED Switzerland
BUCHANAN LIMITED Switzerland
TYLER LIMITED Switzerland
CITITRUST (JERSEY) LIMITED Channel Is.
SECUNDUS NOMINEES (JERSEY) LIMITED Channel Is.
TERTIUS NOMINEES (JERSEY) LIMITED Channel Is.
CITITRUST (KENYA) LIMITED Kenya
CITITRUST (MAURITIUS) LIMITED Mauritius
CITITRUST (SINGAPORE) LIMITED Singapore
CITITRUST (SWITZERLAND) LIMITED Switzerland
CITITRUST AND BANKING CORPORATION Japan
CITIVALORES DE HONDURAS, S.A. Honduras
CITIVALORES, S.A. Guatemala
CITIVALORES, S.A. Panama
CJSC CITIBANK KAZAKHSTAN Kazakhstan
COPELCO CAPITAL (PUERTO RICO), INC. Puerto Rico
CORPIFEXSA, CORPORACION DE INVERSIONES Y FOMENTO DE EXPORTACIONES S.A. Ecuador
CITITRADING S.A. CASA DE VALORES Ecuador
INMOCITI S.A. Ecuador
INMOBIRENTSA S.A. Ecuador
CORPORACION CITIBANK G.F.C. S.A. Costa Rica
ASESORES CORPORATIVOS DE COSTA RICA, S.A. Costa Rica
CITIBANK (COSTA RICA) SOCIEDAD ANONIMA Costa Rica
CITIVALORES PUESTO DE BOLSA, S.A. Costa Rica
CREINVEST B.V. Netherlands
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DECAJO FINANCE ApS Denmark
DECMONT 1 LLC Delaware
DECMONT 2 LLC Delaware
DINERS CLUB (THAILAND) LIMITED, THE Thailand
DINERS CLUB ARGENTINA S.A.C. Y DE T. Argentina
DINERS TRAVEL S.A.C. Y DE T. Argentina
SERVICIOS COMERCIALES S.A.C.I.M. Y F. Argentina
DINERS CLUB DE MEXICO S.A. DE C.V. Mexico
DINERS CLUB INTERNATIONAL (HONG KONG) LIMITED Hong Kong
DINERS CLUB INTERNATIONAL (TAIWAN) LIMITED Taiwan
DINERS CLUB OF GREECE, S.A. Greece
DINERS CLUB URUGUAY S.A. Uruguay
DINERS CLUB PARAGUAY S.A. Paraguay
e-SERVE INTERNATIONAL LIMITED - EMPLOYEES' WELFARE TRUST India
ENITI LLC Delaware
EUROMAIA FINANCE LLC Delaware
FARFALLA PRIMA LLC Delaware
FARFALLA SECONDA LLC Delaware
FIMEN S.A. Belgium
CITICORP INSURANCE SERVICES S.A./N.V. Belgium
CITIBANK INSURANCE SERVICES S.A. Greece
FNC-COMERCIO E PARTICIPACOES LTDA. Brazil
CHELSEA-EMPREENDIMENTOS E PARTICIPACOES LIMITADA Brazil
CITI CP MERCANTIL S.A. Brazil
CITIBANK LEASING S.A.-ARRENDAMENTO MERCANTIL Brazil
CITICORP CORRETORA DE SEGUROS S.A. Brazil
FOFIP S.A. Uruguay
FOREMOST INVESTMENT CORPORATION Delaware
FOURSTARZ LLC Delaware
FIVESTARZ LLC Delaware
STARZTRUST Delaware
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ONESTARZ INTERNATIONAL TRADE AND INVESTMENTS CORPORATION Delaware
FREPERP 1 LLC Delaware
FREPERP 2 LLC Delaware
FUTURE FINANCIAL CORPORATION Delaware
FUTURE MORTGAGES LIMITED England & Wales
FUTURE MORTGAGES 1 LIMITED England & Wales
HANSEATIC REAL ESTATE B.V.* Netherlands
INARCO INTERNATIONAL BANK N.V. Aruba
INTERCITI, LTD. Belize
CREDIT CARD SERVICES MIDDLE EAST S.A. Panama
INTERCO (INTERMEDIACIONES COMERCIALES) S.A. Bolivia
INTERNATIONAL FINANCE ASSOCIATES, B.V. Netherlands
CITICORP INVESTMENT BANK (THE NETHERLANDS) N.V. Netherlands
CITICORP LEASING NEDERLAND, B.V. Netherlands
INVERSIONES CITICORP (R.D.), S.A. Dominican Republic
INVERSIONES Y ADELANTOS, C.A. Venezuela
JKO PRIMA LLC Delaware
JKO SECONDA LLC Delaware
JSCB CITIBANK (UKRAINE) Ukraine
MENARA CITI HOLDING COMPANY SDN. BHD. Malaysia
NESSUS INVESTMENT CORPORATION Delaware
CITIBANK LIMITED Australia
OUTSOURCING INVESTMENTS PTY. LIMITED Australia
INTEGRATED PROCESSING SOLUTIONS PTY. LIMITED Australia
CITICORP CAPITAL MARKETS AUSTRALIA LIMITED Australia
CITIFUTURES LIMITED Australia
CITISECURITIES LIMITED Australia
CITICORP EQUITY CAPITAL LIMITED Australia
CITICORP GROUP SUPERANNUATION LIMITED Australia
CITICORP INVESTMENTS LIMITED* Australia
CITICORP LIMITED Australia
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PLACE OF
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CITICORP GENERAL INSURANCE LIMITED Australia
CITICORP LIFE INSURANCE LIMITED Australia
CITICORP NOMINEES PTY. LIMITED Australia
ONEPORT PTY LIMITED Australia
PHINDA PTY. LIMITED Australia
REMITTANCE COLLECTION SERVICES LIMITED Australia
TARWOOD PTY. LIMITED Australia
DINERS CLUB PTY. LTD.* Australia
NOSTRO INVESTMENT CORPORATION Delaware
P.T. CITICORP FINANCE INDONESIA Indonesia
P.T. CITICORP SECURITIES INDONESIA Indonesia
PAVEC DEVELOPMENTS LIMITED Ireland
PERPICA LLC Delaware
PREMIUM FINANCE NO. 3 C.V. Netherlands
CITICORP CAPITAL PHILIPPINES, INC.* Philippines
PROVENCRED 1 Cayman Is.
PROVENCRED 2 Cayman Is.
SILEFED S.R.L. Argentina
REPFIN LTDA. Colombia
CITIINSURANCE AGENCIA DE SEGUROS LTDA. Colombia
CITIVALORES S.A. COMISIONISTA DE BOLSA* Colombia
COMPANIA EXPORTADORA CITYEXPORT S.A.* Colombia
SALOMON SMITH BARNEY (CHILE) S.A. Chile
CITICORP CHILE ADMINISTRADORA DE FONDOS DE INVERSION S.A. Chile
CITICORP CHILE ADMINISTRADORA DE FONDOS MUTUOS S.A. Chile
FINAUTO S.A. Chile
INVERSIONES Y FINANCIAMIENTOS COMERCIALES S.A. Chile
SALOMON SMITH BARNEY (CHILE) S.A. CORREDORES DE BOLSA Chile
SERVICIOS FINANCIEROS CITIBANK (CHILE) S.A. Chile
SCOTTISH PROVIDENT (IRISH HOLDINGS) LIMITED Ireland
SEPRACI 3 LLC Delaware
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SEPRACI 1 LLC Delaware
SEPRACI 2 LLC Delaware
TARJETAS DE CHILE S.A. Chile
VIALATTEA LLC Delaware
BUCONERO LLC Delaware
YONDER INVESTMENT CORPORATION Delaware
LATIN AMERICAN INVESTMENT BANK BAHAMAS LIMITED Bahamas
BRAZIL BOND TRUST New York
CITIBANK BRAZILIAN ANNEX VI TRUST New York
FOREIGN INVESTMENT FUNDO RENDA FIXA CAPITAL ESTRANGEIRO Brazil
CITIBRAZIL BOND FUND-FUNDO DE RENDA FIXA CAPITAL ESTRANGEIRO* Brazil
MOPONI HOLDINGS N.V.* Netherlands Antilles
ZAO "CITIBANK" Russia
CITIBANK STRATEGIC TECHNOLOGY INC. Delaware
CITIBANK ZAMBIA LIMITED Zambia
CITIBUREAU ZAMBIA LIMITED Zambia
CITICAPITAL COMMERCIAL CORPORATION Delaware
ASSOCIATES CAPITAL INVESTMENTS, L.L.C. Delaware
JOLIET GENERATION II, LLC Delaware
POWERTON GENERATION II, LLC Delaware
ASSOCIATES CAPITAL SERVICES CORPORATION Indiana
ASSOCIATES COMMERCIAL CORPORATION [AL] Alabama
ASSOCIATES COMMERCIAL CORPORATION OF LOUISIANA Louisiana
ASSOCIATES COMMERCIAL LEASING COMPANY, INC. Delaware
CITICAPITAL COMMERCIAL LEASING CORPORATION Indiana
ASSOCIATES/TRANS-NATIONAL LEASING, INC. Delaware
FLEETMARK, INC. Tennessee
UNITED STATES FLEET LEASING, INC. California
CITICAPITAL SMALL BUSINESS FINANCE, INC. Delaware
FRUEHAUF FINANCE COMPANY Michigan
GREAT DANE FINANCE COMPANY Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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PREMIUM LEASE & FINANCE, LLC Delaware
VT FINANCE, INC. Delaware
CITICORP ELECTRONIC COMMERCE, INC. New York
CITICORP FINANCE PUERTO RICO, INC. Puerto Rico
CITICORP FINANCIAL GUARANTY HOLDINGS, INC. Delaware
CITICORP INSURANCE SERVICES, INC. Delaware
CITICORP INTERIM SERVICES, INC. Delaware
ADV ELEVEN, INC. Delaware
AZ NOTES CORP. Arizona
MONACO ART CORP. New York
MBBT CORP. Florida
MR ABLES INC. New York
CITICORP INVESTMENT SERVICES Delaware
CITICORP LEASING, INC. Delaware
ADV THREE, INC. Delaware
CM FSC II LIMITED Bermuda
CM FSC III LIMITED Bermuda
CM FSC IV, LTD. Bermuda
CPI LEASING CORP. Connecticut
CITICORP PAYMENT SERVICES, INC. Delaware
CITICORP REAL ESTATE, INC. Delaware
CITICORP TRUST, N.A. (FLORIDA) USA
CITICORP TRUST, NATIONAL ASSOCIATION USA
CITICORP USA, INC. Delaware
CITIGROUP CCDE INVESTMENT FUND LLC Delaware
CITICORP VENDOR FINANCE, INC. Delaware
COPELCO CAPITAL FUNDING CORP. I Delaware
COPELCO CAPITAL FUNDING CORP. II Delaware
COPELCO CAPITAL FUNDING CORP. III Delaware
COPELCO CAPITAL FUNDING CORP. IV Delaware
COPELCO CAPITAL FUNDING CORP. V Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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COPELCO CAPITAL FUNDING CORP. VI Delaware
COPELCO CAPITAL FUNDING CORP. VIII Delaware
COPELCO CAPITAL FUNDING CORP. IX Delaware
COPELCO CAPITAL FUNDING CORP. X Delaware
COPELCO CAPITAL FUNDING CORP. XI Delaware
COPELCO CAPITAL FUNDING LLC 2000-1 Delaware
COPELCO CAPITAL FUNDING LLC 2000-2 Delaware
COPELCO CAPITAL FUNDING LLC 98-1 Delaware
COPELCO CAPITAL FUNDING LLC 99-1* Delaware
COPELCO CAPITAL FUNDING LLC 99-B Delaware
COPELCO CAPITAL RECEIVABLES LLC Delaware
COPELCO CAPITAL RESIDUAL FUNDING LLC I Delaware
COPELCO CREDIT FUNDING CORP. IX Delaware
COPELCO EQUIPMENT LEASING CORPORATION Delaware
COPELCO MANAGEMENT SERVICES, INC. Delaware
COPELCO MANAGER, INC. Delaware
NATIONAL EQUIPMENT RENTAL PROGRAM, INC. Delaware
CITICORP VENTURE CAPITAL LTD. New York
CITIFLIGHT, INC. Delaware
CITIGROUP/EAB SERVICES LLC Delaware
CITIMAE, INC. Delaware
CITIMORTGAGE, INC. Delaware
CITICORP CREDIT SERVICES, INC. (MARYLAND) Delaware
CITICORP MORTGAGE SECURITIES, INC. Delaware
CMC INSURANCE AGENCY, INC. Michigan
EKS CORP. Delaware
MHMC INSURANCE AGENCY, INC. Michigan
SOMSC SERVICES, INC. Michigan
CITIPARTNERS SERVICES GROUP A.I.E.* Spain
CITITRUST LIMITED Hong Kong
CITYSPIRE REALTY CORP. New York
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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DRAKE & CO., LLC Delaware
EAB COMMUNITY DEVELOPMENT CORP. New York
EAB MORTGAGE COMPANY, INC. New York
EXCT LLC Hawaii
EXCT HOLDINGS, INC. Hawaii
EXCT LIMITED PARTNERSHIP* Hawaii
GERLACH (NOMINEE) & CO., L.L.C. Delaware
HANK & CO., L.L.C. Delaware
HURLEY & CO., L.L.C. Delaware
INTERNATIONAL EQUITY INVESTMENTS, INC. Delaware
CVC/OPPORTUNITY EQUITY PARTNERS, L.P. Cayman Is.
525 PARTICIPACOES S.A. Brazil
SWEET RIVER FUND Cayman Is.
BELAPART S.A. Brazil
OPPORTUNITY PRIME FUNDO MUTUO DE INVESTIMENTO EM
ACOES-CARTEIRA LIVRE* Brazil
ELETRON S.A.* Brazil
ISLAND ABODES CORP. New York
KING (NOMINEE) & CO., L.L.C. Delaware
KORDULA & CO., L.L.C. Delaware
NIMER & CO., L.L.C. Delaware
PENY & CO., L.L.C. Delaware
PERENNIALLY GREEN, INC. New York
STATELY & CO., L.L.C. Delaware
STORMS & CO., L.L.C. Delaware
STUART & CO., L.L.C. Delaware
SWEENEY & CO., L.L.C. Delaware
TWELVE POLO REALTY, INC. New York
UNIVERSAL CARD SERVICES CORP. Delaware
UNIVERSAL BANCORP SERVICES, INC. Delaware
UNIVERSAL BANK, N.A. Delaware
UNIVERSAL CARD SERVICES LLC Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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WASCO FUNDING CORP. New York
WEBER & CO., L.L.C. Delaware
CITICORP (MEXICO) HOLDINGS LLC Delaware
CITICORP BANKING CORPORATION Delaware
BEST MARKET S.A. Argentina
CITI FCP S.A. Luxembourg
CITI ISLAMIC INVESTMENT BANK Bahrain
CITI ISLAMIC PORTFOLIOS S.A. Luxembourg
CITIACCIONES FLEXIBLE, S.A. DE C.V., SOCIEDAD DE INVERSION COMUN* Mexico
CITIBANK (SWITZERLAND) Switzerland
CITIBANK, FEDERAL SAVINGS BANK USA
CITIBANK INSURANCE AGENCY, INC. Illinois
CITIBANK MORTGAGE SERVICES, INC. Florida
CITIBANK SERVICE CORPORATION California
CITICORP FINANCIAL SERVICES CORPORATION (D.C.) District of Columbia
CITICORP INSURANCE AGENCY, INC. District of Columbia
FIRST SAVINGS CORPORATION Illinois
HOLIDAY HARBOR MANAGEMENT CORPORATION Florida
WEST SUBURBAN INVESTMENTS, INC. Illinois
FIRST PADDLE CREEK, INC. Florida
WEST FLORIDA INVESTMENTS, INC. Florida
WEST SUBURBAN INVESTMENTS, INC. OF CALIFORNIA California
WEST SUBURBAN INVESTMENTS, INC. OF COLORADO Colorado
CITICORP (JERSEY) LIMITED Channel Is.
CITICORP CAPITAL INVESTORS EUROPE LIMITED Delaware
CITICORP COMMUNITY DEVELOPMENT, INC. New York
CITICORP DATA SYSTEMS INCORPORATED Delaware
CITICORP DELAWARE SERVICES, INC. Delaware
CITICORP FUNDING, INC. Delaware
CITICORP GLOBAL HOLDINGS, INC. Delaware
CITICORP GLOBAL TECHNOLOGY, INC. Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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CITICORP INFORMATION TECHNOLOGY, INC. Delaware
CITICORP INSURANCE USA, INC. Vermont
CITICORP INTERNATIONAL FINANCE CORPORATION Delaware
BRAZIL HOLDINGS INC. LIMITED Bahamas
CITICORP MERCANTIL-PARTICIPACOES E INVESTIMENTOS S.A. Brazil
CITICORP INTERNATIONAL INSURANCE COMPANY, LTD. Bermuda
CITICORP INTERNATIONAL TECHNOLOGY, INC. Delaware
CITICORP INTERNATIONAL TRADE INDEMNITY, INC. New Jersey
CITICORP INTERNATIONAL TRADING COMPANY, INC. Delaware
CITICOM DE MEXICO, S.A. DE C.V. Mexico
CITICORP INTERNATIONAL TRADING COMPANY (BAHAMAS) LTD. Bahamas
CITICORP INTERNATIONAL TRADING COMPANY ARGENTINA S.A. Argentina
CITICORP TRADING S.A. Brazil
COMERCIALIZADORA CITICORP, S.A. Dominican Republic
ESMERIL TRADING LDA Portugal
MARCHANTE TRADING LDA Portugal
RICHEMONT SERVICOS LDA Portugal
TREVANO SERVICOS E GESTAO LDA Portugal
TURBANTE COMERCIO INTERNACIONAL LDA Portugal
VILACETE INVESTIMENTOS E GESTAO LDA Portugal
CITICORP INVESTMENT MANAGEMENT (LUXEMBOURG) S.A. Luxembourg
CITICORP INVESTMENT PARTNERS, INC. Delaware
CITICORP SECURITIES ASIA PACIFIC LIMITED Hong Kong
ASIA INVESTORS LLC* Delaware
CITIBANK GLOBAL ASSET MANAGEMENT (ASIA) LIMITED Hong Kong
CITICORP SECURITIES INVESTMENT CONSULTING INC. Taiwan
CITICORP STRATEGIC TECHNOLOGY CORPORATION Delaware
EZLOGIN.COM INC. California
SPYONIT.COM, INC. Delaware
TANTAU SOFTWARE Delaware
YRLESS INTERNET CORPORATION Ontario, Canada
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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ORBIAN MANAGEMENT LIMITED England
CITICORP TECHNOLOGY HOLDINGS INC. Delaware
ORBITECH SOLUTIONS LIMITED India
CITICORP BROKERAGE (INDIA) LIMITED India
ORBITECH SOLUTIONS LIMITED India
CITICORP TRUST COMPANY (MARYLAND) Maryland
CITICORP VENTURE CAPITAL MANAGER HOLDINGS, LTD. Delaware
CITICORP VENTURE CAPITAL MANAGEMENT LLC Delaware
CITIDEL, INC. Delaware
CITIFOCUS S.A. Luxembourg
CITIFONDO DE LIQUIDEZ, S.A. DE C.V, SOCIEDAD DE INVERSION EN INSTRUMENTOS Mexico
DE DEUDA PARA PERSONAS FISICAS*
CITIFONDO GUBERNAMENTAL, S.A. DE C.V., SOCIEDAD DE INVERSION EN INSTRUMENTOS Mexico
DE DEUDA PARA PERSONAS MORALES
CITIFONDO INSTITUCIONAL, S.A. DE C.V, SOCIEDAD DE INVERSION EN INSTRUMENTOS Mexico
DE DEUDA PARA PERSONAS
CITIGROUP PROPERTY LIMITED England
CITIGROUP WASHINGTON, INC. District of Columbia
CITILIFE S.A./N.V. Belgium
CITIMARKETS S.A. Luxembourg
CITIMONEY S.A. Luxembourg
CITIPLAZO, S.A. DE C.V., SOCIEDAD DE INVERSION EN INSTRUMENTOS DE DEUDA* Mexico
CITIRENTA, S.A. DE C.V., SOCIEDAD DE INVERSION EN INSTRUMENTOS DE DEUDA Mexico
CITISHARE CORPORATION Delaware
CITITRUST S.P.A.-ISTITUTO FIDUCIARIO Italy
CMI OF DELAWARE, INC. Delaware
CORPORACION INVERSORA DE CAPITALES S.R.L. Argentina
COPELCO REINSURANCE COMPANY, LTD. Bermuda
COURT SQUARE CAPITAL LIMITED Delaware
CHASE ACQUISITION CORP. Delaware
CHROMCRAFT REVINGTON, INC. Delaware
CITICORP VENTURE CAPITAL GP HOLDINGS, LTD. Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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CVC PARTNERS, LLC Delaware
CITICORP VENTURE CAPITAL LP HOLDINGS, LTD. Delaware
CITICORP VENTURE CAPITAL EQUITY PARTNERS LP* Delaware
DELCO REMY INTERNATIONAL, INC. Delaware
FLENDER HOLDING COMPANY S.A. Luxembourg
STRATEGIC INDUSTRIES, LLC Maryland
FCC HOLDING CORPORATION Delaware
MSX INTERNATIONAL, INC.* Delaware
TBW LLC New York
CROSSMAR, INC. Delaware
GENERAR COMPANIA DE SEGUROS DE RETIRO S.A. Argentina
HOUSING SECURITIES, INC. Delaware
INVERSIONES CITIMINERA S.A. Chile
MORTGAGE CAPITAL FUNDING INC. Delaware
ORBIAN CORPORATION Delaware
ORBIAN (UK) LIMITED England
PROVIDENCIA COMPANIA DE SEGUROS DE VIDA S.A. Argentina
SIEMBRA SEGUROS DE RETIRO S.A. Argentina
SIEMBRA SEGUROS DE VIDA S.A. Argentina
UNIVERSAL FINANCIAL CORP. Utah
CITICORP CAPITAL I Delaware
CITICORP CAPITAL II Delaware
CITICORP CAPITAL III Delaware
CITICORP CAPITAL INVESTORS, LIMITED Delaware
CITICORP MEZZANINE PARTNERS III, L.P. Delaware
CITICORP MEZZANINE PARTNERS, L.P. New York
CVC CAPITAL FUNDING, INC. Delaware
CVC CAPITAL FUNDING, LLC Delaware
WORLD EQUITY PARTNERS, L.P. Delaware
WORLD SUBORDINATED DEBT PARTNERS, L.P. Delaware
CITICORP CREDIT SERVICES, INC. Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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CITICORP ELECTRONIC FINANCIAL SERVICES, INC. New York
CITICORP SERVICES INC. Delaware
CITICORP NATIONAL SERVICES, INC. Delaware
CITICORP NORTH AMERICA, INC. Delaware
ADV ONE, INC. Delaware
ASSET D VEHICLE, INC. Delaware
CITICORP CHURCHILL LEASE, INC. Delaware
CITICORP EPIC FINANCE, INC. Delaware
CITICORP FSC II LTD. Bermuda
CITICORP GLOBAL LEASE, INC. Delaware
CITICORP MT AQUARIUS SHIP, INC. Delaware
CITICORP MT ARIES SHIP, INC. Delaware
CITICORP SIERRA LEASE, INC. Delaware
CITICORP TRANSLEASE, INC. Delaware
CGI CAPITAL, INC. Delaware
CITICORP LEASING (ALYESKA), INC. Delaware
CITICORP LESCAMAN, INC. New York
CITICORP PETROLEASE, INC. Delaware
CITICORP TULIP LEASE, INC. Delaware
CM LEASING MEMBER 1995 TRUST-A2 Delaware
CITIMARLEASE (BURMAH I), INC. Delaware
CITIMARLEASE (BURMAH I), INC. UTA (9/28/72)* Delaware
CITIMARLEASE (BURMAH LIQUEGAS), INC. Delaware
CITIMARLEASE (BURMAH LIQUEGAS), INC. UTA (9/28/72)* Delaware
CITIMARLEASE (BURMAH LNG CARRIER), INC. Delaware
CITIMARLEASE (BURMAH LNG CARRIER), INC. UTA (9/28/72)* Delaware
CITIMARLEASE (FULTON), INC. Delaware
CITIMARLEASE (WHITNEY), INC. Delaware
CM FSC I LTD. Bermuda
CM LEASING MEMBER 1995 TRUST-A1 Delaware
CM NORTH AMERICA HOLDING COMPANY* Canada
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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CM LEASING COMPANY* Canada
CM TULIP HOLDING COMPANY* Canada
ESSL 1, INC. Delaware
ESSL 2, INC. Delaware
FCL SHIP ONE, INC. Delaware
FCL SHIP THREE, INC. Delaware
FCL SHIP TWO, INC. Delaware
GRAND RIVER NAVIGATION COMPANY* Delaware
LOWER LAKES TOWING LTD. Canada
LOWER LAKES TRANSPORTATION COMPANY Delaware
POP TROPHY I INC. New York
POP TROPHY INC. New York
PRITIRED 1 LLC Delaware
PRITIRED 2 LLC Delaware
S.P.L., INC. Delaware
SCIENCE DEFEASANCE CORP. Delaware
SOMANAD 1 LLC Delaware
SOMANAD 2 LLC Delaware
CITICORP RETAIL SERVICES, INC. Delaware
GRUPO FINANCIERO BANAMEX, S.A. DE C.V.* Mexico
ACCIONES Y VALORES DE MEXICO, S.A. DE C.V. Mexico
ACCI ALTA LIQUIDEZ, S.A. DE C.V., SOCIEDAD DE INVERSION EN Mexico
INSTRUMENTOS DE DEUDA
ACCI CORPORATIVO, S.A. DE C.V., SOCIEDAD DE INVERSION EN DEUDA PARA Mexico
PERSONAS MORALES
ACCI SECURITIES, INC. Delaware
ACCI WORLD WIDE, S.A. DE C.V. Mexico
ACCIVALMEX ALTA RENTABILIDAD, S.A. DE C.V., SOCIEDAD DE INVERSION COMUN* Mexico
ACCIVALMEX PATRIMONIAL, S.A. DE C.V., SOCIEDAD DE INVERSION COMUN* Mexico
ACCIVALMEX, S.A. DE C.V., SOCIEDAD DE INVERSION EN DEUDA PARA PERSONAS Mexico
MORALES
FONDO ACCIVALMEX, S.A. DE C.V., SOCIEDAD DE INVERSION COMUN* Mexico
FONDO DE ALTA LIQUIDEZ BANAMEX, S.A. DE C.V., SOCIEDAD DE INVERSION Mexico
EN INSTRUMENTOS DE DEUDA
FONDO DE INVERSION A PLAZO BANAMEX, S.A. DE C.V., SOCIEDAD DE INVERSION Mexico
EN INSTRUMENTOS DE DEUDA
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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ARRENDADORA BANAMEX, S.A. DE C.V., ORGANIZACION AUXILIAR DEL CREDITO, GRUPO Mexico
FINANCIERO BANAMEX
BANCO NACIONAL DE MEXICO, S.A. Mexico
ABA SIS, S.A. DE C.V. Mexico
AEROPERSONAL, S.A. DE C.V. Mexico
AFORE BANAMEX AEGON, S.A. DE C.V. Mexico
PRH AFORE BANAMEX AEGON, S.A. DE C.V. Mexico
SERVICIOS CORPORATIVOS AFORE BANAMEX, S.A. DE C.V. Mexico
SIEFORE BANAMEX #1, S.A. DE C.V. Mexico
SIEFORE BANAMEX #2, S.A. DE C.V. Mexico
BANAMEX ACCIVAL ASSET MANAGEMENT, LTD. Ireland
BANAMEX INVESTMENT LIMITED England
BANCO BANSUD, S.A. Argentina
SUD ACCIONES Y VALORES, SOCIEDAD DE BOLSA, S.A. Argentina
SUD BANK & TRUST COMPANY LIMITED Bahamas
SUD INVERSIONES & ANALISIS, S.A. Argentina
SUD VALORES SOCIEDAD GERENTE DE FONDOS COMUNES DE INVERSION, S.A.* Argentina
DESARROLLADORA MEXICANA DE INMUEBLES, S.A. DE C.V. Mexico
EUROAMERICAN CAPITAL CORPORATION LIMITED Cayman Is
FONDO CORPORATIVO BANAMEX, S.A. DE C.V., SOCIEDAD DE INVERSION EN Mexico
INSTRUMENTOS DE DEUDA
FONDO DE INVERSIONES BANAMEX, S.A. DE C.V., SOCIEDAD DE INVERSION COMUN Mexico
FONDO FINANCIERO BANAMEX, S.A. DE C.V., SOCIEDAD DE INVERSION EN Mexico
INSTRUMENTOS DE DEUDA
FONDO FINANCIERO 2 BANAMEX, S.A. DE C.V., SOCIEDAD DE INVERSION COMUN. Mexico
INSTRUMENTOS DE DEUDA*
FONDO INTEGRAL BANAMEX, S.A. DE C.V., SOCIEDAD DE INVERSION EN Mexico
FONDO INTEGRA 3 BANAMEX, S.A. DE C.V., SOCIEDAD DE INVERSION EN Mexico
INSTRUMENTOS DE DEUDA
GARANTE, S.A. DE C.V., AFORE* Mexico
GARANTE 1, S.A. DE C.V., SOCIEDAD DE INVERSION ESPECIALIZADA Mexico
DE FONDOS PARA EL RETIRO*
VIDAPASS, SOCIEDAD ANONIMA DE CAPITAL VARIABLE* Mexico
GRUPO PROAGRO, S.A. DE C.V. Mexico
PROYECTOS AGRICOLAS, S.A. DE C.V. Mexico
PLUSAGRO, S.A. DE C.V. Mexico
INTERMEDIADORA DE FRUTAS, S.A. DE C.V. Mexico
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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INTERALTA, S.A. DE C.V. Mexico
HACIENDA EL CAMPANARIO, S.A. DE C.V. Mexico
IMPULSORA DE FONDOS, S.A. DE C.V. Mexico
IMREF S.A. DE C.V. Mexico
INMOBILIARIA CITIBANK, S.A. DE C.V. Mexico
INMOBILIARIA PROVINCIAL DEL NORTE, S.A. DE C.V. Mexico
INMUEBLES BANAMEX, S.A. DE C.V. Mexico
PROMOCIONES INMOBILIARIAS BANAMEX, S.A. DE C.V. Mexico
PROMOTORA BANAMEX DE SISTEMAS DE TELEINFORMATICA Y TELECOMUNICACIONES, Mexico
S.A. DE C.V.
PLANEACION DE RECURSOS HUMANOS, S.A. DE C.V. Mexico
AVANTEL, S.A. Mexico
AVANTEL RECURSOS, S.A. DE C.V. Mexico
AVANTEL EQUIPOS, S.A. DE C.V. Mexico
AVANTEL SERVICIOS LOCALES, S.A. Mexico
INTELIGIA, S.A. Mexico
PROMOTORA DE BIENES Y SERVICIOS BANAMEX, S.A. DE C.V. Mexico
PROCESADORA DE PLASTICOS COMERCIALES, S.A. Mexico
DIRECCION PROFESIONAL DE EMPRESAS AFILIADAS, S.A. Mexico
SERVICIOS AERONAUTICOS AEROPERSONAL, S.A. DE C.V. Mexico
SERVICIOS CORPORATIVOS DE FINANZAS, S.A. DE C.V. Mexico
SERVIFONDOS, S.A. DE C.V. Mexico
CASA DE BOLSA BANAMEX, S.A. DE C.V., GRUPO FINANCIERO BANAMEX Mexico
SEGUROS BANAMEX AEGON, S.A. DE C.V. Mexico
SERVICIOS EJECUTIVOS BANAMEX AEGON, S.A. DE C.V. Mexico
SERVICIOS PROFESIONALES BANAMEX AEGON, S.A. DE C.V. Mexico
HOLDING BUSA II, S. DE R.L. DE C.V. Mexico
HOLDING BUSA, S. DE R.L. DE C.V. Mexico
BANAMEX USA BANCORP California
CALIFORNIA COMMERCE BANK California
CALIFORNIA COMMERCE BANC SECURITIES, INC. California
COMMUNICO California
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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WINTER CAPITAL INTERNATIONAL LLC Delaware
WINTER CAPITAL CONSULTING LLC Delaware
WINTER CAPITAL MANAGEMENT INTERNATIONAL LLC Cayman Is.
CITIGROUP INVESTMENTS INC. Delaware
CITIGROUP JAPAN INC. Delaware
CITIGROUP MANAGEMENT CORP. Delaware
FS SECURITIES HOLDINGS INC. Delaware
FS ASIA HOLDINGS LLC* Delaware
MRC HOLDINGS, INC. Delaware
SALOMON SMITH BARNEY HOLDINGS INC. New York
GENESIS ENERGY, L.L.C. Delaware
GENESIS CRUDE OIL, L.P.* Delaware
GENESIS PIPELINE TX, L.P.* Texas
GENESIS PIPELINE USA, L.P.* Texas
GENESIS ENERGY, L.P. Delaware
NEXTCO INC. Delaware
PENDRAGON GUINEVERE FUND LLC England
PHIBRO ENERGY PRODUCTION, INC. Delaware
PHIBRO INC. Delaware
MC2 TECHNOLOGIES, INC. Delaware
PHIBRO ENERGY CLEARING, INC. Delaware
PHIBRO GMBH Switzerland
PHIBRO (ASIA) PTE LTD Singapore
SCANPORTS LIMITED England
TURAVENT OIL AG Switzerland
PHIBRO HOLDINGS LIMITED England
PHIBRO FUTURES AND METALS LIMITED England
SCANPORTS SHIPPING, INC. Delaware
PHIBRO RESOURCES CORP. Delaware
R-H CAPITAL, INC. Delaware
R-H/TRAVELERS, L.P.* Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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R-H CAPITAL PARTNERS, L.P.* Delaware
R-H VENTURE CAPITAL, LLC Delaware
ROBINSON-HUMPHREY NETLANTA(SM) FUND I, L.P. Georgia
SALOMON BROTHERS HOLDING COMPANY INC. Delaware
AST STOCKPLAN, INC. Delaware
BAEK HO ASSET SECURITIZATION SPECIALTY LIMITED Korea
BAEK JO ASSET SECURITIZATION SPECIALTY LIMITED Korea
BAEK MA ASSET SECURITIZATION SPECIALTY LIMITED Korea
BAEK MA II ASSET SECURITIZATION SPECIALTY LIMITED Korea
CEFOF GP I CORP. Delaware
CITIGROUP EMPLOYEE FUND OF FUNDS (CAYMAN) I, LP Cayman Is.
CITIGROUP EMPLOYEE FUND OF FUNDS (DE-UK) I, LP Delaware
CITIGROUP EMPLOYEE FUND OF FUNDS (UK) I, LP* England
CELFOF GP CORP. Delaware
CITIGROUP EMPLOYEE FUND OF FUNDS (MASTER FUND) I, LP* Delaware
CITIGROUP EMPLOYEE FUND OF FUNDS (US-UK) I, LP Delaware
CITIGROUP EMPLOYEE FUND OF FUNDS I, LP Delaware
CITICORP SECURITIES SERVICES, INC. Delaware
CITIGROUP PAYCO LLC Delaware
HAE RYONG ASSET SECURITIZATION SPECIALTY LIMITED Korea
HUWEST COMPANY, L.L.C. Delaware
JEONG SANG ASSET SECURITIZATION SPECIALTY LIMITED Korea
LOAN PARTICIPATION HOLDING CORPORATION Delaware
HOME MAC GOVERNMENT FINANCIAL CORPORATION District of Columbia
HOME MAC MORTGAGE SECURITIES CORPORATION District of Columbia
LT INVESTMENT I, LLC New York
LT INVESTMENT II, LLC New York
NOMOLAS BA LTD Australia
PB-SB INVESTMENTS, INC Delaware
PB-SB 1983 I New York
PB-SB 1983 III New York
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PB-SB VENTURES, INC Delaware
PB-SB 1985 VII New York
PB-SB 1988 III New York
PB-SB 1988 VIII New York
PT SALOMON SMITH BARNEY INDONESIA Indonesia
SALOMON (INTERNATIONAL) FINANCE AG Switzerland
SALOMON BROTHERS HOLDINGS GMBH* Switzerland
NIKKO SALOMON SMITH BARNEY LIMITED* Cayman Is.
NIKKO SALOMON SMITH BARNEY SERVICES LIMITED* Cayman Is.
SALOMON INTERNATIONAL FINANCIAL PRODUCTS LLC* Delaware
SALOMON BROTHERS ASIA GROWTH FUND LIMITED* Cayman Is.
SALOMON BROTHERS OVERSEAS INC Cayman Is.
SALOMON SMITH BARNEY HONG KONG HOLDINGS LIMITED* Hong Kong
SALOMON BROTHERS ASSET MANAGEMENT ASIA PACIFIC LIMITED Hong Kong
SALOMON SMITH BARNEY HONG KONG FUTURES, LIMITED Hong Kong
SALOMON SMITH BARNEY HONG KONG NOMINEE LIMITED* Hong Kong
SALOMON SMITH BARNEY HONG KONG LIMITED Hong Kong
SALOMON-SHANGHAI INDUSTRIAL GREATER CHINA FUND* Cayman Is.
SALOMON ANALYTICS INC Delaware
SALOMON BROTHERS ASIA CAPITAL CORPORATION LIMITED Ireland
SOLOM INTERNATIONAL LIMITED Ireland
SALOMON BROTHERS ASSET MANAGEMENT (IRELAND) LTD Ireland
SALOMON BROTHERS ASSET MANAGEMENT INC Delaware
SBAM G.P. INC. Delaware
SSB CITI ASSET MANAGEMENT CO., LTD.* Japan
SALOMON BROTHERS HOUSING INVESTMENT INC Delaware
SALOMON BROTHERS INTERNATIONAL OPERATIONS (JAPAN) INC. Delaware
SALOMON BROTHERS INTERNATIONAL OPERATIONS (JERSEY) LIMITED Channel Is.
SALOMON BROTHERS INTERNATIONAL OPERATIONS (OVERSEAS) LIMITED Channel Is.
SALOMON BROTHERS INTERNATIONAL OPERATIONS INC Delaware
SALOMON BROTHERS MORTGAGE SECURITIES III, INC Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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SALOMON BROTHERS MORTGAGE SECURITIES VI, INC Delaware
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC Delaware
SALOMON BROTHERS PACIFIC HOLDING COMPANY INC Delaware
SALOMON SMITH BARNEY INDIA PRIVATE LIMITED* India
SALOMON BROTHERS PROPERTIES INC Delaware
SALOMON BROTHERS INVESTMENTS INC Delaware
SALOMON BROTHERS REAL ESTATE DEVELOPMENT CORP Delaware
CROW WOOD TERRACE ASSOCIATES Georgia
SALOMON BROTHERS REALTY CORP New York
LIQUIDATION PROPERTIES HOLDING COMPANY INC. New York
LIQUIDATION PROPERTIES INC. New York
MACA INN LLC Delaware
REM FINANCE, LLC Delaware
TK MEMBER HOLDING CORP. Delaware
TK MEMBER, INC. Delaware
VE APARTMENTS LLC New York
SALOMON BROTHERS RUSSIA HOLDING COMPANY INC Delaware
ZAO SALOMON BROTHERS* Russia
SALOMON BROTHERS TOSCA INC. Delaware
SALOMON CAPITAL ACCESS FOR SAVINGS INSTITUTIONS, INC. Delaware
SALOMON CAPITAL ACCESS CORPORATION District of Columbia
SALOMON FOREX INC Delaware
SALOMON BROTHERS FINANCE CORPORATION Delaware
SALOMON INTERNATIONAL LLC Delaware
CHEAPSIDE (SSL) LIMITED England
CHEAPSIDE HOLDINGS (JERSEY) LIMITED Channel Is.
JHSW LIMITED England
CHEAPSIDE (SJL) LIMITED Cayman Is.
SCHRODER SALOMON SMITH BARNEY (BANKING) NOMINEES LIMITED England
SCHRODER SALOMON SMITH BARNEY (GUERNSEY) LIMITED Channel Is.
CITIGROUP ASSET MANAGEMENT LIMITED England
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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SALOMON BROTHERS EUROPE LIMITED* England
SALOMON BROTHERS ASSET MANAGEMENT LIMITED England
SALOMON BROTHERS EASTERN EUROPE LIMITED England
SALOMON BROTHERS INTERNATIONAL LIMITED* England
SALOMON BROTHERS NOMINEES LIMITED England
SALOMON BROTHERS UK EQUITY LIMITED England
SALOMON NORTHPOINT CORP Delaware
SALOMON PLAZA HOLDINGS INC Delaware
PLAZA HOLDINGS INC. Delaware
SALOMON BROTHERS FINANCE CORPORATION AND CO BESCHRANTHAFTENDE KG* Germany
SALOMON BROTHERS AG Germany
SALOMON BROTHERS KAPITALANLAGE-GESELLSCHAFT MBH* Germany
SALOMON REINVESTMENT COMPANY, INC Delaware
SALOMON SMITH BARNEY ASIA LIMITED Hong Kong
SALOMON SMITH BARNEY ASIA PACIFIC LIMITED Delaware
SALOMON SMITH BARNEY AUSTRALIA PTY LTD Australia
FRIDAY SERVICES PTY LTD Australia
SALOMON SMITH BARNEY AUSTRALIA BROKER HOLDINGS PTY LIMITED Australia
SALOMON SMITH BARNEY AUSTRALIA SECURITIES PTY LIMITED Australia
BOW LANE NOMINEES PTY LTD Australia
BOWYANG NOMINEES PTY LIMITED Australia
CALEX NOMINEES PTY LIMITED Australia
DERVAT NOMINEES PTY LIMITED Australia
FETA NOMINEES PTY LIMITED Australia
GYMKHANA NOMINEES PTY LIMITED Australia
SALOMON SMITH BARNEY NEW ZEALAND LIMITED New Zealand
PALLISER NOMINEES LIMITED New Zealand
SKEET NOMINEES PTY LTD Australia
SALOMON SMITH BARNEY AUSTRALIA CAPITAL MARKETS PTY LIMITED Australia
SALOMON SMITH BARNEY AUSTRALIA CORPORATE FINANCE PTY LIMITED Australia
SALOMON SMITH BARNEY AUSTRALIA FINANCIAL PRODUCTS LTD Australia
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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SALOMON SMITH BARNEY AUSTRALIA FIXED INCOME TRADING PTY LIMITED Australia
SALOMON SMITH BARNEY AUSTRALIA NOMINEES NO. 2 PTY LIMITED Australia
SALOMON SMITH BARNEY AUSTRALIA SUPERANNUATION FUND PTY LIMITED Australia
SALOMON SMITH BARNEY PRIVATE CLIENTS PTY LIMITED Australia
SALOMON SMITH BARNEY CANADA HOLDING COMPANY* Canada
SALOMON SMITH BARNEY CANADA INC. Canada
SALOMON SMITH BARNEY CHINA LIMITED Hong Kong
SALOMON SMITH BARNEY HOLDINGS (THAILAND) LIMITED Thailand
SALOMON SMITH BARNEY (THAILAND) LIMITED* Thailand
SALOMON SMITH BARNEY INC. New York
PATRIMONIA FOREIGN FUND 1 FUNDA DE RENTA FIXA CAPITAL ESTRANGEIRO Brazil
SALOMON SMITH BARNEY PUERTO RICO INC. Puerto Rico
SALOMON SMITH BARNEY REPRESENTACOES LTDA.* Brazil
SALOMON SMITH BARNEY/TRAVELERS REF GP, LLC Delaware
SALOMON SMITH BARNEY/TRAVELERS REAL ESTATE FUND, L.P. Delaware
SBHU LIFE AGENCY, INC. Delaware
ROBINSON-HUMPHREY INSURANCE SERVICES INC. Georgia
ROBINSON-HUMPHREY INSURANCE SERVICES OF ALABAMA, INC. Alabama
SALOMON SMITH BARNEY LIFE AGENCY INC. New York
SBHU LIFE AGENCY OF ARIZONA, INC. Arizona
SBHU LIFE AGENCY OF INDIANA, INC. Indiana
SBHU LIFE AGENCY OF OHIO, INC. Ohio
SBHU LIFE AGENCY OF OKLAHOMA, INC. Oklahoma
SBHU LIFE AGENCY OF TEXAS, INC. Texas
SBHU LIFE AGENCY OF UTAH, INC. Utah
SBHU LIFE INSURANCE AGENCY OF MASSACHUSETTS, INC. Massachusetts
SBS INSURANCE AGENCY OF HAWAII, INC. Hawaii
SBS INSURANCE AGENCY OF IDAHO, INC. Idaho
SBS INSURANCE AGENCY OF MAINE, INC. Maine
SBS INSURANCE AGENCY OF MONTANA, INC. Montana
SBS INSURANCE AGENCY OF NEVADA, INC. Nevada
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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SBS INSURANCE AGENCY OF OHIO, INC. Ohio
SBS INSURANCE AGENCY OF SOUTH DAKOTA, INC. South Dakota
SBS INSURANCE AGENCY OF WYOMING, INC. Wyoming
SBS INSURANCE BROKERAGE AGENCY OF ARKANSAS, INC. Arkansas
SBS INSURANCE BROKERS OF KENTUCKY, INC. Kentucky
SBS INSURANCE BROKERS OF NEW HAMPSHIRE, INC. New Hampshire
SBS INSURANCE BROKERS OF NORTH DAKOTA, INC. North Dakota
SBS LIFE INSURANCE AGENCY OF PUERTO RICO, INC. Puerto Rico
SLB INSURANCE AGENCY OF MARYLAND, INC. Maryland
SMITH BARNEY INTERNATIONAL INCORPORATED Oregon
THE ROBINSON-HUMPHREY COMPANY, LLC Delaware
SALOMON SMITH BARNEY INTERNATIONAL MERCHANT BANKERS LIMITED Singapore
SALOMON SMITH BARNEY KOREA LTD. Korea
SALOMON SMITH BARNEY MALAYSIA SDN. BHD. Malaysia
SALOMON SMITH BARNEY MAURITIUS PRIVATE LIMITED* Mauritius
SALOMON SMITH BARNEY PRINCIPAL INVESTMENTS (JAPAN) LTD. Cayman Is.
SALOMON SMITH BARNEY S.A.* France
SALOMON SMITH BARNEY SECURITIES (PROPRIETARY) LIMITED South Africa
SALOMON SMITH BARNEY NOMINEES (PROPRIETARY) LIMITED South Africa
SALOMON SMITH BARNEY SECURITIES ASIA LIMITED Hong Kong
SAS NOMINEES LIMITED Hong Kong
SALOMON SMITH BARNEY SINGAPORE HOLDINGS PTE. LTD. Singapore
SALOMON SMITH BARNEY SINGAPORE PTE. LTD. Singapore
SALOMON SMITH BARNEY SINGAPORE SECURITIES PTE. LTD. Singapore
SALOMON SMITH BARNEY TAIWAN LIMITED Taiwan
SALOMON SWAPCO INC. Delaware
SAN GOME ASSET SECURITIZATION SPECIALTY LIMITED Korea
SB FUNDING CORP. Delaware
SB MOTEL CORP. Delaware
SCHRODER (MALAYSIA) HOLDINGS SDN. BHD. Malaysia
SCHRODER SALOMON SMITH BARNEY POLSKA Sp. z o.o. Poland
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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SCHRODER WERTHEIM HOLDINGS I INC. Delaware
SCHRODER WERTHEIM & CO. INC. 1996 EUROPEAN INVESTMENT PARTNERSHIP L.P. Delaware
SCHRODERS MALAYSIA (L) BERHAD Malaysia
SEVEN WORLD HOLDINGS LLC Delaware
SEVEN WORLD TECHNOLOGIES, INC Delaware
SSB BB INC. Delaware
SSB IRISH INVESTOR LLC Delaware
SSB VEHICLE SECURITIES INC. Delaware
SSBCP GP I CORP. Delaware
SSB CAPITAL PARTNERS (CAYMAN) I, LP Cayman Is.
SSB CAPITAL PARTNERS (DE-UK) I, LP Delaware
SSB CAPITAL PARTNERS (UK) I, LP* England
SSBPIF GP CORP. Delaware
SSB CAPITAL PARTNERS (MASTER FUND) I, LP* Delaware
SSB CAPITAL PARTNERS (US-UK) I, LP Delaware
SSB CAPITAL PARTNERS I, LP Delaware
STRUCTURED PRODUCTS CORP Delaware
TCEP PARTICIPATION CORP. New York
TCP CORP. Delaware
THE GENEVA COMPANIES INC. Delaware
GENEVA MERGER & ACQUISITION SERVICES OF CANADA (ONT.) INC. Ontario, Canada
WERTHEIM ENERGY CORPORATION Delaware
WS MANAGEMENT COMPANY, INC. Delaware
SALOMON BROTHERS SERVICES GMBH Germany
SALOMON SMITH BARNEY (LOAN NOTES) INC. Delaware
SALOMON SMITH BARNEY SECURITIES INVESTMENT CONSULTING CO. LTD. Taiwan
SB CAYMAN HOLDINGS I INC. Delaware
SMITH BARNEY PRIVATE TRUST COMPANY (CAYMAN) LIMITED* Cayman Is.
GREENWICH (CAYMAN) I LIMITED Cayman Is.
GREENWICH (CAYMAN) II LIMITED Cayman Is.
GREENWICH (CAYMAN) III LIMITED Cayman Is.
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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SB CAYMAN HOLDINGS II INC. Delaware
SB CAYMAN HOLDINGS III INC. Delaware
SMITH BARNEY CREDIT SERVICES (CAYMAN) LTD.* Cayman Is.
SB CAYMAN HOLDINGS IV INC. Delaware
SMITH BARNEY (IRELAND) LIMITED Ireland
SMITH BARNEY COMMERCIAL CORP. Delaware
SMITH BARNEY EUROPE HOLDINGS, LTD. England
SMITH BARNEY FUND MANAGEMENT LLC. Delaware
CITI FUND MANAGEMENT INC. Delaware
CITIGROUP ASSET MANAGEMENT AUSTRALIA LIMITED Australia
SMITH BARNEY MANAGEMENT COMPANY (IRELAND) LIMITED Ireland
SSB GREENWICH STREET PARTNERS LLC Delaware
SALOMON SMITH BARNEY/GREENWICH STREET CAPITAL PARTNERS II, L.P. Delaware
SSB PRIVATE MANAGEMENT LLC Delaware
SALOMON SMITH BARNEY HICKS MUSE PARTNERS L. P. Delaware
SMITH BARNEY FUTURES MANAGEMENT LLC
CTA CAPITAL LLC Delaware
F-1000 FUTURES FUND L.P., MICHIGAN SERIES I New York
F-1000 FUTURES FUND L.P., MICHIGAN SERIES II New York
HUTTON INVESTORS FUTURES FUND, L.P. II Delaware
SALOMON SMITH BARNEY DIVERSIFIED 2000 FUTURES FUND L.P. New York
SALOMON SMITH BARNEY GLOBAL DIVERSIFIED FUTURES FUND L.P. New York
SALOMON SMITH BARNEY ORION FUTURES FUND L.P. New York
SALOMON SMITH BARNEY RIVERTON FUTURES FUND L.P. New York
SB/MICHIGAN FUTURES FUND L.P. New York
SHEARSON MID-WEST FUTURES FUND New York
SHEARSON SELECT ADVISORS FUTURES FUND L.P. Delaware
SMITH BARNEY AAA ENERGY FUND L.P. New York
SMITH BARNEY DIVERSIFIED FUTURES FUND L.P. New York
SMITH BARNEY DIVERSIFIED FUTURES FUND L.P. II New York
SMITH BARNEY GLOBAL MARKETS FUTURES FUND L.P. New York
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
1 2 3 4 5 6 7 8 9 10 11 12 INCORPORATION
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SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P. New York
SMITH BARNEY MID-WEST FUTURES FUND LP II New York
SMITH BARNEY POTOMAC FUTURES FUND, L.P. New York
SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II New York
SMITH BARNEY PRINCIPAL PLUS FUTURES FUND LP New York
SMITH BARNEY TIDEWATER FUTURES FUND L.P. New York
SMITH BARNEY WESTPORT FUTURES FUND L.P. New York
SMITH BARNEY GLOBAL CAPITAL MANAGEMENT, INC. Delaware
SMITH BARNEY MORTGAGE CAPITAL GROUP, INC. Delaware
SMITH BARNEY PRIVATE TRUST GMBH Switzerland
SMITH BARNEY REALTY, INC. Delaware
SMITH BARNEY RISK INVESTORS, INC. Delaware
SMITH BARNEY CONSULTING PARTNERSHIP, LP Delaware
SMITH BARNEY INVESTORS L.P. Delaware
SMITH BARNEY VENTURE CORP. Delaware
FIRST CENTURY MANAGEMENT COMPANY New York
SSB KEEPER HOLDINGS LLC Delaware
CITIGROUP PAYCO I LLC Delaware
CITIGROUP PAYCO II LLC Delaware
CITIGROUP PAYCO III LLC Delaware
SSBH CAPITAL I Delaware
TARGETS TRUST III Delaware
TARGETS TRUST IV Delaware
TARGETS TRUST IX Delaware
TARGETS TRUST V Delaware
TARGETS TRUST VI Delaware
TARGETS TRUST VII Delaware
TARGETS TRUST VIII Delaware
TARGETS TRUST X Delaware
THE TRAVELERS INVESTMENT MANAGEMENT COMPANY Connecticut
SMITH BARNEY CORPORATE TRUST COMPANY Delaware
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CITIGROUP INC. AS OF 31 DECEMBER 2001
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PLACE OF
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THE GENEVA GROUP, LLC Delaware
THE GENEVA COMPANIES, LLC Delaware
GENEVA CAPITAL MARKETS, LLC Delaware
GENEVA II LLC Delaware
TRAVELERS AUTO LEASING CORPORATION Delaware
TRAVELERS GROUP DIVERSIFIED DISTRIBUTION SERVICES, INC. Delaware
TRAVELERS GROUP EXCHANGE, INC. Delaware
TRAVELERS GROUP INTERNATIONAL LLC Delaware
TRV EMPLOYEES INVESTMENTS, INC. Delaware
TRV EMPLOYEES FUND, L.P. Delaware
TOTAL RECORDS: 1826
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Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Citigroup Inc.:
We consent to the incorporation by reference in the Registration Statements on:
o Form S-3 Nos. 33-49280, 33-55542, 33-56940, 33-68760, 33-51101, 33-62903, 33-63663, 333-04809, 333-12439, 333-27155, 333-37992, 333-42575, 333-44549, 333-49442, 333-51201, 333-68949, 333-68989, 333-90079, 333-57364; and 333-75554
o Form S-8 Nos. 33-29711, 33-38109, 33-39025, 33-43883, 33-47437, 33-50206, 33-51201, 33-51353, 33-51769, 33-51783, 33-52027, 33-52029, 33-64985, 33-28110, 33-52601, 333-00983, 333-02809, 333-02811, 333-12697, 333-25603, 333-38647, 333-41865, 333-49124, 333-51030, 333-56589, 333-65487, 333-77425, 333-94905, 333-46268, 333-58452, 333-58460, 333-58458; and 333-63016
of Citigroup Inc. of our report dated January 17, 2002, with respect to the consolidated statement of financial position of Citigroup Inc. and subsidiaries ("Citigroup") as of December 31, 2001 and 2000, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2001, which report is included in the annual report and Form 10-K of Citigroup Inc. for the year ended December 31, 2001. Our report refers to changes, in 2001, in Citigroup's methods of accounting for derivative instruments and hedging activities, accounting for interest income and impairment on purchased and retained beneficial interests in securitized financial assets, and accounting for goodwill and intangible assets resulting from business combinations consummated after June 30, 2001. Also, in 1999, Citigroup changed its methods of accounting for insurance-related assessments, accounting for insurance and reinsurance contracts that do not transfer insurance risk, and accounting for the costs of start-up activities.
/s/ KPMG New York, New York March 12, 2002 |
Exhibit 24.01
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ C. Michael Armstrong ------------------------ |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Alain J.P. Belda ---------------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Kenneth J. Bialkin ---------------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Kenneth T. Derr ------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ John M. Deutch ------------------ |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Alfredo Harp Helu --------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Roberto Hernandez Ramirez ----------------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Ann Dibble Jordan --------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Robert I. Lipp ---------------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Reuben Mark --------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Michael T. Masin -------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Dudley C. Mecum ------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Richard D. Parsons ---------------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Andrall E. Pearson ---------------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Robert E. Rubin ------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Franklin A. Thomas ----------------------------------- |
POWER OF ATTORNEY
ANNUAL REPORT ON FORM 10-K
CITIGROUP INC.
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, a director of Citigroup Inc., a Delaware corporation, do hereby constitute and appoint Sanford I. Weill, Todd S. Thomson and Michael A. Ross, and each of them severally, to be my true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and re-substitution, to sign my name to an Annual Report on Form 10-K of Citigroup Inc. for the fiscal year ended December 31, 2001, and all amendments thereto, and to file, or cause to be filed, the same with all exhibits thereto (including this power of attorney), and other documents in connection therewith with the Securities and Exchange Commission, provided that such Annual Report on Form 10-K in final form, and any amendment or amendments thereto and such other documents, be approved by said attorneys-in-fact, or by any one of them; and I do hereby grant unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in or about the premises, as fully and to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have subscribed these presents as of January 15, 2002.
/s/ Arthur Zankel ----------------- |
Exhibit 99.01
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class registered
------------------- -------------------------------
Common Stock, par value $ .01 New York Stock Exchange and
per share Pacific Exchange
Depositary Shares, each representing New York Stock Exchange
1/5th of a share of 6.365% Cumulative
Preferred Stock, Series F
Depositary Shares, each representing New York Stock Exchange
1/5th of a share of 6.213% Cumulative
Preferred Stock, Series G
Depositary Shares, each representing New York Stock Exchange
1/5th of a share of 6.231% Cumulative
Preferred Stock, Series H
Depositary Shares, each representing New York Stock Exchange
1/5th of a share of 5.864% Cumulative
Preferred Stock, Series M
Depositary Shares, each representing New York Stock Exchange
1/10th of a share of Adjustable Rate
Cumulative Preferred Stock, Series Q
Depositary Shares, each representing New York Stock Exchange
1/10th of a share of Adjustable Rate
Cumulative Preferred Stock, Series R
7 3/4% Trust Securities of Subsidiary Trust New York Stock Exchange
(and registrant's guaranty with respect
thereto)
7 5/8% Trust Securities of Subsidiary Trust New York Stock Exchange
(and registrant's guaranty with respect
thereto)
6.850% Trust Securities (TRUPS(R)) of New York Stock Exchange
Subsidiary Trust (and registrant's guaranty
with respect thereto)
7% Trust Securities (TRUPS(R)) of New York Stock Exchange
Subsidiary Trust (and registrant's guaranty
with respect thereto)
6 7/8% Trust Securities (TRUPS(R)) of New York Stock Exchange
Subsidiary Trust (and registrant's guaranty
with respect thereto)
7.125% Trust Securities (TRUPS(R)) of New York Stock Exchange
Subsidiary Trust (and registrant's guaranty
with respect thereto)
6.950% Trust Securities (TRUPS(R)) of New York Stock Exchange
Subsidiary Trust (and registrant's guaranty
with respect thereto)
|