FINANCIAL INFORMATION

THE COMPANY 26 Loan Maturities and Fixed/Variable Pricing 89

Citigroup Segments and Products 26 Market Risk Management Process 89
Citigroup Regions 26 Operational Risk Management Process 91
CITIGROUP INC. AND SUBSIDIARIES Country and Cross-Border Risk Management Process 92
FIVE-YEAR SUMMARY OF BALANCE SHEET REVIEW 94
SELECTED FINANCIAL DATA 27 Average Balances and Interest Rates—Assets 96
MANAGEMENT’S DISCUSSION AND ANALYSIS 28 Average Balances and Interest Rates—Liabilities and Equity,
2005 in Summary 28 and Net Interest Revenue 97
Events in 2005 30 Analysis of Changes in Interest Revenue 98
Events in 2004 34 Analysis of Changes in Interest Expense and
Events in 2003 34 Net Interest Revenue 99
SIGNIFICANT ACCOUNTING POLICIES CAPITAL RESOURCES AND LIQUIDITY 100
AND SIGNIFICANT ESTIMATES 35 Capital Resources 100
SEGMENT, PRODUCT AND REGIONAL Liquidity 103
NET INCOME 37 Funding 104
Citigroup Net Income—Product View 37 Off-Balance Sheet Arrangements 106
Citigroup Net Income—Regional View 38 Interest Rate Risk Associated with Consumer Mortgage
Selected Revenue and Expense Items 39 Lending Activity 108
GLOBAL CONSUMER 40 Pension and Postretirement Plans 109
U.S. Consumer 41 CORPORATE GOVERNANCE
U.S. Cards 42 AND CONTROLS AND PROCEDURES 110
U.S. Retail Distribution 44 FORWARD-LOOKING STATEMENTS 111
U.S. Consumer Lending 46 GLOSSARY OF TERMS 112
U.S. Commercial Business 48 MANAGEMENT’S REPORT ON INTERNAL
U.S. Consumer Outlook 50 CONTROL OVER FINANCIAL REPORTING 114
International Consumer 51 REPORT OF INDEPENDENT REGISTERED
International Cards 52 PUBLIC ACCOUNTING FIRM — INTERNAL
International Consumer Finance 54 CONTROL OVER FINANCIAL REPORTING 115
International Retail Banking 56 REPORT OF INDEPENDENT REGISTERED
International Consumer Outlook 58 PUBLIC ACCOUNTING FIRM —
Other Consumer 58 CONSOLIDATED FINANCIAL STATEMENTS 116
CORPORATE AND INVESTMENT BANKING 59 CONSOLIDATED FINANCIAL STATEMENTS 117
Capital Markets and Banking 60 Consolidated Statement of Income 117
Transaction Services 62 Consolidated Balance Sheet 118
Other CIB 64 Consolidated Statement of Changes in Stockholders’ Equity 119
Corporate and Investment Banking Outlook 64 Consolidated Statement of Cash Flows 120
GLOBAL WEALTH MANAGEMENT 65 Consolidated Balance Sheet—Citibank, N.A. 121
Smith Barney 66 NOTES TO CONSOLIDATED FINANCIAL
Private Bank 68 STATEMENTS 122
Global Wealth Management Outlook 70 FINANCIAL DATA SUPPLEMENT (Unaudited) 178
ALTERNATIVE INVESTMENTS 71 Ratios 178
CORPORATE/OTHER 74 Average Deposit Liabilities in Offices Outside the U.S. 178
RISK FACTORS 75 Maturity Profile of Time Deposits ($100,000 or more)
MANAGING GLOBAL RISK 76 in U.S. Offices 178
Risk Capital 76 Short-Term and Other Borrowings 178
Credit Risk Management Process 77 LEGAL AND REGULATORY REQUIREMENTS 179
Loans Outstanding 78 Securities Regulation 180
Other Real Estate Owned and Other Repossessed Assets 78 Capital Requirements 180
Details of Credit Loss Experience 79 General Business Factors 181
Cash-Basis, Renegotiated, and Past Due Loans 80 Properties 181
Foregone Interest Revenue on Loans 80 Legal Proceedings 181
Consumer Credit Risk 81 Unregistered Sales of Equity and Use of Proceeds 186
Consumer Portfolio Review 81 Equity Compensation Plan Information 187
Corporate Credit Risk 84 10-K CROSS-REFERENCE INDEX 189
Citigroup Derivatives 86 CORPORATE INFORMATION 190
Global Corporate Portfolio Review 88 Exhibits and Financial Statement Schedules 190
CITIGROUP BOARD OF DIRECTORS 192
25
THE COMPANY

Citigroup Inc. (Citigroup and, together with its subsidiaries, the Company) is strategic business acquisitions and divestitures during the past three years,
a diversified global financial services holding company whose businesses details of which can be found in Notes 2 and 3 to the Consolidated Financial
provide a broad range of financial services to consumer and corporate Statements on pages 131 and 132, respectively.
customers. Citigroup has more than 200 million customer accounts and does The principal executive offices of the Company are located at 399 Park
business in more than 100 countries. Citigroup was incorporated in 1988 Avenue, New York, New York 10043, telephone number 212-559-1000.
under the laws of the State of Delaware. Additional information about Citigroup is available on the Company’s Web
The Company is a bank holding company within the meaning of the U.S. site at www.citigroup.com. Citigroup’s annual report on Form 10-K, its
Bank Holding Company Act of 1956 registered with, and subject to quarterly reports on Form 10-Q, its current reports on Form 8-K, and all
examination by, the Board of Governors of the Federal Reserve System (FRB). amendments to these reports are available free of charge through the
Some of the Company’s subsidiaries are subject to supervision and Company’s Web site by clicking on the “Investor Relations” page and
examination by their respective federal and state authorities. At December 31, selecting “SEC Filings.” The Securities and Exchange Commission (SEC)
2005, the Company had approximately 140,000 full-time and 8,000 part-time Web site contains reports, proxy and information statements, and other
employees in the United States and approximately 159,000 full-time information regarding the Company at www.sec.gov.
employees outside the United States. The Company has completed certain Citigroup is managed along the following segment and product lines:

Citigroup Segments and Products

Global Corporate and Global Wealth Alternative Corporate/

Consumer Investment Management Investments Other
Group Banking (CIB)

• Capital Markets • Smith Barney –Private equity –Treasury

and Banking –Advisory –Hedge funds –Operations and
–Investment banking –Financial Planning –Real estate technology
U.S. International –Debt and equity –Brokerage –Structured products –Corporate expenses
• Cards • Cards markets • Citigroup –Managed futures –Discontinued
–MasterCard, VISA, –MasterCard, VISA, –Lending Investment operations
Diners Club and Diners Club and • Transaction Research
private label private label Services –Equity and fixed
• Consumer • Consumer –Cash management income research
Lending Finance –Trade services • Private Bank
–Real estate lending –Real estate lending –Custody and fund –Wealth
–Student loans –Personal loans services management
–Auto loans –Auto loans –Clearing services services
• Retail • Retail Banking –Agency/trust
Distribution –Retail bank services
–Citibank branches branches
–CitiFinancial –Small and middle
branches market commercial
–Primerica Financial banking
Services –Investment services
• Commercial –Asset management
Business –Retirement services
–Small and middle –Real estate lending
market commercial –Personal loans
banking –Sales finance

The following are the six regions in which Citigroup operates. The regional results are fully reflected in the product results.

Citigroup Regions

Europe,
United States(1) Middle East & Asia
(U.S.) Mexico Latin America Japan
Africa (excl. Japan)
(EMEA)
(1) Disclosure includes Canada and Puerto Rico.

26
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA Citigroup Inc. and Subsidiaries

In millions of dollars, except per share amounts 2005 2004 2003 2002 2001
Revenues, net of interest expense $ 83,642 $ 79,635 $ 71,594 $ 66,246 $ 61,621
Operating expenses 45,163 49,782 37,500 35,886 35,026
Provisions for credit losses and for benefits and claims 9,046 7,117 8,924 10,972 7,666
Income from continuing operations before taxes, minority
interest, and cumulative effect of accounting changes $ 29,433 $ 22,736 $ 25,170 $ 19,388 $ 18,929
Income taxes 9,078 6,464 7,838 6,615 6,659
Minority interest, net of taxes 549 218 274 91 87
Income from continuing operations before cumulative effect of
accounting changes $ 19,806 $ 16,054 $ 17,058 $ 12,682 $ 12,183
Income from discontinued operations, net of taxes (1) 4,832 992 795 2,641 2,101
Cumulative effect of accounting changes, net of taxes (2) (49) — — (47) (158)
Net Income $ 24,589 $ 17,046 $ 17,853 $ 15,276 $ 14,126

Earnings per share

Basic earnings per share:
Income from continuing operations $3.90 $3.13 $3.34 $2.48 $2.40
Net income 4.84 3.32 3.49 2.99 2.79
Diluted earnings per share:
Income from continuing operations 3.82 3.07 3.27 2.44 2.35
Net income 4.75 3.26 3.42 2.94 2.72
Dividends declared per common share $1.76 $1.60 $1.10 $0.70 $0.60

At December 31
Total assets $1,494,037 $1,484,101 $1,264,032 $1,097,590 $1,051,850
Total deposits 592,595 562,081 474,015 430,895 374,525
Long-term debt 217,499 207,910 162,702 126,927 121,631
Mandatorily redeemable securities of subsidiary trusts (3) 6,264 6,209 6,057 6,152 7,125
Common stockholders’ equity 111,412 108,166 96,889 85,318 79,722
Total stockholders’ equity 112,537 109,291 98,014 86,718 81,247

Ratios:
Return on common stockholders’ equity (4) 22.3% 17.0% 19.8% 18.6% 19.7%
Return on total stockholders’ equity (4) 22.1 16.8 19.5 18.3 19.4
Return on risk capital (5) 38 35 39
Return on invested capital (5) 22 17 20

Tier 1 capital 8.79% 8.74% 8.91% 8.47% 8.42%

Total capital 12.02 11.85 12.04 11.25 10.92
Leverage (6) 5.35 5.20 5.56 5.67 5.64

Common stockholders’ equity to assets 7.46% 7.29% 7.67% 7.77% 7.58%

Total stockholders’ equity to assets 7.53 7.36 7.75 7.90 7.72
Dividends declared (7) 37.1 49.1 32.2 23.8 22.1
Ratio of earnings to fixed charges and preferred stock dividends 1.79X 2.00x 2.41x 1.89x 1.58x
(1) Discontinued operations for 2001 to 2005 includes the operations (and associated gain) described in the Company’s June 24, 2005 announced agreement for the sale of substantially all of its Asset Management
business to Legg Mason. The transaction closed on December 1, 2005. Discontinued operations from 2001 to 2005 also includes the operations (and associated gain) described in the Company’s January 31, 2005
announced agreement for the sale of Citigroup’s Travelers Life & Annuity, substantially all of Citigroup’s international insurance business and Citigroup’s Argentine pension business to MetLife Inc. The transaction closed on
July 1, 2005. On August 20, 2002, Citigroup completed the distribution to its stockholders of a majority portion of its remaining ownership interest in Travelers Property Casualty Corp. (TPC). Following the distribution,
Citigroup began accounting for TPC as discontinued operations. As such, 2001 to 2002 also reflect TPC as a discontinued operation. See Note 3 to the Consolidated Financial Statements on page 132.
(2) Accounting change of $(49) million represents the adoption of Financial Accounting Standards Board (FASB) Interpretation (FIN) 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of SFAS No.
143.” Accounting change of $(47) million in 2002 resulted from the adoption of the remaining provisions of Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets” (SFAS
142). Accounting changes of $(42) million and $(116) million in 2001 resulted from the adoption of SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133), and the adoption of 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), respectively.
(3) During 2004, the Company deconsolidated the subsidiary issuer trusts in accordance with FIN 46-R. For regulatory capital purposes, these trust securities remain a component of Tier 1 Capital. See “Capital Resources
and Liquidity” on page 100.
(4) The return on average common stockholders’ equity and return on average total stockholders’ equity are calculated using net income after deducting preferred stock dividends.
(5) Risk capital is defined as the amount of capital required to absorb potential unexpected economic losses resulting from extremely severe events over a one-year time period. Return on risk capital is calculated as net
income divided by average risk capital. Invested capital is defined as risk capital plus goodwill and intangible assets excluding mortgage servicing rights, which are a component of risk capital. Return on invested capital is
calculated using income adjusted to exclude a net internal charge Citigroup levies on the goodwill and intangible assets of each business offset by each business’ share of the rebate of the goodwill and intangible asset
charge. Return on risk capital and return on invested capital are non-GAAP performance measures. Management uses return on risk capital to assess businesses’ operational performance and to allocate Citigroup’s
balance sheet and risk capital capacity. Return on invested capital is used to assess returns on potential acquisitions and to compare long-term performance of businesses with differing proportions of organic and
acquired growth. For a further discussion on risk capital, see page 76.
(6) Tier 1 capital divided by adjusted average assets.
(7) Dividends declared per common share as a percentage of net income per diluted share.

27
MANAGEMENT’S DISCUSSION AND ANALYSIS

2005 in Summary
2005 Income by Region*
During 2005, we shifted our business mix more toward the distribution of
financial services, with the sales of our Asset Management and Travelers Life
& Annuities businesses. We reorganized our U.S. Consumer business to more Latin
America 5%
closely integrate our product offerings to better meet the needs of our
customers. We focused on organic investment, adding more than 200 retail Asia 14%
bank branches and nearly 350 consumer finance branches during the year,
most of them outside of the U.S. Japan 6%
U.S.
57%
All of these changes reflect our competitive advantages:
EMEA 8%
• our global presence,
• broad distribution, Mexico 10%
• valuable brand,
• unmatched scale and efficiency,
• and product breadth.
*Excludes Alternative Investments, Corporate/Other, and Discontinued Operations.
These advantages combined to generate net income of $24.6 billion in 2005.
Income was well diversified by segment, product and region, as shown in the
charts below. Results in 2005 included a $2.1 billion after-tax gain on the sale Diluted Earnings Per Share—
of the Travelers Life & Annuities Business and a $2.1 billion after-tax gain on Income from Continuing Operations
the sale of the Asset Management Business. Income from Continuing $3.82
Operations (which excludes the gains from these transactions and the
historical results from these businesses) was $19.8 billion. $3.27
$3.07

Income from Continuing Operations $2.44

In billions of dollars $2.35

$19.8

$17.1
$16.1

$12.2 $12.7

2001 2002 2003 2004 2005

Revenues increased 5% from 2004, reaching $83.6 billion. Our

international operations recorded revenue growth of 7% in 2005, including a
12% increase in International Consumer. A 10% increase in International
Consumer loans, 23% increase in international investment product sales, 8%
increase in U.S. Cards purchase sales, and 9% increase in U.S. Consumer
2001 2002 2003 2004 2005
loans drove Global Consumer volume growth. CIB revenues grew by 10%,
with particularly strong performance in Transaction Services. Capital
2005 Income by Segment* Markets and Banking finished the year ranked #1 in equity underwriting
and #2 in completed mergers and acquisitions activity. Higher equity market
Alternative valuations led to significantly increased results in Alternative Investments.
Investments A challenging business environment and competitive pricing pressures
7%
Global Wealth during 2005 accentuated the impact of flattening global yield curves, which
Management 6%
drove a decline in net interest revenue. This spread compression negatively
impacted the Company’s operating leverage ratios, particularly in U.S. Cards
Global and Capital Markets and Banking.
Consumer
Corporate 53% Revenue growth benefited from increased loan volumes, including
and Investment corporate loan growth of 13% and consumer loan growth of 4%.
Banking 34%
Transaction Services assets under custody increased 9% and Smith Barney
client assets increased 16%.

*Excludes Corporate/Other and Discontinued Operations.

28
Total Deposits During 2005, we maintained our focus on disciplined capital allocation
In billions of dollars and returns to our shareholders. Our equity capital base and trust preferred
U.S.
International securities grew to $118.8 billion at December 31, 2005. Stockholders’ equity
$593
$562 increased by $3.2 billion during 2005 to $112.5 billion, even with the
distribution of $9.1 billion in dividends to common shareholders and the
$474 $207
$193
repurchase of $12.8 billion of common stock during the year. Return on
$431
common equity was 22.3% for 2005.
$375
$177
$171 Return on Average Common Equity
$134

$386 22.3%
$369
$297 19.8%
$241 $260 19.7%
18.6%
17.0%

2001 2002 2003 2004 2005

Operating expenses decreased 9% from the previous year, primarily

reflecting the absence of the $7.9 billion WorldCom and Litigation Reserve
Charge and the $400 million charge related to closing the Japan Private
Bank, which were both recorded in 2004. Expenses in 2005 reflected a $600
million release from the WorldCom and Litigation Reserve Charge. Excluding
these items, operating expenses increased 10% in 2005, reflecting increased
investment spending, the impact of foreign exchange, and an increase in 2001 2002 2003 2004 2005
other legal expenses. Investment spending included, among other things, the
addition of Consumer branches and investments in technology. The Board of Directors increased the quarterly common dividend by
10% during 2005 and by an additional 11% in January 2006, bringing
Net Revenue and Operating Expense the current quarterly payout to $0.49 per share. Citigroup maintained
In billions of dollars its “well-capitalized” position with a Tier 1 Capital Ratio of 8.79% at
Net revenue
Operating expense December 31, 2005.

Total Capital (Tier 1 and Tier 2)

In billions of dollars
$83.6 Tier 1 and Tier 2
$79.6
Tier 1
$71.6 $106.4
$66.2 $100.9
$61.6
$49.8 $90.3
$45.2
$35.0 $35.9 $37.5 $75.8 $78.3

$77.8
$74.4
$66.9
$58.4 $59.0
2001 2002 2003 2004 2005

Despite the negative impact of the U.S. bankruptcy law change and
Hurricane Katrina, the global credit environment remained favorable;
however, total credit costs increased $1.9 billion, primarily due to the absence 2001 2002 2003 2004 2005
of the reserve releases recorded during 2004. The effective tax rate increased
241 basis points to 30.8% for the year, primarily reflecting the impact of During 2005, we made progress towards our goal of ensuring that all of
indefinitely invested international earnings and other items on the lower level our businesses are best in class; we grew our Global Consumer franchise; and
of pretax earnings in 2004 due to the impact of the WorldCom and Litigation significantly expanded our International businesses. Our Five Point Plan was
Reserve Charge. a priority during 2005, and we met every deadline for implementation. We
also continued to resolve our legal and regulatory issues. And we promoted a
new generation of business leaders.

29
 Events in 2005
Outlook for 2006
Certain of the statements below are forward-looking statements within the
We enter 2006 optimistic and well-positioned to gain from our competitive
meaning of the Private Securities Litigation Reform Act. See “Forward-
advantages.
Looking Statements” on page 111.
We are a global company with an unparalleled presence around the world.
We have operations in 100 countries and customers in nearly 50 more, with Sale of Asset Management Business
40% of our revenues in 2005 from outside of the U.S. The international On December 1, 2005, the Company completed the sale of substantially all of
market for goods and services is more than twice the size of, and is growing its Asset Management Business to Legg Mason, Inc. (Legg Mason) in
at a faster rate than the U.S. market, leading to significant opportunities for exchange for Legg Mason’s broker-dealer business, $2.298 billion of Legg
us globally. Mason’s common and preferred shares (valued as of the closing date), and
Our strategic initiatives for 2006 include the expansion of both our $500 million in cash. This cash was obtained via a lending facility provided
international and U.S. distribution. Our pace of opening branches and by Citigroup Corporate and Investment Banking. The transaction did not
distribution points will accelerate. We plan to transfer our expertise and include Citigroup’s asset management business in Mexico, its retirement
market knowledge from business to business and region to region. We will services business in Latin America (both of which are now included in
continue to invest in technology and people, integrating these investments International Retail Banking) or its interest in the CitiStreet joint venture
across the Company. To do each of these effectively, disciplined capital (which is now included in Smith Barney). The total value of the transaction
allocation is fundamental to our strategic process. at the time of closing was approximately $4.369 billion, resulting in an after-
We expect to continue to achieve growth in loans, deposits and other tax gain to Citigroup of approximately $2.082 billion ($3.404 billion pretax).
customer activity as we add distribution points and continue to enhance our This gain remains subject to final closing adjustments.
product offerings. Concurrently, Citigroup sold Legg Mason’s Capital Markets business to
During 2006, we will continue to build on our Shared Responsibilities and Stifel Financial Corp. (The transactions described in these two paragraphs are
strive to exceed our customers’ needs. referred to as the “Sale of the Asset Management Business”).
Citigroup’s financial results are closely tied to the external global Upon completion of the Sale of the Asset Management Business, Citigroup
economic environment. Movements in interest rates and foreign exchange added 1,226 financial advisors in 124 branch offices from Legg Mason to its
rates present both opportunities and risks for the Company. Weakness in the Global Wealth Management business.
global economy, credit deterioration, inflation, and geopolitical uncertainty Additional information can be found in Note 3 to the Consolidated
are examples of risks that could adversely impact our earnings. Financial Statements on page 132.
We expect revenue growth in 2006 to continue to reflect some pressure
Sale of Travelers Life & Annuity
from the flat yield curve in the U.S. and many international markets, as well
On July 1, 2005, the Company completed the sale of Citigroup’s Travelers Life
as a competitive pricing environment in the U.S. We look for these to be more
& Annuity and substantially all of Citigroup’s international insurance
than offset by continued strong growth in our customer businesses,
businesses to MetLife, Inc. (MetLife). The businesses sold were the primary
particularly outside the U.S., as the investments we have made in our
vehicles through which Citigroup engaged in the Life Insurance and
businesses are reflected in our results. We will continue to be disciplined in
Annuities business.
our expense management, while investing for our future. Credit is stable as
Citigroup received $1.0 billion in MetLife equity securities and $10.830
we enter 2006.
billion in cash, which resulted in an after-tax gain of approximately $2.120
Although there may be volatility in our results in any given year, over time
billion ($3.386 billion pretax). This gain remains subject to final closing
we look for our revenues to grow at a mid to high single-digit rate, with strong
adjustments.
expense and credit management driving earnings and earnings per share
The transaction encompassed the Travelers Life & Annuity’s U.S.
growth at a faster level. We look to augment this growth rate over time
businesses and its international operations, other than Citigroup’s life
through targeted acquisitions.
insurance business in Mexico (which is now included within International
A detailed review and outlook for each of our business segments and
Retail Banking). International operations included wholly owned insurance
products are included in the discussions that follow, and the risks are more
companies in the United Kingdom, Belgium, Australia, Brazil, Argentina, and
fully discussed on page 75.
Poland; joint ventures in Japan and Hong Kong; and offices in China. The
Certain of the statements above are forward-looking statements within the
transaction also included Citigroup’s Argentine pension business. (The
meaning of the Private Securities Litigation Reform Act. See “Forward-
transaction described in the preceding three paragraphs is referred to as the
Looking Statements” on page 111.
“Sale of the Life Insurance and Annuities Business”).
Additional information can be found in Note 3 to the Consolidated
Financial Statements on page 132.
Change in EMEA Consumer Write-off Policy
Prior to the third quarter of 2005, certain Western European consumer
portfolios were granted an exception to Citigroup’s global write-off policy.
The exception extended the write-off period from the standard 120-day policy
for personal installment loans, and was granted because of the higher

30
recovery rates experienced in these portfolios. Citigroup recently observed Sale of Nikko Cordial Stake
lower actual recovery rates, stemming primarily from a change in bankruptcy On December 13, 2005, Citigroup and Nikko Cordial agreed that Citigroup
and wage garnishment laws in Germany and, as a result, rescinded the would reduce its stake in Nikko Cordial from approximately 11.2% to 4.9%.
exception to the global standard. The net charge was $332 million ($490 The sale resulted in an after-tax gain of $248 million ($386 million pretax).
million pretax) resulting from the recording of $1.153 billion of write-offs In connection with this sale, Nikko Cordial and Citigroup each contributed
and a corresponding utilization of $663 million of reserves in the 2005 an additional approximately $175 million to their joint venture, Nikko
third quarter. These write-offs, along with the underlying portfolio Citigroup Limited.
performance, caused the 90-day delinquency rate for the Consumer EMEA
Sale of the Merchant Acquiring Businesses
portfolio to decline to 1.29% at December 31, 2005, compared to 3.36% at
In December 2005, Citigroup sold its European merchant acquiring business
December 31, 2004.
to EuroConex for $127 million. This transaction resulted in a $62 million
These write-offs did not relate to a change in the portfolio credit quality
after-tax gain ($98 million pretax).
but rather to a change in environmental factors due to law changes and
In September 2005, Citigroup sold its U.S. merchant acquiring business,
consumer behavior that led Citigroup to re-evaluate its estimates of future
Citigroup Payment Service Inc., to First Data Corporation for $70 million,
long-term recoveries and their appropriateness to the write-off exception.
resulting in a $41 million after-tax gain ($61 million pretax).
A slight upward movement in net charge-offs may occur in EMEA in the
near term due to the timing of the write-offs, now at 120 days, versus the Homeland Investment Act Benefit
longer period of time over which recoveries will be realized. The Company is The Company’s results from continuing operations include a $198 million
in the process of adjusting its collection strategies in EMEA to reflect the tax benefit from the Homeland Investment Act provision of the American Jobs
revised write-off time frame. Creation Act of 2004, net of the impact of remitting income earned in 2005
and prior years that would otherwise have been indefinitely invested overseas.
Impact from Hurricane Katrina
The amount of dividends that were repatriated relating to this benefit is
The Company recorded a $222 million after-tax charge ($357 million pretax)
approximately $3.2 billion.
for the estimated probable losses incurred from Hurricane Katrina. This
charge consists primarily of additional credit costs in U.S. Cards, U.S. Copelco Litigation Settlement
Commercial Business, U.S. Consumer Lending and U.S. Retail In 2000, Citigroup purchased Copelco Capital, Inc., a leasing business, from
Distribution businesses, based on total credit exposures of approximately Itochu International Inc. and III Holding Inc. (collectively “Itochu”) for
$3.6 billion in the Federal Emergency Management Agency (FEMA) $666 million. During 2001, Citigroup filed a lawsuit asserting breach of
Individual Assistance designated areas. This charge does not include an after- representations and warranties, among other causes of action, under the
tax estimate of $75 million ($109 million pretax) for fees and interest due Stock Purchase Agreement entered into between Citigroup and Itochu in
from related customers that were waived during 2005. March of 2000. During the 2005 third quarter, Citigroup and Itochu signed a
settlement agreement that mutually released all claims, and under which
United States Bankruptcy Legislation
Itochu paid Citigroup $185 million.
On October 17, 2005, the Bankruptcy Reform Act (or the Act) became
effective. The Act imposes a means test to determine if people who file for Mexico Value Added Tax (VAT) Refund
Chapter 7 bankruptcy earn more than the median income in their state and During the 2005 third quarter, Citigroup Mexico received a $182 million
could repay at least $6,000 of unsecured debt over five years. Bankruptcy filers refund of VAT taxes from the Mexican government related to the 2003 and
who meet this test are required to enter into a repayment plan under Chapter 2004 tax years as a result of a Mexico Supreme Court ruling. The refund was
13, instead of canceling their debt entirely under Chapter 7. As a result of recorded as a reduction of $140 million (pretax) in other operating expense
these more stringent guidelines, bankruptcy claims accelerated prior to the and $42 million (pretax) in other revenue.
effective date. The incremental bankruptcy losses over the Company’s
Legal Settlements and Charges for Enron and WorldCom
estimated baseline in 2005 that was attributable to the Act in U.S. Cards Class Action Litigations and for Other Regulatory and
business was approximately $970 million on a managed basis ($550 million Legal Matters
in the Company’s on-balance sheet portfolio and $420 million in the The Company is a defendant in numerous lawsuits and other legal
securitized portfolio). In addition, the U.S. Retail Distribution business proceedings arising out of alleged misconduct in connection with:
incurred incremental bankruptcy losses of approximately $90 million
during 2005. (i) underwritings for, and research coverage of, WorldCom;

Bank and Credit Card Customer Rewards Costs (ii) underwritings for Enron and other transactions and activities related
During the 2005 fourth quarter, the Company conformed its global policy to Enron;
approach for the accounting of rewards costs for bank and credit card (iii) transactions and activities related to research coverage of companies
customers. Conforming the global policy resulted in the write-off of $354 other than WorldCom; and
million after-tax ($565 million pretax) of unamortized deferred rewards
costs. Previously, accounting practices for these costs varied across the (iv) transactions and activities related to the IPO Securities Litigation.
Company. The revised policy requires all businesses to recognize rewards costs
as incurred.

31
 During the 2004 second quarter, in connection with the settlement of the Settlement of the Securities and Exchange Commission’s
WorldCom class action, the Company re-evaluated and increased its reserves Transfer Agent Investigation
for these matters. The Company recorded a charge of $7.915 billion ($4.95 On May 31, 2005, the Company completed the settlement with the Securities
billion after-tax) relating to (i) the settlement of class action litigation and Exchange Commission (SEC), disclosed by Citigroup in January 2005,
brought on behalf of purchasers of WorldCom securities, and (ii) an increase resolving an investigation by the SEC into matters relating to arrangements
in litigation reserves for the other matters described above. Subject to the between certain Smith Barney mutual funds (the Funds), an affiliated
terms of the WorldCom class action settlement, and its eventual approval by transfer agent, and an unaffiliated sub-transfer agent.
the courts, the Company will make a payment of $2.57 billion pretax to the Under the terms of the settlement, Citigroup paid a total of $208 million,
WorldCom settlement class. In addition, subject to the terms of the Enron consisting of $128 million in disgorgement and $80 million in penalties.
class action settlement, and its eventual approval by the courts, the Company These funds, less $24 million already credited to the Funds, have been paid
will make a payment of $2.01 billion pretax to the Enron settlement class. to the U.S. Treasury and will be distributed pursuant to a distribution plan
During the fourth quarter of 2005, in connection with an evaluation of prepared by Citigroup and to be approved by the SEC. The terms of the
these matters and as a result of the favorable resolution of certain settlement had been fully reserved by Citigroup in prior periods.
WorldCom/Research litigation matters, the Company re-evaluated its reserves Resolution of the 2004 Eurozone Bond Trade
for these matters and released $600 million ($375 million after-tax) from this As announced on June 28, 2005, Citigroup paid $7.29 million to the U.K.
reserve. As of December 31, 2005, the Company’s litigation reserve for these Financial Services Authority (FSA) during the 2005 third quarter relating
matters, net of settlement amounts previously paid, the amounts to be paid to trading activity in the European government bond and bond derivative
upon final approval of the WorldCom and Enron class action settlements and markets on August 2, 2004. The Company also relinquished to the FSA
other settlements arising out of the matters above not yet paid, and the $600 approximately $18.2 million in profits generated by the trade. In Italy,
million release that was recorded during the 2005 fourth quarter, was Citigroup was suspended from trading on the Multilateral Trading System
approximately $3.3 billion. (MTS) domestic electronic bond trading platform for one month beginning
The Company believes that this reserve is adequate to meet all of its November 1, 2005.
remaining exposure for these matters. However, in view of the large number of
these matters, the uncertainties of the timing and outcome of this type of Merger of Bank Holding Companies
litigation, the novel issues presented, and the significant amounts involved, it On August 1, 2005, Citigroup merged its two intermediate bank holding
is possible that the ultimate costs of these matters may exceed or be below the companies, Citigroup Holdings Company and Citicorp, into Citigroup Inc.
reserve. The Company will continue to defend itself vigorously in these cases, Coinciding with this merger, Citigroup assumed all existing indebtedness and
and seek to resolve them in the manner management believes is in the best outstanding guarantees of Citicorp.
interests of the Company. During the 2005 second quarter, Citigroup also consolidated its capital
The Company continues to evaluate its reserves on an ongoing basis. markets funding activities into two legal entities: (i) Citigroup Inc., which
See “Legal Proceedings” on page 181. issues long-term debt, trust preferred securities, and preferred and common
stock, and (ii) Citigroup Funding Inc. (CFI), a newly formed first-tier
Acquisition of Federated Credit Card Portfolio and Credit subsidiary of Citigroup, which issues commercial paper and medium-term
Card Agreement With Federated Department Stores
notes, all of which is guaranteed by Citigroup.
On June 2, 2005, Citigroup announced that it had agreed to enter into a long-
As part of the funding consolidation, Citigroup unconditionally
term agreement with Federated Department Stores, Inc. (Federated) under
guaranteed Citigroup Global Markets Holdings Inc.’s (CGMHI) outstanding
which the companies will partner to manage Federated’s credit card business,
SEC-registered indebtedness. CGMHI no longer files periodic reports with the
including existing and new accounts.
SEC and continues to be rated on the basis of a guarantee of its financial
Under the agreement, Citigroup will acquire Federated’s approximately
obligations from Citigroup.
$6.3 billion credit card receivables portfolio in three phases. For the first
Due to unified access to the capital markets and a reduction in the number
phase, which closed on October 24, 2005, Citigroup acquired Federated’s
of the Company’s credit-rated entities, this legal vehicle simplification has
receivables under management, totaling approximately $3.3 billion. For the
resulted in more efficient management of capital and liquidity. See “Capital
second phase, additional Federated receivables, which total approximately
Resources and Liquidity” on page 100 and Note 27 to the Consolidated
$1.2 billion, are expected to be transferred to Citigroup in the 2006 second
Financial Statements on page 167 for further discussion.
quarter from the current provider. For the final phase, Citigroup expects to
acquire, in the 2006 third quarter, the approximately $1.8 billion credit card Credit Reserves
receivable portfolio of The May Department Stores Company (May), which During 2005, the Company recorded a net release/utilization of its credit
recently merged with Federated. reserves of $227 million, consisting of a net release/utilization of $459
Citigroup is paying a premium of approximately 11.5% to acquire each of million in Global Consumer and Global Wealth Management, and a net build
the portfolios. The multi-year agreement also provides Federated the ability of $232 million in CIB.
to participate in the portfolio based on credit sales and certain other The net release/utilization in Global Consumer included a utilization in
performance metrics of the portfolio after the receivable sale is completed. EMEA of $663 million, related to write-offs of $1.153 billion in loans, and a
The Federated and May credit card portfolios comprise a total of reserve build of $260 million in the U.S. for the credit impact from Hurricane
approximately 17 million active accounts. Katrina realized in the third quarter of 2005. The EMEA utilization and

32
corresponding write-offs were the results of the standardization of the loan Resolution of Glendale Litigation
write-off policy in certain Western European consumer portfolios. During the 2005 first quarter, the Company recorded a $72 million after-tax
The net build of $232 million in CIB was primarily composed of $204 gain ($114 million pretax) following the resolution of Glendale Federal
million in Capital Markets and Banking, which included a $238 million Bank v. United States, an action brought by Glendale Federal Bank, a
reserve increase for unfunded lending commitments and letters of credit, and predecessor to Citibank (West), FSB, against the United States government.
$28 million in Transaction Services, which included a $12 million increase
Acquisition of First American Bank
for unfunded lending commitments and letters of credit.
On March 31, 2005, Citigroup completed its acquisition of First American
During 2004, the Company recorded a net release/utilization of
Bank in Texas (FAB). The transaction established Citigroup’s retail branch
$2,368 million to its credit reserves, consisting of a net release/utilization
presence in Texas, giving Citigroup 106 branches, $4.2 billion in assets and
of $1,266 million in Global Consumer and a net release/utilization of
approximately 120,000 new customers in the state at the time of transaction
$1,102 million in CIB.
closing. The results of FAB are included in the Consolidated Financial
Credit Reserve Builds (Releases) Statements from March 2005 forward.
In millions of dollars 2005 2004 Divestiture of the Manufactured Housing Loan Portfolio
By Product: On May 1, 2005, Citigroup completed the sale of its manufactured housing
U.S. Cards $ (170) $ (639) loan portfolio, consisting of $1.4 billion in loans, to 21st Mortgage Corp. The
U.S. Retail Distribution 302 (16) Company recognized a $109 million after-tax loss ($157 million pretax) in
U.S. Consumer Lending (64) (155) the 2005 first quarter related to the divestiture.
U.S. Commercial Business (39) (316)
Divestiture of CitiCapital’s Transportation
International Cards 72 (103)
Finance Business
International Consumer Finance (9) (24)
International Retail Banking (588) (12) On November 22, 2004, the Company reached an agreement to sell
CitiCapital’s Transportation Finance Business based in Dallas and Toronto to
Smith Barney 12 —
Private Bank 25 — GE Commercial Finance for total cash consideration of approximately $4.6
billion. The sale, which was completed on January 31, 2005, resulted in an
Consumer Other — (1)
after-tax gain of $111 million ($157 million pretax).
Total Consumer $ (459) $ (1,266)
Shutdown of the Private Bank in Japan and Related
Capital Markets and Banking $ 204 $ (921) Charge and Other Activities in Japan
Transaction Services 28 (181)
On September 29, 2005, the Company officially closed its Private Bank
Total CIB $ 232 $ (1,102) business in Japan.
Total Citigroup $ (227) $ (2,368) In September 2004, the Financial Services Agency of Japan (FSA) issued an
administrative order against Citibank Japan. This order included a
By Region:
requirement that Citigroup exit all private banking operations in Japan by
U.S. $ 33 $ (1,586)
Mexico 242 (96) September 30, 2005. In connection with this required exit, the Company
EMEA (433) (16) established a $400 million ($244 million after-tax) reserve (the Exit Plan
Japan 25 (39) Charge) during the 2004 fourth quarter. During 2005, the Company utilized
Asia (35) (165) $220 million and released $95 million of this reserve due to favorable foreign
Latin America (59) (466)
exchange translation and interest rate movements in the customers’
Total Citigroup $ (227) $ (2,368) investment accounts. The Company believes that the remaining reserve of $50
million (adjusted by $35 million for current foreign exchange translation
Allowance for Credit Losses rates) is adequate to cover any future settlements with ex-Private Bank Japan
Dec. 31, Dec. 31, customers.
In millions of dollars, at year end 2005 2004 The Company’s Private Bank operations in Japan had total revenues, net
Allowance for loan losses $ 9,782 $11,269 of interest expense, of $200 million and net income of $39 million (excluding
Allowance for unfunded lending commitments 850 600 the Exit Plan Charge) during the year ended December 31, 2004 and $264
million and $83 million, respectively, for 2003.
Total allowance for loans and unfunded
lending commitments $10,632 $11,869 On October 25, 2004, Citigroup announced its decision to wind down
Cititrust and Banking Corporation (Cititrust), a licensed trust bank in Japan,
Repositioning Charges after concluding that there were internal control, compliance and governance
The Company recorded a $272 million after-tax ($435 million pretax) charge issues in that subsidiary. On April 22, 2005, the FSA issued an administrative
during the 2005 first quarter for repositioning costs. The repositioning order requiring Cititrust to suspend from engaging in all new trust business in
charges were predominantly severance-related costs recorded in CIB ($151 2005. Cititrust closed all customer accounts in 2005, and the Company
million after-tax) and in Global Consumer ($95 million after-tax). These expects to be liquidated in 2006.
repositioning actions are consistent with the Company’s objectives of
controlling expenses while continuing to invest in growth opportunities.

33
Events in 2004 Events in 2003
Settlement of WorldCom Class Action Litigation and Acquisition of Sears’ Credit Card and Financial
Charge for Regulatory and Legal Matters Products Business
As discussed on page 29, during the 2004 second quarter, Citigroup recorded a On November 3, 2003, Citigroup acquired the Sears’ Credit Card and
charge of $4.95 billion after-tax ($7.915 billion pretax) related to a settlement Financial Products business (Sears), the eighth largest credit card portfolio in
of class action litigation brought on behalf of purchasers of WorldCom the U.S. $28.6 billion of gross receivables were acquired for a 10% premium of
securities and an increase in litigation reserves (WorldCom and Litigation $2.9 billion and annual performance payments over the next ten years based
Reserve Charge). on new accounts, retail sales volume and financial product sales. The
Company recorded $5.8 billion of intangible assets and goodwill as a result of
Sale of Samba Financial Group
this transaction. In addition, the companies signed a multi-year marketing
On June 15, 2004, the Company sold, for cash, its 20% equity investment in
and servicing agreement across a range of each company’s businesses,
The Samba Financial Group (Samba), formerly known as the Saudi
products and services. The results of Sears are included in the Consolidated
American Bank, to the Public Investment Fund, a Saudi public sector entity.
Financial Statements from November 2003 forward.
Citigroup recognized an after-tax gain of $756 million ($1.168 billion pretax)
on the sale during the 2004 second quarter. The gain was recognized equally Acquisition of The Home Depot’s Private-Label Portfolio
between Global Consumer and CIB. In July 2003, Citigroup completed the acquisition of The Home Depot private-
label portfolio (Home Depot), which added $6 billion in receivables and 12
Acquisition of KorAm Bank
million accounts. The results of Home Depot are included in the Consolidated
On April 30, 2004, Citigroup completed its tender offer to purchase all of the
Financial Statements from July 2003 forward.
outstanding shares of KorAm Bank (KorAm) at a price of KRW 15,500 per
share in cash. In total, Citigroup has acquired 99.9% of KorAm’s outstanding Settlement of Certain Legal and Regulatory Matters
shares for a total of KRW 3.14 trillion ($2.7 billion). The results of KorAm are On July 28, 2003, Citigroup entered into financial settlement agreements with
included in the Consolidated Financial Statements from May 2004 forward. the Securities and Exchange Commission (SEC), the Office of the Comptroller
At the time of the acquisition KorAm was a leading commercial bank in of the Currency (OCC), the Federal Reserve Bank of New York (FED), and the
Korea, with 223 domestic branches and total assets at June 30, 2004 of $37 Manhattan District Attorney’s Office that resolved on a civil basis their
billion. During the 2004 fourth quarter, KorAm was merged with the Citibank investigations into Citigroup’s structured finance work for Enron. The
Korea branch to form Citibank Korea Inc. Company also announced that its settlement agreement with the SEC
concluded that agency’s investigation into certain Citigroup work for Dynegy.
Divestiture of Electronic Financial Services Inc.
The agreements were reached by Citigroup (and, in the case of the agreement
During January 2004, the Company completed the sale for cash of Electronic
with the OCC, Citibank, N.A.) without admitting or denying any wrongdoing
Financial Services Inc. (EFS) for $390 million. EFS is a provider of
or liability, and the agreements do not establish wrongdoing or liability for
government-issued benefit payments and prepaid stored-value cards used by
the purpose of civil litigation or any other proceeding. Citigroup paid from
state and federal government agencies, as well as of stored-value services for
previously established reserves an aggregate amount of $145.5 million in
private institutions. The sale of EFS resulted in an after-tax gain of $180
connection with these settlements.
million ($255 million pretax) in the 2004 first quarter.
Acquisition of Washington Mutual Finance Corporation
On January 9, 2004, Citigroup completed the acquisition of Washington
Mutual Finance Corporation (WMF) for $1.25 billion in cash. WMF was the
consumer finance subsidiary of Washington Mutual, Inc. WMF provides direct
consumer installment loans and real-estate-secured loans, as well as sales
finance and the sale of insurance. The acquisition included 427 WMF offices
located in 26 states, primarily in the Southeastern and Southwestern United
States, and total assets of $3.8 billion. Citigroup has guaranteed all
outstanding unsecured indebtedness of WMF in connection with this
acquisition. The results of WMF are included in the Consolidated Financial
Statements from January 2004 forward.

34
SIGNIFICANT ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

The Notes to the Consolidated Financial Statements, on page 122, contain a Allowance for Credit Losses
summary of the Company’s significant accounting policies, including a Management provides reserves for an estimate of probable losses inherent in
discussion of recently issued accounting pronouncements. These policies, as the funded loan portfolio on the balance sheet in the form of an allowance for
well as estimates made by management, are integral to the presentation of the credit losses. In addition, management has established and maintained
Company’s financial condition. It is important to note that they require reserves for the potential losses related to the Company’s off-balance sheet
management to make difficult, complex or subjective judgments and exposures of unfunded lending commitments, including standby letters of
estimates, at times, regarding matters that are inherently uncertain. credit and guarantees. These reserves are established in accordance with
Management has discussed each of these significant accounting policies, the Citigroup’s Loan Loss Reserve Policies, as approved by the Company’s Board of
related estimates and its judgments with the Audit and Risk Management Directors. Under these policies, the Company’s Senior Risk Officer and Chief
Committee of the Board of Directors. Additional information about these Financial Officer review the adequacy of the credit loss reserves each quarter
policies can be found in Note 1 to the Consolidated Financial Statements on with representatives from Risk Management and Financial Control for each
page 122. applicable business area.
Certain statements below are forward-looking statements within the During these reviews, these above-mentioned representatives covering the
meaning of the Private Securities Litigation Reform Act. See “Forward- business area having classifiably-managed portfolios (that is, portfolios
Looking Statements” on page 111. where internal credit-risk ratings are assigned, which are primarily Corporate
and Investment Banking, Global Consumer’s commercial lending businesses,
Valuations of Financial Instruments
and Global Wealth Management) present recommended reserve balances for
The Company holds fixed income and equity securities, derivatives,
their funded and unfunded lending portfolios along with supporting
investments in private equity and other financial instruments. The Company
quantitative and qualitative data. The quantitative data include:
holds its investments and trading assets and liabilities on the balance sheet to
meet customer needs, to manage liquidity needs and interest rate risks, and • Estimated probable losses for non-performing, non-homogenous
for proprietary trading and private equity investing. exposures within a business line’s classifiably-managed portfolio.
Substantially all of these assets and liabilities are reflected at fair value Consideration is given to all available evidence when determining this
on the Company’s balance sheet. Fair values are determined in the estimate including, as appropriate: (i) the present value of expected future
following ways: cash flows discounted at the loan’s contractual effective rate; (ii) the
borrower’s overall financial condition, resources and payment record; and
• Externally verified via comparison to quoted market prices or third-party
(iii) the prospects for support from financially responsible guarantors or
broker quotations;
the realizable value of any collateral.
• By using models that are validated by qualified personnel independent of
• Statistically calculated losses inherent in the classifiably-managed
the area that created the model and inputs that are verified by comparison
portfolio for performing and de minimis nonperforming exposures.
to third-party broker quotations or other third-party sources; or
The calculation is based upon: (i) Citigroup’s internal system of credit risk
• By using alternative procedures such as comparison to comparable
ratings, which are analogous to the risk ratings of the major rating
securities and/or subsequent liquidation prices.
agencies; (ii) the Corporate portfolio database; and (iii) historical default
At December 31, 2005 and 2004, respectively, approximately 94.5% and and loss data, including rating agency information regarding default rates
96.2% of the available-for-sale and trading portfolios’ gross assets and from 1983 to 2004, and internal data, dating to the early 1970s, on severity
liabilities (prior to netting positions pursuant to FIN 39) are considered of losses in the event of default.
verified and approximately 5.5% and 3.8% are considered unverified. Of the • Additional adjustments include: (i) statistically calculated estimates to
unverified assets, at December 31, 2005 and 2004, respectively, approximately cover the historical fluctuation of the default rates over the credit cycle, the
60.6% and 66.4% consist of cash products, where independent quotes were not historical variability of loss severity among defaulted loans, and the degree
available and/or alternative procedures were not feasible, and 39.4% and to which there are large obligor concentrations in the global portfolio, and
33.6% consist of derivative products where either the model was not validated (ii) adjustments made for specifically known items, such as current
and/or the inputs were not verified due to the lack of appropriate market environmental factors and credit trends.
quotations. Such values are actively reviewed by management.
In addition, representatives from Risk Management and Financial Control
Changes in the valuation of the trading assets and liabilities flow through
that cover business areas which have delinquency-managed portfolios
the income statement. Changes in the valuation of available-for-sale assets
containing smaller homogeneous loans (primarily Global Consumer’s non-
generally flow through other comprehensive income, which is a component
commercial lending areas) present their recommended reserve balances
of equity on the balance sheet. A full description of the Company’s related
based upon historical delinquency flow rates, charge-off statistics and loss
policies and procedures can be found in Notes 1, 5 and 8 to the Consolidated
severity. This methodology is applied separately for each individual product
Financial Statements on pages 122, 135, and 139, respectively.
within each different geographic region in which these portfolios exist.
Adjustments are also made for specifically known items, such as changing
regulations, current environmental factors and credit trends.
This evaluation process is subject to numerous estimates and judgments.
The frequency of default, risk ratings, loss recovery rates, the size and diversity
of individual large credits, and the ability of borrowers with foreign currency

35
obligations to obtain the foreign currency necessary for orderly debt servicing, American Jobs Creation Act of 2004.” The Homeland Investment Act (HIA)
among other things, are all taken into account during this review. Changes in provision of the American Jobs Creation Act of 2004 is intended to provide
these estimates could have a direct impact on the credit costs in any quarter companies with a one-time 85% reduction in the U.S. net tax liability on cash
and could result in a change in the allowance. Changes to the reserve flow dividends paid by foreign subsidiaries in 2005, to the extent that they exceed a
through the income statement on the lines “provision for loan losses” and baseline level of dividends paid in prior years. In accordance with FASB Staff
“provision for unfunded lending commitments.” For a further description of Position FAS No. 109-2, “Accounting and Disclosure Guidance for the Foreign
the loan loss reserve and related accounts, see Notes 1and 12 to the Earnings Repatriation Provision within the American Jobs Creation Act of
Consolidated Financial Statements on pages 122 and 141, respectively. 2004” (FSP FAS 109-2), the Company did not recognize any income tax
effects of the repatriation provisions of the Act in its 2004 financial statements.
Securitizations
In 2005, the Company’s results from continuing operations included a $198
The Company securitizes a number of different asset classes as a means of
million tax benefit from the HIA provision of the Act, net of the impact of
strengthening its balance sheet and to access competitive financing rates in
remitting income earned in 2005 and prior years that would otherwise have
the market. Under these securitization programs, assets are sold into a trust
been indefinitely invested overseas.
and used as collateral by the trust to access financing. The cash flows from
See Note 16 to the Consolidated Financial Statements on page 150 for a
assets in the trust service the corresponding trust securities. If the structure of
further description of the Company’s provision and related income tax assets
the trust meets stringent accounting guidelines, trust assets are treated as sold
and liabilities.
and no longer reflected as assets of the Company. If these guidelines are not
met, the assets continue to be recorded as the Company’s assets, with the Legal Reserves
financing activity recorded as liabilities on Citigroup’s balance sheet. The The Company is subject to legal, regulatory and other proceedings and claims
Financial Accounting Standards Board (FASB) is currently working on arising from conduct in the ordinary course of business. These proceedings
amendments to the accounting standards governing asset transfers, include actions brought against the Company in its various roles, including
securitization accounting, and fair value of financial instruments. Upon acting as a lender, underwriter, broker/dealer or investment advisor. Reserves
completion of these standards the Company will need to re-evaluate its are established for legal and regulatory claims based upon the probability and
accounting and disclosures. Due to the FASB’s ongoing deliberations the estimability of losses and to fairly present, in conjunction with the disclosures
Company is unable to accurately determine the effect of future amendments of these matters in the Company’s financial statements and SEC filings,
at this time. management’s view of the Company’s exposure. The Company reviews
The Company assists its clients in securitizing their financial assets and outstanding claims with internal as well as external counsel to assess
also packages and securitizes financial assets purchased in the financial probability and estimates of loss. The risk of loss is reassessed as new
markets. The Company may also provide administrative, asset management, information becomes available and reserves are adjusted, as appropriate. The
underwriting, liquidity facilities and/or other services to the resulting actual cost of resolving a claim may be substantially higher, or lower, than the
securitization entities, and may continue to service these financial assets. amount of the recorded reserve. See Note 26 to the Consolidated Financial
A complete description of the Company’s accounting for securitized Statements on page 167 and the discussion of “Legal Proceedings” beginning
assets can be found in “Off-Balance Sheet Arrangements” on page 106 and on page 181.
in Notes 1 and 13 to the Consolidated Financial Statements on pages 122
Accounting Changes and Future Application of
and 141, respectively. Accounting Standards
Income Taxes See Note 1 to the Consolidated Financial Statements on page 122 for a
The Company is subject to the income tax laws of the U.S., its states and discussion of Accounting Changes and the Future Application of
municipalities and those of the foreign jurisdictions in which the Company Accounting Standards.
operates. These tax laws are complex and subject to different interpretations
by the taxpayer and the relevant governmental taxing authorities. In
establishing a provision for income tax expense, the Company must make
judgments and interpretations about the application of these inherently
complex tax laws. The Company must also make estimates about when in the
future certain items will affect taxable income in the various tax jurisdictions,
both domestic and foreign.
Disputes over interpretations of the tax laws may be subject to
review/adjudication by the court systems of the various tax jurisdictions or
may be settled with the taxing authority upon examination or audit.
The Company reviews these balances quarterly and as new information
becomes available, the balances are adjusted as appropriate.
SFAS No. 109, “Accounting for Income Taxes” (SFAS 109), requires
companies to make adjustments to their financial statements in the quarter
that new tax legislation is enacted. In the 2004 fourth quarter, the U.S.
Congress passed and the President signed into law a new tax bill, “The

36
SEGMENT, PRODUCT AND REGIONAL NET INCOME

The following tables show the net income (loss) for Citigroup’s businesses both on a product view and on a regional view:

CITIGROUP NET INCOME — PRODUCT VIEW

% Change % Change
In millions of dollars 2005 2004(1) 2003(1) 2005 vs. 2004 2004 vs. 2003
Global Consumer
U.S. Cards $ 2,754 $ 3,562 $ 2,854 (23)% 25%
U.S. Retail Distribution 1,752 2,019 1,707 (13) 18
U.S. Consumer Lending 1,938 1,664 1,636 16 2
U.S. Commercial Business 729 765 525 (5) 46
Total U.S. Consumer (2) $ 7,173 $ 8,010 $ 6,722 (10)% 19%
International Cards $ 1,373 $ 1,137 $ 725 21% 57%
International Consumer Finance 642 586 579 10 1
International Retail Banking 2,083 2,157 1,752 (3) 23
Total International Consumer $ 4,098 $ 3,880 $ 3,056 6% 27%
Other (3) $ (374) $ 97 $ (113) NM NM
Total Global Consumer $10,897 $11,987 $ 9,665 (9)% 24%
Corporate and Investment Banking
Capital Markets and Banking $ 5,327 $ 5,395 $ 4,642 (1)% 16%
Transaction Services 1,135 1,045 748 9 40
Other (4)(5) 433 (4,398) (16) NM NM
Total Corporate and Investment Banking $ 6,895 $ 2,042 $ 5,374 NM (62)%
Global Wealth Management
Smith Barney $ 871 $ 891 $ 795 (2)% 12%
Private Bank (6) 373 318 551 17 (42)
Total Global Wealth Management $ 1,244 $ 1,209 $ 1,346 3% (10)%
Alternative Investments $ 1,437 $ 768 $ 402 87% 91%
Corporate/Other (667) 48 271 NM (82)
Income from Continuing Operations $19,806 $16,054 $17,058 23% (6)%
Income from Discontinued Operations (7) 4,832 992 795 NM 25
Cumulative Effect of Accounting Change (8) (49) — — — —
Total Net Income $24,589 $17,046 $17,853 44% (5)%

(1) Reclassified to conform to the current period’s presentation. See Note 4 to the Consolidated Financial Statements on page 134 for assets by segment.
(2) U.S. disclosure includes Canada and Puerto Rico.
(3) 2004 includes a $378 million after-tax gain related to the sale of Samba.
(4) 2005 includes a $375 million after-tax release of WorldCom Settlement and Litigation Reserve Charge.
(5) 2004 includes a $378 million after-tax gain related to the sale of Samba and a $4.95 billion after-tax charge related to the WorldCom and Litigation Reserve Charge.
(6) 2004 includes a $244 million after-tax charge related to the exit plan implementation for the Company’s Private Bank operations in Japan.
(7) See Note 3 to the Consolidated Financial Statements on page 132.
(8) Accounting change in 2005 of ($49) million represents the adoption of FIN 47. See Note 1 to the Consolidated Financial Statements on page 122.
NM Not meaningful

37
CITIGROUP NET INCOME — REGIONAL VIEW
% Change % Change
In millions of dollars 2005 2004(1) 2003(1) 2005 vs. 2004 2004 vs. 2003
U.S. (2)
Global Consumer $ 6,799 $ 7,729 $ 6,609 (12)% 17%
Corporate and Investment Banking (3)(4) 2,950 (2,190) 2,540 NM NM
Global Wealth Management 1,141 1,179 1,076 (3) 10
Total U.S. $10,890 $ 6,718 $10,225 62% (34)%
Mexico
Global Consumer $ 1,432 $ 978 $ 785 46% 25%
Corporate and Investment Banking 450 659 407 (32) 62
Global Wealth Management 44 52 41 (15) 27
Total Mexico $ 1,926 $ 1,689 $ 1,233 14% 37%
Latin America
Global Consumer $ 236 $ 296 $ 197 (20)% 50%
Corporate and Investment Banking 619 813 566 (24) 44
Global Wealth Management 17 43 44 (60) (2)
Total Latin America $ 872 $ 1,152 $ 807 (24)% 43%
EMEA
Global Consumer (5) $ 374 $ 1,180 $ 680 (68)% 74%
Corporate and Investment Banking (5) 1,130 1,136 924 (1) 23
Global Wealth Management 8 15 (16) (47) NM
Total EMEA $ 1,512 $ 2,331 $ 1,588 (35)% 47%
Japan
Global Consumer $ 706 $ 616 $ 583 15% 6%
Corporate and Investment Banking 498 334 162 49 NM
Global Wealth Management (6) (82) (205) 83 60 NM
Total Japan $ 1,122 $ 745 $ 828 51% (10)%
Asia
Global Consumer $ 1,350 $ 1,188 $ 811 14% 46%
Corporate and Investment Banking 1,248 1,290 775 (3) 66
Global Wealth Management 116 125 118 (7) 6
Total Asia $ 2,714 $ 2,603 $ 1,704 4% 53%
Alternative Investments $ 1,437 $ 768 $ 402 87% 91%
Corporate/Other (667) 48 271 NM (82)
Income from Continuing Operations $19,806 $16,054 $17,058 23% (6)%
Income from Discontinued Operations (7) 4,832 992 795 NM 25
Cumulative Effect of Accounting Change (8) (49) — — — —
Total Net Income $24,589 $17,046 $17,853 44% (5)%

(1) Reclassified to conform to the current period’s presentation.

(2) Excludes Alternative Investments and Corporate/Other which are predominantly related to the U.S. The U.S. regional disclosure includes Canada and Puerto Rico. Global Consumer for the U.S. includes Other Consumer
(except for Samba gain which is allocated to EMEA).
(3) 2005 includes a $375 million after-tax release of WorldCom Settlement and Litigation Reserve Charge.
(4) 2004 includes a $4.95 billion after-tax charge related to the WorldCom and Litigation Reserve Charge.
(5) 2004 includes a $756 million after-tax gain ($378 million in Global Consumer and $378 million in CIB) related to the sale of Samba.
(6) 2004 includes a $244 million after-tax charge related to the exit plan implementation for the Company’s Private Bank operations in Japan.
(7) See Note 3 to the Consolidated Financial Statements on page 132.
(8) See Note 1 to the Consolidated Financial Statements on page 122.
NM Not meaningful.

38
SELECTED REVENUE AND EXPENSE ITEMS Provisions for Credit Losses and for Benefits and Claims
Total provisions for credit losses and for benefits and claims were $9.0 billion,
Revenues
$7.1 billion and $8.9 billion in 2005, 2004 and 2003, respectively.
Net interest revenue was $39.3 billion in 2005, down $2.3 billion, or 6%, from
Policyholder benefits and claims in 2005 decreased $17 million, or 2%, from
2004. This, in turn, was up $4.3 billion, or 12%, from 2003. Increases in
2004. The provision for credit losses increased $1.9 billion, or 31%, from 2004
business volumes during 2005 were more than offset by spread compression,
to $8.2 billion in 2005.
as the Company’s cost of funding increased more significantly than the rates
Global Consumer provisions for loan losses and for policyholder benefits
on interest-earning assets. Rates on the Company’s interest-earning assets
and claims of $9.1 billion in 2005 were up $966 million, or 12% from 2004,
were impacted during the year by competitive pricing (particularly in U.S.
reflecting increases in International Retail Banking, U.S. Retail
Cards and Capital Markets and Banking), as well as business mix shifts.
Distribution, International Cards, and U.S. Commercial Business,
Total commissions, asset management and administration fees, and other
partially offset by decreases in U.S. Cards, International Consumer
fee revenues of $23.3 billion were up $1.8 billion, or 8%, in 2005. The 2004
Finance and U.S. Consumer Lending. Net credit losses were $8.683 billion,
amount of $21.5 billion was up $1.3 billion, or 6%, from 2003. The 2005
and the related loss ratio was 2.01% in 2005, as compared to $8.471 billion
increase primarily reflected improved global equity markets, higher
and 2.13% in 2004 and $7.555 billion and 2.22% in 2003.
transactional volume and continued strong investment banking results.
The CIB provision for credit losses in 2005 increased $933 million from
Insurance premiums of $3.1 billion in 2005 were up $406 million, or 15%,
2004, which decreased $1.7 billion from 2003. The increase in the 2005
from 2004 and up $271 million, or 11% in 2004 compared to 2003. The 2005
balance is primarily due to an increase in expected losses resulting from an
increase primarily represents higher business volumes.
increase in off-balance sheet exposure and related credit quality. Corporate
Principal transactions revenues of $6.4 billion increased $2.7 billion, or
cash-basis loans at December 31, 2005, 2004 and 2003 were $1.004 billion,
73%, from 2004, primarily reflecting record revenues in the fixed income and
$1.906 billion and $3.419 billion, respectively.
equity markets. Principal transactions revenue in 2004 decreased $1.2 billion,
or 24%, from 2003, primarily reflecting decreased fixed income markets Income Taxes
revenues related to interest rate fluctuations, positioning and lower volatility. The Company’s effective tax rate on continuing operations of 30.8% in 2005
Realized gains from sales of investments of $2.0 billion in 2005 were up increased from 28.4% in 2004. The 2005 tax provision on continuing
$1.1 billion from 2004, which was up $304 million from 2003. The increase operations included a $198 million benefit from the Homeland Investment
from 2004 is primarily attributable to the gain of $386 million (pretax) on Act provision of the American Jobs Creation Act of 2004, net of the impact of
the sale of Nikko Cordial stock and sales of St. Paul Travelers shares over the remitting income earned in 2005 and prior years that would otherwise have
course of the year. been indefinitely invested overseas, and a $65 million release due to the
Other revenue of $9.5 billion in 2005 increased $322 million from 2004, resolution of an audit. The 2004 tax provision on continuing operations
which was up $3.0 billion from 2003. The increase from 2004 is related to included a $234 million benefit for the release of a valuation allowance
securitization and hedging gains and activity. The increase from 2003 relating to the utilization of foreign tax credits and the releases of $150
primarily reflected the $1.2 billion gain on the sale of Samba, increased million and $147 million due to the closing of tax audits. The 2005 effective
securitization gains and improved investment results. tax rate also increased from 2004 because of the impact of indefinitely
invested international earnings and other items on the lower level of pretax
Operating Expenses
earnings in 2004 due to the impact of the WorldCom and Litigation Reserve
Operating expenses decreased $4.6 billion, or 9%, to $45.2 billion in 2005,
Charge. The Company’s effective tax rate on continuing operations was 31.1%
and increased $12.3 billion, or 33%, from 2003 to 2004. The expense
in 2003. See additional discussion on page 36 and in Note 16 to the
fluctuations were primarily related to the reserve charges taken in 2004 (a
Consolidated Financial Statements on page 150.
$7.9 billion pretax reserve for WorldCom and Litigation Reserve Charge and a
$400 million Private Bank Japan Exit Plan Charge). Expenses in 2005 reflect
a $600 million release from the WorldCom and Litigation Reserve Charge.
The net income line in the following business segment and operating unit
Partially offsetting the absence of these items was increased expenses related
discussions excludes the cumulative effect of accounting change and
to higher incentive compensation (driven by increased revenue), and higher
income from discontinued operations. The cumulative effect of
pension and insurance expenses.
accounting change and income from discontinued operations are
disclosed within the Corporate/Other business segment. See Notes 1 and 3
to the Consolidated Financial Statements on pages 122 and 132,
respectively. Certain amounts in prior years have been reclassified to
conform to the current year’s presentation.

39
GLOBAL CONSUMER

Global Consumer Global Consumer Global Consumer

Net Income 2005 Net Income by Product* 2005 Net Income by Region*
In billions of dollars
$12.0 Latin
International America
$10.9 Retail Banking 2%
19% U.S. Cards Asia 12%
$9.7 24%
Japan 6%
International
Consumer EMEA 3%
Finance U.S.
6% 64%

International U.S. Retail Mexico 13%

Cards 12% Distribution
16%
U.S.
Commercial U.S. Consumer
Business Lending
6% 17%

2003 2004 2005 *Excludes Other Consumer loss of $374 million. *Excludes Other Consumer loss of $374 million.

Citigroup’s Global Consumer Group provides a wide array of banking, lending, insurance and investment services through a network of 7,237 branches, 6,920
ATMs, 682 Automated Lending Machines (ALMs), the Internet, telephone and mail, and the Primerica Financial Services salesforce. Global Consumer serves more
than 200 million customer accounts, providing products and services to meet the financial needs of both individuals and small businesses.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense $48,245 $47,887 $41,501 1% 15%
Operating expenses 23,318 22,151 19,051 5 16
Provisions for loan losses and for benefits and claims 9,063 8,097 8,182 12 (1)
Income before taxes and minority interest $15,864 $17,639 $14,268 (10)% 24%
Income taxes 4,904 5,592 4,551 (12) 23
Minority interest, net of taxes 63 60 52 5 15
Net income $10,897 $11,987 $ 9,665 (9)% 24%

Average assets (in billions of dollars) $ 533 $ 487 $ 422 10% 15%
Return on assets 2.04% 2.46% 2.29%
Average risk capital (1) $26,857 $22,816 $21,066 18% 8%
Return on risk capital (1) 41% 53% 46%
Return on invested capital (1) 18% 22%

(1) See footnote 5 to the table on page 27.

40
U.S. Consumer
U.S. Consumer U.S. Consumer U.S. Consumer
Net Income 2005 Net Income by Product Average Loans
In billions of dollars In billions of dollars
$8.0 Commercial $310.7
Business $285.5
$7.2 10%
$6.7
$246.8
Cards
38%
Consumer
Lending
27%

Retail
Distribution
25%

2003 2004 2005 2003 2004 2005

U.S. Consumer is composed of four businesses: Cards, Retail Distribution, Consumer Lending and Commercial Business.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense $30,107 $30,907 $27,287 (3)% 13%
Operating expenses 13,449 13,214 11,158 2 18
Provisions for loan losses and for benefits and claims 5,600 5,444 5,628 3 (3)
Income before taxes and minority interest $11,058 $12,249 $10,501 (10)% 17%
Income taxes 3,823 4,181 3,730 (9) 12
Minority interest, net of taxes 62 58 49 7 18
Net income $ 7,173 $ 8,010 $ 6,722 (10)% 19%

Average assets (in billions of dollars) $ 357 $ 327 $ 281 9% 16%

Return on assets 2.01% 2.45% 2.39%
Average risk capital (1) $13,843 $11,507 $ 9,818 20% 17%
Return on risk capital (1) 52% 70% 68%
Return on invested capital (1) 21% 25%

(1) See footnote 5 to the table on page 27.

41
U.S. Cards
U.S Cards U.S. Cards—Average Managed Loans U.S. Cards—Managed Net Credit Losses
Net Income In billions of dollars In millions of dollars
In billions of dollars On-Balance Sheet On-Balance Sheet
Securitized Securitized
$3.6 $136.9 $136.5 $8,605
$8,091
$116.0 $7,138
$2.9 $2.8 $46.9
$55.9 $3,526 $2,737
$41.4 $2,388

$89.6 $5,079 $5,354

$74.6 $81.0 $4,750

2003 2004 2005 2003 2004 2005 2003 2004 2005

U.S. Cards is the largest provider of credit cards in North America, with more than 130 million customer accounts in the United States, Canada and Puerto Rico.
In addition to MasterCard (including Diners), Visa, and American Express, U.S. Cards is the largest provider of credit card services to the oil and gas industry and
the leading provider of consumer private-label credit cards and commercial accounts on behalf of merchants such as The Home Depot, Sears, Federated, Dell
Computer, Radio Shack, Staples and Zale Corporation.
Revenues are primarily generated from net interest revenue on receivables, interchange fees on purchase sales and other delinquency or services fees.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense $12,824 $14,207 $11,380 (10)% 25%
Operating expenses 6,002 5,920 4,520 1 31
Provision for loan losses 2,567 2,887 2,400 (11) 20
Income before taxes and minority interest $ 4,255 $ 5,400 $ 4,460 (21)% 21%
Income taxes and minority interest, net of taxes 1,501 1,838 1,606 (18) 14
Net income $ 2,754 $ 3,562 $ 2,854 (23)% 25%

Average assets (in billions of dollars) $ 66 $ 74 $ 52 (11)% 42%

Return on assets 4.17% 4.81% 5.49%
Average risk capital (1) $ 5,774 $ 4,125 $ 3,295 40% 25%
Return on risk capital (1) 48% 86% 87%
Return on invested capital (1) 20% 28%
Key indicators — on a managed basis: (in billions of dollars)
Return on managed assets 1.90% 2.41% 2.33%
Purchase sales $ 278.2 $ 257.0 $ 236.9 8% 8%
Managed average yield (2) 13.75% 13.53% 12.17%
Managed net interest margin (2) 10.85% 11.76% 10.91%

(1) See footnote 5 to the table on page 27.

(2) As a percentage of average managed loans.

42
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, declined as the positive impact of 8% Revenues, net of interest expense, increased due to the impact of the Sears
growth in purchase sales and the addition of the Federated portfolio in the and Home Depot acquisitions, higher net interest revenue, and the benefit of
2005 fourth quarter was more than offset by a $545 million charge to increased purchase sales. The positive revenue drivers were partially offset by
conform accounting practices for customer rewards, net interest margin higher payment rates resulting from the overall improved economy.
compression, lower fee revenues due to the impact of increased bankruptcy Operating expenses increased, due primarily to the full-year impact of the
filings due to a change in law that became effective on October 17, 2005, and Home Depot and Sears acquisitions and increased advertising and marketing
the impact of Hurricane Katrina. Net interest margin contracted as pricing expenses, including the “Live Richly” and “Identity Theft” media campaigns.
actions in floating rate products were offset by higher cost of funds; higher Provision for loan losses increased primarily due to the full-year impact
payment rates resulting from the overall improved economy and a customer of acquisitions and increased presence in the private label market. This was
shift to real-estate-secured lending, which led to lower loan balances; an partially offset by the significantly improved credit environment, which led to
increased proportion of transactional activity; and a mix shift in the private loan loss reserve releases of $639 million during 2004.
label business to lower rate products.
Operating expenses remained essentially unchanged, primarily reflecting
the addition of the Federated portfolio and repositioning expenses of $19
million taken in the 2005 first quarter. This was partially offset by a decline in
advertising and marketing expenses, largely reflecting the timing of
advertising campaigns, as the Company invested significant resources in 2004
in the “Live Richly” and “Identity Theft” media campaigns.
Provision for loan losses declined, due to a $789 million, or 22%, decline
in net credit losses, due to the positive credit environment and improvements
in the Sears portfolio, partially offset by lower credit reserve releases in 2005 of
$170 million, versus $639 million in 2004.

43
U.S. Retail Distribution
U.S. Retail Distribution—Net Income U.S. Retail Distribution U.S. Retail Distribution—Branches
In billions of dollars 2005 Net Income by Distribution Channel At December 31
Primerica Financial Services Citibank
Citibank Branches CitiFinancial
CitiFinancial Branches
$2.0 Citibank 3,173
Branches 3,056
$1.8 29% CitiFinancial 2,775
$1.7 $0.5 Branches
775 896
40%
$0.5 $0.6 779
$0.5

$0.5 $0.5
2,281 2,277
1,996
$1.0 Primerica
$0.7 $0.7 Financial
Services
31%
2003 2004 2005 2003 2004 2005

U.S. Retail Distribution provides banking, lending, investment and insurance products and services to customers through 896 Citibank branches, 2,277
CitiFinancial branches, the Primerica Financial Services (PFS) salesforce, the Internet, direct mail and telesales. Revenues are primarily derived from net interest
revenue on loans and deposits, and fees on banking, insurance and investment products.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by business:
Citibank branches $3,103 $3,065 $2,959 1% 4%
CitiFinancial branches 4,190 4,139 3,534 1 17
Primerica Financial Services 2,222 2,141 2,088 4 3
Revenues, net of interest expense $9,515 $9,345 $8,581 2% 9%
Operating expenses 4,407 4,358 4,045 1 8
Provisions for loan losses and for benefits and claims 2,410 2,017 1,908 19 6
Income before taxes and minority interest $2,698 $2,970 $2,628 (9)% 13%
Income taxes 946 951 919 (1) 3
Minority interest, net of taxes — — 2 — (100)
Net income $1,752 $2,019 $1,707 (13)% 18%

Net income by business:

Citibank branches $ 506 $ 515 $ 486 (2)% 6%
CitiFinancial branches 696 960 675 (28) 42
Primerica Financial Services 550 544 546 1 —
Net income $1,752 $2,019 $1,707 (13)% 18%

Average assets (in billions of dollars) $ 64 $ 60 $ 53 7% 13%

Return on assets 2.74% 3.37% 3.22%
Average risk capital (1) $2,977 $2,717 $2,286 10 19
Return on risk capital (1) 59% 74% 75%
Return on invested capital (1) 16% 20%
Key indicators: (in billions of dollars)
Average loans $ 40.4 $ 37.8 $ 32.7 7% 16%
Average deposits 119.8 115.6 112.7 4 3
EOP Investment AUMs 72.6 68.5 62.0 6 10

(1) See footnote 5 to the table on page 27.

44
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, increased primarily due to loan and Revenues, net of interest expense, increased primarily due to strong loan
deposit growth, increased investment product sales, and the impact of the FAB and deposit growth in the Citibank and CitiFinancial Branches businesses,
acquisition, which were partially offset by a decrease in net interest margin. increased life insurance and investment fee revenues in Primerica Financial
Net interest margin declined as increased short-term funding rates more than Services, and the impact of the WMF acquisition. This was partially offset by
offset an increase in asset yields. Revenues also included a $110 million gain lower net funding spreads in the Citibank Branches business and lower loan
relating to the resolution of the Glendale litigation in the 2005 first quarter volumes and higher capital funding costs in Primerica Financial Services.
and a $20 million charge in the 2005 fourth quarter to conform accounting Operating expense growth was primarily due to higher volume-related
practices for customer rewards. expenses, increased investment spending driven by branch expansion, and the
Operating expense growth was primarily due to higher volume-related impact of the WMF acquisition.
expenses, increased investment spending driven by branch expansion, and the Provision for loan losses and for benefits and claims increased due to
impact of the FAB acquisition. increased net credit losses in the CitiFinancial Branches business, primarily
Provision for loan losses and for benefits and claims increased due to tied to increased volumes and the impact of the WMF acquisition, and
an increase in bankruptcy filings from a change in law that became effective lower loan loss reserve releases. Overall credit conditions remained favorable
on October 17, 2005. This led to an approximately $93 million increase in net in 2004.
credit losses and a $42 million increase in loan loss reserves. In addition, the Deposit growth reflected an increase in higher-margin demand deposits
Company increased loan loss reserves by $110 million for the impact of and money market accounts, which was only partially offset by a decline in
Hurricane Katrina. Also, the reorganization of the former Consumer time deposits. Loan growth was primarily attributable to the impact of the
Finance business into components of the current U.S. Retail Distribution WMF acquisition.
and U.S. Consumer Lending businesses, resulted in a reallocation of loan
loss reserves between U.S. Retail Distribution and U.S. Consumer Lending.
CitiFinancial Branches increased loan loss reserves by $165 million, reflecting
an increase in reserves for bankruptcy coverage in Personal Loans, while Real
Estate Lending and Auto (both now in U.S. Consumer Lending) had
corresponding loan loss reserve releases of $76 million and $89 million,
respectively. Excluding the impact of increased bankruptcy filings and
Hurricane Katrina, overall credit conditions remained favorable in 2005.
Deposit growth reflected an increase in demand balances and rate-
sensitive money market balances, as well as the impact of the FAB acquisition.
Loan growth reflected improvements in all channels and products from
home equity and personal loans to increased volumes in the PFS channel.
Investment product sales increased 9% driven by increased volumes.

45
U.S. Consumer Lending
U.S. Consumer Lending—Net Income U.S. Consumer Lending U.S. Consumer Lending—Average Loans
In billions of dollars 2005 Net Income by Product In billions of dollars
Student Loans Student Loans
Auto Auto
Real Estate Lending Real Estate Lending
$1.9 Auto $167.5
17%
$1.7 $0.2 $25.2
$1.6 $139.0
$0.2 $0.3 Student $11.7
$0.2
Loans $117.4 $21.8
$0.2 $0.3 12% $10.5
$20.6
$9.3

Real Estate $130.6

$1.2 $1.4 Lending
$1.2 $106.7
71% $87.5

2003 2004 2005 2003 2004 2005

U.S. Consumer Lending provides home mortgages and home equity loans to prime and non-prime customers, auto financing to non-prime consumers and
educational loans to students. Loans are originated throughout the United States and Canada through the Citibank, CitiFinancial and Smith Barney branch
networks, Primerica Financial Services agents, third-party brokers, direct mail, the Internet and telesales. Loans are also purchased in the wholesale markets.
U.S. Consumer Lending also provides mortgage servicing to a portfolio of mortgage loans owned by third parties. Revenues are composed of loan fees, net
interest revenue and mortgage servicing fees.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by business:
Real Estate Lending $3,558 $3,196 $3,594 11% (11)%
Student Loans 652 612 487 7 26
Auto 1,259 1,253 1,217 — 3
Revenues, net of interest expense $5,469 $5,061 $5,298 8% (4)%
Operating expenses 1,700 1,629 1,651 4 (1)
Provisions for loan losses and for benefits and claims 614 658 944 (7) (30)
Income before taxes and minority interest $3,155 $2,774 $2,703 14% 3%
Income taxes 1,155 1,052 1,022 10 3
Minority interest, net of taxes 62 58 45 7 29
Net income $1,938 $1,664 $1,636 16% 2%

Net income by business:

Real Estate Lending $1,378 $1,180 $1,268 17% (7)%
Student Loans 234 227 179 3 27
Auto 326 257 189 27 36
Net income $1,938 $1,664 $1,636 16% 2%

Average assets (in billions of dollars) $ 189 $ 156 $ 136 21% 15%
Return on assets 1.03% 1.07% 1.20%
Average risk capital (1) $3,280 $2,689 $2,137 22 26
Return on risk capital (1) 59% 62% 76%
Return on invested capital (1) 34% 30%
Key indicators: (in billions of dollars)
Net interest margin: (2)
Real Estate Lending 2.46% 2.92% 3.46%
Student Loans 1.96 2.64 2.33
Auto 10.52 11.72 12.93
Originations:
Real Estate Lending $131.9 $115.3 $120.3 14% (4)%
Student Loans 10.8 7.8 6.8 38 15
Auto 6.4 5.3 4.8 21 10

(1) See footnote 5 to the table on page 27.

(2) As a percentage of average loans.

46
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, increased due to volume growth in all Revenues, net of interest expense, decreased mainly due to lower
products, improved net servicing revenues, higher securitization and portfolio securitization revenues and lower net servicing revenues. Lower hedge-related
sales gains, and the benefit of the Principal Residential Mortgage, Inc. revenues, due to higher hedging costs and the impact of losses on mortgage
(PRMI) acquisition, partially offset by lower net interest revenue due to spread servicing hedge ineffectiveness, resulting from the volatile rate environment,
compression. The increase in net revenues was driven by the absence of a loss drove the decline in net servicing revenues. These declines were partially offset
in the prior year due to servicing hedge ineffectiveness caused by the volatile by the impact of higher loan volumes driven by growth in originations, and
rate environment. Average loan growth reflected a 16% increase in the PRMI acquisition.
originations across all businesses. Operating expenses were down due to lower expenses in the Real Estate
Operating expenses increased primarily due to higher volumes and the Lending and Auto businesses which were partially offset by a volume-driven
impact of the PRMI acquisition. increase in expenses in the Student Loans business.
Provisions for loan losses and for benefits and claims decreased due to Provisions for loan losses and for benefits and claims decreased due to
lower net credit losses of $136 million, primarily in the Auto and Real Estate $155 million of loan loss reserve releases in 2004, primarily in the Real Estate
Lending businesses, partially offset by lower loan loss reserve releases of Lending and Auto businesses, reflecting a favorable credit environment.
$91 million. The lower loan loss reserve releases reflected a $110 million
reserve build related to the estimated impact of Hurricane Katrina in the 2005
third quarter, partially offset by reserve releases of $89 million in Auto and
$76 million in Real Estate Lending related to the reorganization of the
U.S. Consumer Finance businesses. The continued favorable credit
environment drove a decline in the net credit loss ratio.
A 20% increase in prime mortgage originations and home equity loans
drove loan growth. Non-prime mortgage originations declined 20%, reflecting
the company’s decision to avoid offering teaser rate and interest-only
mortgages to lower FICO score customers.

47
U.S. Commercial Business
U.S Commercial Business U.S. Commercial Business U.S. Commercial Business
Net Income Average Loans Total Deposits
In billions of dollars In billions of dollars In billions of dollars at December 31
$0.8 $36.1 $19.0

$0.7 $32.4
31.3
$15.0
$13.5
$0.5

2003 2004 2005 2003 2004 2005 2003 2004 2005

U.S. Commercial Business provides equipment leasing and financing, banking services to small- and middle-market businesses ($5 million to $500 million in
annual revenues) and financing for investor-owned multifamily and commercial properties. Revenues are composed of net interest revenue and fees on loans
and leases.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense $2,299 $2,294 $2,028 — 13%
Operating expenses 1,340 1,307 942 3% 39
Provision for loan losses 9 (118) 376 NM NM
Income before taxes and minority interest $ 950 $1,105 $ 710 (14)% 56%
Income taxes 221 340 183 (35) 86
Minority interest, net of taxes — — 2 — (100)
Net income $ 729 $ 765 $ 525 (5)% 46%

Average assets (in billions of dollars) $ 38 $ 37 $ 40 3% (8)%

Return on assets 1.92% 2.07% 1.31%
Average risk capital (1) $1,813 $1,976 $2,100 (8)% (6)%
Return on risk capital (1) 40% 39% 25%
Return on invested capital (1) 27% 27%
Key indicators: (in billions of dollars)
Average earning assets $ 33.0 $ 33.7 $ 36.1 (2)% (7)%

(1) See footnote 5 to the table on page 27.

NM Not meaningful

48
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, were essentially flat as growth in core loan Revenues, net of interest expense, increased primarily due to the
and deposit balances, up 13% and 20% respectively, and the impact of the FAB reclassification of operating leases from loans to other assets and the related
acquisition were more than offset by the impact of spread compression and operating lease depreciation expense of $403 million from revenue to
reduced revenues from sold and liquidating portfolios. Revenues also reflected expense. This was partially offset by the impact of the liquidation of non-core
a $162 million legal settlement benefit related to the purchase of Copelco in portfolios, including the prior-year sale of the Fleet Services portfolio.
the 2005 third quarter, a $161 million gain on the sale of the CitiCapital Operating expenses increased primarily due to the $403 million impact of
Transportation Finance business in the 2005 first quarter, and the the operating lease reclassification from revenue to expense, partially offset by
reclassification of operating leases from loans to other assets and the related lower expenses from the liquidating and sold portfolios.
operating lease depreciation expense from revenue to expense. The Provision for loan losses decreased as $216 million of loan loss reserves
reclassification of operating leases increased both revenues and expenses by were released during 2004, reflecting the improved credit environment and
$123 million. the continued liquidation of non-core portfolios.
Operating expenses increased primarily due to the impact of the operating Deposit and loan volumes declined, primarily due to the liquidation and
lease reclassification from revenue to expense of $123 million and the impact sales of non-core portfolios.
of the FAB acquisition, partially offset by lower expenses from the sold
transportation finance businesses and a $23 million expense benefit related to
the Copelco legal settlement.
Provision for loan losses increased primarily due to the absence of $216
million in loan loss reserve releases during 2004, partially offset by lower net
credit losses due to an improved credit environment and the continued
liquidation of non-core portfolios.
Deposit and core loan growth reflected strong transaction volumes and
balances across all business units and the impact of the FAB acquisition,
partially offset by declines in the liquidating portfolio, primarily due to the
impact of the sale of the CitiCapital Transportation Finance business.

49
U.S. CONSUMER OUTLOOK U.S. Retail Distribution —In 2006, U.S. Retail Distribution expects to
Certain of the statements below are forward-looking statements within generate increases in loans, deposits and accounts, which will in turn drive
the meaning of the Private Securities Litigation Reform Act. See “Forward- earnings growth. The business will significantly expand its footprint with an
Looking Statements” on page 111. aggressive program of new branch openings in both the Citibank and
During 2006, the U.S. Consumer businesses will focus on continued CitiFinancial businesses. The challenging interest rate environment is
expansion of its customer base by opening new branches and offering a more expected to continue, with a corresponding shift in deposits to lower-profit
integrated set of products and services. The businesses will also focus on time deposits and CDs, which will affect both sales and income growth. Credit
maintaining tight expense control, effective credit management and costs are expected to reflect the benefit of lower bankruptcy filings, while the
productivity improvements. Revenues and credit performance will be affected underlying credit environment is expected to remain stable.
by U.S. economic conditions, including the level of interest rates, bankruptcy U.S. Consumer Lending —In 2006, U.S. Consumer Lending expects to
filings and unemployment rates. generate earnings growth across its product lines. In Real Estate Lending, an
In 2006, the U.S. Consumer business is expected to operate in a stable to expected decline in the level of new housing starts and existing home sales
improving economic environment. Net interest revenue pressure is expected will be mitigated by an increase in the Retail Distribution network of
to continue due to the flat yield curve and competitive pricing environment branches, and higher sales from Primerica agents in the Smith Barney
but is not expected to be as pressured as in 2005. Bankruptcy filings are network. Results are also expected to reflect improved portfolio earnings and
expected to decline significantly from 2005 levels. The credit environment servicing activities. Loan volume growth is forecast in the Student Loan and
is expected to be stable, in line with underlying trends in delinquency Auto businesses.
experience and a stable to improving economy. Inflation is expected to U.S. Commercial Business —In 2006, earnings growth is expected from
remain well-contained. continued expansion of the core business portfolio and a stable credit
U.S. Cards —In 2006, the competitive environment is expected to remain environment.
robust and challenging. U.S. Cards expects to generate earnings growth as
managed receivables increase and expenses remain controlled through
improved productivity levels and opportunities of scale. Growth in managed
receivables will be driven by continued brand development, private-label
expansion and new product launches. Credit costs will reflect the benefit
of lower bankruptcy filings. Credit is expected to be negatively affected by
conforming to industry and regulatory guidance regarding minimum
payment calculations. This change will result in an increase in delinquencies
and credit loss experience, which the business is working to minimize through
customer solutions, credit line management, and collection strategies.

50
International Consumer
International Consumer International Consumer International Consumer
Net Income 2005 Net Income by Product 2005 Net Income by Region
In billions of dollars
$4.1 Latin
$3.9 Consumer America
Finance 6%
16%
Mexico
$3.1 35%

Asia
33%
Retail
Banking
51%
Cards
33%
EMEA
Japan 9%
17%

2003 2004 2005

International Consumer is composed of three businesses: Cards, Consumer Finance and Retail Banking.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by region:
Mexico $ 4,373 $ 3,607 $ 2,971 21% 21%
Latin America 1,110 979 864 13 13
EMEA 5,201 4,735 3,957 10 20
Japan 3,251 3,290 3,374 (1) (2)
Asia 4,461 3,813 2,941 17 30
Revenues, net of interest expense $18,396 $16,424 $14,107 12% 16%
Operating expenses 9,520 8,549 7,604 11 12
Provisions for loan losses and for benefits and claims 3,463 2,653 2,554 31 4
Income before taxes and minority interest $ 5,413 $ 5,222 $ 3,949 4% 32%
Income taxes 1,314 1,340 890 (2) 51
Minority interest, net of taxes 1 2 3 (50) (33)
Net income $ 4,098 $ 3,880 $ 3,056 6% 27%

Net income by region:

Mexico $ 1,432 $ 978 $ 785 46% 25%
Latin America 236 296 197 (20) 50
EMEA 374 802 680 (53) 18
Japan 706 616 583 15 6
Asia 1,350 1,188 811 14 46
Net income $ 4,098 $ 3,880 $ 3,056 6% 27%

Average assets (in billions of dollars) $ 167 $ 150 $ 129 11% 16%
Return on assets 2.45% 2.59% 2.37%
Average risk capital (1) $13,014 $11,309 $11,248 15% 1%
Return on risk capital (1) 31% 34% 27%
Return on invested capital (1) 16% 16%

(1) See footnote 5 to the table on page 27.

51
International Cards
International Cards International Cards International Cards
Net Income 2005 Net Income by Region Average Loans
In billions of dollars In billions of dollars
$1.4 Latin $22.5
America
8%
$18.4
$1.1
Mexico
41% $14.5
Asia
32%
$0.7

Japan
5% EMEA
14%

2003 2004 2005 2003 2004 2005

International Cards provides MasterCard-, Visa- and Diners-branded credit and charge cards, as well as private label cards and co-branded cards, to more than
26 million customer accounts in 43 countries outside of the U.S. and Canada. Revenues are primarily generated from net interest revenue on receivables,
interchange fees on purchase sales and other delinquency or service fees.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by region:
Mexico $1,311 $ 870 $ 561 51% 55%
Latin America 297 280 217 6 29
EMEA 1,277 1,157 964 10 20
Japan 302 295 259 2 14
Asia 1,663 1,472 1,183 13 24
Revenues, net of interest expense $4,850 $4,074 $3,184 19% 28%
Operating expenses 2,371 2,131 1,674 11 27
Provision for loan losses 739 510 536 45 (5)
Income before taxes and minority interest $1,740 $1,433 $ 974 21% 47%
Income taxes 364 293 246 24 19
Minority interest, net of taxes 3 3 3 — —
Net income $1,373 $1,137 $ 725 21% 57%

Net income by region:

Mexico $ 564 $ 377 $ 228 50% 65%
Latin America 108 120 97 (10) 24
EMEA 188 164 101 15 62
Japan 75 100 58 (25) 72
Asia 438 376 241 16 56
Net income $1,373 $1,137 $ 725 21% 57%

Average assets (in billions of dollars) $ 26 $ 21 $ 17 24% 24%

Return on assets 5.28% 5.41% 4.26%
Average risk capital (1) $1,794 $1,240 $1,080 45 15
Return on risk capital (1) 77% 92% 67%
Return on invested capital (1) 34% 34%
Key indicators: (in billions of dollars)
Purchase sales $ 68.7 $ 59.1 $ 45.3 16% 30%
Average yield (2) 17.82% 16.74% 17.16%
Net interest margin (2) 12.34% 12.79% 12.85%

(1) See footnote 5 to the table on page 27.

(2) As a percentage of average loans.

52
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, increased primarily due to growth in Revenues, net of interest expense, increased, reflecting growth in all regions,
purchase sales and average loans, as well as the impact of the KorAm and included the addition of KorAm and Diners Club Europe, the benefit of
acquisition, a gain on sale of a merchant-acquiring business in EMEA of foreign currency translation, and the gain on the sale of Orbitall in the 2004
$95 million, and the impact of foreign currency translation. This was fourth quarter. International Cards sales grew 30%, reflecting growth in
partially offset by the absence of a prior-year gain on the sale of Orbitall Asia, Latin America and Japan, the addition of KorAm, and the benefit of
(credit card processing company in Brazil) of $42 million. Volume growth strengthening currencies. Average managed loans benefited from
was diversified across regions, led by Mexico. Net interest spread compression strengthening currencies and organic growth in both Asia and EMEA, as
reflected rising funding costs and a primarily fixed rate portfolio. well as the addition of KorAm, to grow 27%.
Operating expenses increased, primarily driven by the impact of higher Operating expenses increased, reflecting growth in all regions. This
expansion expenses in Asia and EMEA, integration expenses of CrediCard included the impact of the Diners Club Europe and KorAm acquisitions, the
in the Brazil franchise, the KorAm acquisition, and the impact of foreign net effect of foreign currency translation, and increased advertising and
currency translations. A VAT refund in Mexico during the 2005 third quarter marketing expenses.
partially offset expense growth. Provision for loan losses decreased, primarily due to the release of
Provision for loan losses reflected an increase in net credit losses, due $103 million in credit reserves during 2004 as the credit environment
primarily to volume growth in Mexico, which was partially offset by declines improved. Partially offsetting this release were additional net credit losses
in Asia. During 2005, loan loss reserves increased by $175 million, reflecting primarily due to the acquisitions of KorAm and Diners Club Europe.
portfolio expansion and the absence of prior-year reserve releases of
$103 million, recorded mostly in Asia and Latin America.
Mexico income increased due to higher sales volumes and average loans,
as well as a tax benefit related to the Homeland Investment Act and the VAT
refund. Asia income increased due to strong sales, loan balance increases,
and improved net credit loss experience. EMEA income increased primarily
due to the gain on the sale of a merchant-acquiring business, partially offset
by increased expense related to business expansion and customer acquisition
initiatives. Latin America income declined primarily due to the 2004 gain on
the sale of Orbitall and the absence of 2004 credit reserve releases. Japan
income declined primarily due to tax credits received in 2004.

53
International Consumer Finance
International Consumer Finance International Consumer Finance International Consumer Finance
Net Income 2005 Net Income by Region Average Loans
In billions of dollars In billions of dollars
$0.6 $0.6 $0.6 $21.8 $22.3
EMEA $20.9
Mexico 6%
6%
Asia
8%
Latin America
1%

Japan
79%

2003 2004 2005 2003 2004 2005

International Consumer Finance provides community-based lending services through a branch network, regional sales offices and cross-selling initiatives with
International Cards and International Retail Banking. As of December 31, 2005, International Consumer Finance maintained 2,137 sales points composed
of 1,455 branches in more than 25 countries, and 682 Automated Loan Machines (ALMs) in Japan. International Consumer Finance offers real-estate-secured
loans, unsecured or partially secured personal loans, auto loans, and loans to finance consumer-goods purchases. Revenues are primarily derived from net
interest revenue and fees on loan products.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by region:
Mexico $ 184 $ 165 $ 150 12% 10%
Latin America 123 96 84 28 14
EMEA 743 717 606 4 18
Japan 2,475 2,526 2,664 (2) (5)
Asia 294 178 107 65 66
Revenues, net of interest expense $3,819 $3,682 $3,611 4% 2%
Operating expenses 1,612 1,479 1,443 9 2
Provision for loan losses 1,272 1,364 1,518 (7) (10)
Income before taxes and minority interest $ 935 $ 839 $ 650 11% 29%
Income taxes 293 253 71 16 NM
Net income $ 642 $ 586 $ 579 10% 1%
Net income by region:
Mexico $ 36 $ 41 $ 37 (12)% 11%
Latin America 10 28 4 (64) NM
EMEA 36 126 134 (71) (6)
Japan 505 362 392 40 (8)
Asia 55 29 12 90 NM
Net income $ 642 $ 586 $ 579 10% 1%
Average assets (in billions of dollars) $ 26 $ 26 $ 26 — —
Return on assets 2.47% 2.25% 2.23%
Average risk capital (1) $ 918 $1,003 $ 915 (8)% 10%
Return on risk capital (1) 70% 58% 63%
Return on invested capital (1) 18% 16%
Key indicators:
Average yield (2) 18.68% 18.33% 18.75%
Net interest margin (2) 16.48% 16.53% 17.00%
Number of sales points:
Other branches 1,130 754 540
Japan branches 325 405 552
Japan Automated Loan Machines 682 512 372
Total 2,137 1,671 1,464
(1) See footnote 5 to the table on page 27.
(2) As a percentage of average loans.
NM Not meaningful
54
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, increased, driven by growth in all regions Revenues, net of interest expense, increased, with growth in all regions
except Japan, mainly due to higher loan volumes. Japan revenues declined except Japan. The strongest growth was in EMEA and Asia, mainly due to
due to lower personal and real-estate-secured loan balances, partially offset by higher loan volumes as well as the impact of foreign currency translation.
the impact of foreign currency translation. This was partially offset by a decline in Japan from lower personal and
Operating expense increased, reflecting the impact of investment real-estate-secured loan volumes, as well as a decline in spreads.
spending associated with the expansion of 376 branches outside of Japan and Operating expenses increased on higher investment spending for branch
repositioning charges in EMEA during the 2005 first quarter of $38 million. expansion in Asia and EMEA, as well as the impact of foreign currency
These were partially offset by declines in Japan due to the closing of branches translation. This was partially offset by expense reductions from branch
and the transition to ALMs. closings and head-count reductions in Japan.
Provision for loan losses declined due to improved credit conditions, Provision for loan losses decreased as favorable credit conditions
including lower bankruptcy losses in Japan of $96 million. This was partially continued, including lower bankruptcies in Japan, partially offset by higher
offset by higher personal loan losses in the U.K., standardization of write-off personal loan losses in EMEA.
policy in Spain and Italy, and lower credit reserve releases. The net credit loss Net Income increased from growth in Latin America, Asia and Mexico,
ratio declined 61 basis points to 5.75%. primarily driven by volume growth, partially offset by declines in Japan
Growth in average loans was mainly driven by increases in the real- (lower tax credits and lower revenue, partially offset by lower operating
estate-secured and personal-loan portfolios in EMEA and Asia, partially offset expenses and improved credit losses) and EMEA (higher net credit losses).
by a decline in EMEA auto loans. In Japan, average loans declined by 10%, Growth in real-estate-secured and personal loans in both EMEA and Asia
due to the impact of higher pay-downs, reduced loan demand, and the impact and the impact of strengthening currencies led to average loan growth, which
of foreign currency translation. was partially offset by a decline in EMEA auto loans. In Japan, average loans
declined 6%, as the benefit of foreign currency translation was more than
offset by increased loan pay downs and reduced loan demand.

55
International Retail Banking
International Retail Banking International Retail Banking International Retail Banking
Net Income 2005 Net Income by Region Average Loans
In billions of dollars In billions of dollars
$2.2 Latin $61.7
$2.1 America
6% $53.6
$1.8

Mexico $42.5
40%
Asia
41%

Japan EMEA
6% 7%

2003 2004 2005 2003 2004 2005

International Retail Banking delivers a wide array of banking, lending, insurance and investment services through a network of local branches and electronic
delivery systems, including ATMs, call centers and the Internet. International Retail Banking serves more than 47 million customer accounts, composed
of individuals and small businesses. Revenues are primarily derived from net interest revenue on deposits and loans, and fees on mortgage, banking, and
investment products.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by region:
Mexico $ 2,878 $2,572 $2,260 12% 14%
Latin America 690 603 563 14 7
EMEA 3,181 2,861 2,387 11 20
Japan 474 469 451 — 4
Asia 2,504 2,163 1,651 16 31
Revenues, net of interest expense $ 9,727 $8,668 $7,312 12% 19%
Operating expenses 5,537 4,939 4,487 12 10
Provisions for loan losses and for benefits and claims 1,452 779 500 86 56
Income before taxes and minority interest $ 2,738 $2,950 $2,325 (7)% 27%
Income taxes 657 794 573 (17) 39
Minority interest, net of taxes (2) (1) — (100) —
Net income $ 2,083 $2,157 $1,752 (3)% 23%

Net income by region:

Mexico $ 832 $ 560 $ 520 49% 8%
Latin America 118 148 96 (20) 54
EMEA 150 512 445 (71) 15
Japan 126 154 133 (18) 16
Asia 857 783 558 9 40
Net income $ 2,083 $2,157 $1,752 (3)% 23%

Average assets (in billions of dollars) $ 115 $ 103 $ 86 12% 20%

Return on assets 1.81% 2.09% 2.04%
Average risk capital (1) $10,303 $9,067 $9,252 14% (2)%
Average return on risk capital (1) 20% 24% 19%
Return on invested capital (1) 12% 13%

Key indicators: (in billions of dollars)

Average deposits $ 136.3 $125.1 $107.1 9% 17%
AUMs (EOP) 120.5 103.4 77.5 17 33
Average loans 61.7 53.6 42.5 15 26

(1) See footnote 5 to the table on page 27.

56
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, increased, with improved deposit revenues Revenues, net of interest expense, increased, primarily due to the positive
in all regions; higher branch lending revenues in EMEA, Asia and Latin impact of foreign currency translation, the addition of KorAm and growth in
America; higher investment revenues in all regions except Latin America; Asia, EMEA, and Mexico. Excluding foreign currency translation and KorAm,
the benefits of foreign currency translation; and the impact of the KorAm growth in both Asia and EMEA was driven by increased investment product
acquisition. Average loans grew 15%, primarily in Asia, Mexico, and Japan, sales, and higher deposits and lending revenues. Higher loans and deposits, as
while average deposits grew by 9%, primarily in Asia, Mexico, and EMEA. well as the gain on the sale of a mortgage portfolio, drove growth in Mexico.
Assets under management increased by 17%. This was partially offset by the negative impact of foreign currency
Operating expenses increased due to the expansion of the distribution translation.
network in all regions except Japan, foreign currency translation, the impact Operating expenses increased, due to the impact of foreign currency
of first quarter 2005 repositioning expenses of $70 million, and the impact of translation, the addition of KorAm in Asia, and higher sales commissions and
the KorAm acquisition. This was partially offset by the VAT refund of $93 increased investment spending on branch and salesforce expansion.
million in Mexico. Total branches grew by a net 131 during 2005, reflecting Provisions for loan losses and for benefits and claims increased
the opening of 183 new branches. primarily due to higher net credit losses in EMEA, principally Germany, and
Provisions for loan losses and for benefits and claims increased as a in Mexico, due to the absence of a prior-year $64 million credit recovery, and
sustained improvement in credit quality was offset by a $476 million pretax higher loan loss reserve builds in EMEA, partially offset by higher loan loss
charge to standardize loan write-off policies in EMEA to the global write-off reserve releases in all other regions. Lower net credit losses in Latin America
policy (see page 30) and a $127 million increase in the German credit benefited from the absence of an $87 million write-down of an Argentina
reserves to reflect increased experience with the effects of bankruptcy law compensation note in 2003, which was written down against previously
liberalization. As a result, the consumer net credit loss ratio increased to established reserves.
3.05% in 2005. The standardization of the loan write-off policies resulted in a Average customer deposits grew 17% from the prior year, primarily driven
significant drop in the 90 days past-due ratio, which fell to 1.29% in 2005, by growth in Asia and EMEA, which included the benefits of the KorAm
compared to 3.36% in 2004 and 4.61% in 2003. acquisition and foreign currency translation. The KorAm acquisition and
Net income in 2005 also reflected a $61 million net tax benefit from the positive foreign currency translation drove average loan growth of 26%.
Homeland Investment Act.
Mexico income increased on strong sales and customer balance growth,
as well as the VAT refund of $93 million and tax benefits from the Homeland
Investment Act. Asia income increased, benefiting primarily from strongly
improved revenues due to increased business volumes, the impact of the
KorAm acquisition, and benefits from foreign currency translation. Japan
income declined due primarily to expense growth associated with the
consolidation and compliance activities related to the shutdown of the Japan
Private Bank. Latin America income declined, driven by repositioning
expenses in 2005, and the impact of investment initiatives, primarily in
Brazil. EMEA income declined, driven by the impact of the write-off policy
standardization, increases in credit loss reserves in Germany, and
repositioning expenses reflected in the first quarter of 2005.

57
INTERNATIONAL CONSUMER OUTLOOK OTHER CONSUMER
Certain of the statements below are forward-looking statements within the Other Consumer includes certain treasury and other unallocated staff
meaning of the Private Securities Litigation Reform Act. See “Forward- functions and global marketing.
Looking Statements” on page 111. In millions of dollars 2005 2004 2003
Consumer is well diversified across a number of geographies, product
Revenues, net of interest expense $(258) $556 $ 107
groups, and customer segments and monitors the economic situation in all Operating expenses 349 388 289
of the countries in which it operates. In 2006, International Consumer will
Income (loss) before tax benefits $(607) $168 $(182)
continue to invest aggressively to build on the competitive advantages of its Income taxes (benefits) (233) 71 (69)
existing global network of branches, offices and sales professionals. The
business expects earnings growth from expanding its customer base, which Net income (loss) $(374) $ 97 $(113)
is expected to drive growth in loans, deposits and investment product sales.
Revenues and credit costs will be affected by global economic conditions, Revenues and expenses reflect offsets to certain line-items reported in
including the level of interest rates, the credit environment, unemployment other Global Consumer operation segments.
rates, and political and regulatory developments around the world. The net income decline was primarily due to the absence of a $378 million
International economies are expected to be stable to improving, with an after-tax gain related to the sale of Samba in the 2004 second quarter, and the
improvement in economic activity expected in Western Europe and a self- 2005 first quarter loss on the sale of a Manufactured Housing Loan portfolio of
sustaining recovery in Japan, two of International Consumer’s most $109 million after-tax, partially offset by the absence of a $14 million after-tax
important markets. Citigroup’s operations in Korea are currently write-down of assets in a non-core business in the 2004 fourth quarter and
experiencing labor actions that are impairing its ability to offer its full range lower legal costs. Excluding the impact of the Samba gain, the decline in 2004
of products and services. The Company is in active negotiations to reach an was primarily due to lower treasury results, including the impact of higher
expeditious agreement with the union. capital funding costs, the $14 million after-tax write-down of assets in the 2004
International Cards —In 2006, continued investment in customer fourth quarter, and higher staff-related, global marketing and legal costs.
acquisition in both new and existing markets is expected to drive increased
purchase sales and loan volumes. The credit environment is forecast to
remain stable.
International Consumer Finance —In 2006, investment in new
branches and sales professionals will continue in key expansion markets.
Organic growth in existing branches, coupled with new branch openings,
is expected to drive revenue and earnings growth. Offerings of new loan
products and services in new markets will continue, and gains in market
share across several key international regions are forecast. The credit
environment is expected to remain stable.
International Retail Banking —In 2006, the business will continue to
invest in branch expansion, building on a strong presence in several key
markets and establishing its presence in new markets. The business is
expected to generate revenue and earnings growth through an expanded base
of customers, as well as increases in loan and deposit balances and increased
investment product sales.

58
CORPORATE AND INVESTMENT BANKING

Corporate and Investment Banking Corporate and Investment Banking Corporate and Investment Banking
Net Income 2005 Net Income by Product* 2005 Net Income by Region*
In billions of dollars
$6.9 Latin
Transaction America
Services 10%
18%
$5.4
Asia
19% U.S.
39%

Japan
$2.0 8%
Capital Markets
and Banking Mexico
EMEA 7%
82% 17%

*Excludes Other Corporate and Investment Banking income of *Excludes Other Corporate and Investment Banking income of
2003 2004 2005 $433 million. $433 million.

Corporate and Investment Banking (CIB) provides corporations, governments, institutions and investors in approximately 100 countries with a broad range of
financial products and services. CIB includes Capital Markets and Banking, Transaction Services and Other CIB.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by region:
U.S. $ 9,901 $ 8,961 $ 8,878 10% 1%
Mexico 777 770 708 1 9
Latin America 1,415 1,318 1,591 7 (17)
EMEA 6,849 6,512 5,741 5 13
Japan 1,224 817 520 50 57
Asia 3,697 3,408 2,594 8 31
Revenues, net of interest expense $23,863 $21,786 $20,032 10% 9%
Operating expenses 14,133 20,530 11,460 (31) 79
Provision for credit losses (42) (975) 732 96 NM
Income before taxes and minority interest $ 9,772 $ 2,231 $ 7,840 NM (72)%
Income taxes 2,818 96 2,429 NM (96)
Minority interest, net of taxes 59 93 37 (37)% NM
Net income $ 6,895 $ 2,042 $ 5,374 NM (62)%

Net income by region:

U.S. $ 2,950 $ (2,190) $ 2,540 NM NM
Mexico 450 659 407 (32)% 62%
Latin America 619 813 566 (24) 44
EMEA 1,130 1,136 924 (1) 23
Japan 498 334 162 49 NM
Asia 1,248 1,290 775 (3) 66
Net income $ 6,895 $ 2,042 $ 5,374 NM (62)%

Average risk capital (1) $21,226 $19,047 $16,266 11% 17%

Return on risk capital (1) 32% 11% 33%
Return on invested capital (1) 24% 8%

(1) See footnote 5 to the table on page 27.

NM Not meaningful.

59
Capital Markets and Banking
Capital Markets and Banking Capital Markets and Banking Capital Markets and Banking
Net Income 2005 Revenue by Region 2005 Net Income by Region
In billions of dollars
$5.4 $5.3 Latin Latin
America America
5% 9%
$4.6 Asia
12% Asia
14%
Japan
6%
U.S.
47% U.S.
46%
Japan
9%

EMEA
27% EMEA
Mexico 15% Mexico
3% 7%

2003 2004 2005

Capital Markets and Banking offers a wide array of investment and commercial banking services and products, including investment banking and advisory
services, debt and equity trading, institutional brokerage, foreign exchange, structured products, derivatives, and lending. Capital Markets and Banking revenue
is generated primarily from fees for investment banking and advisory services, fees and spread on structured products, foreign exchange and derivatives, fees and
interest on loans, and income earned on principal transactions.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by region:
U.S. $ 8,860 $ 8,116 $ 8,061 9% 1%
Mexico 586 594 580 (1) 2
Latin America 896 883 1,099 1 (20)
EMEA 5,093 4,393 4,388 16 —
Japan 1,140 744 456 53 63
Asia 2,395 2,376 1,861 1 28
Revenues, net of interest expense $18,970 $17,106 $16,445 11% 4%
Operating expenses 11,501 9,959 8,910 15 12
Provision for credit losses (61) (777) 738 92 NM
Income before taxes and minority interest $ 7,530 $ 7,924 $ 6,797 (5)% 17%
Income taxes 2,145 2,440 2,118 (12) 15
Minority interest, net of taxes 58 89 37 (35) NM
Net income $ 5,327 $ 5,395 $ 4,642 (1)% 16%

Net income by region:

U.S. $ 2,422 $ 2,502 $ 2,424 (3)% 3%
Mexico 376 544 349 (31) 56
Latin America 466 621 437 (25) 42
EMEA 810 486 709 67 (31)
Japan 485 322 150 51 NM
Asia 768 920 573 (17) 61
Net income $ 5,327 $ 5,395 $ 4,642 (1)% 16%

Average risk capital (1) $19,898 $17,666 $14,785 13% 19%

Return on risk capital (1) 27% 31% 31%
Return on invested capital (1) 20% 24%

(1) See footnote 5 to the table on page 27.

NM Not meaningful.

60
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, increased, driven by growth across all Revenues, net of interest expense, increased in our Lending, Fixed Income
products. Equity Markets revenues increased, driven by growth in cash Markets, and Equity Markets. Lending increased primarily due to the absence
trading, alternative execution and derivatives products. Fixed Income Markets of prior-year losses in credit derivatives (which serve as an economic hedge for
revenue increases reflected growth in interest rate products, commodity the loan portfolio) and the acquisition of KorAm. Fixed Income Markets’
derivatives, foreign exchange, and securitized markets. Investment Banking increase was driven primarily by higher trading in commodities, distressed
revenue growth was driven by increased advisory fees on strong growth in debt and mortgage trading, partially offset by declines in interest rate and
completed M&A transactions and growth in equity underwriting. Lending foreign exchange trading. The Equity Markets increase primarily reflected
revenue growth was mainly due to hedging gains in credit derivatives. increases in cash trading, including the impact of the Lava Trading
Revenues also include a $386 million pretax gain on the sale of Nikko acquisition and higher derivatives, partially offset by declines in convertibles.
Cordial shares. Investment Banking revenues were flat, reflecting lower debt underwriting
Operating expenses increased due to higher incentive compensation, offset by growth in equity underwriting and advisory and other fees,
including repositioning costs of $212 million pretax (in the 2005 first primarily M&A.
quarter), increased investment spending on strategic growth initiatives, and Operating expenses increased, primarily due to higher compensation and
the impact of the acquisitions of Knight and Lava Trading. Expenses included benefits expense, increased legal reserves, increased investment spending and
a $160 million pretax charge to increase reserves for previously disclosed legal the acquisitions of KorAm and Lava Trading.
matters recorded in the 2005 fourth quarter. The provision for credit losses was down, primarily due to lower credit
The provision for credit losses increased, reflecting an increase to loan losses in the power and energy industry in Argentina and Brazil, prior-year
loss reserves in 2005 and the absence of loan loss reserve releases recorded in losses recorded on Parmalat, and loan loss reserve releases as a result of
the prior year. The provision for credit losses in 2005 included $289 million to improving credit quality globally.
increase loan loss reserves for increases in off-balance sheet exposure, and a Net income in the U.S. increased primarily due to a lower provision for
slight decline in credit quality. credit losses, as well as increases in Lending, Fixed Income Markets and
Net income in the U.S. decreased primarily due to an increased provision Equity Markets revenues.
for credit losses. Mexico net income increased primarily due to loan loss reserve releases
The negative impact of a flat yield curve on revenues and the absence of resulting from improving credit quality.
loan loss reserve releases recorded in the prior year caused a decline in Latin America net income increased primarily due to loan loss reserve
Mexican net income. releases on improving credit quality, partially offset by the absence of strong
Latin America net income decreased primarily due to the absence of loan prior-year Fixed Income Markets revenues in Brazil.
loss reserve releases recorded in 2004 and a decline in revenues from In EMEA, declines in Fixed Income Markets and relatively flat advisory
completed corporate finance transactions. Credit quality in Argentina and and other revenues, as well as increased expenses from legal reserves, higher
Brazil improved. investment spending, and compensation and benefits, drove flat results.
EMEA net income increased as a result of strong revenues across all Net income in Japan increased, driven by increases in Fixed Income
businesses and lower credit provisions. Revenues increased in Fixed Income Markets and Investment Banking revenues, a gain on the partial sale of Nikko
Markets, Equity Markets, Investment Banking, and Lending, on higher Cordial shares worth $20 million pretax, and a lower provision for credit
volumes and growth in customer activity. losses due to loan loss reserve releases.
Net income in Japan increased due to strong growth in Equity Markets Net income in Asia increased primarily due to increases in Fixed Income
and Fixed Income Markets revenues and a $248 million after-tax gain on the Markets (mainly in global distressed debt trading and foreign exchange
sale of Nikko Cordial shares recorded in the 2005 fourth quarter. trading), loan loss reserve releases as a result of improving credit quality,
Net income in Asia decreased primarily due to lower Fixed Income and the acquisition of KorAm.
Markets revenues, mainly in global distressed debt trading and foreign
exchange trading.

61
Transaction Services
Transaction Services Transaction Services Transaction Services
Net Income 2005 Net Income by Region 2005 Net Revenue by Type
In billions of dollars
$1.1
Japan Trade
$1.0 1% 12%
EMEA
28%
Asia
42%
$0.7
Securities
Services
29%
Cash
Mexico Management
7% 59%
U.S.
8% Latin
America
14%

2003 2004 2005

Transaction Services is composed of Cash Management, Trade Services and Global Securities Services (GSS). Cash Management and Trade Services provide
comprehensive cash management and trade finance for corporations and financial institutions worldwide. GSS provides custody and fund services to investors
such as insurance companies and pension funds, clearing services to intermediaries such as broker/dealers, and depository and agency/trust services to
multinational corporations and governments globally. Revenue is generated from fees for transaction processing, net interest revenue on Trade Services loans and
deposits in Cash Management and GSS, and fees on assets under custody in GSS.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by region:
U.S. $1,039 $ 827 $ 829 26% —%
Mexico 191 176 128 9 38
Latin America 519 435 492 19 (12)
EMEA 1,756 1,535 1,353 14 13
Japan 84 73 64 15 14
Asia 1,302 1,032 733 26 41
Revenues, net of interest expense $4,891 $4,078 $3,599 20% 13%
Operating expenses 3,316 2,846 2,561 17 11
Provision for credit losses 19 (198) (6) NM NM
Income before taxes and minority interest $1,556 $1,430 $1,044 9% 37%
Income taxes 420 381 296 10 29
Minority interest, net of taxes 1 4 — (75) —
Net income $1,135 $1,045 $ 748 9% 40%

Net income by region:

U.S. $ 95 $ 84 $ 132 13% (36)%
Mexico 74 115 58 (36) 98
Latin America 153 192 129 (20) 49
EMEA 320 272 215 18 27
Japan 13 12 12 8 —
Asia 480 370 202 30 83
Net income $1,135 $1,045 $ 748 9% 40%

Average risk capital (1) $1,328 $1,380 $1,481 (4)% (7)%

Return on risk capital (1) 85% 76% 51%
Return on invested capital (1) 47% 46%
Key indicators:
Liability balances (average in billions of dollars) $ 145 $ 121 $ 100 20% 21%
Assets under custody at year end (in trillions of dollars) 8.6 7.9 6.4 9 23
(1) See footnote 5 to the table on page 27.
NM Not meaningful.

62
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, increased, reflecting growth in Cash Revenues, net of interest expense, increased, reflecting growth in Cash
Management and Global Securities Services. Average liability balances grew Management and Global Securities Services, offset by declines in Trade Services.
20%, primarily due to increases in Asia, EMEA and the U.S., reflecting positive Cash Management revenue increased, mainly due to growth in liability
flow from new and existing customers. Average liability balances reached balances (primarily in Asia and EMEA and the acquisition of KorAm),
$155 billion in the fourth quarter. improved spreads, a benefit from foreign currency translation and increased
Cash Management revenue increased mainly due to growth in liability fees. This was partially offset by gains on the early termination of
balances, improved spreads, and increased fees from new sales. Revenue intracompany deposits (which were offset in Capital Markets and Banking)
growth was at a double-digit rate across all regions. in 2003.
Global Securities Services revenue increased, primarily reflecting growth Global Securities Services revenue increased, primarily reflecting higher
in Latin America, Asia and the U.S.; higher assets under custody and fees; fees on a $1.5 trillion increase in assets under custody from market
and the impact of acquisitions. Assets under custody reached $8.6 trillion, an appreciation, foreign translation benefits, incremental net sales, and the
increase of $0.7 trillion, or 9%, on strong momentum from record sales, impact of acquisitions. These improvements were partially offset by a prior-
equity markets, and the inclusion of ABN Amro and Unisen assets under year gain on the sale of interest in a European market exchange.
custody. This was partially offset by a strengthened U.S. dollar and a slowdown Trade Services revenue decreased, primarily due to lower spreads.
in fixed income markets. Operating expenses increased on the impact of foreign currency
Trade Services revenue increased, due to growth in Asia and EMEA, translation and higher business volumes, including the effect of acquisitions,
partially offset by spread compression in Mexico and Latin America. as well as increased compensation and benefits costs.
The change in the provision for credit losses was attributable to a reserve The provision for credit losses decreased, primarily due to a loan loss
release of $163 million in 2004; this compared to reserve increases of reserve release of $163 million in 2004 as a result of improving credit quality
$18 million in 2005. and net credit recoveries in Latin America.
Operating expenses increased on higher business volumes, acquisitions, Net income in the U.S. decreased, due to loan loss reserve releases in 2003,
and investments in growth opportunities. increased investment spending, divestitures, increases in expenses, and gains
Net income in the U.S. increased, due to growth in liability balances, on the early termination of intracompany deposits (which were offset in
improved spreads, and an increase in assets under custody, partially offset by Capital Markets and Banking) in 2003.
higher expenses due to acquisitions and continued investment spending. Mexico net income increased, due primarily to loan loss reserve releases in
Mexico net income decreased, due primarily to loan loss reserve releases 2004 and increases in fee revenue.
in 2004. Adjusting for the reserve releases in 2004, net income momentum Latin America net income increased, due primarily to loan loss reserve
was strong. releases in 2004.
Latin America net income decreased, due primarily to the impact of loan EMEA net income increased, due to increases in liability balances, growth
loss reserve releases in 2004. in assets under custody, and the impact of acquisitions.
EMEA net income increased, mainly due to increases in liability balances Asia net income rose, due to increases in liability balances and a benefit
and assets under custody, which drove strong revenues in Cash Management from the impact of KorAm.
and Global Securities Services. Japan net income was flat at $12 million. Growth in liability balances and
Asia net income rose in 2005, driven by new sales, increased fees from assets under custody were offset by higher business and investment spending,
higher customer volumes, the impact of the KorAm acquisition, and growth including the Nikko Cititrust joint venture.
in liability balances. Cash-basis loans were $112 million and $156 million at December 31,
Japan net income increased, mainly due to increases in liability balances 2004 and 2003, respectively. The decrease in cash-basis loans of $44 million
and assets under custody. in 2004 was primarily due to charge-offs in Argentina and Poland.
Cash-basis loans, which in the Transaction Services businesses are
primarily trade finance receivables, were $81 million and $112 million at
December 31, 2005 and 2004, respectively. The decrease of $31 million in
2005 was primarily due to a decline in Brazil.

63
OTHER CIB CORPORATE AND INVESTMENT BANKING OUTLOOK
Other CIB includes offsets to certain line items reported in other CIB Certain of the statements below are forward-looking statements within the
segments, certain non-recurring items and tax amounts not allocated to meaning of the Private Securities Litigation Reform Act. See “Forward-
CIB products. Looking Statements” on page 111.
In millions of dollars 2005 2004 2003 CIB is significantly affected by the levels of activity in the global capital
markets, which are influenced by macro-economic and political
Revenues, net of interest expense $ 2 $ 602 $(12)
Operating expenses (684) 7,725 (11) developments, among other factors, in the approximately 100 countries in
which the business operates. Global economic and market events can have
Income (loss) before income taxes (benefits) $ 686 $(7,123) $ (1)
both positive and negative effects on the revenue and credit performance of
Income taxes (benefits) 253 (2,725) 15
the businesses.
Net income (loss) $ 433 $(4,398) $(16) As we enter the year, the credit environment is stable; however, losses on
corporate lending activities and the level of cash-basis loans can vary widely
2005 vs. 2004: with respect to timing and amount, particularly within any narrowly defined
Net income of $433 million in 2005, compared to a net loss of $4.398 billion business or loan type.
in 2004, is primarily the result of the $4.95 billion after-tax WorldCom and In 2006, Capital Markets & Banking initiatives will continue to focus on
Litigation Reserve Charge recorded in 2004 and the release of WorldCom/ the delivery of financial solutions tailored to clients’ needs and the targeting
Research litigation reserves of $375 million after-tax in the 2005 fourth of client segments with strong growth prospects. The business intends to
quarter. Results in 2004 included a $378 million after-tax gain on the sale of leverage its position in flow products and client relationships to increase its
Samba recorded in EMEA. Results in 2005 included a $120 million after-tax share of higher-margin structured products, for which continued demand is
insurance recovery related to WorldCom and Enron legal matters recorded in expected. Building on the momentum of 2005, Capital Markets and
the 2005 fourth quarter. Banking will continue to leverage the acquisitions of Lava Trading, Knight
Trading’s derivatives markets businesses and the more recently announced
2004 vs. 2003: electronic communications network, to grow the Equity Markets business.
Net loss of $4.398 billion included the $4.95 billion after-tax WorldCom and The business has initiated a multi-year build out of structured products
Litigation Reserve Charge, partially offset by a $378 million after-tax gain on capabilities in rates, currencies and credit, which should become a platform
the sale of Samba recorded in EMEA. for future growth. Banking will build on the successful launch last year of the
National Corporate Bank and National Investment Bank in the U.S. and
continue to expand its client base in Europe and the emerging markets,
particularly the rapidly expanding small and medium enterprises (SME)
business segment. In parallel, leveraging the CIB’s global network, client
teams will seek to further strengthen client relationships and increase market
share and revenues.
In 2006, Transaction Services will work to grow revenues and earnings
organically while funding strategic investments. The recent investments in
funds services, cross-border payments and liquidity management will drive
some of this growth. The recent U.S. interest rate increases are expected to
have a positive impact on revenue; however, this may be partially offset by
industry-wide spread compression, especially in trade financing. Global
Securities Services is well positioned to capitalize on the momentum in the
global capital markets, especially in emerging markets.

64
GLOBAL WEALTH MANAGEMENT

Global Wealth Management Global Wealth Management Global Wealth Management

Net Income 2005 Net Income by Product 2005 Net Income by Region*
In billions of dollars
$1.3 Latin
$1.2 $1.2 America
Asia 9% 1%
Private Bank EMEA 1%
30% Mexico 3%

Smith
Barney U.S.
70% 86%

2003 2004 2005 *Excludes Japan loss of $82 million.

Global Wealth Management is composed of the Smith Barney Private Client businesses (including Citigroup Wealth Advisors outside the U.S.), Citigroup
Private Bank, and Citigroup Investment Research.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense by region:
U.S. $7,628 $7,241 $6,596 5% 10%
Mexico 124 138 117 (10) 18
Latin America 203 227 212 (11) 7
EMEA 295 291 260 1 12
Japan (6) 200 264 NM (24)
Asia 440 432 398 2 9
Revenues, net of interest expense $8,684 $8,529 $7,847 2% 9%
Operating expenses 6,696 6,666 5,753 — 16
Provision for loan losses 29 (5) 12 NM NM
Income before taxes $1,959 $1,868 $2,082 5% (10)%
Income taxes 715 659 736 8 (10)
Net income $1,244 $1,209 $1,346 3% (10)%

Net income by region:

U.S. $1,141 $1,179 $1,076 (3)% 10%
Mexico 44 52 41 (15) 27
Latin America 17 43 44 (60) (2)
EMEA 8 15 (16) (47) NM
Japan (82) (205) 83 60 NM
Asia 116 125 118 (7) 6
Net income $1,244 $1,209 $1,346 3% (10)%

Average risk capital (1) $2,113 $1,907 $1,896 11% 1%

Return on risk capital (1) 59% 63% 71%
Return on invested capital (1) 46% 52%

(1) See footnote 5 to the table on page 27.

NM Not meaningful.

65
Smith Barney
Smith Barney Smith Barney Smith Barney
Net Income Total Assets Under Fee-Based Management Financial Advisors
In billions of dollars In billions of dollars at December 31 At December 31
$0.9 $0.9 $321 13,414

$0.8 12,207 12,138

$240
$209

2003 2004 2005 2003 2004 2005 2003 2004 2005

Smith Barney provides investment advice, financial planning and brokerage services to affluent individuals, companies, and non-profits through a network of
more than 13,000 financial advisors in more than 600 offices primarily in the U.S. Smith Barney generates revenue from managing client assets, acting as a
broker for clients in the purchase and sale of securities, financing customers’ securities transactions and other borrowing needs through lending, and through the
sale of mutual funds.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense $ 6,825 $ 6,485 $ 5,851 5% 11%
Operating expenses 5,405 5,016 4,570 8 10
Provision for loan losses 12 — 1 — (100)
Income before taxes $ 1,408 $ 1,469 $ 1,280 (4)% 15%
Income taxes 537 578 485 (7) 19
Net income $ 871 $ 891 $ 795 (2)% 12%

Average risk capital (1) $ 938 $ 1,156 $ 1,269 (19)% (9)%

Return on risk capital (1) 93% 77% 63%
Return on invested capital (1) 59% 57%
Key indicators: (in billions of dollars)
Total assets under fee-based management $ 321 $ 240 $ 209 34% 15%
Total client assets 1,130 978 912 16 7
Financial advisors 13,414 12,138 12,207 11 (1)
Annualized revenue per financial
advisor (in thousands of dollars) $ 556 $ 536 $ 473 4% 13%

(1) See footnote 5 to the table on page 27.

66
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, increased primarily due to a $459 million Revenues, net of interest expense, increased in both asset-based fee revenue,
increase in asset-based revenue. Lower client trading volumes drove a decline reflecting higher assets under fee-based management, and transactional
in transactional revenue, which decreased by $119 million. revenue, reflecting equity market appreciation driving trading.
Operating expenses increased, primarily due to higher production-related Operating expenses increased, primarily reflecting higher marketing, legal
compensation as a result of increased revenue. The increase also included and compliance costs, as well as continued investment in new client offerings.
repositioning charges of $28 million pretax in the first quarter of 2005, higher The increase in total assets under fee-based management was primarily
legal costs, and integration costs related to the acquisition of the Legg Mason due to positive net flows and higher equity market values. Total client assets,
retail brokerage business. including assets under fee-based management, increased primarily due to
Provision for loan loss increased, primarily reflecting the impact of higher equity market values and positive net flows of $24 billion.
growth in tailored loans.
Citigroup Investment Research
On December 1, 2005, Smith Barney completed the acquisition of Legg
Citigroup Investment Research provides independent client-focused research
Mason’s private client business, which added 124 branches, approximately
to individuals and institutions around the world. The majority of expense for
$100 billion of assets under management and more than 1,200 financial
this organization is charged to the Global Equities business in Capital
advisors, primarily in the Mid-Atlantic and Southeastern states. These
Markets and Banking and Smith Barney.
branches and financial advisors were converted to Smith Barney’s operating
platform during the 2006 first quarter.
Total assets under fee-based management increased, reflecting organic
growth and the addition of Legg Mason. Total client assets, including assets
under fee-based management, increased primarily due to higher equity
market values, the acquisition of Legg Mason and positive net flows of
$28 billion.

67
Private Bank
Private Bank Private Bank Private Bank
Net Income 2005 Net Income by Region* Client Business Volumes Under Management
In billions of dollars In billions of dollars at December 31
$0.6 Latin $224 $226
America
4%
$195
Asia
25%
$0.4

$0.3
U.S.
EMEA 2% 59%

Mexico
10%

2003 2004 2005 *Excludes Japan loss of $82 million. 2003 2004 2005

Private Bank provides personalized wealth management services for high-net-worth clients in 33 countries and territories. These services include comprehensive
investment management (investment funds management, capital markets solutions, trust, fiduciary and custody services), investment finance (credit services
including real estate financing, commitments and letters of credit) and banking services (deposit, checking and savings accounts, as well as cash management
and other traditional banking services).
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, by region:
U.S. $ 803 $ 756 $ 745 6% 1%
Mexico 124 138 117 (10) 18
Latin America 203 227 212 (11) 7
EMEA 295 291 260 1 12
Japan (6) 200 264 NM (24)
Asia 440 432 398 2 9
Revenues, net of interest expense $1,859 $2,044 $1,996 (9)% 2%
Operating expenses 1,291 1,650 1,183 (22) 39
Provision for loan losses 17 (5) 11 NM NM
Income before taxes $ 551 $ 399 $ 802 38% (50)%
Income taxes 178 81 251 NM (68)
Net income $ 373 $ 318 $ 551 17% (42)%

Net income by region:

U.S. $ 270 $ 288 $ 281 (6)% 2%
Mexico 44 52 41 (15) 27
Latin America 17 43 44 (60) (2)
EMEA 8 15 (16) (47) NM
Japan (82) (205) 83 60 NM
Asia 116 125 118 (7) 6
Net income $ 373 $ 318 $ 551 17% (42)%

Average risk capital (1) $1,175 $ 751 $ 627 56% 20%

Return on risk capital (1) 32% 42% 88%
Return on invested capital (1) 29% 40%
Key indicators: (in billions of dollars)
Client assets under fee-based management $ 52 $ 52 $ 42 —% 24%
Other client activity 174 172 153 1 12
Total client business volumes $ 226 $ 224 $ 195 1% 15%

(1) See footnote 5 to the table on page 27.

NM Not meaningful.

68
2005 vs. 2004 2004 vs. 2003
Revenues, net of interest expense, decreased due to the closure of the Japan Revenues, net of interest expense, increased, as a $64 million decline in
Private Bank business. Revenue in Japan included losses of $82 million from Japan was offset by combined growth of $112 million, or 6%, in other regions.
foreign exchange and interest rate hedges on anticipated client settlements for U.S. revenue increased, primarily driven by strong growth in banking and
which reserves were established in the 2004 fourth quarter. lending volumes, combined with growth in fee income from discretionary,
U.S. revenue increased, primarily driven by increased banking spreads and custody and trust assets. Growth in the U.S. was negatively impacted by net
growth in lending volumes, combined with growth in fee income from interest revenue compression as increased funding costs were partially offset
discretionary and custody assets. Growth in the U.S. was negatively impacted by the benefit of changes in the mix of deposits and liabilities.
by net interest revenue compression. Mexico revenue increased, primarily due to increased client transactional
Mexico revenue decreased as lower client transactional activity was activity and fee income from discretionary, custody and trust assets.
partially offset by increased banking volumes. Revenue increased in Latin America primarily reflecting growth in
Latin America revenue decreased, primarily driven by lower client banking and lending volumes.
transactional activity, a decline in fee income from discretionary and trust EMEA revenue increased, primarily driven by growth in fee income from
assets, and net interest revenue compression. discretionary and trust assets as well as increased transactional revenue.
EMEA revenue increased, primarily driven by growth in fee income from Revenue in Japan declined as the business began to wind down resulting
discretionary assets and growth in banking volumes. in lower transactional revenues.
Asia revenue increased, reflecting higher banking volumes and increased Asia revenue increased, reflecting broad-based increases in recurring fee-
fee income from discretionary, trust and custody assets. based and net interest revenue that were partially offset by a decline in client
Operating expenses decreased, primarily due to a $400 million pretax exit transactional activity and lower performance fees.
plan charge in Japan recorded in the fourth quarter of 2004. Increased Operating expenses increased, primarily due to the $400 million pretax
expenses in other regions reflected higher employee-related costs, including Exit Plan Charge in Japan recorded in the fourth quarter of 2004. Excluding
investments in front office sales and support. the Exit Plan Charge, expenses increased $67 million, or 6%, primarily
Provision for loan losses included net recoveries in Asia and Europe, net reflecting increases in incentive compensation resulting from corresponding
write-offs in the U.S. and increases in the allowance for loan losses. The increases in revenue, as well as higher staff costs that were driven by
allowance reflected an increase in Japan and changes in the application of investments in bankers and product specialists. Offsetting the growth in
environmental factors for all regions. Net credit recoveries were (0.02%) of expenses was the absence of prior-year repositioning costs in Europe.
average loans outstanding in both 2005 and 2004. Provision for loan losses included recoveries in Japan, Asia, the U.S.,
Client business volumes increased $2 billion in 2005, as a decline of and Europe.
$14 billion in Japan was offset by growth of $16 billion, or 8%, in other The decline in the effective tax rate was primarily driven by the impact of
regions. Growth was led by an increase of $3 billion in custody assets, which the $400 million pretax ($244 million after-tax) Japan Exit Plan
were higher in the U.S. and Latin America, offsetting the decline in Japan. implementation charge.
Managed assets were flat due to the decline in Japan, offset predominantly by Client business volumes increased $29 billion in 2004, led by an increase
the impact of positive net flows in the U.S. Investment finance volumes were in custody assets, which were higher in all regions except Japan. Managed
flat, reflecting the decline in Japan, offset by growth in real-estate-secured assets increased $10 billion predominantly in the U.S., reflecting the impact
loans in the U.S. Banking and fiduciary deposits decreased $1 billion, with of positive net flows. Investment finance volumes increased $5 billion, on
double-digit growth in Asia and Europe offset by the decline in Japan. growth in real-estate-secured loans in the U.S. and increased margin lending
in the international business, excluding Japan. Banking and fiduciary
deposits grew $4 billion with double-digit growth in the U.S. and EMEA,
partially offset by a $1 billion, or 19%, decline in Japan.

69
GLOBAL WEALTH MANAGEMENT OUTLOOK
Certain of the statements below are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act. See “Forward-
Looking Statements” on page 111.
Smith Barney —In 2006, Smith Barney expects to see continued asset
and revenue growth resulting from the 2005 investments in its wealth
management platform, as well as from the acquisition of the Legg Mason
private client business.
Investments are expected to continue in 2006 and will include expanded
fee-based services (wealth management, advisory, and liability management
among others) as well as selective recruiting and training of financial advisors.
In Citigroup Investment Research, major initiatives include strategically
expanding research coverage in targeted sectors, continuing expense
management, and refining the scope and management structure of the
global research platform.
Private Bank —In 2006, the Private Bank will continue to focus on
expansion in geographic markets, adding onshore offices and bankers in
India, Brazil, China, Mexico, the United Kingdom and select cities in North
America. Moreover, the Private Bank will continue to invest in building out
new product capabilities, maintain and expand successful partnerships with
other Citigroup entities, and develop its team of bankers.
In 2006, the Private Bank expects growth in recurring fee-based revenue
and transactional revenue to be partially offset by a decline in net interest
revenue due to the flat-yield-curve environment. Investments in origination,
product and onshore market build-outs will negatively affect net income
growth, as the associated revenues will trail the costs in the near term.

70
ALTERNATIVE INVESTMENTS

Alternative Investments Alternative Investments Alternative Investments

Net Income Capital Under Management 2005 Revenue by Type
In billions of dollars In billions of dollars at December 31
$1.4 $37.6 Client
Revenue
10%
Fees, Dividends
$27.9 $28.5 and Interest
15%

$0.8

$0.4

Net Realized and

Net Change in
Unrealized Gains
75%
2003 2004 2005 2003 2004 2005

Alternative Investments (AI) manages capital on behalf of Citigroup, as well as for third-party institutional and high-net-worth investors. AI is an integrated
alternative investment platform that manages a wide range of products across five asset classes, including private equity, hedge funds, real estate, structured
products and managed futures. AI’s business model is to enable its 12 investment centers to retain entrepreneurial qualities required to capitalize on evolving
opportunities, while benefiting from the intellectual, operational and financial resources of Citigroup.
% Change % Change
In millions of dollars 2005 2004 2003 2005 vs. 2004 2004 vs. 2003
Net realized and net change in unrealized gains $2,582 $1,039 $ 520 NM 100%
Fees, dividends and interest 509 269 418 89% (36)
Other (1) 122 83 NM 47
Total proprietary investment activities revenues $3,090 $1,430 $1,021 NM 40%
Client revenues (1) 340 273 258 25% 6
Total revenues, net of interest expense $3,430 $1,703 $1,279 NM 33%
Operating expenses 633 462 393 37% 18
Provision for loan losses (2) — — — —
Income before taxes and minority interest $2,799 $1,241 $ 886 NM 40%
Income taxes 950 398 309 NM 29
Minority interest, net of taxes 412 75 175 NM (57)
Net income $1,437 $ 768 $ 402 87% 91%
Average risk capital (2) $4,264 $3,669 $3,945 16% (7)%
Return on risk capital (2) 33% 21% 10%
Return on invested capital (2) 31% 19%
Key indicators: (in billions of dollars)
Capital under management:
Client $ 25.4 $ 20.4 $ 20.5 25% —%
Proprietary 12.2 8.1 7.4 51 9
Total $ 37.6 $ 28.5 $ 27.9 32% 2%

(1) Includes fee income. Prior to 2005, revenue was reported net of profit sharing (profit sharing was reflected in the internal Citigroup distributor’s revenues).
(2) See footnote 5 to the table on page 27.
NM Not meaningful

71
 The Proprietary Portfolio of Alternative Investments consists of private losses recorded in income. Certain private equity investments in companies
equity, single- and multi-manager hedge funds, real estate, St. Paul Travelers located in developing economies that are not held in investment company
Companies Inc. (St. Paul) common shares, MetLife, Inc. (MetLife) common subsidiaries are either carried at cost or accounted for by the equity method,
shares, and Legg Mason, Inc. (Legg Mason) common and preferred shares. with unrealized losses recognized in income for other-than-temporary
Private equity, which constitutes the largest proprietary investments on both declines in value. Investments classified as available-for-sale are carried at
a direct and indirect basis, is in the form of equity and mezzanine debt fair value with the net change in unrealized gains and losses recorded in
financing in companies across a broad range of industries worldwide, equity as accumulated other changes in equity from nonowner sources.
including in developing economies. Such investments include Citigroup All other investment activities are primarily carried at fair value, with the net
Venture Capital International Brazil, LP (CVC/Brazil, formerly change in unrealized gains and losses recorded in income.
CVC/Opportunity Equity Partners, LP), which has invested primarily in The ownership of St. Paul shares was a result of the April 1, 2004 merger
companies privatized by the government of Brazil in the mid-1990s. of Travelers Property Casualty Corp. (TPC) with The St. Paul Companies. The
The Client Portfolio is composed of single- and multi-manager hedge sale of Citigroup’s Life Insurance and Annuities business to MetLife, Inc. on
funds, real estate, managed futures, private equity, and a variety of leveraged July 1, 2005, included $1.0 billion in MetLife equity securities in the sale
fixed income products (credit structures). Products are distributed to investors proceeds. The investment in Legg Mason resulted from the sale of Citigroup’s
directly by AI and through Citigroup’s Private Bank and Smith Barney Asset Management business to Legg Mason, Inc. on December 1, 2005, which
businesses. Revenue includes management and performance fees earned included $2.298 billion, a combination of Legg Mason common and
on the portfolio. Prior to 2005, the pretax profits from managing capital on preferred equity securities in the sale proceeds. The St. Paul, MetLife and Legg
behalf of Global Wealth Management clients were recorded in the respective Mason equity securities are classified on Citigroup’s Consolidated Balance
Citigroup distributor’s income statement as a component of revenues. Sheet as Investments (available-for-sale).
Investments held by investment company subsidiaries (including CVC
Brazil) are carried at fair value with the net change in unrealized gains and

St. Paul, MetLife and Legg Mason Equity Securities

Pretax Unrealized
Market Value as Gain (Loss) as
Type of Shares owned on of December 31, 2005 of December 31, 2005
Company Ownership December 31, 2005 Sale Restriction ($ millions) ($ millions)

St. Paul Travelers Common stock 12.3 million To comply with the terms $ 549 $244
Companies, Inc. representing of an IRS private letter
approximately ruling on the spin-off
1.8% ownership of TPC, Citigroup
must sell all shares
by August 20, 2007
MetLife, Inc. Common stock 22.4 million May be sold in private offerings $1,099 $ 99
representing until July 1, 2006. Thereafter, may
approximately be sold publicly
3.0% ownership
Legg Mason, Inc. Common stock representing 5.4 million May be sold in private offerings $2,243 $ (55)
approximately 4.7% ownership after receipt and may be sold
publicly after March 1, 2006

Non-voting convertible 13.3 shares

preferred stock representing (convertible into
approximately 10.0% ownership 13.3 million shares
of common stock
upon sale to
non-affiliate)
Total $3,891 $288

72
2005 vs. 2004 2004 vs. 2003
Total proprietary revenues, net of interest expense, were composed of Total proprietary revenues, net of interest expense were composed of
revenues from private equity of $2.6 billion, other investment activity of $1.3 billion for private equity, $12 million for hedge funds and $94 million for
$458 million and hedge funds of $69 million. Private equity revenue other investment activity. Private equity revenues increased $418 million
increased $1.2 billion, primarily driven by gains realized through the sale of primarily due to net unrealized gains from investments managed by the U.S.
portfolio investments. The Company’s investment in CVC/Brazil is subject to a and international investment teams as compared to net unrealized losses in
variety of unresolved matters involving some of its portfolio companies, which 2003. Other investment activity revenue increased $60 million, reflecting sales
could affect future valuation of these companies. * Other investment activities in 2004 of St. Paul shares. Partially offsetting these increases, hedge fund
revenue increased $364 million, due to realized gains from the sale of a revenues decreased $69 million as a result of a lower change in unrealized
portion of Citigroup’s investment in St. Paul shares, while hedge fund revenue gains in 2004 versus 2003.
increased $57 million due to a higher net change in unrealized gains on a Operating expenses increased, primarily reflecting higher performance-
substantially increased asset base. Client revenues increased $67 million, driven compensation.
reflecting increased management fees from 25% growth in client capital Minority interest, net of tax, decreased, primarily due to the absence of
under management. prior-year dividends and a mark-to-market valuation on the recapitalization
Operating expenses increased due primarily to increased performance- of a private equity investment held by a consolidated legal entity.
driven compensation and higher investment spending in hedge funds and Proprietary capital under management increased, primarily driven by
real estate. growth in hedge funds, partially offset by a decrease in private equity.
Minority interest, net of tax, increased, primarily due to private equity
gains related to underlying investments held by consolidated legal entities.
The impact of minority interest is reflected in fees, dividends, and interest,
and net realized gains/(losses) consistent with cash proceeds received by
minority interest.
Proprietary capital under management increased $4.1 billion,
primarily driven by the MetLife and Legg Mason shares acquired during 2005,
as well as the funding of proprietary investments in hedge funds and real
estate, partially offset by the sale of a portion of Citigroup’s holdings of St.
Paul shares.
Client capital under management increased $5.0 billion due to inflows
from institutional and high-net-worth clients, and the reclassification of $1.4
billion in assets for the former Travelers Life & Annuities business, following
the July 1, 2005 sale to MetLife.

* This is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act.
See “Forward-Looking Statements” on page 111.

73
CORPORATE/OTHER

Corporate/Other includes net treasury results, unallocated corporate expenses, 2004 vs. 2003
offsets to certain line-item reclassifications reported in the business segments Revenues, net of interest expense, decreased, primarily due to lower net
(inter-segment eliminations), the results of discontinued operations, the treasury results, lower intersegment eliminations and the absence of the prior-
cumulative effect of accounting change and unallocated taxes. year revenues earned in the EFS business, partially offset by the gain on the
In millions of dollars 2005 2004 2003 sale of EFS. The treasury decrease resulted from increased funding costs, due
to both higher interest rates as well as higher debt levels, and the absence of
Revenues, net of interest expense $ (580) $ (270) $ 935
Operating expenses 383 (27) 843 the prior-year gain on the sale of a convertible bond.
Provisions for loan losses and for benefits Operating expenses decreased, primarily due to lower intersegment
and claims (2) — (2) eliminations, the absence of prior-year operating expense in EFS and lower
Income (loss) from continuing operations employee-related costs.
before taxes and minority interest and Income tax benefits of $281 million in 2004 included the impact of a
cumulative effect of accounting change $ (961) $ (243) $ 94 $147 million tax reserve release due to the closing of a tax audit, compared
Income tax benefits (309) (281) (187) with a tax reserve release of $200 million in 2003 that had been held at
Minority interest, net of taxes 15 (10) 10
the legacy Associates’ businesses and was deemed to be in excess of expected
Income (loss) from continuing operations tax liabilities.
before cumulative effect
of accounting change $ (667) $ 48 $ 271
Income from discontinued operations 4,832 992 795
Cumulative effect of accounting change (49) — —
Net income $4,116 $1,040 $1,066

2005 vs. 2004

Revenues, net of interest expense, decreased, primarily due to the absence of
the prior-year gain on sale of EFS and lower treasury results, partially offset by
higher intersegment eliminations. Higher short-term interest rates, partially
offset by lower funding balances, drove a decline in treasury results.
Operating expenses increased, primarily due to higher intersegment
eliminations and unallocated employee-related costs, increased staffing and
technology costs, and increased Citigroup Foundation contributions. These
were partially offset by a reserve release associated with the shutdown of the
Private Bank in Japan.
Income tax benefits increased, due to the higher pretax loss in the current
year, offset by the $147 million tax reserve release due to the closing of a tax
audit in 2004.
Discontinued operations represent the operations in the Company’s Sale of
the Asset Management Business to Legg Mason, Inc., and the Sale of the Life
Insurance and Annuities Business. For 2005, income from discontinued
operations included a $2,082 million, after-tax gain from the Sale of the Asset
Management Business, as well as a $2,120 million, after-tax gain from the Sale
of the Life Insurance and Annuities Business. See Note 3 to the Consolidated
Financial Statements on page 132.

74
RISK FACTORS

The following discussion sets forth certain risks that the Company believes subject to negative fluctuations as a result of the above factors. The impact of
could cause its actual future results to differ materially from expected results. these fluctuations could be accentuated because certain international trading
markets, particularly those in emerging market countries, are typically
Economic conditions. The profitability of Citigroup’s businesses may
smaller, less liquid and more volatile than U.S. trading markets.
be affected by global and local economic conditions, such as the liquidity of
For geographic distributions of net income, see page 38. For a discussion
the global financial markets, the level and volatility of interest rates and equity
of international loans, see Note 11 to the Consolidated Financial Statements
prices, investor sentiment, inflation, and the availability and cost of credit.
on page 140 and “Country and Cross-Border Risk Management Process” on
The Company generally maintains large trading portfolios in the fixed
page 92.
income, currency, commodity and equity markets and has significant
Operational risk. Citigroup is exposed to many types of operational
investment positions, including investments held by its private equity
risk, including the risk of fraud by employees and outsiders, clerical and
business. The revenues derived from the values of these portfolios are directly
record-keeping errors, and computer/telecommunications systems
affected by economic conditions.
malfunctions. Given the high volume of transactions at Citigroup, certain
The credit quality of Citigroup’s on-balance sheet assets and off-balance
errors may be repeated or compounded before they are discovered and
sheet exposures is also affected by economic conditions, as more loan
rectified. In addition, the Company’s necessary dependence upon automated
delinquencies would likely result in a higher level of charge-offs and
systems to record and process its transaction volume may further increase the
increased provisions for credit losses, adversely affecting the Company’s
risk that technical system flaws or employee tampering or manipulation of
earnings. The Company’s consumer businesses are particularly affected by
those systems will result in losses that are difficult to detect. The Company
factors such as prevailing interest rates, the rate of unemployment, the level
may also be subject to disruptions of its operating systems arising from events
of consumer confidence, changes in consumer spending and the number of
that are wholly or partially beyond its control (for example, natural disasters,
personal bankruptcies.
acts of terrorism, epidemics, computer viruses, and electrical/
Credit, market and liquidity risk. As discussed above, the
telecommunications outages), which may give rise to losses in service to
Company’s earnings may be impacted through its market risk and credit risk
customers and/or monetary loss to the Company. All of these risks are also
positions and by changes in economic conditions. In addition, Citigroup’s
applicable where the Company relies on outside vendors to provide services to
earnings are dependent upon the extent to which management can
it and its customers.
successfully manage its positions within the global markets. In particular
U.S. fiscal policies. The Company’s businesses and earnings are
environments, the Company may not be able to mitigate its risk exposures as
affected by the fiscal policies adopted by regulatory authorities of the United
effectively as desired, and may have unwanted exposures to certain risk factors.
States. For example, in the United States, policies of the Federal Reserve Board
The Company’s earnings are also dependent upon its ability to properly
directly influence the rate of interest paid by commercial banks on their
value financial instruments. In certain illiquid markets, judgmental estimates
interest-bearing deposits and also may affect the value of financial
of value may be required. The Company’s earnings are also dependent upon
instruments held by the Company. In addition, such changes in fiscal policy
how effectively it assesses the cost of credit and manages its portfolio of risk
may affect the credit quality of the Company’s customers. The actions of the
concentrations. In addition to the direct impact of the successful management
Federal Reserve Board directly impact the Company’s cost of funds for
of these risk factors, management effectiveness is taken into consideration by
lending, capital raising and investment activities.
the rating agencies, which determine the Company’s own credit ratings and
Reputational and legal risk. Various issues may give rise to
thereby establish the Company’s cost of funds.
reputational risk and cause harm to the Company and its business prospects.
Competition. Merger activity in the financial services industry has
These issues include appropriately dealing with potential conflicts of interest;
produced companies that are capable of offering a wide array of financial
legal and regulatory requirements; ethical issues; money laundering laws;
products and services at competitive prices. Globalization of the capital
privacy laws; information security policies; and sales and trading practices.
markets and financial services industries exposes Citigroup to competition
Failure to address these issues appropriately could also give rise to additional
both at the global and local level. In addition, technological advances and the
legal risk to the Company, which could increase the number of litigation
growth of e-commerce have made it possible for non-depository institutions
claims and the amount of damages asserted against the Company, or subject
to offer products and services that traditionally were banking products.
the Company to regulatory enforcement actions, fines and penalties.
Citigroup’s ability to grow its businesses, and therefore its earnings, is affected
Certain regulatory considerations. As a worldwide business,
by these competitive pressures.
Citigroup and its subsidiaries are subject to extensive regulation, new
Country risk. Citigroup’s international revenues are subject to risk of
legislation and changing accounting standards and interpretations thereof.
loss from unfavorable political and diplomatic developments, currency
Legislation is introduced, including tax legislation, from time to time in
fluctuations, social instability, and changes in governmental policies,
Congress, in the states and in foreign jurisdictions that may change banking
including expropriation, nationalization, international ownership
and financial services laws and the operating environment of the Company
legislation, and tax policies. In addition, revenues from the trading of
and its subsidiaries in substantial and unpredictable ways. The Company
international securities and investment in international securities may be
cannot determine whether such legislation will be enacted and the ultimate
effect that would have on the Company’s results.

75
MANAGING GLOBAL RISK

The Citigroup risk management framework recognizes the diversity of The drivers of “economic losses” are risks, which can be broadly
Citigroup’s global business activities by balancing strong corporate categorized as credit risk (including cross-border risk), market risk,
oversight with well-defined independent risk management functions within operational risk, and insurance risk:
each business.
• Credit risk losses primarily result from a borrower’s or counterparty’s
The Citigroup Senior Risk Officer is responsible for:
inability to meet its obligations.
• establishing standards for the measurement and reporting of risk, • Market risk losses arise from fluctuations in the market value of trading
• managing and compensating the senior independent risk managers at the and non-trading positions, including changes in value resulting from
business level, fluctuation in rates.
• approving business-level risk management policies, • Operational risk losses result from inadequate or failed internal processes,
• reviewing major risk exposures and concentrations across the organization. people, systems or from external events.
• Insurance risks arise from unexpectedly high payouts on insurance
The independent risk managers at the business level are responsible for
liabilities.
establishing and implementing risk management policies and practices
within their business, for overseeing the risk in their business, and for These risks are measured and aggregated within businesses and across
responding to the needs and issues of their business. Citigroup to facilitate the understanding of the Company’s exposure to
extreme downside events and any changes in its level or its composition.
RISK CAPITAL At December 31, 2005, 2004 and 2003, risk capital for Citigroup was
Risk capital is defined at Citigroup as the amount of capital required to composed of the following risk types:
absorb potential unexpected economic losses resulting from extremely severe In billions of dollars 2005 2004 2003
events over a one-year time period.
Credit risk $36.1 $33.2 $28.7
• “Economic losses” include losses that appear on the income statement Market risk 13.5 16.0 16.8
Operational risk 8.1 8.1 6.1
and fair value adjustments to the financial statements, as well as any
Insurance risk 0.2 0.2 0.3
further declines in the value of assets or increases in the value of liabilities Intersector diversification (1) (4.7) (5.3) (5.2)
not captured on the income statement.
Total Citigroup $53.2 $52.2 $46.7
• “Unexpected losses” are the difference between potential extremely severe
losses and Citigroup’s expected (average) loss over a one-year time period. Return on risk capital 38% 35% 39%
• “Extremely severe” is defined as potential loss at a 99.97% confidence Return on invested capital 22% 17% 20%
level, as extrapolated from the distribution of observed events and (1) Reduction in risk represents diversification between risk sectors.
scenario analysis.
The increase in Citigroup’s risk capital versus December 31, 2004 was
Risk capital quantifies or is a metric of risk levels and the tradeoff of risk primarily driven by increased volumes in the credit portfolio, as well as a
and return. Risk capital is used in the calculation of return on risk capital $1.6 billion increase in credit risk in U.S. Cards due to risk measurement
(RORC) and return on invested capital (ROIC) measures for assessing methodology refinements. This was offset by a decrease in market risk due
business performance and allocating Citigroup’s balance sheet and risk- mostly to the divestitures of the Life Insurance & Annuities and Asset
taking capacity. Management businesses.
RORC, calculated as annualized net income divided by average risk Average risk capital, return on risk capital and return on invested capital are
capital, compares business income with the capital required to absorb the provided for each segment and product and are disclosed on pages 40 – 71.
risks. This is analogous to a return on tangible equity calculation. It is used to The increase in average risk capital in 2005 was driven by increases across
assess businesses’ operating performance and to determine incremental Citigroup businesses. The $1.6 billion increase in U.S. Cards was driven by
allocation of capital for organic growth. refinements in risk capital methodologies. The increases in U.S. Consumer
ROIC is calculated using income adjusted to exclude a net internal Lending and International Cards were due primarily to portfolio growth.
funding cost Citigroup levies on the intangible assets of each business. This The increase in International Retail Banking was due to portfolio growth
adjusted annualized income is divided by the sum of each business’ average and the acquisition of KorAm in mid-2004.
risk capital and intangible assets (excluding mortgage servicing rights, which Average risk capital in CIB increased $2.2 billion, or 11%, due to the
are captured in risk capital). ROIC thus compares business income with the impact in mid-2004 on operational risk of the WorldCom and Litigation
total invested capital —risk capital and intangible assets —used to generate Reserve Charge, as well as credit portfolio growth and acquisition of KorAm,
that income. ROIC is used to assess returns on potential acquisitions and offset by a sell-down of the investment in Nikko Cordial. Average risk capital
divestitures, and to compare long-term performance of businesses with in the Private Bank increased $0.4 billion, or 57%, due largely to an increase
differing proportions of organic and acquired growth. in operational risk. Average risk capital for Alternative Investments increased
Methodologies to measure risk capital are jointly developed by risk by $0.6 billion, or 16%, due to higher asset balances.
management, the financial division and Citigroup businesses, and approved
by the Citigroup Senior Risk Officer and Citigroup Chief Financial Officer. It is
expected, due to the evolving nature of risk capital, that these methodologies
will continue to be refined.

76
 Citigroup implements updates to risk capital methodologies in the first
Consumer Credit
quarter of each year. To evaluate the impact of the refinements, risk capital as 90 Days or More Past Due
of year end is calculated under both existing and revised methodologies. For In millions of dollars at December 31

2006, Citigroup will be updating the methodologies for credit risk, market risk $8,734
$8,213
for non-trading positions, and operational risk. Measured under the revised
methodologies, the total risk capital as of December 31, 2005 was $55.0 $6,589
billion ($1.8 billion, or 3%, higher than what was measured under existing
methodologies). The increase is due to higher market risk, as measured
under the revised models, offset by lower credit risk and greater intersector
diversification. RORC and ROIC for the 2006 first quarter will be measured
using average risk capital based on the revised methodologies.

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 obligations.
Credit risk arises in many of the Company’s business activities, including: 2003 2004 2005

• lending
• sales and trading Corporate Credit
Cash-Basis Loans
• derivatives In millions of dollars at December 31
• securities transactions $3,419
• settlement
• 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 $1,906
oversight to ensure appropriate consistency with business-specific policies
and practices to ensure applicability.
$1,004
Total Loans
At December 31, 2005

Corporate 2003 2004 2005

22%

Allowance for Credit Losses

In millions of dollars at December 31
Allowance for Unfunded Lending Commitments
Allowance for Loan Losses
$13,243
$600
$11,869
$600
Consumer 78% $10,632
$850

$12,643
$11,269
$9,782

2003 2004 2005

77
LOANS OUTSTANDING
In millions of dollars at year end 2005 2004 2003 2002 2001
Consumer loans
In U.S. offices:
Mortgage and real estate $192,108 $161,832 $129,507 $121,178 $ 80,099
Installment, revolving credit, and other 127,789 134,784 136,725 113,620 100,801
Lease financing 5,095 6,030 8,523 12,027 13,206
$324,992 $302,646 $274,755 $246,825 $194,106
In offices outside the U.S.:
Mortgage and real estate $ 39,619 $ 39,601 $ 28,743 $ 26,564 $ 28,688
Installment, revolving credit, and other 90,466 93,523 76,718 65,343 57,681
Lease financing 866 1,619 2,216 2,123 2,143
$130,951 $134,743 $107,677 $ 94,030 $ 88,512
$455,943 $437,389 $382,432 $340,855 $282,618
Unearned income (1,323) (2,163) (2,500) (3,174) (4,644)
Consumer loans — net $454,620 $435,226 $379,932 $337,681 $277,974
Corporate loans
In U.S. offices:
Commercial and industrial $ 22,081 $ 14,437 $ 15,207 $ 22,041 $ 15,997
Lease financing 1,952 1,879 2,010 2,017 4,473
Mortgage and real estate 29 100 95 2,573 2,784
$ 24,062 $ 16,416 $ 17,312 $ 26,631 $ 23,254
In offices outside the U.S.:
Commercial and industrial $ 80,116 $ 77,052 $ 62,884 $ 67,456 $ 72,515
Mortgage and real estate 5,206 3,928 1,751 1,885 1,874
Loans to financial institutions 16,889 12,921 12,063 8,583 10,163
Lease financing 2,082 2,485 2,859 2,784 2,036
Governments and official institutions 882 1,100 1,496 3,081 4,033
$105,175 $ 97,486 $ 81,053 $ 83,789 $ 90,621
$129,237 $113,902 $ 98,365 $110,420 $113,875
Unearned income (354) (299) (291) (296) (455)
Corporate loans — net $128,883 $113,603 $ 98,074 $110,124 $113,420
Total loans — net of unearned income $583,503 $548,829 $478,006 $447,805 $391,394
Allowance for credit losses — on drawn exposures (9,782) (11,269) (12,643) (11,101) (9,688)
Total loans — net of unearned income and allowance for credit losses $573,721 $537,560 $465,363 $436,704 $381,706

OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS

In millions of dollars at year end 2005 2004 2003 2002 2001
Other real estate owned (1)
Consumer $ 279 $ 320 $ 437 $ 495 $ 393
Corporate 150 126 105 75 147
Corporate/Other — — — — 8
Total other real estate owned $ 429 $ 446 $ 542 $ 570 $ 548
Other repossessed assets (2) $ 62 $ 93 $ 151 $ 230 $ 439
(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.

78
DETAILS OF CREDIT LOSS EXPERIENCE
In millions of dollars at year end 2005 2004 2003 2002 2001
Allowance for loan losses at beginning of year $11,269 $12,643 $11,101 $ 9,688 $ 8,561
Provision for loan losses
Consumer $ 8,224 $ 7,205 $ 7,316 $ 7,714 $ 5,947
Corporate (295) (972) 730 2,281 853
$ 7,929 $ 6,233 $ 8,046 $ 9,995 $ 6,800
Gross credit losses
Consumer (1)
In U.S. offices $ 5,922 $ 6,937 $ 5,783 $ 5,826 $ 4,991
In offices outside the U.S. 4,664 3,304 3,270 2,865 2,132
Corporate
Mortgage and real estate
In U.S. offices — — — 5 13
In offices outside the U.S. — 6 27 23 3
Governments and official institutions outside the U.S. — — 111 — —
Loans to financial institutions
In U.S. offices — — — — 10
In offices outside the U.S. 10 3 13 4 —
Commercial and industrial
In U.S. offices 78 52 383 825 572
In offices outside the U.S. 287 571 939 1,018 567
$10,961 $10,873 $10,526 $10,566 $ 8,288
Credit recoveries
Consumer (1)
In U.S. offices $ 1,061 $ 1,079 $ 763 $ 729 $ 543
In offices outside the U.S. 842 691 735 510 423
Corporate (2)
Mortgage and real estate
In U.S. offices — — — 1 1
In offices outside the U.S. 5 3 1 — 1
Governments and official institutions outside the U.S. 55 1 — 2 —
Loans to financial institutions
In U.S. offices — 6 — — —
In offices outside the U.S. 15 35 12 6 9
Commercial and industrial
In U.S. offices 104 100 34 147 154
In offices outside the U.S. 473 357 215 168 129
$ 2,555 $ 2,272 $ 1,760 $ 1,563 $ 1,260
Net credit losses
In U.S. offices $ 4,835 $ 5,804 $ 5,369 $ 5,779 $ 4,888
In offices outside the U.S. 3,571 2,797 3,397 3,224 2,140
Total $ 8,406 $ 8,601 $ 8,766 $ 9,003 $ 7,028
Other — net (3) $ (1,010) $ 994 $ 2,262 $ 421 $ 1,355
Allowance for loan losses at end of year $ 9,782 $11,269 $12,643 $11,101 $ 9,688

Allowance for unfunded lending commitments (4) $ 850 $ 600 $ 600 $ 567 $ 450

Total allowance for loans and unfunded lending commitments $10,632 $11,869 $13,243 $11,668 $10,138
Net consumer credit losses $ 8,683 $ 8,471 $ 7,555 $ 7,452 $ 6,157
As a percentage of average consumer loans 2.01% 2.13% 2.22% 2.55% 2.33%
Net corporate credit losses/(recoveries) $ (277) $ 130 $ 1,211 $ 1,551 $ 871
As a percentage of average corporate loans NM 0.11% 1.17% 1.44% 0.76%

(1) Consumer credit losses and recoveries primarily relate to revolving credit and installments loans.
(2) Amounts in 2003, 2002 and 2001 include $12 million (through the 2003 third quarter), $114 million and $52 million, respectively, of collections from credit default swaps purchased from third parties. From the 2003
fourth quarter forward, collections from credit default swaps are included within Principal Transactions on the Consolidated Statement of Income.
(3) 2005 primarily includes reductions to the loan loss reserve of $584 million related to securitizations and portfolio sales, a reduction of $110 million related to purchase accounting adjustments from the KorAm acquisition,
and a reduction of $90 million from the sale of CitiCapital’s transportation portfolio. 2004 primarily includes the addition of $715 million of loan loss reserves related to the acquisition of KorAm and the addition of $148
million of loan loss reserves related to the acquisition of WMF. 2003 primarily includes the addition of $2.1 billion of loan loss reserves related to the acquisition of the Sears credit card business. 2002 primarily includes
the addition of $452 million of loan loss reserves related to the acquisition of Golden State Bancorp (GSB). 2001 primarily includes the addition of loan loss reserves related to the acquisitions of Banamex and European
American Bank (EAB).
(4) Represents additional credit loss reserves for unfunded corporate lending commitments and letter of credit recorded with Other Liabilities on the Consolidated Balance Sheet.
NM Not meaningful
79
CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS
In millions of dollars at year end 2005 2004 2003 2002 2001
Corporate cash-basis loans (1)
Collateral dependent (at lower of cost or collateral value) (2) $ 6 $ 7 $ 8 $ 64 $ 365
Other 998 1,899 3,411 3,931 2,522
Total $1,004 $1,906 $3,419 $3,995 $2,887

Corporate cash-basis loans (1)

In U.S. offices $ 81 $ 254 $ 640 $ 887 $ 678

In offices outside the U.S. 923 1,652 2,779 3,108 2,209
Total $1,004 $1,906 $3,419 $3,995 $2,887

Renegotiated loans (includes Corporate and Commercial Business Loans)

In U.S. offices $ 22 $ 63 $ 107 $ 115 $ 263
In offices outside the U.S. 10 20 33 55 74
Total $ 32 $ 83 $ 140 $ 170 $ 337

Consumer loans on which accrual of interest had been suspended (3)

In U.S. offices $2,307 $2,485 $3,127 $3,114 $3,101
In offices outside the U.S. 1,713 2,978 2,958 2,792 2,266
Total $4,020 $5,463 $6,085 $5,906 $5,367

Accruing loans 90 or more days delinquent (4)(5)

In U.S. offices $2,886 $3,153 $3,298 $2,639 $1,822
In offices outside the U.S. 391 401 576 447 776
Total $3,277 $3,554 $3,874 $3,086 $2,598

(1) Excludes purchased distressed loans as they are accreting interest in accordance with Statement of Position 03-3, “Accounting for Certain Loans on Debt Securities Acquired in a Transfer” (SOP 03-3) in 2005. In prior
years, these loans were classified with other assets. The carrying value of these loans was $1.120 billion at December 31, 2005 and $1.213 billion at December 31, 2004. Prior to 2004, the balances were immaterial.
(2) A cash-basis loan is defined as collateral dependent when repayment is expected to be provided solely by the liquidation of the underlying collateral and there are no other available and reliable sources of repayment, in
which case the loans are written down to the lower of cost or collateral value.
(3) The December 31, 2005 balance includes the impact of the change in the EMEA Consumer Write-Off Policy.
(4) The December 31, 2004 balance includes the PRMI data. The December 31, 2003 balance includes the Sears and Home Depot data. The December 31, 2002 balance includes GSB data. The December 31, 2001
balance includes Banamex data.
(5) Substantially composed of consumer loans of which $1,591 million, $1,867 million, $1,643 million, $1,764 million, and $920 million are government-guaranteed student loans and Federal Housing Authority mortgages
at December 31, 2005, 2004, 2003, 2002, and 2001, respectively.

FOREGONE INTEREST REVENUE ON LOANS(1)

In U.S. In non-U.S. 2005
In millions of dollars offices offices total

Interest revenue that would have

been accrued at original contractual rates (2) $253 $477 $730
Amount recognized as interest revenue (2) 28 187 215
Foregone interest revenue $225 $290 $515

(1) Relates to corporate cash-basis, renegotiated loans and consumer loans on which accrual of interest
had been suspended.
(2) Interest revenue in offices outside the U.S. may reflect prevailing local interest rates, including the
effects of inflation and monetary correction in certain countries.

80
CONSUMER CREDIT RISK In the Consumer portfolio, credit loss experience is often expressed in
Within Global Consumer, independent credit risk management is responsible terms of annualized net credit losses as a percentage of average loans.
for establishing the Global Consumer Credit Policy, approving business- Consumer loans are generally written off no later than a predetermined
specific policies and procedures, monitoring business risk management number of days past due on a contractual basis, or earlier in the event of
performance, providing ongoing assessment of portfolio credit risk, and bankruptcy. For specific write-off criteria, see Note 1 to the Consolidated
approving new products and new risks. Financial Statements on page 122.
Approval policies for a product or business are tailored to internal audit Commercial Business includes loans and leases made principally to
ratings, profitability, and credit risk portfolio performance. small- and middle-market businesses. Commercial Business loans comprise
7% of the total consumer loan portfolio. These are placed on a non-accrual
CONSUMER PORTFOLIO REVIEW basis when it is determined that the payment of interest or principal is past
Citigroup’s consumer loan portfolio is well diversified by both product due for 90 days or more, except when the loan is well secured and in the
and location. process of collection.
The following table summarizes delinquency and net credit loss
Consumer Loans by Type experience in both the managed and on-balance sheet consumer loan
At December 31, 2005
portfolios, as well as the accrual status of the Commercial Business loans. The
managed loan portfolio includes held-for-sale and securitized credit card
Installment & receivables. Only U.S. Cards from a product view and U.S. from a regional
Other 30% view are impacted. Although a managed basis presentation is not in
conformity with GAAP, the Company believes managed credit statistics provide
a representation of performance and key indicators of the credit card business
Mortgage &
that is consistent with the way management reviews operating performance
Real Estate 51% and allocates resources. For example, the U.S. Cards business considers both
Auto 3% on-balance sheet and securitized balances (together, its managed portfolio)
when determining capital allocation and general management decisions and
Credit compensation. Furthermore, investors use information about the credit
Cards 16%
quality of the entire managed portfolio, as the results of both the on-balance
sheet and securitized portfolios impact the overall performance of the U.S.
Cards business. For a further discussion of managed-basis reporting, see the
U.S. Cards business on page 42 and Note 13 to the Consolidated Financial
Statements on page 141.
Consumer Loans by Geography
At December 31, 2005

Latin
America
Asia 1%
12%
Japan
3%
EMEA
8%
Mexico
3%

U.S. 73%

81
Consumer Loan Delinquency Amounts, Net Credit Losses, and Ratios
Total Average
loans 90 days or more past due (1) loans Net credit losses (1)
In millions of dollars, except total and average loan amounts in billions
Product View: 2005 2005 2004 2003 2005 2005 2004 2003
U.S.:
U.S. Cards $ 45.4 $1,161 $1,271 $ 1,670 $ 46.9 $ 2,737 $ 3,526 $ 2,388
Ratio 2.56% 2.25% 2.55% 5.83% 6.30% 5.76%
U.S. Retail Distribution 42.3 818 814 806 40.4 1,404 1,330 1,221
Ratio 1.94% 2.06% 2.34% 3.48% 3.51% 3.74%
U.S. Consumer Lending 181.4 2,624 2,888 2,902 167.5 673 809 966
Ratio 1.45% 1.86% 2.34% 0.40% 0.58% 0.82%
U.S. Commercial Business 33.6 170 188 339 31.3 48 198 467
Ratio 0.51% 0.58% 1.02% 0.15% 0.62% 1.30%
International:
International Cards 24.1 469 345 302 22.5 667 613 558
Ratio 1.95% 1.61% 1.79% 2.97% 3.33% 3.86%
International Consumer Finance 21.8 442 494 543 22.3 1,284 1,386 1,477
Ratio 2.03% 2.13% 2.50% 5.75% 6.36% 7.05%
International Retail Banking 60.4 779 2,086 2,051 61.7 1,882 615 458
Ratio 1.29% 3.36% 4.61% 3.05% 1.15% 1.08%
Private Bank (2) 39.3 79 127 121 38.5 (8) (5) 18
Ratio 0.20% 0.33% 0.35% (0.02)% (0.02)% 0.05%
Other Consumer Loans 2.3 47 — — 1.7 (4) (1) 2
On-Balance Sheet Loans (3) $450.6 $6,589 $8,213 $ 8,734 $432.8 $ 8,683 $ 8,471 $ 7,555
Ratio 1.46% 1.91% 2.32% 2.01% 2.13% 2.22%
Securitized receivables (all in U.S. Cards) $ 96.2 $1,314 $1,296 $ 1,421 $ 89.2 $ 5,326 $ 4,865 $ 4,529
Credit card receivables held-for-sale (4) — — 32 — 0.4 28 214 221
Managed Loans (5) $546.8 $7,903 $9,541 $10,155 $522.4 $14,037 $13,550 $12,305
Ratio 1.45% 1.84% 2.25% 2.69% 2.84% 2.97%

Regional View:
U.S. $330.4 $4,872 $5,216 $ 5,786 $310.7 $ 4,860 $ 5,862 $ 5,052
Ratio 1.47% 1.70% 2.10% 1.56% 2.05% 2.05%
Mexico 14.8 624 563 580 13.3 284 100 12
Ratio 4.21% 4.65% 6.10% 2.13% 0.95% 0.12%
EMEA 35.9 499 1,785 1,669 37.9 2,132 877 641
Ratio 1.39% 4.44% 4.67% 5.62% 2.40% 2.02%
Japan 11.6 182 308 355 13.7 1,016 1,210 1,331
Ratio 1.56% 1.91% 2.04% 7.43% 7.22% 7.91%
Asia 54.0 376 309 298 53.6 404 413 397
Ratio 0.70% 0.58% 0.87% 0.75% 0.93% 1.26%
Latin America 3.9 36 32 46 3.6 (13) 9 122
Ratio 0.93% 0.94% 1.49% (0.38)% 0.30% 3.92%
On-Balance Sheet Loans (3) $450.6 $6,589 $8,213 $ 8,734 $432.8 $ 8,683 $ 8,471 $ 7,555
Ratio 1.46% 1.91% 2.32% 2.01% 2.13% 2.22%
Securitized receivables (all in U.S. Cards) $ 96.2 $1,314 $1,296 $ 1,421 $ 89.2 $ 5,326 $ 4,865 $ 4,529
Credit card receivables held-for-sale (4) — — 32 — 0.4 28 214 221
Managed Loans (5) $546.8 $7,903 $9,541 $10,155 $522.4 $14,037 $13,550 $12,305
Ratio 1.45% 1.84% 2.25% 2.69% 2.84% 2.97%

(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) Private Bank results are reported as part of the Global Wealth Management segment.
(3) Total loans and total average loans exclude certain interest and fees on credit cards of approximately $4 billion and $4 billion, respectively, which are included in Consumer Loans on the Consolidated Balance Sheet.
(4) Included in Other Assets on the Consolidated Balance Sheet.
(5) This table presents credit information on a held basis and shows the impact of securitizations to reconcile to a managed basis. Only U.S. Cards from a product view, and U.S from a regional view, are impacted.
Managed-basis reporting is a non-GAAP measure. Held-basis reporting is the related GAAP measure. See a discussion of managed-basis reporting on page 81.

82
Consumer Loan Balances, Net of Unearned Income
End of period Average

In billions of dollars 2005 2004 2003 2005 2004 2003

On-balance sheet (1) $450.6 $430.7 $375.9 $432.8 $396.9 $339.6
Securitized receivables (all in U.S. Cards) 96.2 85.3 76.1 89.2 77.9 71.4
Credit card receivables held-for-sale (2) — 2.5 — 0.4 3.1 3.2
Total managed (3) $546.8 $518.5 $452.0 $522.4 $477.9 $414.2

(1) Total loans and total average loans exclude certain interest and fees on credit cards of approximately $4 billion for both 2005 and 2004 and approximately $4 billion and $2 billion, respectively, for 2003, which are
included in Consumer Loans on the Consolidated Balance Sheet.
(2) Included in Other Assets on the Consolidated Balance Sheet.
(3) This table presents loan information on a held basis and shows the impact of securitization to reconcile to a managed basis. Managed-basis reporting is a non-GAAP measure. Held-basis reporting is the related GAAP
measure. See a discussion of managed-basis reporting on page 81.

Citigroup’s total allowance for loans, leases and unfunded lending of approximately $4.3 billion resulting from the 2005 first quarter sale of
commitments of $10.632 billion is available to absorb probable credit losses CitiCapital’s transportation portfolio, was partially offset by an increase of
inherent in the entire portfolio. For analytical purposes only, the portion of $2.4 billion from the FAB acquisition. Loans in Japan also declined, mainly
Citigroup’s allowance for credit losses attributed to the Consumer portfolio reflecting continued contraction in the International Consumer Finance
was $6.922 billion at December 31, 2005, $8.379 billion at December 31, 2004 portfolio. Growth in mortgage and other real-estate-secured loans, the
and $9.088 billion at December 31, 2003. The decrease in the allowance for addition of the KorAm and WMF portfolios, and the impact of strengthening
credit losses from 2004 of $1.457 billion included: currencies drove the increase in 2004.
Net credit losses, delinquencies and the related ratios are affected by the
• reserve releases, primarily related to the impact of the change in
credit performance of the portfolios, including bankruptcies, unemployment,
bankruptcy legislation on U.S. Cards and continued improved credit
global economic conditions, portfolio growth and seasonal factors, as well as
conditions in the U.S.
macro-economic and regulatory policies.
• $663 million of utilizations as a result of standardizing the consumer loan
Consumer credit loss ratios and net credit losses in 2006 are expected to
write-off policies in certain EMEA countries in the 2005 third quarter
improve against prior-year levels due to the following:
• $554 million of reductions related to securitizations in the U.S. Cards
business • The acceleration of 2006 credit losses in 2005 as a result of changes to the
• $110 million of purchase accounting adjustments related to the U.S. bankruptcy laws that became effective in October 2005.
KorAm acquisition • The absences of the one-time charge in 2005 for the standardization of the
• $90 million reduction from the sale of the transportation portfolio write-off policy within EMEA for Retail Banking and Consumer Finance.
• $79 million reclass to a non-credit related reserve in other assets. • Continued stability in employment and the credit environment.
Offsetting these reductions in the allowance for credit losses was the This is expected to be partially offset by additional credit losses in U.S.
impact of reserve builds of $660 million, primarily related to the estimated Cards from the full year impact of adopting the U.S. regulator’s mandated
credit losses incurred with Hurricane Katrina; increased reserves in EMEA, change in the minimum payment due balance calculation plus the increase
primarily related to Germany; increased reserves in Mexico; and the impact of in the losses recognized from the resolution of disputed interest charges by
the change in bankruptcy legislation on U.S. Retail Distribution. The CitiFinancial Japan.
decrease in the allowance for credit losses in 2004 was primarily due to the
impact of reserve releases of $1.171 billion in 2004 related to improving credit
conditions, partially offset by the addition of $274 million and $148 million
associated with the acquisitions of KorAm and WMF, respectively.
On-balance sheet consumer loans of $450.6 billion increased $19.9 billion,
or 5%, from December 31, 2004, primarily driven by growth in mortgage and
other real-estate-secured loans in the U.S. Consumer Lending and Private
Bank businesses and growth in student loans. Credit card receivables declined
on securitization activities and higher payment rates by customers. In the
U.S., Commercial Business loans continued to decline in both 2005 and 2004,
reflecting the continued liquidation and sale of non-core portfolios; a decline

83
CORPORATE CREDIT RISK The maintenance of accurate and consistent risk ratings across the
For corporate clients and investment banking activities across the corporate credit portfolio facilitates the comparison of credit exposure across
organization, the credit process is grounded in a series of fundamental all lines of business, geographic regions and products.
policies, including: Obligor risk ratings reflect an estimated probability of default for an
• Joint business and independent risk management responsibility for obligor, and are derived primarily through the use of statistical models
managing credit risks; (which are validated periodically), external rating agencies (under defined
• Single center of control for each credit relationship that coordinates credit circumstances), or approved scoring methodologies. Facility risk ratings
activities with that client; are assigned, using the obligor risk rating, and then factors that affect the
• Portfolio limits to ensure diversification and maintain risk/capital loss-given-default of the facility such as support or collateral are taken
alignment; into account.
• A minimum two-authorized credit officer-signature requirement on Internal obligor ratings equivalent to BBB and above are considered
extensions of credit—one from a sponsoring credit officer in the business investment-grade. Ratings below the equivalent of BBB are considered
and one from a credit officer in independent credit risk management; non-investment-grade.
• Risk rating standards, applicable to every obligor and facility; and The following table presents the corporate credit portfolio by facility risk
• Consistent standards for credit origination documentation and remedial rating at December 31, 2005 and 2004, as a percentage of the total portfolio:
management. Direct outstandings and
unfunded commitments
The following table represents the corporate credit portfolio, before 2005 2004
consideration of collateral, by maturity at December 31, 2005. The Corporate AAA/AA/A 54% 54%
portfolio is broken out by direct outstandings (which include drawn loans, BBB 29 29
overdrafts, interbank placements, banker’s acceptances, certain investment BB/B 15 15
securities and leases) and unfunded commitments (which include unused CCC or below 1 1
commitments to lend, letters of credit and financial guarantees). Unrated 1 1
Total 100% 100%
Corporate Credit Portfolio
Due Greater The corporate credit portfolio is diversified by industry, with a
In billions of dollars at within than 1 year but Greater Total
December 31, 2005 1 year within 5 years than 5 years exposure concentration only to the financial sector, including banks, other financial
Direct outstandings $106 $ 56 $22 $184 institutions, investments banks, and government and central banks. The
Unfunded lending commitments 194 131 7 332 following table shows the allocation of direct outstandings and unfunded
Total $300 $187 $29 $516 commitments to industries as a percentage of the total Corporate portfolio.
Direct outstandings and
unfunded commitments
Due Greater
In billions of dollars at within than 1 year but Greater Total 2005 2004
December 31, 2004 1 year within 5 years than 5 years exposure
Government and central banks 8% 10%
Direct outstandings $131 $ 41 $13 $185 Other financial institutions 8 8
Unfunded lending commitments 148 99 13 260 Banks 7 7
Investment banks 5 6
Total $279 $140 $26 $445
Utilities 5 5
Petroleum 5 4
Portfolio Mix Insurance 4 4
Agriculture and food preparation 4 4
The corporate credit portfolio is geographically diverse across counterparty, Telephone and cable 4 4
industry and region. The following table shows direct outstandings and Industrial machinery and equipment 3 3
unfunded commitments by region: Autos 2 2
Dec. 31, Dec. 31, Freight transportation 2 2
2005 2004 Global information technology 2 2
Chemicals 2 2
U.S. 47% 42% Retail 2 2
EMEA 26 29 Metals 2 2
Japan 2 3 Other industries (1) 35 33
Asia 15 15
Latin America 4 4 Total 100% 100%
Mexico 6 7 (1) Includes all other industries, none of which exceeds 2% of total outstandings.
Total 100% 100%

84
Credit Risk Mitigation
Credit Exposure Arising from Derivatives and
As part of its overall risk management activities, the Company uses credit Foreign Exchange
derivatives and other risk mitigants to hedge portions of the credit risk in its Citigroup uses derivatives as both an end-user for asset/liability management
portfolio, in addition to outright asset sales. The effect of these transactions is and in its client businesses. In CIB, Citigroup enters into derivatives for
to transfer credit risk to credit-worthy, independent third parties. Beginning in trading purposes or to enable customers to transfer, modify or reduce their
the fourth quarter of 2003, the results of the mark-to-market and any realized interest rate, foreign exchange and other market risks. In addition, Citigroup
gains or losses on credit derivatives are reflected in the Principal Transactions uses derivatives and other instruments, primarily interest rate and foreign
line on the Consolidated Statement of Income. At December 31, 2005 and exchange products, as an end-user to manage interest rate risk relating to
2004, $40.7 billion and $27.3 billion, respectively, of credit risk exposure was specific groups of interest-sensitive assets and liabilities. In addition, foreign
economically hedged. The reported amounts of direct outstandings and exchange contracts are used to hedge non-U.S. dollar denominated debt, net
unfunded commitments in this report do not reflect the impact of these capital exposures and foreign exchange transactions.
hedging transactions. At December 31, 2005 and 2004, the credit protection The following tables summarize by derivative type the notionals,
was economically hedging underlying credit exposure with the following risk receivables and payables held for trading and asset/liability management
rating distribution: hedge purposes as of December 31, 2005 and December 31, 2004. See Note 22
Rating of Hedged Exposure to the Consolidated Financial Statements on page 161.
2005 2004
AAA/AA/A 48% 48%
BBB 43 43
BB/B 6 8
CCC or below 3 1
Total 100% 100%

At December 31, 2005 and 2004, the credit protection was economically
hedging underlying credit exposure with the following industry distribution:
Industry of Hedged Exposure
2005 2004
Utilities 10% 11%
Telephone and cable 8 7
Agriculture and food preparation 7 7
Autos 7 6
Other financial institutions 6 7
Petroleum 6 3
Industrial machinery and equipment 5 7
Natural gas distribution 5 4
Airlines 4 5
Chemicals 4 4
Pharmaceuticals 4 4
Retail 4 4
Insurance 4 2
Global information technology 3 4
Forest products 3 3
Metals 3 3
Investment banks 3 2
Business services 2 3
Banks 2 3
Freight transportation 2 3
Entertainment 2 2
Other industries (1) 6 6
Total 100% 100%

(1) Includes all other industries, none of which is greater than 2% of the total hedged amount.

85
CITIGROUP DERIVATIVES

Notionals
Trading Asset/Liability
In millions of dollars Derivatives (1) Management Hedges (2)

As of December 31 2005 2004 2005 2004

Interest rate contracts
Swaps $12,677,814 $10,184,941 $403,576 $256,193
Futures and forwards 2,090,844 1,921,691 18,425 26,958
Written options 1,949,501 1,778,861 5,166 6,373
Purchased options 1,633,983 1,552,763 53,920 73,413
Foreign exchange contracts
Swaps $ 563,888 $ 508,294 $ 37,418 $ 30,412
Futures and forwards 1,508,754 1,529,520 53,757 48,147
Written options 249,725 252,507 — 11
Purchased options 253,089 250,459 808 11
Equity contracts
Swaps $ 70,188 $ 56,744 $ — $ 10
Futures and forwards 14,487 26,122 — 160
Written options 213,383 166,747 — —
Purchased options 193,248 141,022 — 1,148
Commodity and other contracts
Swaps $ 20,486 $ 14,969 $ — $ —
Futures and forwards 10,876 11,163 — —
Written options 9,761 7,925 — —
Purchased options 12,240 10,303 — —
Credit derivatives $ 1,030,745 $ 585,540 $ — $ —

Mark-to-Market (MTM) Receivables/Payables

Derivatives Derivatives
In millions of dollars Receivables —MTM Payable —MTM

As of December 31 2005 2004 2005 2004

Trading Derivatives (1)
Interest rate contracts $ 192,761 $ 190,655 $ 188,182 $ 186,391
Foreign exchange contracts 42,749 83,040 41,474 72,410
Equity contracts 18,633 11,150 32,313 29,390
Commodity and other contracts 7,332 7,047 6,986 11,489
Credit derivative 8,106 4,728 9,279 4,701
Total $ 269,581 $ 296,620 $ 278,234 $ 304,381
Less: Netting agreements, cash collateral and market value adjustments (222,167) (239,136) (216,906) (239,895)
Net Receivables/Payables $ 47,414 $ 57,484 $ 61,328 $ 64,486

Asset/Liability Management Hedges (2)

Interest rate contracts $ 3,775 $ 4,742 $ 1,615 $ 2,541
Foreign exchange contracts 1,385 1,268 1,137 1,655
Equity contracts — 204 — 7
Total $ 5,160 $ 6,214 $ 2,752 $ 4,203
(1) Trading Derivatives include proprietary positions, as well as hedging derivative instruments that do not qualify for hedge accounting in accordance with SFAS 133, “Accounting for Derivative Instruments and Hedging
Activities” (SFAS 133).
(2) Asset/Liability Management Hedges include only those hedging derivative instruments that qualify for hedge accounting in accordance with SFAS 133.

86
 The Company’s credit exposure on derivatives and foreign exchange For asset/liability management hedges, a derivative must be highly
contracts is primarily to professional counterparties in the financial sector, effective in accomplishing the hedge objective of offsetting either changes in
with 79% arising from transactions with banks, investments banks, the fair value or cash flows of the hedged item for the risk being hedged. Any
governments and central banks, and other financial institutions. ineffectiveness present in the hedge relationship is recognized in current
For purposes of managing credit exposure on derivative and foreign earnings. The assessment of effectiveness excludes the changes in the value of
exchange contracts, particularly when looking at exposure to a single the hedged item that are unrelated to the risks being hedged. Similarly, the
counterparty, the Company measures and monitors credit exposure taking assessment of effectiveness may exclude changes in the fair value of a
into account the current mark-to-market value of each contract plus a derivative related to time value which, if excluded, is recognized in current
prudent estimate of its potential change in value over its life. This earnings. See Note 22 to the Consolidated Financial Statements on page 161.
measurement of the potential future exposure for each credit facility is based
on a stressed simulation of market rates and generally takes into account
legally enforceable risk-mitigating agreements for each obligor such as
netting and margining. The following table presents the global derivatives
portfolio by internal obligor credit rating at December 31, 2005 and 2004, as
a percentage of credit exposure:
2005 2004
AAA/AA/A 80% 79%
BBB 11 12
BB/B 8 8
CCC or below — —
Unrated 1 1
Total 100% 100%

The following table presents the global derivatives portfolio by industry of

the obligor as a percentage of credit exposure:
2005 2004
Financial institutions 67% 70%
Governments 12 8
Corporations 21 22
Total 100% 100%

87
GLOBAL CORPORATE PORTFOLIO REVIEW Cash-basis loans decreased $1.513 billion in 2004 due to decreases of
Corporate loans are identified as impaired and placed on a non-accrual basis $1.469 million in Capital Markets and Banking and $44 million in
(cash-basis) when it is determined that the payment of interest or principal Transaction Services. Capital Markets and Banking primarily reflected
is doubtful or when interest or principal is past due for 90 days or more; the declining charge-offs in the U.S., Argentina and Mexico, partially offset by the
exception is when the loan is well secured and in the process of collection. addition of KorAm. Transaction Services decreased primarily due to the
Impaired corporate loans are written down to the extent that principal is reclassification of cash-basis loans ($248 million) in Mexico to Capital
judged to be uncollectible. Impaired collateral-dependent loans are written Markets and Banking and charge-offs in Argentina and Poland.
down to the lower of cost or collateral value, less disposal costs. Total corporate Other Real Estate Owned (OREO) was $150 million,
The following table summarizes corporate cash-basis loans and net $126 million and $105 million at December 31, 2005, 2004, and 2003,
credit losses. respectively. The $24 million increase in 2005 from 2004 reflects net
foreclosures in the U.S. real estate portfolio.
In millions of dollars 2005 2004 2003
Total corporate loans outstanding at December 31, 2005 were $129 billion
Corporate cash-basis loans as compared to $114 billion and $98 billion at December 31, 2004 and
Capital Markets and Banking $ 923 $1,794 $3,263
2003, respectively.
Transaction Services 81 112 156
Total corporate net credit recovery of $277 million in 2005 decreased
Total corporate cash-basis loans (1) $1,004 $1,906 $3,419 $407 million compared to 2004, primarily due to improvements in the overall
Net credit losses (recoveries) credit environment, and the absence of losses taken in prior years. Total
Capital Markets and Banking $ (268) $ 148 $1,191 corporate net credit losses of $130 million in 2004 decreased $1.081 billion
Transaction Services (9) (18) 23 compared to 2003 primarily due to improvements in the overall credit
Alternative Investments — — (3)
environment, and the absence of the exposure to Parmalat.
Total net credit losses (recoveries) $ (277) $ 130 $1,211 Citigroup’s allowance for credit losses for loans, leases and lending
Corporate allowance for loan losses $2,860 $2,890 $3,555
commitments of $10.632 billion is available to absorb probable credit losses
Corporate allowance for credit losses on inherent in the entire portfolio. For analytical purposes only, the portion of
unfunded lending commitments (2) 850 600 600 Citigroup’s allowance for credit losses attributed to the corporate portfolio
Total corporate allowance for loans was $3.710 billion at December 31, 2005, compared to $3.490 billion at
and unfunded lending commitments $3,710 $3,490 $4,155 December 31, 2004 and $4.155 billion at December 31, 2003, respectively.
The $220 million increase in the total allowance at December 31, 2005 from
As a percentage of total corporate loans (3) 2.22% 2.54% 3.62%
December 31, 2004 primarily reflects reserve builds of $85 million due to
(1) Excludes purchased distressed loans as they are accreting interest in accordance with SOP 03-3 in increases in expected losses during the year and the deterioration of the credit
2005. In prior years, these loans were classified in Other Assets. The carrying value of these loans was
$1.120 billion at December 31, 2005 and $1.213 billion at December 31, 2004. Prior to 2004, the quality of the underlying portfolios. The $665 million decrease in the total
balances were immaterial.
(2) Represents additional reserves recorded in Other Liabilities on the Consolidated Balance Sheet. allowance at December 31, 2004 from December 31, 2003 primarily reflects
(3) Does not include the allowance for unfunded lending commitments. reserve release of $900 million due to continued improvement in the
Cash-basis loans on December 31, 2005 decreased $902 million from portfolio, partially offset by the addition of KorAm. Losses on corporate
2004; $871 million of the decrease was in Capital Markets and Banking and lending activities and the level of cash-basis loans can vary widely with
$31 million was in Transaction Services. Capital Markets and Banking respect to timing and amount, particularly within any narrowly defined
decreased primarily due to declines in charge-offs in Poland, Mexico and business or loan type.
Europe. Transaction Services decreased primarily due to reductions in
corporate borrowers in India and Mexico.

88
LOAN MATURITIES AND FIXED/VARIABLE PRICING Non-Trading Portfolios
Due Over 1 year Citigroup’s non-trading portfolios are managed using a common set of
within but within Over 5 standards that define, measure, limit and report market risk. The risks are
In billions of dollars at year end 1 year 5 years years Total
managed within limits approved by independent market risk management.
Corporate loan portfolio
In addition, there are Citigroup-wide reporting metrics that are common to
maturities
In U.S. offices: all business units, which enable Citigroup to aggregate and compare non-
Commercial and trading risks across businesses. The metrics measure the change in either
industrial loans $16,278 $ 3,150 $ 2,937 $ 22,365 income or value of the Company’s positions under various rate scenarios that
Mortgage and real estate 21 4 4 29 are different from the market expectations.
Lease financing 1,421 275 257 1,953
Citigroup’s primary focus is providing financial products for its customers.
In offices outside the U.S. 63,357 32,831 8,702 104,890
Loans and deposits are tailored to the customer’s requirements in terms of
Total corporate loans $81,077 $36,260 $11,900 $129,237 maturity and whether the rate is fixed or floating and, if it is floating, how
Fixed/variable pricing of often the rate resets and according to which market index. These customer
corporate loans with transactions result in a risk exposure for Citigroup. This exposure may be
maturities due after related to differences in the timing of maturities, and/or rate resetting for
one year (1) assets and liabilities, or it may be due to different positions resetting based on
Loans at fixed interest rates $11,567 $ 5,065
Loans at floating or adjustable
different indices. In some instances it may also be indirectly related to interest
interest rates 24,693 6,835 rate changes. For example, mortgage prepayment rates vary not only as a
result of interest rate changes, but also with the absolute level of rates relative
Total $36,260 $11,900
to the rate on the mortgage itself.
(1) Based on contractual terms. Repricing characteristics may effectively be modified from time to time One function of Treasury at Citigroup is to understand the risks that arise
using derivative contracts. See Note 22 to the Consolidated Financial Statements on page 161.
from customer transactions and to manage them so that unexpected changes
in the markets do not adversely impact Citigroup’s Net Interest Revenue
MARKET RISK MANAGEMENT PROCESS
(NIR). Various market factors are considered, including the market’s
Market risk encompasses liquidity risk and price risk, both of which arise in
expectation of future interest rates and any different expectations for rate
the normal course of business of a global financial intermediary. Liquidity
indices (LIBOR, treasuries, etc.). In order to manage these risks effectively,
risk is the risk that an entity may be unable to meet a financial commitment
Citigroup may modify customer pricing, enter into transactions with other
to a customer, creditor, or investor when due. Liquidity risk is discussed in the
institutions that may have opposite risk positions and enter into off-balance
“Capital Resources and Liquidity” on page 100. Price risk is the earnings risk
sheet transactions, including derivatives.
from changes in interest rates, foreign exchange rates, equity and commodity
NIR is a function of the size of the balance and the rate that is earned or
prices, and in their implied volatilities. Price risk arises in non-trading
paid on that balance. NIR in any period is the result of customer transactions
portfolios, as well as in trading portfolios.
and the related contractual rates from prior periods, as well as new
Market risks are measured in accordance with established standards to
transactions in the current period; it may be impacted by changes in rates on
ensure consistency across businesses and the ability to aggregate like risk at
floating rate assets and liabilities. Due to the long-term nature of the
the Citigroup level. Each business is required to establish, with approval from
portfolio, NIR will vary from quarter to quarter even in the absence of changes
independent market risk management, a market risk limit framework,
in interest rates.
including risk measures, limits and controls, that clearly defines approved
Citigroup’s principal measure of earnings risk to earnings from non-
risk profiles and is within the parameters of Citigroup’s overall risk appetite.
trading portfolios due to interest rates changes is Interest Rate Exposure
In all cases, the businesses are ultimately responsible for the market risks
(IRE). IRE measures the change in expected NIR in each currency that
they take and for remaining within their defined limits.
results solely from unanticipated changes in market rates of interest;
scenarios are run assuming unanticipated instantaneous parallel rate
changes, as well as more gradual rate changes. Other factors such as changes
in volumes, spreads, margins, and the impact of prior period pricing decisions
can also change current period interest income, but are not captured by IRE.
While IRE assumes that businesses make no additional changes in pricing or
balances in response to the unanticipated rate changes, in practice businesses
may alter their portfolio mix, customer pricing and hedge positions, which
could significantly impact reported NIR.
Citigroup employs additional measurements, including stress testing the
impact of non-linear interest rate movements on the value of the balance
sheet; analysis of portfolio duration and volatility, particularly as they relate to
mortgages and mortgage-backed securities; and the potential impact of the
change in the spread between different market indices.

89
Citigroup Interest Rate Exposure (Impact on Trading Portfolios
Pretax Earnings) Price risk in trading portfolios is measured through a complementary set of
The exposures in the table below represent the approximate change in NIR for tools, including factor sensitivities, value-at-risk, and stress testing. Each of
the next 12 months based on current balances and pricing that would result these is discussed in greater detail below. Each trading portfolio has its own
from unanticipated rate change scenarios of an instantaneous 100bp change market risk limit framework, encompassing these measures and other
and a gradual 100bp (25bp per quarter) change in interest rates. controls, including permitted product lists and a new product approval
December 31, 2005 December 31, 2004 process for complex products.
In millions of dollars
100 bps
Increase
100 bps
Decrease
100 bps
Increase
100 bps
Decrease
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
U.S. dollar Treasury bill for a one basis point change in interest rates). It is the
100 bp instantaneous change $(155) $284 $(462) $279
100 bp gradual change (73) 66 NA NA
responsibility of independent market risk management to ensure that factor
sensitivities are calculated, monitored and, in most cases, limited, for all
Mexican peso
relevant risks taken in a trading portfolio.
100 bp instantaneous change $ 63 $ (64) $ 46 $ (46)
100 bp gradual change 34 (34) NA NA Value-at-Risk (VAR) estimates the potential decline in the value of a
position or a portfolio, under normal market conditions, over a one-day
Euro
holding period, at a 99% confidence level. The VAR method incorporates the
100 bp instantaneous change $ (40) $ 40 $ (89) $ 89
100 bp gradual change (19) 19 NA NA factor sensitivities of the trading portfolio with the volatilities and correlations
of those factors. Citigroup’s VAR is based on the volatilities of, and correlations
Japanese yen
100 bp instantaneous change $ (16) NM $ 36 NM
between, approximately 250,000 market risk factors, including factors that
100 bp gradual change (11) NM NA NA track the specific issuer risk in debt and equity securities.
Stress testing is performed on trading portfolios on a regular basis to
Pound sterling
100 bp instantaneous change $ 3 $ (3) $ 22 $ (22)
estimate the impact of extreme market movements. Stress testing is performed
100 bp gradual change 9 (9) NA NA on individual trading portfolios, as well as on aggregations of portfolios and
businesses, as appropriate. It is the responsibility of independent market risk
NM Not meaningful. A 100 basis point decrease in interest rates would imply negative rates for the
Japanese yen yield curve. management, in conjunction with the businesses, to develop stress scenarios,
NA Not applicable. review the output of periodic stress testing exercises, and use the information
The changes in U.S. dollar Interest Rate Exposure from the prior year to make judgments as to the ongoing appropriateness of exposure levels
reflect changes in the aggregate asset/liability mix, changes in actual and and limits.
projected pre-payments for mortgages and mortgage-related investments, Risk capital for market risk in trading portfolios is based on an annualized
the impact on stockholders’ equity of retained earnings net of the WorldCom VAR figure, with adjustments for intra-day trading activity.
and Litigation Reserve Charge in 2004, as well as Citigroup’s view of Total revenues of the trading business consist of customer revenue, which
prevailing interest rates. includes spreads from customer flow and positions taken to facilitate customer
orders; proprietary trading activities in both cash and derivative transactions;
and net interest revenue. All trading positions are marked-to-market with the
result reflected in earnings. In 2005, negative trading-related revenue (net
losses) were recorded for 34 of 253 trading days. Of the 34 days on which
negative revenue (net losses) was recorded, only nine were greater than
$30 million. The following histogram of total daily revenue or loss captures
trading volatility and shows the number of days in which the Company’s
trading-related revenues fell within particular ranges.

90
Histogram of Daily Trading-Related Revenue — Twelve Months Ended December 31, 2005
40
Number of trading days

30

20

10

0
($100)-($51)

($50)-($41)

($41)-($31)

($30)-($21)

($20)-($11)

($10)-$0

$1-$10

$11-$20

$21-$30

$31-$40

$41-$50

$51-$60

$61-$70

$71-$80

$81-$90

$91-$100

$101-$110

$111-$120

$121-$130

$131-$140

$141-$150

$151-$160

$161-$170

$171-$180
Revenue (in millions of dollars)

Citigroup periodically performs extensive back-testing of many hypothetical The table below provides the range of VAR in the trading portfolios that was
test portfolios as one check on the accuracy of its Value-at-Risk (VAR). Back- experienced during 2005 and 2004:
testing is the process in which the daily VAR of a test portfolio is compared to
the ex-post daily change in the market value of its transactions. Back-testing is 2005 2004
conducted to confirm the validity of the 99% confidence level that daily market In millions of dollars Low High Low High

value losses in excess of 99% confidence level occur, on average, only 1% of the Interest rate $62 $155 $76 $133
time. The VAR calculation for the hypothetical test portfolios, with different Foreign exchange 9 23 8 29
degrees of risk concentration, meets this statistical criteria. Equity 27 63 15 180
Commodity 5 24 8 22
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. OPERATIONAL RISK MANAGEMENT PROCESS
For Citigroup’s major trading centers, the aggregate pretax VAR in the Operational risk is the risk of loss resulting from inadequate or failed internal
trading portfolios was $93 million at December 31, 2005 and $116 million at processes, people or systems, or from external events. It includes reputation
December 31, 2004. Daily exposures averaged $109 million in 2005 and and franchise risk associated with business practices or market conduct that
ranged from $78 million to $157 million. the Company may undertake. Operational risk is inherent in Citigroup’s
The following table summarizes Value-at-Risk to Citigroup in the trading global business activities and, as with other risk types, is managed through an
portfolios as of December 31, 2005 and 2004, along with the averages: overall framework with checks and balances that include recognized
ownership of the risk by the businesses, independent risk management
Dec. 31, 2005 Dec. 31, 2004
In millions of dollars 2005 Average 2004 Average
oversight, and independent review by Audit Risk and Review (ARR).
Interest rate $ 83 $100 $103 $ 96 Policy
Foreign exchange 17 14 22 16 The Citigroup Self-Assessment and Operational Risk Framework (the
Equity 50 40 32 29 Framework) includes the Citigroup Risk and Control Self-Assessment Policy
Commodity 8 15 15 16
and the Citigroup Operational Risk Policy, which define Citigroup’s approach
Covariance adjustment (65) (60) (56) (56)
to operational risk management.
Total — All market risk factors, The Citigroup Operational Risk Policy codifies the core governing
including general and
principles for operational risk management and provides a framework for
specific risk $ 93 $109 $116 $101
operational risks consistent across the Company. Each major business
Specific risk component $ 12 $ 6 $ 9 $ 9 segment must establish its own operational risk procedures, consistent with
Total — General market the corporate policy, and an approved operational risk governance structure.
factors only $ 81 $103 $107 $ 92 The Framework requires each business to identify its key operational risks as
well as the controls established to mitigate those risks and to ensure
The specific risk component represents the level of issuer-specific risk compliance with laws, regulations, regulatory administrative actions, and
embedded in the VAR, arising from both debt and equity securities. Citigroup’s Citigroup policies. It also requires that all businesses collect and report their
specific risk model conforms with the 4x-multiplier treatment approved by the operational risk losses.
Federal Reserve and is subject to extensive hypothetical back-testing (performed A formal governance structure is established through the Risk and Control
on an annual basis), including many portfolios with position concentrations. Self-Assessment (RCSA) Policy to provide direction, oversight, and monitoring
of Citigroup’s RCSA programs. The RCSA Policy incorporates standards for risk

91
and control assessment that are applicable to all businesses and staff functions; COUNTRY AND CROSS-BORDER RISK
it establishes RCSA as the process whereby risks inherent in a business’ activities MANAGEMENT PROCESS
are identified and the effectiveness of the key controls over those risks are Country Risk
evaluated and monitored. The objective of the policy is to establish a consistent The Citigroup Country Risk Committee is chaired by senior international
approach to assessing relevant risks and the overall control environment business management, and includes as its members business managers and
across Citigroup. RCSA processes facilitate Citigroup’s adherence to regulatory independent risk managers from around the world. The committee’s primary
requirements, including Sarbanes-Oxley, FDICIA, the International objective is to strengthen the management of country risk, defined as the total
Convergence of Capital Measurement and Capital Standards (Basel II), and risk to the Company of an event that impacts a country. The committee
other corporate initiatives, including Operational Risk Management and regularly reviews all risk exposures within a country, makes recommendations
alignment of capital assessments with risk management objectives. The entire as to actions, and follows up to ensure appropriate accountability.
process is subject to audit by Citigroup’s Audit and Risk Review, and the results
of RCSA are included in periodic management reporting, including reporting Cross-Border Risk
to Senior Management and the Audit and Risk Committee. The Company’s cross-border outstandings reflect various economic and
political risks, including those arising from restrictions on the transfer of
Reporting funds as well as the inability to obtain payment from customers on their
The Operational Risk Policy and its requirements facilitate the effective contractual obligations as a result of actions taken by foreign governments
communication of operational risks both within and across businesses. such as exchange controls, debt moratorium, and restrictions on the
Information about the businesses’ operational risk, historical losses, and the remittance of funds.
control environment is reported by each major business segment and Management oversight of cross-border risk is performed through a formal
functional area, and summarized for Senior Management and the Citigroup country risk review process that includes setting of cross-border limits, at least
Board of Directors. annually, in each country in which Citigroup has cross-border limits, at least
Measurement and Basel II annually, in each country in which Citigroup has cross-border exposure,
Risk Capital (RC) requirements are calculated for operational risk and the monitoring of economic conditions globally, and within individual countries
Framework is intended to ensure that relevant information is captured by with proactive action as warranted, and the establishment of internal risk
the businesses to support advanced capital modeling and management. An management policies. Under FFIEC guidelines, total cross-border
enhanced version of the RC model for operational risk has been developed outstandings include cross-border claims on third parties as well as
and is being implemented across the major business segments as a step investments in and funding of local franchises. Cross-border claims on third
toward readiness for Basel II capital calculations. The calculation, which is parties (trade, short-term, and medium- and long-term claims) include
aimed at qualification as an “Advanced Measurement Approach” (AMA) cross-border loans, securities, deposits with banks, investments in affiliates,
under Basel II, uses a combination of internal and external loss data to and other monetary assets, as well as net revaluation gains on foreign
support statistical modeling of capital requirement estimates, which are then exchange and derivative products.
adjusted modestly to reflect more qualitative data about the operational risk Cross-border outstandings are reported by assigning external guarantees to
and control environment. the country of the guarantor. For outstandings with tangible collateral, they
are reflected in the country where the collateral is held. For securities received
Information Security and Continuity of Business as collateral, outstandings are assigned to the domicile of the issuer of the
In the fall of 2004, Citigroup created the function of Chief Information securities.
Technology Risk Officer to enhance risk management practices between Investments in and funding of local franchises represent the excess of local
information security and continuity of business. This enabled the Company country assets over local country liabilities. Local country assets are claims on
to better manage and aggregate risk on an enterprise-wide basis. local residents recorded by branches and majority-owned subsidiaries of
During 2005, Citigroup created a strategic framework for Information Citigroup domiciled in the country, adjusted for externally guaranteed
Security technology initiatives, and the Company began implementing outstandings and certain collateral. Local country liabilities are obligations
enhancements to various Information Security programs across its businesses of branches and majority-owned subsidiaries of Citigroup domiciled in the
covering Information Security Risk Management, Security Incident Response country, for which no cross-border guarantee is issued by Citigroup offices
and Electronic Transportable Media. The Company also implemented tools to outside the country.
increase the effectiveness of its data protection and entitlement management In regulatory reports under FFIEC guidelines, cross-border resale
programs. Additional monthly Information Security metrics were established agreements are presented based on the domicile of the issuer of the securities
to better assist the Information Technology Risk Officer in managing that are held as collateral. However, for purposes of the following table,
enterprise-wide risk. The Information Security Program complies with the cross-border resale agreements are presented based on the domicile of the
Gramm-Leach-Bliley Act and other regulatory guidance. counterparty because the counterparty has the legal obligation for repayment.
During 2005, Citigroup began implementing a new business continuity Similarly, under FFIEC guidelines, long trading securities positions are
program that improves risk analysis and provides robust support for business required to be reported on a gross basis. However, for purposes of the following
resiliency. The Corporate Office of Business Continuity, with the support of table, certain long and short securities positions are presented on a net basis
senior management, continued to coordinate global preparedness and mitigate consistent with internal cross-border risk management policies, reflecting a
business continuity risks by reviewing and testing recovery procedures. reduction of risk from offsetting positions.

92
The table below shows all countries in which total FFIEC cross-border outstandings exceed 0.75% of total Citigroup assets for the periods presented:
December 31, 2005 December 31, 2004
Cross-border claims on third parties Investments in local franchises
Trading and Local Local Net investments Total cross- Total cross-
short-term Resale country country in local border border
In billions of dollars claims (1) agreements All other Total assets liabilities franchises (2) outstandings Commitments (3) outstandings Commitments

United Kingdom $ 7.9 $12.3 $0.6 $20.8 $49.0 $71.7 $ — $20.8 $103.8 $32.9 $82.2
Germany 9.9 2.7 2.2 14.8 19.8 21.1 — 14.8 25.0 25.0 19.7
France 7.8 4.9 2.2 14.9 0.4 0.6 — 14.9 33.5 17.3 19.4
South Korea 2.7 — 0.1 2.8 45.4 33.4 12.0 14.8 5.2 14.9 2.2
Netherlands 12.3 1.1 2.4 15.8 0.1 0.7 — 15.8 9.2 12.9 4.9
Canada 3.3 0.7 0.3 4.3 14.1 9.3 4.8 9.1 2.9 12.0 2.6
Italy 8.4 0.8 0.6 9.8 2.6 1.5 1.1 10.9 3.0 10.5 2.7

(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) If local country liabilities exceed local country assets, zero is used for net investments in and funding of local franchises.
(3) Commitments (not included in total cross-border outstandings) include legally binding cross-border letters of credit and other commitments and contingencies as defined by the FFIEC.

Total cross-border outstandings under FFIEC guidelines, including cross- Cross-border commitments (in billions) at December 31, 2003 were $28.3
border resale agreements based on the domicile of the issuer of the securities for the United Kingdom, $14.5 for Germany, $7.9 for France, $0.2 for South
that are held as collateral, and long securities positions reported on a gross Korea, $3.7 for the Netherlands, $2.2 for Canada and $2.3 for Italy.
basis at December 31, 2005, 2004, and 2003, respectively, were (in billions): The sector percentage allocation for bank, public and private cross-border
the United Kingdom ($13.7, $13.2, and $14.6), Germany ($20.0, $39.1, and claims, respectively, on third parties under FFIEC guidelines at December 31,
$41.4), France ($13.4, $16.2, and $17.5), South Korea ($15.0, $15.1, and 2005 was: the United Kingdom (27%, 21%, and 52%), Germany (30%, 35%,
$4.1), the Netherlands ($17.5, $14.9, and $10.0), Canada ($10.4, $13.0, and and 35%), France (34%, 18%, and 48%), South Korea (15%, 16%, and 69%),
$11.5), Italy ($18.8, $14.0, and $18.7). the Netherlands (13%, 23%, and 64%), Canada (20%, 29%, and 51%), and
Italy (3%, 74%, and 23%).

The following table shows cross-border outstandings to our 10 largest emerging market countries for the current period:
December 31, 2005 December 31, 2004
Cross-border claims on third parties Investments in local franchises
Trading and Local Local Net investments Total cross- Total cross-
short-term Resale country country in local border border
In billions of dollars claims (1) agreements All other Total assets liabilities franchises (2) outstandings Commitments (3) outstandings Commitments

Mexico $1.9 $— $3.7 $5.6 $56.9 $54.6 $2.3 $7.9 $0.9 $7.4 $0.5
Brazil 1.5 0.9 1.6 4.0 8.4 5.2 3.2 7.2 0.3 6.1 0.2
India 3.8 — 0.6 4.4 10.5 8.4 2.1 6.5 0.7 5.3 0.3
China 1.1 3.5 0.3 4.9 3.8 4.6 — 4.9 0.3 3.7 0.3
Taiwan 1.3 2.8 0.3 4.4 8.3 12.4 — 4.4 1.0 7.2 0.9
Hong Kong 2.0 0.1 0.2 2.3 11.2 24.7 — 2.3 0.2 1.5 0.1
Egypt 1.4 — 0.1 1.5 1.1 1.2 — 1.5 0.1 0.1 0.1
Turkey 1.1 — 0.2 1.3 1.7 1.5 0.2 1.5 0.7 1.4 0.2
Chile 0.3 — 0.5 0.8 3.5 2.9 0.6 1.4 0.1 1.6 0.1
Colombia 1.0 — 0.1 1.1 1.4 1.2 0.2 1.3 0.1 1.1 0.1

(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) If local country liabilities exceed local country assets, zero is used for net investments in and funding of local franchises.
(3) Commitments (not included in total cross-border outstandings) include legally binding cross-border letters of credit and other commitments and contingencies as defined by the FFIEC.

93
BALANCE SHEET REVIEW

Increase
In billions of dollars 2005 2004 (Decrease) % Change
Assets
Loans, net of unearned income and allowance for loan losses $ 574 $ 538 $ 36 7%
Trading account assets 296 280 16 6
Federal funds sold and securities borrowed or purchased under agreements to resell 217 201 16 8
Investments 181 213 (32) (15)
All other assets 226 252 (26) (10)
Total assets $1,494 $1,484 $ 10 1%

Liabilities
Deposits $ 593 $ 562 $ 31 6%
Federal funds purchased and securities loaned or sold under repurchase agreements 242 210 32 15
Brokerage payables 71 50 21 42
Short-term borrowings and long-term debt 284 265 19 7
Trading account liabilities 121 135 (14) (10)
Other liabilities 70 153 (83) (54)
Total liabilities $1,381 $1,375 $ 6 —%

Stockholders’ equity $ 113 $ 109 $ 4 4%

Total liabilities and stockholders’ equity $1,494 $1,484 $ 10 1%

Factors Affecting Assets and Liabilities in an increase to total assets of $4 billion. See Note 2 to the Consolidated
Financial Statements on page 131.
2005
On December 1, 2005, Citigroup completed the exchange of its asset Loans
management business for Legg Mason’s broker-dealer business, The increase in total loans represented significant growth in the consumer
approximately $2 billion of Legg Mason’s common and preferred shares, and loan portfolio (net of unearned income) of $19 billion primarily due to
approximately $500 million in cash that was obtained via a lending facility acquisitions, increases in loan originations due to the favorable interest rate
provided by CIB. This exchange resulted in a decrease of approximately $1 environment, and the impact of foreign currency translation. These increases
billion in assets sold and an increase to Citigroup’s total assets of were partially offset by an increase in securitization of private label cards
approximately $6 billion on the business acquired. during the year, write-offs of loans for the estimated losses incurred from
On October 24, 2005, Citigroup completed the first phase in acquiring the Hurricane Katrina, and the impact of U.S. Bankruptcy legislation. The 4%
credit card portfolio of Federated Department Stores, Inc. This resulted in an increase in the consumer loan portfolio was composed of a $30 billion, or
increase of more than $3 billion in the Company’s total assets. 15%, increase in mortgage and real estate loans, slightly offset by a $9 billion,
On July 1, 2005, Citigroup completed the sale of the Life Insurance and or 4%, decrease in installment and revolving credit, and a $2 billion, or 22%,
Annuities Business to MetLife. This transaction resulted in a decrease of decrease in lease financing. Allowance for consumer loan losses was $7
$93 billion in the Company’s total assets and $84 billion in insurance-related billion, which decreased $1 billion from prior year. During 2005, average
liabilities. consumer loans (net of unearned income) of $437 billion yielded an average
On March 31, 2005, Citigroup completed its acquisition of First American rate of 9.0%, compared to $401 billion and 9.2% in the prior year.
Bank in Texas. This acquisition resulted in an increase in the Company’s total In addition, there was a $15 billion increase in the corporate loan portfolio
assets and deposits of more than approximately $4 billion and $3 billion, (net of unearned income) reflected by the increase in existing loan portfolios
respectively. and the acquisition of new portfolios, as well as the impact of foreign currency
During the 2005 year, Citigroup repurchased 278 million shares of translation. The 13% increase in the corporate portfolio was driven by
common stock in open market repurchases. This resulted in a decrease of $13 increases of $11 billion, or 12%, in commercial and industrial loans,
billion in stockholders’ equity, which was offset by an increase of $15 billion $4 billion, or 31%, in loans to financial institutions, and $1 billion, or 30%, in
in retained earnings. mortgage and real estate loans. These increases were partially offset by a $1
See Notes 2 and 3 to the Consolidated Financial Statements on pages 131 billion, or 14%, decrease in lease financing and a slight decrease in
and 132, respectively. governments and official institutions. The allowance for corporate loan losses
of $3 billion was relatively flat from the prior year. Average corporate loans of
2004
$120 billion yielded an average rate of 6.6% in 2005, compared to $108
On April 30, 2004, Citigroup completed its tender offer to purchase the
billion and 6.6% in the prior year.
outstanding shares of KorAm for approximately $3 billion. This transaction
For further information, see “Loans Outstanding” on page 78 and Note 11
resulted in an increase in assets and deposits of $37 billion and $22 billion,
to the Consolidated Financial Statements on page 140.
respectively, at June 30, 2004.
On January 9, 2004, Citigroup completed the acquisition of Washington
Mutual Finance Corporation for approximately $1 billion in cash, resulting

94
Trading Account Assets (Liabilities) benefited from deposit growth marketing programs, branch expansion, and
The increase in trading account assets was attributable to portfolio growth of the impact of foreign exchange rates. Interest-bearing foreign deposits
$12 billion in mortgage loans and collateralized mortgage securities (CMS), comprise 60% of total deposits, interest-bearing domestic deposits comprise
$6 billion in equity securities, $5 billion in state and municipal securities, 29%, and both non-interest-bearing domestic deposits and non-interest-
$3 billion in corporate and other debt securities, and $6 billion in other. bearing foreign deposits comprise 11% of total deposits. For more information
These increases were partially offset by decreases in revaluation gains of on deposits, see “Capital Resources and Liquidity” on page 100.
$10 billion (primarily from foreign exchange contracts as the U.S. dollar
Brokerage Payables
strengthened, offset by gains from interest rate contracts on the flattening of
The increase in brokerage payables consisted of increases in payables to
the yield curve) and decreases in trading inventory of $6 billion in foreign
customers of $17 billion and payables to brokers of $4 billion. Generally, the
government securities.
balance in brokerage payables fluctuates based upon investment security
Trading account liabilities of $121 billion decreased $14 billion from the
inventory levels, trade activity and the timing of settlement of trades, resulting
prior year. The 10% decrease included an $11 billion decrease in securities
in fails to deliver. In addition to these factors, the balance was also impacted
sold, not yet purchased, and a $3 billion decrease in revaluation losses
by $3 billion on the acquisition of the broker/dealer business from Legg
(primarily lower losses on foreign exchange contracts offset by increased
Mason in 2005. Total average brokerage payables were $55 billion in 2005,
gains in interest rate contracts). The decrease in securities sold was
compared to $43 billion in 2004. See Note 7 to the Consolidated Financial
attributable to a decrease of $9 billion in debt securities and a decrease of
Statements on page 138.
$2 billion in U.S. Treasury securities. See Note 8 to the Consolidated Financial
Statements on page 139. Debt
The Company’s debt was composed of long-term debt of $217 billion and
Federal Funds Sold (Purchased) and Securities Borrowed
(Loaned) or Purchased (Sold) Under Agreements to Resell short-term borrowings of $67 billion at December 31, 2005, which increased
(Repurchase) $9 billion and $10 billion, respectively, from the prior year.
The increase in both accounts was primarily due to higher levels of The long-term debt balance at December 31, 2005 included $188 billion of
proprietary inventory, which are funded in a secured manner (mainly with senior notes; $23 billion of subordinated notes, with maturities ranging from
repurchase agreements). In addition, increased levels of matched activities 2006 to 2098; and $6 billion of junior subordinated notes relating to trust
also contributed to the higher levels of funding assets and liabilities. See preferred securities.
Note 6 to the Consolidated Financial Statements on page 138. Citigroup’s average long-term debt outstanding during 2005 was
$212 billion.
Investments During 2005, the Company took advantage of the flattened yield curve and
Investments are primarily fixed income securities, including mortgage- the positive credit environment to extend the maturities of new borrowings
backed securities, U.S. Treasury and federal agencies securities, state and and issued/acquired additional debt from new acquisitions. U.S. dollar- and
municipal securities, foreign government securities, U.S. corporate and other non-U.S. dollar-denominated fixed and variable rate senior debt increased by
debt securities. The decline in the overall investment portfolio was primarily $6 billion, and subordinated debt increased by $3 billion. The increase in
due to the sale of TLA investment assets of approximately $49 billion. This long-term debt was used to fund growth in the mortgage loan portfolio.
was partially offset by securities obtained in the Legg Mason and MetLife The 18% increase in short-term borrowings in 2005 included an increase
transactions as well as the impact of favorable market conditions and foreign of $8 billion in commercial paper, and an increase of $2 billion in other funds
exchange movements. See Note 5 to the Consolidated Financial Statements borrowed. The increase was used to fund both trading and non-trading
on page 135. activities.
Deposits For more information on debt, see Note 15 to the Consolidated Financial
The Company’s largest source of funding is its large, geographically diverse Statements on page 148 and “Capital Resources and Liquidity” on page 100.
deposit base. Average deposits increased $50 billion to $513 billion in 2005,
yielding an average rate of 2.6%, compared to 1.9% in the prior year. The 2005
increase in deposits was driven mainly by increases in corporate and retail
banking deposits, slightly offset by a decline in private banking mainly due
to the shutdown of the Private Bank in Japan.
The growth in corporate interest-bearing deposits, mainly in the Europe
and Asia regions, reflected the addition of new clients, higher balances in
existing customer accounts, the impact of acquisitions, increased interest
rate, transactional volumes and the impact of foreign currency translation.
The increase in retail deposits resulted primarily from growth in higher-
margin money market accounts and time deposits in the consumer
businesses in the U.S., Europe, and Mexico. In U.S., deposit balances grew in
interest-bearing time deposits, CDs and money market accounts, driven by
marketing of new and existing products, competitive interest rates, and the
acquisition of First American Bank. In Europe and Mexico, deposit balances

95
Average Balances and Interest Rates — Assets (1)(2)(3)(4)
Average Volume Interest Revenue % Average Rate \

In millions of dollars 2005 2004 2003 2005 2004 2003 2005 2004 2003
Assets
Cash and due from banks
In U.S. offices $ 4,128 $ 3,921 $ 2,256 $ 110 $ 35 $ 22 2.66% 0.89% 0.98%
In offices outside the U.S. (5) 2,801 2,126 1,737 26 28 24 0.93 1.32 1.38
Total $ 6,929 $ 6,047 $ 3,993 $ 136 $ 63 $ 46 1.96% 1.04% 1.15%
Deposits at interest with banks (5) $ 30,430 $ 25,583 $ 19,344 $ 1,718 $ 525 $ 810 5.65% 2.05% 4.19%
Federal funds sold and securities borrowed
or purchased under agreements to resell (6)
In U.S. offices $ 154,578 $ 129,538 $ 105,425 $ 7,041 $ 2,979 $ 2,156 4.55% 2.30% 2.05%
In offices outside the U.S. (5) 74,728 73,829 64,471 2,561 1,884 1,879 3.43 2.55 2.91
Total $ 229,306 $ 203,367 $ 169,896 $ 9,602 $ 4,863 $ 4,035 4.19% 2.39% 2.37%
Brokerage receivables
In U.S. offices $ 31,414 $ 28,715 $ 26,884 $ 1,107 $ 650 $ 483 3.52% 2.26% 1.80%
In offices outside the U.S. (5) 11,483 8,814 5,531 641 230 245 5.58 2.61 4.43
Total $ 42,897 $ 37,529 $ 32,415 $ 1,748 $ 880 $ 728 4.07% 2.34% 2.25%
Trading account assets (7)(8)
In U.S. offices $ 154,716 $ 125,597 $ 93,567 $ 5,365 $ 4,326 $ 3,230 3.47% 3.44% 3.45%
In offices outside the U.S. (5) 80,367 70,458 45,802 2,408 2,013 1,541 3.00 2.86 3.36
Total $ 235,083 $ 196,055 $ 139,369 $ 7,773 $ 6,339 $ 4,771 3.31% 3.23% 3.42%
Investments (1)
In U.S. offices
Taxable $ 77,000 $ 70,861 $ 71,966 $ 2,696 $ 2,163 $ 2,233 3.50% 3.05% 3.10%
Exempt from U.S. income tax 10,852 8,582 7,432 566 540 502 5.22 6.29 6.75
In offices outside the U.S. (5) 81,309 74,665 59,134 4,234 3,650 2,648 5.21 4.89 4.48
Total $ 169,161 $ 154,108 $ 138,532 $ 7,496 $ 6,353 $ 5,383 4.43% 4.12% 3.89%
Loans (net of unearned income) (9)
Consumer loans
In U.S. offices $ 306,396 $ 283,659 $ 245,013 $24,979 $24,053 $20,844 8.15% 8.48% 8.51%
In offices outside the U.S. (5) 130,550 117,476 96,217 14,238 12,650 10,866 10.91 10.77 11.29
Total consumer loans $ 436,946 $ 401,135 $ 341,230 $39,217 $36,703 $31,710 8.98% 9.15% 9.29%
Corporate loans
In U.S. offices $ 19,200 $ 16,030 $ 21,111 $ 1,134 $ 918 $ 1,033 5.91% 5.73% 4.89%
In offices outside the U.S. (5) 101,262 91,644 80,890 6,837 6,175 5,209 6.75 6.74 6.44
Total corporate loans $ 120,462 $ 107,674 $ 102,001 $ 7,971 $ 7,093 $ 6,242 6.62% 6.59% 6.12%
Total loans $ 557,408 $ 508,809 $ 443,231 $47,188 $43,796 $37,952 8.47% 8.61% 8.56%
Other interest-earning assets $ 10,050 $ 12,921 $ 14,258 $ 518 $ 1,014 $ 938 5.15% 7.85% 6.58%
Total interest-earning assets $1,281,264 $1,144,419 $ 961,038 $76,179 $63,833 $54,663 5.95% 5.58% 5.69%

Non-interest-earning assets (7) 151,492 162,581 140,110

Total assets from discontinued operations 51,270 96,734 81,966
Total assets $1,484,026 $1,403,734 $1,183,114

(1) The taxable equivalent adjustment is based on the U.S. federal statutory tax rate of 35%.
(2) Interest rates and amounts include the effects of risk management activities associated with the respective asset and liability categories. See Note 22 to the Consolidated Financial Statements on page 161.
(3) Monthly or quarterly averages have been used by certain subsidiaries where daily averages are unavailable.
(4) Detailed average volume, interest revenue and interest expense exclude discontinued operations. See Note 3 to the Consolidated Financial Statements on page 132.
(5) Average rates reflect prevailing local interest rates, including inflationary effects and monetary correction in certain countries.
(6) Average volumes of securities borrowed or purchased under agreements to resell are reported net pursuant to FIN 41 and interest revenue excludes the impact of FIN 41.
(7) The fair value carrying amounts of derivative and foreign exchange contracts are reported in non-interest-earning assets and other non-interest bearing liabilities.
(8) Interest expense on trading account liabilities of CGMHI is reported as a reduction of interest revenue.
(9) Includes cash-basis loans.

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Average Balances and Interest Rates — Liabilities and Equity, and Net Interest Revenue (1)(2)(3)(4)
Average Volume Interest Expense % Average Rate \

In millions of dollars 2005 2004 2003 2005 2004 2003 2005 2004 2003
Liabilities
Deposits
In U. S. offices
Savings deposits (5) $ 133,604 $ 125,659 $ 115,614 $ 2,411 $ 1,077 $ 992 1.80% 0.86% 0.86%
Other time deposits 35,754 30,544 26,390 743 676 425 2.08 2.21 1.61
In offices outside the U.S.(6) 343,647 306,633 251,295 10,348 7,037 5,384 3.01 2.29 2.14
Total $ 513,005 $ 462,836 $ 393,299 $13,502 $ 8,790 $ 6,801 2.63% 1.90% 1.73%
Federal funds purchased and securities loaned
or sold under agreements to repurchase (7)
In U.S. offices $ 173,674 $ 145,326 $ 122,480 $ 7,450 $ 3,053 $ 2,216 4.29% 2.10% 1.81%
In offices outside the U.S. (6) 71,921 66,806 56,057 4,118 2,821 2,639 5.73 4.22 4.71
Total $ 245,595 $ 212,132 $ 178,537 $11,568 $ 5,874 $ 4,855 4.71% 2.77% 2.72%
Brokerage payables
In U.S. offices $ 48,902 $ 38,457 $ 31,608 $ 544 $ 94 $ 48 1.11% 0.24% 0.15%
In offices outside the U.S. (6) 5,737 4,923 1,720 23 15 4 0.40 0.30 0.23
Total $ 54,639 $ 43,380 $ 33,328 $ 567 $ 109 $ 52 1.04% 0.25% 0.16%
Trading account liabilities (8)(9)
In U.S. offices $ 34,935 $ 37,233 $ 24,603 $ 86 $ 70 $ 48 0.25% 0.19% 0.20%
In offices outside the U.S. (6) 38,737 39,669 38,455 40 29 15 0.10 0.07 0.04
Total $ 73,672 $ 76,902 $ 63,058 $ 126 $ 99 $ 63 0.17% 0.13% 0.10%
Short-term borrowings
In U.S. offices $ 45,440 $ 47,599 $ 44,580 $ 2,255 $ 1,252 $ 725 4.96% 2.63% 1.63%
In offices outside the U.S. (6) 12,391 13,251 7,788 750 523 408 6.05 3.95 5.24
Total $ 57,831 $ 60,850 $ 52,368 $ 3,005 $ 1,775 $ 1,133 5.20% 2.92% 2.16%
Long-term debt
In U.S. offices $ 180,167 $ 161,700 $ 162,253 $ 6,756 $ 4,429 $ 3,525 3.75% 2.74% 2.17%
In offices outside the U.S. (6) 31,843 26,650 13,546 1,152 928 321 3.62 3.48 2.37
Total $ 212,010 $ 188,350 $ 175,799 $ 7,908 $ 5,357 $ 3,846 3.73% 2.84% 2.19%
Mandatorily redeemable
securities of subsidiary trusts (10) $ — $ — $ 6,300 $ — $ — $ 434 —% —% 6.89%
Total interest-bearing liabilities $1,156,752 $1,044,450 $ 902,689 $36,676 $22,004 $17,184 3.17% 2.11% 1.90%

Demand deposits in U.S. offices 4,807 4,348 7,382

Other non-interest bearing liabilities (8) 165,380 166,251 108,455
Total liabilities from discontinued operations 46,011 87,489 73,498
Total liabilities $1,372,950 $1,302,538 $1,092,024
Total stockholders’ equity (11) $ 111,076 $ 101,196 $ 91,090
Total liabilities and stockholders’ equity $1,484,026 $1,403,734 $1,183,114

Net interest revenue as a percentage

of average interest-earning assets (12)
In U.S. offices $ 769,148 $ 679,929 $ 587,941 $21,649 $25,456 $22,729 2.81% 3.74% 3.87%
In offices outside the U.S.(6) 512,116 464,490 373,097 17,854 16,373 14,750 3.49 3.52 3.95
Total $1,281,264 $1,144,419 $ 961,038 $39,503 $41,829 $37,479 3.08% 3.66% 3.90%

(1)The taxable equivalent adjustment is based on the U.S. federal statutory tax rate of 35%.
(2)Interest rates and amounts include the effects of risk management activities associated with the respective asset and liability categories. See Note 22 to the Consolidated Financial Statements on page 161.
(3)Monthly or quarterly averages have been used by certain subsidiaries where daily averages are unavailable.
(4)Detailed average volume, interest revenue and interest expense exclude discontinued operations. See Note 3 to the Consolidated Financial Statements on page 132.
(5)Savings deposits consist of Insured Money Market Rate accounts, NOW accounts, and other savings deposits.
(6)Average rates reflect prevailing local interest rates, including inflationary effects and monetary corrections in certain countries.
(7)Average volumes of securities loaned or sold under agreements to repurchase are reported net pursuant to FIN 41 and interest expense excludes the impact of FIN 41.
(8)The fair value carrying amounts of derivative and foreign exchange contracts are reported in non-interest-earning assets and other non-interest-bearing liabilities.
(9)Interest expense on trading account liabilities of CGMHI is reported as a reduction of interest revenue.
(10) During 2004, the Company deconsolidated all the subsidiary trusts in accordance with FIN 46-R. The resulting liabilities to the trust companies are included as a component of long-term debt as of December 31, 2005
and 2004.
(11) Includes stockholders’ equity from discontinued operations.
(12) Includes allocations for capital and funding costs based on the location of the asset.

97
Analysis of Changes in Interest Revenue (1)(2)(3)
2005 vs. 2004 2004 vs. 2003

Increase (decrease) Increase (decrease)

due to change in: due to change in:
Average Average Net Average Average Net
In millions of dollars Volume Rate Change(2) Volume Rate Change(2)

Cash and due from banks $ 10 $ 63 $ 73 $ 20 $ (3) $ 17

Deposits at interest with banks (4) $ 116 $1,077 $ 1,193 $ 210 $(495) $ (285)
Federal funds sold and securities borrowed
or purchased under agreements to resell
In U.S. offices $ 669 $3,393 $ 4,062 $ 533 $ 290 $ 823
In offices outside the U.S.(4) 23 654 677 254 (249) 5
Total $ 692 $4,047 $ 4,739 $ 787 $ 41 $ 828
Brokerage receivables
In U.S. offices $ 66 $ 391 $ 457 $ 35 $ 132 $ 167
In offices outside the U.S.(4) 86 325 411 110 (125) (15)
Total $ 152 $ 716 $ 868 $ 145 $ 7 $ 152
Trading account assets (5)
In U.S. offices $1,010 $ 29 $ 1,039 $1,103 $ (7) $1,096
In offices outside the U.S.(4) 293 102 395 732 (260) 472
Total $1,303 $ 131 $ 1,434 $1,835 $(267) $1,568
Investments (1)

In U.S. offices $ 300 $ 259 $ 559 $ 2 $ (34) $ (32)

In offices outside the U.S. (4) 337 247 584 743 259 1,002
Total $ 637 $ 506 $ 1,143 $ 745 $ 225 $ 970
Loans — consumer
In U.S. offices $1,878 $ (952) $ 926 $3,277 $ (68) $3,209
In offices outside the U.S. (4) 1,424 164 1,588 2,309 (525) 1,784
Total $3,302 $ (788) $ 2,514 $5,586 $(593) $4,993
Loans — corporate
In U.S. offices $ 186 $ 30 $ 216 $ (273) $ 158 $ (115)
In offices outside the U.S. (4) 649 13 662 716 250 966
Total $ 835 $ 43 $ 878 $ 443 $ 408 $ 851
Total loans $4,137 $ (745) $ 3,392 $6,029 $(185) $5,844
Other interest-earning assets $ (195) $ (301) $ (496) $ (94) $ 170 $ 76
Total interest revenue $6,852 $5,494 $12,346 $9,677 $(507) $9,170

(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) Detailed average volume, interest revenue and interest expense exclude discontinued operations. See Note 3 to the Consolidated Financial Statements on page 132.
(4) Changes in average rates reflect changes in prevailing local interest rates, including inflationary effects and monetary corrections in certain countries.
(5) Interest expense on trading account liabilities of CGMHI is reported as a reduction of interest revenue.

98
Analysis of Changes in Interest Expense and Net Interest Revenue (1)(2)(3)
2005 vs. 2004 2004 vs. 2003

Increase (decrease) Increase (decrease)

due to change in: due to change in:
Average Average Net Average Average Net
In millions of dollars Volume Rate Change(2) Volume Rate Change(2)

Deposits
In U.S. offices $ 159 $ 1,242 $ 1,401 $ 150 $ 186 $ 336
In offices outside the U.S. (4) 923 2,388 3,311 1,249 404 1,653
Total $1,082 $ 3,630 $ 4,712 $1,399 $ 590 $1,989
Federal funds purchased and securities
loaned or sold under agreements to repurchase
In U.S. offices $ 693 $ 3,704 $ 4,397 $ 449 $ 388 $ 837
In offices outside the U.S. (4) 230 1,067 1,297 472 (290) 182
Total $ 923 $ 4,771 $ 5,694 $ 921 $ 98 $1,019
Brokerage payables
In U.S. offices $ 32 $ 418 $ 450 $ 12 $ 34 $ 46
In offices outside the U.S. (4) 3 5 8 9 2 11
Total $ 35 $ 423 $ 458 $ 21 $ 36 $ 57
Trading account liabilities (5)
In U.S. offices $ (5) $ 21 $ 16 $ 24 $ (2) $ 22
In offices outside the U.S. (4) (1) 12 11 — 14 14
Total $ (6) $ 33 $ 27 $ 24 $ 12 $ 36
Short-term borrowings
In U.S. offices $ (59) $ 1,062 $ 1,003 $ 52 $ 475 $ 527
In offices outside the U.S. (4) (36) 263 227 234 (119) 115
Total $ (95) $ 1,325 $ 1,230 $ 286 $ 356 $ 642
Long-term debt
In U.S. offices $ 550 $ 1,777 $ 2,327 $ (12) $ 916 $ 904
In offices outside the U.S. (4) 187 37 224 409 198 607
Total $ 737 $ 1,814 $ 2,551 $ 397 $ 1,114 $1,511
Mandatorily redeemable securities of subsidiary trusts (6) $ — $ — $ — $ (217) $ (217) $ (434)
Total interest expense $2,676 $11,996 $14,672 $2,831 $ 1,989 $4,820
Net interest revenue $4,176 $ (6,502) $ (2,326) $6,846 $(2,496) $4,350

(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) Detailed average volume, interest revenue and interest expense exclude discontinued operations. See Note 3 to the Consolidated Financial Statements on page 132.
(4) Changes in average rates reflect changes in prevailing local interest rates, including inflationary effects and monetary corrections in certain countries.
(5) Interest expense on trading account liabilities of CGMHI is reported as a reduction of interest revenue.
(6) During 2004, the Company deconsolidated all the subsidiary trusts in accordance with FIN 46-R. The resulting liabilities to the trust companies are included as a component of long-term debt as of December 31, 2005
and 2004.

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CAPITAL RESOURCES AND LIQUIDITY

Capital Resources Components of Capital Under Regulatory Guidelines

In millions of dollars at year end 2005 2004
Overview
Citigroup’s capital management framework is designed to ensure that Tier 1 Capital
Citigroup and its subsidiaries maintain sufficient capital consistent with the Common stockholders’ equity $111,412 $108,166
Qualifying perpetual preferred stock 1,125 1,125
Company’s risk profile, all applicable regulatory standards and guidelines,
Qualifying mandatorily redeemable securities
and external rating agency considerations. The capital management process of subsidiary trusts 6,264 6,209
is centrally overseen by senior management and is continuously reviewed at Minority interest 512 937
the entity and country level. Capital is generated principally via earnings, Less: Net unrealized gains on securities
issuance of common and preferred stock and subordinated debt, and equity available-for-sale (1) (1,084) (2,633)
Less: Accumulated net gains on cash flow
issued as a result of employee benefit plans. It is used primarily to support
hedges, net of tax (612) (173)
growth in the Company’s businesses. Excess capital is used to pay dividends Less: Intangible assets:
to shareholders, repurchase stock, and fund acquisition activity. Goodwill (33,130) (31,992)
Senior management oversees the capital management process of Citigroup Other disallowed intangible assets (6,163) (6,794)
and its principal subsidiaries mainly through Citigroup’s Finance and Capital Less: 50% investment in certain subsidiaries (2) — (68)
Other (500) (362)
Committee. This Committee includes Citigroup’s Chief Executive Officer,
Chief Financial Officer, Corporate Treasurer, Senior Risk Officer, and several Total Tier 1 Capital $ 77,824 $ 74,415
senior business managers. The Committee’s responsibilities include: Tier 2 Capital
determining the financial structure of Citigroup and its principal subsidiaries; Allowance for credit losses (3) $ 10,602 $ 10,785
ensuring that Citigroup and its regulated entities are adequately capitalized; Qualifying debt (4) 17,368 15,383
reviewing the funding and capital markets plan for Citigroup; monitoring Unrealized marketable equity securities gains (1) 608 384
Less: 50% investment in certain subsidiaries (2) — (68)
interest rate risk, corporate and bank liquidity, the impact of currency
translation on non-U.S. earnings and capital; and reviewing and Total Tier 2 Capital $ 28,578 $ 26,484
recommending share repurchase levels and dividends on common and Total Capital (Tier 1 and Tier 2) $106,402 $100,899
preferred stock. The Finance and Capital Committee has established capital
Risk-adjusted assets (5) $885,472 $851,563
targets for Citigroup and for significant subsidiaries. These targets exceed the
regulatory standards. (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
Citigroup is subject to risk-based capital ratio guidelines issued by the FRB. 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, net of tax. Institutions are required to deduct from Tier 1
Capital adequacy is measured via two risk-based ratios, Tier 1 and Total Capital net unrealized holding losses on available-for-sale equity securities with readily determinable fair
Capital (Tier 1 + Tier 2 Capital). Tier 1 Capital is considered core capital values, net of tax.
(2) Represents unconsolidated banking and finance subsidiaries.
while Total Capital includes other items such as subordinated debt and loan (3) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is deducted from risk-
adjusted assets.
loss reserves. Both measures of capital are stated as a percent of risk-adjusted (4) Includes qualifying subordinated debt in an amount not exceeding 50% of Tier 1 Capital.
assets. Risk-adjusted assets are measured primarily on their perceived credit (5) Includes risk-weighted credit equivalent amounts, net of applicable bilateral netting agreements,
of $56.5 billion for interest rate, commodity and equity derivative contracts and foreign-exchange
risk and include certain off-balance sheet exposures, such as unfunded loan contracts as of December 31, 2005, compared with $47.6 billion as of December 31, 2004. Market
risk-equivalent assets included in risk-adjusted assets amounted to $40.6 billion and $39.4 billion at
commitments, letters of credit, and derivative and foreign exchange contracts. December 31, 2005 and 2004, respectively. Risk-adjusted assets also include the effect of other
off-balance sheet exposures, such as unused loan commitments and letters of credit, and reflects
Citigroup is also subject to the Leverage Ratio requirement, a non-risk- deductions for certain intangible assets and any excess allowance for credit losses.
based asset ratio, which is defined as Tier 1 Capital as a percentage of adjusted
average assets. To be “well capitalized” under federal bank regulatory agency Common stockholders’ equity increased approximately $3.2 billion during
definitions, a bank holding company must have a Tier 1 Capital Ratio of at the year to $111.4 billion at December 31, 2005, representing 7.5% of assets.
least 6%, Total Capital Ratio of at least 10%, and Leverage Ratio of at least 3%, This compares to $108.2 billion and 7.3% at year-end 2004. The increase in
and not be subject to an FRB directive to maintain higher capital levels. common stockholders’ equity during the year principally reflected net income
As noted in the following table, Citigroup maintained a “well capitalized” of $24.6 billion and $3.5 billion related to the issuance of shares pursuant to
position during both 2005 and 2004. See Note 17 to the Consolidated employee benefit plans and other activity. These increases were offset by a
Financial Statements on page 151. $12.8 billion stock buyback, dividends of $9.2 billion, $2.2 billion related to
the after-tax net change in equity from nonowner sources, and $0.7 billion
Citigroup Regulatory Capital Ratios related to the net issuance of restricted and deferred stock. The increase in the
At year end 2005 2004 common stockholders’ equity ratio during the year reflected the above items
Tier 1 Capital 8.79% 8.74% and the 0.7% increase in total assets.
Total Capital (Tier 1 and Tier 2) 12.02 11.85
Leverage (1) 5.35 5.20
Common stockholders’ equity 7.46 7.29

(1) Tier 1 Capital divided by adjusted average assets.

100
 On April 14, 2005, the Board of Directors authorized a $15 billion share On February 15, 2006, Citigroup redeemed for cash all outstanding shares
buyback program. As of December 31, 2005, $4.4 billion remained under of its Fixed/Adjustable Rate Cumulative Preferred Stock, Series V. The
authorized repurchase programs after the repurchase of $12.8 billion in redemption price was $50.00 per depositary share, plus accrued dividends to
shares during the year. For further details see “Unregistered Sales of Equity the date of redemption. At December 31, 2005, $125 million of Series V
Securities and Use of Proceeds,” on page 186. Preferred Stock was outstanding.

The table below summarizes the Company’s repurchase activity during 2005:
Dollar Value
Total of Remaining
Common Dollar Value Average Price Authorized
Shares of Shares Paid Repurchase
In millions, except per share amounts Repurchased Repurchased per Share Program

First quarter 2005 19.0 $ 906 $47.65 $ 1,300

Second quarter 2005 41.8 1,965 47.06 14,335
Third quarter 2005 124.2 5,500 44.27 8,835
Fourth quarter 2005 92.9 4,423 47.60 4,412
Total year-to-date 277.9 $12,794 $46.03 $ 4,412

Total mandatorily redeemable securities of subsidiary trusts (trust Citibank, N.A. Ratios
preferred securities), which qualify as Tier 1 Capital, were $6.264 billion at At year end 2005 2004
December 31, 2005, as compared to $6.209 billion at December 31, 2004. On
Tier 1 Capital 8.41% 8.42%
March 1, 2005, the FRB issued the final rule that allows for the continued Total Capital (Tier 1 and Tier 2) 12.55 12.51
limited inclusion of trust preferred securities in the Tier 1 Capital of Bank Leverage (1) 6.45 6.28
Holding (BHCs) while placing them and other restricted core capital elements Common stockholder’s equity 7.96 7.51
under stricter quantitative limits. The final rule provides a transition period, (1) Tier 1 Capital divided by adjusted average assets.
ending March 31, 2009, for application of the quantitative limits. See
“Regulatory Capital and Accounting Standards Developments” below. Citibank, N.A. Components of Capital Under
Citigroup’s subsidiary depository institutions in the United States are Regulatory Guidelines
subject to risk-based capital guidelines issued by their respective primary In billions of dollars at year end 2005 2004
federal bank regulatory agencies, which are similar to the FRB’s guidelines. Tier 1 Capital $44.7 $41.7
To be “well capitalized” under federal bank regulatory agency definitions, Total Capital (Tier 1 and Tier 2) 66.8 62.0
Citigroup’s depository institutions must have a Tier 1 Capital Ratio of at least
6%, a combined Tier 1 and Tier 2 Capital Ratio (Total Capital) of at least 10% Citibank had net income for 2005 amounting to $8.8 billion. During 2005,
and a Leverage Ratio of at least 5%, and not be subject to an FRB directive to Citibank paid dividends of $4.1 billion.
meet and maintain higher capital levels. At December 31, 2005, all of During 2005, Citibank issued an additional $1.4 billion of subordinated
Citigroup’s subsidiary depository institutions were “well capitalized” under notes to Citigroup that qualify for inclusion in Citibank’s Tier 2 capital. Total
the federal regulatory agencies’ definitions, including Citibank, N.A. as noted subordinated notes issued to Citigroup that were outstanding at December 31,
in the table below. 2005 and December 31, 2004 and included in Citibank’s Tier 2 capital
amounted to $15.3 billion and $13.9 billion, respectively. Following the
merger of Citicorp into Citigroup on August 1, 2005, all of Citibank’s
subordinated debt was assigned to Citigroup. See “Funding” on page 104 for
further details of the merger.

101
Other Subsidiary Capital Considerations Capital Instruments
Certain of the Company’s broker/dealer subsidiaries — including Citigroup On March 1, 2005, the FRB issued the final rule, with an effective date of April
Global Markets Inc., an indirect wholly owned subsidiary of Citigroup Global 11, 2005, which retains trust preferred securities in Tier 1 Capital of BHCs, but
Markets Holdings Inc. (CGMHI) — are subject to various securities and with stricter quantitative limits and clearer qualitative standards. Under the
commodities regulations and capital adequacy requirements of the regulatory rule, after a five-year transition period, the aggregate amount of trust
and exchange authorities of the countries in which they operate. The preferred securities and certain other capital elements included in Tier 1
Company’s U.S. registered broker/dealer subsidiaries are subject to the Capital would be limited to 25% of Tier 1 Capital elements, net of goodwill less
Securities and Exchange Commission’s Net Capital Rule, Rule 15c3-1 (the any associated deferred tax liability. Under this rule, Citigroup currently
Net Capital Rule) under the Exchange Act. The Net Capital Rule requires the would have less than 10% against the limit. The amount of trust preferred
maintenance of a defined amount of minimum net capital. The Net Capital securities and certain other elements in excess of the limit could be included
Rule also limits the ability of broker/dealers to transfer large amounts of in Tier 2 Capital, subject to restrictions.
capital to parent companies and other affiliates. Compliance with the Net Additionally, from time to time, the FRB and the FFIEC propose
Capital Rule could limit operations of the Company that require the intensive amendments to, and issue interpretations of, risk-based capital guidelines and
use of capital, such as underwriting and trading activities and the financing reporting instructions. Such proposals or interpretations could, if implemented
of customer account balances. It could also restrict CGMHI’s ability to in the future, affect reported capital ratios and net risk-adjusted assets.*
withdraw capital from its broker/dealer subsidiaries, which could limit
CGMHI’s ability to pay dividends and make payments on its debt. CGMHI
monitors its leverage and capital ratios on a daily basis. See Notes 15 and 17
to the Consolidated Financial Statements on pages 148 and 151, respectively.
In addition, certain of the Company’s broker/dealer subsidiaries are
subject to regulation in the other countries in which they do business,
including requirements to maintain specified levels of net capital or its
equivalent. The Company’s broker/dealer subsidiaries were in compliance
with their capital requirements at December 31, 2005.
Regulatory Capital and Accounting
Standards Developments
Citigroup supports the move to a new set of risk-based regulatory capital
standards, published on June 26, 2004 (and subsequently amended in
November 2005) by the Basel Committee on Banking Supervision (the Basel
Committee), consisting of central banks and bank supervisors from 13
countries. Basel II will allow Citigroup to leverage internal risk models used
to measure credit, operational, and market risk exposures to drive regulatory
capital calculations. On September 30, 2005, the U.S. banking regulators
delayed the U.S. implementation of Basel II by one year. The current U.S.
implementation timetable consists of parallel calculations under the current
regulatory capital regime (Basel I) and Basel II, starting January 1, 2008, and
an implementation transition period, starting January 1, 2009 through year-
end 2011 or possibly later. The U.S. regulators have also reserved the right to
change how Basel II is applied in the U.S., and retain the existing Prompt
Corrective Action and leverage capital requirements applicable to U.S.
banking organizations. The new timetable, clarifications, and other proposals
will be set forth in a notice of proposed rulemaking (NPR), which the U.S.
banking regulators are expected to issue during 2006.
Citigroup continues to monitor and analyze the developing capital
standards in the U.S. and in countries where Citigroup has significant
presence, in order to assess their collective impact and allocate project
management and funding resources accordingly.

* This statement is a forward-looking statement within the meaning of the Private Securities Litigation
Reform Act. See “Forward-Looking Statements” on page 111.

102
Liquidity A series of standard corporate-wide liquidity ratios has been established to
monitor the structural elements of Citigroup’s liquidity. For bank entities,
At the Holding Company level for Citigroup, for CGMHI and for the Combined
these include cash capital (defined as core deposits, long-term debt, and
Holding Company, Citigroup maintains sufficient liquidity to meet all
capital compared with illiquid assets), liquid assets against liquidity gaps,
maturing unsecured debt obligations due within a one-year time horizon
core deposits to loans, long-term assets to long-term liabilities and deposits to
without accessing the unsecured markets.
loans. Several measures exist to review potential concentrations of funding by
Management of Liquidity individual name, product, industry, or geography. At the Holding Company
Management of liquidity at Citigroup is the responsibility of the Corporate level for Citigroup and for CGMHI, ratios are established for liquid assets
Treasurer. A uniform liquidity risk management policy exists for Citigroup against short-term obligations. Triggers for management discussion, which
and its major operating subsidiaries. Under this policy, there is a single set of may result in other actions have been established against these ratios. In
standards for the measurement of liquidity risk in order to ensure consistency addition, each individual major operating subsidiary or country establishes
across businesses, stability in methodologies and transparency of risk. targets against these ratios and may monitor other ratios as approved in its
Management of liquidity at each operating subsidiary and/or country is funding and liquidity plan.
performed on a daily basis and is monitored by the Corporate Treasury. Market triggers are internal or external market or economic factors that
The basis of Citigroup’s liquidity management is strong decentralized may imply a change to market liquidity or Citigroup’s access to the markets.
liquidity management at each of its principal operating subsidiaries and in Citigroup market triggers are monitored by the Corporate Treasurer and Head
each of its countries, combined with an active corporate oversight function. of Risk Architecture and are discussed in the Global ALCO. Appropriate market
As discussed in the “Capital Resources” on page 100, Citigroup’s Finance and triggers are also established and monitored for each major operating
Capital Committee monitors the liquidity position of Citigroup. In addition, subsidiary and/or country as part of the funding and liquidity plans. Local
the Global Asset and Liability Committee (ALCO) undertakes this oversight triggers are reviewed with the local country or business ALCO and
responsibility, along with the Corporate Treasurer. The Global ALCO functions independent risk management.
as an oversight forum composed of Citigroup’s Chief Financial Officer, Senior Simulated liquidity stress testing is periodically performed for each major
Risk Officer, Corporate Treasurer, Head of Risk Architecture and the senior operating subsidiary and/or country. The scenarios include assumptions
corporate and business treasurers and business chief financial officers. One of about significant changes in key funding sources, credit ratings, contingent
the objectives of the Global ALCO is to monitor and review the overall liquidity uses of funding, and political and economic conditions in certain countries.
and balance sheet positions of Citigroup and its principal subsidiaries and to The results of stress tests of individual countries and operating subsidiaries
address corporate-wide policies and make recommendations to senior are reviewed to ensure that each individual major operating subsidiary or
management and the business units. Similarly, ALCOs are also established for country is either self-funded or a net provider of liquidity. In addition, a
each country and/or major line of business. Contingency Funding Plan is prepared on a periodic basis for Citigroup. The
Each principal operating subsidiary and/or country must prepare an plan includes detailed policies, procedures, roles and responsibilities, and the
annual funding and liquidity plan for review by the Corporate Treasurer and results of corporate stress tests. The product of these stress tests is a series of
approval by Independent Risk Management. The funding and liquidity plan alternatives that can be used by the Corporate Treasurer in a liquidity event.
includes analysis of the balance sheet, as well as the economic and business CGMHI monitors liquidity by tracking asset levels, collateral and funding
conditions impacting the liquidity of the major operating subsidiary and/or availability to maintain flexibility to meet its financial commitments. As a
country. As part of the funding and liquidity plan, liquidity limits, liquidity policy, CGMHI attempts to maintain sufficient capital and funding sources in
ratios, market triggers, and assumptions for periodic stress tests are order to have the capacity to finance itself on a fully collateralized basis in the
established and approved. event that its access to uncollateralized financing is temporarily impaired.
Liquidity limits establish boundaries for market access in business-as-usual This is documented in CGMHI’s contingency funding plan. This plan is
conditions and are monitored against the liquidity position on a daily basis. reviewed periodically to keep the funding options current and in line with
These limits are established based on the size of the balance sheet, depth of the market conditions. The management of this plan includes an analysis used
market, experience level of local management, stability of the liabilities, and to determine CGMHI’s ability to withstand varying levels of stress, including
liquidity of the assets. Finally, the limits are subject to the evaluation of the rating downgrades, which could impact its liquidation horizons and required
entities’ stress test results. Generally, limits are established such that in stress margins. CGMHI maintains liquidity reserves of cash and loan value of
scenarios, entities are self-funded or net providers of liquidity. unencumbered securities in excess of its outstanding short-term
uncollateralized liabilities. This is monitored on a daily basis. CGMHI also
ensures that long-term illiquid assets are funded with long-term liabilities.

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Funding Citigroup’s funding sources are well diversified across funding types and
As a financial holding company, substantially all of Citigroup’s net earnings geography, a benefit of the strength of the global franchise. Funding for the
are generated within its operating subsidiaries. These subsidiaries make funds parent and its major operating subsidiaries includes a large geographically
available to Citigroup, primarily in the form of dividends. Certain diverse retail and corporate deposit base of $592.6 billion. A significant
subsidiaries’ dividend paying abilities may be limited by covenant restrictions portion of these deposits has been, and is expected to be, long-term and stable
in credit agreements, regulatory requirements and/or rating agency and is considered core.
requirements that also impact their capitalization levels. Citigroup and its subsidiaries have a significant presence in the global
Citigroup is a legal entity separate and distinct from Citibank, N.A. and its capital markets. During the 2005 second quarter, Citigroup consolidated its
other subsidiaries and affiliates. There are various legal limitations on the capital markets funding activities into two legal entities: (i) Citigroup Inc.,
extent to which Citigroup’s banking subsidiaries may extend credit, pay which issues long-term debt, trust preferred securities, preferred and common
dividends or otherwise supply funds to Citigroup and its nonbank subsidiaries. stock, and (ii) Citigroup Funding Inc. (CFI), a newly formed first-tier
The approval of the Office of the Comptroller of the Currency is required if total subsidiary of Citigroup, which issues commercial paper and medium-term
dividends declared by a national bank in any calendar year exceed net profits notes all of which is guaranteed by Citigroup. Publicly underwritten debt was
(as defined) for that year combined with its retained net profits for the also formerly issued by CGMHI, Citicorp, Associates First Capital Corporation
preceding two years. In addition, dividends for such a bank may not be paid in (Associates) and CitiFinancial Credit Company, which includes the
excess of the bank’s undivided profits. State-chartered bank subsidiaries are underwritten debt previously issued by WMF. As part of the funding
subject to dividend limitations imposed by applicable state law. consolidation during the 2005 second quarter, Citigroup unconditionally
As of December 31, 2005, Citigroup’s national and state-chartered bank guaranteed CGMHI’s outstanding SEC-registered indebtedness. CGMHI will
subsidiaries can declare dividends to their respective parent companies, no longer file reports with the SEC and will continue to be rated on the basis
without regulatory approval, of approximately $13.6 billion. In determining of a guarantee of its financial obligations from Citigroup. On August 1, 2005,
whether and to what extent to pay dividends, each bank subsidiary must also Citigroup merged its two intermediate bank holding companies, Citigroup
consider the effect of dividend payments on applicable risk-based capital and Holdings Company and Citicorp, into Citigroup Inc. Coinciding with this
leverage ratio requirements, as well as policy statements of the federal merger, Citigroup assumed all existing indebtedness and outstanding
regulatory agencies that indicate that banking organizations should guarantees of Citicorp. As a result, Citigroup has also guaranteed various debt
generally pay dividends out of current operating earnings. Consistent with obligations of Associates and of CitiFinancial Credit Company, each an
these considerations, Citigroup estimates that, as of December 31, 2005, its indirect subsidiary of Citigroup. See Note 27 to the Consolidated Financial
bank subsidiaries can directly or through their parent holding company Statements on page 167 for further discussions. Other significant elements of
distribute dividends to Citigroup of approximately $12.2 billion of the long-term debt in the Consolidated Balance Sheet include advances from the
available $13.6 billion. Federal Home Loan Bank system, asset-backed outstandings related to the
Citigroup also receives dividends from its nonbank subsidiaries. These purchase of Sears, and debt of foreign subsidiaries.
nonbank subsidiaries are generally not subject to regulatory restrictions on CGMHI’s consolidated balance sheet is highly liquid, with the vast majority
their payment of dividends, except that the approval of the Office of Thrift of its assets consisting of marketable securities and collateralized short-term
Supervision (OTS) may be required if total dividends declared by a savings financing agreements arising from securities transactions. The highly liquid
association in any calendar year exceed amounts specified by that nature of these assets provides CGMHI with flexibility in financing and
agency’s regulations. managing its business. CGMHI monitors and evaluates the adequacy of its
As discussed in “Capital Resources” on page 100, the ability of CGMHI to capital and borrowing base on a daily basis to allow for flexibility in its
declare dividends can be restricted by capital considerations of its funding, to maintain liquidity, and to ensure that its capital base supports the
broker/dealer subsidiaries. regulatory capital requirements of its subsidiaries.
During 2006, it is not anticipated that any restrictions on the subsidiaries’ Citigroup’s borrowings are diversified by geography, investor, instrument
dividending capability will restrict Citigroup’s ability to meet its obligations as and currency. Decisions regarding the ultimate currency and interest rate
and when they become due.* profile of liquidity generated through these borrowings can be separated from
Primary sources of liquidity for Citigroup and its principal subsidiaries the actual issuance through the use of derivative financial products.
include deposits, collateralized financing transactions, senior and At December 31, 2005, long-term debt and commercial paper outstanding
subordinated debt, issuance of commercial paper, proceeds from issuance of for Citigroup Parent Company, CGMHI, Citigroup Funding Inc. and
trust preferred securities, and purchased/wholesale funds. Citigroup and its Citigroup’s Subsidiaries were as follows:
principal subsidiaries also generate funds through securitizing financial Citigroup Citigroup Other
assets, including credit card receivables and single-family or multi-family In billions of dollars
Parent
Company CGMHI
Funding
Inc.
Citigroup
Subsidiaries
residences. See Note 13 to the Consolidated Financial Statements on page 141
for additional information about securitization activities. Finally, Citigroup’s Long-term debt $100.6 $39.2 $ 6.0 $71.7
Commercial paper — — 32.6 1.6
net earnings provide a significant source of funding to the corporation.
See Note 15 to the Consolidated Financial Statements on page 148 for
further detail on long-term debt and commercial paper outstanding.
* This statement is a forward-looking statement within the meaning of the Private Securities Litigation
Reform Act. See “Forward-Looking Statements” on page 111.

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 Citigroup’s ability to access the capital markets and other sources of wholesale funds, as well as the cost of these funds, is highly dependent on its credit ratings.
The accompanying chart indicates the current ratings for Citigroup.
Citigroup’s Debt Ratings as of December 31, 2005
Citigroup Inc. Citigroup Funding Inc. Citibank, N.A.
Senior Subordinated Commercial Senior Subordinated Commercial Long- Short-
debt debt paper debt debt paper term term

Fitch Ratings AA+ AA F1+ AA+ AA F1+ AA+ F1+

Moody’s Investors Service Aal Aa2 P-1 Aa1 Aa2 P-1 Aa1 P-1
Standard & Poor’s AA– A+ A-1+ AA– A+ A-1+ AA A-1+

The outlook for all Citigroup Inc. and Citigroup Funding Inc. debt ratings Citigroup’s contractual obligations include purchase obligations that are
is “stable.” Moody’s Investors Service assigned a “positive” outlook to the enforceable and legally binding for the Company. For the purposes of the
long-term rating for Citibank, N.A. in December, 2005. The outlook for all table below, purchase obligations are included through the termination date
other Citibank, N.A. ratings is “stable.” of the respective agreements, even if the contract is renewable. Many of the
Some of Citigroup’s affiliates have credit facilities outstanding. Details of purchase agreements for goods or services include clauses that would allow
these facilities can be found in Note 15 of the Consolidated Financial the Company to cancel the agreement with specified notice; however, that
Statements on page 148. impact is not included in the table (unless Citigroup has already notified the
Some of Citigroup’s non-bank subsidiaries, including CGMHI, have credit counterparty of its intention to terminate the agreement).
facilities with Citigroup’s subsidiary banks, including Citibank, N.A. Other liabilities reflected on the Company’s Consolidated Balance Sheet
Borrowings under these facilities must be secured in accordance with Section include obligations for goods and services that have already been received,
23A of the Federal Reserve Act. There are various legal restrictions on the litigation settlements, as well as other long-term liabilities that have been
extent to which a bank holding company and certain of its non-bank incurred and will ultimately be paid in cash. Excluded from the following
subsidiaries can borrow or obtain credit from banking subsidiaries or engage table are obligations that are generally short-term in nature, including
in certain other transactions with them. In general, these restrictions require deposit liabilities and securities sold under agreements to repurchase. The
that transactions be on arms-length terms and be secured by designated table also excludes certain insurance and investment contracts subject to
amounts of specified collateral. mortality and morbidity risks or without defined maturities, such that the
Citigroup uses its liquidity to service debt obligations, to pay dividends to timing of payments and withdrawals is uncertain. The liabilities related to
its stockholders, to support organic growth, to fund acquisitions and to these insurance and investment contracts are included on the Consolidated
repurchase its shares, pursuant to Board of Directors approved plans. Balance Sheet as Insurance Policy and Claims Reserves and Contractholder
Each of Citigroup’s major operating subsidiaries finances its operations on Funds and Separate and Variable Accounts.
a basis consistent with its capitalization, regulatory structure and the Citigroup’s funding policy for pension plans is generally to fund to the
environment in which it operates. Particular attention is paid to those amounts of accumulated benefit obligations. At December 31, 2005, there
businesses that for tax, sovereign risk, or regulatory reasons cannot be freely were no minimum required contributions, and no contributions are currently
and readily funded in the international markets. planned for U.S. pension plans. Accordingly, no amounts have been included
in the table below for future contributions to the U.S. pension plan. For the
Contractual Obligations
non-U.S. plans, discretionary contributions in 2006 are anticipated to be
The following table includes aggregated information about Citigroup’s
approximately $116 million and this amount has been included within
contractual obligations that impact its short- and long-term liquidity and
purchase obligations in the table below. The estimated pension plan
capital needs. The table includes information about payments due under
contributions are subject to change since contribution decisions are affected
specified contractual obligations, aggregated by type of contractual
by various factors such as market performance, regulatory and legal
obligation; it includes the maturity profile of the Company’s consolidated
requirements, and management’s ability to change funding policy. For
long-term debt, operating leases and other long-term liabilities. The
additional information regarding the Company’s retirement benefit
Company’s capital lease obligations are not material and are included within
obligations, see Note 21 to the Consolidated Financial Statements on page 156.
purchase obligations in the table.
Contractual Obligations by Year

In millions of dollars at year end 2006 2007 2008 2009 2010 Thereafter
Long-term debt obligations (1) $39,175 $34,901 $35,981 $21,561 $20,509 $65,372
Operating lease obligations 2,301 1,664 987 872 750 4,074
Purchase obligations 4,393 832 551 359 260 825
Business acquisitions (2) 3,790 — — — — —
Other liabilities reflected on the Company’s Consolidated Balance Sheet (3) 35,859 175 135 112 95 1,541
Total $85,518 $37,572 $37,654 $22,904 $21,614 $71,812
(1) For additional information about long-term debt and trust preferred securities, see Note 15 to the Consolidated Financial Statements on page 148.
(2) Represents the remaining purchase commitments for the Federated Credit Card portfolio.
(3) Relates primarily to accounts payable and accrued expenses included within Other Liabilities in the Company’s Consolidated Balance Sheet. Also included are various litigation settlements.

105
OFF-BALANCE SHEET ARRANGEMENTS Credit Card Receivables
Citigroup and its subsidiaries are involved with several types of off-balance Credit card receivables are securitized through trusts, which are established to
sheet arrangements, including special purpose entities (SPEs), lines and purchase the receivables. Citigroup sells receivables into the trusts on a non-
letters of credit, and loan commitments. recourse basis. Credit card securitizations are revolving securitizations; that is,
An SPE is an entity in the form of a trust or other legal vehicle, designed to as customers pay their credit card balances, the cash proceeds are used to
fulfill a specific limited need of the company that organized it (such as a purchase new receivables and replenish the receivables in the trust. CGMHI is
transfer of risk or desired tax treatment). one of several underwriters that distribute securities issued by the trust to
The principal uses of SPEs are to obtain liquidity and favorable capital investors. The Company relies on securitizations to fund approximately 65%
treatment by securitizing certain of Citigroup’s financial assets, to assist our of its U.S. Cards business.
clients in securitizing their financial assets, and to create investment products The following table reflects amounts related to the Company’s securitized
for the Company’s clients. SPEs may be organized as trusts, partnerships, or credit card receivables at December 31:
corporations. In a securitization, the company transferring assets to an SPE In billions of dollars 2005 2004
converts those assets into cash before they would have been realized in the
Total assets in trusts $107.7 $100.8
normal course of business, through the SPE’s issuing debt and equity Amounts sold to investors via trust-issued securities 92.1 82.1
instruments, certificates, commercial paper, and other notes of indebtedness. Remaining seller’s interest:
Investors usually have recourse to the assets in the SPE and often benefit from Recorded as consumer loans 11.6 15.8
other credit enhancements, such as a collateral account or Recorded as available-for-sale securities (AFS) 4.0 2.9
Amounts receivable from trusts 1.0 1.4
overcollateralization in the form of excess assets in the SPE, or from a
Amounts payable to trusts 1.6 1.3
liquidity facility, such as a line of credit or asset purchase agreement. Interest-only strip in AFS 2.1 1.1
Accordingly, the SPEs can typically obtain a more favorable credit rating from Net gains on securitizations 1.0 0.2
rating agencies than the transferor could obtain for its own debt issuances,
resulting in less expensive financing costs. The SPE may also enter into In 2005, the Company recorded net gains from securitization of credit card
derivative contracts in order to convert the yield or currency of the underlying receivables of $1.0 billion. Net gains reflect the following:
assets to match the needs of the SPE investors or to limit or change the credit
• incremental gains from new securitizations
risk of the SPE. Citigroup may be the counterparty to these derivatives.
• the reversal of the allowance for loan losses associated with receivables
The securitization process enhances the liquidity of the financial markets,
sold
may spread credit risk among several market participants, and makes new
• net gains on replenishments of the trust assets
funds available to extend credit to consumers and commercial entities.
• offset by other than temporary impairments.
Citigroup also acts as intermediary or agent for its corporate clients,
assisting them in raising money by selling their trade receivables or other The total net gain recorded in 2004 of $234 million does not reflect $420
financial assets to an SPE. The Company also securitizes clients’ debt million of reversals of loan loss reserves associated with the securitizations.
obligations in transactions involving SPEs that issue collateralized debt Prior to 2005, the amount of the gain related to reserve releases was allocated
obligations. In yet other arrangements, the Company packages and to the Provision for loan losses rather than to Other revenue.
securitizes assets purchased in the financial markets in order to create new See Note 13 to the Consolidated Financial Statements on page 141 for
security offerings for the institutional and individual investor. In connection additional information regarding the Company’s securitization activities.
with such arrangements, Citigroup may purchase and temporarily hold assets
Mortgages and Other Assets
designated for subsequent securitization.
The Company provides a wide range of mortgage and other loan products to
SPEs may be Qualifying SPEs (QSPEs) or VIEs or neither. The Company’s
its customers. In addition to providing a source of liquidity and less expensive
credit card receivables and mortgage loan securitizations are organized as
funding, securitizing these assets also reduces the Company’s credit exposure
QSPEs and are, therefore, not VIEs subject to FASB Interpretation No. 46,
to the borrowers. The Company’s mortgage loan securitizations are primarily
“Consolidation of Variable Interest Entities (revised December 2003),” (FIN
non-recourse, thereby effectively transferring the risk of future credit losses to
46-R). When an entity is deemed a variable interest entity (VIE) under FIN
the purchasers of the securities issued by the trust. In addition to servicing
46-R, the entity in question must be consolidated by the primary beneficiary;
rights, the Company also retains a residual interest in its auto loan, student
however, the Company is not the primary beneficiary of most of these entities
loan and other asset securitizations, consisting of securities and interest-only
and as such does not consolidate most of them.
strips that arise from the calculation of gain or loss at the time assets are sold
Securitization of Citigroup’s Assets to the SPE. The Company recognized gains related to the securitization of
In some of these off-balance sheet arrangements, including credit card mortgages and other assets of $323 million, $435 million and $588 million in
receivable and mortgage loan securitizations, Citigroup is securitizing assets 2005, 2004 and 2003, respectively.
that were previously recorded on its Consolidated Balance Sheet. A summary
Securitization of Client Assets
of certain cash flows received from and paid to securitization trusts is
The Company acts as an intermediary for its corporate clients, assisting them
included in Note 13 to the Consolidated Financial Statements on page 141.
in obtaining liquidity by selling their trade receivables or other financial
assets to an SPE.

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 In addition, Citigroup administers several third-party-owned, special VIEs under FIN 46-R due to its limited continuing involvement and,
purpose, multi-seller finance companies that purchase pools of trade as a result, we do not consolidate their assets and liabilities in our
receivables, credit cards, and other financial assets from its clients. As financial statements.
administrator, the Company provides accounting, funding, and operations See Note 13 to the Consolidated Financial Statements on page 141 for
services to these conduits but has no ownership interest. Generally, the clients additional information about off-balance sheet arrangements.
continue to service the transferred assets. The conduits’ asset purchases are
Credit Commitments and Lines of Credit
funded by issuing commercial paper and medium-term notes. Clients absorb
The table below summarizes Citigroup’s credit commitments.
the first losses of the conduits by providing collateral in the form of excess
assets or holding a residual interest. The Company, along with other financial In millions of dollars at year end 2005 2004(1)
institutions, provides liquidity facilities, such as commercial paper backstop Financial standby letters of credit and foreign
lines of credit to the conduits. The Company also provides loss enhancement office guarantees $ 52,384 $ 45,796
in the form of letters of credit and other guarantees. All fees are charged on a Performance standby letters of credit and
market basis. During 2003, many of the conduits issued “first loss” foreign office guarantees 13,946 9,145
Commercial and similar letters of credit 5,790 5,811
subordinated notes to third-party investors so that such investors in each
One- to four-family residential mortgages 3,343 4,559
conduit would be deemed the primary beneficiary under FIN 46-R, and would Revolving open-end loans secured by one- to four-family
consolidate that conduit. residential properties 25,089 15,705
At December 31, 2005 and 2004, total assets and liabilities in the Commercial real estate, construction and
unconsolidated conduits were $55 billion and $54 billion, respectively. One land development 2,283 2,084
Credit card lines (2) 859,504 776,281
conduit with assets of $656 million was consolidated at December 31, 2004.
Commercial and other consumer
For 2005 and 2004, the Company’s revenues for these activities amounted to loan commitments (1)(3) 346,444 274,237
$193 million and $197 million, respectively, and estimated expenses before
Total $1,308,783 $1,133,618
taxes were $36 million and $34 million, respectively. Expenses have been
estimated based upon a percentage of product revenues to business revenues. (1) December 31, 2004 restated to conform to the current period’s presentation. Amounts reflect the
inclusion of short-term syndication and bridge loan commitments.
(2) Credit card lines are unconditionally cancelable by the issuer.
Creation of Other Investment and Financing Products (3) Includes commercial commitments to make or purchase loans, to purchase third-party receivables, and
In addition to securitizations of mortgage loans originated by the Company, to provide note issuance or revolving underwriting facilities. Amounts include $179 billion and $141
billion with original maturity of less than one year at December 31, 2005 and 2004, respectively.
the Company also securitizes purchased mortgage loans, creating
collateralized mortgage obligations (CMOs) and other mortgage-backed See Note 25 to the Consolidated Financial Statements on page 163 for
securities (MBSs) and distributes them to investors. In 2005 and 2004, additional information on credit commitments and lines of credit.
respectively, the Company organized 36 and 29 mortgage securitizations with
assets of $25 billion and $24 billion. For 2005 and 2004, the Company’s
revenues for these activities were $483 million and $464 million, respectively,
and estimated expenses before taxes were $116 million and $78 million.
Expenses have been estimated based upon a percentage of product revenues
to total business revenues.
The Company packages and securitizes assets purchased in the financial
markets in order to create new security offerings, including arbitrage
collateralized debt obligations (CDOs) and synthetic CDOs for institutional
clients and retail customers, which match the clients’ investment needs and
preferences. Typically these instruments diversify investors’ risk to a pool of
assets as compared with investments in an individual asset. The VIEs, which
are issuers of CDO securities, are generally organized as limited liability
corporations. The Company typically receives fees for structuring and/or
distributing the securities sold to investors. In some cases, the Company may
repackage the investment with higher-rated debt CDO securities or U.S.
Treasury securities to provide a greater or a very high degree of certainty of the
return of invested principal. A third-party manager is typically retained by the
VIE to select collateral for inclusion in the pool and then actively manage it
or, in other cases, only to manage work-out credits. The Company may also
provide other financial services and/or products to the VIEs for market-rate
fees. These may include: the provision of liquidity or contingent liquidity
facilities, interest rate or foreign exchange hedges and credit derivative
instruments, as well as the purchasing and warehousing of securities until
they are sold to the SPE. The Company is not the primary beneficiary of these

107
Interest Rate Risk Associated with Consumer For the portion of the MSRs that are hedged with instruments that qualify
Mortgage Lending Activity for hedge accounting under SFAS 133, MSRs are recorded at fair value. For the
Citigroup originates and funds mortgage loans. As with all other lending remaining portion of the MSRs, which are hedged with instruments that do
activity, this exposes Citigroup to several risks, including credit, liquidity and not qualify for hedge accounting under SFAS 133 or are unhedged, the MSRs
interest rate risks. To manage credit and liquidity risk, Citigroup sells most are accounted for at the lower-of-cost-or-market.
of the mortgage loans it originates, but retains the servicing. These sale Citigroup’s MSRs totaled $3.318 billion, net of a valuation allowance of
transactions create an intangible asset referred to as mortgage servicing $1.021 billion at December 31, 2005, and $2.869 billion, net of a valuation
rights (MSRs). The fair value of this asset is primarily affected by changes in allowance of $1.280 billion at December 31, 2004.
prepayments that result from shifts in mortgage interest rates. Thus, by As part of the mortgage lending activity, Citigroup commonly enters into
retaining the servicing rights of sold mortgage loans, Citigroup is still exposed purchase commitments to fund residential mortgage loans at specific interest
to interest rate risk. rates within a given period of time, generally up to 60 days after the rate has
In managing this risk, Citigroup hedges a significant portion of the value been set. If the resulting loans from these commitments will be classified as
of its MSRs through the use of interest rate derivative contracts, forward loans-held-for-sale, Citigroup accounts for the commitments as derivatives
purchase commitments of mortgage-backed securities, and purchased under SFAS 133. Accordingly, changes in the fair value of these commitments,
securities classified as available-for-sale or trading (primarily fixed income which are driven by changes in mortgage interest rates, are recognized in
debt, such as U.S. government and agencies obligations, and mortgage- current earnings after taking into consideration the likelihood that the
backed securities including principal-only strips). commitment will be funded. However, a value is not assigned to the MSRs
Since the change in the value of these hedging instruments does not until after the loans have been funded and sold.
perfectly match the change in the value of the MSRs, Citigroup is still exposed Citigroup hedges its exposure to the change in the value of these
to what is commonly referred to as “basis risk.” Citigroup manages this risk commitments by utilizing hedging instruments similar to those referred
by reviewing the mix of the various hedging instruments referred to above on to above.
a daily basis. As of December 31, 2005 and 2004, Citigroup’s total commitment to make
or purchase loans was $5.493 billion and $7.533 billion, respectively. Of these
total commitments, $3.835 billion and $4.228 billion at December 31, 2005
and 2004, respectively, are considered derivative financial instruments in
accordance with SFAS 133.

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Pension and Postretirement Plans The following table shows the expected versus actual rate of return on plan
The Company has several non-contributory defined benefit pension plans assets for the U.S. pension and postretirement plans:
covering substantially all U.S. employees and has various defined benefit 2005 2004 2003
pension and termination indemnity plans covering employees outside the
Expected rate of return 8.0% 8.0% 8.0%
United States. The U.S. defined benefit plan provides benefits under a cash Actual rate of return 9.7 11.5 24.2
balance formula. Employees satisfying certain age and service requirements
remain covered by a prior final pay formula. The Company also offers For the foreign plans, pension expense for 2005 was reduced by the
postretirement health care and life insurance benefits to certain eligible expected return of $315 million which impacted pretax earnings by 1.1%.
U.S. retired employees, as well as to certain eligible employees outside the Pension expense for 2004 and 2003 was reduced by expected returns of $251
United States. million and $209 million, respectively. Actual returns were higher in 2005,
The following table shows the pension expense and contributions for 2004 and 2003 than the expected returns in those years.
Citigroup’s plans: For additional information on the pension and postretirement plans, as
U.S. Plans Non-U.S. Plans well as the effects of a one percentage-point change in the expected rates of
In millions of dollars 2005 2004 2003 2005 2004 2003 return, see Note 21 to the Company’s Consolidated Financial Statements on
Pension expense $237 $196 $101 $182 $185 $158
page 156.
Company contributions (1) 160 400 500 379 524 279 Discount Rate
(1) In addition, the Company absorbed $19 million, $18 million and $12 million during 2005, 2004, and The 2005 discount rates for the U.S. pension and postretirement plans were
2003, respectively, relating to certain investment management fees and administration costs for the
U.S. Plans, which are excluded from this table. selected by reference to a Citigroup-specific analysis using each plan’s specific
cash flows and compared with the Moody’s Aa Long-Term Corporate Bond
The following table shows the combined postretirement expense and Yield for reasonableness. Under the analysis, the resulting plan-specific
contributions for Citigroup’s U.S. and foreign plans: discount rates for the pension and postretirement plans were 5.63% and
U.S. and Non-U.S. Plans 5.49%, respectively. Citigroup’s policy is to round to the nearest tenth of a
In millions of dollars 2005 2004 2003 percent. Accordingly, at December 31, 2005, the discount rate was set at 5.6%
Postretirement expense $ 73 $ 75 $ 97 for the pension plan and 5.5% for the postretirement plans.
Company contributions 226 216 166 At December 31, 2004, the Moody’s Aa Long-Term Corporate Bond Yield
was 5.66% and the discount rate was set at 5.75%, for the pension plans and
5.50% for the postretirement plans, rounding up to the nearest quarter
Expected Rate of Return
percent, after giving consideration to a Citigroup-specific cash flow analysis.
Citigroup determines its assumptions for the expected rate of return on plan
The discount rates for the foreign pension and postretirement plans are
assets for its U.S. pension and postretirement plans using a “building block”
selected by reference to high-quality corporate bond rates in countries that
approach, which focuses on ranges of anticipated rates of return for each
have developed corporate bond markets. However, where developed corporate
asset class. A weighted range of nominal rates is then determined based on
bond markets do not exist, the discount rates are selected by reference to local
target allocations to each asset class. Citigroup considers the expected rate of
government bond rates with a premium added to reflect the additional risk for
return to be a long-term assessment of return expectations and does not
corporate bonds. For additional information on discount rates used in
anticipate changing this assumption annually unless there are significant
determining pension and postretirement benefit obligations and net benefit
changes in economic conditions. This contrasts with the selection of the
expense for the Company’s plans, as well as the effects of a one percentage-
discount rate, future compensation increase rate, and certain other
point change in the discount rates, see Note 21 to the Company’s Consolidated
assumptions, which are reconsidered annually in accordance with generally
Financial Statements on page 156.
accepted accounting principles.
The expected rate of return was 8.0% at December 31, 2005, 2004 and FASB Pension Project
2003, reflecting the performance of the global capital markets. Actual returns The FASB is currently working on a project that will change the way pension
in 2005, 2004 and 2003 were more than the expected returns. The expected and postretirement plan obligations are displayed on the Consolidated
returns impacted pretax earnings by 2.7%, 3.3% and 2.8%, respectively. This Balance Sheet.
expected amount reflects the expected annual appreciation of the plan assets Citigroup expects the standard to require companies to record an asset or
and reduces the obligation of the Company. It is deducted from the service liability on the Consolidated Balance Sheet equal to the funded status of the
cost, interest and other components of pension expense to arrive at the net plans. Any other plan assets or liabilities would be reflected net as an
pension expense. Net pension expense for 2005, 2004 and 2003 reflects adjustment to stockholders’ equity.
deductions of $806 million, $750 million and $700 million of expected
returns, respectively.

109
CORPORATE GOVERNANCE AND CONTROLS AND PROCEDURES

Corporate governance Citigroup has had a longstanding process whereby business and financial
Citigroup has a Code of Conduct that maintains the Company’s commitment officers throughout the Company attest to the accuracy of financial
to the highest standards of conduct. The Company has established an ethics information reported in corporate systems as well as the effectiveness of
hotline for employees. The Code of Conduct is supplemented by a Code of internal controls over financial reporting and disclosure processes.
Ethics for Financial Professionals (including finance, accounting, treasury, Company management is responsible for establishing and maintaining
tax and investor relations professionals) that applies worldwide. adequate internal control over financial reporting. Management maintains a
Both the Code of Conduct and the Code of Ethics for Financial comprehensive system of controls intended to ensure that transactions are
Professionals can be found on the Citigroup Web site, www.citigroup.com, by executed in accordance with management’s authorization, assets are
clicking on the “Corporate Governance” page. The Company’s Corporate safeguarded, and financial records are reliable. Management also takes steps
Governance Guidelines and the charters for the Audit and Risk Management to see that information and communication flows are effective and to
Committee, the Nomination and Governance Committee, the Personnel and monitor performance, including performance of internal control procedures.
Compensation Committee, and the Public Affairs Committee of the Board are All internal control systems, no matter how well designed, have inherent
also available under the “Corporate Governance” page, or by writing to limitations. Therefore, even those systems determined to be effective can
Citigroup Inc., Corporate Governance, 425 Park Avenue, 2nd floor, New York, provide only reasonable assurance with respect to financial statement
New York 10043. preparation and presentation.
Citigroup management, with the participation of the Company’s Chief
Controls and procedures
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
Disclosure of the Company’s internal control over financial reporting as of December 31,
The Company’s disclosure controls and procedures are designed to ensure that 2005. This evaluation was based on the criteria in Internal Control—
information required to be disclosed under the Exchange Act securities laws is Integrated Framework issued by the Committee of Sponsoring Organizations
accumulated and communicated to management, including the Chief of the Treadway Commission (COSO). Based on this evaluation, management
Executive Officer and Chief Financial Officer, to allow timely decisions believes that at that date the Company’s internal control over financial
regarding required disclosure and appropriate SEC filings. reporting was effective.
The Company’s Disclosure Committee is responsible for ensuring that Management’s assessment of effectiveness has been audited by KPMG LLP,
there is an adequate and effective process for establishing, maintaining and the Company’s independent registered public accounting firm. Their report,
evaluating disclosure controls and procedures for the Company’s external on page 115, expresses unqualified opinions on management’s assessment
disclosures. and on the effectiveness of the Company’s internal control over financial
The Company’s management, with the participation of the Company’s reporting as of December 31, 2005.
Chief Executive Officer and Chief Financial Officer, has evaluated the There were no changes in the Company’s internal control over financial
effectiveness of the Company’s disclosure controls and procedures (as defined reporting during the fiscal quarter ended December 31, 2005 that materially
in Rule 13a-15 (e) under the Exchange Act) as of December 31, 2005 and, affected, or are reasonably likely to materially affect, the Company’s internal
based on that evaluation, the Company’s Chief Executive Officer and Chief control over financial reporting.
Financial Officer have concluded that at that date the Company’s disclosure
controls and procedures were effective.
Financial reporting
The Company’s internal control over financial reporting is a process under
the supervision of the Chief Executive Officer and Chief Financial Officer, and
effected by Citigroup’s Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. These controls
include policies and procedures that
• pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
Company;
• provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that the Company’s receipts and
expenditures are being made only in accordance with authorizations of
the Company’s management and directors; and
• provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the financial statements.

110
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. The Company’s actual results may differ materially
from those included in the forward-looking statements. Forward-looking
statements are typically identified by words or phrases such as “believe,”
“expect,” “anticipate,” “intend,” “estimate,” “may increase,” “may
fluctuate,” and similar expressions or future or conditional verbs such as
“will,” “should,” “would,” and “could.” These forward-looking statements
involve risks and uncertainties including, but not limited to: changing
economic conditions—U.S., global, regional, or related to specific issuers or
industries; movements in interest rates and foreign exchange rates; the credit
environment, inflation, and geopolitical risks, including the continued threat
of terrorism; the ability to gain market share in both new and established
markets internationally; levels of activity in the global capital markets;
macro-economic factors, political policies and regulatory developments in
the countries in which the Company’s businesses operate; the level of
bankruptcy filings and unemployment rates; management’s ability to
accurately estimate probable losses inherent in the lending portfolio; the
ability of U.S. Cards to continue brand development, private-label expansion
and new product launches; the effect of U.S. Cards conforming to industry
and regulatory guidance regarding minimum payment calculations; the
ability of International Consumer Finance to grow organically in existing
branches and to open new branches; the impact of a variety of unresolved
matters involving some of the portfolio companies in CVC/Brazil; the
Company’s subsidiaries’ dividending capabilities; the effect of FASB’s
amendments to the accounting standards governing asset transfers,
securitization accounting and fair value of financial instruments; the effect
of banking and financial services reforms; 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; and the resolution of legal and regulatory
proceedings and related matters.

111
GLOSSARY OF TERMS

Accumulated Benefit Obligation (ABO) —The actuarial present Generally Accepted Accounting Principles (GAAP) —
value of benefits (vested and unvested) attributed to employee services Accounting rules and conventions defining acceptable practices in preparing
rendered up to the calculation date. financial statements in the United States of America. The Financial
Accounting Standards Board (FASB), an independent, self-regulatory
Additional Minimum Liability (AML) —Recognition of an
organization, is the primary source of accounting rules.
additional minimum liability is required when the ABO exceeds pension
plan assets and the liability for accrued pension cost already recognized Interest-only (or IO) strip —A residual interest in securitization trusts
is insufficient. representing the remaining value of expected net cash flows to the Company
after payments to third party investors and net credit losses.
Assets Under Management —Assets held by Citigroup in a
fiduciary capacity for clients. These assets are not included on Citigroup’s Leverage Ratio —The leverage ratio is calculated by dividing Tier 1
balance sheet. Capital by leverage assets. Leverage assets are defined as quarterly average
total assets, net of goodwill, intangibles and certain other items as required by
Cash-Basis Formula —A formula, within a defined benefit plan, that
the Federal Reserve.
defines the ultimate benefit as a hypothetical account balance based on
annual benefit credits and interest earnings. Managed Average Yield —Gross managed interest revenue earned
divided by average managed loans.
Cash-Basis Loans —Loans in which the borrower has fallen behind
in interest payments are considered impaired and are classified as Managed Basis —Managed basis presentation includes results from both
nonperforming or non-accrual assets. In situations where the lender on-balance sheet loans and off-balance sheet loans, and exclude the impact
reasonably expects that only a portion of the principal and interest of card securitization activity. Managed basis disclosures assume that
owed ultimately will be collected, payments are credited directly to the securitized loans have not been sold and present the result of the securitized
outstanding principal. loans in the same manner as the Company’s owned loans.
Claim —Request by an insured for a benefit from an insurance company for Managed Loans —Includes loans classified as loans on the balance sheet
an insurable event. plus loans held-for-sale that are included in other assets plus securitized
receivables. These are primarily credit card receivables.
Collateralized Debt Obligations (CDOs) —An investment-grade
security backed by a pool of bonds, loans, or other assets. Managed Net Credit Losses —Net credit losses adjusted for the effect
of credit card securitizations. See Managed Loans.
Credit Default Swap —An agreement between two parties whereby one
party pays the other a fixed coupon over a specified term. The other party Market-Related Value of Plan Assets —A balance used to
makes no payment unless a specified credit event such as a default occurs, at calculate the expected return on pension-plan assets. Market-related value
which time a payment is made and the swap terminates. can be either fair value or a calculated value that recognizes changes in fair
value in a systematic and rational manner over not more than five years.
Deferred Tax Asset —An asset attributable to deductible temporary
differences and carryforwards. A deferred tax asset is measured using the Minority Interest —When a parent owns a majority (but less than
applicable enacted tax rate and provisions of the enacted tax law. 100%) of a subsidiary’s stock, the Consolidated Financial Statements must
reflect the minority’s interest in the subsidiary. The minority interest as shown
Deferred Tax Liability —A liability attributable to taxable temporary
in the Consolidated Statement of Income is equal to the minority’s
differences. A deferred tax liability is measured using the applicable enacted
proportionate share of the subsidiary’s net income and, as included within
tax rate and provisions of the enacted tax law.
other liabilities on the Consolidated Balance Sheet, is equal to the minority’s
Defined Benefit Plan —A retirement plan under which the benefits proportionate share of the subsidiary’s net assets.
paid are based on a specific formula. The formula is usually a function of
Mortgage Servicing Rights (MSRs) —An intangible asset
age, service and compensation. A non-contributory plan does not require
representing servicing rights retained in the securitization of mortgage loans,
employee contributions.
which are measured by allocating the carrying value of the loans between the
Derivative —A contract or agreement whose value is derived from changes assets sold and the interests retained.
in interest rates, foreign exchange rates, prices of securities or commodities,
Net Credit Losses —Gross credit losses (write-offs) less gross
or financial or commodity indices.
credit recoveries.
Federal Funds —Non-interest-bearing deposits held by member banks at
Net Credit Loss Ratio —Annualized net credit losses divided by
the Federal Reserve Bank.
average loans outstanding.
Foregone Interest —Interest on cash-basis loans that would have been
Net Credit Margin —Revenues less net credit losses.
earned at the original contractual rate if the loans were on accrual status.
Net Interest Revenue (NIR) —Interest revenue less interest expense.

Net Interest Margin —Interest revenue less interest expense divided by

average interest-earning assets.

112
Non-Qualified Plan —A retirement plan that is not subject to Securities Sold Under Agreements to Repurchase
certain Internal Revenue Code requirements and subsequent regulations. (Repurchase Agreements) —An agreement between a seller and a
Contributions to non-qualified plans do not receive tax-favored treatment; the buyer, generally of government or agency securities, whereby the seller agrees
employer’s tax deduction is taken when the benefits are paid to participants. to repurchase the securities at an agreed-upon price at a future date.
Notional Amount —The principal balance of a derivative contract used Shared Responsibilities —Citigroup’s concept to become the most
as a reference to calculate the amount of interest or other payments. respected global financial services company. This entails a commitment
by every employee to be responsible on behalf of our clients, each other, and
On-Balance Sheet Loans —Loans originated or purchased by the
the franchise.
Company that reside on the balance sheet at the date of the balance sheet.
Special Purpose Entity (SPE) —An entity in the form of a trust or
Projected Benefit Obligation (PBO) —The actuarial present value
other legal vehicle, designed to fulfill a specific limited need of the company
of all pension benefits accrued for employee service rendered prior to the
that organized it (such as a transfer of risk or desired tax treatment).
calculation date, including an allowance for future salary increases if the
pension benefit is based on future compensation levels. 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
Purchase Sales —Customers’ credit card purchase sales plus
party, contingent upon the failure by the bank’s customer to perform under
cash advances.
the terms of the underlying contract with the beneficiary or it obligates the
Qualifying SPE (QSPE) —A Special Purpose Entity that is very limited bank to guarantee or stand as a surety for the benefit of the third party to the
in its activities and in the types of assets it can hold. It is a passive entity and extent permitted by law or regulation.
may not engage in active decision making. QSPE status allows the seller
Securitizations —A process by which a legal entity issues to investors
to remove assets transferred to the QSPE from its books, achieving sales
certain securities, which pay a return based on the principal and interest cash
accounting. QSPEs are not consolidated by the seller or the investors
flows from a pool of loans or other financial assets.
in the QSPE.
Termination Indemnity Plan —A lump sum benefit payable to an
Return on Assets —Annualized income divided by average assets.
employee when they leave the Company for any reason, whether voluntarily
Return on Common Equity —Annualized income less preferred stock or involuntarily (including retirement, disability, death and dismissal).
dividends, divided by average common equity. This benefit is stipulated by law or custom in certain countries and is
typically unfunded.
Return on Invested Capital —Annualized net income, adjusted
to exclude the effects of capital charges on goodwill and intangibles, Tier 1 and Tier 2 Capital —Tier 1 Capital includes common
divided by average invested capital, which consists of risk capital plus stockholders’ equity (excluding certain components of other comprehensive
goodwill and intangibles. income), qualifying perpetual preferred stock, qualifying mandatorily
redeemable securities of subsidiary trusts, and minority interests that are held
Return on Risk Capital —Annualized net income divided by average
by others, less certain intangible assets. Tier 2 Capital includes, among other
risk capital.
items, perpetual preferred stock to the extent that it does not qualify for Tier 1,
Risk Capital —Risk capital is a management metric defined qualifying senior and subordinated debt, limited-life preferred stock, and the
as the amount of capital required to absorb potential unexpected allowance for credit losses, subject to certain limitations.
economic volatility.
Unearned Compensation —The unamortized portion of a grant to
SB Bank Deposit Program —Smith Barney’s Bank Deposit Program employees of restricted or deferred stock measured at the market value on the
provides eligible clients with FDIC insurance on their cash deposits. Accounts date of grant. Unearned compensation is displayed as a reduction of
enrolled in the program automatically have their cash balances invested, or stockholders’ equity in the Consolidated Balance Sheet.
“swept,” into interest-bearing, FDIC-insured deposit accounts at Citigroup-
Unfunded Commitments —Legally binding agreements to provide
affiliated banks.
financing at a future date.
Securities Purchased Under Agreements to Resell
Variable Interest Entity (VIE) —An entity that does not have
(Reverse Repo Agreements) —An agreement between a seller and a
enough equity to finance its activities without additional subordinated
buyer, generally of government or agency securities, whereby the buyer agrees
financial support from third parties. VIEs may include entities with equity
to purchase the securities and the seller agrees to repurchase them at an
investors that cannot make significant decisions about the entity’s operations.
agreed-upon price at a future date.
A VIE must be consolidated by its primary beneficiary, if any, which is the
party that has the majority of the expected losses or residual returns of the
VIE or both.

113
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING

The management of Citigroup is responsible for establishing and

maintaining adequate internal control over financial reporting. Citigroup’s
internal control system was designed to provide reasonable assurance to the
Company’s management and Board of Directors regarding the preparation
and fair presentation of published financial statements in accordance with
U.S. Generally Accepted Accounting Principles. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
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 ensure that information and communication
flows are effective and to monitor performance, including performance of
internal control procedures.
Citigroup management assessed the effectiveness of the Company’s
internal control over financial reporting as of December 31, 2005 based on
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based on this assessment, management believes that, as of December 31,
2005, the Company’s internal control over financial reporting is effective.
Management’s assessment of the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2005 has been audited by
KPMG LLP, the Company’s independent registered public accounting firm, as
stated in their report appearing on page 115, which expressed unqualified
opinions on management’s assessment and on the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2005.

114
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM —
INTERNAL CONTROL OVER FINANCIAL REPORTING

In our opinion, management’s assessment that Citigroup maintained

effective internal control over financial reporting as of December 31, 2005, is
fairly stated, in all material respects, based on criteria established in Internal
The Board of Directors and Stockholders Control—Integrated Framework issued by the Committee of Sponsoring
Citigroup Inc.: Organizations of the Treadway Commission. Also, in our opinion, Citigroup
We have audited management’s assessment, included in Management’s maintained, in all material respects, effective internal control over financial
Report on Internal Control over Financial Reporting appearing on page 114, reporting as of December 31, 2005, based on criteria established in Internal
that Citigroup Inc. and subsidiaries (the “Company” or “Citigroup”) Control—Integrated Framework issued by the Committee of Sponsoring
maintained effective internal control over financial reporting as of December Organizations of the Treadway Commission.
31, 2005, based on criteria established in Internal Control—Integrated We also have audited, in accordance with the standards of the Public
Framework issued by the Committee of Sponsoring Organizations of the Company Accounting Oversight Board (United States), the consolidated
Treadway Commission (COSO). The Company’s management is responsible balance sheets of Citigroup as of December 31, 2005 and 2004, and the related
for maintaining effective internal control over financial reporting and for its consolidated statements of income, changes in stockholders’ equity and cash
assessment of the effectiveness of internal control over financial reporting. flows for each of the years in the three-year period ended December 31, 2005,
Our responsibility is to express an opinion on management’s assessment and and our report dated February 23, 2006 expressed an unqualified opinion on
an opinion on the effectiveness of the Company’s internal control over those consolidated financial statements.
financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance New York, New York
about whether effective internal control over financial reporting was February 23, 2006
maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, evaluating
management’s assessment, testing and evaluating the design and operating
effectiveness of internal control, and performing such other procedures
as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

115
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM —
CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors and Stockholders

Citigroup Inc.:
We have audited the accompanying consolidated balance sheets of Citigroup
Inc. and subsidiaries (the “Company” or “Citigroup”) as of December 31,
2005 and 2004, 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, 2005, and the related consolidated balance sheets
of Citibank, N.A. and subsidiaries as of December 31, 2005 and 2004. 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 the standards of the Public
Company Accounting Oversight Board (United States). 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 financial statements referred to above present fairly, in
all material respects, the financial position of Citigroup as of December 31,
2005 and 2004, the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 2005, and the financial
position of Citibank, N.A. and subsidiaries as of December 31, 2005 and 2004,
in conformity with U.S. generally accepted accounting principles.
As discussed in Note 1 to the Consolidated Financial Statements on page
122, in 2005 the Company changed its method of accounting for conditional
asset retirement obligations associated with operating leases, and in 2003 the
Company changed its methods of accounting for variable interest entities and
stock-based compensation.
We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the effectiveness of
Citigroup’s internal control over financial reporting as of December 31, 2005,
based on criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated February 23, 2006 expressed an
unqualified opinion on management’s assessment of, and the effective
operation of, internal control over financial reporting.

New York, New York

February 23, 2006

116
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF INCOME Citigroup Inc. and Subsidiaries

Year ended December 31
In millions of dollars, except per share amounts 2005 2004(1) 2003(1)
Revenues
Loan interest, including fees $ 47,188 $ 43,796 $37,952
Other interest and dividends 28,833 19,887 16,562
Insurance premiums 3,132 2,726 2,455
Commissions and fees 17,143 15,981 15,657
Principal transactions 6,443 3,716 4,885
Asset management and administration fees 6,119 5,524 4,576
Realized gains (losses) from sales of investments 1,962 833 529
Other revenue 9,498 9,176 6,162
Total revenues $120,318 $101,639 $88,778
Interest expense 36,676 22,004 17,184
Total revenues, net of interest expense $ 83,642 $ 79,635 $71,594
Provisions for credit losses and for benefits and claims
Provision for loan losses $ 7,929 $ 6,233 $ 8,046
Policyholder benefits and claims 867 884 878
Provision for unfunded lending commitments 250 — —
Total provisions for credit losses and for benefits and claims $ 9,046 $ 7,117 $ 8,924
Operating expenses
Compensation and benefits $ 25,772 $ 22,934 $20,719
Net occupancy expense 5,141 4,791 4,227
Technology/communication expense 3,524 3,518 3,353
Advertising and marketing expense 2,533 2,653 1,938
Other operating expenses 8,193 15,886 7,263
Total operating expenses $ 45,163 $ 49,782 $37,500
Income from continuing operations before income taxes, minority interest,
and cumulative effect of accounting change $ 29,433 $ 22,736 $25,170
Provision for income taxes 9,078 6,464 7,838
Minority interest, net of taxes 549 218 274
Income from continuing operations before cumulative effect of accounting change $ 19,806 $ 16,054 $17,058
Discontinued operations
Income from discontinued operations $ 908 $ 1,446 $ 1,163
Gain on sale 6,790 — —
Provision for income taxes and minority interest, net of taxes 2,866 454 368
Income from discontinued operations, net of taxes $ 4,832 $ 992 $ 795
Cumulative effect of accounting change, net of taxes (49) — —
Net income $ 24,589 $ 17,046 $17,853

Basic earnings per share

Income from continuing operations $ 3.90 $ 3.13 $ 3.34
Income from discontinued operations, net of taxes 0.95 0.19 0.15
Cumulative effect of accounting change, net of taxes (0.01) — —
Net income $ 4.84 $ 3.32 $ 3.49

Weighted average common shares outstanding 5,067.6 5,107.2 5,093.3

Diluted earnings per share

Income from continuing operations $ 3.82 $ 3.07 $ 3.27
Income from discontinued operations, net of taxes 0.94 0.19 0.15
Cumulative effect of accounting change, net of taxes (0.01) — —
Net income $ 4.75 $ 3.26 $ 3.42

Adjusted weighted average common shares outstanding 5,160.4 5,207.4 5,193.6

(1) Reclassified to conform to the current period’s presentation.

See Notes to the Consolidated Financial Statements.

117
CONSOLIDATED BALANCE SHEET Citigroup Inc. and Subsidiaries
December 31
In millions of dollars 2005 2004(1)
Assets
Cash and due from banks (including segregated cash and other deposits) $ 28,373 $ 23,556
Deposits at interest with banks 26,904 23,889
Federal funds sold and securities borrowed or purchased under agreements to resell 217,464 200,739
Brokerage receivables 42,823 39,273
Trading account assets (including $92,495 and $102,573 pledged to creditors at December 31, 2005 and December 31, 2004, respectively) 295,820 280,167
Investments (including $15,819 and $15,587 pledged to creditors at December 31, 2005 and December 31, 2004, respectively) 180,597 213,243
Loans, net of unearned income
Consumer 454,620 435,226
Corporate 128,883 113,603
Loans, net of unearned income $ 583,503 $ 548,829
Allowance for loan losses (9,782) (11,269)
Total loans, net $ 573,721 $ 537,560
Goodwill 33,130 31,992
Intangible assets 14,749 15,271
Other assets 80,456 118,411
Total assets $1,494,037 $1,484,101

Liabilities
Non-interest-bearing deposits in U.S. offices $ 32,869 $ 31,533
Interest-bearing deposits in U.S. offices 173,813 161,113
Non-interest-bearing deposits in offices outside the U.S. 32,614 28,379
Interest-bearing deposits in offices outside the U.S. 353,299 341,056
Total deposits $ 592,595 $ 562,081
Federal funds purchased and securities loaned or sold under agreements to repurchase 242,392 209,555
Brokerage payables 70,994 50,208
Trading account liabilities 121,108 135,487
Short-term borrowings 66,930 56,767
Long-term debt 217,499 207,910
Other liabilities 69,982 152,802
Total liabilities $1,381,500 $1,374,810

Stockholders’ equity
Preferred stock ($1.00 par value; authorized shares: 30 million), at aggregate liquidation value $ 1,125 $ 1,125
Common stock ($.01 par value; authorized shares: 15 billion),
issued shares: 2005 and 2004 — 5,477,416,086 shares 55 55
Additional paid-in capital 20,119 18,851
Retained earnings 117,555 102,154
Treasury stock, at cost: 2005 — 497,192,288 and 2004 — 282,773,501 shares (21,149) (10,644)
Accumulated other changes in equity from nonowner sources (2,532) (304)
Unearned compensation (2,636) (1,946)
Total stockholders’ equity $ 112,537 $ 109,291
Total liabilities and stockholders’ equity $1,494,037 $1,484,101

(1) Reclassified to conform to the current period’s presentation.

See Notes to the Consolidated Financial Statements.

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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 2005 2004 2003 2005 2004 2003
Preferred stock at aggregate liquidation value
Balance, beginning of year $ 1,125 $ 1,125 $ 1,400 4,250 4,250 5,350
Redemption or retirement of preferred stock — — (275) — — (1,100)
Balance, end of year $ 1,125 $ 1,125 $ 1,125 4,250 4,250 4,250
Common stock and additional paid-in capital
Balance, beginning of year $ 18,906 $ 17,586 $ 17,436 5,477,416 5,477,416 5,477,416
Employee benefit plans 1,214 1,212 133 — — —
Other 54 108 17 — — —
Balance, end of year $ 20,174 $ 18,906 $ 17,586 5,477,416 5,477,416 5,477,416
Retained earnings
Balance, beginning of year $102,154 $ 93,483 $ 81,403
Net income 24,589 17,046 17,853
Common dividends (1) (9,120) (8,307) (5,702)
Preferred dividends (68) (68) (71)
Balance, end of year $117,555 $102,154 $ 93,483
Treasury stock, at cost
Balance, beginning of year $ (10,644) $ (11,524) $(11,637) (282,774) (320,467) (336,735)
Issuance of shares pursuant to employee benefit plans 2,203 1,659 2,437 61,278 54,121 75,586
Treasury stock acquired (2) (12,794) (25) (1,967) (277,918) (516) (52,464)
Shares purchased from Employee Pension Fund — (502) (449) — (10,001) (9,556)
Other (3) 86 (252) 92 2,222 (5,911) 2,702
Balance, end of year $ (21,149) $ (10,644) $(11,524) (497,192) (282,774) (320,467)
Accumulated other changes in equity from nonowner sources
Balance, beginning of year $ (304) $ (806) $ (193)
Net change in unrealized gains and losses on investment securities, net of tax (1,549) (275) 951
Net change in cash flow hedges, net of tax 439 (578) (491)
Net change in foreign currency translation adjustment, net of tax (980) 1,355 (1,073)
Minimum pension liability adjustment, net of tax (138) — —
Balance, end of year $ (2,532) $ (304) $ (806)
Unearned compensation
Balance, beginning of year $ (1,946) $ (1,850) $ (1,691)
Net issuance of restricted and deferred stock (690) (96) (159)
Balance, end of year $ (2,636) $ (1,946) $ (1,850)
Total common stockholders’ equity and common shares outstanding $111,412 $108,166 $ 96,889 4,980,224 5,194,642 5,156,949
Total stockholders’ equity $112,537 $109,291 $ 98,014

Summary of changes in equity from nonowner sources

Net income $ 24,589 $ 17,046 $ 17,853
Other changes in equity from nonowner sources, net of tax (2,228) 502 (613)
Total changes in equity from nonowner sources $ 22,361 $ 17,548 $ 17,240

(1) Common dividends declared were 44 cents per share in the first, second, third, and fourth quarters of 2005, 40 cents per share in the first, second, third, and fourth quarters of 2004, 20 cents per share in the first and
second quarters of 2003, and 35 cents per share in the third and fourth quarters of 2003.
(2) All open market repurchases were transacted under an existing authorized share repurchase plan that was publicly announced on July 17, 2002. On April 14, 2005, the Board of Directors authorized up to an additional
$15 billion in share repurchases. In 2003, includes $0.3 billion relating to shares repurchased from Mr. Sanford I. Weill.
(3) In 2004, primarily represents shares redeemed from a legacy employee plan trust.
See Notes to the Consolidated Financial Statements.

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CONSOLIDATED STATEMENT OF CASH FLOWS Citigroup Inc. and Subsidiaries
Year ended December 31
In millions of dollars 2005 2004(1) 2003(1)
Cash flows from operating activities of continuing operations
Net income $ 24,589 $ 17,046 $ 17,853
Income from discontinued operations, net of taxes 630 992 795
Gain on sale, net of taxes 4,202 — —
Cumulative effect of accounting changes, net of taxes (49) — —
Income from continuing operations $ 19,806 $ 16,054 $ 17,058
Adjustments to reconcile net income to net cash provided by (used in) operating activities of continuing operations
Amortization of deferred policy acquisition costs and present value of future profits 274 277 268
Additions to deferred policy acquisition costs (382) (493) (392)
Depreciation and amortization 2,318 2,056 1,570
Deferred tax (benefit) provision (181) (1,209) 808
Provision for credit losses 7,929 6,233 8,046
Change in trading account assets (16,399) (43,071) (80,111)
Change in trading account liabilities (13,986) 13,110 30,443
Change in federal funds sold and securities borrowed or purchased under agreements to resell (16,725) (28,131) (32,228)
Change in federal funds purchased and securities loaned or sold under agreements to repurchase 33,808 22,966 19,468
Change in brokerage receivables net of brokerage payables 17,236 81 14,188
Net gains from sales of investments (1,962) (833) (529)
Venture capital activity 962 (201) 134
Other, net (853) 10,885 6,415
Total adjustments $ 12,039 $ (18,330) $ (31,920)
Net cash provided by (used in) operating activities of continuing operations $ 31,845 $ (2,276) $ (14,862)
Cash flows from investing activities of continuing operations
Change in deposits at interest with banks $ (3,286) $ (2,175) $ (3,395)
Change in loans (68,100) (68,451) (30,012)
Proceeds from sales of loans 22,435 15,121 18,553
Purchases of investments (203,023) (195,903) (208,040)
Proceeds from sales of investments 82,603 112,470 127,277
Proceeds from maturities of investments 97,513 63,318 71,730
Other investments, primarily short-term, net 148 (29) 130
Capital expenditures on premises and equipment (3,724) (3,011) (2,354)
Proceeds from sales of premises and equipment, subsidiaries and affiliates, and repossessed assets 17,611 3,106 1,260
Business acquisitions (602) (3,677) (21,456)
Net cash used in investing activities of continuing operations $ (58,425) $ (79,231) $ (46,307)
Cash flows from financing activities of continuing operations
Dividends paid $ (9,188) $ (8,375) $ (5,773)
Issuance of common stock 1,400 912 686
Issuance of mandatorily redeemable securities of parent trusts — — 1,600
Redemption of mandatorily redeemable securities of parent trusts — — (700)
Redemption of mandatorily redeemable securities of subsidiary trusts — — (625)
Redemption of preferred stock, net — — (275)
Treasury stock acquired (12,794) (779) (2,416)
Stock tendered for payment of withholding taxes (696) (511) (499)
Issuance of long-term debt 68,852 75,764 67,054
Payments and redemptions of long-term debt (52,364) (49,686) (45,800)
Change in deposits 27,912 65,818 42,136
Change in short-term borrowings 10,163 (4,363) 6,647
Contractholder fund deposits 349 11,797 8,346
Contractholder fund withdrawals (351) (7,266) (5,976)
Net cash provided by financing activities of continuing operations $ 33,283 $ 83,311 $ 64,405
Effect of exchange rate changes on cash and cash equivalents $ (1,840) $ 731 $ 579
Discontinued Operations
Net cash (used in) provided by discontinued operations $ (46) $ (128) $ 8
Change in cash and due from banks $ 4,817 $ 2,407 $ 3,823
Cash and due from banks at beginning of period $ 23,556 $ 21,149 $ 17,326
Cash and due from banks at end of period $ 28,373 $ 23,556 $ 21,149
Supplemental disclosure of cash flow information for continuing operations
Cash paid during the period for income taxes $ 8,621 $ 6,808 $ 6,113
Cash paid during the period for interest 32,081 18,544 15,732
Non-cash investing activities
Transfers to repossessed assets $ 1,268 $ 1,046 $ 1,077

(1) Reclassified to conform to the current period’s presentation.

See Notes to the Consolidated Financial Statements.

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CONSOLIDATED BALANCE SHEET Citibank, N.A. and Subsidiaries
December 31
In millions of dollars 2005 2004(1)
Assets
Cash and due from banks $ 15,706 $ 13,354
Deposits at interest with banks 22,704 21,756
Federal funds sold and securities purchased under agreements to resell 15,187 15,637
Trading account assets (including $600 and $389 pledged to creditors at December 31, 2005 and December 31, 2004, respectively) 86,966 97,697
Investments (including $2,122 and $2,484 pledged to creditors at December 31, 2005 and December 31, 2004, respectively) 124,147 108,780
Loans, net of unearned income 386,565 378,100
Allowance for loan losses (6,307) (7,897)
Total loans, net $380,258 $370,203
Goodwill 9,093 9,593
Intangible assets 10,644 10,557
Premises and equipment, net 5,873 6,288
Interest and fees receivable 5,722 5,250
Other assets 30,197 35,414
Total assets $706,497 $694,529

Liabilities
Non-interest-bearing deposits in U.S. offices $ 23,464 $ 22,399
Interest-bearing deposits in U.S. offices 112,264 102,376
Non-interest-bearing deposits in offices outside the U.S. 28,738 24,443
Interest-bearing deposits in offices outside the U.S. 321,524 309,784
Total deposits $485,990 $459,002
Trading account liabilities 46,812 56,630
Purchased funds and other borrowings 48,653 47,160
Accrued taxes and other expense 9,047 10,970
Long-term debt and subordinated notes 34,404 41,038
Other liabilities 25,327 25,588
Total liabilities $650,233 $640,388

Stockholder’s equity
Preferred stock ($100 par value) $ — $ 1,950
Capital stock ($20 par value) standing shares: 37,534,553 in each period 751 751
Surplus 27,244 25,972
Retained earnings 30,651 25,935
Accumulated other changes in equity from nonowner sources (2) (2,382) (467)
Total stockholder’s equity $ 56,264 $ 54,141
Total liabilities and stockholder’s equity $706,497 $694,529

(1) Reclassified to conform to the current period’s presentation.

(2) Amounts at December 31, 2005 and December 31, 2004 include the after-tax amounts for net unrealized gains/(losses) on investment securities of $(210) million and $348 million, respectively, for foreign currency
translation of $(2.381) billion and $(880) million, respectively, for cash flow hedges of $323 million and $65 million, respectively, and for additional minimum pension liability of $(114) million at December 31, 2005.
See Notes to the Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Citigroup Inc. and Subsidiaries

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Foreign Currency Translation

Assets and liabilities denominated in foreign currencies are translated into
Principles of Consolidation
U.S. dollars using year-end spot foreign exchange rates. Revenues and
The Consolidated Financial Statements include the accounts of Citigroup and
expenses are translated monthly at amounts that approximate weighted
its subsidiaries (the Company). The Company consolidates subsidiaries in
average exchange rates, with resulting gains and losses included in income.
which it holds, directly or indirectly, more than 50% of the voting rights or
The effects of translating income with a functional currency other than the
where it exercises control. Entities where the Company holds 20% to 50% of
U.S. dollar are included in stockholders’ equity along with related hedge and
the voting rights and/or has the ability to exercise significant influence, other
tax effects. The effects of translating operations with the U.S. dollar as the
than investments of designated venture capital subsidiaries, are accounted for
functional currency, including those in highly inflationary environments, are
under the equity method, and the pro rata share of their income (loss) is
included in other revenue along with the related hedge effects. Hedges of
included in other revenue. Income from investments in less than 20%-owned
foreign currency exposures include forward currency contracts and
companies is recognized when dividends are received. As discussed below,
designated issues of non-U.S. dollar debt.
Citigroup consolidates entities deemed to be variable interest entities (VIEs)
when Citigroup is determined to be the primary beneficiary. Gains and losses Investment Securities
on the disposition of branches, subsidiaries, affiliates, buildings, and other Investments include fixed income and equity securities. Fixed income
investments and charges for management’s estimate of impairment in their instruments include bonds, notes and redeemable preferred stocks, as well as
value that is other than temporary, such that recovery of the carrying amount certain loan-backed and structured securities subject to prepayment risk.
is deemed unlikely, are included in other revenue. Equity securities include common and nonredeemable preferred stocks. Fixed
income instruments classified as “held to maturity” represent securities that
Citibank, N.A.
the Company has both the ability and the intent to hold until maturity and
Citibank, N.A. is a commercial bank and wholly owned subsidiary of
are carried at amortized cost. Fixed income securities and marketable equity
Citigroup Inc. Citibank’s principal offerings include credit cards, consumer
securities classified as “available-for-sale” are carried at fair value, which is
finance and retail banking products and services; investment banking,
determined based upon quoted market prices when available. If quoted
commercial banking, cash management, trade finance and e-commerce
market prices are not available, discounted expected cash flows using market
products and services, and private banking products and services.
rates commensurate with the characteristics of the investment are used with
The Company includes a balance sheet and statement of changes in
unrealized gains and losses and related hedge effects reported in a separate
stockholder’s equity (see Note 28 to the Consolidated Financial Statements on
component of stockholders’ equity, net of applicable income taxes. Declines in
page 176) for Citibank, N.A. to provide information about this entity to
fair value that are determined to be other than temporary are charged to
shareholders and international regulatory agencies.
earnings. Accrual of income is suspended on fixed income that is in default or
on which it is likely that future interest payments will not be made as
Certain amounts in prior years have been reclassified to conform to the
scheduled. Fixed income subject to prepayment risk is accounted for using the
current year’s presentation.
retrospective method, where the principal amortization and effective yield are
Variable Interest Entities recalculated each period based on actual historical and projected future cash
An entity is referred to as a variable interest entity (VIE) if it meets the criteria flows. Realized gains and losses on sales of investments are included in
outlined in FASB Interpretation No. 46-R, “Consolidation of Variable Interest earnings on a specific identified cost basis.
Entities (revised December 2003)” (FIN 46-R), which are: (1) the entity has Citigroup’s private equity subsidiaries include subsidiaries registered as
equity that is insufficient to permit the entity to finance its activities without Small Business Investment Companies and other subsidiaries that engage
additional subordinated financial support from other parties, or (2) the entity exclusively in venture capital activities. Venture capital investments are
has equity investors that cannot make significant decisions about the entity’s carried at fair value, with changes in fair value recognized in other revenue.
operations or that do not absorb the expected losses or receive the expected The fair values of publicly traded securities held by these subsidiaries are
returns of the entity. generally based upon quoted market prices. In certain situations, including
In addition, as specified in FIN 46-R, a VIE must be consolidated by the thinly traded securities, large block holdings, restricted shares, or other
Company if it is deemed to be the primary beneficiary of the VIE, which is the special situations, the quoted market prices are adjusted to produce an
party involved with the VIE that has a majority of the expected losses or a estimate of the attainable fair value for the securities. For securities held by
majority of the expected residual returns or both. these subsidiaries that are not publicly traded, estimates of fair value are
Along with the VIEs that are consolidated in accordance with these made based upon a review of the investee’s financial results, condition and
guidelines, the Company has significant variable interests in other VIEs that prospects, together with comparisons to similar companies for which quoted
are not consolidated because the Company is not the primary beneficiary. market prices are available.
These include multi-seller finance companies, collateralized debt obligations
(CDOs), many structured finance transactions, and various investment funds.
All other entities not deemed to be VIEs, with which the Company has
involvement, are evaluated for consolidation under ARB No. 51 “Consolidated
Financial Statements,” and SFAS No. 94, “Consolidation of All Majority-
Owned Subsidiaries” (SFAS 94).

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Securities Borrowed and Securities Loaned of derivative contracts reflect cash the Company has paid or received (for
Securities borrowed and securities loaned are recorded at the amount of cash example, option premiums and cash margin in connection with credit
advanced or received. With respect to securities loaned, the Company receives support agreements). Derivatives in a net receivable position, as well as
cash collateral in an amount in excess of the market value of securities options owned and warrants held, are reported as trading account assets.
loaned. The Company monitors the market value of securities borrowed and Similarly, derivatives in a net payable position, as well as options written and
loaned on a daily basis with additional collateral obtained as necessary. warrants issued, are reported as trading account liabilities. Revenues
Interest received or paid is recorded in interest income or interest expense. generated from derivative instruments used for trading purposes are reported
as principal transactions and include realized gains and losses, as well as
Repurchase and Resale Agreements
unrealized gains and losses resulting from changes in the fair value of such
Repurchase and resale agreements are treated as collateralized financing
instruments. Trading profit at inception of a derivative transaction is not
transactions and are carried at the amounts at which the securities will be
recognized unless the fair value of that derivative is obtained from a quoted
subsequently reacquired or resold, including accrued interest, as specified in
market price, supported by comparison to other observable market
the respective agreements. The Company’s policy is to take possession of
transactions, or based upon a valuation technique incorporating observable
securities purchased under agreements to resell. The market value of
market data. The Company defers trade date gains and losses on derivative
securities to be repurchased and resold is monitored, and additional collateral
transactions where the fair value is not determined based upon observable
is obtained where appropriate to protect against credit exposure.
market transactions and market data. The deferral is recognized in income
Trading Account Assets and Liabilities when the market data becomes observable or over the life of the transaction.
Trading account assets and liabilities, including securities, commodities and
Consumer Loans
derivatives, are carried at fair value. Fair value is determined based upon
Consumer Loans include loans and leases managed by the Global Consumer
quoted prices when available, or under an alternative approach such as
business and the Private Bank. As a general rule, interest accrual ceases for
matrix or model pricing when market prices are not readily available. If
open-end revolving and closed-end installment and real estate loans when
quoted market prices are not available for fixed income securities, derivatives,
payments are 90 days contractually past due. For credit cards, however, the
or commodities, the Company discounts the expected cash flows using market
Company accrues interest until payments are 180 days past due and reverses
interest rates commensurate with the credit quality and duration of the
the interest and fees earned, but not collected.
investment. Obligations to deliver securities sold, not yet purchased, are also
As a general rule, unsecured closed-end installment loans are charged off
carried at fair value and included in trading account liabilities. The
at 120 days past due and unsecured open-end (revolving) loans are charged
determination of fair value considers various factors, including: closing
off at 180 days contractually past due. Loans secured with non-real-estate
exchange or over-the-counter market price quotations; time value and
collateral are written down to the estimated value of the collateral, less costs to
volatility factors underlying options, warrants, and derivatives; price activity
sell, at 120 days past due. Real-estate secured loans (both open- and closed-
for equivalent or synthetic instruments; counterparty credit quality; the
end) are written down to the estimated value of the property, less costs to sell,
potential impact on market prices or fair value of liquidating the Company’s
at 180 days contractually past due.
positions in an orderly manner over a reasonable period of time under
In certain consumer businesses in the U.S., secured real estate loans are
current market conditions; and derivatives transaction maintenance costs
written down to the estimated value of the property, less costs to sell, at the
during that period. The fair value of aged inventory is actively monitored and,
earlier of the receipt of title or 12 months in foreclosure (a process that must
where appropriate, is discounted to reflect the implied illiquidity for positions
commence when payments are 120 days contractually past due). Closed-end
that have been available-for-immediate-sale for longer than 90 days. Changes
loans secured by non-real-estate collateral are written down to the estimated
in fair value of trading account assets and liabilities are recognized in
value of the collateral, less costs to sell, at 180 days past due. Unsecured loans
earnings. Interest expense on trading account liabilities is reported as a
(both open- and closed-end) are charged off at 180 days past due and 180
reduction of interest revenue.
days from the last payment, but in no event can these loans exceed 360 days
Commodities are accounted for on a lower of cost or market (LOCOM)
contractually past due.
basis and include physical quantities of commodities involving
Unsecured loans in bankruptcy are charged off within 30 days of
future settlement or delivery. Related gains or losses are reported as
notification of filing by the bankruptcy court or within the contractual write-
principal transactions.
off periods, whichever occurs earlier. In the U.S. Consumer Finance
Derivatives used for trading purposes include interest rate, currency, equity,
business, unsecured loans in bankruptcy are charged off when they are 30
credit, and commodity swap agreements, options, caps and floors, warrants,
days contractually past due.
and financial and commodity futures and forward contracts. The fair value
Commercial Business includes loans and leases made principally to
of derivatives is determined based upon liquid market prices evidenced by
small- and middle-market businesses. Commercial Business loans are
exchange traded prices, broker/dealer quotations, or prices of other
placed on a non-accrual basis when it is determined that the payment of
transactions with similarly rated counterparties. The fair value includes an
interest or principal is doubtful or when payments are past due for 90 days or
adjustment for individual counterparty credit risk and other adjustments, as
more, except when the loan is well secured and in the process of collection.
appropriate, to reflect liquidity and ongoing servicing costs. The fair values

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Corporate Loans In the Corporate and Commercial Business portfolios, larger-balance,
Corporate Loans represent loans and leases managed by the CIB. Corporate non-homogenous exposures representing significant individual credit
loans are identified as impaired and placed on a cash (non-accrual) basis exposures are evaluated based upon the borrower’s overall financial
when it is determined that the payment of interest or principal is doubtful, or condition, resources, and payment record; the prospects for support from any
when interest or principal is 90 days past due, except when the loan is well financially responsible guarantors; and, if appropriate, the realizable value of
secured and in the process of collection. Any interest accrued on impaired any collateral. Reserves are established for these loans based upon an estimate
corporate loans and leases is reversed at 90 days and charged against current of probable losses for the individual loans deemed to be impaired. This
earnings, and interest is thereafter included in earnings only to the extent estimate considers all available evidence including, as appropriate, the
actually received in cash. When there is doubt regarding the ultimate present value of the expected future cash flows discounted at the loan’s
collectibility of principal, all cash receipts are thereafter applied to reduce the contractual effective rate, the secondary market value of the loan and the fair
recorded investment in the loan. Impaired corporate loans and leases are value of collateral less disposal costs. The allowance for credit losses attributed
written down to the extent that principal is judged to be uncollectible. to the remaining portfolio is established via a process that estimates the
Impaired collateral-dependent loans and leases, where repayment is expected probable loss inherent in the portfolio based upon various analyses. These
to be provided solely by the sale of the underlying collateral and there are no analyses consider historical and project default rates and loss severities;
other available and reliable sources of repayment, are written down to the internal risk ratings; and geographic, industry, and other environmental
lower of cost or collateral value. Cash-basis loans are returned to an accrual factors. Management also considers overall portfolio indicators including
status when all contractual principal and interest amounts are reasonably trends in internally risk-rated exposures, classified exposures, cash-basis
assured of repayment and there is a sustained period of repayment loans, historical and forecasted write-offs, and a review of industry,
performance in accordance with the contractual terms. geographic, and portfolio concentrations, including current developments
within those segments. In addition, management considers the current
Lease Financing Transactions
business strategy and credit process, including credit limit setting and
Loans include the Company’s share of aggregate rentals on lease financing
compliance, credit approvals, loan underwriting criteria, and loan
transactions and residual values net of related unearned income. Lease
workout procedures.
financing transactions represent direct financing leases and also include
For consumer loans (excluding Commercial Business loans), each
leveraged leases. Unearned income is amortized under a method that results
portfolio of smaller-balance, homogenous loans—including consumer
in an approximate level rate of return when related to the unrecovered lease
mortgage, installment, revolving credit, and most other consumer loans—
investment. Gains and losses from sales of residual values of leased
is collectively evaluated for impairment. The allowance for credit losses
equipment are included in other revenue.
attributed to these loans is established via a process that estimates the
Loans Held-for-Sale probable losses inherent in the portfolio based upon various analyses. These
Corporate and consumer loans that have been identified for sale are classified include migration analysis, in which historical delinquency and credit loss
as loans held-for-sale within other assets and are accounted for at the lower of experience is applied to the current aging of the portfolio, together with
cost or market value, with any write-downs or subsequent recoveries charged analyses that reflect current trends and conditions. Management also
to other revenue. considers overall portfolio indicators including historical credit losses;
delinquent, non-performing, and classified loans; trends in volumes and
Allowance for Loan Losses
terms of loans; an evaluation of overall credit quality; the credit process,
Allowance for Loan Losses represents management’s estimate of probable
including lending policies and procedures; and economic, geographical,
losses inherent in the portfolio. Attribution of the allowance is made for
product and other environmental factors.
analytical purposes only, and the entire allowance is available to absorb
probable credit losses inherent in the overall portfolio. Additions to the
allowance are made through 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.

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Allowance for Unfunded Lending Commitments Repossessed Assets
A similar approach to the allowance for loan losses is used for calculating a Upon repossession, loans are adjusted, if necessary, to the estimated fair value
reserve for the expected losses related to unfunded loan commitments and of the underlying collateral and transferred to repossessed assets. This is
standby letters of credit. This reserve is classified on the balance sheet within reported in other assets, net of a valuation allowance for selling costs and net
other liabilities. declines in value as appropriate.
Mortgage Servicing Rights (MSRs) Securitizations
Mortgage Servicing Rights (MSRs), which are included within intangible The Company primarily securitizes credit card receivables and mortgages.
assets in the Consolidated Balance Sheet, are recognized as assets when Other types of securitized assets include corporate debt securities, auto loans,
purchased or when the Company sells or securitizes loans acquired through and student loans.
purchase or origination and retains the right to service the loans. Servicing There are two key accounting determinations that must be made relating
rights retained in the securitization of mortgage loans are measured by to securitizations. First, in the case where Citigroup originated or owned the
allocating the carrying value of the loans between the assets sold and the financial assets transferred to the securitization entity, a decision must be
interests retained, based on the relative fair values at the date of made as to whether that transfer is considered a sale under Generally Accepted
securitization. The Company estimates the fair value of MSRs by discounting Accounting Principles. If it is a sale, the transferred assets are removed from
projected net servicing cash flows of the remaining servicing portfolio and the Company’s Consolidated Balance Sheet with a gain or loss recognized.
considering market loan prepayment predictions and other economic factors. Alternatively, when the transfer would not be considered a sale but rather a
The Company uses fair values that are determined using internally developed financing, the assets will remain on the Company’s Balance Sheet with an
assumptions comparable to quoted market prices. MSRs are amortized using offsetting liability recognized in the amount of received proceeds.
a proportionate cash flow method over the period of the related net positive Second, a determination must be made as to whether the securitization
servicing income to be generated from the various portfolios purchased or entity would be included in the Company’s Consolidated Financial
loans originated. Impairment of MSRs is evaluated on a disaggregated basis Statements. For each securitization entity with which it is involved, the
by type (i.e., fixed rate or adjustable rate) and by interest-rate band, which are Company makes a determination of whether the entity should be considered
believed to be the predominant risk characteristics of the Company’s servicing a subsidiary of the Company and be included in its Consolidated Financial
portfolio. Any excess of the carrying value of the capitalized servicing rights Statements or whether the entity is sufficiently independent that it does not
over the fair value by stratum is recognized through a valuation allowance for need to be consolidated. If the securitization entity’s activities are sufficiently
each stratum and charged to the provision for impairment on MSRs. restricted to meet accounting requirements to be a QSPE, the securitization
Additional information on the Company’s MSRs can be found in Note 13 entity is not consolidated by the seller of transferred assets. If the
to the Consolidated Financial Statements on page 141. securitization entity is determined to be a VIE, the Company consolidates
the VIE if it is the primary beneficiary.
Goodwill
For all other securitization entities determined not to be VIEs in which
Goodwill represents an acquired company’s acquisition cost over the fair
Citigroup participates, a consolidation decision is made by evaluating several
value of net tangible and intangible assets acquired. Goodwill is subject to
factors, including how much of the entity’s ownership is in the hands of third
annual impairment tests whereby goodwill is allocated to the Company’s
party investors, who controls the securitization entity, and who reaps the
reporting units and an impairment is deemed to exist if the carrying value of
rewards and bears the risks of the entity. Only securitization entities controlled
a reporting unit exceeds its estimated fair value. Furthermore, on any
by Citigroup are consolidated.
business dispositions, goodwill is allocated to the business disposed of based
Interest in the securitized and sold loans may be retained in the form of
on the ratio of the fair value of the business disposed of to the fair value of the
subordinated interest-only strips, subordinated tranches, spread accounts,
reporting unit.
and servicing rights. The Company retains a seller’s interest in the credit card
Intangible Assets receivables transferred to the trust, which is not in securitized form.
Intangible Assets—including MSRs, core deposit intangibles, present value of Accordingly, the seller’s interest is carried on an historical cost basis and
future profits, purchased credit card relationships, other customer classified as consumer loans. Retained interests in securitized mortgage loans
relationships, and other intangible assets—are amortized over their are classified as trading account assets. Other retained interests are primarily
estimated useful lives. Upon the adoption of SFAS 142, intangible assets recorded as available-for-sale investments. Gains or losses on securitization
deemed to have indefinite useful lives, primarily certain asset management and sale depend in part on the previous carrying amount of the loans
contracts and trade names, are not amortized and are subject to annual involved in the transfer and are allocated between the loans sold and the
impairment tests. An impairment exists if the carrying value of the indefinite- retained interests based on their relative fair values at the date of sale. Gains
lived intangible asset exceeds its fair value. For other intangible assets subject are recognized at the time of securitization and are reported in other revenue.
to amortization, an impairment is recognized if the carrying amount is not
recoverable and exceeds the fair value of the intangible asset.

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 The Company values its securitized retained interest at fair value using For fair value hedges, in which derivatives hedge the fair value of assets,
either financial models, quoted market prices, or sales of similar assets. Where liabilities, or firm commitments, changes in the fair value of derivatives are
quoted market prices are not available, the Company estimates the fair value reflected in other revenue, together with changes in the fair value of the
of these retained interests by determining the present value of expected future related hedged item. These are expected to, and generally do, offset each other.
cash flows using modeling techniques that incorporate management’s best Any net amount, representing hedge ineffectiveness, is reflected in current
estimates of key assumptions, including prepayment speeds, credit losses, and earnings. Citigroup’s fair value hedges are primarily hedges of fixed-rate
discount rates. long-term debt, loans, and available-for-sale securities.
Additional information on the Company’s securitization activities can be For cash flow hedges, in which derivatives hedge the variability of cash
found in “Off-Balance Sheet Arrangements” on page 106 and in Note 13 to flows related to floating rate assets, liabilities, or forecasted transactions, the
the Consolidated Financial Statements on page 141. accounting treatment depends on the effectiveness of the hedge. To the extent
these derivatives are effective in offsetting the variability of the hedged cash
Transfers of Financial Assets
flows, changes in the derivatives’ fair value will not be included in current
For a transfer of financial assets to be considered a sale, the assets must have
earnings but are reported as other changes in stockholders’ equity from non-
been isolated from the Company, even in bankruptcy or other receivership; the
owner sources. These changes in fair value will be included in earnings of
purchaser must have the right to sell the assets transferred, or the purchaser
future periods when the hedged cash flows come into earnings. To the extent
must be a QSPE. If these sale requirements are met, the assets are removed
these derivatives are not effective, changes in their fair values are immediately
from the Company’s Consolidated Balance Sheet. If the conditions for sale are
included in other revenue. Citigroup’s cash flow hedges primarily include
not met, the transfer is considered to be a secured borrowing, and the assets
hedges of loans, rollovers of short-term liabilities, and foreign currency
remain on the Consolidated Balance Sheet. The sale proceeds are recognized
denominated funding. They also include hedges of certain forecasted
as the Company’s liability. A legal opinion on a sale is generally obtained for
transactions up to a maximum term of 30 years, although a substantial
complex transactions or where the Company has continuing involvement
majority of the maturities is under five years.
with assets transferred or with the securitization entity. Those opinions
For net investment hedges in which derivatives hedge the foreign currency
must state that the asset transfer is considered a sale and that the assets
exposure of a net investment in a foreign operation, the accounting treatment
transferred would not be consolidated with the other assets in the event of
will similarly depend on the effectiveness of the hedge. The effective portion of
the Company’s insolvency.
the change in fair value of the derivative, including any forward premium or
See Note 13 to the Consolidated Financial Statements on page 141.
discount, is reflected in other changes in stockholders’ equity from nonowner
Risk Management Activities — Derivatives Used for sources as part of the foreign currency translation adjustment.
Non-Trading Purposes End-user derivatives that are economic hedges rather than qualifying for
The Company manages its exposures to market rate movements outside its hedge accounting purposes are also carried at fair value, with changes in
trading activities by modifying the asset and liability mix, either directly or value included in trading account income or other revenue. Citigroup often
through the use of derivative financial products, including interest rate swaps, uses economic hedges when qualifying for hedge accounting would be too
futures, forwards, and purchased option positions such as interest rate caps, complex or operationally burdensome; examples are hedges of the credit risk
floors, and collars as well as foreign exchange contracts. These end-user component of commercial loans and loan commitments. Citigroup
derivatives are carried at fair value in other assets or other liabilities. periodically evaluates its hedging strategies in other areas, such as mortgage
To qualify as a hedge, a derivative must be highly effective in offsetting the servicing rights, and may designate either a qualifying hedge or economic
risk designated as being hedged. The hedge relationship must be formally hedge, after considering the relative cost and benefits. Economic hedges are
documented at inception, detailing the particular risk management objective also employed when the hedged item itself is marked to market through
and strategy for the hedge, which includes the item and risk that is being current earnings, such as hedges of one-to-four family mortgage loan
hedged and the derivative that is being used, as well as how effectiveness will commitments and non-U.S. dollar debt.
be assessed and ineffectiveness measured. The effectiveness of these hedging For those hedge relationships that are terminated or when hedge
relationships is evaluated on a retrospective and prospective basis, typically designations are removed, the hedge accounting treatment described in the
using quantitative measures of correlation with hedge ineffectiveness paragraphs above is no longer applied. The end-user derivative is terminated
measured and recorded in current earnings. If a hedge relationship is found or transferred to the trading account. For fair value hedges, any changes in
to be ineffective, it no longer qualifies as a hedge and any excess gains or the fair value of the hedged item remain as part of the basis of the asset or
losses attributable to such ineffectiveness, as well as subsequent changes in liability and are ultimately reflected as an element of the yield. For cash flow
fair value, are recognized in other revenue. hedges, any changes in fair value of the end-user derivative remain in other
The foregoing criteria are applied on a decentralized basis, consistent with changes in stockholders’ equity from nonowner sources and are included in
the level at which market risk is managed, but are subject to various limits earnings of future periods when the hedged cash flows flow into earnings.
and controls. The underlying asset, liability, firm commitment, or forecasted However, if the forecasted transaction is no longer likely to occur, any
transaction may be an individual item or a portfolio of similar items. changes in fair value of the end-user derivative are immediately reflected in
other revenue.

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Employee Benefits Expense ACCOUNTING CHANGES
Employee Benefits Expense includes current service costs of pension and other
Accounting for Conditional Asset Retirement Obligations
postretirement benefit plans, which are accrued on a current basis;
On December 31, 2005, the Company adopted Financial Accounting
contributions and unrestricted awards under other employee plans; the
Standards Board (FASB) Interpretation No. 47, “Accounting for Conditional
amortization of restricted stock awards; and costs of other employee benefits.
Asset Retirement Obligations” (FIN 47). The Interpretation requires entities to
Stock-Based Compensation estimate and recognize a liability for costs associated with the retirement or
Prior to January 1, 2003, the Company accounted for stock-based removal of an asset from service, regardless of the uncertainty of timing or
compensation plans under Accounting Principles Board Opinion No. 25, whether performance will be required. For Citigroup, this applies to certain
“Accounting for Stock Issued to Employees” and its related interpretations real estate restoration activities in the Company’s branches and office space,
(APB 25). Under APB 25, there is generally no charge to earnings for employee most of which are rented under operating lease agreements.
stock option awards because the options granted under these plans have an The impact of adopting this interpretation was a $49 million after-tax
exercise price equal to the market value of the underlying common stock on ($80 million pretax) charge to earnings, which was reported on the
the grant date. Consolidated Statement of Income as the cumulative effect of accounting
Alternatively, SFAS No. 123, “Accounting for Stock-Based Compensation” change (net of taxes). Had Citigroup adopted FIN 47 at the inception of leases
(SFAS 123), allows companies to recognize compensation expense over the requiring restoration, pro forma net income and EPS would have been the
related service period based on the grant date fair value of the stock award. amounts shown below.
On January 1, 2003, the Company adopted the fair value provisions of SFAS
In millions of dollars, except per share amounts 2005 2004 2003
123. See “Accounting Changes” on this page.
Cumulative effect of
Income Taxes accounting change
Deferred taxes are recorded for the future tax consequences of events that have related to adoption of
been recognized in the financial statements or tax returns, based upon FIN 47, net of taxes As reported $ 49 $ — $ —
Pro forma 2 4 7
enacted tax laws and rates. Deferred tax assets are recognized subject to
management’s judgment that realization is more likely than not. Net income As reported $24,589 $17,046 $17,853
Pro forma 24,636 17,042 17,846
Commissions, Underwriting, and Principal Transactions
Basic earnings per share As reported $ 4.84 $ 3.32 $ 3.49
Commissions, Underwriting, and Principal Transactions revenues and related Pro forma 4.85 3.32 3.49
expenses are recognized in income on a trade-date basis.
Diluted earnings per share As reported $ 4.75 $ 3.26 $ 3.42
Earnings Per Share Pro forma 4.76 3.26 3.42
Earnings per share is computed after recognition of preferred stock dividend
requirements. Basic earnings per share is computed by dividing income Accounting for Certain Loans or Debt Securities Acquired
available to common stockholders by the weighted average number of in a Transfer
common shares outstanding for the period, excluding restricted stock. Diluted On January 1, 2005, Statement of Position (SOP) No. 03-3, “Accounting for
earnings per share reflects the potential dilution that could occur if securities Certain Loans or Debt Securities Acquired in a Transfer” (SOP 03-3), was
or other contracts to issue common stock were exercised. It is computed after adopted for loan acquisitions. SOP 03-3 requires acquired loans to be
giving consideration to the weighted average dilutive effect of the Company’s recorded at fair value and prohibits carrying over valuation allowances in the
stock options and the shares issued under the Company’s Capital initial accounting for acquired impaired loans. Loans carried at fair value,
Accumulation Program and other restricted stock plans. mortgage loans held for sale, and loans to borrowers in good standing under
revolving credit agreements are excluded from the scope of SOP 03-3.
Use of Estimates
SOP 03-3 limits the yield that may be accreted to the excess of the
Management must make estimates and assumptions that affect the undiscounted expected cash flows over the investor’s initial investment in the
Consolidated Financial Statements and the related footnote disclosures. loan. The excess of the contractual cash flows over expected cash flows may
While management makes its best judgment, actual results could differ not be recognized as an adjustment of yield. Subsequent increases in cash
from those estimates. flows expected to be collected are recognized prospectively through an
Cash Flows adjustment of the loan’s yield over its remaining life. Decreases in expected
Cash equivalents are defined as those amounts included in cash and due from cash flows are recognized as impairments.
banks. Cash flows from risk management activities are classified in the same
category as the related assets and liabilities.

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Consolidation of Variable Interest Entities Some of the Company’s private equity subsidiaries may invest in venture
On January 1, 2004, the Company adopted FIN 46-R, which includes capital entities that may also be subject to FIN 46-R. The Company accounts
substantial changes from the original FIN 46. Included in these changes, the for its venture capital activities in accordance with the Investment Company
calculation of expected losses and expected residual returns has been altered Audit Guide (Audit Guide). The FASB has deferred adoption of FIN 46-R for
to reduce the impact of decision maker and guarantor fees in the calculation non-registered investment companies that apply the Audit Guide. The FASB
of expected residual returns and expected losses. In addition, the definition of has also permitted registered investment companies to defer consolidation of
a variable interest has been changed in the revised guidance. FIN 46 and FIN VIEs with which they are involved until a Statement of Position on the scope
46-R change the method of determining whether certain entities, including of the Audit Guide is finalized, which will amend the definition of an
securitization entities, should be included in the Company’s Consolidated investment company in the Audit Guide.
Financial Statements. The Company has determined that in accordance with Following issuance of the Statement of Position, the FASB will consider
FIN 46-R, the multi-seller finance companies administered by the Company further modification to FIN 46-R to provide an exception for companies that
should continue not to be consolidated. However, the trust preferred security qualify to apply the revised Audit Guide. Following issuance of the revised
vehicles are now deconsolidated. The cumulative effect of adopting FIN 46 Audit Guide, the Company will assess the effect of such guidance on its private
was an increase to assets and liabilities of approximately $1.6 billion, equity business.
primarily due to certain structured finance transactions. The Company may provide administrative, trustee and/or investment
For any VIEs that must be consolidated under FIN 46 that were created management services to numerous personal estate trusts, which are
before February 1, 2003, the assets, liabilities, and noncontrolling interests of considered VIEs under FIN 46-R, but are not consolidated. See Note 13 to the
the VIE are initially measured at their carrying amounts with any difference Consolidated Financial Statements on page 141.
between the net amount added to the balance sheet and any previously
Postretirement Benefits
recognized interest being recognized as the cumulative effect of an
In May 2004, the FASB issued FASB Staff Position FAS No. 106-2, “Accounting
accounting change. If determining the carrying amounts is not practicable,
and Disclosure Requirements Related to the Medicare Prescription Drug,
fair value at the date FIN 46 first applies may be used to measure the assets,
Improvement and Modernization Act of 2003” (FSP FAS 106-2), which
liabilities, and noncontrolling interests of the VIE. In October 2003, the FASB
supersedes FSP FAS 106-1, in response to the December 2003 enactment of the
announced that the effective date of FIN 46 was deferred from July 1, 2003 to
Medicare Prescription Drug, Improvement and Modernization Act of 2003
periods ending after December 15, 2003 for VIEs created prior to February 1,
(the Act of 2003). The Act of 2003 established a prescription drug benefit for
2003. With the exception of the deferral related to certain investment
Medicare-eligible participants, as well as a federal subsidy of 28% of
company subsidiaries, Citigroup elected to implement the remaining
prescription drug claims for sponsors of retiree health care plans with drug
provisions of FIN 46-R in the 2003 third quarter, resulting in the
benefits that are at least actuarially equivalent to those offered under
consolidation of VIEs increasing both total assets and total liabilities by
Medicare Part D. If a plan qualifies, FSP FAS 106-2 requires plan sponsors to
approximately $2.1 billion. The implementation of FIN 46-R encompassed
disclose the effect of the subsidy on the net periodic expense and the
a review of thousands of entities to determine the impact of adoption, and
accumulated postretirement benefit obligation in their financial statements.
considerable judgment was used in evaluating whether or not a VIE should
Plan sponsors that initially elected to defer accounting for the effects of the
be consolidated.
subsidy are allowed the option of retroactive application to the date of
The Company administers several third-party owned, special purpose,
enactment or prospective application from the date of adoption.
multi-seller finance companies (the “conduits”) that purchase pools of trade
In the third quarter of 2004, Citigroup reflected the effects of the subsidy in
receivables, credit cards, and other financial assets from third-party clients of
its financial statements retroactive to January 1, 2004 in accordance with FSP
the Company. The Company has no ownership interest in the conduits, but as
FAS 106-2. The effect of adopting FSP FAS 106-2 is included in Note 21 to the
administrator, provides them with accounting, funding, and operations
Company’s Consolidated Financial Statements on page 156.
services. Generally, the clients continue to service the transferred assets. The
conduits’ asset purchases are funded by issuing commercial paper and Accounting for Loan Commitments Accounted for as
medium-term notes. Clients absorb the first losses of the conduits by Derivatives
providing collateral in the form of excess assets or residual interest. The On April 1, 2004, the Company adopted the SEC’s Staff Accounting Bulletin
Company, along with other financial institutions, provides liquidity facilities, No. 105, “Application of Accounting Principles to Loan Commitments” (SAB
such as commercial paper backstop lines of credit to the conduits. The 105), which specifies that servicing assets embedded in commitments for
Company also provides loss protection in the form of letters of credit and other loans to be held for sale should be recognized only when the servicing asset
guarantees. During 2003, to comply with FIN 46-R, many of the conduits has been contractually separated from the associated loans by sale or
issued “first loss” subordinated notes, such that one third-party investor in securitization. The impact of implementing SAB 105 across all of the
each conduit would be deemed the primary beneficiary and would consolidate Company’s business was a delay in recognition of $35 million pretax in the
that conduit. second quarter of 2004.

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Profit Recognition on Bifurcated Hybrid Instruments Liabilities and Equity
On January 1, 2004, Citigroup revised the application of Derivatives On July 1, 2003, the Company adopted SFAS No. 150, “Accounting for Certain
Implementation Group (DIG) Issue B6, “Embedded Derivatives: Allocating Financial Instruments with Characteristics of Both Liabilities and Equity”
the Basis of a Hybrid Instrument to the Host Contract of the Embedded (SFAS 150). SFAS 150 establishes standards for how an issuer measures and
Derivative.” In December 2003, the SEC staff gave a speech that clarified the classifies certain financial instruments with characteristics of both liabilities
accounting for derivatives embedded in financial instruments (“hybrid and equity. It requires that an issuer classify a financial instrument that is
instruments”) to preclude the recognition of any profit on the trade date for within its scope as a liability (or an asset in some circumstances) when that
hybrid instruments that must be bifurcated for accounting purposes. The financial instrument embodies an obligation of the issuer. SFAS 150 is
trade-date revenue must instead be amortized over the life of the hybrid effective for financial instruments entered into or modified after May 31,
instrument. The impact of this change in application was an approximately 2003, and otherwise is effective July 1, 2003. It did not have a material impact
$256 million pretax reduction in revenue, net of amortization, across all of on the Company’s Consolidated Financial Statements.
the Company’s businesses during 2004. This revenue is recognized over the
Stock-Based Compensation
life of the transactions, which on average is approximately four years.
On January 1, 2003, the Company adopted the fair value recognition
Adoption of SFAS 132-R provisions of SFAS 123, prospectively for all awards granted, modified, or
In December 2003, the FASB issued SFAS No. 132 (Revised 2003), “Employers’ settled after December 31, 2002. The prospective method is one of the
Disclosures About Pensions and Other Postretirement Benefits” (SFAS 132-R), adoption methods provided for under SFAS No. 148, “Accounting for Stock-
which retains the disclosure requirements of SFAS 132 and requires additional Based Compensation—Transition and Disclosure” (SFAS 148) issued in
disclosure in the financial statements about the assets, obligations, cash December 2002. SFAS 123 requires that compensation cost for all stock
flows, and net periodic benefit cost of U.S. defined benefit pension and awards be calculated and recognized over the employees’ service period
postretirement plans for periods ending after December 15, 2003, except for (which is generally equal to the vesting period). This compensation cost is
the disclosure of expected future benefit payments, which must be disclosed determined using option pricing models intended to estimate the fair value of
for fiscal years ending after June 15, 2004. The new disclosure requirements the awards at the grant date. Similar to APB 25 (the alternative method of
for foreign retirement plans apply to fiscal years ending after June 15, 2004, accounting), under SFAS 123, an offsetting increase to stockholders’ equity is
although the Company elected to adopt it for these plans as of December 31, recorded equal to the amount of compensation expense. Earnings per share
2003. Certain disclosures required by this Statement are effective for interim dilution is recognized as well.
periods beginning after December 15, 2003. The annual disclosures are Had the Company applied SFAS 123 prior to 2003 in accounting for all of
included in Note 21 to the Consolidated Financial Statements on page 156. the Company’s stock option plans, including the Citigroup 2003 Stock
Purchase Program, net income and net income per share would have been
Costs Associated with Exit or Disposal Activities
the pro forma amounts indicated below:
On January 1, 2003, Citigroup adopted SFAS No. 146, “Accounting for Costs
Associated with Exit or Disposal Activities” (SFAS 146). SFAS 146 requires that In millions of dollars, except per share amounts 2005 2004 2003
a liability for costs associated with exit or disposal activities, other than in a Compensation expense
business combination, be recognized when the liability is incurred. In the related to stock option
past, the costs were recognized at the date of management’s commitment to plans, net of tax As reported $ 84 $ 173 $ 110
an exit plan. In addition, SFAS 146 requires that the liability be measured at Pro forma 163 325 365
fair value and be adjusted for changes in estimated cash flows. The provisions Net income As reported $24,589 $17,046 $17,853
of the new standard are effective for exit or disposal activities initiated after Pro forma 24,510 16,894 17,598
December 31, 2002. The impact of adopting SFAS 146 was not material. Basic earnings per share As reported $ 4.84 $ 3.32 $ 3.49
Pro forma 4.82 3.29 3.44
Derivative Instruments and Hedging Activities
On July 1, 2003, the Company adopted SFAS No. 149, “Amendment of Diluted earnings per share As reported $ 4.75 $ 3.26 $ 3.42
Pro forma 4.73 3.23 3.37
Statement 133 on Derivative Instruments and Hedging Activities” (SFAS 149).
SFAS 149 amends and clarifies accounting for derivative instruments,
During the first quarter of 2004, the Company changed its option
including certain derivative instruments embedded in other contracts, and
valuation method from the Black-Scholes model to the binomial method,
for hedging activities under SFAS No. 133, “Accounting for Derivative
which did not have a material impact on the Company’s Consolidated
Instruments and Hedging Activities” (SFAS 133). In particular, SFAS 149
Financial Statements.
clarifies under what circumstances a contract with an initial net investment
meets the characteristic of a derivative and when a derivative contains a
financing component that warrants special reporting in the statement of cash
flows. This Statement is generally effective for contracts entered into or
modified after June 30, 2003 and did not have a material impact on the
Company’s Consolidated Financial Statements.

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 The Company has made changes to various stock-based compensation recognized on the date of grant rather than over an associated service period,
plan provisions for future awards. For example, in January 2005, the Citigroup may record an incremental charge to pretax earnings in the 2006
Company largely moved from granting stock options to granting restricted first quarter of approximately $700 million.
and deferred stock awards, unless participants elect to receive all or a portion
Other-Than-Temporary Impairments of Certain
of their award in the form of stock options. Thus, the majority of Investments
management options granted in 2005 were due to stock option elections and On September 30, 2004, the FASB voted unanimously to delay the effective
carried the same vesting period as the restricted or deferred stock awards in date of EITF 03-1, “The Meaning of Other-Than-Temporary Impairment and
lieu of which they were granted. Stock options granted in 2003 and 2004 have its Applications to Certain Investments.” The delay applies to both debt and
three-year vesting periods and six-year terms. In addition, the sale of equity securities and specifically applies to impairments caused by interest
underlying shares acquired upon exercise is restricted for a two-year period rate and sector spreads. In addition, the provisions of EITF 03-1 that were
and pursuant to a stock ownership commitment, senior executives must delayed relate to the requirements that a company declare its intent to hold
retain 75% of the shares they own and acquire from the Company over the the security to recovery and designate a recovery period in order to avoid
term of their employment. Options granted in 2003 and thereafter do not have recognizing an other-than-temporary impairment charge through earnings.
a reload feature; however, some previously granted options retain that feature. On November 3, 2005, the FASB issued FASB Staff Position FAS 115-1, “The
See Note 20 to the Company’s Consolidated Financial Statements on Meaning of Other-Than-Temporary Impairment and its Applications to
page 153. Certain Investments,” revising the guidance in EITF 03-1, which did not have
a material impact on the Company’s Consolidated Financial Statements. The
FUTURE APPLICATION OF ACCOUNTING STANDARDS disclosures required by EITF 03-1 are included in Note 5 to the Consolidated
Stock-Based Compensation Financial Statements on page 135.
In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share- Accounting for Certain Hybrid Financial Instruments
Based Payment” (SFAS 123-R), which replaces the existing SFAS 123 and On February 16, 2006, the FASB issued SFAS No. 155, “Accounting for Certain
supersedes APB 25. SFAS 123-R requires companies to measure and record Hybrid Financial Instruments” (SFAS 155), an amendment of SFAS 140 and
compensation expense for stock options and other share-based payments SFAS 133. SFAS 155 permits the Company to elect to measure any hybrid
based on the instruments’ fair value reduced by expected forfeitures. financial instrument at fair value (with changes in fair value recognized in
Citigroup adopted SFAS 123-R as of January 1, 2006, by using the modified earnings) if the hybrid instrument contains an embedded derivative that
prospective approach, which requires recognizing expense for options granted would otherwise be required to be bifurcated and accounted for separately
prior to the adoption date equal to the grant date fair value of the unvested under SFAS 133. The election to measure the hybrid instrument at fair value
amounts over their remaining vesting period. For unvested stock-based is made on an instrument-by-instrument basis and is irreversible. The
awards granted before January 1, 2003 (“APB 25 awards”), the Company will Statement will be effective for all instruments acquired, issued, or subject to a
expense the incremental grant date fair value of the awards at the grant date remeasurement event occurring after the beginning of the Company’s fiscal
over the remaining vesting period. The portion of fair value attributable to year that begins after September 15, 2006, with earlier adoption permitted as
vested APB 25 awards is not recognized. The estimated impact of this change of the beginning of the Company’s 2006 fiscal year, provided that financial
to Citigroup will be to recognize approximately $46 million (pretax) and $12 statements for any interim period of that fiscal year have not been issued. The
million (pretax) compensation expense for the unvested APB 25 awards in Company has not yet decided whether it will early adopt SFAS 155 effective
2006 and 2007, respectively. January 1, 2006, and is still assessing the impact of this change in accounting.
Citigroup grants restricted or deferred shares to eligible employees under
its Capital Accumulation Program (CAP). The program provides that Potential Amendments to Various Current Accounting
employees who meet certain age plus years-of-service requirements Standards
(retirement-eligible employees) may terminate active employment and The FASB is currently working on a number of amendments to the existing
continue vesting in their awards provided they comply with specified non- accounting standards governing asset transfers, securitizations, leveraged
compete provisions. Citigroup had been amortizing the compensation cost of leases transactions, and fair value of financial instruments. Upon completion
those awards over the full vesting periods. The SEC recently indicated that in of these standards, the Company will need to reevaluate its accounting and
the case of retirement-eligible employees, non-compete agreements would be disclosures. Due to the ongoing deliberations by the Board, the Company is
a sufficient basis for amortizing these compensation costs over the full vesting unable to accurately determine the effect of future amendments or proposals
period only if there was evidence, on an individual basis, that the non- at this time.
compete compelled the employee to continue to work. In addition, the FASB is currently working on a project that will change the
The Company currently is in discussions with the SEC regarding a number accounting and reporting for pension and postretirement plans. Citigroup
of practical implications concerning this matter, including, among other expects the new standard to require companies to record an asset or liability
things, the adequacy of non-compete agreements as a basis for amortization. on the Consolidated Balance Sheet equal to the funded status of the plans. Any
The Company also believes there may be other factors, including plan design other plan assets or liabilities would be reflected net as an adjustment to
changes, which may preserve the current features of the plan, including stockholders’ equity.
amortization of these expenses. If it is concluded that the compensation
expense for awards granted to retirement-eligible employees must be

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2. BUSINESS DEVELOPMENTS Acquisition of KorAm Bank
On April 30, 2004, Citigroup completed its tender offer to purchase all the
Acquisition of Federated Credit Card Portfolio and Credit
Card Agreement With Federated Department Stores outstanding shares of KorAm Bank (KorAm) at a price of KRW 15,500 per
On June 2, 2005, Citigroup announced that it had agreed to enter into a long- share in cash. In total Citigroup has acquired 99.9% of KorAm’s outstanding
term agreement with Federated Department Stores, Inc. (Federated) under shares for a total of KRW 3.14 trillion ($2.7 billion). The results of KorAm are
which the companies will partner to manage Federated’s credit card business, included in the Consolidated Financial Statements from May 2004 forward.
including existing and new accounts. At the time of the acquisition KorAm was a leading commercial bank in
Under the agreement, Citigroup will acquire Federated’s approximately Korea, with 223 domestic branches and total assets at June 30, 2004 of $37
$6.3 billion credit card receivables portfolio in three phases. For the first billion at the time of the acquisition. During the 2004 fourth quarter, KorAm
phase, which closed on October 24, 2005, Citigroup acquired Federated’s was merged with the Citibank Korea branch to form Citibank Korea Inc.
receivables under management, totaling approximately $3.3 billion. For the Divestiture of Electronic Financial Services Inc.
second phase, additional Federated receivables, which total approximately During January 2004, the Company completed the sale for cash of Electronic
$1.2 billion, are expected to be transferred to Citigroup in the 2006 second Financial Services Inc. (EFS) for $390 million. EFS is a provider of
quarter from the current provider. For the final phase, Citigroup expects to government-issued benefits payments and prepaid stored value cards used
acquire, in the 2006 third quarter, the approximately $1.8 billion credit card by state and federal government agencies, as well as of stored value services
receivable portfolio of The May Department Stores Company (May), which for private institutions. The sale of EFS resulted in an after-tax gain of
recently merged with Federated. $180 million ($255 million pretax) in the 2004 first quarter.
Citigroup is paying a premium of approximately 11.5% to acquire each of
the portfolios. The multi-year agreement also provides Federated the ability Acquisition of Washington Mutual Finance Corporation
to participate in the portfolio based on credit sales and certain other On January 9, 2004, Citigroup completed the acquisition of Washington
performance metrics of the portfolio after the receivable sale is completed. Mutual Finance Corporation (WMF) for $1.25 billion in cash. WMF was the
The Federated and May credit card portfolios comprise a total of consumer finance subsidiary of Washington Mutual, Inc. WMF provides direct
approximately 17 million active accounts. consumer installment loans and real-estate-secured loans, as well as sales
finance and the sale of insurance. The acquisition included 427 WMF offices
Acquisition of First American Bank located in 26 states, primarily in the Southeastern and Southwestern United
On March 31, 2005, Citigroup completed the acquisition of First American States, and total assets of $3.8 billion. Citigroup has guaranteed all
Bank in Texas (FAB). The transaction established Citigroup’s retail branch outstanding unsecured indebtedness of WMF in connection with this
presence in Texas, giving Citigroup 106 branches, $4.2 billion in assets and acquisition. The results of WMF are included in the Consolidated Financial
approximately 120,000 new customers in the state at the time of the Statements from January 2004 forward.
transaction’s closing. The results of FAB are included in the Consolidated
Financial Statements from March 2005 forward. Acquisition of Sears’ Credit Card and Financial
Products Business
Divestiture of CitiCapital’s Transportation On November 3, 2003, Citigroup acquired Sears’ Credit Card and Financial
Finance Business Products business (Sears), the eighth largest portfolio in the U.S. $28.6 billion
On November 22, 2004, the Company reached an agreement to sell of gross receivables were acquired for a 10% premium of $2.9 billion and
CitiCapital’s Transportation Finance Business based in Dallas and Toronto annual performance payments over the next ten years based on new accounts,
to GE Commercial Finance for total cash consideration of approximately retail sales volume and financial product sales. The Company recorded
$4.6 billion. The sale, which was completed on January 31, 2005, resulted $5.8 billion of intangible assets and goodwill as a result of this transaction.
in an after-tax gain of $111 million ($157 million pretax). In addition, the companies signed a multi-year marketing and servicing
Sale of Samba Financial Group agreement across a range of each company’s businesses, products and
On June 15, 2004, the Company sold, for cash, its 20% equity investment in services. The results of the Sears portfolio are included in the Consolidated
the Samba Financial Group (Samba), formerly known as the Saudi American Financial Statements from November 2003 forward.
Bank, to the Public Investment Fund, a Saudi public sector entity. Citigroup Acquisition of The Home Depot’s Private-Label Portfolio
recognized an after-tax gain of $756 million ($1.168 billion pretax) on the In July 2003, Citigroup completed the acquisition of The Home Depot’s
sale during the 2004 second quarter. The gain was recognized equally private-label portfolio (Home Depot), which added $6 billion in receivables
between Global Consumer and CIB. and 12 million accounts. The results of this portfolio acquisition are included
in the Consolidated Financial Statements from July 2003 forward.

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3. DISCONTINUED OPERATIONS Any effects on the Company’s current earnings related to these securities, such
as dividend revenue, are included in the results of Alternative Investments.
Sale of the Asset Management Business
The following is summarized financial information for discontinued
On December 1, 2005, the Company completed the sale of substantially all
operations related to the Sale of the Asset Management Business:
of its Asset Management Business to Legg Mason, Inc. (Legg Mason) in
exchange for its broker-dealer business, $2.298 billion of Legg Mason’s In millions of dollars 2005 2004 2003
common and preferred shares (valued as of the closing date), and $500 Total revenues, net of interest expense $4,599 $1,383 $1,251
million in cash. This cash was obtained via a lending facility provided by
Income from discontinued operations $ 168 $ 203 $ 363
Citigroup Corporate and Investment Banking. The transaction did not Gain on sale 3,404 — —
include Citigroup’s asset management business in Mexico, its retirement Provision for income taxes and minority
services business in Latin America (both of which are now included in interest, net of taxes 1,382 112 147
International Retail Banking) or its interest in the CitiStreet joint venture Income from discontinued operations,
(which is now included in Smith Barney). The total value of the transaction net of taxes $2,190 $ 91 $ 216
at the time of closing was approximately $4.369 billion, resulting in an
after-tax gain to Citigroup of approximately $2.082 billion ($3.404 billion The following is a summary of the assets and liabilities of discontinued
pretax). This gain remains subject to final closing adjustments. operations related to the Sale of the Asset Management Business as of
Concurrently, Citigroup sold Legg Mason’s Capital Markets business to December 1, 2005:
Stifel Financial Corp. The business consisted of areas in which Citigroup
In millions of dollars December 1, 2005
already had full capabilities, including investment banking, institutional
equity sales and trading, taxable fixed income sales and trading, and Assets
research. No gain or loss was recognized from this transaction. (The Cash and due from banks $ 96
Investments 3
transactions described in these two paragraphs are referred to as the “Sale
Intangible assets 776
of the Asset Management Business”). Other assets 563
In connection with this sale, Citigroup and Legg Mason entered into a
Total assets $1,438
three-year agreement under which Citigroup will continue to offer its clients
Asset Management’s products, will become the primary retail distributor of the Liabilities
Legg Mason funds managed by Legg Mason Capital Management Inc., and Other liabilities 575
may also distribute other Legg Mason products. These products will be offered
Total liabilities $ 575
primarily through Citigroup’s Global Wealth Management businesses, Smith
Barney and Private Bank, as well as through Primerica and Citibank. The
distribution of these products will be subject to applicable requirements of law Sale of the Life Insurance & Annuities Business
and Citigroup’s suitability standards and product requirements. For the eleven On July 1, 2005, the Company completed the sale of Citigroup’s Travelers Life
months ended November 30, 2005 and the years ended December 31, 2004 & Annuity and substantially all of Citigroup’s international insurance
and 2003, the intercompany fees paid by the Asset Management Business to businesses to MetLife, Inc. (MetLife). The businesses sold were the primary
various other Citigroup businesses totaled approximately $180 million, $206 vehicles through which Citigroup engaged in the Life Insurance and
million, and $208 million, respectively. For the month ended December 31, Annuities business.
2005, these fees, of approximately $31 million, which were received from Legg Citigroup received $1.0 billion in MetLife equity securities and $10.830
Mason, are included in the Consolidated Statement of Income. billion in cash, which resulted in an after-tax gain of approximately $2.120
Upon completion of the Sale of the Asset Management Business, Citigroup billion ($3.386 billion pretax). This gain remains subject to final closing
added 1,226 financial advisors in 124 branch offices from Legg Mason to its adjustments.
Global Wealth Management business. The transaction encompassed Travelers Life & Annuity’s U.S. businesses
Results for all of the businesses included in the Sale of the Asset and its international operations other than Citigroup’s life insurance business
Management Business, including the gain, are reported as Discontinued in Mexico (which is now included within International Retail Banking).
Operations for all periods presented. Changes in the market value of the Legg International operations included wholly owned insurance companies in the
Mason common and preferred shares since the closing of the transaction are United Kingdom, Belgium, Australia, Brazil, Argentina, and Poland; joint
included in the Consolidated Statement of Change in Stockholders’ Equity ventures in Japan and Hong Kong; and offices in China. The transaction also
within “Accumulated Other Changes in Equity from Nonowner Sources” (net included Citigroup’s Argentine pension business. (The transaction described
change in unrealized gains and losses on investment securities, net of tax). in the preceding three paragraphs is referred to as the “Sale of the Life
Insurance and Annuities Business”).
In connection with the Sale of the Life Insurance and Annuities Business,
Citigroup and MetLife entered into ten-year agreements under which
Travelers Life & Annuity and MetLife products will be made available through
certain Citigroup distribution channels. For the six months ended June 30,
2005 and the years ended December 31, 2004 and 2003, the commission fees

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related to the distribution of these products totaled approximately $230 Summarized financial information for all of the Company’s discontinued
million, $426 million, and $351 million, respectively. For the six months operations is as follows:
ended December 31, 2005, these fees, of approximately $200 million, which
In millions of dollars 2005 2004 2003
were received from MetLife, are included in Citigroup’s Consolidated
Statement of Income. Total revenues, net of interest expense $10,727 $6,555 $5,848
Results for all of the businesses included in the Sale of the Life Insurance Income from discontinued operations $ 908 $1,446 $1,163
and Annuities Business are reported as Discontinued Operations for all periods Gain on sale 6,790 — —
presented. The unrealized gain on the MetLife securities after the closing of Provision for income taxes and minority
interest, net of taxes 2,866 454 368
the transaction are included in the Consolidated Statement of Changes in
Stockholders’ Equity within “Accumulated Other Changes in Equity from Income from discontinued operations,
Nonowner Sources” (net change in unrealized gains and losses on investment net of taxes $ 4,832 $ 992 $ 795
securities, net of tax). Any effects on the Company’s current earnings related to
these securities, such as dividend revenue and hedging costs, are included in Cash flows from discontinued operations
the results of Alternative Investments.
In millions of dollars 2005 2004 2003
Summarized financial information for discontinued operations related to
the Sale of the Life Insurance and Annuities Business is as follows: Cash flows from operating activities $(3,313) $ 1,284 $ (97)
Cash flows from investing activities 2,504 (4,704) (429)
In millions of dollars 2005 2004 2003 Cash flows from financing activities 763 3,292 534
Total revenues, net of interest expense $6,128 $5,172 $4,597 Net cash (used in) provided
by discontinued operations $ (46) $ (128) $ 8
Income from discontinued operations $ 740 $1,243 $ 800
Gain on sale 3,386 — —
Provision for income taxes 1,484 342 221 In addition to the accounting policies outlined in Note 1 to the
Consolidated Financial Statements on page 122, the following represents the
Income from discontinued operations,
net of taxes $2,642 $ 901 $ 579 policies specifically related to the Life Insurance and Annuities Business that
was sold:
The following is a summary of the assets and liabilities of discontinued Separate and Variable Accounts
operations related to the Sale of the Life Insurance and Annuities Business as Separate and variable accounts primarily represent funds for which
of July 1, 2005, the date of the distribution: investment income and investment gains/losses accrue directly to, and
In millions of dollars July 1, 2005 investment risk is borne by, the contractholders. The assets of each account
are legally segregated and are not subject to claims that arise out of any other
Assets
Cash and due from banks $ 158 business of the Company. The assets of these accounts are generally carried
Investments 48,860 at market value. Amounts assessed to the contractholders for management
Intangible assets 86 services are included in revenues. Deposits, net investment income and
Other assets (1) 44,123 realized investment gains and losses for these accounts are excluded from
Total assets $93,227 revenues, and related liability increases are excluded from benefits
and expenses.
Liabilities
Federal funds purchased and securities Contractholder Funds
loaned or sold under agreements Contractholder funds represent receipts from the issuance of universal life,
to repurchase $ 971
Other liabilities (2) 82,842 pension investment and certain deferred annuity contracts. Such receipts are
considered deposits on investment contracts that do not have substantial
Total liabilities $83,813
mortality or morbidity risk. Account balances are increased by deposits
(1) At June 30, 2005 and December 31, 2004, other assets consisted of separate and variable accounts of received and interest credited and are reduced by withdrawals, mortality
$30,828 million and $31,183 million, respectively, reinsurance recoverables of $4,048 million and
$3,941 million, respectively, and other of $9,247 million and $12,928 million, respectively.
charges and administrative expenses charged to the contractholders.
(2) At June 30, 2005 and December 31, 2004, other liabilities consisted of contractholder funds and
separate and variable accounts of $66,139 million and $67,257 million, respectively, insurance policy
and claims reserves of $14,370 million and $14,140 million, respectively, and other of $2,333 million
and $6,905 million, respectively.

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4. BUSINESS SEGMENTS Research. Smith Barney provides investment advice, financial planning and
Citigroup is a diversified bank holding company whose businesses provide a brokerage services to affluent individuals, companies, and non-profits.
broad range of financial services to consumer and corporate customers Private Bank provides personalized wealth management services for high net
around the world. The Company’s activities are conducted through the Global worth clients.
Consumer, Corporate and Investment Banking, Global Wealth Management, The Alternative Investments segment manages capital on behalf of
and Alternative Investments business segments. Citigroup (including the ownership of St. Paul’s Travelers, MetLife, and
The Global Consumer segment includes a global, full-service consumer Legg Mason shares) and third party clients across five asset classes,
franchise delivering a wide array of banking, lending, insurance and including private equity, hedge funds, real estate, structured products and
investment services through a network of local branches, offices, and managed futures.
electronic delivery systems. Corporate/Other includes net treasury results, unallocated corporate
The businesses included in the Company’s Corporate and Investment expenses, offsets to certain line-item reclassifications (eliminations), the
Banking segment provide corporations, governments, institutions, and results of discontinued operations, the cumulative effect of accounting
investors in approximately 100 countries with a broad range of banking and changes and unallocated taxes.
financial products and services. The accounting policies of these reportable segments are the same as those
The Global Wealth Management segment is composed of the Smith Barney disclosed in Note 1 to the Consolidated Financial Statements on page 122.
Private Client businesses, Citigroup Private Bank and Citigroup Investment

The following table presents certain information regarding the Company’s continuing operations by segment:
Income (loss) from
continuing operations
Revenues, net Provision (benefit) before cumulative effect of Identifiable
of interest expense (1)(2) for income taxes (1) accounting change (1) (2) (3) (4) assets at year end(1) (5)
In millions of dollars, except
identifiable assets in billions 2005 2004 2003 2005 2004 2003 2005 2004 2003 2005 2004
Global Consumer $48,245 $47,887 $41,501 $4,904 $5,592 $4,551 $10,897 $11,987 $ 9,665 $ 559 $ 532
Corporate and
Investment Banking 23,863 21,786 20,032 2,818 96 2,429 6,895 2,042 5,374 839 763
Global Wealth Management 8,684 8,529 7,847 715 659 736 1,244 1,209 1,346 63 61
Alternative Investments 3,430 1,703 1,279 950 398 309 1,437 768 402 13 9
Corporate/Other (580) (270) 935 (309) (281) (187) (667) 48 271 20 119
Total $83,642 $79,635 $71,594 $9,078 $6,464 $7,838 $19,806 $16,054 $17,058 $1,494 $1,484

(1) Reclassified to conform to the Sale of the Asset Management Business, the Sale of the Life Insurance & Annuities Business, and certain recent organizational changes.
(2) Includes total revenues, net of interest expense, in the U.S. of $47.4 billion, $47.1 billion, and $42.9 billion; in Mexico of $5.3 billion, $4.5 billion, and $3.8 billion and in Japan of $4.5 billion, $4.3 billion, and $4.2 billion
in 2005, 2004, and 2003, respectively. There were no other individual foreign countries that were material to total revenues, net of interest expense. Figures exclude Alternative Investments and Corporate/Other, which
largely operate within the U.S.
(3) Includes pretax provisions (credits) for credit losses and for benefits and claims in the Global Consumer results of $9.1 billion, $8.1 billion, and $8.2 billion, in the Corporate and Investment Banking results of ($42) million,
($975) million, and $732 million, and in the Global Wealth Management results of $29 million, ($5) million, and $12 million for 2005, 2004, and 2003, respectively. Corporate/Other recorded a pretax credit of ($2) million
and ($2) million in 2005 and 2003, respectively. Includes pretax credit in the Alternative Investments results of ($2) million in 2005.
(4) For 2005, the Company recognized after-tax charges of $49 million for the cumulative effect of accounting change related to the adoption of FIN 47.
(5) Corporate/Other includes assets at December 31, 2004 that were part of the Sale of the Life Insurance and Annuities Business and the Sale of the Asset Management Business.

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5. INVESTMENTS
In millions of dollars at year end 2005 2004
Fixed income securities, substantially all
available-for-sale at fair value $163,177 $194,088
Equity securities 14,368 10,114
Venture capital, at fair value 2,844 3,806
Short-term and other 208 5,235
Total $180,597 $213,243

The amortized cost and fair value of investments in fixed income and equity securities at December 31, were as follows:
2005 2004
Gross Gross Gross Gross
Amortized unrealized unrealized Fair Amortized unrealized unrealized Fair
In millions of dollars at year end cost gains losses value cost gains losses value

Fixed income securities held to maturity (1) $ 2 $ — $ — $ 2 $ 94 $ — $ — $ 94

Fixed income securities available-for-sale
Mortgage-backed securities, principally obligations of
U.S. federal agencies $ 13,157 $ 42 $ 262 $ 12,937 $ 20,662 $ 412 $ 66 $ 21,008
U.S. Treasury and federal agencies 28,448 18 432 28,034 33,791 143 318 33,616
State and municipal 13,090 512 21 13,581 8,897 602 17 9,482
Foreign government 67,823 439 388 67,874 65,538 590 158 65,970
U.S. corporate 25,050 312 307 25,055 38,921 1,861 374 40,408
Other debt securities 15,665 74 45 15,694 23,010 536 36 23,510
$163,233 $1,397 $1,455 $163,175 $190,819 $4,144 $969 $193,994
Total fixed income securities $163,235 $1,397 $1,455 $163,177 $190,913 $4,144 $969 $194,088
Equity securities (2) $ 13,017 $1,372 $ 21 $ 14,368 $ 9,260 $ 859 $ 5 $ 10,114

(1) Recorded at amortized cost.

(2) Includes non-marketable equity securities carried at cost of $8,329 million and $6,167 million at December 31, 2005 and 2004, respectively, which are reported in both the amortized cost and fair value columns.

At December 31, 2005, the cost of approximately 4,000 investments in accumulated other changes in equity from nonowner sources into current
equity and fixed income securities exceeded their fair value by $1.476 billion. income related to the hedging instrument.
Of the $1.476 billion, the gross unrealized loss on equity securities was $21 Management has determined that the unrealized losses on the Company’s
million. Of the remainder, $674 million represents fixed income investments investments in equity and fixed income securities at December 31, 2005 are
that have been in a gross unrealized loss position for less than a year, and of temporary in nature. The Company conducts a periodic review to identify
these 97% are rated investment grade; $781 million represents fixed income and evaluate investments that have indications of possible impairment. An
investments that have been in a gross unrealized loss position for a year or investment in a debt or equity security is impaired if its fair value falls below
more, and of these 98% are rated investment grade. its cost and the decline is considered other-than-temporary. Factors considered
The fixed income investments that have been in a gross unrealized loss in determining whether a loss is temporary include the length of time and
position for a year or more include 23 related investment grade asset-backed extent to which fair value has been below cost; the financial condition and
securities, classified with U.S. corporate in the table above, with a gross near-term prospects of the issuer; and the Company’s ability and intent to
unrealized loss of $269 million. These asset-backed securities were acquired hold the investment for a period of time sufficient to allow for any anticipated
between 1994 and 1999 and have remaining maturities ranging from 2006 recovery. The Company’s review for impairment generally entails:
through 2021. The unrealized loss on these asset-backed securities is due
• Identification and evaluation of investments that have indications of
solely to the current interest rate environment, i.e., the unrealized loss is
possible impairment;
unrelated to the credit of the securities. These 23 related asset-backed
• Analysis of individual investments that have fair values significantly less
securities are accounted for similarly to debt securities and are classified as
than amortized cost, including consideration of the length of time the
available-for-sale, and any other-than-temporary impairment of the securities
investment has been in an unrealized loss position;
is recorded in current income. The Company has entered into hedges of these
• Discussion of evidential matter, including an evaluation of factors or
investments that qualify for cash flow hedge accounting under SFAS 133. The
triggers that could cause individual investments to qualify as having
changes in fair value of the asset-backed securities and the changes in fair
other-than-temporary impairment and those that would not support
value of the hedging instruments are reported in accumulated other changes
other-than-temporary impairment; and
in equity from nonowner sources (a component of equity). Any other-than-
• Documentation of the results of these analyses, as required under
temporary impairment recorded in current income on the asset-backed
business policies.
securities would be offset by the reclassification of an amount from

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The table below shows the fair value of investments in fixed income and equity securities that are available-for-sale and that have been in an unrealized loss
position for less than 12 months or for 12 months or longer as of December 31, 2005 and 2004:
Less than 12 months 12 months or longer Total
Gross Gross Gross
Fair unrealized Fair unrealized Fair unrealized
In millions of dollars at year end value losses value losses value losses

2005:
Fixed income securities available-for-sale
Mortgage-backed securities, principally obligations of
U.S. federal agencies $ 7,242 $ 69 $ 1,437 $193 $ 8,679 $ 262
U.S. Treasury and federal agencies 20,697 71 4,356 361 25,053 432
State and municipal 2,205 21 12 — 2,217 21
Foreign government 20,124 186 12,074 202 32,198 388
U.S. corporate 1,542 301 903 6 2,445 307
Other debt securities 3,276 26 1,281 19 4,557 45
Total fixed income securities available-for-sale $55,086 $674 $20,063 $781 $75,149 $1,455

Equity securities $ 229 $ 16 $ 34 $ 5 $ 263 $ 21

2004:
Fixed income securities available-for-sale
Mortgage-backed securities, principally obligations of
U.S. federal agencies $ 6,514 $ 45 $ 1,300 $ 21 $ 7,814 $ 66
U.S. Treasury and federal agencies 18,510 313 76 5 18,586 318
State and municipal 690 8 336 9 1,026 17
Foreign government 8,395 49 6,872 109 15,267 158
U.S. corporate 3,895 52 1,574 322 5,469 374
Other debt securities 2,363 20 537 16 2,900 36
Total fixed income securities available-for-sale $40,367 $487 $10,695 $482 $51,062 $969

Equity securities $ 49 $ 3 $ 32 $ 2 $ 81 $ 5

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 The following table presents the amortized cost, fair value, and average The following table represents realized gains and losses from sales
yield on amortized cost of fixed income securities by contractual maturity of investments:
dates as of December 31, 2005:
In millions of dollars 2005 2004 2003
Amortized Fair
In millions of dollars cost value Yield Gross realized investment gains $2,275 $1,456 $ 1,629
Gross realized investment losses (313) (623) (1,100)
U.S. Treasury and federal agencies (1)
Due within 1 year $ 9,738 $ 9,665 3.50% Net realized gains (losses) $1,962 $ 833 $ 529
After 1 but within 5 years 16,459 16,128 4.08
After 5 but within 10 years 2,451 2,437 4.57 This table excludes the realized and unrealized gains and losses related to
After 10 years (2) 11,201 10,976 5.48
the venture capital investments, which were classified in other revenue
Total $ 39,849 $ 39,206 4.36% because the mark-to-market of these investments is recognized in earnings.
State and municipal The net gain reflected in earnings from these venture capital investments were
Due within 1 year $ 116 $ 114 5.17% $1.055 billion, $554 million, and $703 million for the years ended December
After 1 but within 5 years 408 401 5.88 31, 2005, 2004, and 2003, respectively.
After 5 but within 10 years 1,656 1,692 5.37 The total carrying value and cost for the venture capital investments at
After 10 years (2) 10,910 11,374 5.24
December 31, were as follows:
Total $ 13,090 $ 13,581 5.28%
In millions of dollars 2005 2004
All other (3)
Carrying value $2,844 $3,806
Due within 1 year $ 32,639 $ 32,852 4.02%
Cost 2,499 2,806
After 1 but within 5 years 44,134 44,045 4.70
After 5 but within 10 years 12,796 12,715 5.70
After 10 years (2) 20,727 20,778 4.63 Among these investments, which were held by Citigroup’s private equity
Total $110,296 $110,390 4.60% subsidiaries including those subsidiaries registered as Small Business
Investment Companies and other subsidiaries that engage exclusively in
Total fixed income securities $163,235 $163,177 4.60%
venture capital activities, were positions in publicly traded securities that
(1) Includes mortgage-backed securities of U.S. federal agencies. amounted to $83 million and $380 million carrying value at December 31,
(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. 2005 and 2004, respectively. These publicly traded positions include thinly
(3) Includes foreign government, U.S. corporate, asset-backed securities issued by U.S. corporations,
and other debt securities. Yields reflect the impact of local interest rates prevailing in countries outside traded securities, large block holdings, restricted shares or other special
the U.S. situations. The quoted market prices used in determining their carrying value
The following table presents interest and dividends on investments: were discounted to produce an estimate of the attainable fair value for these
securities. The remaining venture capital positions consist of investments in
In millions of dollars 2005 2004 2003 privately held companies, with a total carrying value of $2.7 billion and $3.4
Taxable interest $6,453 $5,507 $4,450 billion as of December 31, 2005 and 2004, respectively. Their carrying value
Interest exempt from U.S. federal was determined based upon the investments’ financial performance, relevant
income tax 500 412 365 third-party arm’s length transactions, current and subsequent financings,
Dividends 292 81 224
and comparisons to similar companies for which quoted market prices
Total interest and dividends $7,245 $6,000 $5,039 were available.

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6. FEDERAL FUNDS, SECURITIES BORROWED, LOANED, 7. BROKERAGE RECEIVABLES AND
AND SUBJECT TO REPURCHASE AGREEMENTS BROKERAGE PAYABLES
Federal funds sold and securities borrowed or purchased under agreements The Company has receivables and payables for financial instruments
to resell, at their respective carrying values, consisted of the following at purchased from and sold to brokers and dealers and customers. The Company
December 31: is exposed to risk of loss from the inability of brokers and dealers or customers
to pay for purchases or to deliver the financial instruments sold, in which case
In millions of dollars at year end 2005 2004
the Company would have to sell or purchase the financial instruments at
Federal funds sold $ 30 $ 172 prevailing market prices. Credit risk is reduced to the extent that an exchange
Securities purchased under agreements to resell 119,377 129,648
or clearing organization acts as a counterparty to the transaction.
Deposits paid for securities borrowed 98,057 70,919
The Company seeks to protect itself from the risks associated with
Total $217,464 $200,739 customer activities by requiring customers to maintain margin collateral in
compliance with regulatory and internal guidelines. Margin levels are
Federal funds purchased and securities loaned or sold under agreements to monitored daily, and customers deposit additional collateral as required.
repurchase, at their respective carrying values, consisted of the following at Where customers cannot meet collateral requirements, the Company will
December 31: liquidate sufficient underlying financial instruments to bring the customer
In millions of dollars at year end 2005 2004 into compliance with the required margin level.
Exposure to credit risk is impacted by market volatility, which may impair
Federal funds purchased $ 9,821 $ 11,707
Securities sold under agreements to repurchase 198,730 172,216 the ability of clients to satisfy their obligations to the Company. Credit limits
Deposits received for securities loaned 33,841 25,632 are established and closely monitored for customers and brokers and dealers
engaged in forwards and futures and other transactions deemed to be
Total $242,392 $209,555
credit sensitive.
The resale and repurchase agreements represent collateralized financing Brokerage receivables and brokerage payables, which arise in the normal
transactions used to generate net interest income and facilitate trading course of business, consisted of the following at December 31:
activity. These instruments are collateralized principally by government and In millions of dollars 2005 2004
government agency securities and generally have terms ranging from Receivables from customers $29,394 $24,626
overnight to up to a year. It is the Company’s policy to take possession of the Receivables from brokers,
underlying collateral, monitor its market value relative to the amounts due dealers, and clearing organizations 13,429 14,647
under the agreements, and, when necessary, require prompt transfer of Total brokerage receivables $42,823 $39,273
additional collateral or reduction in the balance in order to maintain
contractual margin protection. In the event of counterparty default, the Payables to customers $46,184 $29,742
Payables to brokers,
financing agreement provides the Company with the right to liquidate the dealers, and clearing organizations 24,810 20,466
collateral held. Resale agreements and repurchase agreements are reported
Total brokerage payables $70,994 $50,208
net by counterparty, when applicable, pursuant to FASB Interpretation No. 41,
“Offsetting of Amounts Related to Certain Repurchase and Reverse
Repurchase Agreements” (FIN 41). Excluding the impact of FIN 41, resale
agreements totaled $230.8 billion and $206.6 billion at December 31, 2005
and 2004, 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 FASB Interpretation No. 39, “Offsetting of Amounts
Related to Certain Contracts” (FIN 39).

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8. TRADING ACCOUNT ASSETS AND LIABILITIES 10. COMMISSIONS AND FEES
Trading account assets and liabilities, at market value, consisted of the Commissions and fees revenue represents charges to our customers for credit
following at December 31: and bank cards, including transaction-processing fees and annual fees;
In millions of dollars 2005 2004
advisory, and equity and debt underwriting services; lending and deposit-
related transactions, such as loan commitments, standby letters of credit, and
Trading account assets other deposit and loan servicing activities; investment management-related
U.S. Treasury and federal agency securities $ 38,771 $ 38,506
State and municipal securities 17,856 12,430 fees including brokerage services, and custody and trust services; insurance
Foreign government securities 21,266 27,556 fees and commissions.
Corporate and other debt securities 60,137 56,924 The following table presents commissions and fees revenue for the years
Derivatives (1) 47,414 57,484 ended December 31:
Equity securities 64,553 58,260
In millions of dollars 2005 2004 2003
Mortgage loans and
collateralized mortgage securities 27,852 15,678 Credit cards and bank cards $ 4,498 $ 4,501 $ 4,151
Other 17,971 13,329 Investment banking 3,669 3,482 3,471
Smith Barney 2,326 2,228 2,106
Total trading account assets $295,820 $280,167
CIB trading-related 2,295 1,998 1,647
Trading account liabilities Checking-related 997 1,026 1,033
Securities sold, not yet purchased $ 59,780 $ 71,001 Transaction services 739 729 747
Derivatives (1) 61,328 64,486 Corporate finance 483 456 493
Mortgage servicing 540 (188) 74
Total trading account liabilities $121,108 $135,487 Primerica 374 351 301
(1) Pursuant to master netting agreements.
Other consumer 754 924 981
Other CIB 346 374 293
In determining the fair value of our trading portfolio, management also Other 122 100 360
reviews the length of time trading positions have been held to identify aged Total commissions and fees $17,143 $15,981 $15,657
inventory. During 2005, the monthly average aged trading inventory
designated as available-for-immediate-sale was approximately $8.8 billion
compared with $7.6 billion in 2004. Inventory positions that are both aged
and whose values are unverified amounted to $1.0 billion compared to $2.9
billion at December 31, 2005 and 2004, respectively. The fair value of aged-
inventory is actively monitored and, when appropriate, is discounted to reflect
the implied illiquidity for positions that have been available-for-immediate-
sale for longer than 90 days. At December 31, 2005 and 2004, such valuation
adjustments amounted to $96 million and $83 million, respectively.

9. PRINCIPAL TRANSACTIONS REVENUE

Principal transactions revenue consists of realized and unrealized gains and
losses from trading activities. Not included in the table below is the impact of
net interest revenue related to trading activities, which is an integral part of
trading activities’ profitability. The following table presents principal
transactions revenue for the years ended December 31:
In millions of dollars 2005 2004(1) 2003(1)
Fixed income (2) $2,094 $1,789 $2,448
Equities (3) 585 (335) 182
Foreign exchange (4) 2,870 1,839 2,176
Commodities (5) 910 371 136
All other (16) 52 (57)
Total principal transactions revenue $6,443 $3,716 $4,885

(1) Reclassified to conform to the current presentation.

(2) Includes revenues from government securities and corporate debt, municipal securities, preferred stock,
mortgage securities, and other debt instruments. Also includes spot and forward trading of currencies
and exchange-traded and over-the-counter (OTC) currency options, options on fixed income securities,
interest rate swaps, currency swaps, swap options, caps and floors, credit derivatives, financial futures,
OTC options, and forward contracts on fixed income securities.
(3) Includes revenues from common and convertible preferred stock, convertible corporate debt, equity-
linked notes, and exchange-traded and OTC equity options and warrants.
(4) Includes revenues from foreign exchange spot, forward, option and swap contracts.
(5) Primarily includes the results of Phibro Inc., which trades crude oil, refined oil products, natural gas, and
other commodities.

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11. LOANS The following table presents information about impaired loans:
In millions of dollars at year end 2005 2004 In millions of dollars at year end 2005 2004 2003
Consumer Impaired corporate loans $ 925 $1,854 $3,301
In U.S. offices Other impaired loans (1) 327 934 986
Mortgage and real estate (1) $192,108 $161,832
Installment, revolving credit, and other 127,789 134,784 Total impaired loans (2) $1,252 $2,788 $4,287
Lease financing 5,095 6,030
Impaired loans with valuation allowances $ 919 $1,847 $3,277
$324,992 $302,646 Total valuation allowances (3) 238 431 561

In offices outside the U.S. During the year

Mortgage and real estate (1) $ 39,619 $ 39,601 Average balance of impaired loans $1,432 $2,215 $3,452
Installment, revolving credit, and other 90,466 93,523 Interest income recognized on impaired loans $ 99 $ 175 $ 100
Lease financing 866 1,619
(1) Primarily commercial market loans managed by the Consumer business.
$130,951 $134,743 (2) Excludes loans purchased for investment purposes.
(3) Included in the allowance for loan losses.
$455,943 $437,389
Net unearned income (1,323) (2,163) In addition, included in the loan table above are purchased distressed
loans, which are loans that have evidenced credit deterioration subsequent to
Consumer loans, net of unearned income $454,620 $435,226
origination but prior to acquisition by Citigroup. In conforming to the new
Corporate accounting requirements of Statement of Position No. 03-3, “Accounting for
In U.S. offices Certain Loans or Debt Securities Acquired in a Transfer” (SOP 03-3), which
Commercial and industrial (2) $ 22,081 $ 14,437
became effective in 2005, these purchased loans were reclassified from other
Lease financing 1,952 1,879
Mortgage and real estate (1) 29 100 assets to loans.
In accordance with SOP 03-3, the difference between the total expected
$ 24,062 $ 16,416
cash flows for these loans and the initial recorded investments must be
In offices outside the U.S. recognized in income over the life of the loans using a level yield. Accordingly,
Commercial and industrial (2) $ 80,116 $ 77,052 these loans have been excluded from the impaired loan information
Mortgage and real estate (1) 5,206 3,928
Loans to financial institutions 16,889 12,921 presented above. In addition, per the Statement of Position, subsequent
Lease financing 2,082 2,485 decreases to the expected cash flows for a purchased distressed loan require a
Governments and official institutions 882 1,100 build of an allowance so the loan retains its level yield. However, increases in
$105,175 $ 97,486 the expected cash flows are first recognized as a reduction of any previously
established allowance and then recognized as income prospectively over the
$129,237 $113,902
remaining life of the loan by increasing the loan’s level yield. Where the
Net unearned income (354) (299)
expected cash flow cannot be estimated, the purchased distressed loan is
Corporate loans, net of unearned income $128,883 $113,603 accounted for under the cost recovery method.
(1) Loans secured primarily by real estate. The carrying amount of the purchased distressed loan portfolio at
(2) Includes loans not otherwise separately categorized.
December 31, 2005 was $1.152 million net of an allowance of $63 million.
Included in the loan table above are lending products whose terms may The changes in the accretable yield, related allowance and carrying
give rise to additional credit issues. Credit cards with below-market amount net of accretable yield for 2005 are as follows:
introductory interest rates, multiple loans supported by the same collateral Carrying
amount net of
(e.g., home equity loans), or interest-only loans are examples of such Accretable accretable
In millions of dollars yield yield Allowance
products. However, these products are not material to Citigroup’s financial
position and are closely managed via credit controls that mitigate their Balance reclassified from other assets $243 $1,117 $39
additional inherent risk. Additions (1) $ 96 $ 274
Impaired loans are those on which Citigroup believes it is probable that it Disposals/payments received (12) (327)
will not collect all amounts due according to the contractual terms of the Accretion (88) 88
loan. This excludes smaller-balance homogenous loans that are evaluated Builds/(reductions) to the allowance (2) — 24
collectively for impairment, and are carried on a cash basis. Valuation Balance, December 31, 2005 (2) $237 $1,152 $63
allowances for these loans are estimated considering all available evidence (1) The balance reported in the column “Carrying amount net of accretable yield” consists of $133 million
including, as appropriate, the present value of the expected future cash flows of purchased loans accounted for under the level-yield method and $141 million under the cost
recovery method. These balances represent the fair market value for these loans at their acquisition
discounted at the loan’s contractual effective rate, the secondary market value date. The related total expected cash flow for the level-yield loans was $143 million at their acquisition
date. The balance reported in the “Accretable yield” column includes the effects from an increase in the
of the loan and the fair value of collateral less disposal costs. expected cash flows of $86 million.
(2) The balance reported in the column “Carrying amount net of accretable yield” consists of $590 million
of loans accounted under the level-yield method and $562 million accounted for under the cost
recovery method.

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12. ALLOWANCE FOR CREDIT LOSSES 13. SECURITIZATIONS AND VARIABLE
INTEREST ENTITIES
In millions of dollars 2005 2004 2003
The Company primarily securitizes credit card receivables and mortgages.
Allowance for loan losses Other types of assets securitized include corporate debt securities, auto loans,
at beginning of year $11,269 $12,643 $11,101 and student loans.
Additions
After securitization of credit card receivables, the Company continues to
Consumer provision for credit losses 8,224 7,205 7,316
Corporate provision for credit losses (295) (972) 730 maintain credit card customer account relationships and provides servicing
for receivables transferred to the trusts. The Company also arranges for third
Total provision for loan losses $ 7,929 $ 6,233 $ 8,046
parties to provide credit enhancement to the trusts, including cash collateral
Deductions accounts, subordinated securities, and letters of credit. As specified in some of
Consumer credit losses $10,586 $10,241 $ 9,053 the sale agreements, the net revenue collected each month is accumulated up
Consumer credit recoveries (1,903) (1,770) (1,498)
to a predetermined maximum amount, and is available over the remaining
Net consumer credit losses $ 8,683 $ 8,471 $ 7,555 term of that transaction to make payments of yield, fees, and transaction costs
Corporate credit losses $ 375 $ 632 $ 1,473 in the event that net cash flows from the receivables are not sufficient. Once
Corporate credit recoveries (1) (652) (502) (262) the predetermined amount is reached, net revenue is recognized by the
Net corporate credit losses (recoveries) $ (277) $ 130 $ 1,211 Citigroup subsidiary that sold the receivables.
The Company provides a wide range of mortgage and other loan products
Other, net (2) $ (1,010) $ 994 $ 2,262
to a diverse customer base. In connection with the securitization of these
Allowance for loan losses at end of year $ 9,782 $11,269 $12,643 loans, the servicing rights entitle the Company to a future stream of cash
Allowance for credit losses on flows based on the outstanding principal balances of the loans and the
unfunded lending commitments contractual servicing fee. Failure to service the loans in accordance with
at beginning of year (3) $ 600 $ 600 $ 567 contractual requirements may lead to a termination of the servicing rights
Provision for unfunded lending commitments $ 250 $ — $ 33 and the loss of future servicing fees. In non-recourse servicing, the principal
Allowance for credit losses on unfunded
credit risk to the Company is the cost of temporary advances of funds. In
lending commitments at end of year $ 850 $ 600 $ 600 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
Total allowance for credit losses $10,632 $11,869 $13,243
guarantor. Losses on recourse servicing occur primarily when foreclosure sale
(1) Amounts in 2003 include $12 million (through the 2003 third quarter) of collections from credit default proceeds of the property underlying a defaulted mortgage are less than the
swaps purchased from third parties. From the 2003 fourth quarter forward, collections from credit
default swaps are included in Principal Transactions on the Consolidated Statement of Income. outstanding principal balance and accrued interest of the loan and the cost of
(2) 2005 primarily includes reductions to the loan loss reserve of $584 million related to securitizations and
portfolio sales, a reduction of $110 million related to purchase accounting adjustments from the KorAm holding and disposing of the underlying property. The Company’s mortgage
acquisition, and a reduction of $90 million from the sale of CitiCapital’s transportation portfolio. 2004
primarily includes the addition of $715 million of loan loss reserves related to the acquisition of KorAm
loan securitizations are primarily non-recourse, thereby effectively
Bank and the addition of $148 million of loan loss reserves related to the acquisition of WMF. 2003 transferring the risk of future credit losses to the purchase of the securities
primarily includes the addition of $2.1 billion of loan loss reserves related to the acquisition of Sears. All
periods also include the impact of foreign currency translation. issued by the trust.
(3) Represents additional credit loss reserves for unfunded corporate lending commitments and letters of The Company also originates and sells first mortgage loans in the ordinary
credit recorded within Other Liabilities on the Consolidated Balance Sheet.
course of its mortgage banking activities. The Company sells some of these
loans to the Government National Mortgage Association (GNMA) with the
servicing rights retained. GNMA has the primary recourse obligation on the
individual loans; however, GNMA’s recourse obligation is capped at a fixed
amount per loan. Any losses above that fixed amount are borne by Citigroup
as the seller/servicer.

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The following table summarizes certain cash flows received from and paid to securitization trusts during 2005, 2004, and 2003:

2005 2004 2003

In billions of dollars Credit cards Mortgages Other (1) Credit cards Mortgages Other (1) Credit cards Mortgages Other (1)

Proceeds from new securitizations $ 21.6 $85.2 $33.1 $ 20.2 $66.4 $22.7 $ 19.1 $70.9 $12.2
Proceeds from collections reinvested
in new receivables 201.3 1.4 — 171.1 0.8 0.1 143.4 — —
Servicing fees received 1.9 0.9 — 1.5 0.7 — 1.4 0.3 —
Cash flows received on retained interests
and other net cash flows 6.4 0.1 0.1 5.3 — 0.1 4.4 — 0.1

(1) Other includes corporate debt securities, student loans and other assets.

The Company recognized gains on securitizations of mortgages of respectively, related to the securitization of credit card receivables. Gains
$197 million, $342 million, and $536 million for 2005, 2004, and 2003, recognized on the securitization of other assets during 2005, 2004 and 2003
respectively. In 2005, the Company recorded net gains of $1.0 billion and, were $126 million, $93 million and $52 million, respectively.
in 2004 and 2003, recorded net gains of $234 million and $342 million,

Key assumptions used for credit cards, mortgages, and other assets during 2005 and 2004 in measuring the fair value of retained interests at the date of sale or
securitization follow:
2005 2004
Mortgages Mortgages
Credit cards and other (1) Credit cards and other (1)

Discount rate 13.6 to 17.3% 0.4 to 98.6% 10.0 to 15.6% 0.4 to 98.6%
Constant prepayment rate 8.5 to 20.0 6.0 to 46.4 14.0 to 17.7 8.0 to 48.0
Anticipated net credit losses 5.1 to 6.5 0.0 to 80.0 5.5 to 12.2 0.0 to 80.0

(1) Other includes corporate debt securities, student loans and other assets.

As required by SFAS 140, the effect of two negative changes in each of the December 31, 2005
key assumptions used to determine the fair value of retained interests must be Credit Mortgages
In millions of dollars cards and other
disclosed. The negative effect of each change must be calculated
independently, holding all other assumptions constant. Because the key Carrying value of retained interests $7,275 $8,501
assumptions may not in fact be independent, the net effect of simultaneous Discount rate
adverse changes in the key assumptions may be less than the sum of the 10% $ (111) $ (124)
individual effects shown below. 20% (179) (243)
At December 31, 2005, the key assumptions used to value retained interests Constant prepayment rate
and the sensitivity of the fair value to adverse changes of 10% and 20% in each 10% $ (160) $ (281)
of the key assumptions were as follows: 20% (301) (531)
Anticipated net credit losses
Key Assumptions at December 31, 2005 10% $ (422) $ (7)
Constant Anticipated 20% $ (841) $ (14)
Discount prepayment net credit
rate rate losses

Mortgages and other (1) 0.4 to 8.5 to 0.0 to

26.0% 43.0% 40.0%
Credit cards 12.0 to 8.5 to 5.1 to
17.3% 20.0% 6.0%

(1) Other includes corporate debt securities, student loans and other assets.

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Managed Loans Mortgage Servicing Rights
After securitization of credit card receivables, the Company continues to The fair value of capitalized mortgage loan servicing rights (MSRs) was
maintain credit card customer account relationships and provides servicing $4.3 billion and $4.1 billion at December 31, 2005 and 2004, respectively.
for receivables transferred to the trusts. As a result, the Company considers the The following table summarizes the changes in capitalized MSRs:
securitized credit card receivables to be part of the business it manages.
In millions of dollars 2005 2004
The following tables present a reconciliation between the managed basis
and on-balance sheet credit card portfolios and the related delinquencies Balance, beginning of year $4,149 $1,980
Originations 842 769
(loans which are 90 days or more past due) and credit losses, net of recoveries.
Purchases 107 2,559
In millions of dollars, except loans in billions 2005 2004 Amortization (859) (628)
Gain (loss) on change in value of MSRs (1) (158) (16)
Principal amounts, at year end Provision for impairments (2) (3) 258 (515)
On-balance sheet $ 69.5 $ 77.9
Securitized amounts 96.2 85.3 Balance, end of year $4,339 $4,149
Loans held-for-sale — 2.5
(1) The gain (loss) on change in MSRs value represents the change in the fair value of the MSRs attributable
to risks that are hedged using fair value hedges in accordance with SFAS 133. The offsetting change in
Total managed $165.7 $165.7 the fair value of the related hedging instruments is not included in this table.
(2) The provision for impairment of MSRs represents the excess of their net carrying value, which includes
Delinquencies, at year end the gain (loss) on change in MSRs value, over its fair value. The provision for impairment increases the
valuation allowance on MSRs, which is a component of the net MSRs carrying value. A recovery of the
On-balance sheet $1,630 $1,616 MSR impairment is recorded when the fair value of the MSRs exceeds their carrying value, but it is
Securitized amounts 1,314 1,296 limited to the amount of the existing valuation allowance. The valuation allowance on MSRs was $1.021
billion, $1.280 billion and $765 million at December 31, 2005, 2004, and 2003, respectively. During
Loans held-for-sale — 32 the 2003 second quarter, the Company determined that a portion of the capitalized MSR was not
recoverable and reduced both the previously recognized valuation allowance and the asset by $830
Total managed $2,944 $2,944 million with no impact to earnings. The provision for impairment of MSRs impacts the Consumer
segment and is included in Other Revenue on the Consolidated Statement of Income.
(3) The Company utilizes various financial instruments including swaps, option contracts, futures, principal-
Credit losses, net of recoveries, only securities and forward rate agreements to manage and reduce its exposure to changes in the value
for the year ended December 31, 2005 2004 2003 of MSRs. The provision for impairment does not include the impact of these instruments, which serve to
protect the overall economic value of the MSRs.
On-balance sheet $3,404 $4,140 $2,944
Securitized amounts 5,326 4,865 4,529
Loans held-for-sale 28 214 221
Total managed $8,758 $9,219 $7,694

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Variable Interest Entities
The following table summarizes all the Company’s involvement in SPEs by business segment at December 31, 2005 and 2004, both as direct participant
or structurer:
2005 2004(1)
Total Total
involvement involvement
In millions of dollars of SPEs assets VIEs QSPEs with SPEs VIEs QSPEs with SPEs

Global Consumer
Credit cards $ 791 $ 107,925 $ 108,716 $ 11,564 $103,070 $ 114,634
Investment funds 10,920 — 10,920 15,640 — 15,640
Leasing 2,437 — 2,437 504 — 504
Mortgages 1,833 283,245 285,078 1,847 272,694 274,541
Other 1,733 5,716 7,449 7,418 1,902 9,320
Total $ 17,714 $ 396,886 $ 414,600 $ 36,973 $377,666 $ 414,639

Corporate and Investment Banking

Commercial paper conduits $ 59,662 $ — $ 59,662 $ 49,114 $ — $ 49,114
Mortgage-backed securities 95,149 798,220 893,369 70,809 588,000 658,809
CDOs 74,290 — 74,290 45,516 — 45,516
Structured finance 141,398 6,117 147,515 186,309 3,517 189,826
Other 54,853 2,289 57,142 42,915 2,742 45,657
Total $425,352 $ 806,626 $1,231,978 $394,663 $594,259 $ 988,922

Global Wealth Management

Investment funds $ 4,820 $ — $ 4,820 $ 5,349 $ — $ 5,349
Structured investment vehicles 620 — 620 $ 3,546 — 3,546
Total $ 5,440 $ — $ 5,440 $ 8,895 $ — $ 8,895

Alternative Investments
Structured investment vehicles $ 55,692 $ — $ 55,692 $ 50,968 $ — $ 50,968
Investment funds 4,249 — 4,249 3,443 — 3,443
Total $ 59,941 $ — $ 59,941 $ 54,411 $ — $ 54,411

Discontinued Operations (2)

Investment funds $ — $ — $ — $ 4,369 $ — $ 4,369
Other — — — 375 — 375
Total $ — $ — $ — $ 4,744 $ — $ 4,744

Total Citigroup $508,447 $1,203,512 $1,711,959 $499,686 $971,925 $1,471,611

(1) Reclassified to conform to the current period’s presentation.

(2) Reflects VIEs primarily associated with the Sale of the Asset Management Business.

Some of the Company’s private equity subsidiaries may invest in venture companies that qualify to apply the revised Audit Guide. Following issuance of
capital entities that may also be subject to FIN 46-R and are not included in the revised Audit Guide, which is expected in 2006, and further modification,
the previous table showing our VIE involvement. The Company accounts for if any, to FIN 46-R, the Company will assess the effect of such guidance on its
its venture capital activities in accordance with the Investment Company private equity business.
Audit Guide (Audit Guide). Also excluded from the above table are certain The Company may provide administrative, trustee and/or investment
funds for which the Company provides investment management services. The management services to numerous personal estate trusts, which are
Company’s involvement in these funds is not considered significant, and in considered VIEs under FIN 46-R, but not consolidated. These trusts are
accordance with FIN 46-R, these funds do not qualify as VIEs. excluded from the table summarizing the Company’s involvement in VIEs.
Following issuance of a proposed Statement of Position amending the The following table represents the carrying amounts and classification of
scope of the Audit Guide to redefine an investment company, the FASB will consolidated assets that are collateral for VIE obligations, including VIEs that
consider further modification to FIN 46-R to provide an exception for

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were consolidated prior to the implementation of FIN 46-R under existing The Company administers several third-party owned, special purpose,
guidance and VIEs that the Company became involved with after July 1, 2003: multi-seller finance companies that purchase pools of trade receivables, credit
cards, and other financial assets from third-party clients of the Company. As
December 31, December 31,
In billions of dollars 2005 2004 administrator, the Company provides accounting, funding, and operations
services to these conduits. Generally, the Company has no ownership interest
Cash $ 0.4 $ 0.4
in the conduits. The sellers continue to service the transferred assets. The
Trading account assets 29.7 16.8
Investments 3.2 6.6 conduits’ asset purchases are funded by issuing commercial paper and
Loans 9.5 10.7 medium-term notes. The sellers absorb the first losses of the conduits by
Other assets 4.7 1.1 providing collateral in the form of excess assets. The Company, along with
Total assets of consolidated VIEs $47.5 $35.6 other financial institutions, provides liquidity facilities, such as commercial
paper backstop lines of credit to the conduits. The Company also provides loss
The consolidated VIEs included in the table above represent hundreds enhancement in the form of letters of credit and other guarantees. All fees are
of separate entities with which the Company is involved and includes charged on a market basis.
approximately $1.6 billion related to VIEs consolidated as a result of adopting During 2003, to comply with FIN 46-R, many of the conduits issued “first
FIN 46-R as of January 1, 2004 and $2.1 billion related to VIEs consolidated as loss” subordinated notes such that one third-party investor in each conduit
a result of adopting FIN 46 at July 1, 2003. Of the $47.5 billion and $35.6 would be deemed the primary beneficiary and would consolidate the conduit.
billion of total assets of VIEs consolidated by the Company at December 31, At December 31, 2005 and 2004, total assets in unconsolidated conduits
2005 and 2004, respectively, $37.2 billion and $28.1 billion represent were $55.3 billion and $54.2 billion, respectively. One conduit with assets of
structured transactions where the Company packages and securitizes assets $656 million was consolidated at December 31, 2004.
purchased in the financial markets or from clients in order to create new The Company also packages and securitizes assets purchased in the
security offerings and financing opportunities for clients; $7.6 billion and financial markets in order to create new security offerings, including
$4.8 billion represent investment vehicles that were established to provide a arbitrage CDOs and synthetic CDOs for institutional clients and retail
return to the investors in the vehicles; and $2.7 billion and $1.2 billion customers, that match the clients’ investment needs and preferences.
represent vehicles that hold lease receivables and equipment as collateral Typically, these instruments diversify investors’ risk to a pool of assets as
to issue debt securities, thus obtaining secured financing at favorable compared with investments in an individual asset. The VIEs, which are issuers
interest rates. of CDO securities, are generally organized as limited liability corporations.
The Company may provide various products and services to the VIEs. It The Company typically receives fees for structuring and/or distributing the
may provide liquidity facilities, may be a party to derivative contracts with securities sold to investors. In some cases, the Company may repackage the
VIEs, may provide loss enhancement in the form of letters of credit and other investment with higher rated debt CDO securities or U.S. Treasury securities to
guarantees to the VIEs, may be the investment manager, and may also have provide a greater or a very high degree of certainty of the return of invested
an ownership interest or other investment in certain VIEs. In general, the principal. A third party manager is typically retained by the VIE to select
investors in the obligations of consolidated VIEs have recourse only to the collateral for inclusion in the pool and then actively manage it, or, in other
assets of the VIEs and do not have recourse to the Company, except where the cases, only to manage work-out credits. The Company may also provide other
Company has provided a guarantee to the investors or is the counterparty to a financial services and/or products to the VIEs for market-rate fees. These may
derivative transaction involving the VIE. include: the provision of liquidity or contingent liquidity facilities; interest
In addition to the VIEs that are consolidated in accordance with FIN 46-R, rate or foreign exchange hedges and credit derivative instruments; and the
the Company has significant variable interests in certain other VIEs that are purchasing and warehousing of securities until they are sold to the SPE. The
not consolidated because the Company is not the primary beneficiary. These Company is not the primary beneficiary of these VIEs under FIN 46-R due to
include multi-seller finance companies, collateralized debt obligations its limited continuing involvement and, as a result, does not consolidate their
(CDOs), structured finance transactions, and numerous investment funds. In assets and liabilities in its financial statements.
addition to these VIEs, the Company issues preferred securities to third party
investors through trust vehicles as a source of funding and regulatory capital,
which were deconsolidated during the first quarter of 2004. The Company’s
liabilities to the deconsolidated trust are included in long-term debt.

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 In addition to the conduits discussed above, the following table represents 14. GOODWILL AND INTANGIBLE ASSETS
the assets of unconsolidated VIEs where the Company has significant The changes in goodwill during 2004 and 2005 were as follows:
involvement: In millions of dollars Goodwill

December 31, December 31, Balance at December 31, 2003 $27,581

In billions of dollars 2005 2004(1) WMF acquisition 760
KorAm acquisition 2,200
CDO-type transactions $ 40.7 $ 17.6 Principal Residential Mortgage, Inc. acquisition 102
Investment-related transactions 6.9 7.6 Knight Trading acquisition 118
Trust preferred securities 6.5 6.4 Purchase accounting adjustments — Sears credit card
Mortgage-related transactions 3.1 2.2 portfolio acquisition 582
Structured finance and other 60.5 102.0 Foreign exchange translation and other 649
Total assets of significant unconsolidated VIEs $117.7 $135.8 Balance at December 31, 2004 $31,992
(1) The total assets of unconsolidated VIEs associated with discontinued operations at December 31, 2004 Legg Mason acquisition $ 716
were $10.1 billion, which primarily represented vehicles for investment-related transactions.
FAB acquisition 612
The Company has also established a number of investment funds as ABN Amro Custody acquisition 62
Unisen acquisition 57
opportunities for qualified employees to invest in venture capital investments.
Purchase accounting adjustments — KorAm acquisition (110)
The Company acts as investment manager to these funds and may provide Disposition of Life Insurance and Annuities (291)
employees with financing on both a recourse and non-recourse basis for a Disposition of CitiCapital Transportation Finance (119)
portion of the employees’ investment commitments. Foreign exchange translation and other 211
In addition, the Company administers numerous personal estate trusts. Balance at December 31, 2005 $33,130
The Company may act as trustee and may also be the investment manager for
the trust assets. During 2005 and 2004 no goodwill was written off due to impairment.
As mentioned above, the Company may, along with other financial The changes in intangible assets during 2004 and 2005 were as follows:
institutions, provide liquidity facilities, such as commercial paper backstop Intangible Assets
lines of credit to the VIEs. The Company may be a party to derivative contracts In millions of dollars (Net Carrying Amount)

with VIEs, may provide loss enhancement in the form of letters of credit and Balance at December 31, 2003 $13,881
other guarantees to the VIEs, may be the investment manager, and may also WMF acquisition — customer relationship intangibles 140
have an ownership interest in certain VIEs. Although actual losses are not Alliance acquisition — present value of future profits 143
expected to be material, the Company’s maximum exposure to loss as a result KorAm acquisition — customer relationship intangibles 170
KorAm acquisition — core deposit intangibles 81
of its involvement with VIEs that are not consolidated was $91 billion and KorAm acquisition — other intangibles 41
$78 billion at December 31, 2005 and 2004, respectively. For this purpose, Changes in gross capitalized MSRs (1)(2)(3) 2,797
maximum exposure is considered to be the notional amounts of credit lines, Purchase accounting adjustments — Sears credit card
guarantees, other credit support, and liquidity facilities, the notional amounts portfolio acquisition (582)
of credit default swaps and certain total return swaps, and the amount Foreign exchange translation and other 92
Amortization expense (1,492)
invested where Citigroup has an ownership interest in the VIEs. In addition,
the Company may be party to other derivative contracts with VIEs. Exposures Balance at December 31, 2004 $15,271
that are considered to be guarantees are also included in Note 25 to the Federated receivables acquisition — purchased credit
Consolidated Financial Statements on page 163. card relationships $ 535
Legg Mason acquisition — customer relationship intangibles 380
FAB acquisition — core deposit intangibles 56
Servicing rights on Student Loan securitizations 78
Unisen acquisition — customer relationship intangibles 38
Changes in gross capitalized MSRs (1)(2) 1,049
Disposition of Life Insurance and Annuities (86)
Disposition of Asset Management (778)
Foreign exchange translation and other 48
Amortization expense (1,842)
Balance at December 31, 2005 $14,749

(1) See Note 13 to the Consolidated Financial Statements on page 141 for a summarization of the changes
in capitalized MSRs.
(2) Excludes amortization of MSRs, which is reflected separately in this table under amortization expense.
(3) Includes approximately $2.2 billion of MSRs recorded in 2004 in connection with the acquisition of
Principal Residential Mortgage, Inc.

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The changes in goodwill by segment during 2005 and 2004 were as follows:
Corporate and Global
Global Investment Wealth Corporate /
In millions of dollars Consumer Banking Management Other Total

Balance at January 1, 2004 (1) $22,507 $4,275 $ 376 $ 423 $27,581

Goodwill acquired during 2004 2,072 990 118 — 3,180
Other (1)(2) 720 552 1 (42) 1,231
Balance at December 31, 2004 (1) $25,299 $5,817 $ 495 $ 381 $31,992
Goodwill acquired during 2005 $ 612 $ 119 $ 716 $ — $ 1,447
Goodwill disposed during 2005 (119) — — (291) (410)
Other (2) 272 1 (82) (90) 101
Balance at December 31, 2005 $26,064 $5,937 $1,129 $ — $33,130

(1) Reclassified to conform to the current period’s presentation.

(2) Other changes in goodwill primarily reflect foreign exchange effects on non-dollar-denominated goodwill, as well as purchase accounting adjustments.

The components of intangible assets were as follows:

December 31, 2005 December 31, 2004
Gross carrying Accumulated Net carrying Gross carrying Accumulated Net carrying
In millions of dollars amount amortization (1) amount amount amortization (1) amount

Purchased credit card relationships $ 7,541 $2,929 $ 4,612 $ 7,040 $2,366 $ 4,674
Mortgage servicing rights (1) 8,808 4,469 4,339 8,099 3,950 4,149
Core deposit intangibles 1,248 424 824 1,158 318 840
Other customer relationships 1,065 596 469 1,089 497 592
Present value of future profits 429 229 200 781 474 307
Other (2) 4,455 647 3,808 4,129 692 3,437
Total amortizing intangible assets $23,546 $9,294 $14,252 $22,296 $8,297 $13,999
Indefinite-lived intangible assets 497 1,272
Total intangible assets $14,749 $15,271

(1) Accumulated amortization of mortgage servicing rights includes the related valuation allowance. The assumptions used to value mortgage servicing rights are described in Notes 1 and 13 to the Consolidated Financial
Statements on pages 122 and 141, respectively.
(2) Includes contract-related intangible assets.

The intangible assets recorded during 2005 and their respective amortization
periods are as follows:
Weighted-average
amortization
In millions of dollars 2005 period in years

Mortgage servicing rights $ 950 6

Purchased credit card relationships 535 11
Other customer relationships 418 14
Core deposit intangibles 56 15
Other intangibles 91 5
Total intangible assets recorded during
the period (1) $2,050

(1) There was no significant residual value estimated for the intangible assets recorded during 2005.

Intangible assets amortization expense was $1,842 million, $1,482 million

and $1,178 million for 2005, 2004 and 2003, respectively. Intangible assets
amortization expense is estimated to be $2,013 million in 2006, $1,806
million in 2007, $1,630 million in 2008, $1,474 million in 2009, and
$1,271 million in 2010.

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15. DEBT Long-Term Debt
Weighted Balances
Short-Term Borrowings average
Short-term borrowings consist of commercial paper and other borrowings In millions of dollars at year end coupon Maturities 2005 2004
with weighted average interest rates as follows: Citigroup Parent Company
Senior notes (1) 4.42% 2006-2035 $ 74,429 $ 68,119
2005 2004 Subordinated notes 5.45 2006-2033 19,712 14,243
Weighted Weighted Junior subordinated
In millions of dollars at year end Balance average Balance average
notes relating to trust
Commercial paper preferred securities 6.68 2027-2036 6,459 6,397
Citigroup Funding Inc. $32,581 4.34% $ — —% Other Citigroup
Citigroup Global Markets Subsidiaries
Holdings Inc. — — 17,368 2.25 Senior notes 4.75 2006-2037 68,563 68,173
Other Citigroup Subsidiaries 1,578 3.50 8,270 2.28 Subordinated notes 5.71 2006-2016 2,576 4,808
Citigroup Global
$34,159 $25,638
Markets Holdings Inc. (2)
Other borrowings 32,771 3.85% 31,129 2.54%
Senior notes 2.61 2006-2097 38,884 45,139
Total $66,930 $56,767 Subordinated notes 4.77 2006-2011 330 98
Citigroup Funding Inc. (3)
Senior notes 4.24 2006-2035 5,963 —
Citigroup issues commercial paper directly to investors, maintaining
Other
liquidity reserves of cash and securities to support its outstanding Secured debt 1.83 2006-2044 583 933
commercial paper.
Total $217,499 $207,910
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. Citigroup Senior notes $187,839 $181,431
pays commitment fees for its lines of credit. Subordinated notes 22,618 19,149
Citigroup, CGMHI, and some of their non-bank subsidiaries have credit Junior subordinated
facilities with Citigroup’s subsidiary banks, including Citibank, N.A. notes relating to trust
preferred securities 6,459 6,397
Borrowings under these facilities must be secured in accordance with Section
Other 583 933
23A of the Federal Reserve Act.
CGMHI has a syndicated five-year committed uncollateralized revolving Total $217,499 $207,910
line of credit facility with unaffiliated banks totaling $2.5 billion. CGMHI also (1) Includes $250 million of notes maturing in 2098.
has three-and five-year bilateral facilities totaling $575 million with (2) Includes Targeted Growth Enhanced Term Securities (TARGETS) with carrying values of $376 million
issued by TARGETS Trusts XVIII through XXIV and $564 million issued by TARGETS Trusts XIII through
unaffiliated banks with borrowings maturing on various dates in 2007, 2008 XXIII at December 31, 2005 and 2004, respectively (collectively, the “Trusts”). CGMHI owns all of the
voting securities of the Trusts, which are consolidated in Citigroup’s Consolidated Balance Sheet. The
and 2010. At December 31, 2005, there were no outstanding borrowings under Trusts have no assets, operations, revenues or cash flows other than those related to the issuance,
administration, and repayment of the TARGETS and the Trusts’ common securities. The Trusts’
these facilities. obligations under the TARGETS are fully and unconditionally guaranteed by CGMHI and CGMHI’s
CGMHI also has committed long-term financing facilities with guarantee obligations are fully and unconditionally guaranteed by Citigroup.
(3) Includes Targeted Growth Enhanced Term Securities (TARGETS) with carrying values of $58 million
unaffiliated banks. At December 31, 2005, CGMHI had drawn down the full issued by TARGETS Trust XXV at December 31, 2005 (the “Trust”). CFI owns all of the voting securities
of the Trust, which is consolidated in Citigroup’s Consolidated Balance Sheet. The Trust has no assets,
$1.65 billion available under these facilities, of which $375 million is operations, revenues or cash flows other than those related to the issuance, administration, and
guaranteed by Citigroup. A bank can terminate these facilities by giving repayment of the TARGETS and the Trust’s common securities. The Trust’s obligations under the
TARGETS are fully and unconditionally guaranteed by CFI and CFI’s guarantee obligations are fully and
CGMHI prior notice (generally one year). Under all of these facilities, CGMHI unconditionally guaranteed by Citigroup.

is required to maintain a certain level of consolidated adjusted net worth (as The Company issues both fixed and variable rate debt in a range of
defined in the agreements). At December 31, 2005, this requirement was currencies. It uses derivative contracts, primarily interest rate swaps, to
exceeded by approximately $8.9 billion. CGMHI also has substantial effectively convert a portion of its fixed rate debt to variable rate debt and
borrowing arrangements consisting of facilities that CGMHI has been advised variable rate debt to fixed rate debt. The maturity structure of the derivatives
are available, but where no contractual lending obligation exists. These generally corresponds to the maturity structure of the debt being hedged.
arrangements are reviewed on an ongoing basis to ensure flexibility in In addition, the Company uses other derivative contracts to manage the
meeting CGMHI’s short-term requirements. foreign exchange impact of certain debt issuances. At December 31, 2005,
the Company’s overall weighted average interest rate for long-term debt
was 4.36% on a contractual basis and 4.08% including the effects of derivative
contracts.

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Aggregate annual maturities of long-term debt obligations (based on final maturity dates) including trust preferred securities are as follows:
In millions of dollars 2006 2007 2008 2009 2010 Thereafter
Citigroup Parent Company $10,957 $ 9,610 $12,240 $ 7,721 $11,792 $48,280
Other Citigroup Subsidiaries 19,109 19,165 15,809 7,568 2,280 7,208
Citigroup Global Markets Holdings Inc. 8,273 5,359 5,767 6,032 5,446 8,337
Citigroup Funding Inc. 586 602 2,088 229 991 1,467
Other 250 165 77 11 — 80
Total $39,175 $34,901 $35,981 $21,561 $20,509 $65,372

Long-term debt at December 31, 2005 and December 31, 2004 includes subordinated debentures issued by the Citigroup subsidiaries and purchased
$6,459 million and $6,397 million, respectively, of junior subordinated debt. by the Trusts remain on Citigroup’s Consolidated Balance Sheet. In addition,
The Company formed statutory business trusts under the laws of the state of the related interest expense continues to be included in the Consolidated
Delaware, which exist for the exclusive purposes of (i) issuing Trust Securities Income Statement.
representing undivided beneficial interests in the assets of the Trust; (ii) For Regulatory Capital purposes, these Trust Securities remain a
investing the gross proceeds of the Trust securities in junior subordinated component of Tier 1 Capital. See “Capital Resources and Liquidity” on
deferrable interest debentures (subordinated debentures) of its parent; and page 100.
(iii) engaging in only those activities necessary or incidental thereto. Citigroup owns all of the voting securities of the subsidiary trusts. The
Upon approval from the Federal Reserve, Citigroup has the right to redeem subsidiary trusts have no assets, operations, revenues or cash flows other than
these securities. those related to the issuance, administration, and repayment of the subsidiary
In 2004, Citigroup adopted FIN 46-R, which resulted in the assets and trusts and the subsidiary trusts’ common securities. The subsidiary trusts’
liabilities, as well as the related income and expenses of the Trusts, being obligations are fully and unconditionally guaranteed by Citigroup.
excluded from Citigroup’s Consolidated Financial Statements. However, the

The following table summarizes the financial structure of each of the Company’s subsidiary trusts at December 31, 2005:
Junior subordinated debentures owned by trust
Common
Trust securities shares Redeemable
with distributions Issuance Securities Liquidation Coupon issued by issuer
guaranteed by: date issued value rate to parent Amount Maturity beginning
In millions of dollars, except share amounts

Citicorp Capital I (1) Dec. 1996 300,000 $ 300 7.933% 9,000 $ 309 Feb. 15, 2027 Feb. 15, 2007
Citicorp Capital II (1) Jan. 1997 450,000 450 8.015% 13,500 464 Feb. 15, 2027 Feb. 15, 2007
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 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
Citigroup Capital IX Feb. 2003 44,000,000 1,100 6.000% 1,360,825 1,134 Feb. 14, 2033 Feb. 13, 2008
Citigroup Capital X Sept. 2003 20,000,000 500 6.100% 618,557 515 Sept. 30, 2033 Sept. 30, 2008
Citigroup Capital XI Sept. 2004 24,000,000 600 6.000% 742,269 619 Sept. 27, 2034 Sept. 27, 2009
6 mo. LIB
Adam Capital Trust I (2) Nov. 2001 25,000 25 +375 bp. 774 26 Dec. 8, 2031 Dec. 8, 2006
3 mo. LIB
Adam Statutory Trust I (2) Dec. 2001 23,000 23 +360 bp. 712 24 Dec. 18, 2031 Dec. 18, 2006
6 mo. LIB
Adam Capital Trust II (2) Apr. 2002 22,000 22 +370 bp. 681 23 Apr. 22, 2032 Apr. 22, 2007
3 mo. LIB
Adam Statutory Trust II (2) Mar. 2002 25,000 25 +360 bp. 774 26 Mar. 26, 2032 Mar. 26, 2007
3 mo. LIB
Adam Capital Trust III (2) Dec. 2002 17,500 18 +335 bp. 542 18 Jan. 7, 2033 Jan. 7, 2008
3 mo. LIB
Adam Statutory Trust III (2) Dec. 2002 25,000 25 +325 bp. 774 26 Dec. 26, 2032 Dec. 26, 2007
3 mo. LIB
Adam Statutory Trust IV (2) Sept. 2003 40,000 40 +295 bp. 1,238 41 Sept. 17, 2033 Sept. 17, 2008
3 mo. LIB
Adam Statutory Trust V (2) Mar. 2004 35,000 35 +279 bp. 1,083 36 Mar. 17, 2034 Mar. 17, 2009
Total obligated $6,313 $6,508
(1) Assumed by Citigroup via Citicorp’s merger with and into Citigroup on August 1, 2005.
(2) Assumed by Citigroup upon completion of First American Bank acquisition which closed on March 31, 2005.

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 In each case, the coupon rate on the debentures is the same as that on the Deferred income taxes at December 31 related to the following:
trust securities. Distributions on the trust securities and interest on the
In millions of dollars 2005 2004
debentures are payable quarterly, except for Citigroup Capital II and III and
Citicorp Capital I and II, on which distributions are payable semiannually. Deferred tax assets
Credit loss deduction $ 2,597 $ 2,893
Deferred compensation and employee benefits 1,163 942
16. INCOME TAXES Restructuring and settlement reserves 3,194 3,682
In millions of dollars 2005 2004 2003 Unremitted foreign earnings 2,635 1,618
Interest-related items 839 188
Current Foreign and state loss carryforwards 16 16
Federal $ 3,908 $ 3,879 $3,757 Other deferred tax assets 1,912 2,311
Foreign 4,507 3,005 2,792
State 844 739 481 Gross deferred tax assets $12,356 $ 11,650
Valuation allowance 16 16
Total current income taxes $ 9,259 $ 7,673 $7,030
Deferred tax assets after valuation allowance $12,340 $ 11,634
Deferred
Federal $ 40 $(1,307) $ 501 Deferred tax liabilities
Foreign (104) 397 232 Investments $ (1,294) $ (2,494)
State (117) (299) 75 Deferred policy acquisition costs and value
of insurance in force (700) (1,486)
Total deferred income taxes $ (181) $(1,209) $ 808 Leases (2,308) (2,705)
Provision for income tax Fixed assets (1,319) (1,001)
on continuing operations Intangibles (808) (908)
before minority interest (1) $ 9,078 $ 6,464 $7,838 Other deferred tax liabilities (2,349) (1,690)
Provision for income tax on Gross deferred tax liabilities $ (8,778) $(10,284)
discontinued operations 2,866 445 357
Provision (benefit) for income taxes on Net deferred tax asset $ 3,562 $ 1,350
cumulative effect of accounting change (31) — —
Income tax expense (benefit) reported in Foreign pretax earnings approximated $10.6 billion in 2005, $10.5 billion
stockholders’ equity related to:
in 2004, and $8.6 billion in 2003. As a U.S. corporation, Citigroup and its U.S.
Foreign currency translation 119 146 (327)
Securities available-for-sale (1,234) 48 456 subsidiaries are subject to U.S. taxation, currently, on all foreign pretax
Employee stock plans (463) (474) (363) earnings earned by a foreign branch. Pretax earnings of a foreign subsidiary
Cash flow hedges 194 (270) (154) or affiliate are subject to U.S. taxation when effectively repatriated. The
Minimum Pension Liability (69) — — Company provides income taxes on the undistributed earnings of non-U.S.
Income taxes before minority interest $10,460 $ 6,359 $7,807 subsidiaries except to the extent that such earnings are indefinitely invested
outside the United States. At December 31, 2005, $10.6 billion of accumulated
(1) Includes the effect of securities transactions resulting in a provision of $687 million in 2005,
$291 million in 2004, and $178 million in 2003. undistributed earnings of non-U.S. subsidiaries were indefinitely invested. At
the existing U.S. federal income tax rate, additional taxes (net of U.S. foreign
The reconciliation of the federal statutory income tax rate to the tax credits) of $2.9 billion would have to be provided if those earnings were
Company’s effective income tax rate applicable to income from continuing remitted currently. The current year’s effect on the income tax expense from
operations (before minority interest and the cumulative effect of accounting continuing operations is included in the reconciliation of the federal statutory
change) for the years ended December 31 was as follows: rate to the Company’s effective income tax rate.
2005 2004 2003 The Homeland Investment Act provision of the American Jobs Creation Act
Federal statutory rate 35.0% 35.0% 35.0%
of 2004 (“2004 Tax Act”) provided companies with a one time 85% reduction
State income taxes, net of federal benefits 1.6 1.4 1.4 in the U.S. net tax liability on cash dividends paid by foreign subsidiaries in
Foreign income tax rate differential (3.3) (4.5) (3.1) 2005 to the extent that they exceeded a baseline level of dividends paid in prior
Other, net (2.5) (3.5) (2.2) years. In accordance with FASB Staff Position FAS 109-2, “Accounting and
Effective income tax rate 30.8% 28.4% 31.1% Disclosure Guidance for the Foreign Earnings Repatriation Provision within
the American Jobs Creation Act of 2004,” the Company did not recognize any
income tax effects of the repatriation provisions of the Act in its 2004 financial
statements. In 2005, the Company recognized a tax benefit of $198 million in
continuing operations, net of the impact of remitting income earned in 2005
and prior years that would have been indefinitely invested overseas.
Income taxes are not provided for 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.
This “account” aggregated $982 million (subject to a tax of $344 million)
at December 31, 2004. The 2004 Tax Act provides that this “account” could

150
be reduced directly by distributions made by the life insurance subsidiaries There was no net change for 2005 in the valuation allowance related to
in 2005 and 2006. The Company made sufficient distributions in 2005 deferred tax assets. The valuation allowance of $16 million at December 31,
to eliminate this “account” and thus does not have a balance at 2005 relates to state tax loss carryforwards. Management believes that the
December 31, 2005. realization of the recognized net deferred tax asset (after valuation
Income taxes are not provided for the Company’s “savings bank base allowance) of $3,562 million is more likely than not based on existing
year bad debt reserves” that arose before 1988, because under current U.S. tax carryback ability and expectations as to future taxable income in the
rules such taxes will become payable only to the extent such amounts are jurisdictions in which it operates. The Company, which has a strong history
distributed in excess of limits prescribed by federal law. At December 31, 2005, of earnings, has reported pretax income from continuing operations in the
the amount of the base year reserves totaled approximately $358 million Consolidated Income Statement of approximately $26 billion, on average,
(subject to a tax of $125 million). over the last three years.

17. PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

Perpetual Preferred Stock

The following table sets forth the Company’s perpetual preferred stock outstanding at 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 2005 2004
Series F (3) 6.365% June 16, 2007 $250 1,600,000 $ 400 $ 400
Series G (3) 6.213% July 11, 2007 $250 800,000 200 200
Series H (3) 6.231% September 8, 2007 $250 800,000 200 200
Series M (3) 5.864% October 8, 2007 $250 800,000 200 200
Series V (4) Fixed/Adjustable February 15, 2006 $500 250,000 125 125
$1,125 $1,125

(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-tenth interest in a share of the corresponding series of preferred stock.

All dividends on the Company’s perpetual preferred stock are payable At December 31, 2005, regulatory capital as set forth in guidelines issued
quarterly and are cumulative. by the U.S. federal bank regulators is as follows:
On February 15, 2006, Citigroup redeemed for cash all outstanding shares Well
of its Fixed/Adjustable Rate Cumulative Preferred Stock, Series V. The Required capitalized Citibank,
In millions of dollars minimum minimum Citigroup N.A.
redemption price was $50.00 per depositary share, plus accrued dividends to
Tier 1 Capital $ 77,824 $44,733
the date of redemption.
Total Capital (1) 106,402 66,777
Regulatory Capital Tier 1 Capital Ratio 4.0% 6.0% 8.79% 8.41%
Total Capital Ratio (1) 8.0 10.0 12.02 12.55
Citigroup is subject to risk-based capital and leverage guidelines issued by
Leverage Ratio (2) 3.0 5.0(3) 5.35 6.45
the Board of Governors of the Federal Reserve System (FRB). Its U.S. insured
depository institution subsidiaries, including Citibank, N.A., are subject (1) Total Capital includes Tier 1 and Tier 2.
(2) Tier 1 Capital divided by adjusted average assets.
to similar guidelines issued by their respective primary federal bank (3) Applicable only to depository institutions. For bank holding companies to be “well capitalized” they must
maintain a minimum leverage ratio of 3%.
regulatory agencies. These guidelines are used to evaluate capital adequacy
and include the required minimums shown in the following table. Citigroup is a legal entity separate and distinct from Citibank, N.A. and its
The regulatory agencies are required by law to take specific prompt actions other subsidiaries and affiliates. There are various legal limitations on the
with respect to institutions that do not meet minimum capital standards. extent to which Citigroup’s banking subsidiaries may extend credit, pay
As of December 31, 2005 and 2004, all of Citigroup’s U.S. insured subsidiary dividends or otherwise supply funds to Citigroup and its nonbank subsidiaries.
depository institutions were “well capitalized.” 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.
As of December 31, 2005, Citigroup’s national and state-chartered bank
subsidiaries can declare dividends to their respective parent companies
without regulatory approval of approximately $13.6 billion. In determining
whether and to what extent to pay dividends, each bank subsidiary must also

151
consider the effect of dividend payments on applicable risk-based capital and As discussed in “Capital Resources” on page 100, the ability of CGMHI to
leverage ratio requirements, as well as policy statements of the federal declare dividends can be restricted by capital considerations of its
regulatory agencies that indicate that banking organizations should broker/dealer subsidiaries.
generally pay dividends out of current operating earnings. Consistent with
In millions of dollars
these considerations, Citigroup estimates that, as of December 31, 2005, its Excess over
bank subsidiaries can distribute dividends to Citigroup of approximately Net capital minimum
Subsidiary Jurisdiction or equivalent requirement
$12.2 billion of the available $13.6 billion.
Citigroup also receives dividends from its nonbank subsidiaries. These Citigroup Global U.S. Securities and
Markets Inc. Exchange Commission
nonbank subsidiaries are generally not subject to regulatory restrictions on Uniform Net Capital Rule
their payment of dividends, except that the approval of the Office of Thrift (Rule 15c3-1) $3,548 $2,857
Supervision (OTS) may be required if total dividends declared by a savings Citigroup Global United Kingdom’s Financial
association in any calendar year exceed amounts specified by that Markets Limited Services Authority $8,337 $2,517
agency’s regulations.

18. CHANGES IN EQUITY FROM NONOWNER SOURCES

Changes in each component of “Accumulated Other Changes in Equity from Nonowner Sources” for the three-year period ended December 31, 2005 are
as follows:
Accumulated other
Net unrealized gains Foreign currency Minimum changes in equity
on investment translation pension liability from nonowner
In millions of dollars securities adjustment Cash flow hedges adjustment sources

Balance, January 1, 2003 $ 1,957 $(3,392) $1,242 $ — $ (193)

Increase in net unrealized gains on investment securities, net of tax (1) 1,283 — — — 1,283
Less: Reclassification adjustment for gains included in net income,
net of tax (1) (332) — — — (332)
Foreign currency translation adjustment, net of tax (2) — (1,073) — — (1,073)
Cash flow hedges, net of tax — — (491) — (491)
Change $ 951 $(1,073) $ (491) $ — $ (613)
Balance, December 31, 2003 $ 2,908 $(4,465) $ 751 $ — $ (806)
Increase in net unrealized gains on investment securities, net of tax 265 — — — 265
Less: Reclassification adjustment for gains included in net income,
net of tax (540) — — — (540)
Foreign currency translation adjustment, net of tax (3) — 1,355 — — 1,355
Cash flow hedges, net of tax — — (578) — (578)
Change $ (275) $ 1,355 $ (578) $ — $ 502
Balance, December 31, 2004 $ 2,633 $(3,110) $ 173 $ — $ (304)
Decrease in net unrealized gains on investment securities, net of tax (4) (274) — — — (274)
Less: Reclassification adjustment for gains included in net income,
net of tax (1,275) — — — (1,275)
Foreign currency translation adjustment, net of tax (5) — (980) — — (980)
Cash flow hedges, net of tax — — 439 — 439
Minimum pension liability adjustment, net of tax (6) — — — (138) (138)
Current period change $(1,549) $ (980) $ 439 $(138) $(2,228)
Balance, December 31, 2005 $ 1,084 $(4,090) $ 612 $(138) $(2,532)

(1) Primarily reflects an increase in the investment portfolio due to incremental purchases and the impact of declining interest rates coupled with spread tightening, partially offset by realized gains resulting from the sale of
securities.
(2) Reflects, among other items, the decline in the Mexican peso against the U.S. dollar and changes in related tax effects.
(3) Reflects, among other items, the movements in the Japanese yen, euro, Korean won, Mexican peso, British pound, and the Polish zloty against the U.S. dollar and changes in related tax effects.
(4) Primarily due to realized gains, including $1.5 billion after-tax, resulting from the sale of the Life Insurance and Annuities business.
(5) Reflects, among other items, the movements in the Japanese yen, British pound, Bahamian dollar, and the Mexican peso against the U.S. dollar, and changes in related tax effects.
(6) Additional minimum liability, as required by SFAS No. 87, “Employers’ Accounting for Pensions” (SFAS 87), related to unfunded or book reserve plans, such as the U.S. nonqualified pension plans, and certain foreign
pension plans.

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19. EARNINGS PER SHARE 20. INCENTIVE PLANS
The following is a reconciliation of the income and share data used in the The Company has adopted a number of equity compensation plans under
basic and diluted earnings per share computations for the years ended which it administers stock options, restricted or deferred stock and stock
December 31: purchase programs. These plans are used to attract, retain and motivate
officers and employees, to compensate them for their contributions to the
In millions, except per share amounts 2005 2004 2003
Company, and to encourage employee stock ownership. All of the plans are
Income from continuing operations administered by the Personnel and Compensation Committee of the Citigroup
before cumulative effect
Board of Directors, which is composed entirely of independent non-employee
of accounting change $19,806 $16,054 $17,058
Discontinued operations 4,832 992 795 directors. At December 31, 2005, approximately 370 million shares were
Cumulative effect of accounting change (49) — — authorized for grant under Citigroup’s stock incentive plans.
Preferred dividends (68) (68) (71)
Stock Award Programs
Income available to common The Company, primarily through its Capital Accumulation Program (CAP),
stockholders for basic EPS $24,521 $16,978 $17,782
issues shares of Citigroup common stock in the form of restricted or deferred
Effect of dilutive securities — — —
Income available to common stock to participating officers and employees. For all stock award programs,
stockholders for diluted EPS $24,521 $16,978 $17,782 during the applicable vesting period, the shares awarded cannot be sold or
transferred by the participant, and the award is subject to cancellation if the
Weighted average common shares
outstanding applicable to basic EPS 5,067.6 5,107.2 5,093.3
participant’s employment is terminated. After the award vests, the shares
Effect of dilutive securities: become freely transferable (subject to the stock ownership commitment
Options 33.6 44.3 47.1 of senior executives). From the date of award, the recipient of a restricted
Restricted and deferred stock 59.2 55.9 52.3 stock award can direct the vote of the shares and receive regular dividends.
Convertible securities — — 0.9 Recipients of deferred stock awards receive dividend equivalents and
Adjusted weighted average common cannot vote.
shares outstanding applicable to Stock awards granted in January 2005 generally vest 25% per year over
diluted EPS 5,160.4 5,207.4 5,193.6
four years, except for certain employees at Smith Barney whose awards vest
Basic earnings per share after two years. Stock awards granted in 2003 and 2004 generally vest after a
Income from continuing operations before two- or three-year vesting period. CAP participants may elect to receive all or
cumulative effect of accounting change $ 3.90 $ 3.13 $ 3.34 part of their award in stock options. The figures presented in the stock option
Discontinued operations 0.95 0.19 0.15
Cumulative effect of accounting change (0.01) — —
program tables include options granted under CAP. Unearned compensation
expense associated with the stock awards represents the market value of
Net income $ 4.84 $ 3.32 $ 3.49 Citigroup common stock at the date of grant and is recognized as a charge to
Diluted earnings per share income ratably over the vesting period.
Income from continuing operations before In 2003, special equity awards were issued to certain employees in the
cumulative effect of accounting change $ 3.82 $ 3.07 $ 3.27 Corporate and Investment Banking, Global Wealth Management and
Discontinued operations 0.94 0.19 0.15
Citigroup International businesses. The awards vest over a three-year term
Cumulative effect of accounting change (0.01) — —
beginning on July 12, 2003, with one-sixth of the award vesting every six
Net income $ 4.75 $ 3.26 $ 3.42 months. During the vesting period, the stock cannot be sold or transferred by
the participant, and is subject to total or partial cancellation if the
During 2005, 2004 and 2003, weighted average options of 99.2 million participant’s employment is terminated.
shares, 98.4 million shares and 149.8 million shares with weighted average During 2005, 2004 and 2003, Citigroup granted restricted or deferred
exercise prices of $49.44 per share, $49.60 per share, and $46.08 per share, shares under the Citigroup Ownership Program (COP) to eligible employees.
respectively, were excluded from the computation of diluted EPS because the This program replaces the WealthBuilder, CitiBuilder, and Citigroup
options’ exercise prices were greater than the average market price of the Ownership stock option programs. Employees are issued either restricted or
Company’s common stock. deferred shares of Citigroup common stock that vest after three years.
Unearned compensation expense associated with the 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 stock awards is as follows:
2005 2004 2003
Shares awarded 57,902,680 38,662,598 57,559,301
Weighted average fair market
value per share $47.71 $38.65 $34.07
After-tax compensation cost charged to
earnings (in millions of dollars) $1,074 $ 922 $ 903

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Stock Option Programs merger of Citicorp and Travelers Group, Inc., generally vested at a rate of 20%
The Company has a number of stock option programs for its directors, officers per year over five years, with the first vesting date occurring 12 to 18 months
and employees. Generally, since January 2005, stock options have been following the grant date. Certain options, mostly granted prior to January 1,
granted only to CAP participants who elect to receive stock options in lieu of 2003, permit an employee exercising an option under certain conditions to be
restricted or deferred stock awards, and to non-employee directors who elect to granted new options (reload options) in an amount equal to the number of
receive their compensation in the form of a stock option grant. All stock common shares used to satisfy the exercise price and the withholding taxes
options are granted on Citigroup common stock with exercise prices equal to due upon exercise. The reload options are granted for the remaining term of
the fair market value at the time of grant. Options granted in 2005 have six- the related original option and vest after six months. An option may not be
year terms; directors’ options vest after two years and all other options granted exercised using the reload method unless the market price on the date of
since January 2005 typically vest 25% each year over four years. Options exercise is at least 20% greater than the option exercise price.
granted in 2004 and 2003 typically vest in thirds each year over three years, To further encourage employee stock ownership, the Company’s eligible
with the first vesting date occurring 17 months after the grant date. The employees participate in WealthBuilder, CitiBuilder, or the Citigroup
options granted in 2004 and 2003 have terms of six years. The sale of Ownership Program. Options granted under the WealthBuilder and the
underlying shares acquired through the exercise of employee stock options Citigroup Ownership programs vest over a five-year period, whereas options
granted since 2003 is restricted for a two-year period (and the shares are granted under the CitiBuilder program vest after five years. These options do
subject to stock ownership commitment of senior executives thereafter). Prior not have a reload feature. Options have not been granted under these
to 2003, Citigroup options, including options granted since the date of the programs since 2002.

Information with respect to stock option activity under Citigroup stock option plans for the years ended December 31, 2005, 2004 and 2003 is as follows:
2005 2004 2003
Weighted Weighted Weighted
average average average
exercise exercise exercise
Options price Options price Options price

Outstanding, beginning of year 330,910,779 $39.28 359,376,198 $37.07 380,274,611 $36.09

Granted-original 5,279,863 47.45 27,520,987 49.05 43,649,005 32.35
Granted-reload 3,013,384 48.85 12,725,607 49.99 13,956,702 44.21
Forfeited or exchanged (17,726,910) 44.29 (16,606,946) 43.27 (22,454,416) 40.27
Expired (2,572,189) 47.70 (1,635,927) 48.12 (5,545,698) 48.66
Exercised (41,648,992) 31.72 (50,469,140) 29.89 (50,504,006) 24.39
Outstanding, end of year 277,255,935 $40.27 330,910,779 $39.28 359,376,198 $37.07

Exercisable at year end 221,497,294 214,952,186 199,263,927

The following table summarizes the information about stock options outstanding under Citigroup stock options plans at December 31, 2005:
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

$ 7.77 – 9.99 270,358 .6 years $ 9.57 270,358 $ 9.57

$10.00 – 19.99 5,258,344 1.1 years 16.55 5,251,765 16.55
$20.00 – 29.99 37,348,315 2.4 years 22.75 37,178,661 22.74
$30.00 – 39.99 46,054,011 3.9 years 33.02 34,277,389 33.22
$40.00 – 49.99 175,936,477 4.6 years 45.82 132,174,760 45.70
$50.00 – 56.83 12,388,430 3.2 years 51.87 12,344,361 51.87
277,255,935 4.1 YEARS $40.27 221,497,294 $39.52

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Stock Purchase Program Fair Value Assumptions
The Citigroup 2003 Stock Purchase Program, which was administered under SFAS 123 requires that reload options be treated as separate grants from the
the Citigroup 2000 Stock Purchase Plan, as amended, allowed eligible related original grants. Pursuant to the terms of currently outstanding
employees of Citigroup to enter into fixed subscription agreements to reloadable options, upon exercise of an option, if employees use previously
purchase shares in the future at the lesser of the market price on the first day owned shares to pay the exercise price and surrender shares otherwise to be
of the offering period or at the market price at the end of the offering period. received for related tax withholding, they will receive a reload option covering
For the June 15, 2003 offering only, subject to certain limits, enrolled the same number of shares used for such purposes, but only if the market
employees were permitted to make one purchase prior to end of the offering price on the date of exercise is at least 20% greater than the option exercise
period. The purchase price of the shares was paid with accumulated payroll price. Reload options vest at the end of a six-month period and carry the same
deductions plus interest. Shares of Citigroup’s common stock delivered under expiration date as the option that gave rise to the reload grant. The exercise
the Citigroup 2003 Stock Purchase Program were sourced from treasury price of a reload grant is the market price on the date the underlying option
shares. Offerings under the Citigroup 2003 Stock Purchase Program were was exercised. Reload options are intended to encourage employees to
made in June 2003 and to new employees in June 2004. The program ended exercise options at an earlier date and to retain the shares acquired. The result
in July 2005. of this program is that employees generally will exercise options as soon as
The following are the share prices under the Stock Purchase Program: the they are able and, therefore, these options have shorter expected lives. Shorter
fixed price for the June 2003 offering was $44.10 and the fixed price for the option lives result in lower valuations. However, such values are expensed
June 2004 offering was $46.74. The market price at the end of the program more quickly due to the shorter vesting period of reload options. In addition,
was $46.50. The shares under the June 2003 offering were purchased at the since reload options are treated as separate grants, the existence of the reload
offering price ($44.10), which was the market price at the start of the offering feature results in a greater number of options being valued.
period. The shares under the June 2004 offering were purchased at the market Shares received through option exercises under the reload program, as
price at the closing of the program ($46.50). well as certain other options granted, are subject to restrictions on sale.
Discounts have been applied to the fair value of options granted to reflect
2005 2004 2003
these sale restrictions.
Outstanding subscribed shares Additional valuation and related assumption information for Citigroup
at beginning of year 7,112,678 8,336,245 —
option plans, including the Citigroup 2003 Stock Purchase Program, is
Subscriptions entered into — 495,144 8,784,380
Shares purchased (4,498,358) (365,591) (65) presented below. For 2005 and 2004, Citigroup utilized a binomial model to
Canceled or terminated (2,614,320) (1,353,120) (448,070) value stock options. For 2003 and prior grants, the Black-Scholes valuation
model was utilized.
Outstanding subscribed shares
at end of year — 7,112,678 8,336,245 For options granted during 2005 2004 2003
Weighted average fair value $7.23 $6.82 $6.92
Pro Forma Impact of SFAS 123 Weighted average expected life
Prior to January 1, 2003, Citigroup applied APB 25 in accounting for its stock- Original grants 5.26 yrs. 4.54 yrs. 3.45 yrs.
based compensation plans. Under APB 25, there is generally no charge to Reload grants 3.29 yrs. 3.28 yrs. 2 yrs.
Stock Purchase Program grants N/A 1.07 yrs. 2.1 yrs.
earnings for employee stock option awards because the options granted under
these plans have an exercise price equal to the market value of the underlying Valuation assumptions
Expected volatility 25.06% 25.98% 37.74%
common stock on the grant date. Alternatively, SFAS 123 allows companies to
Risk-free interest rate 3.66% 2.84% 2.00%
recognize compensation expense over the related service period based on the Expected annual dividends per share
grant date fair value of the stock award. Refer to Note 1 on page 122 for a For grants before July 14, 2003 $0.92
further description of these accounting standards and a presentation of the For grants on or after July 14, 2003 $1.54
effect on net income and earnings per share had the Company applied SFAS Expected dividend yield 3.35% 2.96%
Expected annual forfeitures
123 in accounting for all of the company’s stock options plans. The pro forma
Original and reload grants 7% 7% 7%
adjustments in that table related to stock option granted from 1995 through Stock Purchase Program grants N/A 10% 10%
2002, for which a fair value on the date of grant was determined using a
Black-Scholes option pricing model. In accordance with SFAS 123, 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.

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21. RETIREMENT BENEFITS benefits to certain eligible U.S. retired employees, as well as to certain eligible
The Company has several non-contributory defined benefit pension plans employees outside the United States.
covering substantially all U.S. employees and has various defined benefit The following tables summarize the components of net expense
pension and termination indemnity plans covering employees outside the recognized in the Consolidated Statement of Income and the funded status
United States. The U.S. qualified defined benefit plan provides benefits under and amounts recognized in the Consolidated Balance Sheet for the
a cash balance formula. Employees satisfying certain age and service Company’s U.S. qualified plan and significant plans outside the United States.
requirements remain covered by a prior final pay formula under that plan. The Company uses a December 31 measurement date for the U.S. plans as
The Company also offers postretirement health care and life insurance well as the plans outside the United States.

Net Expense
Postretirement
Pension plans benefit plans (2)

U.S. plans (1) Plans outside U.S. U.S. plans

In millions of dollars 2005 2004 2003 2005 2004 2003 2005 2004 2003
Benefits earned during the year $ 257 $ 241 $ 208 $ 163 $ 147 $ 118 $ 2 $ 2 $ 3
Interest cost on benefit obligation 599 581 548 261 222 190 63 66 72
Expected return on plan assets (806) (750) (700) (315) (251) (209) (14) (16) (18)
Amortization of unrecognized:
Net transition obligation — — — 2 3 5 — — —
Prior service cost (benefit) (24) (25) (25) 1 — — (4) (4) (4)
Net actuarial loss 161 105 24 69 60 48 13 8 8
Curtailment loss — — — 1 4 6 — — —
Net expense $ 187 $ 152 $ 55 $ 182 $ 185 $ 158 $ 60 $ 56 $ 61

(1) The U.S. plans exclude nonqualified pension plans, for which the net expense was $50 million in 2005, $44 million in 2004, and $46 million in 2003.
(2) For plans outside the U.S., net postretirement benefit expense was $13 million in 2005, $19 million in 2004, and $36 million in 2003.

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Prepaid Benefit Cost (Benefit Liability)
Postretirement
Pension plans benefit plans(2)

U.S. plans(1) Plans outside U.S. U.S. plans

In millions of dollars at year end 2005 2004 2005 2004 2005 2004
Change in projected benefit obligation
Projected benefit obligation at beginning of year $10,249 $ 9,032 $4,381 $3,513 $1,172 $1,184
Benefits earned during the year 257 241 163 147 2 2
Interest cost on benefit obligation 599 581 261 222 63 66
Plan amendments — — (2) 12 — —
Actuarial loss 372 845 229 381 14 16
Benefits paid (493) (455) (211) (200) (90) (96)
Acquisitions — 5 76 90 — —
Divestitures — — — (1) — —
Settlements — — (45) (14) — —
Curtailments — — 8 (4) — —
Foreign exchange impact — — (308) 235 — —
Projected benefit obligation at year end $10,984 $10,249 $4,552 $4,381 $1,161 $1,172

Change in plan assets

Plan assets at fair value at beginning of year $10,379 $ 9,427 $4,190 $3,237 $ 193 $ 210
Actual return on plan assets 916 986 678 357 18 22
Company contributions 179 418 379 524 58 57
Employee contributions — — 5 8 — —
Acquisitions — 3 75 59 — —
Divestitures — — — (1) — —
Settlements — — (46) (9) — —
Benefits paid (493) (455) (211) (200) (90) (96)
Foreign exchange impact — — (286) 215 — —
Plan assets at fair value at year end $10,981 $10,379 $4,784 $4,190 $ 179 $ 193

Reconciliation of prepaid (accrued) benefit cost and total amount recognized

Funded status of the plan $ (3) $ 130 $ 232 $ (191) $ (982) $ (979)
Unrecognized:
Net transition obligation — — 11 14 — —
Prior service cost (benefit) (109) (133) 11 17 (21) (26)
Net actuarial loss 2,613 2,512 799 1,102 191 195
Net amount recognized $ 2,501 $ 2,509 $1,053 $ 942 $ (812) $ (810)

Amounts recognized on the balance sheet consist of

Prepaid benefit cost $ 2,501 $ 2,509 $1,176 $ 901 $ — $ —
Accrued benefit liability — — (212) (58) (812) (810)
Intangible asset — — 21 99 — —
Other changes in equity from nonowner sources — — 68 — — —
Net amount recognized $ 2,501 $ 2,509 $1,053 $ 942 $ (812) $ (810)

Accumulated benefit obligation at year end $10,734 $10,026 $4,121 $3,924 $1,161 $1,172
(1) The U.S. plans exclude nonqualified pension plans, for which the aggregate projected benefit obligation was $671 million and $625 million, and the aggregate accumulated benefit obligation was $648 million and $599
million at December 31, 2005 and 2004, respectively. Accumulated other changes in equity from nonowner sources at December 31, 2005 include a pretax charge of $141 million related to an additional minimum
liability adjustment for U.S. nonqualified plans.
(2) For plans outside the U.S., the accumulated postretirement benefit obligation was $669 million and $536 million, and the fair value of plan assets was $633 million and $393 million at December 31, 2005 and 2004,
respectively. The accumulated postretirement benefit obligation exceeded plan assets for the plans outside the U.S. at December 31, 2005 and 2004.

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 At the end of 2005 and 2004 for both qualified and non-qualified plans, the aggregate fair value of plan assets for pension plans with a projected
and both funded and unfunded plans, the aggregate projected benefit benefit obligation in excess of plan assets, and pension plans with an
obligation (PBO), the aggregate accumulated benefit obligation (ABO), and accumulated benefit obligation in excess of plan assets, were as follows:

PBO exceeds fair value of plan assets ABO exceeds fair value of plan assets

U.S. plans Plans outside U.S. U.S. plans Plans outside U.S.

In millions of dollars at year end 2005 2004 2005 2004 2005 2004 2005 2004
Projected benefit obligation $11,655 $625 $1,613 $2,255 $671 $625 $691 $772
Accumulated benefit obligation 11,382 599 1,419 1,973 648 599 634 671
Fair value of plan assets 10,981 — 1,337 1,890 — — 493 494

Combined plan assets for the U.S. and non-U.S. pension plans, excluding
U.S. non-qualified plans, exceeded the accumulated benefit obligations by
$910 million and $619 million at December 31, 2005 and December 31,
2004, respectively.
Assumptions
The discount rate and future rate of compensation assumptions used in
determining pension and postretirement benefit obligations and net benefit
expense for the Company’s plans are shown in the following table:

At year end During the year

2005 2004 2005 2004

Discount rate
U.S. plans: (1)
Pension 5.6% 5.75% 5.75% 6.25%
Postretirement 5.5 5.5 5.5 6.25
Plans outside the U.S.
Range 2.0 to 12.0 2.0 to 10.0 2.0 to 10.0 2.0 to 10.0
Weighted average 7.0 5.3 5.3 5.4
Future compensation increase rate
U.S. Plans (1) (2) 4.0 4.0 4.0 4.0
Plans outside the U.S.
Range 2.0 to 9.0 1.5 to 9.0 1.5 to 9.0 1.5 to 8.0
Weighted average 4.2 2.9 2.9 2.6

(1) Weighted average rates for the U.S. plans equal the stated rates.
(2) Future compensation increase rate for small groups of grandfathered employees is 3.0% or 6.0%.

A one percentage-point change in the discount rates would have the following effects on pension expense:
One percentage-point increase One percentage-point decrease

In millions of dollars 2005 2004 2003 2005 2004 2003

Effect on pension expense for U.S. plans $(146) $(140) $(52) $146 $140 $120
Effect on pension expense for foreign plans (68) (260) (43) 83 306 53

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Assumed health care cost trend rates were as follows: Citigroup considers the expected rate of return to be a longer-term
assessment of return expectations, based on each plan’s expected asset
2005 2004
allocation, and does not anticipate changing this assumption annually
Health care cost increase rate unless there are significant changes in economic conditions. Market
U.S. plans
performance over a number of earlier years is evaluated covering a wide
Following year 10.0% 10.0%
Ultimate rate to which cost increase is assumed range of economic conditions to determine whether there are sound reasons
to decline 5.0% 5.0% for projecting forward any past trends.
Year in which the ultimate rate is reached 2011 2010 The expected long-term rates of return on assets used in determining the
Company’s pension expense and postretirement expense are shown below:
A one percentage-point change in assumed health care cost trend rates
2005 2004
would have the following effects:
One percentage- One percentage- Rate of return on assets
point increase point decrease U.S. plans (1) 8.0% 8.0%
In millions of dollars 2005 2004 2005 2004 Plans outside the U.S.:
Range 3.25 to 10.0 3.25 to 10.0
Effect on benefits earned and Weighted average 6.6 6.5
interest cost for U.S. plans $ 3 $ 2 $ (3) $ (2)
Effect on accumulated (1) Weighted average rates for the U.S. plans equal the stated rates.
postretirement benefit
obligation for U.S. plans 54 43 (48) (38)

A one percentage-point change in the expected rates of return would have the following effects on pension expense:
One percentage-point increase One percentage-point decrease

In millions of dollars 2005 2004 2003 2005 2004 2003

Effect on pension expense for U.S. plans $(101) $ (94) $(88) $101 $ 94 $88
Effect on pension expense for foreign plans (45) (118) (24) 45 118 24

Plan Assets
Citigroup’s pension and postretirement plan asset allocation for the U.S. plans at the end of 2005 and 2004, and the target allocation for 2006 by asset category
based on asset fair values are as follows:
Target asset U.S. pension assets U.S. postretirement
allocation at December 31 assets at December 31

Asset Category 2006 2005 2004 2005 2004

Equity securities 22.5 to 42.5% 45.0% 47.0% 45.0% 51.0%
Debt securities 17.5 to 42.5 27.0 29.0 26.0 21.0
Real estate 5.5 to 11.5 6.0 5.0 6.0 6.0
Other investments 18.5 to 42.5 22.0 19.0 23.0 22.0
Total 100% 100% 100% 100%

Equity securities in the U.S. pension plans include Citigroup common Affiliated and third-party investment managers and affiliated advisors
stock with a fair value of $122 million or 1.1% of plan assets and $123 million provide their respective services to Citigroup’s U.S. pension plans. Assets are
or 1.2% of plan assets at the end of 2005 and 2004, respectively. The Citigroup rebalanced as the Company deems appropriate. Citigroup’s investment
Pension Plan sold approximately $500 million of Citigroup common stock strategy with respect to its pension assets is to maintain a globally diversified
in 2004. investment portfolio across several asset classes targeting an annual rate of
return of 8% while ensuring that the accumulated benefit obligation is
fully funded.

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Citigroup’s pension and postretirement plans’ weighted average asset allocations for the non-U.S. plans and the actual ranges at the end of 2005 and 2004, and
the weighted average target allocations for 2006 by asset category based on asset fair values are as follows:
Non-U.S. pension assets Non-U.S. postretirement plans
Weighted Weighted
average Actual range Weighted average average Actual range Weighted average
Target asset Target asset
allocation At December 31 At December 31 allocation At December 31 At December 31
Asset Category 2006 2005 2004 2005 2004 2006 2005 2004 2005 (1) 2004 (1)

Equity securities 57.2% 0.0 to 80.4% 0.0 to 77.8% 57.3% 55.1% 50.0% 17.5 to 46.5% 17.5 to 49.3% 46.5% 49.3%
Debt securities 32.3 0.0 to 96.0 0.0 to 97.0 37.9 28.3 32.5 43.0 to 82.5 28.0 to 82.5 43.0 28.0
Real estate 0.2 0.0 to 21.2 0.0 to 18.4 3.0 0.3 — — — — —
Other investments 10.3 0.0 to 100 0.0 to 100 1.8 16.3 17.5 0.0 to 10.5 0.0 to 22.7 10.5 22.7
Total 100% 100% 100% 100% 100% 100%

(1) The weighted average asset allocation is affected by the assets of one plan only, as the assets in the other postretirement plans are insignificant and do not affect the weighting.

Citigroup’s global pension and postretirement funds’ investment strategies Estimated Future Benefit Payments
are to invest in a prudent manner for the exclusive purpose of providing The Company expects to pay the following estimated benefit payments in
benefits to participants. The investment strategies are targeted to produce a future years:
total return that, when combined with Citigroup’s contributions to the funds, U.S. plans Plans outside U.S.
will maintain the funds’ ability to meet all required benefit obligations. Risk Pension Pension Postretirement
In millions of dollars benefits benefits benefits
is controlled through diversification of asset types and investments in
domestic and international equities, fixed income securities and cash. The 2006 $ 591 $ 206 $ 26
target asset allocation in most locations is 50% equities and 50% debt 2007 617 202 27
2008 645 207 28
securities. These allocations may vary by geographic region and country
2009 675 218 29
depending on the nature of applicable obligations and various other regional 2010 707 232 30
considerations. The wide variation in the actual range of plan asset 2011 – 2015 4,086 1,388 178
allocations for the funded non-U.S. plans is a result of differing local
economic conditions. For example, in certain countries local law requires In December 2003, the Medicare Prescription Drug, Improvement and
that all pension plan assets must be invested in fixed income investments, or Modernization Act of 2003 (the “Act of 2003”) was enacted. The Act of 2003
in government funds, or in local country securities. established a prescription drug benefit under Medicare known as “Medicare
Part D,” and a federal subsidy to sponsors of U.S. retiree health care benefit
Contributions
plans that provide a benefit that is at least actuarially equivalent to Medicare
Citigroup’s pension funding policy for U.S. plans and non-U.S. plans is
Part D. The benefits provided to certain participants are at least actuarially
generally to fund to the amounts of accumulated benefit obligations, subject
equivalent to Medicare Part D and, accordingly, the Company is entitled
to applicable minimum funding requirements. For the U.S. plans, the
to a subsidy.
Company may increase its contributions above the minimum required
With respect to this, Citigroup adopted FSP FAS 106-2 retroactive to the
contribution under ERISA, if appropriate, to its tax and cash position and the
beginning of 2004. The expected subsidy reduced the accumulated
plan’s funded position. At December 31, 2005, there were no minimum
postretirement benefit obligation (APBO) by approximately $130 million and
required contributions, and no discretionary or non-cash contributions are
$100 million as of January 1, 2005 and 2004, respectively, and the 2005 and
currently planned. However, in 2005, the Company contributed $160 million
2004 postretirement expense by approximately $19 million and $11 million,
to the U.S. pension plan to avoid an additional minimum liability at year end.
respectively, for all of the postretirement welfare plans for 2005 and 2004.
For the non-U.S. plans, actual contributions increased by $206 million over
Additionally, as of December 31, 2005, an additional reduction in the plans’
previously estimated amounts, primarily to avoid an additional minimum
APBO of approximately $45 million was recognized to reflect the expected
liability, as well as to satisfy regulatory funding requirements in certain
impact of the final Medicare regulations issued during 2005.
countries. Discretionary contributions in 2006 are anticipated to be
approximately $116 million. For 2006 there are no expected or required
contributions for both the U.S. and non-U.S. postretirement benefit plans.
These estimates are subject to change, since contribution decisions are
affected by various factors, such as market performance and regulatory
requirements; in addition, management has the ability to change
funding policy.

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 The following table shows the estimated future benefit payments without the The following table summarizes certain information related to the
effect of the subsidy and the amounts of the expected subsidy in future years: Company’s hedging activities for the years ended December 31, 2005, 2004,
Expected U.S. postretirement and 2003:
benefit payments
In millions of dollars 2005 2004 2003
Before Medicare Medicare
In millions of dollars Part D subsidy Part D subsidy
Fair value hedges
2006 $112 $12 Hedge ineffectiveness recognized in earnings $ 38 $ (100) $ 96
2007 114 13 Net gain (loss) excluded from assessment
2008 114 13 of effectiveness (1) (32) 509 (90)
2009 113 14 Cash flow hedges
2010 111 14 Hedge ineffectiveness recognized in earnings (18) 10 (21)
2011 – 2015 507 68 Net gain excluded from assessment
of effectiveness (1) 1 8 10
Net investment hedges
Citigroup 401(k) Net gain (loss) included in foreign currency
Under the Citigroup 401(k) plan, eligible employees receive matching translation adjustment within
accumulated other changes in equity
contributions of up to 3% of their compensation, subject to an annual from nonowner sources 492 (1,159) (2,291)
maximum of $1,500, invested in the Citigroup common stock fund. The
pretax expense associated with this plan amounted to approximately $70 (1) Represents the portion of derivative gain (loss).

million in 2005, $69 million in 2004, and $65 million in 2003. For cash flow hedges, any changes in the fair value of the end-user
derivative remain in accumulated other changes in equity from nonowner
22. DERIVATIVES AND OTHER ACTIVITIES sources on the Consolidated Balance Sheet and are generally included in
Citigroup enters into derivative and foreign exchange futures, forwards, earnings of future periods when earnings are also affected by the variability of
options and swaps, to enable customers to transfer, modify or reduce their the hedged cash flow. The net gains associated with cash flow hedges expected
interest rate, foreign exchange and other market risks; it also trades these to be reclassified from accumulated other changes in equity from nonowner
products for its own account. In addition, Citigroup uses derivatives and other sources within 12 months of December 31, 2005 are $543 million.
instruments, primarily interest rate products, as an end-user in connection The accumulated other changes in equity from nonowner sources from
with its risk management activities. Derivatives are used to manage interest cash flow hedges for 2005, 2004, and 2003 can be summarized as follows
rate risk relating to specific groups of on-balance sheet assets and liabilities, (after-tax):
including investments, corporate and consumer loans, deposit liabilities,
long-term debt and other interest-sensitive assets and liabilities, as well as In millions of dollars 2005 2004 2003
credit card securitizations, redemptions and sales. In addition, foreign Beginning balance $ 173 $ 751 $1,242
exchange contracts are used to hedge non-U.S. dollar denominated debt, net Net gain (loss) from cash flow hedges 641 (251) 237
capital exposures and foreign exchange transactions. Net amounts reclassified to earnings (202) (327) (728)
A derivative must be highly effective in accomplishing the hedge objective Ending balance $ 612 $ 173 $ 751
of offsetting either changes in the fair value or cash flows of the hedged item
for the risk being hedged. Any ineffectiveness in the hedge relationship is The Company enters into various types of derivative transactions in the
recognized in current earnings. The assessment of effectiveness excludes course of its trading and non-trading activities. Futures and forward contracts
changes in the value of the hedged item that are unrelated to the risks being are commitments to buy or sell at a future date a financial instrument,
hedged. Similarly, the assessment of effectiveness may exclude changes in the commodity or currency at a contracted price and may be settled in cash or
fair value of a derivative related to time value that, if excluded, are recognized through delivery. Swap contracts are commitments to settle in cash at a future
in current earnings. 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 yet 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.

161
 Derivatives and short sales may expose Citigroup to market risk or credit The fair value represents management’s best estimates based on a range of
risk in excess of the amounts recorded on the Consolidated Balance Sheet. methodologies and assumptions. The carrying value of short-term financial
Market risk on a derivative, short sale or foreign exchange product is the instruments, as well as receivables and payables arising in the ordinary course
exposure created by potential fluctuations in interest rates, foreign exchange of business, approximates fair value because of the relatively short period of
rates and other values, and is a function of the type of product, the volume of time between their origination and expected realization. Quoted market
transactions, the tenor and terms of the agreement, and the underlying prices are used for most investments and for both trading and end-user
volatility. Credit risk is the exposure to loss in the event of nonperformance by derivatives, as well as for liabilities, such as long-term debt, with quoted
the other party to the transaction where the value of any collateral held is not prices. For performing loans, contractual cash flows are discounted at quoted
adequate to cover such losses. The recognition in earnings of unrealized gains secondary market rates or estimated market rates if available. Otherwise, sales
on these transactions is subject to management’s assessment as to of comparable loan portfolios or current market origination rates for loans
collectibility. Liquidity risk is the potential exposure that arises when the size with similar terms and risk characteristics are used. For loans with doubt as to
of the derivative position may not be able to be rapidly adjusted in periods of collectibility, expected cash flows are discounted using an appropriate rate
high volatility and financial stress at a reasonable cost. considering the time of collection and the premium for the uncertainty of the
flows. The value of collateral is also considered. For liabilities such as long-
23. CONCENTRATIONS OF CREDIT RISK term debt without quoted market prices, market borrowing rates of interest
Concentrations of credit risk exist when changes in economic, industry or are used to discount contractual cash flows.
geographic factors similarly affect groups of counterparties whose aggregate 2005 2004(1)
credit exposure is material in relation to Citigroup’s total credit exposure. Carrying Estimated Carrying Estimated
In billions of dollars at year end value fair value value fair value
Although Citigroup’s portfolio of financial instruments is broadly diversified
along industry, product, and geographic lines, material transactions are Assets
completed with other financial institutions, particularly in the securities Investments $180.6 $180.6 $213.2 $213.2
trading, derivatives, and foreign exchange businesses. Federal funds sold and
securities borrowed or
In connection with the Company’s efforts to maintain a diversified purchased under
portfolio, the Company limits its exposure to any one geographic region, agreements to resell 217.5 217.5 200.7 200.7
country or individual creditor and monitors this exposure on a continuous Trading account assets 295.8 295.8 280.2 280.2
basis. At December 31, 2005, Citigroup’s most significant concentration of Loans (2) 563.7 583.0 525.5 549.5
credit risk was with the U.S. government and its agencies. The Company’s Other financial assets (3) 137.1 137.1 162.9 163.0
exposure, which primarily results from trading assets and investments issued Liabilities
by the U.S. government and its agencies, amounted to $78.0 billion and $88.1 Deposits $592.6 $592.2 $562.1 $561.9
billion at December 31, 2005 and 2004, respectively. After the U.S. Federal funds purchased and
securities loaned or sold under
government, the Company’s next largest exposure is to the Mexican
agreements to repurchase 242.4 242.4 209.6 209.6
government and its agencies, which are rated investment grade by both Trading account liabilities 121.1 121.1 135.5 135.5
Moody’s and S&P. The Company’s exposure amounted to $20.7 billion and Long-term debt (4) 217.5 218.9 207.9 209.5
$23.8 billion at December 31, 2005 and 2004, respectively, and is composed of Other financial liabilities (5) 166.5 166.5 196.6 196.7
investment securities, loans, and trading assets. (1) Reclassified to conform to the current period’s presentation.
(2) The carrying value of loans is net of the allowance for loan losses and also excludes $10.0 billion and
$12.0 billion of lease finance receivables in 2005 and 2004, respectively.
24. FAIR VALUE OF FINANCIAL INSTRUMENTS (3) Includes cash and due from banks, deposits at interest with banks, brokerage receivables, reinsurance
recoverable and separate and variable accounts for which the carrying value is a reasonable estimate of
Estimated Fair Value of Financial Instruments fair value, and the carrying value and estimated fair value of financial instruments included in other
assets on the Consolidated Balance Sheet.
The table in the following column presents the carrying value and fair value (4) Trust preferred securities were deconsolidated during the 2004 first quarter in accordance with FIN 46-
R with the resulting liabilities to the trust companies included as a component of long-term debt. At
of Citigroup’s financial instruments. The disclosure excludes leases, affiliate December 31, 2005 and 2004, the carrying value was $6.5 billion and $6.1 billion, respectively, and
the fair value was $6.3 billion and $6.4 billion, respectively. See Note 15 to the Consolidated Financial
investments, pension and benefit obligations, and insurance policy claim Statements on page 148.
reserves. In addition, contractholder fund amounts exclude certain insurance (5) Includes brokerage payables, separate and variable accounts, investment banking, short-term
borrowings, and contractholder funds with and without defined maturities for 2004 only (due to the Sale
contracts. Also as required, the disclosure excludes the effect of taxes, any of the Life Insurance and Annuities Business in 2005), for which the carrying value is a reasonable
estimate of fair value, and the carrying value and estimated fair value of financial instruments included
premium or discount that could result from offering for sale at one time the in other liabilities on the Consolidated Balance Sheet.
entire holdings of a particular instrument, excess fair value associated with
deposits with no fixed maturity and other expenses that would be incurred in Fair values vary from period to period based on changes in a wide range of
a market transaction. In addition, the table excludes the values of factors, including interest rates, credit quality, and market perceptions of
nonfinancial assets and liabilities, as well as a wide range of franchise, value, and as existing assets and liabilities run off and new transactions are
relationship, and intangible values, which are integral to a full assessment of entered into.
Citigroup’s financial position and the value of its net assets. 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 the carrying values (reduced by
the allowance for loan losses) by $19.3 billion in 2005 and $24.0 billion in

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2004. Within these totals, estimated fair values exceeded carrying values for Lease Commitments
consumer loans net of the allowance by $11.8 billion, a decrease of $4.7 Rental expense (principally for offices and computer equipment) was $1.8
billion from 2004, and an increase for corporate loans net of the allowance by billion, $1.7 billion, and $1.7 billion for the years ended December 31, 2005,
$7.5 billion, which was consistent from 2004. The excess of the estimated fair 2004, and 2003, respectively.
value of loans over their carrying value reflects the decline in market interest Future minimum annual rentals under noncancelable leases, net of
rates since many of the loans were issued. sublease income, are as follows:
In millions of dollars
25. PLEDGED ASSETS, COLLATERAL,
COMMITMENTS AND GUARANTEES 2006 $ 2,301
2007 1,664
Pledged Assets 2008 987
At December 31, 2005 and 2004, the approximate market value of securities 2009 872
sold under agreements to repurchase and other assets pledged, excluding the 2010 750
Thereafter 4,074
impact of FIN 39 and FIN 41, were as follows:
Total $10,648
In millions of dollars 2005 2004
For securities sold under agreements to repurchase $322,188 $278,448
As collateral for securities borrowed for approximately Loan Commitments
equivalent value 45,671 69,947
In millions of dollars at year end 2005 2004(1)
As collateral on bank loans 51,841 41,567
To clearing organizations or segregated under One- to four-family residential mortgages $ 3,343 $ 4,559
securities laws and regulations 31,649 34,549 Revolving open-end loans secured by one- to four-family
For securities loaned 49,666 39,606 residential properties 25,089 15,705
Other 38,219 48,410 Commercial real estate, construction and land development 2,283 2,084
Credit card lines (2) 859,504 776,281
Total $539,234 $512,527
Commercial and other consumer loan commitments (1)(3) 346,444 274,237

In addition, included in cash and due from banks at December 31, 2005 Total $1,236,663 $1,072,866
and 2004 is $5.1 billion and $4.1 billion, respectively, of cash segregated (1) Reclassified to conform to the current period’s presentation. Amounts reflect the inclusion of short-term
under federal and other brokerage regulations or deposited with syndication and bridge loan commitments.
(2) Credit card lines are unconditionally cancelable by the issuer.
clearing organizations. (3) Includes commercial commitments to make or purchase loans, to purchase third party receivables, and
to provide note issuance or revolving underwriting facilities. Amounts include $179 billion and $141
At December 31, 2005 and 2004, $17.4 billion and $10.7 billion, billion with original maturity of less than one year at December 31, 2005 and 2004, respectively.
respectively, of consumer loans were pledged as collateral in
financing transactions. The majority of unused commitments are contingent upon customers
At December 31, 2005 and 2004, the Company had $2.3 billion and maintaining specific credit standards. Commercial commitments generally
$1.6 billion, respectively, of outstanding letters of credit from third-party have floating interest rates and fixed expiration dates and may require
banks to satisfy various collateral and margin requirements. 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
Collateral is deemed remote, amortized over the commitment period. The table does not
At December 31, 2005 and 2004, the approximate market value of collateral include unfunded commercial letters of credit issued on behalf of customers
received by the Company that may be sold or repledged by the Company, and collateralized by the underlying shipment of goods that totaled $5.8
excluding amounts netted in accordance with FIN 39 and FIN 41, was $409.1 billion at December 31, 2005 and 2004.
billion and $366.4 billion, respectively. This collateral was received in
connection with resale agreements, securities borrowings and loans, Obligations under Guarantees
derivative transactions and margined broker loans. The Company provides a variety of guarantees and indemnifications to
At December 31, 2005 and 2004, a substantial portion of the collateral Citigroup customers to enhance their credit standing and enable them to
received by the Company has been sold or repledged in connection with complete a wide variety of business transactions. The following table
repurchase agreements; securities sold, not yet purchased; securities summarizes at December 31, 2005 and 2004 all of the Company’s guarantees
borrowings and loans; pledges to clearing organizations; segregation and indemnifications, where management believes the guarantees and
requirements under securities laws and regulations; derivative transactions; indemnifications are related to an asset, liability, or equity security of the
and bank loans. guaranteed parties at the inception of the contract. The maximum potential
In addition, at December 31, 2005 and 2004, the Company had pledged amount of future payments represents the notional amounts that could be
$295 billion and $121 billion, respectively, of collateral that may not be sold lost under the guarantees and indemnifications if there were a total default by
or repledged by the secured parties. the guaranteed parties, without consideration of possible recoveries under
recourse provisions or from collateral held or pledged. Such amounts bear no
relationship to the anticipated losses on these guarantees and
indemnifications and greatly exceed anticipated losses.

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The following table presents information about the Company’s guarantees at December 31, 2005 and 2004:
Maximum potential amount of future payments

Expire within Expire after Total amount

In billions of dollars at December 31, except carrying value in millions 1 year 1 year outstanding Carrying value

2005:
Financial standby letters of credit $ 30.6 $ 21.8 $ 52.4 $ 175.2
Performance guarantees 10.0 3.9 13.9 18.2
Derivative instruments 24.5 217.0 241.5 11,837.4
Guarantees of collection of contractual cash flows (1) — 0.1 0.1 —
Loans sold with recourse — 1.3 1.3 58.4
Securities lending indemnifications (1) 68.4 — 68.4 —
Credit card merchant processing (1) 28.1 — 28.1 —
Custody indemnifications (1) — 27.0 27.0 —
Total $161.6 $271.1 $432.7 $12,089.2

2004:
Financial standby letters of credit $ 34.4 $ 11.4 $ 45.8 $ 199.4
Performance guarantees 5.0 4.1 9.1 16.4
Derivative instruments 23.8 291.3 315.1 15,129.0
Guarantees of collection of contractual cash flows (1) — 0.2 0.2 —
Loans sold with recourse — 1.2 1.2 42.6
Securities lending indemnifications (1) 60.5 — 60.5 —
Credit card merchant processing (1) 29.7 — 29.7 —
Custody indemnifications (1) — 18.8 18.8 —
Total $153.4 $327.0 $480.4 $15,387.4
(1) The carrying values of guarantees of collection of contractual cash flows, securities lending indemnifications, credit card merchant processing, and custody indemnifications are not material as the Company has
determined that the amount and probability of potential liabilities arising from these guarantees are not significant and the carrying amount of the Company’s obligations under these guarantees is immaterial.

Financial standby letters of credit include guarantees of payment of At December 31, 2005 and 2004, the Company’s maximum potential
insurance premiums and reinsurance risks that support industrial revenue amount of future payments under these guarantees was approximately
bond underwriting and settlement of payment obligations to clearing houses, $433 billion and $480 billion, respectively. For this purpose, the maximum
and that support options and purchases of securities or in lieu of escrow potential amount of future payments is considered to be the notional
deposit accounts. Financial standbys also backstop loans, credit facilities, amounts of letters of credit, guarantees, written credit default swaps, written
promissory notes and trade acceptances. Performance guarantees and letters total return swaps, indemnifications, and recourse provisions of loans sold
of credit are issued to guarantee a customer’s tender bid on a construction or with recourse, and the fair values of foreign exchange options and other
systems installation project or to guarantee completion of such projects in written put options, warrants, caps and floors.
accordance with contract terms. They are also issued to support a customer’s Citigroup’s primary credit card business is the issuance of credit cards to
obligation to supply specified products, commodities, or maintenance or individuals. In addition, the Company provides transaction processing
warranty services to a third party. services to various merchants with respect to bankcard and private label cards.
Derivative instruments include credit default swaps, total return swaps, In the third quarter of 2005, the Company entered into a partnership under
written foreign exchange options, written put options, and written equity which a third-party processes bankcard transactions. As a result, in the event
warrants. Guarantees of collection of contractual cash flows protect investors of a billing dispute with respect to a bankcard transaction between a
in credit card receivables securitization trusts from loss of interest relating to merchant and a cardholder, that is ultimately resolved in the cardholder’s
insufficient collections on the underlying receivables in the trusts. Loans sold favor, the third party holds the primary contingent liability to credit or refund
with recourse represent the Company’s obligations to reimburse the buyers for the amount to the cardholder and charge back the transaction to the
loan losses under certain circumstances. Securities lending indemnifications merchant. If the third party is unable to collect this amount from the
are issued to guarantee that a securities lending customer will be made whole merchant, it bears the loss for the amount of the credit or refund paid to
in the event that the security borrower does not return the security subject to the cardholder.
the lending agreement and collateral held is insufficient to cover the market
value of the security. Credit card merchant processing guarantees represent
the Company’s indirect obligations in connection with the processing of
private label and bankcard transactions on behalf of merchants. Custody
indemnifications are issued to guarantee that custody clients will be made
whole in the event that a third-party subcustodian fails to safeguard
clients’ assets.

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 The Company continues to have the primary contingent liability with In the normal course of business, the Company provides standard
respect to its portfolio of private label merchants. The risk of loss is mitigated representations and warranties to counterparties in contracts in connection
as the cash flows between the third party or the Company and the merchant with numerous transactions and also provides indemnifications that protect
are settled on a net basis and the third party or the Company has the right to the counterparties to the contracts in the event that additional taxes are owed
offset any payments with cash flows otherwise due to the merchant. To further due either to a change in the tax law or an adverse interpretation of the tax
mitigate this risk, the third party or the Company may require a merchant to law. Counterparties to these transactions provide the Company with
make an escrow deposit, delay settlement, or include event triggers to provide comparable indemnifications. While such representations, warranties and tax
the third party or the Company with more financial and operational control indemnifications are essential components of many contractual
in the event of the financial deterioration of the merchant, or require various relationships, they do not represent the underlying business purpose for the
credit enhancements (including letters of credit and bank guarantees). In the transactions. The indemnification clauses are often standard contractual
unlikely event that a private label merchant is unable to deliver products, terms related to the Company’s own performance under the terms of a
services or a refund to its private label cardholders, Citigroup is contingently contract and are entered into in the normal course of business based on an
liable to credit or refund cardholders. In addition, although a third party assessment that the risk of loss is remote. Often these clauses are intended to
holds the primary contingent liability with respect to the processing of ensure that terms of a contract are met at inception (for example, that loans
bankcard transactions, in the event that the third party does not have transferred to a counterparty in a sales transaction did in fact meet the
sufficient collateral from the merchant or sufficient financial resources of its conditions specified in the contract at the transfer date). No compensation is
own to provide the credit or refunds to the cardholders, Citigroup would be received for these standard representations and warranties, and it is not
liable to credit or refund the cardholders. possible to determine their fair value because they rarely, if ever, result in a
The Company’s maximum potential contingent liability related to both payment. In many cases, there are no stated or notional amounts included in
bankcard and private label merchant processing services is estimated to be the the indemnification clauses and the contingencies potentially triggering the
total volume of credit card transactions that meet the requirements to be valid obligation to indemnify have not occurred and are not expected to occur.
chargeback transactions at any given time. At December 31, 2005 and 2004, There are no amounts reflected on the Consolidated Balance Sheet as of
this maximum potential exposure was estimated to be $28 billion and $30 December 31, 2005 and December 31, 2004, related to these indemnifications
billion, respectively. and they are not included in the table above.
However, the Company believes that the maximum exposure is not In addition, the Company is a member of or shareholder in hundreds of
representative of the actual potential loss exposure, based on the Company’s value transfer networks (VTNs)(payment, clearing and settlement systems as
historical experience and its position as a secondary guarantor (in the case of well as securities exchanges) around the world. As a condition of
bankcards). In most cases, this contingent liability is unlikely to arise, as most membership, many of these VTNs require that members stand ready to
products and services are delivered when purchased and amounts are backstop the net effect on the VTNs of a member’s default on its obligations.
refunded when items are returned to merchants. The Company assesses the The Company’s potential obligations as a shareholder or member of VTN
probability and amount of its contingent liability related to merchant associations are excluded from the scope of FIN 45, since the shareholders
processing based on the financial strength of the primary guarantor (in the and members represent subordinated classes of investors in the VTNs.
case of bankcards) and the extent and nature of unresolved chargebacks and Accordingly, the Company’s participation in VTNs is not reported in the table
its historical loss experience. At December 31, 2005 and 2004, the estimated above and there are no amounts reflected on the Consolidated Balance Sheet
losses incurred and the carrying amounts of the Company’s contingent as of December 31, 2005 or 2004 for potential obligations that could arise
obligations related to merchant processing activities were immaterial. from the Company’s involvement with VTN associations.
In addition, the Company, through its credit card business, provides At December 31, 2005 and 2004, the carrying amounts of the liabilities
various cardholder protection programs on several of its card products, related to the guarantees and indemnifications included in the table above
including programs that provide insurance coverage for rental cars, coverage amounted to approximately $12 billion and $15 billion, respectively. The
for certain losses associated with purchased products, price protection for carrying value of derivative instruments is included in either trading
certain purchases and protection for lost luggage. These guarantees are not liabilities or other liabilities, depending upon whether the derivative was
included in the table above, since the total outstanding amount of the entered into for trading or non-trading purposes. The carrying value of
guarantees and the Company’s maximum exposure to loss cannot be financial and performance guarantees is included in other liabilities. The
quantified. The protection is limited to certain types of purchases and certain carrying value of the guarantees of contractual cash flows is offset against the
types of losses and it is not possible to quantify the purchases that would receivables from the credit card trusts. For loans sold with recourse, the
qualify for these benefits at any given time. Actual losses related to these carrying value of the liability is included in other liabilities. In addition, at
programs were not material during 2005 and 2004. The Company assesses the December 31, 2005 and 2004, other liabilities on the Consolidated Balance
probability and amount of its potential liability related to these programs Sheet include an allowance for credit losses of $850 million and $600 million,
based on the extent and nature of its historical loss experience. At December respectively, relating to letters of credit and unfunded lending commitments.
31, 2005, the estimated losses incurred and the carrying value of the
Company’s obligations related to these programs were immaterial.

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 In addition to the collateral available in respect of the credit card Financial Guarantees
merchant processing contingent liability discussed above, the Company has Financial guarantees are used in various transactions to enhance the credit
collateral available to reimburse potential losses on its other guarantees. Cash standing of Citigroup customers. They represent irrevocable assurances,
collateral available to the Company to reimburse losses realized under these subject to the satisfaction of certain conditions, that Citigroup will make
guarantees and indemnifications amounted to $55 billion and $43 billion at payment in the event that the customer fails to fulfill its obligations to
December 31, 2005 and 2004, respectively. Securities and other marketable third parties.
assets held as collateral amounted to $24 billion and $32 billion and letters of Citigroup issues financial standby letters of credit, which are obligations to
credit in favor of the Company held as collateral amounted to $681 million pay a third-party beneficiary when a customer fails to repay an outstanding
and $635 million at December 31, 2005 and 2004, respectively. Other property loan or debt instrument, such as assuring payments by a foreign reinsurer to
may also be available to the Company to cover losses under certain a U.S. insurer, to act as a substitute for an escrow account, to provide a
guarantees and indemnifications; however, the value of such property has payment mechanism for a customer’s third-party obligations, and to assure
not been determined. payment of specified financial obligations of a customer. Fees are recognized
In billions of dollars at year end 2005 2004 Form of credit enhancement ratably over the term of the standby letter of credit. The following table
Residential mortgages and other
summarizes financial standby letters of credit issued by Citigroup. The table
loans sold with recourse (1) $ 9.0 $ 6.0 2005: Recourse does not include securities lending indemnifications issued to customers,
obligation of $1.3 which are fully collateralized and totaled $68.4 billion at December 31, 2005
2004: Recourse and $60.5 billion at December 31, 2004, and performance standby letters
obligation of $1.2 of credit.
GNMA sales/servicing
2005 2004
agreements (2) 29.1 34.2 Secondary recourse
obligation Expire within Expire after Total amount Total amount
In billions of dollars at year end 1 year 1 year outstanding outstanding
Securitized credit card receivables $92.3 $82.3 Includes net revenue over
Insurance, surety $ 2.9 $ 8.9 $11.8 $12.3
the life of the transaction.
Options, purchased securities,
Also includes other
and escrow — — — 0.1
recourse obligations of
Clean letters of credit 5.3 3.7 9.0 6.4
$7.3 in 2005 and
Other debt related 20.8 7.6 28.4 21.0
$5.1 in 2004
Total (1) $29.0 $20.2 $49.2 $39.8
(1) Residential mortgages represent 25% in 2005 and 47% of amounts in 2004.
(2) Government National Mortgage Association sales/servicing agreements covering securitized
residential mortgages. (1) Total is net of cash collateral of $3.2 billion in 2005 and $6.0 billion in 2004. Collateral other than cash
covered 14% of the total in 2005 and 18% in 2004.

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 $114 million at December 31,
2005 and $156 million at December 31, 2004. Net revenue from securitized
credit card receivables included in other revenue was $4.8 billion, $3.8
billion, and $3.3 billion for the years ended December 31, 2005, 2004, and
2003, respectively.

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26. CONTINGENCIES Merger of Bank Holding Companies
As described in the “Legal Proceedings” discussion on page 181, the Company On August 1, 2005, Citigroup merged its two intermediate bank holding
is a defendant in numerous lawsuits and other legal proceedings arising out companies, Citigroup Holdings Company and Citicorp, into Citigroup Inc.
of alleged misconduct in connection with: Coinciding with this merger, Citigroup assumed all existing indebtedness and
(i) underwritings for, and research coverage of, WorldCom; outstanding guarantees of Citicorp.
(ii) underwritings for Enron and other transactions and activities related During the 2005 second quarter, Citigroup consolidated its capital markets
to Enron; funding activities into two legal entities:
(iii) transactions and activities related to research coverage of companies (i) Citigroup Inc., which issues long-term debt, trust preferred securities,
other than WorldCom; and preferred and common stock, and
(iv) transactions and activities related to the IPO Securities Litigation. (ii) Citigroup Funding Inc. (CFI), a newly formed first-tier subsidiary of
Citigroup, which issues commercial paper and medium-term notes,
During the 2004 second quarter, in connection with the settlement of the
all of which is guaranteed by Citigroup.
WorldCom class action, the Company reevaluated and increased its reserves
As part of the funding consolidation, Citigroup unconditionally
for these matters. The Company recorded a charge of $7.915 billion ($4.95
guaranteed Citigroup Global Markets Holdings Inc.’s (CGMHI) outstanding
billion after-tax) relating to (i) the settlement of class action litigation
SEC-registered indebtedness. CGMHI no longer files periodic reports with the
brought on behalf of purchasers of WorldCom securities, and (ii) an increase
SEC and continues to be rated on the basis of a guarantee of its financial
in litigation reserves for the other matters described above. Subject to the
obligations from Citigroup.
terms of the WorldCom class action settlement, and its eventual approval by
The condensed financial statements on pages 168 to 175 include the
the courts, the Company will make a payment of $2.57 billion pretax to the
financial results of the following Citigroup entities:
WorldCom settlement class. In addition, subject to the terms of the Enron
class action settlement, and its eventual approval by the courts, the Company Citigroup Parent Company
will make a payment of $2.01 billion pretax to the Enron settlement class. The holding company, Citigroup Inc.
During the fourth quarter of 2005, in connection with an evaluation of these
Citigroup Global Markets Holdings Inc. (CGMHI)
matters and as a result of the favorable resolution of certain
Citigroup has issued a full and unconditional guarantee for all of the
WorldCom/Research litigation matters, the Company reevaluated its reserves
outstanding SEC-registered indebtedness of CGMHI.
for these matters and released $600 million ($375 million after-tax) from this
reserve. As of December 31, 2005, the Company’s litigation reserve for these Citigroup Funding Inc. (CFI)
matters, net of settlement amounts previously paid, the amounts to be paid CFI is a newly formed first-tier subsidiary of Citigroup, which issues
upon final approval of the WorldCom and Enron class action settlements and commercial paper and medium-term notes. Citigroup has issued a full and
other settlements arising out of the matters above not yet paid, and the $600 unconditional guarantee for all of the commercial paper and SEC-registered
million release that was recorded during the 2005 fourth quarter was indebtedness issued by CFI.
approximately $3.3 billion.
CitiFinancial Credit Company (CCC)
The Company believes that this reserve is adequate to meet all of its
An indirect wholly owned subsidiary of Citigroup. CCC is a wholly owned
remaining exposure for these matters. However, in view of the large number of
subsidiary of Associates. The operations of WMF were integrated into CCC.
these matters, the uncertainties of the timing and outcome of this type of
Citigroup has issued a full and unconditional guarantee of the outstanding
litigation, the novel issues presented, and the significant amounts involved, it
indebtedness of CCC.
is possible that the ultimate costs of these matters may exceed or be below the
reserve. The Company will continue to defend itself vigorously in these cases, Associates First Capital Corporation (Associates)
and seek to resolve them in the manner management believes is in the best A wholly owned subsidiary of Citigroup. Citigroup has issued a full and
interests of the Company. unconditional guarantee of the outstanding long-term debt securities and
In addition, in the ordinary course of business, Citigroup and its commercial paper of Associates and Associates Corporation of North America
subsidiaries are defendants or co-defendants or parties in various litigation (ACONA), a subsidiary of Associates. Associates is the immediate parent
and regulatory matters incidental to and typical of the businesses in which company of CCC.
they are engaged. In the opinion of the Company’s management, the
Other Citigroup Subsidiaries
ultimate resolution of these legal and regulatory proceedings would not be
Includes all other subsidiaries of Citigroup, intercompany eliminations, and
likely to have a material adverse effect on the consolidated financial
income/loss from discontinued operations.
condition of the Company but, if involving monetary liability, may be
material to the Company’s operating results for any particular period. Consolidating Adjustments
Includes Citigroup parent company elimination of distributed and
27. CONDENSED CONSOLIDATING undistributed income of subsidiaries, investment in subsidiaries and the
FINANCIAL STATEMENT SCHEDULES elimination of CCC, which is included in the Associates column.
These condensed consolidating financial statement schedules are presented
for purposes of additional analysis but should be considered in relation to the
audited consolidated financial statements of Citigroup taken as a whole.

167
Condensed Consolidating Statement of Income
Year ended December 31, 2005
Other
Citigroup
subsidiaries,
eliminations
and income
Citigroup from
parent discontinued Consolidating Citigroup
In millions of dollars company CGMHI CFI CCC Associates operations adjustments Consolidated

Revenues
Dividends from subsidiary banks and bank holding companies $28,220 $ — $ — $ — $ — $ — $(28,220) $ —
Loan interest, including fees — — — 7,882 8,932 38,256 (7,882) 47,188
Loan interest, including fees—intercompany 2,963 — 190 (77) 211 (3,364) 77 —
Other interest and dividends 323 16,382 — 156 188 11,940 (156) 28,833
Other interest and dividends—intercompany — 417 486 — 3 (906) — —
Commissions and fees — 8,287 — 29 82 8,774 (29) 17,143
Commissions and fees—intercompany — 234 — 7 4 (238) (7) —
Principal transactions 8 4,313 (25) — (7) 2,154 — 6,443
Principal transactions—intercompany 6 (2,208) 19 2 2 2,181 (2) —
Other income 1,085 3,158 30 682 607 15,831 (682) 20,711
Other income—intercompany 105 558 (33) (25) (18) (612) 25 —
Total revenues $32,710 $31,141 $667 $8,656 $10,004 $74,016 $(36,876) $120,318
Interest expense 4,691 12,602 515 355 828 18,040 (355) 36,676
Interest expense—intercompany — 986 155 2,176 2,514 (3,655) (2,176) —
Total revenues, net of interest expense $28,019 $17,553 $ (3) $6,125 $ 6,662 $59,631 $(34,345) $ 83,642
Provisions for credit losses and for benefits and claims $ — $ 27 $ — $2,048 $ 2,228 $ 6,791 $ (2,048) $ 9,046
Expenses
Compensation and benefits $ 108 $ 9,392 $ — $ 954 $ 1,102 $15,170 $ (954) $ 25,772
Compensation and benefits—intercompany — 1 — 131 132 (133) (131) —
Other expense 225 2,441 1 596 709 16,015 (596) 19,391
Other expense—intercompany 110 1,365 6 188 240 (1,721) (188) —
Total operating expenses $ 443 $13,199 $ 7 $1,869 $ 2,183 $29,331 $ (1,869) $ 45,163
Income from continuing operations before taxes,
minority interest, cumulative effect of accounting
change, and equity in undistributed income
of subsidiaries $27,576 $ 4,327 $ (10) $2,208 $ 2,251 $23,509 $(30,428) $ 29,433
Income taxes (benefits) (283) 1,441 (4) 837 842 7,082 (837) 9,078
Minority interest, net of taxes — — — — — 549 — 549
Equities in undistributed income of subsidiaries (3,258) — — — — — 3,258 —
Income from continuing operations before cumulative
effect of accounting change $24,601 $ 2,886 $ (6) $1,371 $ 1,409 $15,878 $(26,333) $ 19,806
Income from discontinued operations, net of taxes — 2,198 — — — 2,634 — 4,832
Cumulative effect of accounting change, net of taxes (12) — — — — (37) — (49)
Net income $24,589 $ 5,084 $ (6) $1,371 $ 1,409 $18,475 $(26,333) $ 24,589

168
Condensed Consolidating Statement of Income
Year ended December 31, 2004
Other
Citigroup
subsidiaries,
eliminations
and income
Citigroup from
parent discontinued Consolidating Citigroup
In millions of dollars company CGMHI CFI CCC Associates operations adjustments Consolidated

Revenues
Dividends from subsidiary banks and bank holding companies $ 7,503 $ — $ — $ — $ — $ — $ (7,503) $ —
Loan interest, including fees — — — 7,502 8,653 35,143 (7,502) 43,796
Loan interest, including fees—intercompany 2,223 — — (30) 85 (2,308) 30 —
Other interest and dividends 305 9,843 — 161 195 9,544 (161) 19,887
Other interest and dividends—intercompany — 165 — — 2 (167) — —
Commissions and fees — 7,704 — 29 79 8,198 (29) 15,981
Commissions and fees—intercompany — 241 — 1 1 (242) (1) —
Principal transactions — 1,649 — — 14 2,053 — 3,716
Principal transactions—intercompany (40) (802) — (5) (5) 847 5 —
Other income (169) 2,865 — 640 669 14,894 (640) 18,259
Other income—intercompany 140 612 — 9 18 (770) (9) —
Total revenues $ 9,962 $22,277 $ — $8,307 $9,711 $67,192 $(15,810) $101,639
Interest expense 2,022 6,162 — 309 878 12,942 (309) 22,004
Interest expense—intercompany — 204 — 1,916 1,553 (1,757) (1,916) —
Total revenues, net of interest expense $ 7,940 $15,911 $ — $6,082 $7,280 $56,007 $(13,585) $ 79,635
Provisions for credit losses and for benefits
and claims $ — $ (2) $ — $1,992 $2,195 $ 4,924 $ (1,992) $ 7,117
Expenses
Compensation and benefits $ 49 $ 8,546 $ — $1,061 $1,185 $13,154 $ (1,061) $ 22,934
Compensation and benefits—intercompany — (5) — (1) — 5 1 —
Other expense 621 8,913 — 695 825 16,489 (695) 26,848
Other expense—intercompany 155 1,057 — 188 209 (1,421) (188) —
Total operating expenses $ 825 $18,511 $ — $1,943 $2,219 $28,227 $ (1,943) $ 49,782
Income from continuing operations before taxes,
minority interest, and equity in undistributed
income of subsidiaries $ 7,115 $ (2,598) $ — $2,147 $2,866 $22,856 $ (9,650) $ 22,736
Income taxes (benefits) (290) (1,042) — 791 863 6,933 (791) 6,464
Minority interest, net of taxes — — — — — 218 — 218
Equities in undistributed income of subsidiaries 9,641 — — — — — (9,641) —
Income from continuing operations $17,046 $ (1,556) $ — $1,356 $2,003 $15,705 $(18,500) $ 16,054
Income from discontinued operations, net of taxes — 115 — — — 877 — 992
Net income $17,046 $ (1,441) $ — $1,356 $2,003 $16,582 $(18,500) $ 17,046

169
Condensed Consolidating Statement of Income
Year ended December 31, 2003
Other
Citigroup
subsidiaries,
eliminations
and income
Citigroup from
parent discontinued Consolidating Citigroup
In millions of dollars company CGMHI CFI CCC Associates operations adjustments Consolidated

Revenues
Dividends from subsidiary banks and bank holding companies $ 6,015 $ — $— $ — $ — $ — $ (6,015) $ —
Loan interest, including fees — — — 6,825 7,973 29,979 (6,825) 37,952
Loan interest, including fees—intercompany 1,693 — — 42 82 (1,775) (42) —
Other interest and dividends 273 7,805 — 161 230 8,254 (161) 16,562
Other interest and dividends—intercompany — 116 — — 3 (119) — —
Commissions and fees — 7,221 — 35 72 8,364 (35) 15,657
Commissions and fees—intercompany — 248 — 7 7 (255) (7) —
Principal transactions — 2,542 — — (8) 2,351 — 4,885
Principal transactions—intercompany — (655) — (7) (7) 662 7 —
Other income 105 2,353 — 617 743 10,521 (617) 13,722
Other income—intercompany 69 324 — 12 42 (435) (12) —
Total revenues $ 8,155 $19,954 $— $7,692 $9,137 $57,547 $(13,707) $88,778
Interest expense 1,459 5,522 — 233 1,138 9,065 (233) 17,184
Interest expense—intercompany — (463) — 2,115 1,188 (725) (2,115) —
Total revenues, net of interest expense $ 6,696 $14,895 $— $5,344 $6,811 $49,207 $(11,359) $71,594
Provisions for credit losses and for benefits and claims $ — $ 2 $— $1,915 $2,163 $ 6,759 $ (1,915) $ 8,924

Expenses
Compensation and benefits $ 135 $ 7,754 $— $ 904 $1,064 $11,766 $ (904) $20,719
Compensation and benefits—intercompany — (5) — (1) — 5 1 —
Other expense 177 2,343 — 718 1,007 13,254 (718) 16,781
Other expense—intercompany 445 506 — 143 169 (1,120) (143) —
Total operating expenses $ 757 $10,598 $— $1,764 $2,240 $23,905 $ (1,764) $37,500
Income from continuing operations before taxes,
minority interest, and equity in undistributed
income of subsidiaries $ 5,939 $ 4,295 $— $1,665 $2,408 $18,543 $ (7,680) $25,170
Income taxes (benefits) (33) 1,642 — 608 808 5,421 (608) 7,838
Minority interest, net of taxes — — — — — 274 — 274
Equities in undistributed income of subsidiaries 11,881 — — — — — (11,881) —
Income from continuing operations $17,853 $ 2,653 $— $1,057 $1,600 $12,848 $(18,953) $17,058
Income from discontinued operations, net of taxes — 240 — — — 555 — 795
Net income $17,853 $ 2,893 $— $1,057 $1,600 $13,403 $(18,953) $17,853

170
Condensed Consolidating Balance Sheet
Year ended December 31, 2005
Other
Citigroup
Citigroup subsidiaries
parent and Consolidating Citigroup
In millions of dollars company CGMHI CFI CCC Associates eliminations adjustments Consolidated

Assets
Cash and due from banks $ — $ 8,266 $ — $ 296 $ 421 $ 19,686 $ (296) $ 28,373
Cash and due from banks—intercompany 300 5,341 1 63 77 (5,719) (63) —
Federal funds sold and resale agreements — 204,371 — — — 13,093 — 217,464
Federal funds sold and resale agreements—intercompany — 5,870 — — — (5,870) — —
Trading account assets — 207,682 — 1 44 88,094 (1) 295,820
Trading account assets—intercompany — 2,350 — — 17 (2,367) — —
Investments 8,215 — — 2,801 3,548 168,834 (2,801) 180,597
Loans, net of unearned income — 1,120 — 75,330 84,147 498,236 (75,330) 583,503
Loans, net of unearned income—intercompany — — 18,057 5,443 7,976 (26,033) (5,443) —
Allowance for loan losses — (66) — (1,434) (1,589) (8,127) 1,434 (9,782)
Total loans, net $ — $ 1,054 $18,057 $79,339 $ 90,534 $464,076 $ (79,339) $ 573,721
Advances to subsidiaries 71,784 — — — — (71,784) — —
Investments in subsidiaries 132,214 — — — — — (132,214) —
Other assets 8,751 60,710 8 7,224 8,846 119,747 (7,224) 198,062
Other assets—intercompany — 4,122 32,872 261 388 (37,382) (261) —
Total assets $221,264 $499,766 $50,938 $89,985 $103,875 $750,408 $(222,199) $1,494,037

Liabilities and stockholders’ equity

Deposits $ — $ — $ — $ 1,075 $ 1,075 $591,520 $ (1,075) $ 592,595
Federal funds purchased and securities loaned or sold — 202,490 — — — 39,902 — 242,392
Federal funds purchased and securities loaned or
sold—intercompany — 2,132 — — — (2,132) — —
Trading account liabilities — 79,020 97 — — 41,991 — 121,108
Trading account liabilities—intercompany — 2,572 85 — — (2,657) — —
Short-term borrowings — 10,391 33,440 1,520 3,103 19,996 (1,520) 66,930
Short-term borrowings—intercompany — 29,181 11,209 7,626 10,461 (50,851) (7,626) —
Long-term debt 100,600 39,214 5,963 8,901 19,148 52,574 (8,901) 217,499
Long-term debt—intercompany — 17,671 — 55,878 59,000 (76,671) (55,878) —
Advances from subsidiaries — — — — — — — —
Other liabilities 4,436 89,774 31 1,930 1,661 45,074 (1,930) 140,976
Other liabilities—intercompany 3,691 5,778 42 1,028 566 (10,077) (1,028) —
Stockholders’ equity 112,537 21,543 71 12,027 8,861 101,739 (144,241) 112,537
Total liabilities and stockholders’ equity $221,264 $499,766 $50,938 $89,985 $103,875 $750,408 $(222,199) $1,494,037

171
Condensed Consolidating Balance Sheet
Year ended December 31, 2004(1)
Other
Citigroup
Citigroup subsidiaries
parent and Consolidating Citigroup
In millions of dollars company CGMHI CFI CCC Associates eliminations adjustments Consolidated

Assets
Cash and due from banks $ — $ 5,892 $— $ 332 $ 458 $ 17,206 $ (332) $ 23,556
Cash and due from banks—intercompany 28 3,651 — 99 106 (3,785) (99) —
Federal funds sold and resale agreements — 189,023 — — — 11,716 — 200,739
Federal funds sold and resale agreements—intercompany — 3,636 — — 20 (3,656) — —
Trading account assets — 178,987 — — 44 101,136 — 280,167
Trading account assets—intercompany — 2,312 — — — (2,312) — —
Investments 9,096 — — 2,929 3,636 200,511 (2,929) 213,243
Loans, net of unearned income — 10 — 70,632 80,757 468,062 (70,632) 548,829
Loans, net of unearned income—intercompany — — — 4,174 4,786 (4,786) (4,174) —
Allowance for loan losses — — — (1,188) (1,373) (9,896) 1,188 (11,269)
Total loans, net $ — $ 10 $— $73,618 $84,170 $453,380 $ (73,618) $ 537,560
Advances to subsidiaries 63,820 — — — — (63,820) — —
Investments in subsidiaries 124,060 — — — — — (124,060) —
Other assets 4,766 54,561 — 5,463 8,437 161,072 (5,463) 228,836
Other assets—intercompany — 2,530 — 245 300 (2,830) (245) —
Total assets $201,770 $440,602 $— $82,686 $97,171 $868,618 $(206,746) $1,484,101

Liabilities and stockholders’ equity

Deposits $ — $ 1 $— $ 1,094 $ 1,343 $560,737 $ (1,094) $ 562,081
Federal funds purchased and securities loaned or sold — 175,208 — 42 42 34,305 (42) 209,555
Federal funds purchased and securities loaned or
sold—intercompany — 2,248 — 2 2 (2,250) (2) —
Trading account liabilities — 82,143 — — — 53,344 — 135,487
Trading account liabilities—intercompany — 2,385 — 6 6 (2,391) (6) —
Short-term borrowings — 25,799 — 28 1,312 29,656 (28) 56,767
Short-term borrowings—intercompany — 171 — 10,619 2,627 (2,798) (10,619) —
Long-term debt 87,913 45,237 — 7,094 19,182 55,578 (7,094) 207,910
Long-term debt—intercompany — 14,070 — 50,168 62,919 (76,989) (50,168) —
Advances from subsidiaries — — — — — — — —
Other liabilities 1,557 67,080 — 2,006 1,875 132,498 (2,006) 203,010
Other liabilities—intercompany 3,009 9,103 — 868 375 (12,487) (868) —
Stockholders’ equity 109,291 17,157 — 10,759 7,488 99,415 (134,819) 109,291
Total liabilities and stockholders’ equity $201,770 $440,602 $— $82,686 $97,171 $868,618 $(206,746) $1,484,101

(1) Reclassified to conform to the current period’s presentation.

172
Condensed Consolidating Statements of Cash Flows
Year ended December 31, 2005
Other
Citigroup
Citigroup subsidiaries
parent and Consolidating Citigroup
In millions of dollars company CGMHI CFI CCC Associates eliminations adjustments Consolidated

Net cash provided by (used in) operating

activities of continuing operations $ 26,493 $(10,669) $ (98) $ 2,652 $ 3,039 $ 13,080 $(2,652) $ 31,845
Cash flows from investing activities
Change in loans $ — $ (59) $ — $(7,191) $ (6,877) $ (61,164) $ 7,191 $ (68,100)
Proceeds from sales of loans — — — — — 22,435 — 22,435
Purchases of investments (9,790) — — (8,515) (10,169) (183,064) 8,515 (203,023)
Proceeds from sales of investments 7,140 — — 7,201 7,679 67,784 (7,201) 82,603
Proceeds from maturities of investments 3,200 — — 1,368 2,516 91,797 (1,368) 97,513
Changes in investments and advances—intercompany (14,438) — (50,721) (1,549) (3,191) 68,350 1,549 —
Business acquisitions — (138) — — — (464) — (602)
Other investing activities — 1,969 — 3 1,105 7,675 (3) 10,749
Net cash (used in) provided by investing activities $(13,888) $ 1,772 $(50,721) $(8,683) $(8,937) $ 13,349 $ 8,683 $ (58,425)
Cash flows from financing activities
Dividends paid $ (9,188) $ — $ — $ — $ — $ — $ — $ (9,188)
Dividends paid—intercompany — (1,646) — — — 1,646 — —
Issuance of common stock 1,400 — — — — — — 1,400
Treasury stock acquired (12,794) — — — — — — (12,794)
Proceeds from issuance of long-term debt—third-party, net 7,355 (3,581) 6,097 1,830 (33) 6,650 (1,830) 16,488
Proceeds from issuance of long-term debt—intercompany, net — 4,585 — 4,547 (3,918) (667) (4,547) —
Change in deposits — — — (19) — 27,912 19 27,912
Net change in short-term borrowings and other investment
banking and brokerage borrowings—third-party — (15,407) 33,440 1,426 1,764 (9,634) (1,426) 10,163
Net change in short-term borrowings and other
advances—intercompany 1,590 29,010 11,208 (1,830) 8,016 (49,824) 1,830 —
Capital contributions from parent — — 75 — — (75) — —
Other financing activities (696) — — 5 3 (5) (5) (698)
Net cash (used in) provided by financing activities $(12,333) $12,961 $50,820 $ 5,959 $ 5,832 $ (23,997) $(5,959) $ 33,283
Effect of exchange rate changes on cash and
due from banks $ — $ — $ — $ — $ — $ (1,840) $ — $ (1,840)
Net cash used in discontinued operations $ — $ — $ — $ — $ — $ (46) $ — $ (46)
Net increase (decrease) in cash and due from banks $ 272 $ 4,064 $ 1 $ (72) $ (66) $ 546 $ 72 $ 4,817
Cash and due from banks at beginning of period 28 9,543 — 431 564 13,421 (431) 23,556
Cash and due from banks at end of period from
continuing operations $ 300 $ 13,607 $ 1 $ 359 $ 498 $ 13,967 $ (359) $ 28,373
Supplemental disclosure of cash flow information
Cash paid during the year for:
Income taxes $ (544) $ 977 $ — $ 763 $ 453 $ 7,735 $ (763) $ 8,621
Interest 4,095 12,889 608 1,157 550 13,939 (1,157) 32,081
Non-cash investing activities:
Transfers to repossessed assets $ — $ — $ — $ 1,044 $ 1,120 $ 148 $(1,044) $ 1,268

173
Condensed Consolidating Statements of Cash Flows
Year ended December 31, 2004
Other
Citigroup
Citigroup subsidiaries
parent and Consolidating Citigroup
In millions of dollars company CGMHI CFI CCC Associates eliminations adjustments Consolidated

Net cash provided by (used in) operating activities

of continuing operations $ 6,075 $(18,062) $— $ 3,193 $ 3,154 $ 6,557 $ (3,193) $ (2,276)
Cash flows from investing activities
Change in loans $ — $ (233) $— $ (9,947) $(13,276) $ (54,942) $ 9,947 $ (68,451)
Proceeds from sales of loans — — — — — 15,121 — 15,121
Purchases of investments (17,092) — — (422) (4,432) (174,379) 422 (195,903)
Proceeds from sales of investments 10,161 — — 563 3,086 99,223 (563) 112,470
Proceeds from maturities of investments 5,830 — — 135 1,694 55,794 (135) 63,318
Changes in investments and advances—intercompany (13,687) — — (51) (673) 14,360 51 —
Business acquisitions — (590) — (1,250) — (3,087) 1,250 (3,677)
Other investing activities — (420) — (69) 188 (1,877) 69 (2,109)
Net cash used in investing activities $(14,788) $ (1,243) $— $(11,041) $(13,413) $ (49,787) $11,041 $ (79,231)
Cash flows from financing activities
Dividends paid $ (8,375) $ — $— $ — $ — $ — $ — $ (8,375)
Dividends paid—intercompany — (1,292) — — — 1,292 — —
Issuance of common stock 912 — — — — — — 912
Treasury stock acquired (779) — — — — — — (779)
Proceeds from issuance of long-term debt—third-party, net 16,616 8,373 — 1,742 1,522 (433) (1,742) 26,078
Proceeds from issuance of long-term debt—intercompany, net — 5,948 — 5,887 7,208 (13,156) (5,887) —
Change in deposits — — — 84 — 65,818 (84) 65,818
Net change in short-term borrowings and other investment
banking and brokerage borrowings—third-party (381) 3,357 — (46) (370) (6,969) 46 (4,363)
Net change in short-term borrowings and other
advances—intercompany 1,219 (31) — 145 1,808 (2,996) (145) —
Capital contributions from parent — 4,100 — — — (4,100) — —
Other financing activities (511) — — 9 — 4,531 (9) 4,020
Net cash provided by financing activities $ 8,701 $ 20,455 $— $ 7,821 $ 10,168 $ 43,987 $ (7,821) $ 83,311
Effect of exchange rate changes on cash and due
from banks $ — $ — $— $ — $ — $ 731 $ — $ 731
Net cash used in discontinued operations $ — $ — $— $ — $ — $ (128) $ — $ (128)
Net increase (decrease) in cash and due from banks $ (12) $ 1,150 $— $ (27) $ (91) $ 1,360 $ 27 $ 2,407
Cash and due from banks at beginning of period 40 8,393 — 458 655 12,061 (458) 21,149
Cash and due from banks at end of period from
continuing operations $ 28 $ 9,543 $— $ 431 $ 564 $ 13,421 $ (431) $ 23,556
Supplemental disclosure of cash flow information
Cash paid during the year for:
Income taxes $ (403) $ 1,695 $— $ 715 $ 87 $ 5,429 $ (715) $ 6,808
Interest 2,876 5,600 — 1,971 478 9,590 (1,971) 18,544
Non-cash investing activities:
Transfers to repossessed assets $ — $ — $— $ 1,166 $ 1,166 $ (120) $ (1,166) $ 1,046

174
Condensed Consolidating Statements of Cash Flows
Year ended December 31, 2003
Other
Citigroup
Citigroup subsidiaries
parent and Consolidating Citigroup
In millions of dollars company CGMHI CFI CCC Associates eliminations adjustments Consolidated

Net cash provided by (used in) operating activities

of continuing operations $ 6,760 $(4,850) $— $ 4,043 $ 2,136 $ (18,908) $ (4,043) $ (14,862)
Cash flows from investing activities
Change in loans $ — $ (766) $— $ (4,373) $(4,059) $ (25,187) $ 4,373 $ (30,012)
Proceeds from sales of loans — — — — — 18,553 — 18,553
Purchases of investments (21,353) — — (3,464) (2,951) (183,736) 3,464 (208,040)
Proceeds from sales of investments 17,502 — — 2,770 2,718 107,057 (2,770) 127,277
Proceeds from maturities of investments 3,669 — — 84 236 67,825 (84) 71,730
Changes in investments and advances—intercompany (19,532) — — (901) 408 19,124 901 —
Business acquisitions 200 — — — — (21,656) — (21,456)
Other investing activities — (740) — — 1,420 (5,039) — (4,359)
Net cash used in investing activities $(19,514) $(1,506) $— $ (5,884) $(2,228) $ (23,059) $ 5,884 $ (46,307)
Cash flows from financing activities
Dividends paid $ (5,773) $ — $— $ — $ — $ — $ — $ (5,773)
Dividends paid—intercompany — (1,056) — — — 1,056 — —
Issuance of common stock 686 — — — — — — 686
Treasury stock acquired (2,416) — — — — — — (2,416)
Proceeds from issuance of long-term debt—third-party, net 20,294 5,184 — (13,825) (4,965) 741 13,825 21,254
Proceeds from issuance of long-term debt—intercompany, net — 5,122 — 8,303 4,473 (9,595) (8,303) —
Change in deposits — — — 5 — 42,136 (5) 42,136
Net change in short-term borrowings and other investment
banking and brokerage borrowings—third-party 14 348 — 95 176 6,109 (95) 6,647
Net change in short-term borrowings and other
advances—intercompany 662 (256) — 6,602 214 (620) (6,602) —
Capital contributions from parent — 500 — 586 — (500) (586) —
Other financing activities (774) (426) — 3 — 3,071 (3) 1,871
Net cash provided by (used in) by financing activities $ 12,693 $ 9,416 $— $ 1,769 $ (102) $ 42,398 $ (1,769) $ 64,405
Effect of exchange rate changes on cash and due
from banks $ — $ — $— $ — $ — $ 579 $ — $ 579
Net cash provided by discontinued operations $ — $ — $— $ — $ — $ 8 $ — $ 8
Net (decrease) increase in cash and due from banks $ (61) $ 3,060 $— $ (72) $ (194) $ 1,018 $ 72 $ 3,823
Cash and due from banks at beginning of period 101 5,333 — 530 849 11,043 (530) 17,326
Cash and due from banks at end of period from
continuing operations $ 40 $ 8,393 $— $ 458 $ 655 $ 12,061 $ (458) $ 21,149
Supplemental disclosure of cash flow information
Cash paid during the year for:
Income taxes $ (691) $ 1,518 $— $ 507 $ — $ 5,286 $ (507) $ 6,113
Interest 1,588 5,100 — 2,476 2,616 6,428 (2,476) 15,732
Non-cash investing activities:
Transfers to repossessed assets $ — $ — $— $ 1,154 $ 844 $ 233 $ (1,154) $ 1,077

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28. CITIBANK, N.A. STOCKHOLDER’S EQUITY

Statement of Changes in Stockholder’s Equity

Year ended December 31

In millions of dollars 2005 2004(1) 2003(1)

Preferred stock ($100 par value)
Balance, beginning of year $ 1,950 $ 1,950 $ 1,950
Redemption or retirement of preferred stock (1,950) — —
Balance, end of year $ — $ 1,950 $ 1,950
Common stock ($20 par value)
Balance, beginning of year — Shares: 37,534,553 in 2005, 2004 and 2003 $ 751 $ 751 $ 751
Balance, end of year — Shares: 37,534,553 in 2005, 2004 and 2003 $ 751 $ 751 $ 751
Surplus
Balance, beginning of year $25,972 $24,831 $21,606
Capital contribution from parent company 1,000 754 2,407
Employee benefit plans 155 336 220
Other (2) 117 51 598
Balance, end of year $27,244 $25,972 $24,831

Retained earnings
Balance, beginning of year $25,935 $19,515 $17,523
Net income 8,830 9,413 7,919
Dividends paid (4,114) (2,993) (6,812)
Other (2) — — 885
Balance, end of year $30,651 $25,935 $19,515

Accumulated other changes in equity from nonowner sources

Balance, beginning of year $ (467) $ (1,094) $ (521)
Net change in unrealized gains (losses) on investment securities, available-for-sale, net of tax (558) 147 (207)
Net change in foreign currency translation adjustment, net of tax (1,501) 1,148 61
Net change for cash flow hedges, net of tax 258 (668) (427)
Minimum pension liability adjustment, net of tax (114) — —
Balance, end of year $ (2,382) $ (467) $ (1,094)

Total stockholder’s equity

Balance, beginning of year $54,141 $45,953 $41,309
Changes during the year, net 2,123 8,188 4,644
Balance, end of year $56,264 $54,141 $45,953
Summary of changes in equity from nonowner sources
Net income $ 8,830 $ 9,413 $ 7,919
Other changes in equity from nonowner sources, net of tax (1,915) 627 (573)
Total changes in equity from nonowner sources $ 6,915 $10,040 $ 7,346

(1) Reclassified to conform to the current period’s presentation.

(2) Primarily represents the surplus and retained earnings of Citibank New York State, which was merged with Citibank, N.A. in 2003.

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29. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
2005 2004(1)
In millions of dollars, except per share amounts Fourth Third Second First Fourth Third Second First

Revenues, net of interest expense $20,779 $21,498 $20,169 $21,196 $20,110 $18,738 $20,855 $19,932
Operating expenses 11,374 11,413 10,972 11,404 11,255 10,179 18,172 10,176
Provisions for credit losses and for benefits and claims 2,144 2,840 2,032 2,030 1,614 1,235 1,811 2,457
Income from continuing operations before income taxes,
minority interest, and cumulative effect of accounting change $ 7,261 $ 7,245 $ 7,165 $ 7,762 $ 7,241 $ 7,324 $ 872 $ 7,299
Income taxes 2,251 2,164 2,179 2,484 2,047 2,229 (83) 2,271
Minority interest, net of taxes 38 93 255 163 46 69 39 64
Income from continuing operations before cumulative
effect of accounting change $ 4,972 $ 4,988 $ 4,731 $ 5,115 $ 5,148 $ 5,026 $ 916 $ 4,964
Income from discontinued operations, net of taxes 2,009 2,155 342 326 173 282 228 309
Cumulative effect of accounting change, net of taxes (2) (49) — — — — — — —
Net income $ 6,932 $ 7,143 $ 5,073 $ 5,441 $ 5,321 $ 5,308 $ 1,144 $ 5,273

Earnings per share (3)

Basic earnings per share
Income from continuing operations $ 1.00 $ 0.98 $ 0.92 $ 0.99 $ 1.00 $ 0.98 $ 0.18 $ 0.97
Net income 1.39 1.41 0.99 1.06 1.04 1.03 0.22 1.03
Diluted earnings per share
Income from continuing operations $ 0.98 $ 0.97 $ 0.91 $ 0.98 $ 0.98 $ 0.96 $ 0.17 $ 0.95
Net income 1.37 1.38 0.97 1.04 1.02 1.02 0.22 1.01
Common stock price per share
High $ 49.64 $ 46.51 $ 47.84 $ 49.78 $ 48.75 $ 47.24 $ 52.29 $ 51.94
Low 44.31 43.05 44.59 44.35 42.56 43.19 44.86 48.11
Close 48.53 45.52 46.23 44.94 48.18 44.12 46.50 51.70
Dividends per share of common stock $ 0.44 $ 0.44 $ 0.44 $ 0.44 $ 0.40 $ 0.40 $ 0.40 $ 0.40

(1) Reclassified to conform to the current period’s presentation.

(2) Accounting change in the 2005 fourth quarter represents the adoption of FIN 47.
(3) Due to averaging of shares, quarterly earnings per share may not add up to the totals reported for the full year.

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FINANCIAL DATA SUPPLEMENT (Unaudited)

RATIOS
2005 2004 2003
Net income to average assets 1.66% 1.21% 1.51%
Return on common stockholders’ equity (1) 22.3 17.0 19.8
Return on total stockholders’ equity (2) 22.1 16.8 19.5
Total average equity to average assets 7.48 7.21 7.70
Dividends declared per common
share as a percentage of income per
diluted common share 37.1 49.1 32.2

(1) Based on net income less total preferred stock dividends as a percentage of average common
stockholders’ equity.
(2) Based on net income less preferred stock dividends as a percentage of average total stockholders’
equity.

AVERAGE DEPOSIT LIABILITIES IN OFFICES OUTSIDE THE U.S.(1)

2005 2004 2003

Average Average Average Average Average Average

In millions of dollars at year end balance interest rate balance interest rate balance interest rate

Banks $ 29,794 5.21% $ 32,067 2.99% $ 28,495 2.84%

Other demand deposits 140,105 1.65 121,588 1.11 85,556 1.54
Other time and savings deposits (2) 203,041 2.92 179,916 2.43 159,448 2.11
Total $372,940 2.62% $333,571 2.00% $273,499 2.01%

(1) Interest rates and amounts include the effects of risk management activities and also reflect the impact of the local interest rates prevailing in certain countries. See Note 22 to the Consolidated Financial Statements on
page 161.
(2) Primarily consists of certificates of deposit and other time deposits in denominations of $100,000 or more.

MATURITY PROFILE OF TIME DEPOSITS ($100,000 OR

MORE) IN U.S. OFFICES

In millions of dollars Under 3 Over 3 to 6 Over 6 to 12 Over 12

at year end 2005 months months months months

Certificates of deposit $19,848 $1,843 $2,572 $4,112

Other time deposits 993 67 35 9

SHORT-TERM AND OTHER BORROWINGS (1)

Federal funds purchased

and securities sold under
agreements to repurchase(2) Commercial paper Other funds borrowed (2)

In millions of dollars 2005 2004 2003 2005 2004 2003 2005 2004 2003
Amounts outstanding at year end $242,392 $209,555 $181,156 $34,159 $25,638 $32,719 $32,771 $31,129 $25,910
Average outstanding during the year (3) 245,595 212,132 178,537 26,106 32,799 30,866 31,725 28,051 21,502
Maximum month-end outstanding 279,021 240,169 198,339 34,751 39,469 32,932 33,907 34,719 30,435
Weighted-average interest rate
During the year(3) (4) 4.71% 2.77% 2.72% 3.11% 1.28% 1.14% 6.92% 4.83% 2.59%
At year end (5) 3.77% 2.37% 3.11% 4.30% 2.26% 1.15% 3.85% 2.54% 2.00%

(1) Original maturities of less than one year.

(2) Rates reflect prevailing local interest rates including inflationary effects and monetary correction in certain countries.
(3) Excludes discontinued operations.
(4) Interest rates include the effects of risk management activities. See Notes 15 and 22 to the Consolidated Financial Statements on pages 148 and 161, respectively.
(5) Based on contractual rates at year end.

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LEGAL AND REGULATORY REQUIREMENTS

Bank holding company/Financial holding company Dividends

Citigroup’s ownership of Citibank, N.A. (Citibank) and other banks makes The Company’s bank holding companies and banking subsidiaries are
Citigroup a “bank holding company” under U.S. law. Bank holding limited in their ability to pay dividends. (See Note 17 to the Consolidated
companies are generally limited to the business of banking, managing or Financial Statements on page 151.) In addition to specific limitations on the
controlling banks, and other closely related activities. Because Citigroup’s dividends that subsidiary banks can pay to their holding companies, federal
subsidiary banks are “well capitalized” and “well managed” under U.S. regulators could prohibit a dividend that would be an unsafe or unsound
banking regulations, and have satisfactory ratings under the U.S. Community banking practice.
Reinvestment Act, Citigroup has qualified as a “financial holding company,” It is FRB policy that bank holding companies pay dividends on common
which permits the Company to engage in a broader range of financial stock only out of income available over the past year, and only if prospective
activities in the U.S. and abroad. These activities include underwriting and earnings retention is consistent with the organization’s expected future needs
dealing in securities, insurance underwriting and brokerage, and making and financial condition. Moreover, bank holding companies should not
temporary investments in non-financial companies, as long as the Company maintain dividend levels that undermine the company’s ability to be a source
does not manage the non-financial company’s day-to-day activities, and of strength to its banking subsidiaries.
the non-financial company does not cross-market with the Company’s
Transactions with non-bank subsidiaries
banking subsidiaries.
A banking subsidiary’s transactions with a holding company or non-bank
If Citigroup ceases to qualify as a financial holding company, it could be
subsidiary generally are limited to 10% of the banking subsidiary’s capital
barred from new financial activities or acquisitions, and have to discontinue
stock and surplus, with an aggregate limit of 20% of the banking subsidiary’s
the broader range of activities permitted to financial holding companies.
capital stock and surplus for all such transactions. Such transactions must be
Regulators on arm’s-length terms, and certain credit transactions must be fully secured
As a bank holding company, Citigroup is regulated and supervised by the by approved forms of collateral.
FRB. Nationally chartered subsidiary banks, such as Citibank, are regulated
Liquidation
and supervised by the Office of the Comptroller of the Currency (OCC); federal
The Company’s right to participate in the distribution of assets of a subsidiary
savings associations by the Office of Thrift Supervision; and state-chartered
upon the subsidiary’s liquidation will be subordinate to the claims of the
depository institutions by state banking departments and the Federal Deposit
subsidiary’s creditors. If the subsidiary is an insured depository institution, the
Insurance Corporation (FDIC). The FDIC has back-up enforcement
Company’s claim as a stockholder or creditor will be subordinated to the
authority for banking subsidiaries whose deposits it insures. Overseas
claims of depositors and other general or subordinated creditors.
branches of Citibank are regulated and supervised by the FRB and OCC
In the liquidation of a U.S. insured depository institution, deposits in U.S.
and overseas subsidiary banks by the FRB. Such overseas branches and
offices and certain claims for administrative expenses and employee
subsidiary banks are also regulated and supervised by regulatory authorities
compensation will have priority over other general unsecured claims,
in the host countries.
including deposits in offices outside the U.S., non-deposit claims in all offices,
Internal growth and acquisitions and claims of a parent such as the Company. The FDIC, which succeeds to the
Financial holding companies generally can engage, directly or indirectly in position of insured depositors, would be a priority creditor.
the U.S. and abroad, in financial activities, either de novo or by acquisition, An FDIC-insured financial institution that is affiliated with a failed FDIC-
by providing after-the-fact notice to the FRB. However, the Company must insured institution may have to indemnify the FDIC for losses resulting from
obtain the prior approval of the FRB before acquiring more than five the insolvency of the failed institution, even if this causes the indemnifying
percent of any class of voting stock of a U.S. depository institution or bank institution also to become insolvent. Obligations of a subsidiary depository
holding company. institution to a parent company are subordinate to the subsidiary’s indemnity
Subject to certain restrictions and the prior approval of the appropriate liability and the claims of its depositors.
federal banking regulatory agency, the Company can acquire U.S. depository
Other bank and bank holding company regulation
institutions, including out-of-state banks. In addition, intrastate bank
The Company and its banking subsidiaries are subject to other regulatory
mergers are permitted and banks in states that do not prohibit out-of-state
limitations, including requirements for banks to maintain reserves against
mergers may merge. A national or state bank can establish a new branch in
deposits; requirements as to risk-based capital and leverage (see “Capital
another state if permitted by the other state, and a federal savings association
Resources and Liquidity”on page 100, and Note 17 to the Consolidated
can generally open new branches in any state.
Financial Statements on page 151); restrictions on the types and amounts of
The FRB must approve certain additional capital contributions to an
loans that may be made and the interest that may be charged; and limitations
existing non-U.S. investment and certain acquisitions by the Company of an
on investments that can be made and services that can be offered.
interest in a non-U.S. company, including in a foreign bank, as well as the
establishment by Citibank of foreign branches.

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 The FRB may also expect the Company to commit resources to its Guam. The SEC and the CFTC also require certain registered broker-dealers
subsidiary banks in certain circumstances. However, the FRB may not compel (including CGMI) to maintain records concerning certain financial and
a bank holding company to remove capital from its regulated securities and securities activities of affiliated companies that may be material to the broker-
insurance subsidiaries for this purpose. dealer, and to file certain financial and other information regarding such
A U.S. bank is not required to repay a deposit at a branch outside the U.S. if affiliated companies.
the branch cannot repay the deposit due to an act of war, civil strife, or action Citigroup’s securities operations abroad are conducted through various
taken by the government in the host country. subsidiaries and affiliates, principally Citigroup Global Markets Limited in
London and Nikko Citigroup Limited (a joint venture between CGMHI and
Privacy and data security
Nikko Cordial) in Tokyo. Its securities activities in the United Kingdom, which
Under U.S. federal law, the Company must disclose its privacy policy to
include investment banking, trading, and brokerage services, are subject to
consumers, permit consumers to “opt out” of having non-public customer
the Financial Services and Markets Act of 2000, which regulates organizations
information disclosed to third parties, and allow customers to opt out
that conduct investment businesses in the United Kingdom including capital
of receiving marketing solicitations based on information about the
and liquidity requirements and to the rules of the Financial Services
customer received from another subsidiary. States may adopt more extensive
Authority. Nikko Citigroup Limited is a registered foreign securities company
privacy protections.
in Japan and, as such, its activities in Japan are subject to Japanese law
The Company is similarly required to have an information security
applicable to non-Japanese securities firms and are regulated principally by
program to safeguard the confidentiality and security of customer
the Financial Services Agency. These and other subsidiaries of Citigroup are
information and to ensure its proper disposal. Customers must be notified
also members of various securities and commodities exchanges and are
when unauthorized disclosure involves sensitive customer information that
subject to the rules and regulations of those exchanges. Citigroup’s other
may be misused.
offices abroad are also subject to the jurisdiction of foreign financial services
Non-U.S. regulation regulatory authorities.
A substantial portion of the Company’s revenues is derived from its operations CGMI is a member of the Securities Investor Protection Corporation
outside the U.S., which are subject to the local laws and regulations of the (SIPC), which, in the event of the liquidation of a broker-dealer, provides
host country. Those requirements affect how the local activities are organized protection for customers’ securities accounts held by the firm of up to
and the manner in which they are conducted. The Company’s foreign $500,000 for each eligible customer, subject to a limitation of $100,000 for
activities are thus subject to both U.S. and foreign legal and regulatory claims for cash balances. To supplement the SIPC coverage, CGMI has
requirements and supervision, including U.S. laws prohibiting companies purchased for the benefit of its customers additional protection, subject to an
from doing business in certain countries. aggregate loss limit of $600 million and a per client cash loss limit of up to
$1.9 million.
SECURITIES REGULATION
Certain of Citigroup’s subsidiaries are subject to various securities and CAPITAL REQUIREMENTS
commodities regulations and capital adequacy requirements of the regulatory As a registered broker-dealer, CGMI is subject to the SEC’s Net Capital Rule.
and exchange authorities of the jurisdictions in which they operate. CGMI computes net capital under the alternative method of the Net Capital
Subsidiaries’ registrations include as broker-dealer and as investment Rule, which requires the maintenance of minimum net capital equal to 2% of
advisor with the SEC and as futures commission merchant and commodity aggregate debit items (as defined). A member of the NYSE may be required to
pool operator with the Commodity Futures Trading Commission (CFTC). reduce its business if its net capital is less than 4% of aggregate debit balances
Subsidiaries’ memberships include the New York Stock Exchange, Inc. (as defined) and may also be prohibited from expanding its business or
(NYSE) and other principal United States securities exchanges, as well as the paying cash dividends if resulting net capital would be less than 5% of
National Association of Securities Dealers, Inc. (NASD) and the National aggregate debit balances. Furthermore, the Net Capital Rule does not permit
Futures Association (NFA). withdrawal of equity or subordinated capital if the resulting net capital would
Citigroup’s primary U.S. broker-dealer subsidiary, Citigroup Global be less than 5% of such aggregate debit balances.
Markets Inc. (CGMI), is registered as a broker-dealer in all 50 states, the The Net Capital Rule also limits the ability of broker-dealers to transfer
District of Columbia, Puerto Rico, Taiwan and Guam. CGMI is also a primary large amounts of capital to parent companies and other affiliates. Under the
dealer in U.S. Treasury securities and a member of the principal United States Net Capital Rule, equity capital cannot be withdrawn from a broker-dealer
futures exchanges. CGMI is subject to extensive regulation, including without the prior approval of that broker-dealer’s designated examining
minimum capital requirements, which are issued and enforced by, among authority (in the case of CGMI, the NYSE) in certain circumstances, including
others, the SEC, the CFTC, the NFA, the NASD, the NYSE, various other self- when net capital after the withdrawal would be less than (i) 120% of the
regulatory organizations of which CGMI is a member and the securities minimum net capital required by the Net Capital Rule, or (ii) 25% of the
administrators of the 50 states, the District of Columbia, Puerto Rico and broker-dealer’s securities position “haircuts”. “Haircuts” is the term used for

180
deductions from capital of certain specified percentages of the market value of LEGAL PROCEEDINGS
securities to reflect the possibility of a market decline prior to disposition. In
Enron Corp.
addition, the Net Capital Rule requires broker-dealers to notify the SEC and
In April 2002, Citigroup was named as a defendant along with, among others,
the appropriate self-regulatory organization two business days before any
commercial and/or investment banks, certain current and former Enron
withdrawals of excess net capital if the withdrawals (in the aggregate over any
officers and directors, lawyers and accountants in a putative consolidated
30-day period) would exceed the greater of $500,000 or 30% of the broker-
class action complaint that was filed in the United States District Court for the
dealer’s excess net capital, and two business days after any withdrawals (in the
Southern District of Texas seeking unspecified damages. The action, brought
aggregate over any 30-day period) that exceeds the greater of $500,000 or 20%
on behalf of individuals who purchased Enron securities (NEWBY, ET AL. V.
of excess net capital. The Net Capital Rule also authorizes the SEC to order a
ENRON CORP., ET AL.), alleges violations of Sections 11 and 15 of the
freeze (for up to 20 business days) on the transfer of capital if a broker-dealer
Securities Act of 1933, as amended, and Sections 10 (b) and 20 (a) of the
plans a withdrawal of more than 30% of its excess net capital (when
Securities Exchange Act of 1934, as amended. In May 2003, plaintiffs filed an
aggregated with all other withdrawals during the previous 30 days) and the
amended consolidated class action complaint. Citigroup filed a motion to
SEC believes that such a withdrawal may be detrimental to the financial
dismiss in June 2003, which motion was denied in April 2004. Citigroup
integrity of the broker-dealer or may jeopardize the broker-dealer’s ability to
answered the operative complaint in May 2004. Plaintiffs filed a motion for
pay its customers.
class certification in May 2003, which motion remains pending. On June 10,
2005, Citigroup and certain of its subsidiaries agreed to a settlement of this
GENERAL BUSINESS FACTORS
action. Under the terms of the settlement, Citigroup will make a pretax
In the Company’s judgment, no material part of the Company’s business
payment of $2.01 billion to the settlement class, which consists of all
depends upon a single customer or group of customers, the loss of which
purchasers of all publicly traded equity and debt securities issued by Enron
would have a materially adverse effect on the Company, and no one customer
and Enron-related entities between September 9, 1997 and December 2, 2001.
or group of affiliated customers accounts for as much as 10% of the
The amount to be paid in settlement of this action, which was preliminarily
Company’s consolidated revenues.
approved by the court on February 22, 2006, is covered by existing litigation
reserves.
PROPERTIES
Additional actions have been filed against Citigroup and certain of its
Citigroup’s and Citibank’s principal executive offices are located at 399 Park
affiliates, along with other parties, including (i) actions (including putative
Avenue in New York City. Citigroup and certain of its subsidiaries are the
class actions) brought by individual and institutional investors in connection
largest tenant of this building. The Company also has office space in
with the purchase and/or holding of Enron and Enron-related equity and
Citigroup Center (153 E. 53rd St. in New York City) under a long-term lease.
debt securities, alleging violations of various state and federal securities laws,
Citibank owns a building in Long Island City, New York, and has a long-term
state unfair competition statutes, common law fraud, misrepresentation,
lease on a building at 111 Wall Street in New York City, which are totally
negligence, unjust enrichment, breach of fiduciary duty, aiding and abetting
occupied by the Company and certain of its subsidiaries.
a breach of fiduciary duty, conspiracy and other violations of state law; (ii)
CGMHI owns its principal offices in a building at 388 Greenwich Street
actions by banks that participated in Enron revolving credit facilities and/or
in New York City, and also owns the neighboring building at 390 Greenwich
purchasers of Enron bank debt in the secondary market, alleging fraud,
Street, both of which it fully occupies.
negligence, gross negligence, breach of fiduciary duty, breach of implied
Associates has its principal offices in Irving, Texas, in facilities that are part
duties, aiding and abetting and civil conspiracy in connection with
owned and part leased by it. Associates has office and branch sites for its
defendants’ administration of a credit facility with Enron; (iii) a putative
business units throughout the United States, Canada, Asia (Japan, Taiwan,
class action brought by clients of CGMI in connection with research reports
Philippines and Hong Kong), Europe and Latin America. The majority of
concerning Enron, alleging breach of contract; this action was voluntary
these sites are leased; none is material to Associates’ operations.
dismissed with prejudice on December 14, 2005; (iv) an action brought by an
Banamex has its principal offices in Mexico City in facilities that are part
investment company, alleging that Citigroup and others aided Enron in
owned and part leased by it. Banamex has office and branch sites throughout
fraudulently inducing it to enter into a commodity sales contract; (v) five
Mexico, most of which it owns.
adversary proceedings filed by Enron in its chapter 11 bankruptcy proceedings
The Company owns other offices and certain warehouse space, none of
to recover alleged preferential payments and fraudulent transfers involving
which is material to the Company’s financial condition or operations.
Citigroup, certain of its affiliates and other entities, and to disallow or to
The Company believes its properties are adequate and suitable for its
subordinate claims that Citigroup and other entities have filed against Enron;
business as presently conducted and are adequately maintained. For further
in one such proceeding, Enron also alleges various common law claims,
information concerning leases, see Note 25 to the Consolidated Financial
including a claim for aiding and abetting a breach of fiduciary duty;
Statements on page 163.
(vi) third-party claims asserted by Arthur Andersen and former Enron officers
and directors, alleging violation of state securities and other laws and a right

181
to contribution from Citigroup, in connection with claims under state WorldCom, Inc.
securities and common law brought against them; (vii) a purported class Citigroup, CGMI and certain executive officers and current and former
action brought on behalf of Connecticut municipalities, alleging violation employees were named as defendants —along with twenty-two other
of state statutes, conspiracy to commit fraud, aiding and abetting a breach of investment banks, certain current and former WorldCom officers and
fiduciary duty and unjust enrichment; (viii) actions brought by the Attorney directors, and WorldCom’s former auditors—in a consolidated class action
General of Connecticut in connection with various commercial and (IN RE WORLDCOM, INC. SECURITIES LITIGATION) brought on behalf of
investment banking services provided to Enron; (ix) an action brought by individuals and entities who purchased or acquired publicly traded securities
the indenture trustee for the Yosemite and ECLN Trusts and the Yosemite of WorldCom between April 29, 1999 and June 25, 2002. The class action
Securities Co., alleging fifteen causes of action sounding in tort and contract complaint asserted claims against CGMI under (i) Sections 11 and 12 (a)(2)
and relating to the initial notes offerings and the post-bankruptcy settlement of the Securities Act of 1933, as amended, in connection with certain bond
of the notes; (x) actions brought by utilities concerns, alleging that Citigroup offerings in which it served as underwriter, and (ii) Sections 10 (b) and 20 (a)
and others aided Enron in fraudulently overcharging for electricity; of the Securities Exchange Act of 1934, as amended, and Rule 10b-5
(xi) adversary proceedings filed by Enron in its Chapter 11 bankruptcy promulgated under Section 10 (b), alleging that it participated in the
proceedings against entities that purchased Enron bankruptcy claims preparation and/or issuance of misleading WorldCom registration statements
from Citigroup, seeking to disallow or to subordinate those claims; and and disseminated misleading research reports concerning WorldCom stock.
(xii) actions by a bank that entered into credit derivative swap transactions In 2003, the Court denied CGMI’s motion to dismiss the consolidated class
with Citibank, alleging breach of contract, fraud, fraudulent concealment, action complaint and granted the plaintiffs’ motion for class certification.
aiding and abetting and civil conspiracy. Several of these cases have been On May 10, 2004, Citigroup announced that it had agreed to settle all
consolidated or coordinated with the NEWBY action and are stayed, except for claims against it in the consolidated class action. Under the terms of the
certain discovery, pending the Court’s decision on the pending motion for settlement, Citigroup will make a payment of $2.57 billion ($1.59 billion
class certification in NEWBY. Fact discovery closed on November 30, 2005, after-tax) to the settlement class. On November 10, 2004, the United States
with certain limited exceptions. District Court for the Southern District of New York entered an order granting
Certain of these cases have been settled and dismissed. In April 2005, final approval of the settlement. The amount to be paid in settlement of this
Citigroup, along with other financial institution defendants, reached an action is covered by existing litigation reserves.
agreement-in-principle to settle four state-court actions brought by various Approximately sixty-five WorldCom individual actions remain pending in
investment funds, which were not previously consolidated or coordinated with various federal and state courts. Pursuant to an order entered on May 28,
the NEWBY action. The four cases are OCM OPPORTUNITIES FUND III, L.P., 2003, the District Court presently has before it approximately two-thirds of
et al. v. CITIGROUP INC., et al.; PACIFIC INVESTMENT MANAGEMENT CO. these individual actions that have been consolidated with the class action for
LLC, et al. v. CITIGROUP INC., et al.; AUSA LIFE INSURANCE v. CITIGROUP pretrial proceedings. The claims asserted in these individual actions are
INC., et al. and PRINCIPAL GLOBAL INVESTORS v. CITIGROUP INC., et al. On substantially similar to the claims alleged in the class action and assert state
June 3, 2005, Citigroup, along with other financial institution defendants, and federal securities law claims based on CGMI’s research reports
reached an agreement in principle to settle a state-court action, concerning WorldCom and/or CGMI’s role as an underwriter in WorldCom
RETIREMENT SYSTEMS OF ALABAMA v. MERRILL LYNCH, et al., brought by offerings. Plaintiffs in certain of these actions filed motions to remand their
an Alabama public corporation comprising various state employee pension cases to state court. The District Court denied these motions and its rulings
funds that had purchased Enron securities from (among others) CGMI. The were upheld on appeal. Citigroup has settled approximately thirty-five of the
court approved the settlement on July 5, 2005. On October 18, 2005, Citigroup, WorldCom individual actions. Those settlements include a global settlement
along with one other financial institution defendant, reached an agreement by Citigroup, along with other financial institutions and other defendants,
in principle to settle a state court action, CITY OF MONTGOMERY, ALABAMA dated October 27, 2005, of thirty-two individual actions brought on behalf of
EMPLOYEES RETIREMENT SYSTEM v. LAY, et al. seventy institutional plaintiffs that opted out of the WorldCom class action
settlement, all of which actions were brought by one law firm.

182
 A number of other individual actions asserting claims against CGMI in Research
connection with its research reports about WorldCom and/or its role as an Since May 2002, Citigroup, CGMI and certain executive officers and current
investment banker for WorldCom are pending in other federal and state and former employees have been named as defendants in numerous putative
courts. These actions have been remanded to various state courts, are pending class action complaints and arbitration demands by purchasers of various
in other federal courts, or have been conditionally transferred to the United securities, alleging that they violated federal securities law, including Sections
States District Court for the Southern District of New York to be consolidated 10 and 20 of the Securities Exchange Act of 1934, as amended, for allegedly
with the class action. In addition to the court suits, actions asserting claims issuing research reports without a reasonable basis in fact and for allegedly
against Citigroup and certain of its affiliates relating to its WorldCom research failing to disclose conflicts of interest with companies in connection with
reports are pending in numerous arbitrations around the country. These published investment research, including AT&T Corp. (“AT&T”), Winstar
actions assert claims that are substantially similar to the claims asserted in Communications, Inc. (“Winstar”), Level 3 Communications, Inc. (“Level
the class action. In one such arbitration, STURM, et al. v. CITIGROUP, et al., 3”), Metromedia Fiber Network, Inc. (“MFN”), XO Communications, Inc.
claimants sought $901million in compensatory damages, in addition to (“XO”), Williams Communications Group Inc. (“Williams”), and Focal
unspecified punitive damages. Following a NASD arbitration hearing, the Communications, Inc. Almost all of these putative class actions are pending
arbitration panel denied claimants’ claims in their entirety in November before a single judge in the United States District Court for the Southern
2005. In February 2006, claimants filed a motion to vacate the award in District of New York for coordinated proceedings. The Court has consolidated
Colorado federal district court. these actions into separate proceedings corresponding to the companies
named above. On December 2, 2004, the Court granted in part and denied in
Global Crossing
part the Citigroup-Related Defendants’ motions to dismiss the claims against
On or about January 28, 2003, lead plaintiff in a consolidated putative class
it in the AT&T, Level 3, XO and Williams actions. On January 5, 2005, the
action in the United States District Court for the Southern District of New
Court dismissed the Winstar action in its entirety with prejudice. On January
York (IN RE GLOBAL CROSSING, LTD. SECURITIES LITIGATION) filed a
6, 2005, the Court granted in part and denied in part Citigroup’s motion to
consolidated complaint on behalf of purchasers of the securities of Global
dismiss the claims against it in the MFN action. The plaintiffs in the MFN
Crossing and its subsidiaries, which named as defendants, among others,
action have moved for class certification; that motion was fully briefed on
Citigroup, CGMI and certain executive officers and current and former
August 29, 2005 and is pending before the District Court.
employees, asserting claims under the federal securities laws for allegedly
Citigroup has signed memoranda of agreement settling four putative class
issuing research reports without a reasonable basis in fact and for allegedly
actions alleging research analyst conflicts of interest: IN RE SALOMON
failing to disclose conflicts of interest with Global Crossing in connection with
ANALYST LEVEL 3 LITIGATION, IN RE SALOMON ANALYST XO LITIGATION,
published investment research. On March 22, 2004, lead plaintiff amended its
IN RE SALOMON ANALYST WILLIAMS LITIGATION, and IN RE SALOMON
consolidated complaint to add claims on behalf of purchasers of the securities
ANALYST AT&T LITIGATION. In addition, Citigroup has reached a settlement
of Asia Global Crossing. The added claims assert causes of action under the
in principle of LOS ANGELES CITY EMPLOYEES RETIREMENT ASSOCIATION
federal securities laws and common law in connection with CGMI’s research
v. CITIGROUP, the putative class action brought by shareholders of Focal
reports about Global Crossing and Asia Global Crossing and for CGMI’s roles
Communications, Inc. Each of these five settlements is subject to court
as an investment banker for Global Crossing and as an underwriter in the
approval; the amounts to be paid in settlement of each are covered by existing
Global Crossing and Asia Global Crossing offerings. The Citigroup-Related
litigation reserves.
Defendants moved to dismiss all of the claims against them on July 2, 2004.
In addition to the putative research class actions, several individual
The plaintiffs and the Citigroup-Related Defendants entered into a settlement
actions have been filed against Citigroup and CGMI relating to, among other
agreement that was preliminarily approved by the Court on March 8, 2005,
things, research on Qwest Communications International, Inc. These actions
and was finally approved on June 30, 2005. The amount to be paid in
allege violations of state and federal securities laws in connection with CGMI’s
settlement is covered by existing litigation reserves.
publication of research about Qwest and its underwriting of Qwest securities.
In addition, on or about January 27, 2004, the Global Crossing Estate
On January 17, 2005, Citigroup settled two such actions (NEW YORK CITY
Representative filed in the United States Bankruptcy Court for the Southern
EMPLOYEES RETIREMENT SYSTEM, et al. v. CITIGROUP, et al. and
District of New York an adversary proceeding against Citigroup and several
STICHTING PENSIOENFONDS ABP, et al. v. CITIGROUP, et al.). The
other financial institutions seeking to rescind the payment of a $1 billion
amounts to be paid in settlement of these two actions are covered by existing
loan made to a subsidiary of Global Crossing. The Citigroup-Related
litigation reserves.
Defendants moved to dismiss the latter action on May 28, 2004, which motion
remains pending. In addition, actions asserting claims against Citigroup and
certain of its affiliates relating to CGMI Global Crossing research reports are
pending in numerous arbitrations around the country.

183
 On September 22, 2005, Citigroup agreed to settle NORMAN v. SALOMON respect to the complaints of the Official Committee of Unsecured Creditors
SMITH BARNEY, a putative class action asserting violations of the Investment and the Equity Holders Committee. The motions are currently pending.
Advisers Act of 1940 and various common law claims in connection with In addition, CGMI is among the underwriters named in numerous civil
certain investors who maintained guided portfolio management accounts at actions brought to date by investors in Adelphia debt securities in connection
Smith Barney. The District Court preliminarily approved the settlement on with Adelphia securities offerings between September 1997 and October 2001.
January 20, 2006. The amount to be paid in settlement is covered by existing Three of the complaints also assert claims against Citigroup Inc. and
litigation reserves. In August 2004, the United States District Court remanded Citibank, N.A. All of the complaints allege violations of federal securities laws,
DISHER v. CITIGROUP GLOBAL MARKETS INC. to Illinois state court. This is and certain of the complaints also allege violations of state securities laws and
a putative class action asserting common law claims on behalf of Smith the common law. The complaint seeks unspecified damages. In December
Barney customers in connection with published investment research. On 2003, a second amended complaint was filed and consolidated before the
August 17, 2005, the United States Court of Appeals for the Seventh Circuit same judge of the United States District Court for the Southern District of New
reversed the District Court and held that the action was preempted and thus York. In February 2004, motions to dismiss the class and individual actions
must be dismissed. On December 16, 2005, plaintiffs filed a petition for a writ pending in the United States District Court for the Southern District of New
of certiorari in the United States Supreme Court, which remains pending. York were filed. In May and July of 2005, the United States District Court for
the Southern District of New York granted motions to dismiss several claims,
Parmalat
based on the running of applicable statute of limitations, asserted in the
On July 29, 2004, Enrico Bondi, as extraordinary commissioner of Parmalat
putative class and individual actions being coordinated under IN RE
and other affiliated entities, filed a lawsuit in New Jersey Superior Court
ADELPHIA COMMUNICATIONS CORPORATION SECURITIES AND
against Citigroup, Citibank, N.A. and others, alleging that the defendants
DERIVATIVE LITIGATION. With the exception of one individual action that
participated in fraud committed by the officers and directors of Parmalat and
was dismissed with prejudice, the court granted the putative class and
seeking unspecified damages. The action alleges a variety of claims under
individual plaintiffs leave to re-plead certain of those claims the court found
New Jersey state law, including fraud, negligent misrepresentation, violations
to be time-barred. Additional motions to dismiss the class complaint and the
of the New Jersey Fraudulent Transfer Act and violations of the New Jersey
remaining individual complaints on other grounds remain pending.
RICO statute. Defendants filed a motion to dismiss the action, which was
granted in part and denied in part. Defendants answered and Citibank Allied Irish Bank
filed counterclaims alleging causes of action for fraud, negligent On January 31, 2006, the United States District Court for the Southern District
misrepresentation, conversion and breach of warranty. Plaintiff/counterclaim- of New York partially denied motions filed by Citibank and a co-defendant to
defendant then moved to dismiss the counterclaims, which was denied. On dismiss a complaint filed by Allied Irish Bank, P.L.C. (“AIB”) in May 2003,
July 11, 2005, the New Jersey Supreme Court granted defendants’ motion for seeking compensatory and punitive damages in connection with losses
leave to appeal the denial of its motion to dismiss; that appeal is fully briefed. sustained by a subsidiary of AIB in 2000-2002. The complaint alleges that
Discovery is effectively stayed pending appeal. defendants are liable for fraudulent and fictitious foreign currency trades
Citigroup, Citibank, N.A. and others also are defendants in three class entered by one of AIB’s traders through defendants, who provided prime
action complaints filed in the United States District Court for the Southern brokerage services. The court’s ruling on the motions to dismiss allowed
District of New York relating to the collapse of Parmalat Finanziaria S.P.A. On plaintiff’s common law claims, including fraudulent concealment and aiding
May 21, 2004, the court issued an order consolidating the complaints under and abetting fraud, to proceed.
the caption IN RE PARMALAT SECURITIES LITIGATION. The consolidated
amended complaint was filed on October 18, 2004 on behalf of purchasers of Foreign Currency Conversion
Parmalat securities between January 5, 1999 and December 18, 2003. The Citigroup and certain of its affiliates as well as VISA, U.S.A., Inc., VISA
complaint alleges violations of Sections 10 (b) and 20 (a) of the Securities International Service Association, MasterCard International, Incorporated
Exchange Act of 1934, as amended, and seeks unspecified damages. On and other banks are defendants in a consolidated class action lawsuit (IN RE
January 10, 2005, the Citigroup defendants filed a motion to dismiss the CURRENCY CONVERSION FEE ANTITRUST LITIGATION) pending in the
action. The court granted in part and denied in part the motion on July 13, United States District Court for the Southern District of New York, which seeks
2005. Plaintiff filed a second amended consolidated complaint on August 25, unspecified damages and injunctive relief. The action, brought on behalf of
2005. Defendants answered and discovery is ongoing. certain United States holders of VISA, MasterCard and Diners Club branded
general purpose credit cards who used those cards since March 1, 1997 for
Adelphia Communications Corporation foreign currency transactions, asserts, among other things, claims for alleged
On July 6, 2003, an adversary proceeding was filed by the Official Committee violations of (i) Section 1 of the Sherman Act, (ii) the federal Truth in
of Unsecured Creditors on behalf of Adelphia Communications Corporation Lending Act (TILA), and (iii) as to Citibank (South Dakota), N.A., the South
against certain lenders and investment banks, including CGMI, Citibank, Dakota Deceptive Trade Practices Act. On October 15, 2004, the Court granted
N.A., Citicorp USA, Inc., and Citigroup Financial Products, Inc. (together, the the plaintiffs’ motion for class certification of their Sherman Act and TILA
“Citigroup Parties”). The complaint alleges that the Citigroup Parties and claims but denied the motion as to the South Dakota Deceptive Trade
numerous other defendants committed acts in violation of the Bank Holding Practices Act claim against Citibank (South Dakota), N.A. On December 7,
Company Act and common law. The complaints seek equitable relief and an 2005, the District Court certified a Diners Club damages subclass, as well as
unspecified amount of compensatory and punitive damages. In November Diners Club antitrust and TILA injunctive relief subclasses. The Citigroup
2003, a similar adversary proceeding was filed by the Equity Holders defendants, J.P. Morgan Chase & Co. and the plaintiffs have appealed certain
Committee of Adelphia. In June 2004, motions to dismiss were filed with aspects of the District Court’s class action rulings.

184
Mutual Funds IPO Antitrust Litigation
Citigroup and certain of its affiliates have been named in several class action Also filed in the Southern District of New York against CGMI and other
litigations pending in various Federal District Courts arising out of alleged investment banks were several putative class actions that were consolidated
violations of the federal securities laws, including the Investment Company into a single class action, alleging violations of certain federal and state
Act, and common law (including breach of fiduciary duty and unjust antitrust laws in connection with the allocation of shares in initial public
enrichment). The claims concern practices in connection with the sale of offerings when acting as underwriters. A separate putative class action was
mutual funds, including allegations involving market timing, revenue filed against the same underwriter defendants as well as certain institutional
sharing, incentive payments for the sale of proprietary funds, undisclosed investors alleging commercial bribery claims under the Robinson Patman
breakpoint discounts for the sale of certain classes of funds, inappropriate Act arising out of similar allegations regarding IPO allocation conduct. On
share class recommendations and inappropriate fund investments. The November 3, 2003, the district court granted CGMI’s motion to dismiss the
litigations involving market timing have been consolidated under the Multi consolidated amended complaint in the antitrust case and the Robinson
District rules in the United States District Court for the District of Maryland Patman complaint. Plaintiffs thereafter appealed the district court’s order
(the “MDL action”), and the litigations involving revenue sharing, incentive dismissing the two actions. In a decision dated September 28, 2005, the
payment and other issues are pending in the United States District Court for Second Circuit vacated the district court’s decision and remanded the cases
the Southern District of New York. The plaintiffs in these litigations generally to the district court. Before the cases could be remanded to the district court,
seek unspecified compensatory damages, recessionary damages, injunctive the underwriter defendants filed a petition for rehearing en banc, which
relief, costs and fees. In the principal cases concerning revenue sharing, was denied by the Second Circuit on January 12, 2006. The underwriter
incentive payment and other issues, the lead plaintiff filed a consolidated and defendants have filed a motion in the Second Circuit to stay the issuance of
amended complaint on December 15, 2004. Several derivative actions and the mandate remanding the cases to the district court pending the filing of a
class actions were dismissed against Citigroup defendants in the MDL action petition for writ of certiorari to the United States Supreme Court. That motion
(the class actions were dismissed with leave to replead state law claims of remains pending.
unjust enrichment).
Investigations of Euro Zone Government Bonds Trade
Issues in the mutual fund industry continue to receive scrutiny by various
On August 2, 2004, Citigroup Global Markets Limited executed certain large
government regulators and SROs. The Company continues to cooperate and
trades in Euro Zone Government bonds in London that were carried out on the
respond to subpoenas and other requests for information regarding market
MTS trading platform. On August 19, 2004, the UK Financial Services Authority
timing and other mutual fund issues and it entered into a settlement in
commenced an enforcement investigation into certain aspects of these trades.
March 2005 with the SEC and NASD with respect to revenue sharing and sales
Other European regulators have also commenced similar investigations. The
of classes of funds.
German regulator, BaFin, referred the results of its investigation into the trades
IPO Securities Litigation to prosecutors for possible prosecution against employees of the Company. The
In April 2002, consolidated amended complaints were filed against CGMI and German prosecutors have declined to take any action against the employees
other investment banks named in numerous putative class actions filed in the and the BaFin declined to pursue the matter. Eurex found the firm not liable on
United States District Court for the Southern District of New York, alleging the substantive charge but found the firm liable for a registration violation.
violations of certain federal securities laws (including Section 11 of the Citigroup is cooperating with these investigations.
Securities Act of 1933, as amended, and Section 10 (b) of the Securities
California Employment Actions
Exchange Act of 1934, as amended) with respect to the allocation of shares for
Numerous financial services firms, including Citigroup and its affiliates,
certain initial public offerings and related aftermarket transactions and
have been named in purported class actions alleging that certain present and
damage to investors caused by allegedly biased research analyst reports.
former employees in California were entitled to overtime pay under California
Defendants moved to dismiss, which was denied. On October 13, 2004, the
and federal law and were subject to certain allegedly unlawful deductions in
court granted in part the motion to certify class actions for six focus cases in
violation of California law. One of these class actions filed in the United
the securities litigation. CGMI is not a defendant in any of the six focus cases.
States District Court for the Northern District of California, BAHRAMIPOUR v.
On October 27, 2004, the underwriter defendants in the six focus cases filed a
CITIGROUP GLOBAL MARKETS INC., is seeking damages and injunctive
petition for review of the class certification order in the United States Court of
relief. Similar complaints have been filed in other jurisdictions. In addition,
Appeals for the Second Circuit. The Second Circuit allowed the underwriter
complaints asserting similar allegations were filed in the United States District
defendants to appeal the class certification order, which is fully briefed.
Court, Southern District of New York and the United States District Court for
Discovery is ongoing.
the District of New Jersey.

185
Other UNREGISTERED SALES OF EQUITY SECURITIES AND
The Securities and Exchange Commission is conducting a non-public USE OF PROCEEDS
investigation, which the Company believes originated with the Company’s Share Repurchases
accounting treatment regarding its investments and business activities, and Under its long-standing repurchase program (which was expanded in the
loan loss allowances, with respect to Argentina in the 4th Quarter of 2001 and 2005 second quarter as noted below), the Company buys back common
the 1st Quarter of 2002. The investigation is also addressing the timing and shares in the market or otherwise from time to time.
support documentation for certain other accounting entries or adjustments. The following table summarizes the Company’s share repurchases
In connection with these matters, the SEC has subpoenaed witness testimony during 2005:
and certain accounting and internal control-related information for the years Dollar
1997– 2004. The Company is cooperating with the SEC in its investigation. value of
remaining
The Company cannot predict the outcome of the investigation. Average authorized
Total shares price paid repurchase
Beginning in April 2003, two putative class actions on behalf of In millions, except per share amounts repurchased per share program
participants in, and beneficiaries of, the Citigroup 401 (k) plan were filed in
First quarter 2005
the Southern District of New York and later consolidated under the caption Open market repurchases (1) 19.0 $47.65 $ 1,300
IN RE: CITIGROUP ERISA LITIGATION. Citigroup filed a motion to dismiss in Employee transactions (2) 10.2 49.06 NA
January 2004. The parties have reached an agreement in principle to settle Total first quarter 2005 29.2 $48.15 $ 1,300
this action, subject to court approval.
Beginning in July 2002, Citigroup and certain officers were named as Second quarter 2005
Open market repurchases (1) 41.8 $47.06 $14,335
defendants in putative class actions filed in the United States District Court for Employee transactions 0.7 46.67 NA
the Southern District of New York brought on behalf of purchasers of
Total second quarter 2005 42.5 $47.05 $14,335
Citigroup common stock, alleging violations of Sections 10 (b) and 20 (a) of
the Securities Exchange Act of 1934, as amended, and, in approximately half Third quarter 2005
of the actions, claims for common law fraud. In November 2002, these Open market repurchases 124.2 $44.27 $ 8,835
Employee transactions 2.1 45.76 NA
actions were consolidated under the caption IN RE: CITIGROUP INC.
SECURITIES LITIGATION. In August 2004, the District Court dismissed the Total third quarter 2005 126.3 $44.30 $ 8,835
action, and on February 6, 2006, the United States Court of Appeals for the October 2005
Second Circuit affirmed the dismissal. Open market repurchases 18.5 $45.13 $ 8,000
In December 2002, Citigroup and certain members of the Citigroup Board Employee transactions 0.7 45.62 NA
of Directors were named as defendants in a derivative action brought by an November 2005
Open market repurchases 40.1 47.54 6,094
individual Citigroup shareholder in the United States District Court for the Employee transactions 0.7 48.37 NA
Southern District of New York (FINK V. WEILL, ET AL.). The complaint alleges December 2005
state law claims of breach of fiduciary duty, gross mismanagement and Open market repurchases 34.3 48.98 4,412
corporate waste, as well as violations of the federal securities laws. Citigroup Employee transactions 1.1 48.96 NA
filed a motion to dismiss in October 2003 and plaintiff later filed a motion for Fourth quarter 2005
leave to amend. On September 15, 2005, the court denied plaintiff’s motion Open market repurchases 92.9 $47.60 $ 4,412
for leave to amend the complaint and granted defendants’ motion to dismiss Employee transactions 2.5 47.90 NA
the complaint in its entirety. Total fourth quarter 2005 95.4 $47.60 $ 4,412
In May 2004, in CARROLL V. WEILL, ET AL., a shareholder derivative
Year-to-date 2005
action in New York state court alleging claims against Citigroup directors in Open market repurchases 277.9 $46.03 $ 4,412
connection with Citigroup’s activities with Enron and other matters, the New Employee transactions 15.5 48.32 NA
York Court of Appeals denied the principal plaintiff’s motion for leave to Total year-to-date 2005 293.4 $46.16 $ 4,412
appeal from the Appellate Division’s affirmance of the dismissal of the
complaint. Since that date, Citigroup has received a shareholder demand (1) All open market repurchases were transacted under an existing authorized share repurchase plan that
was publicly announced on July 17, 2002. On April 14, 2005, the Board of Directors authorized up to an
containing allegations similar to those set forth in the CARROLL action additional $15 billion in share repurchases.
(2) Consists of shares added to treasury stock related to activity on employee stock option program
referred to above, and a supplemental letter containing various additional exercises, where the employee delivers existing shares to cover the option exercise, or under the
Company’s employee restricted or deferred stock program, where shares are withheld to satisfy tax
allegations relating to other activities of Citigroup. In February 2006, the requirements.
parties reached an agreement in principle to settle this action. NA Not applicable

On June 22, 2005, a shareholder derivative action was filed in Delaware

state court, DAVID B. SHAEV PROFIT SHARING ACCOUNT v. ARMSTRONG, ET
AL., alleging claims against Citigroup directors in connection with Citigroup’s
activities with Enron, WorldCom, and research analyst-related matters.
Defendants’ motion to dismiss the complaint was granted on January 25,
2006.
Additional lawsuits containing claims similar to those described above
may be filed in the future.

186
EQUITY COMPENSATION PLAN INFORMATION
(a) (b) (c)
Number of securities remaining
available for future issuance
Number of securities to be issued Weighted-average exercise under equity compensation
upon exercise of outstanding price of outstanding options, plans (excluding securities
Plan Category options, warrants and rights warrants and rights reflected in column (a))
Equity compensation plans approved by security holders 296,535,557(1) $46.93(2) 370,176,147(3)
Equity compensation plans not approved by security holders 20,281,224(4) $39.82(5) — (6)
Total 316,816,781 $40.27 370,176,147

(1) Includes 45.16 million shares issuable upon the vesting of deferred stock awards. Does not include an aggregate of 8.53 million shares subject to outstanding options granted by predecessor companies under plans
assumed by Citigroup in connection with mergers and acquisitions. Citigroup has not made any awards under these plans, and they are not considered as a source of shares for future awards. The weighted-average
exercise price of such options is $40.86 per share. Some of the assumed options also entitled the holders to receive Litigation Tracking Warrants (LTWs) upon exercise, in addition to the shares underlying the options. The
LTWs were issued in 1998 to holders of the outstanding common stock of Golden State Bancorp Inc. (GSB), and assumed by Citigroup upon the acquisition of GSB in 2002. In 2005, following resolution of certain litigation
against the U.S. government by Glendale Federal Bank, FSB, the LTWs became exercisable for a 60-day period entitling the holders to receive upon exercise 0.02302 share of Citigroup common stock and $0.6725 net
cash payment after deducting the $0.0002 exercise price per LTW. Holders of unexercised GSB options who would have received LTWs had their options been exercised before the start of the LTW exercise period are
entitled to receive the LTW consideration whenever the underlying GSB options are exercised. This could result in the issuance of up to an additional 4,429 shares of Citigroup common stock if all the LTW options are
exercised in full.
(2) As described in footnote 1 above, does not include 8.53 million shares subject to outstanding options under certain plans assumed by Citigroup in connection with mergers and acquisitions, and 45.16 million shares
subject to deferred stock awards.
(3) Does not include shares that were available for issuance under plans approved by shareholders of acquired companies but under which Citigroup does not make any awards. Of the number of shares available for future
issuance, 303.73 million of such shares are available under plans that provide for awards of restricted stock, in addition to (or in lieu of) options, warrants and rights.
(4) Includes 3.14 million shares issuable upon the vesting of deferred stock awards. Does not include 310,609 shares subject to outstanding options under a plan assumed by Citigroup in a merger. Citigroup has not made
any awards under this plan, and it is not considered as a source of shares for future awards by Citigroup. The weighted-average exercise price of such options is $45.37 per share.
(5) As described in footnote 4 above, does not include 310,609 shares subject to outstanding options under a plan assumed by Citigroup in a merger, and 3.14 million shares subject to deferred stock awards.
(6) Does not include plans of acquired companies under which Citigroup does not make any awards. Also does not include up to 4.7 million shares available for purchase pursuant to the Travelers Group Stock Purchase Plan
for PFS Representatives. This plan allows eligible Primerica Financial Services (PFS) representatives to use their earned commissions to periodically purchase shares of Citigroup common stock at current market prices. A
limited number of high performers may purchase shares, subject to plan limits, at discounts of up to 25%. The discount is funded by Primerica Financial Services and is considered additional compensation. Shares are
purchased on the open market; no newly-issued or treasury shares are used in this program.

Most of Citigroup’s outstanding equity awards were granted under four deferred stock award, or in some cases, restricted or deferred stock and stock
stockholder approved plans—the Citigroup 1999 Stock Incentive Plan (the options. Vesting periods for restricted and deferred stock awards under this
1999 Plan); the Travelers Group Capital Accumulation Plan; the 1997 plan, including awards pursuant to CAP, were generally from three to five
Citicorp Stock Incentive Plan; and the Citigroup 2000 Stock Purchase Plan. A years. Stock options awarded under this plan, including CAP options, are non-
small percentage of equity awards have been granted under several plans that qualified stock options. Options granted prior to January 1, 2003 have ten-
have not been approved by stockholders, primarily the Citigroup Employee year terms and vest at a rate of 20% per year, with the first vesting date
Incentive Plan. Generally, awards were made to employees participating in generally occurring 12 to 18 months following the grant date. Options
Citigroup’s stock option, stock award or stock purchase programs. granted on or after January 1, 2003, but prior to January 1, 2005, generally
All of the plans are administered by the Personnel and Compensation have six-year terms and vest at a rate of one-third per year, with the first
Committee of the Citigroup Board of Directors (the Committee), which is vesting date generally occurring 12 to 18 months following the grant date.
comprised entirely of non-employee independent directors. Persons eligible to Options granted under this plan in 2005 generally have six-year terms and
participate in Citigroup’s equity plans are selected by management from time vest at a rate of 25% per year. Generally, the terms of restricted and deferred
to time subject to the Committee’s approval. stock awards and options granted under the Citigroup Employee Incentive
Effective April 19, 2005, stockholders approved amendments to the 1999 Plan provide that the awards will be canceled if an employee leaves the
Plan, and the other plans mentioned above were terminated as a source of Company, except in cases of disability or death, or after satisfying certain age
shares for future awards. Outstanding awards under the Travelers Life & and years of service requirements.
Annuity Agency Capital Accumulation Plan vested, and the plan was Additionally, since December 2001, deferred stock awards that used to be
terminated, effective upon the sale of Travelers Life & Annuity Company to made under certain deferred compensation plans administered by Citigroup
MetLife on July 1, 2005. Global Markets Holdings Inc. were made under the Citigroup Employee
The following disclosure is provided with respect to plans that have not Incentive Plan. These plans provide for deferred stock awards to employees
been submitted to stockholders for approval, and which remain active only who meet certain specified performance targets. Generally, the awards vest in
with respect to previously granted awards. Additional information regarding five years. Awards are canceled if an employee voluntarily leaves the Company
Citigroup’s equity compensation programs can be found in Note 20 to the prior to vesting. Effective April 19, 2005, all equity awards provided for by
Company Consolidated Financial Statements. these deferred compensation plans are being granted under the 1999 Plan.
Deferred stock awards granted under the Salomon Smith Barney Inc. Branch
Non-Stockholder Approved Plans
Managers Asset Deferred Bonus Plan, the Salomon Smith Barney Inc. Asset
The Citigroup Employee Incentive Plan, originally adopted by the Board of
Gathering Bonus Plan, the Salomon Smith Barney Inc. Directors’ Council
Directors in 1991, was amended by the Board of Directors on April 17, 2001.
Milestone Bonus Plan and the Salomon Smith Barney Inc. Stock Bonus Plan
This plan was used to grant stock options and restricted or deferred stock
for FC Associates prior to December 2001 remain outstanding.
awards to participants in the Citigroup Capital Accumulation Program (CAP)
The Travelers Group Capital Accumulation Plan for PFS Representatives,
and to new hires. Executive officers and directors of the Company were not
the Travelers Property Casualty Corp. Agency Capital Accumulation Plan for
eligible to participate in this plan. CAP is an incentive and retention award
Citigroup Stock, the Travelers Life & Annuity Agency Capital Accumulation
program pursuant to which a specified portion of a participant’s incentive
Plan, and the Travelers Life & Annuity (Producers Group) Agency Stock
compensation (or commissions) is delivered in the form of a restricted or

187
Incentive Program were adopted by Citigroup at various times. These plans Executive Officers
provided for CAP awards and other restricted stock awards to agents of certain Citigroup’s Executive Officers on February 23, 2006 are:
subsidiaries or affiliates of Citigroup. The Travelers Property Casualty Corp. Name Age Position and office held
plan was terminated with respect to new awards upon the spin-off of Travelers
Property Casualty Corp. in August 2002. The Travelers Life & Annuity Agency Ajay Banga 46 Chairman & CEO—Global Consumer
Group, International
Stock Incentive Program was terminated with respect to new awards following
Sir Winfried F.W. Bischoff 64 Chairman, Citigroup Europe
a one-time award in 2001. Beginning in July 2002, awards pursuant to the
David C. Bushnell 51 Senior Risk Officer
Travelers Group Capital Accumulation Program for PFS Representatives were
Michael A. Carpenter 58 Chairman & CEO, Citigroup
made under the Employee Incentive Plan, and are now being made under the
Global Investments
1999 Plan. Effective upon the sale of Travelers Life & Annuity Company to
Robert Druskin 56 President & CEO, Corporate and
MetLife, Inc., on July 1, 2005, the outstanding awards under the Travelers Life
Investment Banking
& Annuity Agency Capital Accumulation Plan vested and the plan was
Steven J. Freiberg 48 Chairman & CEO—Global Consumer
terminated. Group, North America
The Travelers Group Stock Option Plan for PFS Representatives was John C. Gerspach 52 Controller and Chief Accounting Officer
adopted in 1991. The plan provided for non-qualified stock option grants to Michael S. Helfer 60 General Counsel and Corporate Secretary
certain exclusive insurance agents. The plan is terminated with respect to new Lewis B. Kaden 63 Vice Chairman and Chief
awards. All options that were outstanding under the plan as of December 31, Administrative Officer
2004, expired in January 2005. Sallie Krawcheck 41 Chief Financial Officer; Head of Strategy
In connection with the acquisition of Associates in 2001, Citigroup Manuel Medina-Mora 55 Chairman & CEO, Latin America &
assumed options granted to former Associates directors pursuant to the Mexico; CEO, Banamex
Associates First Capital Corporation Deferred Compensation Plan for Non- Charles Prince 56 Chief Executive Officer
Employee Directors. Upon the acquisition, the options vested and were William R. Rhodes 70 Senior Vice Chairman; Chairman,
converted to options to purchase Citigroup common stock, and the plan was Citibank, N.A.
terminated. All options that remain outstanding under the plan will expire by Robert E. Rubin 67 Chairman of the Executive Committee;
no later than January 2010. Member, Office of the Chairman
The Citigroup 2000 International Stock Purchase Plan was adopted in Todd S. Thomson 45 Chairman & CEO, Global Wealth
2000 to allow employees outside the United States to participate in Citigroup’s Management Group
stock purchase programs. The terms of the international plan are identical to Stephen R. Volk 69 Vice Chairman
the terms of the stockholder-approved Citigroup 2000 Stock Purchase Plan, Sanford I. Weill 72 Chairman
except that it is not intended to be qualified under Section 423 of the United
Each executive officer has held executive or management positions with the
States Internal Revenue Code. The number of shares available for issuance
Company for at least five years, except that:
under both plans may not exceed the number authorized for issuance under
the stockholder-approved plan. • Mr. Helfer joined Citigroup in February 2003. From 2002 to 2003, he was
President, Strategic Investments of Nationwide Mutual Insurance
Company, and from 2000 to 2003 he was Executive Vice President,
Corporate Strategy of Nationwide Mutual Insurance Company and
Nationwide Financial Services, Inc.
• Mr. Kaden joined Citigroup in September 2005. Prior to joining Citigroup,
Mr. Kaden was a partner at Davis Polk & Wardwell.
• Ms. Krawcheck joined Citigroup in 2002, serving as Chairman and Chief
Executive Officer of Smith Barney until November 2004. Prior to 2002,
Ms. Krawcheck was Chairman and Chief Executive Officer of Sanford C.
Bernstein & Co., LLC and an Executive Vice President of Bernstein’s parent
company, Alliance Capital Management, L.P. from 2001. Before that, Ms.
Krawcheck was Director of Research at Bernstein.
• Mr. Volk joined Citigroup in July 2004. From 2001 to 2004, Mr. Volk was
Chairman of Credit Suisse First Boston. Before that, Mr. Volk was a partner
at Shearman & Sterling.

188
10-K CROSS-REFERENCE INDEX

This Annual Report on Form 10-K incorporates the requirements of the

accounting profession and the Securities and Exchange Commission, Part III
including a comprehensive explanation of 2005 results.
10. Directors and Executive Officers
Form 10-K of the Registrant . . . . . . . . . . . . . . . . . . . 188, 190, 192*
11. Executive Compensation . . . . . . . . . . . . . **
Item Number Page 12. Security Ownership of Certain Beneficial
Owners and Management and Related
Part I Stockholder Matters . . . . . . . . . . . . . . . . 187-188***
1. Business . . . . . . . . . . . . . . . . . . . . . . . . 26, 28-109, 134, 13. Certain Relationships and
179-188 Related Transactions . . . . . . . . . . . . . . . . ****
1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . 75 14. Principal Accountant Fees and Services . *****
1B. Unresolved Staff Comments . . . . . . . . . Not Applicable
2. Properties . . . . . . . . . . . . . . . . . . . . . . . 181 Part IV

3. Legal Proceedings . . . . . . . . . . . . . . . . . 181-186 15. Exhibits and Financial

Statement Schedules . . . . . . . . . . . . . . . . 190
4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . Not Applicable * For additional information regarding Citigroup Directors, see the material under the captions
“Corporate Governance,” “Proposal 1: Election of Directors” and “Section 16 (a) Beneficial Ownership
Reporting Compliance” in the definitive Proxy Statement for Citigroup’s Annual Meeting of
Stockholders to be held on April 18, 2006, to be filed with the SEC (the Proxy Statement), incorporated
Part II herein by reference.
** See the material under the captions “How We Have Done,” “Report of the Personnel and
Compensation Committee on Executive Compensation,” “Executive Compensation” and “Employment
5. Market for Registrant’s Common Equity, Agreements” in the Proxy Statement, incorporated herein by reference.
Related Stockholder Matters, and Issuer *** See the material under the captions “About the Annual Meeting” and “Stock Ownership” in the Proxy
Statement, incorporated herein by reference.
Purchases of Equity Securities . . . . . . . 101, 177, 186, **** See the material under the captions “Proposal 1: Election of Directors,” “Executive Compensation” and
“Certain Transactions and Relationships, Compensation Committee Interlocks and Insider
190-191 Participation” in the Proxy Statement, incorporated herein by reference.
***** See the material under the caption “Proposal 2: Ratification of Selection of Independent Registered
6. Selected Financial Data . . . . . . . . . . . . . 27 Public Accounting Firm” 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.
7. Management’s Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . 28-109
7A. Quantitative and Qualitative Disclosures
about Market Risk . . . . . . . . . . . . . . . . . 76-93, 135-150,
161-166
8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . . . 117-178
9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . Not Applicable
9A. Controls and Procedures . . . . . . . . . . . 110, 114
9B. Other Information . . . . . . . . . . . . . . . . . Not Applicable

189
CORPORATE INFORMATION

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Annual Meeting

The annual meeting will be held at 9:00 a.m. on April 18, 2006, at Carnegie
The following exhibits are either filed herewith or have been previously filed Hall, 154 West 57th Street, New York, New York.
with the Securities and Exchange Commission and are filed herewith by
Transfer Agent
incorporation by reference:
Stockholder address changes and inquiries regarding stock transfers, dividend
• Citigroup’s Restated Certificate of Incorporation, as amended,
replacement, 1099-DIV reporting, and lost securities for common and
• Citigroup’s By-Laws,
preferred stocks should be directed to:
• Instruments Defining the Rights of Security Holders, including Indentures,
Citibank Stockholder Services
• Material Contracts, including certain compensatory plans available only
P.O. Box 43077
to officers and/or directors,
Providence, RI 02940-3077
• Statements re: Computation of Ratios,
Telephone No. 781 575 4555
• Code of Ethics for Financial Professionals,
Toll-free No. 888 250 3985
• Subsidiaries of the Registrant,
Facsimile No. 201 324 3284
• Consent of Expert,
E-mail address: Citibank@shareholders-online.com
• Powers of Attorney of Directors Armstrong, Belda, David, Derr, Deutch,
Hernandez Ramirez, Jordan, Kleinfeld, Liveris, Mecum, Mulcahy, Parsons, Exchange Agent
Rodin, Rubin, Thomas, and Weill. Holders of Golden State Bancorp, Associates First Capital Corporation, Citicorp
• CEO and CFO certifications under Sections 302 and 906 of the Sarbanes- or Salomon Inc common stock, Citigroup Inc. Preferred Stock Series J, K, Q,
Oxley Act of 2002. R, S, T, U, or V, Salomon Inc Preferred Stock Series D or E, or Travelers Group
Preferred Stock Series D should arrange to exchange their certificates by
A more detailed exhibit index has been filed with the SEC. Stockholders
contacting:
may obtain copies of that index, or any of the documents in that index, by
Citibank Stockholder Services
writing to Citigroup Inc., Corporate Governance, 425 Park Avenue, 2nd floor,
P.O. Box 43035
New York, New York 10043, or on the Internet at http://www.sec.gov.
Providence, RI 02940-3035
Financial Statements filed for Citigroup Inc. and Subsidiaries: Telephone No. 781 575 4555
• Consolidated Statement of Income Toll-free No. 888 250 3985
• Consolidated Balance Sheet Facsimile No. 201 324 3284
• Consolidated Statement of Changes in Stockholders’ Equity E-mail address: Citibank@shareholders-online.com
• Consolidated Statement of Cash Flows The 2005 Form 10-K filed with the Securities and Exchange Commission
• Consolidated Balance Sheet (Citibank, N.A.) by the Company, as well as annual and quarterly reports, are available from
Citigroup Document Services toll free at 877 936 2737 (outside the United
United States Securities and Exchange Commission
States at 718 765 6514), by e-mailing a request to docserve@citigroup.com,
Washington, DC 20549
or by writing to:
Form 10-K
Citigroup Document Services
Annual Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act 140 58th Street, Suite 8G
of 1934 for the fiscal year ended December 31, 2005. Brooklyn, NY 11220
Commission File Number 1-9924 Copies of this annual report and other Citigroup financial reports can be
viewed or retrieved through the Company’s Web site at http://www.citigroup.com
Citigroup Inc.
by clicking on the “Investor Relations” page and selecting “SEC Filings” or
Incorporated in the State of Delaware
through the SEC’s Web site at http://www.sec.gov.
IRS Employer Identification Number: 52-1568099
Address: 399 Park Avenue Corporate Governance Materials
New York, New York 10043 The following materials, which have been adopted by the Company, are
Telephone: 212 559 1000 available free of charge on the Company’s Web site at
http://www.citigroup.com under the “Corporate Governance” page or by
Stockholder Information
writing to Citigroup Inc., Corporate Governance, 425 Park Avenue, 2nd floor,
Citigroup common stock is listed on the New York Stock Exchange (NYSE)
New York, New York 10043: the Company’s (i) corporate governance
and the Pacific Exchange (PCX) under the ticker symbol “C.”
guidelines, (ii) code of conduct, (iii) code of ethics for financial professionals,
Citigroup Preferred Stock Series F, G, H, and M are also listed on the New
and (iv) charters of (a) the audit and risk management committee, (b) the
York Stock Exchange.
personnel and compensation committee, (c) the public affairs committee,
Because our common stock is listed on the NYSE and the PCX, our chief
and (d) the nomination and governance committee. The code of ethics for
executive officer is required to make, and he has made, annual certifications
financial professionals applies to the Company’s principal executive officer,
to the NYSE and the PCX stating that he was not aware of any violation by
principal financial officer and principal accounting officer. Amendments and
Citigroup of the corporate governance listing standards of the NYSE and the
waivers, if any, to the code of ethics for financial professionals will be disclosed
PCX, respectively. Our chief executive officer made his annual certifications to
on the Company’s Web site.
that effect to each of the NYSE and the PCX as of May 16, 2005.

190
Securities Registered Pursuant to Section 12 (b) and (g) of Pursuant to the requirements of the Securities Exchange Act of 1934, this
the Exchange Act report has been signed below by the following persons on behalf of the
A list of Citigroup securities registered pursuant to Section 12 (b) and (g) of registrant and in the capacities indicated on the 23rd day of February, 2006.
the Securities Exchange Act of 1934 is filed as an exhibit herewith and is
available from Citigroup Inc., Corporate Governance, 425 Park Avenue, 2nd Citigroup’s Principal Executive Officer and a Director:
floor, New York, New York 10043 or on the Internet at http://www.sec.gov.
As of February 6, 2006, Citigroup had 4,991,302,195 shares of common
stock outstanding.
As of February 6, 2006, Citigroup had approximately 208,325 common
stockholders of record. This figure does not represent the actual number of Charles Prince
beneficial owners of common stock because shares are frequently held in
“street name” by securities dealers and others for the benefit of individual Citigroup’s Principal Financial Officer:
owners who may vote the shares.
Citigroup is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act of 1933.
Citigroup is required to file reports pursuant to Section 13 or Section
15 (d) of the Securities Exchange Act of 1934. Sallie Krawcheck
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 Citigroup’s Principal Accounting Officer:
(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
John C. Gerspach
not contained herein nor in Citigroup’s 2006 Proxy Statement incorporated by
reference in Part III of this Form 10-K.
The Directors of Citigroup listed below executed a power of attorney
Citigroup is a large accelerated filer (as defined in Rule 12b-2 under the
appointing Sallie Krawcheck their attorney-in-fact, empowering her to sign
Securities Exchange Act of 1934).
this report on their behalf.
Citigroup is not a shell company (as defined in Rule 12b-2 under the
Securities Exchange Act of 1934). C. Michael Armstrong Andrew N. Liveris
The aggregate market value of Citigroup common stock held by non- Alain J.P. Belda Dudley C. Mecum
affiliates of Citigroup on February 6, 2006 was approximately $224.5 billion. George David Anne Mulcahy
Certain information has been incorporated by reference as described Kenneth T. Derr Richard D. Parsons
herein into Part III of this annual report from Citigroup’s 2006 Proxy John M. Deutch Judith Rodin
Statement. Roberto Hernández Ramirez Robert E. Rubin
Ann Dibble Jordan Franklin A. Thomas
Signatures
Klaus Kleinfeld Sanford I. Weill
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 23rd day
of February, 2006.
Citigroup Inc. Sallie Krawcheck
(Registrant)

Sallie Krawcheck
Chief Financial Officer

191
CITIGROUP BOARD OF DIRECTORS

C. Michael Armstrong Roberto Hernández Ramirez Anne Mulcahy Franklin A. Thomas

Chairman, Board of Trustees Chairman Chairman and Consultant
Johns Hopkins Medicine, Banco Nacional de Mexico Chief Executive Officer The Study Group
Health Systems & Hospital Xerox Corporation
Ann Dibble Jordan Sanford I. Weill
Alain J.P. Belda Consultant Richard D. Parsons Chairman
Chairman and Chairman and Citigroup Inc.
Chief Executive Officer Klaus Kleinfeld Chief Executive Officer
Alcoa Inc. President and Time Warner Inc. HONORARY DIRECTOR
Chief Executive Officer
George David Siemens AG Charles Prince The Honorable
Chairman and Chief Executive Officer Gerald R. Ford
Chief Executive Officer Andrew N. Liveris Citigroup Inc. Former President
United Technologies Corporation President, Chief Executive Officer
of the United States
and Chairman-Elect Judith Rodin
Kenneth T. Derr The Dow Chemical Company President
Chairman, Retired Rockefeller Foundation
Chevron Corporation Dudley C. Mecum
Managing Director Robert E. Rubin
John M. Deutch Capricorn Holdings, LLC Chairman, Executive Committee;
Institute Professor Member, Office of the Chairman
Massachusetts Institute of Citigroup Inc.
Technology

192