Filed Pursuant to Rule 424(b)(2)
Registration No. 333-69230-07
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JANUARY 26, 2005
PROSPECTUS
TARGETS
TRUST XXIV
TARGETED GROWTH WITH RESPECT TO THE COMMON STOCK OF
ENHANCED TERMS SECURITIES INTEL CORPORATION
(TARGETS(R)) DUE ON , 2008
$10.00 PER TARGETS
PAYMENTS DUE FROM
TARGETS TRUST XXIV GUARANTEED BY
CITIGROUP GLOBAL MARKETS HOLDINGS INC.
- Preferred securities of a trust paying:
1. Quarterly distributions in the amount of $ (except $ on May 15,
2005), and
2. A maturity payment based on the market price of the common stock of
Intel Corporation.
- We will apply to list the TARGETS on the American Stock Exchange under the
symbol "TOI."
INVESTING IN THE TARGETS INVOLVES A NUMBER OF RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 9.
Intel Corporation is not involved in any way in this offering and has no
obligations relating to the TARGETS or to holders of the TARGETS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the TARGETS or determined that this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
PER TARGETS TOTAL
----------- -----
Public Offering Price $10.00 $
------ --------
Underwriting Discount to be paid by Citigroup Global Markets Holdings $ $
------ --------
Proceeds to TARGETS Trust XXIV before expenses $ $
------ --------
Citigroup Global Markets Inc. expects to deliver the TARGETS to purchasers on or
about , 2005.
Investment Products Not FDIC Insured May Lose Value No Bank Guarantee
, 2005
(CITIGROUP LOGO)
TARGETS(R) (TARGETED GROWTH ENHANCED TERMS SECURITIES) SUMMARY
This summary highlights selected information from this prospectus to help
you understand the TARGETS with respect to the common stock of Intel
Corporation. You should carefully read the entire prospectus to understand fully
the terms of the TARGETS as well as the principal tax and other considerations
that are important to you in making a decision about whether to invest in the
TARGETS. You should, in particular, carefully review the section entitled "Risk
Factors," which highlights a number of risks, to determine whether an investment
in the TARGETS is appropriate for you. All of the information set forth below is
qualified in its entirety by the more detailed explanation set forth elsewhere
in this prospectus.
GENERAL
TARGETS are preferred securities issued by a trust that offer a potential
growth and income investment opportunity. TARGETS provide the growth potential
of a particular stock in any given monthly period up to an appreciation cap of %
subject to automatic resets, while limiting potential loss in any given monthly
period to a depreciation floor of % subject to automatic resets. Although the
growth potential of an investment in the TARGETS is capped, TARGETS investors
receive quarterly distributions with a yield greater than the underlying stock's
current dividend yield. TARGETS have a term of approximately 3 years.
SELECTED PURCHASE CONSIDERATIONS
- GROWTH POTENTIAL -- TARGETS allow you to participate in the first % of
appreciation in the price of the common stock on which they are based in
the period between the issue date and the reset date of the following
month and in any subsequent monthly period during the term of the TARGETS.
- CURRENT INCOME -- TARGETS pay quarterly distributions with a yield set at
a rate that is significantly higher than the dividend yield currently paid
by the company on whose common stock the TARGETS are based.
- TAX ADVANTAGE -- For most investors, a significant portion of the TARGETS'
quarterly distributions will be considered a return of principal. This tax
advantage of the TARGETS has the potential effect of producing a higher
after-tax return than would be produced by a more conventional
income-generating security. In addition, the TARGETS generally will give
rise to a capital gain or loss upon sale or at maturity.
- EXCHANGE LISTING -- Although the TARGETS are expected to be "buy and hold"
investments, they are listed on a major exchange.
SELECTED RISK CONSIDERATIONS
An investment in the TARGETS involves significant risks. These risks are
explained in more detail in the "Risk Factors" section of this prospectus. Some
are summarized here.
- YOUR INVESTMENT IN THE TARGETS MAY RESULT IN A LOSS -- The maturity
payment on the TARGETS is dependent on the compounded value of the
periodic capped returns on the common stock for each reset period during
the term of the TARGETS. The first reset period begins on the date the
TARGETS are issued and ends on a date determined at the time of pricing
the TARGETS for initial sale to the public, which will be approximately
one month later. Subsequent reset periods end on that day of each month,
with the last reset period ending at maturity. If the price of the common
stock declines in any reset period, the periodic capped return for that
reset period will be negative, and the compounded value of the periodic
capped returns will decrease. If the price of the common stock declines in
enough reset periods, the compounded value will be negative. As a result,
the amount of any maturity payments may be less than the amount you paid
for your TARGETS. This may be the case even if the price of the common
stock increases during one or more reset periods or the price of the
common stock at some point over the life of your TARGETS or at maturity is
equal to, or higher than, the price of the common stock at the time you
bought your TARGETS.
- THE APPRECIATION OF YOUR INVESTMENT IN THE TARGETS WILL BE CAPPED --
TARGETS may provide less opportunity for equity appreciation than a direct
investment in the common stock because the periodic capped return will
limit the portion of any appreciation in the price of the common stock in
which you will share to the first % of the increase in the period between
the issue date and the first reset date and in any subsequent monthly
period, but will expose you to the first % of any depreciation in the
price of the common stock during any such period. If the price of the
common stock increases by more than % in any such period during the term
of the TARGETS, your return on the TARGETS may be less than your return on
a similar security that was directly linked to the common stock but was
not subject to a cap on appreciation.
- YOU HAVE NO RIGHTS AGAINST THE ISSUER OF THE COMMON STOCK EVEN THOUGH THE
MATURITY PAYMENT ON THE TARGETS IS BASED ON THE PRICE OF THE COMMON STOCK
-- The market price of the TARGETS at any time will be affected primarily
by changes in the price of the common stock. The yield on the TARGETS is
set at a rate that is higher than the current dividend yield on the
common stock, but may not remain higher through the term of the TARGETS if
the issuer of the common stock increases its dividends or the price of the
common stock decreases. The issuer of the common stock is not involved in
this offering and has no obligations relating to the TARGETS.
- YOU MAY NOT BE ABLE TO SELL YOUR TARGETS IF AN ACTIVE TRADING MARKET FOR
THE TARGETS DOES NOT DEVELOP -- The TARGETS are listed on a major
exchange, but there can be no guarantee of liquidity in the secondary
market. Although Citigroup Global Markets Inc. intends to make a market in
the TARGETS, it is not obligated to do so.
- THE PRICE AT WHICH YOU WILL BE ABLE TO SELL YOUR TARGETS PRIOR TO MATURITY
MAY BE SUBSTANTIALLY LESS THAN THE AMOUNT YOU ORIGINALLY INVEST -- Due to
changes in the price of and the dividend yield on the common stock,
interest rates, other economic conditions and Citigroup Global Markets
Holdings' perceived creditworthiness, the TARGETS may trade at prices
below their initial issue price and you could receive substantially less
than the amount of your original investment if you sell your TARGETS prior
to maturity.
2
SUMMARY INFORMATION -- Q&A
WHAT IS TARGETS TRUST XXIV?
TARGETS Trust XXIV is a Delaware statutory trust. Citigroup Global Markets
Holdings will own all of the common securities of Trust XXIV. The common
securities will comprise at least 3% of Trust XXIV's capital.
Trust XXIV will not engage in any activities except:
- issuing its trust securities, which are limited to TARGETS and
common securities,
- investing approximately 85% to 90% of the proceeds of the offering in a
forward contract of Citigroup Global Markets Holdings relating to the
common stock of Intel Corporation.
- investing approximately 10% to 15% of the proceeds of the offering in
stripped self-amortizing U.S. treasury securities, and
- activities incidental to the above.
Trust XXIV will not issue any securities except the common securities and
the TARGETS.
Trust XXIV will be managed by trustees elected by Citigroup Global Markets
Holdings, as the holder of the common securities. The holders of the TARGETS
will have no right to elect or remove trustees. Citigroup Global Markets
Holdings will pay all costs, expenses, debts and liabilities of Trust XXIV,
including fees and expenses related to the offering of the TARGETS, but not
including payments under the TARGETS.
The address and telephone number of Trust XXIV are:
TARGETS Trust XXIV
c/o Citigroup Global Markets Holdings Inc.
388 Greenwich Street
New York, NY 10013
(212) 816-6000
WHAT ARE THE TARGETS?
The TARGETS are preferred undivided interests in Trust XXIV. The TARGETS
mature on , 2008, but will be subject to acceleration to an
accelerated maturity date upon the occurrence of one of the acceleration events
described below. If an acceleration event occurs or Citigroup Global Markets
Holdings defaults on its guarantee, holders of the TARGETS will have a
preference over holders of the common securities for payments.
The TARGETS are designed to provide you with a higher yield than the
current dividend yield paid on the common stock of Intel. They also provide the
opportunity for you to share in the first % of any appreciation while limiting
your potential loss to the first % of any depreciation in the price of the
common stock in the period between the issue date and the first reset date and
in any subsequent monthly period during the term of the TARGETS.
WILL I RECEIVE QUARTERLY DISTRIBUTIONS ON THE TARGETS?
You will receive cash distributions of $ per quarter on each TARGETS
(except that the quarterly distribution payment payable on May 15, 2005 will be
$ per TARGETS), payable on each February 15, May 15, August 15 and November
15, beginning May 15, 2005.
3
Trust XXIV will make quarterly distribution payments out of:
- payments received on the treasury securities, and
- any yield enhancement payments received from Citigroup Global Markets
Holdings under the forward contract.
Depending on market conditions at the time of pricing the TARGETS for
initial sale to the public, the amount of the yield enhancement payments may be
zero or a nominal amount.
The ability of Trust XXIV to make quarterly distributions on the TARGETS is
entirely dependent on receipt by Trust XXIV of payments under the treasury
securities and yield enhancement payments, if any, under the forward contract.
Citigroup Global Markets Holdings may elect not to make yield enhancement
payments, if any, on the date they are due under the forward contract, and is
permitted to delay making those payments, with interest, until maturity. You
should refer to the sections "Risk Factors -- You May Not Receive Yield
Enhancement Payments on the Date They Are Due Because They Can Be Deferred" and
"Description of the TARGETS -- Quarterly Distributions" in this prospectus.
WHAT WILL I RECEIVE AT MATURITY OF THE TARGETS?
At maturity, you will receive for each TARGETS the maturity payment and the
final quarterly distribution. The maturity payment per TARGETS will equal the
sum of (A) the initial principal amount of $10.00 per TARGETS and (B) the stock
return payment, which may be positive, zero or negative.
HOW WILL THE STOCK RETURN PAYMENT BE CALCULATED?
The stock return payment will equal the product of:
Initial Principal Amount of $10.00 per TARGETS x Stock Return
The stock return will equal the compounded value of the periodic capped
returns for each reset period computed in the following manner, and is presented
in this prospectus as a percentage:
Product of [(1.00 + the periodic capped return) for each reset period] -
1.00
The periodic capped return for any reset period (including the reset period
ending at maturity) will equal the following fraction:
Ending Value - Starting Value
---------------------------------
Starting Value
Reset dates occur on the day of each month beginning , 2005,
except that the final reset date will occur at maturity. We refer to each period
between any two consecutive reset dates (or the issue date and the first reset
date) as a reset period. The periodic capped return for any reset period will
not in any circumstances be greater than % or less than %.
The stock return will be calculated by compounding the product of the
periodic capped returns for each reset period. Assuming a hypothetical 4.5% cap
on appreciation and a hypothetical 10% floor on depreciation in each reset
period and a total of 36 reset periods, the stock return cannot be more than
approximately 387.74% (a maximum value that represents an increase in the price
of the common stock of at least 4.5% in each reset period) and may be as little
as -97.75% (a minimum value that represents a decrease in the price of the
common stock of at least 10% in each reset period).
The ending value for any reset period other than the reset period ending at
maturity will be the trading price of the common stock on the reset date at the
end of the period or, if that day is not a trading day, the trading price of the
common stock on the next following trading day. The ending value for the reset
period ending at maturity will be the average daily trading price of the common
stock for the 10 trading days immediately up to and including the date three
trading days before the maturity date.
4
The starting value for the initial reset period will be the closing sale
price of the common stock on the date the TARGETS are priced for initial sale to
the public. We will disclose the initial starting value to you in the final
prospectus delivered to you in connection with sales of the TARGETS. The
starting value for each subsequent reset period (including the reset period
ending on maturity) will equal the ending value for the immediately preceding
reset period.
A trading day means a day, as determined by Citigroup Global Markets
Holdings, on which trading is generally conducted (or was scheduled to have been
generally conducted, but for the occurrence of a market disruption event) on the
New York Stock Exchange, the American Stock Exchange, the Nasdaq National
Market, the Chicago Mercantile Exchange and the Chicago Board Options Exchange,
and in the over-the-counter market for equity securities in the United States.
A market disruption event means the occurrence or existence of any
suspension of or limitation imposed on trading (by reason of movements in price
exceeding limits permitted by any exchange or market or otherwise) of, or the
unavailability, through a recognized system of public dissemination of
transaction information, of accurate price, volume or related information in
respect of, (1) the shares of Intel common stock on any exchange or market, or
(2) any options contracts or futures contracts relating to the shares of Intel
common stock, or any options on such futures contracts, on any exchange or
market if, in each case, in the determination of Citigroup Global Markets
Holdings, any such suspension, limitation or unavailability is material.
The trading price of the Intel common stock (or any other security for
which a trading price must be determined) on any date of determination will be
(1) if the common stock is listed on a national securities exchange on that date
of determination, the closing sale price or, if no closing sale price is
reported, the last reported sale price on that date on the principal U.S.
exchange on which the common stock is listed or admitted to trading, (2) if the
common stock is not listed on a national securities exchange on that date of
determination, or if the closing sale price or last reported sale price is not
obtainable (even if the common stock is listed or admitted to trading on such
exchange), and the common stock is quoted on the Nasdaq National Market, the
closing sale price or, if no closing sale price is reported, the last reported
sale price on that date as reported on the Nasdaq, and (3) if the common stock
is not quoted on the Nasdaq on that date of determination or, if the closing
sale price or last reported sale price is not obtainable (even if the common
stock is quoted on the Nasdaq), the last quoted bid price for the common stock
in the over-the-counter market on that date as reported by the OTC Bulletin
Board, the National Quotation Bureau or a similar organization. The
determination of the trading price on any trading day may be deferred by
Citigroup Global Markets Holdings for up to five consecutive trading days on
which a market disruption event is occurring, but not past the trading day prior
to maturity. If no sale price is available pursuant to clauses (1), (2) or (3)
above or if there is a market disruption event, the trading price on any date of
determination, unless deferred by Citigroup Global Markets Holdings as described
in the preceding sentence, will be the arithmetic mean, as determined by
Citigroup Global Markets Holdings, of the bid prices of the common stock
obtained from as many dealers in such stock (which may include Citigroup Global
Markets Inc. or any of its other subsidiaries or affiliates), but not exceeding
three such dealers, as will make such bid prices available to Citigroup Global
Markets Holdings. A security "quoted on the Nasdaq National Market" will include
a security included for listing or quotation in any successor to such system and
the term "OTC Bulletin Board" will include any successor to such service.
The periodic capped return is subject to adjustment upon the occurrence of
certain events involving Intel and its capital structure.
The stock return payment payable to you at maturity is dependent on the
return on the common stock during the period between the issue date and the
first reset date and during each subsequent monthly period. The stock return
payment that you receive on the maturity date may be positive, zero or negative.
If the stock return is negative, the maturity payment you receive will be less
than the amount of your original investment. If the stock return is zero, the
maturity payment you receive will equal the amount of your original investment.
If the ending value for the reset period ending at maturity is less than
the price of the common stock upon issuance of the TARGETS, the maturity payment
on each TARGETS may be less than the amount you
5
originally invested. As demonstrated by some of the hypothetical examples
provided below, the possibility exists that an investment in the TARGETS will
result in a loss even if the ending value for the reset period ending at
maturity is greater than the price of the common stock when the TARGETS are
issued.
The TARGETS may provide less opportunity for appreciation than a direct
investment in the common stock because the periodic capped return will limit the
portion of any appreciation in the price of the common stock in which you will
share to the first % of any increase in the price of the common stock during
any reset period, but will expose you to the first % of any depreciation in
the price of the common stock during any reset period.
The maturity payment with respect to each TARGETS will be paid by Trust
XXIV out of the funds received by Trust XXIV from Citigroup Global Markets
Holdings under the forward contract. Trust XXIV's ability to make the maturity
payments is entirely dependent upon Trust XXIV receiving payments under the
forward contract from Citigroup Global Markets Holdings.
WHERE CAN I FIND EXAMPLES OF HYPOTHETICAL MATURITY PAYMENTS?
For a table setting forth hypothetical maturity payments, see "Description
of the TARGETS -- Maturity Payment -- Hypothetical Examples" in this prospectus.
WHAT HAPPENS IF AN ACCELERATION EVENT OCCURS?
If one of the acceleration events described below occurs, the treasury
securities will be sold and Trust XXIV will be liquidated. You will receive for
each TARGETS the accelerated maturity payment and a pro rata portion of the
proceeds of the sale of the treasury securities, plus any accrued and unpaid
yield enhancement payments.
The accelerated maturity payment per TARGETS will be calculated in the same
manner as the maturity payment and as though the date on which the acceleration
event occurred were the maturity date.
You will receive payment before holders of the common securities if an
acceleration event occurs or Citigroup Global Markets Holdings defaults on any
of its obligations under its guarantee.
Any of the following will constitute an acceleration event:
- the occurrence of certain adverse tax consequences to Trust XXIV,
- the classification of Trust XXIV as an "investment company" under the
Investment Company Act, or
- the initiation of bankruptcy proceedings regarding Citigroup Global
Markets Holdings.
ARE PAYMENTS ON THE TARGETS GUARANTEED?
Citigroup Global Markets Holdings has guaranteed that if a payment on the
forward contract or the treasury securities is made to Trust XXIV but, for any
reason, Trust XXIV does not make the corresponding payment to you, then
Citigroup Global Markets Holdings will make the payment directly to you. You
should refer to the section "Description of the Guarantee" in this prospectus.
WHAT ARE MY VOTING RIGHTS?
You will have limited voting rights with respect to Trust XXIV and will not
be entitled to vote to appoint, remove or replace, or increase or decrease the
number of, the trustees. These voting rights will be held exclusively by
Citigroup Global Markets Holdings, as the holder of the common securities. You
will, however, have the right to direct JPMorgan Chase Bank, N.A., as trustee of
Trust XXIV and as holder of the forward contract and the treasury securities, to
exercise its rights as trustee and to direct the time, method and place of any
proceeding for any remedy available to the trustee.
You will have no voting rights and no ownership interest in any common
stock of Intel.
6
HOW HAS INTEL COMMON STOCK PERFORMED HISTORICALLY?
We have provided a table showing the high and low sale prices for Intel
common stock since the first quarter of 2000. You can find this table in the
section "Historical Data on the Common Stock of Intel Corporation" in this
prospectus. We have provided this historical information to help you evaluate
the behavior of Intel common stock in recent years. However, past performance is
not necessarily indicative of how Intel common stock will perform in the future.
You should also refer to the section "Risk Factors -- You Have No Rights Against
Intel Even Though the Maturity Payment on the TARGETS is Based on the Trading
Price of Intel Common Stock" in this prospectus.
The TARGETS are obligations of Trust XXIV and, to the extent of the
guarantee, of Citigroup Global Markets Holdings. Even though the maturity
payment will reflect the market price of Intel common stock at maturity, Intel
has no obligations under the TARGETS or Citigroup Global Markets Holdings'
guarantee.
WHAT IS THE FORWARD CONTRACT?
The forward contract will be issued under an indenture between Citigroup
Global Markets Holdings and JPMorgan Chase Bank, N.A., as trustee. Citigroup
Global Markets Holdings conducts other business with JPMorgan Chase Bank, N.A.
Trust XXIV will purchase the forward contract from Citigroup Global Markets
Holdings on the date the TARGETS are issued. Under the forward contract,
Citigroup Global Markets Holdings will be required to pay to Trust XXIV the
total maturity payments, or the total accelerated maturity payments, and any
yield enhancement payments. The forward contract is a prepaid "cash-settled"
forward contract under which Citigroup Global Markets Holdings will settle its
obligations in cash rather than in securities. The proceeds from the sale of the
forward contract will be used by Citigroup Global Markets Holdings for general
corporate purposes. You should refer to the sections "Use of Proceeds and
Hedging Activities," "Description of the Forward Contract" and "Risk
Factors -- The Market Value of the TARGETS May Be Affected by Purchases and
Sales of Intel Common Stock or Derivative Instruments Related to Intel Common
Stock by Affiliates of Citigroup Global Markets Holdings" in this prospectus.
WHAT ARE THE U.S. FEDERAL INCOME TAXES CONSEQUENCES OF INVESTING IN THE TARGETS?
If you are a U.S. individual or taxable entity, you generally will be
required to pay taxes on only a portion of each quarterly cash distribution you
receive from Trust XXIV, which will be ordinary income. The remaining portion of
each quarterly cash distribution that you receive from Trust XXIV will be
treated as a tax-free return of your investment in the TARGETS and will reduce
your tax basis in them. If you hold your TARGETS until they mature or if you
sell your TARGETS, you will have a capital gain or loss equal to the difference
between your tax basis in the TARGETS and the cash you receive. You should refer
to the section "Certain United States Federal Income Tax Considerations" in this
prospectus.
WILL THE TARGETS BE LISTED ON A STOCK EXCHANGE?
We will apply to list the TARGETS on the American Stock Exchange under the
symbol "TOI." You should be aware that the listing of the TARGETS on the
American Stock Exchange will not necessarily ensure that a liquid trading market
will be available for the TARGETS.
WHAT IS THE ROLE OF CITIGROUP GLOBAL MARKETS HOLDINGS' SUBSIDIARY, CITIGROUP
GLOBAL MARKETS INC.?
Citigroup Global Markets Holdings' subsidiary, Citigroup Global Markets
Inc., is the underwriter for the offering and sale of the TARGETS. After the
initial offering, Citigroup Global Markets Inc. and/or other broker-dealer
affiliates of Citigroup Global Markets Holdings intend to buy and sell TARGETS
to create a secondary market for holders of the TARGETS, and may engage in other
activities described below in the section "Underwriting." However, neither
Citigroup Global Markets Inc. nor any of these affiliates will be
7
obligated to engage in any market-making activities, or continue them once it
has started. Citigroup Global Markets Inc. will also act as calculation agent
for the TARGETS.
CAN YOU TELL ME MORE ABOUT CITIGROUP GLOBAL MARKETS HOLDINGS?
Citigroup Global Markets Holdings Inc. is a holding company that provides
investment banking, securities and commodities trading, brokerage, asset
management and other financial services through its subsidiaries. Citigroup
Global Markets Holdings is a subsidiary of Citigroup Inc., a diversified
financial services holding company.
Citigroup Global Markets Holdings' ratios of earnings to fixed charges
(Citigroup Global Markets Holdings has no outstanding preferred stock) since
1999 are as follows:
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -------------------------------------
2004 2003 2002 2001 2000 1999
------------- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges......... 0.27x 1.90x 1.44x 1.34x 1.32x 1.46x
CAN YOU TELL ME MORE ABOUT CITIGROUP GLOBAL MARKETS HOLDINGS' HEDGING ACTIVITY?
Citigroup Global Markets Holdings expects to hedge its obligations under
the TARGETS through one or more of its affiliates. This hedging activity will
likely involve trading in Intel common stock or in other instruments, such as
options or swaps, based upon Intel common stock. This hedging activity could
affect the market price of Intel common stock and therefore the market value of
the TARGETS. The costs of maintaining or adjusting this hedging activity could
also affect the price at which Citigroup Global Markets Holdings' subsidiary
Citigroup Global Markets Inc. may be willing to purchase your TARGETS in the
secondary market. Moreover, this hedging activity may result in Citigroup Global
Markets Holdings or its affiliates receiving a profit, even if the market value
of the TARGETS declines. You should refer to "Risk Factors -- Citigroup Global
Markets Holdings' Hedging Activity Could Result in a Conflict of Interest,"
"-- The Price at Which You Will Be Able to Sell Your TARGETS Prior to Maturity
Will Depend on a Number of Factors and May Be Substantially Less Than the Amount
You Originally Invest" and "Use of Proceeds and Hedging Activities" in this
prospectus.
DOES ERISA IMPOSE ANY LIMITATIONS ON PURCHASES OF THE TARGETS?
Employee benefit plans subject to ERISA, individual retirement accounts,
Keogh plans and other similar plans subject to Section 4975 of the Internal
Revenue Code, entities the assets of which may be deemed to be "plan assets"
under ERISA regulations, and governmental plans subject to any substantially
similar laws (collectively, "Pension Type Accounts") can generally purchase the
TARGETS. However, each such Pension Type Account should consider whether
purchase of the TARGETS is prudent and consistent with the documents governing
such account. The fiduciary rules governing Pension Type Accounts are complex
and individual considerations may apply to a particular account. Accordingly,
any fiduciary of a Pension Type Account should consult with its legal advisers
to determine whether purchase of the TARGETS is permissible under the fiduciary
rules. Each purchaser will be deemed to have made certain representations
concerning its purchase or other acquisition of the TARGETS. You should refer to
the section "ERISA Considerations" in this prospectus.
ARE THERE ANY RISKS ASSOCIATED WITH MY INVESTMENT?
Yes, the TARGETS are subject to a number of risks. Please refer to the
section "Risk Factors" in this prospectus.
8
RISK FACTORS
You should carefully consider the following risk factors in addition to the
other information contained in this prospectus before investing in the TARGETS.
Hypothetical examples illustrating certain of the risks described in each of the
first four risk factors can be found below in the section "Description of the
Targets -- Maturity Payment -- Hypothetical Examples."
YOUR INVESTMENT IN THE TARGETS MAY RESULT IN A LOSS IF THE TRADING PRICE OF
INTEL COMMON STOCK DECLINES
If the trading price of the common stock declines during the period between
the issue date and the first reset date or in any subsequent reset period during
the term of the TARGETS, the value of the periodic capped return for that reset
period will be negative. Because the amount of the payment to you at maturity is
based on the compounded value of the periodic capped return for the reset
periods during the term of the TARGETS, the likelihood that the value of the
stock return will be negative increases as the number of periodic capped returns
with negative values increases and as the size of the decline in the trading
price of the common stock in any reset period increases (down to the %
depreciation floor). As demonstrated by some of the hypothetical examples in the
section "Description of the TARGETS -- Maturity Payment -- Hypothetical
Examples," the maturity payment may be less than the amount of your investment
even if the price of the common stock has increased during one or more monthly
periods during the term of the TARGETS or if the trading price of the common
stock as of the maturity date is greater than its price at issuance. In fact,
assuming a hypothetical 4.5% cap on appreciation and a hypothetical 10% floor
for depreciation in each reset period and a total of 36 reset periods, if the
trading price of the common stock declines in at least 11 reset periods by 10%
or more, the maturity payment amount will be less than the amount of your
investment, even if the trading price of the common stock increases by at least
4.5% in every other reset period. In addition, assuming a hypothetical 10%
depreciation floor, the maturity payment amount can be as low as $0.23 per
TARGETS if the trading price of the common stock declines by 10% or more in each
reset period.
THE APPRECIATION OF YOUR INVESTMENT IN THE TARGETS WILL BE CAPPED
The TARGETS may provide less opportunity for equity appreciation than a
direct investment in the common stock because the periodic capped return will
limit the portion of any appreciation in the price of the common stock in which
you will share to the first % of the increase in any reset period, but will
expose you to the first % of any depreciation in the price of the common stock
during any given reset period. If the trading price of the common stock
increases by more than % in any reset period during the term of the TARGETS,
your return on the TARGETS may be less than your return on a similar security
that was directly linked to the common stock but was not subject to a cap on
appreciation.
YOU HAVE NO RIGHTS AGAINST INTEL EVEN THOUGH THE MATURITY PAYMENT ON THE TARGETS
IS BASED ON THE TRADING PRICE OF INTEL COMMON STOCK
The historical common stock price is not an indicator of the future
performance of the common stock during the term of the TARGETS. Changes in the
price of the common stock will affect the trading price of the TARGETS, but it
is impossible to predict whether the price of the common stock will rise or
fall.
The yield on the TARGETS is higher than the current dividend yield on the
common stock. However, it may not remain higher through the term of the TARGETS
if Intel increases its dividends or the price of the common stock decreases. In
addition, you will not receive dividends or other distributions paid on the
common stock.
Intel is not in any way involved with this offering and has no obligations
relating to the TARGETS or holders of the TARGETS. In addition, you will have no
voting rights with respect to the common stock of Intel.
9
Intel is currently subject to SEC reporting requirements, and distributes
reports and other information to its stockholders. In the event that Intel
ceases to be subject to these reporting requirements, pricing requirements,
pricing information for the TARGETS may be more difficult to obtain and the
value, trading price and liquidity of the common stock and the TARGETS may be
reduced.
THE PRICE AT WHICH YOU WILL BE ABLE TO SELL YOUR TARGETS PRIOR TO MATURITY WILL
DEPEND ON A NUMBER OF FACTORS AND MAY BE SUBSTANTIALLY LESS THAN THE AMOUNT YOU
ORIGINALLY INVEST
We believe that the value of your TARGETS in the secondary market will be
affected by the supply of and demand for the TARGETS, the value of Intel common
stock and a number of other factors. Some of these factors are interrelated in
complex ways. As a result, the effect of any one factor may be offset or
magnified by the effect of another factor. The following paragraphs describe
what we expect to be the impact on the market value of the TARGETS of a change
in a specific factor, assuming all other conditions remain constant.
Intel Common Stock Price. We expect that the market value of the TARGETS
will depend substantially on the amount, if any, by which the price of Intel
common stock changes from the price of the common stock when the TARGETS are
issued. However, changes in the price of Intel common stock may not always be
reflected, in full or in part, in the market value of the TARGETS. If you choose
to sell your TARGETS when the price of Intel common stock exceeds the common
stock price at the time the TARGETS were issued, you may receive substantially
less than the amount that would be payable at maturity based on that price
because of expectations that the price of Intel common stock will continue to
fluctuate between that time and the time when the maturity payment is
determined. In addition, significant increases in the value of Intel common
stock above the cap of % on monthly appreciation may not be reflected in the
trading price of the TARGETS. If you choose to sell your TARGETS when the price
of Intel common stock is below the common stock price at the time the TARGETS
were issued, you may receive less than the amount you originally invested,
except to the extent of any quarterly distributions. Because of the cap on
monthly appreciation, the price at which you will be able to sell your TARGETS
prior to maturity may be substantially less than the amount originally invested,
even if the price of Intel common stock when you sell your TARGETS is equal to,
or higher than, the price of the common stock at the time you bought your
TARGETS.
The value of Intel common stock will be influenced by Intel's results of
operations and by complex and interrelated political, economic, financial and
other factors that can affect the capital markets generally and the market
segment of which Intel is a part. Citigroup Global Markets Holdings' hedging
activities in the common stock of its obligations under the forward contract,
the issuance of securities similar to the TARGETS and other trading activities
by Citigroup Global Markets Holdings, its affiliates and other market
participants can also affect the price of Intel's common stock.
Volatility of Intel Common Stock. Volatility is the term used to describe
the size and frequency of market fluctuations. If the volatility of Intel common
stock changes during the term of the TARGETS, the market value of the TARGETS
may decrease.
Events Involving Intel Common Stock. General economic conditions and the
earnings results of Intel Corporation and real or anticipated changes in those
conditions or results may affect the market value of the TARGETS. In addition,
if the dividend yield on Intel common stock increases, the market value of the
TARGETS may decrease because the value of the payment you receive at maturity
will not reflect the value of such dividend payments. Conversely, if the
dividend yield on Intel common stock decreases, the market value of the TARGETS
may increase.
Interest Rates. We expect that the market value of the TARGETS will be
affected by changes in U.S. interest rates. In general, if U.S. interest rates
increase, the market value of the TARGETS may decrease, and if U.S. interest
rates decrease, the market value of the TARGETS may increase.
Time Premium or Discount. As a result of a "time premium or discount," the
TARGETS may trade at a value above or below that which would be expected based
on the level of interest rates and the value of the
10
Intel common stock the longer the time remaining to maturity. A "time premium or
discount" results from expectations concerning the value of Intel common stock
during the period prior to the maturity of the TARGETS. However, as the time
remaining to maturity decreases, this time premium or discount may diminish,
increasing or decreasing the market value of the TARGETS.
Citigroup Global Markets Holdings' Hedging Activities. Hedging activities
in Intel common stock by one or more affiliates of Citigroup Global Markets
Holdings will likely involve trading in Intel common stock or in other
instruments, such as options or swaps, based upon Intel common stock. This
hedging activity could affect the market price of Intel common stock and
therefore the market value of the TARGETS.
Citigroup Global Markets Holdings' Credit Ratings, Financial Condition and
Results. Actual or anticipated changes in our credit ratings, financial
condition or results may affect the market value of the TARGETS.
Economic Conditions and Earnings Performance of Intel. General economic
conditions and the earnings results of Intel and real or anticipated changes in
those conditions or results may affect the market value of the TARGETS.
We want you to understand that the impact of one of the factors specified
above, such as an increase in interest rates, may offset some or all of any
change in the market value of the TARGETS attributable to another factor, such
as an increase in the value of Intel common stock.
In general, assuming all relevant factors are held constant, we expect that
the effect on the market value of the TARGETS of a given change in most of the
factors listed above may be less if it occurs later in the term of the TARGETS
than if it occurs earlier in the term of the TARGETS.
THE TRADING PRICE OF THE TARGETS MAY BE LESS THAN YOU WOULD OTHERWISE EXPECT
BECAUSE THE MATURITY OF THE TARGETS CAN BE ACCELERATED
If an acceleration event occurs, the maturity of the TARGETS will be
accelerated and you will receive with respect to each TARGETS the accelerated
maturity payment and a pro rata portion of the proceeds of the sale of the
treasury securities. Because the amount that would be payable on the accelerated
maturity date is uncertain, since it would depend on when an acceleration event
occurs, the market value of the TARGETS may be less than what you would
otherwise expect based on the price of Intel common stock and the level of
interest rates at a particular time.
YOU MAY NOT RECEIVE YIELD ENHANCEMENT PAYMENTS ON THE DATE THEY ARE DUE BECAUSE
THEY CAN BE DEFERRED
The failure by Citigroup Global Markets Holdings to make any yield
enhancement payments on the date they are due will not constitute an
acceleration event. Citigroup Global Markets Holdings will be allowed under the
forward contract to delay making any unpaid yield enhancement payments until the
maturity date or the accelerated maturity date.
YOU WILL HAVE LIMITED VOTING RIGHTS WITH RESPECT TO TRUST XXIV AND THE TRUSTEES
You will have limited voting rights with respect to Trust XXIV and will not
be entitled to vote to appoint, remove or replace, or increase or decrease the
number of, the trustees. These voting rights will be held exclusively by
Citigroup Global Markets Holdings, as the holder of the common securities of
Trust XXIV. You should refer to the section "Description of the
TARGETS -- Voting Rights" in this prospectus.
THE MATURITY PAYMENT MAY BE REDUCED UNDER SOME CIRCUMSTANCES IF INTEL COMMON
STOCK IS DILUTED BECAUSE THE MATURITY PAYMENT WILL NOT BE ADJUSTED FOR ALL
EVENTS THAT DILUTE INTEL COMMON STOCK
The maturity payment and accelerated maturity payment are subject to
adjustment for a number of events arising from stock splits and combinations,
stock dividends, a number of other actions of Intel that modify its capital
structure and a number of other transactions involving Intel, as well as for the
liquidation,
11
dissolution or winding up of Intel. You should refer to the section "Description
of the TARGETS -- Dilution Adjustments" in this prospectus. The maturity payment
and accelerated maturity payment will not be adjusted for other events that may
adversely affect the price of Intel common stock, such as offerings of common
stock for cash or in connection with acquisitions. Because of the relationship
of the maturity payment and accelerated maturity payment to the price of Intel
common stock, these other events may reduce the maturity payment on the TARGETS.
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE TARGETS ARE UNCERTAIN
No statutory, judicial or administrative authority directly addresses the
characterization of the TARGETS for U.S. federal income tax purposes. As a
result, significant aspects of the U.S. federal income tax consequences of an
investment in the TARGETS are not certain. No ruling is being requested from the
Internal Revenue Service with respect to the TARGETS and no assurance can be
given that the Internal Revenue Service will agree with the conclusions
expressed under the section "Certain United States Federal Income Tax
Considerations" in this prospectus.
YOU MAY NOT BE ABLE TO SELL YOUR TARGETS IF AN ACTIVE TRADING MARKET FOR THE
TARGETS DOES NOT DEVELOP
There is currently no secondary market for the TARGETS. Citigroup Global
Markets Inc. currently intends, but is not obligated, to make a market in the
TARGETS. Even if a secondary market does develop, it may not be liquid and may
not continue for the term of the TARGETS. If the secondary market for the
TARGETS is limited, there may be few buyers should you choose to sell your
TARGETS prior to maturity. This may affect the price you receive.
THE MARKET VALUE OF THE TARGETS MAY BE AFFECTED BY PURCHASES AND SALES OF INTEL
COMMON STOCK OR DERIVATIVE INSTRUMENTS RELATED TO INTEL COMMON STOCK BY
AFFILIATES OF CITIGROUP GLOBAL MARKETS HOLDINGS
Citigroup Global Markets Holdings' affiliates, including Citigroup Global
Markets Inc., may from time to time buy or sell Intel common stock or derivative
instruments relating to Intel common stock for their own accounts in connection
with their normal business practices or in connection with hedging Citigroup
Global Markets Holdings' obligations under the forward contract. These
transactions could affect the price of Intel common stock and therefore the
market value of the TARGETS. You should refer to the section "Use of Proceeds
and Hedging Activities" in this prospectus.
CITIGROUP GLOBAL MARKETS INC., AN AFFILIATE OF CITIGROUP GLOBAL MARKETS
HOLDINGS, IS THE CALCULATION AGENT, WHICH COULD RESULT IN A CONFLICT OF INTEREST
Citigroup Global Markets Inc., which is acting as the calculation agent for
the TARGETS, is an affiliate of Citigroup Global Markets Holdings. As a result,
Citigroup Global Markets Inc.'s duties as calculation agent, including with
respect to certain determinations and judgments that the calculation agent must
make in determining amounts due to you, may conflict with its interest as an
affiliate of Citigroup Global Markets Holdings.
CITIGROUP GLOBAL MARKETS HOLDINGS' HEDGING ACTIVITY COULD RESULT IN A CONFLICT
OF INTEREST
Citigroup Global Markets Holdings expects to hedge its obligations under
the TARGETS through one or more of its affiliates. This hedging activity will
likely involve trading in Intel common stock or in other instruments, such as
options or swaps, based upon Intel common stock. This hedging activity may
present a conflict between your interest in the TARGETS and the interests
Citigroup Global Markets Holdings and its affiliates have in executing,
maintaining and adjusting its hedge transactions because it could affect the
market price of Intel common stock and therefore the market value of the
TARGETS. It could also be adverse to your interest if it affects the price at
which Citigroup Global Markets Holdings' subsidiary Citigroup Global Markets
Inc. may be willing to purchase your TARGETS in the secondary market. Since
hedging Citigroup
12
Global Markets Holdings obligation under the TARGETS involves risk and may be
influenced by a number of factors, it is possible that Citigroup Global Markets
Holdings or its affiliates may profit from its hedging activity, even if the
market value of the TARGETS declines.
THE PAYMENTS YOU RECEIVE ON THE TARGETS WILL LIKELY BE DELAYED OR REDUCED IN THE
EVENT OF A BANKRUPTCY OF CITIGROUP GLOBAL MARKETS HOLDINGS
Although the TARGETS are securities of Trust XXIV, the ability of Trust
XXIV to make payments under the TARGETS depends upon its receipt from Citigroup
Global Markets Holdings under the forward contract of (1) the total maturity
payments or total accelerated maturity payments and (2) any yield enhancement
payments. The ability of Citigroup Global Markets Holdings to meet its
obligations under the forward contract and, in turn, the ability of Trust XXIV
to meet its obligations under the TARGETS, therefore depends on the solvency and
creditworthiness of Citigroup Global Markets Holdings. In the event of a
bankruptcy of Citigroup Global Markets Holdings, any recovery by the holders of
TARGETS will likely be substantially delayed and may be less than each holder's
pro rata portion of the forward contract.
13
AVAILABLE INFORMATION
Citigroup Global Markets Holdings files annual, quarterly and special
reports and other information (File No. 1-15286) with the SEC. You may read and
copy any document Citigroup Global Markets Holdings files at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Citigroup Global Markets Holdings' SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.
Separate financial statements of Trust XXIV have not been included in this
prospectus. Citigroup Global Markets Holdings does not believe that these
financial statements would be material to you because
- Citigroup Global Markets Holdings, an SEC reporting company, owns all the
voting securities of Trust XXIV,
- Trust XXIV has no independent operations,
- Citigroup Global Markets Holdings is the obligor under the forward
contract, and
- Citigroup Global Markets Holdings has fully and unconditionally
guaranteed Trust XXIV's obligations under the TARGETS to the extent that
Trust XXIV has funds available to meet its obligations.
In its future filings under the Securities Exchange Act of 1934, a footnote
to Citigroup Global Markets Holdings' annual financial statements will state
- that Trust XXIV is consolidated with Citigroup Global Markets Holdings,
- that Citigroup Global Markets Holdings owns all of the voting securities
of Trust XXIV,
- that Trust XXIV has no assets, operations, revenues or cash flows other
than those related to the issuance, administration and repayment of the
TARGETS and common securities, and
- that the guarantee, when taken together with the forward contract, the
related indenture, the declaration of trust of Trust XXIV and Citigroup
Global Markets Holdings' obligations to pay all fees and expenses of
Trust XXIV, constitutes a full and unconditional guarantee by Citigroup
Global Markets Holdings of Trust XXIV's obligations under the TARGETS.
Citigroup Global Markets Holdings and Trust XXIV have filed with the SEC a
registration statement (No. 333-69230) which contains additional information not
included in this prospectus. A copy of the registration statement can be
obtained from the SEC as described above or from Citigroup Global Markets
Holdings.
The SEC allows Citigroup Global Markets Holdings to "incorporate by
reference" the information it files, which means that Citigroup Global Markets
Holdings can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be part of
this prospectus, and later information filed with the SEC will update and
supersede this information. We incorporate by reference the documents filed by
Citigroup Global Markets Holdings listed below and any future filings made by
Citigroup Global Markets Holdings with the SEC under Section 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act until the later of the completion of the
offering of the TARGETS and the cessation of market-making activities in the
TARGETS by Citigroup Global Markets Inc. and its broker-dealer affiliates:
- Annual Report on Form 10-K for the year ended December 31, 2003,
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004,
June 30, 2004 and September 30, 2004,
- Current Reports on Form 8-K filed on January 20, 2004, January 29, 2004,
January 30, 2004, March 1, 2004, March 29, 2004, April 1, 2004, April 15,
2004, April 30, 2004, June 3, 2004, June 22, 2004, June 29, 2004, June
30, 2004, July 15, 2004, July 21, 2004, July 29, 2004, August 26, 2004,
August 27, 2004, August 31, 2004, October 5, 2004, October 14, 2004,
October 20, 2004, October 22, 2004, October 28, 2004, October 29, 2004,
November 2, 2004, November 29, 2004 and January 20, 2005.
14
You may request a copy of these filings, at no cost, by writing or
telephoning Citigroup Global Markets Holdings at the following address:
Treasurer
Citigroup Global Markets Holdings Inc.
388 Greenwich Street
New York, NY 10013
212-816-6000
You should rely only on the information incorporated by reference or
provided in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of the document.
15
CITIGROUP GLOBAL MARKETS HOLDINGS INC.
Citigroup Global Markets Holdings operates through its subsidiaries in
three business segments: Investment Services, Private Client Services and Asset
Management. Citigroup Global Markets Holdings provides investment banking,
securities and commodities trading, capital raising, asset management, advisory,
research, brokerage and other financial services to its customers, and executes
proprietary trading strategies on its own behalf. As used in this section,
unless the context otherwise requires, Citigroup Global Markets Holdings refers
to Citigroup Global Markets Holdings Inc. and its consolidated subsidiaries.
Citigroup Inc., Citigroup Global Markets Holdings' parent, is a diversified
holding company whose businesses provide a broad range of financial services to
consumer and corporate customers around the world. Citigroup's activities are
conducted through the Global Consumer, Global Corporate and Investment Bank,
Private Client Services, Global Investment Management, and Proprietary
Investment Activities business segments.
Citigroup Global Markets Holdings is a global, full-service investment
banking and securities brokerage firm. Citigroup Global Markets Holdings
provides a full range of financial advisory, research and capital raising
services to corporations, governments and individuals. At December 31, 2003, the
firm had more than 12,200 Financial Consultants, located in more than 500
offices worldwide.
Citigroup Global Markets Holdings' global investment banking services
encompass a full range of capital market activities, including the underwriting
and distribution of debt and equity securities for United States and foreign
corporations and for state, local and other governmental and government
sponsored authorities. Citigroup Global Markets Holdings frequently acts as an
underwriter or private placement agent in corporate and public securities
offerings and provides alternative financing options. It also provides financial
advice to investment banking clients on a wide variety of transactions including
mergers and acquisitions, divestitures, leveraged buyouts, financial
restructurings and a variety of cross-border transactions.
Private Client Services provides investment advice, financial planning and
brokerage services to affluent individuals, small and mid-size companies, and
non-profit and large corporations primarily through the worldwide network of
Smith Barney Financial Consultants. In addition, Private Client Services
provides independent client-focused research to individuals and institutions
around the world.
The portion of Citigroup's Asset Management segment housed within Citigroup
Global Markets Holdings is comprised primarily of two asset management business
platforms: Salomon Brothers Asset Management and Smith Barney Asset Management.
These platforms offer a broad range of asset management products and services
from global investment centers, including mutual funds, closed-end funds and
managed accounts. In addition, these platforms offer a broad range of unit
investment trusts.
The principal office of Citigroup Global Markets Holdings is located at 388
Greenwich Street, New York, New York 10013, and its telephone number is (212)
816-6000. Citigroup Global Markets Holdings, a New York corporation, was
incorporated in 1977.
16
USE OF PROCEEDS AND HEDGING ACTIVITIES
Trust XXIV will use approximately 85% to 90% of the total proceeds from the
sale of the TARGETS and the common securities to buy the forward contract from
Citigroup Global Markets Holdings, and approximately 10% to 15% of the proceeds
to buy the treasury securities. Citigroup Global Markets Holdings will use a
portion of the net proceeds from the sale of the forward contract for general
corporate purposes, which may include capital contributions to subsidiaries of
Citigroup Global Markets Holdings and/or the reduction or refinancing of
borrowings of Citigroup Global Markets Holdings or its subsidiaries. In order to
fund its business, Citigroup Global Markets Holdings expects to incur additional
debt in the future. To the extent that any TARGETS the underwriter is purchasing
for resale are not sold, the aggregate proceeds to Citigroup Global Markets
Holdings and its subsidiaries would be reduced. Citigroup Global Markets
Holdings or an affiliate may enter into a swap agreement with one of Citigroup
Global Markets Holdings' affiliates in connection with the sale of the TARGETS
and may earn additional income as a result of payments pursuant to such swap or
related hedge transactions.
Citigroup Global Markets Holdings or one or more of its subsidiaries will
use the remainder of the net proceeds from the sale of the forward contract for
hedging activities related to Citigroup Global Markets Holdings' obligations
under the forward contract. On or prior to the closing date of the TARGETS
offering, Citigroup Global Markets Holdings, directly or through its
subsidiaries, will hedge its anticipated exposure under the forward contract by
the purchase or sale of common stock of Intel or options, futures contracts,
forward contracts or swaps or options on the foregoing, or other derivative or
synthetic instruments related to, the common stock.
From time to time after the initial sale of the TARGETS and prior to the
maturity date or accelerated maturity date, depending on market conditions,
including the price of the Intel common stock, Citigroup Global Markets Holdings
expects that it or its subsidiaries will increase or decrease their initial
hedge positions through various transactions and may purchase or sell Intel
common stock or options, swaps, futures contracts, forward contracts or other
derivative or synthetic instruments related to Intel common stock. In addition,
Citigroup Global Markets Holdings and its subsidiaries may purchase or sell the
TARGETS from time to time. Citigroup Global Markets Holdings or its subsidiaries
may also take positions in other types of appropriate financial instruments that
may become available in the future.
To the extent that Citigroup Global Markets Holdings or its subsidiaries
have a long or short hedge position in Intel common stock or options, swaps,
futures contracts, forward contracts or other derivative or synthetic
instruments related to Intel common stock, they may liquidate all or a portion
of their holdings close to maturity of the forward contract and the TARGETS.
Depending on, among other things, future market conditions, the aggregate amount
and composition of those positions are likely to vary over time. Profits or
losses from any of those positions cannot be determined until the position is
closed out and any offsetting position or positions are taken into account.
Although Citigroup Global Markets Holdings has no reason to believe that this
hedging activity will have a material effect on the price of the TARGETS or
options, swaps, futures contracts, forward contracts or other derivative or
synthetic instruments, or on the value of Intel common stock, the hedging
activities of Citigroup Global Markets Holdings and its subsidiaries may affect
those prices or value.
17
INTEL CORPORATION
According to publicly available documents, Intel Corporation is the world's
largest semiconductor chip maker and produces chips, boards and other
semiconductor components that are the building blocks integral to computers,
servers, and networking and communications products. Intel is currently subject
to the informational requirements of the Securities Exchange Act. Accordingly,
Intel Corporation files reports (including its Annual Report on Form 10-K for
the fiscal year ended December 27, 2003 and its Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 27, 2004, June 26, 2004 and September 25,
2004), proxy statements and other information with the SEC. Copies of Intel's
registration statements, reports, proxy statements and other information may be
inspected and copied at offices of the SEC at the locations listed above under
"Available Information."
Citigroup Global Markets Holdings has not participated in the preparation
of Intel Corporation's publicly available documents and has not made any due
diligence investigation or inquiry of Intel Corporation in connection with the
offering of TARGETS. We make no representation that the publicly available
information about Intel Corporation is accurate or complete.
Intel is not affiliated with Trust XXIV, will not receive any of the
proceeds from the sale of the TARGETS and will have no obligations with respect
to the TARGETS, the treasury securities or the forward contract. This prospectus
relates only to the TARGETS offered hereby and does not relate to Intel or Intel
common stock.
18
HISTORICAL DATA ON THE COMMON STOCK OF INTEL CORPORATION
The common stock is traded on the Nasdaq National Market under the symbol
"INTC." The following tables set forth, for each of the quarterly periods
indicated, the high and low sales prices for Intel common stock, as reported on
the Nasdaq National Market, as well as the dividends paid per share of Intel
common stock.
HIGH LOW DIVIDEND
---- --- --------
2000
Quarter
First................................................... 72.6875 38.6875 0.0150
Second.................................................. 70.1250 52.5625 0.0150
Third................................................... 75.8125 41.3750 0.0200
Fourth.................................................. 47.8750 29.8125 0.0200
2001
Quarter
First................................................... 38.5938 24.5625 0.0200
Second.................................................. 32.5700 22.2500 0.0200
Third................................................... 32.2300 18.9600 0.0200
Fourth.................................................. 34.8500 19.0800 0.0200
2002
Quarter
First................................................... 36.7800 28.5000 0.0200
Second.................................................. 31.4500 17.4500 0.0200
Third................................................... 19.8800 12.9500 0.0200
Fourth.................................................. 22.0900 12.9500 0.0200
2003
Quarter
First................................................... 19.0100 14.8800 0.0200
Second.................................................. 22.9190 16.2800 0.0200
Third................................................... 29.3800 20.5100 0.0200
Fourth.................................................. 34.5000 27.5900 0.0200
2004
Quarter
First................................................... 34.6000 26.0300 0.0400
Second.................................................. 29.0100 25.6100 0.0400
Third................................................... 27.4800 19.6400 0.0400
Fourth.................................................. 24.9900 20.2200 0.0400
2005
Quarter
First (through January 26, 2005)........................ 23.7900 21.8900 0.0000
The closing price of the common stock on January 26, 2005 was $22.42.
According to Intel's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 25, 2004, as of October 22, 2004, there were 6,323,000,000
shares of common stock outstanding. During the period reflected in the above
table, Intel split its common stock 2 for 1 on July 30, 2000. The data appearing
in the above table have been adjusted to reflect this split.
Holders of the TARGETS will not be entitled to any rights with respect to
the Intel common stock (including, without limitation, voting rights or rights
to receive dividends or other distributions in respect thereof).
19
TARGETS TRUST XXIV
Trust XXIV is a statutory trust formed under Delaware law pursuant to a
declaration of trust executed by Citigroup Global Markets Holdings, as sponsor,
and the trustees of TARGETS Trust XXIV (as described below), and the filing of a
certificate of trust with the Secretary of State of the State of Delaware. The
declaration will be amended and restated in its entirety substantially in the
form filed as an exhibit to the registration statement of which this prospectus
forms a part. The amended and restated declaration of trust will be qualified as
an indenture under the Trust Indenture Act of 1939. Upon issuance of the
TARGETS, the purchasers thereof will own all the TARGETS. Citigroup Global
Markets Holdings will directly or indirectly acquire all of the common
securities in an aggregate amount equal to 3% or more of the total capital of
Trust XXIV.
Trust XXIV will use all the proceeds derived from the issuance of the
TARGETS and the common securities to purchase the forward contract and treasury
securities and, accordingly, the assets of Trust XXIV will consist solely of the
forward contract and treasury securities. Of the total proceeds from the sale of
the trust securities, approximately 85% to 90% will be invested by Trust XXIV in
the forward contract and approximately 10% to 15% will be invested by Trust XXIV
in the treasury securities. Trust XXIV exists for the exclusive purposes of
- issuing its trust securities representing undivided beneficial interests
in the assets of Trust XXIV,
- investing the gross proceeds of its trust securities in the forward
contract and the treasury securities, and
- engaging only in activities incidental to the above.
Trust XXIV's business and affairs are conducted by its trustees, each
appointed by Citigroup Global Markets Holdings as holder of the common
securities. Pursuant to the declaration, the number of trustees of Trust XXIV
will be five:
- JPMorgan Chase Bank, N.A., a national association that is unaffiliated
with Citigroup Global Markets Holdings, as the institutional trustee,
- Chase Manhattan Bank USA, National Association, a Delaware state banking
corporation with its principal place of business in the State of
Delaware, as the Delaware trustee, and
- Three officers of Citigroup Global Markets Holdings, as the individual
trustees.
The institutional trustee will act as the sole indenture trustee under the
declaration for purposes of compliance with the Trust Indenture Act until it is
removed or replaced by the holder of the common securities. JPMorgan Chase Bank,
N.A. will also act as indenture trustee under each of the forward contract, and
the guarantee that Citigroup Global Markets Holdings will execute and deliver
for the benefit of the holders of TARGETS.
The institutional trustee will hold title to the forward contract for the
benefit of the holders of Trust XXIV's trust securities and, in its capacity as
the holder, the institutional trustee will have the power to exercise all
rights, powers and privileges under the indenture pursuant to which the forward
contract is issued. In addition, the institutional trustee will maintain
exclusive control of a segregated non-interest bearing bank account to hold all
payments made in respect of the forward contract and the treasury securities for
the benefit of the holders of Trust XXIV's trust securities. The institutional
trustee will make payments of distributions and payments on liquidation and
otherwise to the holders of the trust securities out of funds from the
segregated bank account.
The indenture trustee will act as trustee for the forward contract under
the indenture for purposes of compliance with the provisions of the Trust
Indenture Act.
The guarantee trustee will hold the guarantee for the benefit of the
holders of the TARGETS. Citigroup Global Markets Holdings, as direct or indirect
holder of all the common securities, will have the right, subject to certain
restrictions contained in the declaration, to appoint, remove or replace any
trustees and to increase
20
or decrease the number of trustees. Citigroup Global Markets Holdings will pay
all fees and expenses related to Trust XXIV and the offering of Trust XXIV's
trust securities.
The rights of the holders of the TARGETS, including economic rights, rights
to information and voting rights, are set forth in the declaration, the Delaware
Statutory Trust Act and the Trust Indenture Act.
The location of the principal executive office of Trust XXIV is c/o
Citigroup Global Markets Holdings Inc., 388 Greenwich Street, New York, New York
10013 and its telephone number is (212) 816-6000.
21
DESCRIPTION OF THE TARGETS
The TARGETS will be issued pursuant to the terms of the amended and
restated declaration of trust. The amended and restated declaration of trust
will be qualified as an indenture under the Trust Indenture Act. The
institutional trustee, JPMorgan Chase Bank, N.A., will act as the institutional
trustee for the TARGETS under the amended and restated declaration of trust for
purposes of compliance with the provisions of the Trust Indenture Act. The terms
of the TARGETS will include those stated in the amended and restated declaration
of trust and those made part of the amended and restated declaration of trust by
the Trust Indenture Act. Pursuant to the amended and restated declaration of
trust, every holder of the TARGETS will be deemed to have expressly assented and
agreed to the terms of, and will be bound by, the amended and restated
declaration of trust. The following is a summary of the terms and provisions of
the TARGETS. This summary does not describe all of the terms and provisions of
the amended and restated declaration of trust and the guarantee. You should read
the forms of these documents, which are filed as exhibits to the registration
statement.
GENERAL
The amended and restated declaration of trust authorizes the individual
trustees to issue the trust securities on behalf of Trust XXIV. The trust
securities represent undivided beneficial interests in the assets of Trust XXIV.
All of the common securities of Trust XXIV will be owned, directly or
indirectly, by Citigroup Global Markets Holdings. The common securities rank
pari passu with the TARGETS and payments will be made on the common securities
on a pro rata basis with the TARGETS, except that upon the occurrence of an
acceleration event, the rights of the holders of the common securities to
receive payments will be subordinated to the rights of the holders of the
TARGETS. The amended and restated declaration does not permit the issuance by
Trust XXIV of any securities other than its trust securities or the incurrence
of any debt by Trust XXIV. Pursuant to the amended and restated declaration, the
institutional trustee will hold title to the forward contract and the treasury
securities for the benefit of the holders of the trust securities. The payment
of distributions out of money held by Trust XXIV and payments upon maturity of
the TARGETS out of money held by Trust XXIV are guaranteed by Citigroup Global
Markets Holdings to the extent described under "Description of the Guarantee."
The guarantee will be held by JPMorgan Chase Bank, N.A., the guarantee trustee,
for the benefit of the holders of the TARGETS. The guarantee does not cover
payment of distributions when Trust XXIV does not have sufficient available
funds to pay such distributions. In such event, the remedies of a holder of the
TARGETS are to
- vote to direct the institutional trustee to enforce the institutional
trustee's rights under the forward contract and treasury securities,
- if the institutional trustee fails to enforce its rights against
Citigroup Global Markets Holdings, initiate a proceeding against
Citigroup Global Markets Holdings to enforce the institutional trustee's
rights under the forward contract, or
- if the failure by Trust XXIV to pay distributions is attributable to the
failure of Citigroup Global Markets Holdings to pay amounts in respect of
the forward contract, institute a proceeding directly against Citigroup
Global Markets Holdings for enforcement of payment to such holder of the
amounts owed on such holder's pro rata interest in the forward contract.
The aggregate number of TARGETS to be issued will be , as
described in "Underwriting." The TARGETS will be issued in fully registered
form. The TARGETS will not be issued in bearer form. See "-- Book-Entry Only
Issuance" below.
PAYMENT AT MATURITY
The TARGETS will mature on , 2008, subject to acceleration to the
accelerated maturity date upon an acceleration event. See "-- Acceleration of
Maturity Date; Enforcement of Rights" below. On the maturity date, holders of
the TARGETS will be entitled to receive, to the extent Trust XXIV has assets
available, the maturity payment with respect to each TARGETS. On the maturity
date, holders of the
22
TARGETS will also receive a final quarterly distribution with respect to each
TARGETS, plus any accrued and unpaid yield enhancement payments.
The maturity payment per TARGETS will equal the sum of (A) the initial
principal amount of $10.00 per TARGETS and (B) the stock return payment, which
may be positive, zero or negative.
STOCK RETURN PAYMENT
The stock return payment will equal the product of:
Initial Principal Amount of $10.00 per TARGETS X Stock Return.
The stock return will equal the compounded value of the capped returns for
each period, computed in the following manner, and expressed in this prospectus
as a percentage:
Product of [(1.00 + the periodic capped return) for each reset period] -
1.00
The periodic capped return for any reset period (including the period
ending at maturity) will equal the following fraction:
Ending Value - Starting Value
----------------------------------
Starting Value
Reset dates occur on the day of each month, beginning ,
2005, except that the final reset date will occur at maturity. We refer to the
period between any two consecutive reset dates (or the issue date and the first
reset date) as reset periods. The periodic capped return for any reset period
will not in any circumstances be greater than % or less than %.
The stock return will be calculated by compounding the product of the
periodic capped returns for each reset period. Assuming a hypothetical 4.5% cap
on appreciation and a hypothetical 10% floor on depreciation in each reset
period and a total of 36 reset periods, the stock return cannot be more than
approximately 387.74% (a maximum value that represents an increase in the price
of the common stock of at least 4.5% in each reset period) and may be as little
as -97.75% (a minimum value that represents a decrease in the price of the
common stock of at least 10% in each reset period).
The ending value for any reset period other than the reset period ending at
maturity will be the trading price of the common stock on the reset date at the
end of the period or, if that day is not a trading day, the trading price of the
common stock on the next following trading day. The ending value for the reset
period ending at maturity will be the average daily trading price of the common
stock for the 10 trading days immediately up to and including the date three
trading days before the maturity date.
The starting value for the initial reset period will be the closing price
of the common stock on the date the TARGETS are priced for initial sale to the
public. We will disclose the initial starting value to you in the final
prospectus delivered to you in connection with sales of the TARGETS. The
starting value for each subsequent reset period (including the reset period
ending on maturity) will equal the ending value for the immediately preceding
reset period.
A trading day means a day, as determined by Citigroup Global Markets
Holdings, on which trading is generally conducted (or was scheduled to have been
generally conducted, but for the occurrence of a market disruption event) on the
New York Stock Exchange, the American Stock Exchange, the Nasdaq National
Market, the Chicago Mercantile Exchange and the Chicago Board Options Exchange,
and in the over-the-counter market for equity securities in the United States.
A market disruption event means the occurrence or existence of any
suspension of or limitation imposed on trading (by reason of movements in price
exceeding limits permitted by any exchange or market or otherwise) of, or the
unavailability, through a recognized system of public dissemination of
transaction information, of accurate price, volume or related information in
respect of, (1) the shares of Intel common stock on any exchange or market, or
(2) any options contracts or futures contracts relating to the shares of Intel
common stock, or any options on such futures contracts, on any exchange or
market if, in each case, in
23
the determination of Citigroup Global Markets Holdings, any such suspension,
limitation or unavailability is material.
The trading price of Intel common stock (or any other security for which a
trading price must be determined) on any date of determination will be (1) if
the common stock is listed on a national securities exchange on that date of
determination, the closing sale price or, if no closing sale price is reported,
the last reported sale price on that date on the principal national securities
exchange on which the common stock is listed or admitted to trading, (2) if the
common stock is not listed on a national securities exchange on that date of
determination, or if the closing sale price or last reported sale price is not
obtainable (even if the common stock is listed or admitted to trading on such
exchange), and the common stock is quoted on the Nasdaq National Market, the
closing sale price or, if no closing sale price is reported, the last reported
sale price on that date as reported on the Nasdaq, and (3) if the common stock
is not quoted on the Nasdaq on that date of determination or, if the closing
sale price or last reported sale price is not obtainable (even if the common
stock is quoted on the Nasdaq), the last quoted bid price for the common stock
in the over-the-counter market on that date as reported by the OTC Bulletin
Board, the National Quotation Bureau or a similar organization. The
determination of the trading price on any trading day may be deferred by
Citigroup Global Markets Holdings for up to five consecutive trading days on
which a market disruption event is occurring, but not past the trading day prior
to maturity. If no sale price is available pursuant to clauses (1), (2) or (3)
above or if there is a market disruption event, the trading price on any date of
determination, unless deferred by Citigroup Global Markets Holdings as described
in the preceding sentence, will be the arithmetic mean, as determined by
Citigroup Global Markets Holdings, of the bid prices of the common stock
obtained from as many dealers in such stock (which may include Citigroup Global
Markets Inc. or any of its other subsidiaries or affiliates), but not exceeding
three such dealers, as will make such bid prices available to Citigroup Global
Markets Holdings. A security "quoted on the Nasdaq National Market" will include
a security included for listing or quotation in any successor to such system and
the term "OTC Bulletin Board" will include any successor to such service. Upon
the occurrence of certain events described under "-- Dilution Adjustments"
below, the trading price will be calculated by substituting the relevant
security for the common stock.
The periodic capped return is subject to adjustment upon the occurrence of
a number of events involving Intel and its capital structure as described
further under "-- Dilution Adjustments" below.
MATURITY PAYMENT -- HYPOTHETICAL EXAMPLES
Because the stock return is dependent on the trading price of the common
stock on each reset date and over the 10-day calculation period prior to
maturity, and the value of the common stock may be subject to significant
variations over the term of the TARGETS, it is not possible to present a chart
or table illustrating a complete range of possible payments at maturity. The
examples of hypothetical maturity payment calculations that follow are intended
to illustrate the effect of possible general trends in the price of the common
stock on the amount payable on the TARGETS at maturity. All of the hypothetical
examples assume that the initial price to the public of each TARGETS is $10,
that the price of the common stock on the date of issuance is $22.50, that the
periodic capped return cannot exceed 4.5% or be less than -10% and that the
maturity date is February 15, 2008.
24
EXAMPLE 1: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS GREATER
THAN ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON
STOCK APPRECIATED BY 3.5% (AN AMOUNT LESS THAN THE ASSUMED 4.5%
PERIODIC APPRECIATION CAP) DURING EACH RESET PERIOD THROUGHOUT
THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------- ------------------------- ------------------------- -------------------------
CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
-------------- -------- -------------- -------- -------------- -------- -------------- --------
January.............. $32.85 3.50% $49.64 3.50% $75.01 3.50%
February............. $34.00 3.50% $51.37 3.50% $77.63 3.50%
March................ $23.29 3.50% $35.19 3.50% $53.17 3.50%
April................ $24.10 3.50% $36.42 3.50% $55.03 3.50%
May.................. $24.95 3.50% $37.70 3.50% $56.96 3.50%
June................. $25.82 3.50% $39.01 3.50% $58.95 3.50%
July................. $26.72 3.50% $40.38 3.50% $61.02 3.50%
August............... $27.66 3.50% $41.79 3.50% $63.15 3.50%
September............ $28.63 3.50% $43.26 3.50% $65.36 3.50%
October.............. $29.63 3.50% $44.77 3.50% $67.65 3.50%
November............. $30.67 3.50% $46.34 3.50% $70.02 3.50%
December............. $31.74 3.50% $47.96 3.50% $72.47 3.50%
STOCK RETURN = [(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X
(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X
(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X
(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X
(1.00 + 0.035)] - 1 = 245.03%.
STOCK RETURN PAYMENT = $10.00 X 2.4503 = $24.50
MATURITY PAYMENT = $10.00 + $24.50 = $34.50 PER TARGETS.
EXAMPLE 2: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS GREATER
THAN ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON
STOCK APPRECIATED BY 8% (AN AMOUNT GREATER THAN THE ASSUMED 4.5%
PERIODIC APPRECIATION CAP) DURING EACH RESET PERIOD THROUGHOUT
THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------- ------------------------- ------------------------- -------------------------
CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
-------------- -------- -------------- -------- -------------- -------- -------------- --------
January.............. $ 52.46 4.50% $132.11 4.50% $332.67 4.50%
February............. $ 56.66 4.50% $142.68 4.50% $359.28 4.50%
March................ $24.30 4.50% $ 61.19 4.50% $154.09 4.50%
April................ $26.24 4.50% $ 66.09 4.50% $166.42 4.50%
May.................. $28.34 4.50% $ 71.37 4.50% $179.73 4.50%
June................. $30.61 4.50% $ 77.08 4.50% $194.11 4.50%
July................. $33.06 4.50% $ 83.25 4.50% $209.64 4.50%
August............... $35.70 4.50% $ 89.91 4.50% $226.41 4.50%
September............ $38.56 4.50% $ 97.10 4.50% $244.52 4.50%
October.............. $41.65 4.50% $104.87 4.50% $264.08 4.50%
November............. $44.98 4.50% $113.26 4.50% $285.21 4.50%
December............. $48.58 4.50% $122.32 4.50% $308.03 4.50%
25
STOCK RETURN = [(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X(1.00 +
0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X
(1.00 + 0.045)] - 1 = 387.74%.
STOCK RETURN PAYMENT = $10.00 X 3.8774 = $38.77
MATURITY PAYMENT = $10.00 + $38.77 = $48.77 PER TARGETS, WHICH IS THE MAXIMUM
POSSIBLE MATURITY PAYMENT.
EXAMPLE 3: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS LESS THAN
ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON STOCK
DEPRECIATED BY 8% (AN AMOUNT LESS THAN THE ASSUMED 10% PERIODIC
DEPRECIATION FLOOR) DURING EACH PERIOD THROUGHOUT THE TERM OF
THE TARGETS:
2005 2006 2007 2008
------------------------- ------------------------- ------------------------- -------------------------
CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
-------------- -------- -------------- -------- -------------- -------- -------------- --------
January.............. $8.99 -8.00% $3.31 -8.00% $1.22 -8.00%
February............. $8.27 -8.00% $3.04 -8.00% $1.12 -8.00%
March................ $20.70 -8.00% $7.61 -8.00% $2.80 -8.00%
April................ $19.04 -8.00% $7.00 -8.00% $2.57 -8.00%
May.................. $17.52 -8.00% $6.44 -8.00% $2.37 -8.00%
June................. $16.12 -8.00% $5.93 -8.00% $2.18 -8.00%
July................. $14.83 -8.00% $5.45 -8.00% $2.00 -8.00%
August............... $13.64 -8.00% $5.02 -8.00% $1.84 -8.00%
September............ $12.55 -8.00% $4.61 -8.00% $1.70 -8.00%
October.............. $11.55 -8.00% $4.25 -8.00% $1.56 -8.00%
November............. $10.62 -8.00% $3.91 -8.00% $1.44 -8.00%
December............. $ 9.77 -8.00% $3.59 -8.00% $1.32 -8.00%
STOCK RETURN = [(1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 +
-0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X
(1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 +
-0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X
(1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 +
-0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X
(1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 +
-0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X (1.00 + -0.08) X
(1.00 + -0.08)] -- 1 = -95.03%.
STOCK RETURN PAYMENT = $10.00 X -0.9503 = $-9.50
MATURITY PAYMENT = $10.00 + $-9.50 = $0.50 PER TARGETS.
26
EXAMPLE 4: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS LESS THAN
ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON STOCK
DEPRECIATED BY 15% (AN AMOUNT GREATER THAN THE ASSUMED 10%
PERIODIC DEPRECIATION FLOOR) DURING EACH RESET PERIOD THROUGHOUT
THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------- ------------------------- ------------------------- -------------------------
CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
-------------- -------- -------------- -------- -------------- -------- -------------- --------
January.............. $3.77 -10.00% $0.54 -10.00% $0.08 -10.00%
February............. $3.20 -10.00% $0.46 -10.00% $0.06 -10.00%
March................ $19.13 -10.00% $2.72 -10.00% $0.39 -10.00%
April................ $16.26 -10.00% $2.31 -10.00% $0.33 -10.00%
May.................. $13.82 -10.00% $1.97 -10.00% $0.28 -10.00%
June................. $11.75 -10.00% $1.67 -10.00% $0.24 -10.00%
July................. $ 9.98 -10.00% $1.42 -10.00% $0.20 -10.00%
August............... $ 8.49 -10.00% $1.21 -10.00% $0.17 -10.00%
September............ $ 7.21 -10.00% $1.03 -10.00% $0.15 -10.00%
October.............. $ 6.13 -10.00% $0.87 -10.00% $0.12 -10.00%
November............. $ 5.21 -10.00% $0.74 -10.00% $0.11 -10.00%
December............. $ 4.43 -10.00% $0.63 -10.00% $0.09 -10.00%
STOCK RETURN = [(1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 +
-0.10) X (1.00 + -0.10) X (1.00 + - 0.10) X (1.00 + -0.10) X (1.00 + -0.10) X
(1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 +
-0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X
(1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 +
-0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X
(1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 +
-0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X (1.00 + -0.10) X
(1.00 + -0.10)] - 1 = -97.75%.
STOCK RETURN PAYMENT = $10.00 X -0.9775 = $-9.77
MATURITY PAYMENT = $10.00 + $-9.77 = $0.23 PER TARGETS, WHICH IS THE LOWEST
POSSIBLE MATURITY PAYMENT.
27
The following two examples (5 and 6) show that if the trading price of the
common stock fluctuates over the term of the TARGETS and is less at maturity
than at issuance, the maturity payment on the TARGETS may be less or more than
the amount of your initial investment, depending on the size of the increases
and decreases in the trading price of the common stock during each reset period.
EXAMPLE 5: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS LESS THAN
ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON STOCK
FLUCTUATED DURING THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------- ------------------------- ------------------------- -------------------------
CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
-------------- -------- -------------- -------- -------------- -------- -------------- --------
January.............. $22.65 2.00% $23.23 4.50% $20.79 1.00%
February............. $24.01 4.50% $24.16 4.00% $21.00 1.00%
March................ $23.63 4.50% $24.49 2.00% $25.36 4.50%
April................ $24.33 3.00% $25.47 4.00% $25.62 1.00%
May.................. $18.25 -10.00% $25.72 1.00% $26.13 2.00%
June................. $18.98 4.00% $26.24 2.00% $27.70 4.50%
July................. $19.17 1.00% $27.81 4.50% $22.16 -10.00%
August............... $19.55 2.00% $28.37 2.00% $23.05 4.00%
September............ $20.73 4.50% $29.22 3.00% $23.28 1.00%
October.............. $21.14 2.00% $30.10 3.00% $23.74 2.00%
November............. $21.99 4.00% $31.60 4.50% $20.18 -10.00%
December............. $22.21 1.00% $22.12 -10.00% $20.58 2.00%
STOCK RETURN = [(1.00 + 0.045) X (1.00 + 0.03) X(1.00 + -0.10) X (1.00 + 0.04) X
(1.00 + 0.01) X (1.00 + 0.02) X (1.00 + 0.045) X (1.00 + 0.02) X (1.00 + 0.04) X
(1.00 + 0.01) X (1.00 + 0.02) X (1.00 + 0.045) X (1.00 + 0.02) X (1.00 + 0.04) X
(1.00 + 0.01) X (1.00 + 0.02) X (1.00 + 0.045) X (1.00 + 0.02) X (1.00 + 0.03) X
(1.00 + 0.03) X (1.00 + 0.045) X (1.00 + -0.10) X (1.00 + 0.045) X (1.00 + 0.04)
X (1.00 + 0.045) X (1.00 + 0.01) X (1.00 + 0.02) X(1.00 + 0.045) X (1.00 +
-0.10) X (1.00 + 0.04) X (1.00 + 0.01) X (1.00 + 0.02) X (1.00 + -0.10) X (1.00
+ 0.02) X (1.00 + 0.01) X (1.00 + 0.01)] - 1 = 58.94%.
STOCK RETURN PAYMENT = $10.00 X 0.5894 = $5.89
MATURITY PAYMENT = $10.00 + $5.89 = $15.89 PER TARGETS, MORE THAN THE AMOUNT OF
YOUR INITIAL INVESTMENT (EVEN THOUGH THE TRADING PRICE OF THE COMMON STOCK AT
MATURITY IS LESS THAN ITS PRICE AT ISSUANCE).
28
EXAMPLE 6: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS LESS
THAN ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE
COMMON STOCK FLUCTUATED DURING THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------- ------------------------- ------------------------- -------------------------
CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
-------------- -------- -------------- -------- -------------- -------- -------------- --------
January.............. $20.44 4.50% $20.52 -5.00% $17.35 -5.00%
February............. $21.46 4.50% $21.55 4.50% $16.48 -5.00%
March................ $23.63 4.50% $20.39 -5.00% $20.47 -5.00%
April................ $24.81 4.50% $21.41 4.50% $19.45 -5.00%
May.................. $23.57 -5.00% $22.91 4.50% $18.47 -5.00%
June................. $21.68 -8.00% $21.76 -5.00% $19.40 4.50%
July................. $22.76 4.50% $20.68 -5.00% $20.95 4.50%
August............... $23.90 4.50% $21.71 4.50% $19.90 -5.00%
September............ $22.71 -5.00% $22.80 4.50% $18.91 -5.00%
October.............. $21.57 -5.00% $23.94 4.50% $17.96 -5.00%
November............. $20.49 -5.00% $22.74 -5.00% $17.06 -5.00%
December............. $19.47 -5.00% $21.60 -5.00% $18.26 4.50%
STOCK RETURN = [(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.05) X (1.00 +
-0.08) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.05) X (1.00 + -0.05) X
(1.00 + -0.05) X (1.00 + -0.05) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
-0.05) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.05) X (1.00 + -0.05) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.05) X (1.00 +
-0.05) X (1.00 + -0.05) X (1.00 + 0.045) X (1.00 + -0.05) X (1.00 + -0.05) X
(1.00 + -0.05) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.05) X (1.00 +
-0.05) X (1.00 + -0.05) X (1.00 + -0.05) X (1.00 + 0.045) X (1.00 + -0.05) X
(1.00 + -0.05)] - 1 = -36.17%.
STOCK RETURN PAYMENT = $10.00 X -0.3617 = $-3.62
MATURITY PAYMENT = $10.00 + $-3.62 = $6.38 PER TARGETS, LESS THAN THE AMOUNT OF
YOUR INITIAL INVESTMENT.
29
The following two examples (7 and 8) show that if the trading price of the
common stock fluctuates over the term of the TARGETS and is greater at maturity
than at issuance, the maturity payment on the TARGETS may be less or more than
the amount of your initial investment, depending on the size of the increases
and decreases in the trading price of the common stock during each reset period.
EXAMPLE 7: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS GREATER
THAN ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE
COMMON STOCK FLUCTUATED DURING THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------- ------------------------- -------------------------- --------------
CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON
STOCK RETURN STOCK RETURN STOCK RETURN STOCK
-------------- -------- -------------- -------- -------------- --------- --------------
January.............. $22.36 3.00% $21.11 -7.00% $24.89
February............. $23.03 3.00% $22.17 4.50% $24.77
March................ $23.40 4.00% $23.95 4.00% $22.83 3.00%
April................ $24.10 3.00% $22.51 -6.00% $23.86 4.50%
May.................. $25.31 4.50% $23.86 4.50% $25.05 4.50%
June................. $25.05 -1.00% $25.29 4.50% $26.56 4.50%
July................. $24.55 -2.00% $24.03 -5.00% $28.42 4.50%
August............... $23.33 -5.00% $23.31 -3.00% $25.58 -10.00%
September............ $23.09 -1.00% $22.84 -2.00% $26.85 4.50%
October.............. $23.55 2.00% $22.61 -1.00% $26.32 -2.00%
November............. $22.85 -3.00% $23.40 3.50% $26.05 -1.00%
December............. $21.70 -5.00% $22.70 -3.00% $27.36 4.50%
2008
--------
PERIODIC
CAPPED
RETURN
--------
January.............. -9.00%
February............. -0.50%
March................
April................
May..................
June.................
July.................
August...............
September............
October..............
November.............
December.............
STOCK RETURN = [(1.00 + 0.04) X (1.00 + 0.03) X (1.00 + 0.045) X (1.00 + -0.01)
X (1.00 + -0.02) X (1.00 + -0.05) X (1.00 + -0.01) X (1.00 + 0.02) X (1.00 +
-0.03) X (1.00 + -0.05) X (1.00 + 0.03) X (1.00 + 0.03) X (1.00 + 0.04) X (1.00
+ -0.06) X(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.05) X (1.00 + -0.03) X
(1.00 + -0.02) X (1.00 + -0.01) X (1.00 + 0.035) X (1.00 + -0.03) X (1.00 +
-0.07) X (1.00 + 0.045) X (1.00 + 0.03) X (1.00 + 0.045) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.10) X (1.00 + 0.045) X(1.00 +
-0.02) X (1.00 + -0.01) X (1.00 + 0.045) X (1.00 + -0.09) X (1.00 + -0.005)] - 1
= 0.59%.
STOCK RETURN PAYMENT = $10.00 X 0.0059 = $0.06
MATURITY PAYMENT = $10.00 + $0.06 = $10.06 PER TARGETS, MORE THAN THE AMOUNT OF
YOUR INITIAL INVESTMENT.
30
EXAMPLE 8: DESPITE THE ASSUMED 10% PERIODIC DEPRECIATION FLOOR, THE
MATURITY PAYMENT CAN BE LESS THAN YOUR INVESTMENT, EVEN IF THE
TRADING PRICE INCREASES IN MORE RESET PERIODS THAN IT DECREASES.
AS AN EXAMPLE, THE TRADING PRICE OF THE COMMON STOCK AT MATURITY
IS GREATER THAN ITS PRICE AT ISSUANCE, THE TRADING PRICE OF THE
COMMON STOCK INCREASED THROUGHOUT ALL BUT 11 OF THE RESET
PERIODS DURING THE TERM OF THE TARGETS, BUT THERE WAS A DECLINE
IN THE TRADING PRICE OF THE COMMON STOCK RESULTING IN A PERIODIC
CAPPED RETURN OF -10% DURING EACH OF THESE 11 RESET PERIODS (IF
THIS OCCURS, THE MATURITY PAYMENT WILL ALWAYS BE LESS THAN THE
AMOUNT OF YOUR INITIAL INVESTMENT):
2005 2006 2007 2008
------------------------- ------------------------- ------------------------- -------------------------
CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC CLOSING VALUES PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
-------------- -------- -------------- -------- -------------- -------- -------------- --------
January.............. $20.77 4.50% $20.14 4.50% $22.77 4.50%
February............. $21.81 4.50% $21.14 4.50% $23.91 4.50%
March................ $20.25 -10.00% $19.63 -10.00% $19.03 -10.00%
April................ $21.26 4.50% $20.61 4.50% $19.98 4.50%
May.................. $22.33 4.50% $21.64 4.50% $20.98 4.50%
June................. $20.09 -10.00% $19.48 -10.00% $18.88 -10.00%
July................. $21.10 4.50% $20.45 4.50% $19.82 4.50%
August............... $22.15 4.50% $21.47 4.50% $20.82 4.50%
September............ $19.94 -10.00% $19.33 -10.00% $21.86 4.50%
October.............. $20.93 4.50% $20.29 4.50% $22.95 4.50%
November............. $21.98 4.50% $21.31 4.50% $20.65 -10.00%
December............. $19.78 -10.00% $19.18 -10.00% $21.69 4.50%
STOCK RETURN = [(1.00 + -0.10) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
-0.10) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.10) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + -0.10) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
-0.10) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.10) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + -0.10) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
-0.10) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.10) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + -0.10) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X (1.00 + 0.045) X (1.00 + -0.10) X (1.00 + 0.045) X (1.00 + 0.045) X
(1.00 + 0.045)] - 1 = -5.69%.
STOCK RETURN PAYMENT = $10.00 X -0.0569 = $-0.57
MATURITY PAYMENT = $10.00 + $-0.57 = $9.43 PER TARGETS, LESS THAN THE AMOUNT OF
YOUR INITIAL INVESTMENT (EVEN THOUGH THE TRADING PRICE OF THE COMMON STOCK AT
MATURITY IS GREATER THAN ITS PRICE AT ISSUANCE).
ACCELERATION OF MATURITY DATE; ENFORCEMENT OF RIGHTS
If at any time an acceleration event occurs, the individual trustees will
give written instructions to the institutional trustee to sell the treasury
securities, dissolve Trust XXIV and, after satisfaction of creditors of Trust
XXIV, cause to be distributed, as soon as is practicable following the
occurrence of such acceleration event, to the holders of the TARGETS in
liquidation of such holders' interests in Trust XXIV, the accelerated maturity
payment with respect to each TARGETS and a pro rata portion of the treasury
proceeds, plus any accrued and unpaid yield enhancement payments.
The accelerated maturity payment with respect to each TARGETS will be paid
out of amounts received by Trust XXIV from Citigroup Global Markets Holdings in
respect of the forward contract and will be equal to the sum of (A) the initial
principal amount of $10.00 per TARGETS and (B) the stock return as of the
accelerated maturity date.
The accelerated maturity date will be the date of the occurrence of the
event or events constituting such acceleration event.
31
The treasury proceeds will be the amount received by Trust XXIV as proceeds
from the sale of the treasury securities upon the occurrence of an acceleration
event. The individual trustees will send the institutional trustee written
notice and instructions to liquidate the treasury securities on an accelerated
maturity date. Upon receiving such notice, the institutional trustee will
solicit at least three bids and sell and transfer the treasury securities to the
highest of the three bidders.
The amount of either any accelerated maturity payment or the treasury
proceeds which, in either case, may be distributed to holders of the TARGETS
upon a dissolution and liquidation of Trust XXIV is uncertain. Accordingly, the
amount that a holder of TARGETS may receive on the accelerated maturity date is
uncertain.
An acceleration event will occur upon the occurrence of (1) a "tax event,"
(2) an "investment company event" or (3) a "bankruptcy event."
A tax event will occur if Citigroup Global Markets Holdings requests,
receives and delivers to the individual trustees an opinion of nationally
recognized independent tax counsel experienced in such matters indicating that:
(1) on or after the date of this prospectus, one or more of the following
has occurred:
- an amendment to, change in or announced proposed change in the laws, or
any regulations thereunder, of the United States or any political
subdivision or taxing authority thereof or therein,
- a judicial decision interpreting, applying, or clarifying such laws or
regulations,
- an administrative pronouncement or action that represents an official
position, including a clarification of an official position, of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or
- a threatened challenge asserted in connection with an audit of Citigroup
Global Markets Holdings or any of its subsidiaries or Trust XXIV, or a
threatened challenge asserted in writing against any other taxpayer that
has raised capital through the issuance of securities that are
substantially similar to the forward contract or the TARGETS; and
(2) there is more than an insubstantial risk that:
- Trust XXIV is, or will be, subject to United States federal income tax
with respect to income accrued or received on the forward contract or the
treasury securities, or
- Trust XXIV is, or will be, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
An investment company event will occur if Citigroup Global Markets Holdings
requests, receives and delivers to the individual trustees an opinion of
nationally recognized independent legal counsel experienced in such matters
indicating that as a result of the occurrence on or after the date of this
prospectus of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, Trust XXIV is or will be considered an
investment company which is required to be registered under the Investment
Company Act of 1940.
A bankruptcy event will occur if either of the following takes place:
(1) the entry of a decree or order
- of relief in respect of Citigroup Global Markets Holdings by a court
having jurisdiction in the premises in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law,
- appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Citigroup Global Markets
Holdings or of any substantial part of its property, or
32
- ordering the winding up or liquidation of its affairs, and, in each case,
the continuance of any such decree or order unstayed and in effect for a
period of 90 consecutive days; or
(2) an action by Citigroup Global Markets Holdings to:
- commence a voluntary case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or
- consent to the entry of an order for relief in an involuntary case under
any such law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official of Citigroup
Global Markets Holdings or of any substantial part of its property, or
- make an assignment for the benefit of its creditors, or
- admit in writing its inability to pay its debts generally as they become
due, or
- take corporate action in furtherance of any of the foregoing.
The phrase pro rata means, with respect to any payment, distribution, or
treatment, proportionately to each holder of trust securities according to the
aggregate beneficial interests in the assets of Trust XXIV represented by the
trust securities held by the relevant holder in relation to the aggregate
beneficial interests in the assets of Trust XXIV represented by all trust
securities outstanding. If an acceleration event has occurred and is continuing,
any funds available to make a payment will be paid first to each holder of the
TARGETS proportionately according to the aggregate beneficial interests in the
assets of Trust XXIV represented by the TARGETS held by the relevant holder
relative to the aggregate beneficial interests in the assets of Trust XXIV
represented by all TARGETS outstanding. Only after satisfaction of all amounts
owed to the holders of the TARGETS, will payment be paid to each holder of
common securities proportionately according to the aggregate beneficial
interests in the assets of Trust XXIV represented by the common securities held
by the relevant holder relative to the aggregate beneficial interests in the
assets of Trust XXIV represented by all common securities outstanding.
On the date fixed for any payment of the accelerated maturity payment or
the treasury proceeds, the TARGETS and the common securities will no longer be
deemed to be outstanding and each TARGETS and common security will be deemed to
represent the right to receive an accelerated maturity payment and a pro rata
portion of the treasury proceeds, plus any accrued and unpaid yield enhancement
payments. If the accelerated maturity payments or any accrued and unpaid yield
enhancement payments can be paid only in part because Trust XXIV has
insufficient assets available to pay in full such amounts, then the amounts
payable directly by Trust XXIV in respect of the TARGETS will be paid on a pro
rata basis. In addition, in the case of a default by Citigroup Global Markets
Holdings on its obligations under the guarantee, the holders of the TARGETS will
have a preference over the holders of the common securities with respect to
amounts owed on the trust securities.
Subject to the institutional trustee obtaining a tax opinion as described
below, the holders of a majority of the TARGETS have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the institutional trustee, or direct the exercise of any trust or power
conferred upon the institutional trustee under the amended and restated
declaration of trust, including the right to direct the institutional trustee,
as holder of the forward contract and the treasury securities, to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee, or exercising any trust or
power conferred on the indenture trustee with respect to the forward
contract,
- direct the time, method and place of conducting any proceeding for any
remedy available to the institutional trustee or exercise any trust or
power conferred on the institutional trustee with respect to the treasury
securities,
- waive the consequences of any acceleration event under the indenture that
are waivable under the indenture,
33
- exercise any right to rescind or annul a declaration that any accelerated
maturity payment will be due and payable or
- consent to any amendment, modification or termination of the indenture or
the forward contract, where such consent shall be required.
If a consent or action under the indenture would require the consent or act of
holders of a majority of the beneficial interests in the forward contract, only
the holders of at least a super majority of the TARGETS can direct the
institutional trustee to give the consent or take the action. The institutional
trustee will notify all holders of TARGETS of any notice of default received
from the indenture trustee with respect to the forward contract. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy available to the institutional trustee, the institutional trustee, as
holder of the forward contract and the treasury securities, will not take any of
the actions described above unless it has obtained an opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect
that as a result of such action, Trust XXIV will not fail to be classified as a
grantor trust for United States federal income tax purposes.
If the institutional trustee fails to enforce its rights under the forward
contract, any holder of TARGETS can directly institute a legal proceeding
against Citigroup Global Markets Holdings to enforce the institutional trustee's
rights under the forward contract, without first instituting a legal proceeding
against the institutional trustee or any other person or entity. If Citigroup
Global Markets Holdings fails to pay amounts owed on the forward contract on the
date they are otherwise payable, then a holder of TARGETS may also directly
institute a direct action in respect of the amounts owed on the holder's pro
rata interest in the forward contract on or after the due date specified in the
forward contract, without first directing the institutional trustee to enforce
the terms of the forward contract or instituting a legal proceeding directly
against Citigroup Global Markets Holdings to enforce the institutional trustee's
rights under the forward contract. The holders of TARGETS will not be able to
exercise directly any other remedy available to the holder of the forward
contract. In connection with a direct action, Citigroup Global Markets Holdings
will be subrogated to the rights of a holder of TARGETS under the declaration to
the extent of any payment made by Citigroup Global Markets Holdings to that
holder of TARGETS in such direct action.
A waiver of an acceleration event under the indenture by the institutional
trustee at the direction of the holders of the TARGETS will constitute a waiver
of the corresponding acceleration event under the amended and restated
declaration of trust.
Holders of TARGETS may give any required approval or direction at a
separate meeting of holders of TARGETS convened for this purpose, at a meeting
of holders of trust securities or by written consent. The individual trustees
will cause a notice of any meeting at which holders of TARGETS are entitled to
vote, or of any matter upon which action by written consent of the holders is to
be taken, to be mailed to each holder of record of TARGETS. Each notice will
include a statement setting forth the date of such meeting or the date by which
the action is to be taken, a description of any resolution proposed for adoption
at the meeting on which the holders are entitled to vote or of such matter upon
which written consent is sought and instructions for the delivery of proxies or
consents. No vote or consent of the holders of TARGETS will be required for
Trust XXIV to cancel TARGETS in accordance with the amended and restated
declaration of trust. It is anticipated that the only holder of TARGETS issued
in book-entry form will be Cede & Co., as nominee of DTC, and each beneficial
owner of TARGETS will be permitted to exercise the rights of holders of TARGETS
only indirectly through DTC and its participants.
Notwithstanding that holders of TARGETS are entitled to vote or consent
under any of the circumstances described above, any of the TARGETS that are
owned at that time by Citigroup Global Markets Holdings or any entity directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, Citigroup Global Markets Holdings, will not be entitled to vote or
consent and will, for purposes of such vote or consent, be treated as if they
were not outstanding.
34
QUARTERLY DISTRIBUTIONS
Holders of TARGETS will be entitled to receive quarterly distributions at
the rate per TARGETS of $ per quarter (except that the quarterly
distribution payment payable on May 15, 2005 will be $ per TARGETS), payable
on each February 15, May 15, August 15 and November 15, beginning May 15, 2005.
The quarterly distributions will be paid by Trust XXIV out of payments
under the treasury securities and the yield enhancement payments made to Trust
XXIV by Citigroup Global Markets Holdings under the forward contract. Of each
quarterly distribution payable to holders of the TARGETS, approximately % will
be paid out of payments received by Trust XXIV under the treasury securities and
approximately % will be paid out of yield enhancement payments received by
Trust XXIV from Citigroup Global Markets Holdings under the forward contract.
The treasury securities and the forward contract will be the sole assets of
Trust XXIV and will be held by the institutional trustee on behalf of Trust
XXIV. The ability of Trust XXIV to make quarterly distributions on the TARGETS
is therefore entirely dependent on receipt by Trust XXIV of payments with
respect to both the treasury securities and the forward contract.
Under the forward contract, any yield enhancement payments which are
payable, but are not punctually paid, by Citigroup Global Markets Holdings on
their scheduled due date will cease to be due and payable and may instead be
paid, together with interest at % per annum compounded quarterly, on a future
date chosen by Citigroup Global Markets Holdings in its sole discretion. Any
yield enhancement payments that are not paid by Citigroup Global Markets
Holdings prior to maturity will become due and payable on the maturity date or
the accelerated maturity date, as the case may be.
Assuming quarterly distributions on the TARGETS with a hypothetical yield
of 7.5% per annum, set forth below is an example of how the cash flows on the
TARGETS would be comprised. Trust XXIV would invest approximately 15% of the
proceeds of the offering in the treasury securities. Quarterly distributions
providing the assumed yield may require a larger cash flow than will be provided
by the treasury securities, in which case yield enhancement payments would be
paid by the obligor of the forward contract pursuant to the following schedule
and based on the following:
Hypothetical Offering Size:........................ $100,000,000
Hypothetical Annual Cash Flow:..................... 7.5%
Hypothetical Payment Frequency:.................... Quarterly
Hypothetical Settlement Date:...................... February 15, 2005
Hypothetical Maturity Date:........................ February 15, 2008
TREASURY TREASURY TREASURY TREASURY YIELD
SECURITY SECURITY SECURITY SECURITY ENHANCEMENT ANNUALIZED
MATURITY UNIT PURCHASE CASH PAYMENTS TOTAL EQUIVALENT
DATE COST COST FLOW CASH FLOW CASH FLOW COUPON
-------- -------- -------------- -------------- ------------- -------------- ----------
05/15/05 99.272% $ 1,306,850.20 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
08/15/05 98.566% $ 1,297,556.17 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
11/15/05 97.792% $ 1,287,366.97 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
02/15/06 97.067% $ 1,277,822.83 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
05/15/06 96.280% $ 1,267,462.49 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
08/15/06 95.445% $ 1,256,470.27 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
11/15/06 94.558% $ 1,244,793.50 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
02/15/07 93.744% $ 1,234,077.73 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
05/15/07 92.930% $ 1,223,361.96 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
08/15/07 92.076% $ 1,212,119.62 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
11/15/07 91.271% $ 1,201,522.32 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
02/15/08 90.441% $ 1,190,595.92 $ 1,316,433.83 $ 558,566.17 $ 1,875,000.00 7.5%
-------------- -------------- ------------- --------------
$15,000,000.00 $15,797,206.00 $6,702,794.00 $22,500,000.00
============== ============== ============= ==============
35
A portion of each quarterly distribution should represent a return to you
of your initial investment in the TARGETS for tax purposes. In the final
prospectus, the following table will set forth information regarding the
distributions you will receive on the treasury securities to be acquired by
Trust XXIV with a portion of the proceeds received by Trust XXIV from the sale
of the TARGETS, the distributions you will receive from any yield enhancement
payments, the portion of each year's distributions that should constitute a
return of capital for U.S. federal income tax purposes, the amount of original
issue discount that should accrue on the treasury securities and the amount of
ordinary income that should accrue on any yield enhancement payments with
respect to a holder who acquires its trust securities at the issue price from
Citigroup Global Markets Inc. pursuant to the original offering. See "Certain
United States Federal Income Tax Considerations" in this prospectus.
ANNUAL GROSS
DISTRIBUTIONS ANNUAL GROSS
FROM ANNUAL GROSS DISTRIBUTIONS FROM ANNUAL RETURN ANNUAL INCLUSION OF
ANNUAL GROSS YIELD DISTRIBUTIONS FROM YIELD ENHANCEMENT OF ORIGINAL ISSUE
DISTRIBUTIONS FROM ENHANCEMENT TREASURY SECURITIES PAYMENTS PER CAPITAL PER DISCOUNT IN INCOME
YEAR TREASURY SECURITIES PAYMENTS PER TARGETS TARGETS TARGETS PER TARGETS
---- ------------------- ----------------- ------------------- ------------------ ---------------- -------------------
ANNUAL INCLUSION OF
ORDINARY INCOME
FROM YIELD
ENHANCEMENT
PAYMENTS PER
YEAR TARGETS
---- -------------------
DILUTION ADJUSTMENTS
The calculation of the periodic capped return will be subject to adjustment
from time to time in certain situations. Any such adjustments could have an
impact on the maturity payments or accelerated maturity payments to be paid by
Citigroup Global Markets Holdings to Trust XXIV upon maturity of the forward
contract and, therefore, on the maturity payments or accelerated maturity
payments to be paid by Trust XXIV to the holders of TARGETS.
If Intel, after the closing date of the offering contemplated hereby,
(1) pays a stock dividend or makes a distribution with respect to the
common stock in shares of such stock,
(2) subdivides or splits the outstanding shares of the common stock into a
greater number of shares,
(3) combines the outstanding shares of the common stock into a smaller
number of shares, or
(4) issues by reclassification of shares of the common stock any shares of
other common stock of Intel,
then, in each such case, the starting value for the calculation of the periodic
capped return for the reset period ending on the reset date next occurring after
such event will be multiplied by a dilution adjustment equal to a fraction, the
numerator of which will be the number of shares of common stock outstanding
immediately before such event and the denominator of which will be the number of
shares of common stock outstanding immediately after such event, plus, in the
case of a reclassification referred to in (4) above, the number of shares of
other common stock of Intel. In the event of a reclassification referred to in
(4) above as a result of which no common stock is outstanding, the periodic
capped return for each subsequent reset period will be determined by reference
to the other common stock of Intel issued in the reclassification.
If Intel, after the closing date, issues, or declares a record date in
respect of an issuance of, rights or warrants to all holders of common stock
entitling them to subscribe for or purchase shares of common stock at a price
per share less than the then-current market price of the common stock, other
than rights to purchase common stock pursuant to a plan for the reinvestment of
dividends or interest, then, in each such case, the starting value for the
calculation of the periodic capped return for the reset period ending on the
reset date next occurring after such event will be multiplied by a dilution
adjustment equal to a fraction, the numerator of which will be the number of
shares of common stock outstanding immediately before the adjustment is effected
by reason of the issuance of such rights or warrants, plus the number of
additional shares of common stock which the aggregate offering price of the
total number of shares of common stock so offered for
36
subscription or purchase pursuant to such rights or warrants would purchase at
the then-current market price of the common stock, which will be determined by
multiplying the total number of shares so offered for subscription or purchase
by the exercise price of such rights or warrants and dividing the product so
obtained by such then-current market price, and the denominator of which will be
the number of shares of common stock outstanding immediately before the
adjustment is effected, plus the number of additional shares of common stock
offered for subscription or purchase pursuant to such rights or warrants. To the
extent that, after the expiration of such rights or warrants, the shares of
common stock offered thereby have not been delivered, the starting value for the
calculation of the periodic capped return for the reset period ending on the
reset date next occurring after such event will be further adjusted to equal the
starting value which would have been in effect had such adjustment for the
issuance of such rights or warrants been made upon the basis of delivery of only
the number of shares of common stock actually delivered.
If Intel, after the closing date, declares or pays a dividend or makes a
distribution to all holders of common stock of any class of its capital stock,
the capital stock of one or more of its subsidiaries, evidences of its
indebtedness or other non-cash assets, excluding any dividends or distributions
referred to above, or issues to all holders of common stock rights or warrants
to subscribe for or purchase any of its or one or more of its subsidiaries'
securities, other than rights or warrants referred to above, then, in each such
case, the starting value for the calculation of the periodic capped return for
the reset period ending on the reset date next occurring after such event will
be multiplied by a dilution adjustment equal to a fraction, the numerator of
which will be the then-current market price of one share of the common stock,
less the fair market value as of the time the adjustment is effected of the
portion of the capital stock, assets, evidences of indebtedness, rights or
warrants so distributed or issued applicable to one share of the common stock,
and the denominator of which will be the then-current market price of one share
of the common stock. If any capital stock declared or paid as dividend or
otherwise distributed or issued to all holders of Intel common stock consists,
in whole or in part, of marketable securities, then the fair market value of
such marketable securities will be determined by the calculation agent by
reference to the price per share of such capital stock on the principal market
on which it is traded as of the time the adjustment is effected. The fair market
value of any other distribution or issuance referred to in this paragraph will
be determined by a nationally recognized independent investment banking firm
retained for this purpose by Citigroup Global Markets Holdings, whose
determination will be final.
Notwithstanding the foregoing, in the event that, with respect to any
dividend or distribution to which the above paragraph would otherwise apply, the
numerator in the fraction referred to in the above formula is less than $1.00 or
is a negative number, then Citigroup Global Markets Holdings may, at its option,
elect to have the adjustment provided by that paragraph not be made and in lieu
of such adjustment, on the maturity date, the holders of the TARGETS will be
entitled to receive an additional amount of cash equal to the product of the
number of the TARGETS held by such holder multiplied by the fair market value of
such indebtedness, assets, rights or warrants (determined, as of the date such
dividend or distribution is made, by a nationally recognized independent
investment banking firm retained for this purpose by Citigroup Global Markets
Holdings, whose determination will be final) so distributed or issued applicable
to the number of shares of common stock underlying one TARGETS.
If Intel, after the closing date, declares a record date in respect of a
distribution of cash, other than any permitted dividends described below, any
cash distributed in consideration of fractional shares of common stock, and any
cash distributed in a reorganization event referred to below, by dividend or
otherwise, to all holders of the common stock, or makes an excess purchase
payment, then the starting value for the calculation of the periodic capped
return for the reset period ending on the reset date next occurring after such
event will be multiplied by a dilution adjustment equal to a fraction, the
numerator of which will be the then-current market price of the common stock, on
such record date less the amount of such distribution applicable to one share of
common stock which would not be a permitted dividend, or, in the case of an
excess purchase payment, less the aggregate amount of such excess purchase
payment for which adjustment is being made at such time divided by the number of
shares of common stock outstanding on such record date, and the denominator of
which will be such then-current market price of the common stock.
For purposes of these adjustments, a permitted dividend is any cash
dividend in respect of the common stock, other than a cash dividend that exceeds
the immediately preceding cash dividend, and then only to the
37
extent that the per share amount of such dividend results in an annualized
dividend yield on the common stock in excess of 10%. An excess purchase payment
is the excess, if any, of (x) the cash and the value (as determined by a
nationally recognized independent investment banking firm retained for this
purpose by Citigroup Global Markets Holdings, whose determination will be final)
of all other consideration paid by Intel with respect to one share of common
stock acquired in a tender offer or exchange offer by Intel, over (y) the
then-current market price of the common stock.
Notwithstanding the foregoing, in the event that, with respect to any
dividend or distribution or excess purchase payment to which the sixth paragraph
in this section would otherwise apply, the numerator in the fraction referred to
in the formula in that paragraph is less than $1.00 or is a negative number,
then Citigroup Global Markets Holdings may, at its option, elect to have the
adjustment provided by that paragraph not be made and in lieu of such
adjustment, on the maturity date, the holders of the TARGETS will be entitled to
receive an additional amount of cash equal to the product of the number of the
TARGETS held by such holder multiplied by the sum of the amount of cash plus the
fair market value of such other consideration (determined, as of the date such
dividend or distribution is made, by a nationally recognized independent
investment banking firm retained for this purpose by Citigroup Global Markets
Holdings, whose determination will be final) so distributed or applied to the
acquisition of the common stock in such a tender offer or exchange offer
applicable to the number of shares of common stock underlying one TARGETS.
Each dilution adjustment will be effected as follows:
- in the case of any dividend, distribution or issuance, at the opening of
business on the business day next following the record date for
determination of holders of common stock entitled to receive such
dividend, distribution or issuance or, if the announcement of any such
dividend, distribution, or issuance is after such record date, at the
time such dividend, distribution or issuance was announced by Intel,
- in the case of any subdivision, split, combination or reclassification,
on the effective date of such transaction,
- in the case of any excess purchase payment for which Intel announces, at
or prior to the time it commences the relevant share repurchase, the
repurchase price per share for shares proposed to be repurchased, on the
date of such announcement, and
- in the case of any other excess purchase payment, on the date that the
holders of the repurchased shares become entitled to payment in respect
thereof.
All dilution adjustments will be rounded upward or downward to the nearest
1/10,000th or, if there is not a nearest 1/10,000th, to the next lower
1/10,000th. No adjustment in the starting value for the calculation of the
periodic capped return for any reset period will be required unless such
adjustment would require an increase or decrease of at least one percent
therein, provided, however, that any adjustments which by reason of this
sentence are not required to be made will be carried forward (on a percentage
basis) and taken into account in any subsequent adjustment. If any announcement
or declaration of a record date in respect of a dividend, distribution, issuance
or repurchase requiring an adjustment as described herein is subsequently
canceled by Intel, or such dividend, distribution, issuance or repurchase fails
to receive requisite approvals or fails to occur for any other reason, then,
upon such cancellation, failure of approval or failure to occur, the periodic
capped return for the reset period ending on the reset date next occurring after
such event will be further adjusted to the periodic capped return which would
then have been in effect had adjustment for such event not been made. If a
reorganization event described below occurs after the occurrence of one or more
events requiring an adjustment as described herein, the dilution adjustments
previously applied to the periodic capped return for the reset period ending on
the reset date next occurring after such events will not be rescinded but will
be applied to the new periodic capped return provided for below.
The then-current market price of the common stock, for the purpose of
applying any dilution adjustment, means the average trading price per share of
common stock for the 10 trading days immediately before such adjustment is
effected or, in the case of an adjustment effected at the opening of business on
the business day
38
next following a record date, immediately before the earlier of the date such
adjustment is effected and the related ex-date.
The ex-date with respect to any dividend, distribution or issuance is the
first date on which the shares of the common stock trade regular way on their
principal market without the right to receive such dividend, distribution or
issuance.
In the event of any of the following reorganization events
- any consolidation or merger of Intel, or any surviving entity or
subsequent surviving entity of Intel, with or into another entity, other
than a merger or consolidation in which Intel is the continuing
corporation and in which the common stock outstanding immediately before
the merger or consolidation is not exchanged for cash, securities or
other property of Intel or another issuer,
- any sale, transfer, lease or conveyance to another corporation of the
property of Intel or any successor as an entirety or substantially as an
entirety,
- any statutory exchange of securities of Intel or any successor of Intel
with another issuer, other than in connection with a merger or
acquisition, or
- any liquidation, dissolution or winding up of Intel or any successor of
Intel,
the ending value used to calculate the periodic capped return for the reset
period ending on the reset date next occurring, and the starting value and the
ending value used to calculate the periodic capped return for each reset period
thereafter (other than the reset period ending at maturity) will be based on the
transaction value described below rather than the trading price of the common
stock, and the ending value used to calculate the periodic capped return for the
reset period ending at maturity will be based on the transaction value rather
than the 10-day average trading price of the common stock.
The transaction value with respect to any reset period, will be the sum of:
(1) for any cash received in a reorganization event, the amount of cash
received per share of common stock,
(2) for any property other than cash or marketable securities received in a
reorganization event, an amount equal to the market value on the date
the reorganization event is consummated of that property received per
share of common stock, as determined by a nationally recognized
independent investment banking firm retained for this purpose by
Citigroup Global Markets Holdings, whose determination will be final,
and
(3) for any marketable securities received in a reorganization event, (A)
with respect to all reset periods other than the reset period ending at
maturity, an amount equal to the trading price per share of such
marketable securities on the reset date at the end of the relevant
reset period multiplied by the number of those marketable securities
received for each share of common stock or, if that day is not a
trading day, the trading price on the next following trading day, and
(B) with respect to the reset period ending on maturity, an amount
equal to the average trading price per share of those marketable
securities for the 10 trading days immediately prior to but not
including the date one business day before the maturity date or
accelerated maturity date multiplied by the number of such marketable
securities received for each share of common stock.
Marketable securities are any perpetual equity securities or debt
securities with a stated maturity after the maturity date, in each case that are
listed on a U.S. national securities exchange or reported by the Nasdaq Stock
Market, Inc. The number of shares of any equity securities constituting
marketable securities included in the calculation of transaction value pursuant
to clause (3) above will be adjusted if any event occurs with respect to the
marketable securities or the issuer of the marketable securities between the
time of the reorganization event and the maturity date or accelerated maturity
date that would have required an adjustment as described above, had it occurred
with respect to the common stock of Intel. Adjustment for those subsequent
events will be as nearly equivalent as practicable to the adjustments described
above.
39
Citigroup Global Markets Holdings will be responsible for the effectuation
and calculation of any adjustment described herein and will furnish the
indenture trustee with notice of any such adjustment.
PAYMENT PROCEDURES
Distributions on the TARGETS will be payable to the holders of the TARGETS
as they appear on the books and records of Trust XXIV at the close of business
on the relevant record dates. While the TARGETS remain in book-entry only form,
the relevant record dates for distributions of any maturity payments or
accelerated maturity payments and any accrued and unpaid yield enhancement
payments with respect to the TARGETS will be five business days prior to the
date Trust XXIV receives those maturity payments or accelerated maturity
payments, as the case may be, under the forward contract. While the TARGETS
remain in book-entry only form, the relevant record date for distribution of the
treasury proceeds to holders of TARGETS will be five business days prior to the
date Trust XXIV receives those treasury proceeds upon liquidation of the
treasury securities. While the TARGETS remain in book-entry only form, the
relevant record dates for any quarterly distributions will be five business days
prior to the relevant payment dates, which payment dates will correspond to the
dates on which Trust XXIV receives payments in respect of, and in accordance
with the terms of, the treasury securities and the forward contract. The
relevant record dates for the common securities will be the same record dates as
for the TARGETS.
If the TARGETS will not continue to remain in book-entry only form, the
relevant record dates will conform to the rules of any securities exchange on
which they are listed and, if none, will be 15 days before the relevant payment
dates, which payment dates will correspond to the dates on which payments are
made in respect of, and in accordance with the terms of, the treasury securities
and the forward contract.
Distributions payable on any TARGETS that are not punctually paid on any
payment date, as a result of either Citigroup Global Markets Holdings having
failed to make a payment under the forward contract or the U.S. Government
having failed to make a payment in respect of the treasury securities, will
cease to be payable to the person in whose name the TARGETS are registered on
the relevant record date. The defaulted distribution will instead be payable to
the person in whose name those TARGETS are registered on a special record date
which will be the date on which Trust XXIV actually receives the amount of the
defaulted distributions.
If any date on which distributions are payable on the TARGETS is not a
business day, then payment of the distribution payable on such date will be made
on the next succeeding day that is a business day and without any interest or
other payment in respect of any such delay, with the same force and effect as if
made on that date. If that business day is in the next succeeding calendar year,
the payment will be made on the immediately preceding business day, with the
same force and effect as if made on that date. A business day is any day other
than a Saturday, Sunday or a day on which banking institutions in The City of
New York are authorized or required by law to close.
Payments in respect of the TARGETS represented by global certificates (as
defined below under "Book-Entry Only Issuance") will be made to DTC, which will
credit the relevant accounts at DTC on the scheduled payment dates. In the case
of TARGETS in the form of certificated securities, if any, the payments will be
made by check mailed to the holder's address as it appears on the register.
VOTING RIGHTS
Except as described in this prospectus under "-- Acceleration of Maturity
Date; Enforcement of Rights" and "Description of the Guarantee -- Modifications
of the Guarantee; Assignment," and except as provided under the Delaware
Statutory Trust Act, the Trust Indenture Act and as otherwise required by law
and the amended and restated declaration of trust, the holders of the TARGETS
will have no voting rights.
In the event the consent of the institutional trustee, as the holder of the
forward contract, is required under the indenture with respect to any amendment,
modification or termination of the indenture, the institutional trustee will
request the written direction of the holders of the trust securities with
respect to the amendment, modification or termination and will vote with respect
to the amendment, modification or
40
termination as directed by a majority of the trust securities voting together as
a single class. If any amendment, modification or termination under the
indenture requires the consent of a super majority, the institutional trustee
may only give its consent at the direction of the holders of at least the
proportionate number of the trust securities represented by the relevant super
majority of the aggregate beneficial interests in the forward contract. The
institutional trustee will be under no obligation to take any such action in
accordance with the directions of the holders of the trust securities unless the
institutional trustee has obtained an opinion of a nationally recognized
independent tax counsel experienced in such matters to the effect that for
United States federal income tax purposes Trust XXIV will not be classified as
other than a grantor trust.
The procedures by which holders of the TARGETS may exercise their voting
rights are described below under "-- Book-Entry Only Issuance."
Holders of the TARGETS will have no rights to appoint or remove the
trustees, who may be appointed, removed or replaced solely by Citigroup Global
Markets Holdings as the indirect or direct holder of all of the common
securities.
MODIFICATION OF THE AMENDED AND RESTATED DECLARATION OF TRUST
The declaration may be modified and amended if approved by the individual
trustees, and in certain circumstances the institutional trustee and the
Delaware trustee, provided that, if any proposed amendment to the amended and
restated declaration of trust provides for, or the individual trustees otherwise
propose to effect,
(1) any action that would adversely affect the powers, preferences or
special rights of the trust securities, whether by way of amendment to
the amended and restated declaration of trust or otherwise, or
(2) the dissolution, winding-up or termination of Trust XXIV other than
pursuant to the terms of the amended and restated declaration of trust,
then the holders of the trust securities, voting together as a single class,
will be entitled to vote on the amendment or proposal and the amendment or
proposal will not be effective except with the approval of the holders of at
least a majority of the trust securities affected thereby. If any amendment or
proposal referred to in (1) above would adversely affect only the TARGETS or the
common securities, then only holders of the affected class will be entitled to
vote on the amendment or proposal and the amendment or proposal will not be
effective except with the approval of a majority of that class of trust
securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the amended and restated declaration of trust if the amendment or modification
would
- cause Trust XXIV to fail to be classified as a grantor trust for United
States federal income tax purposes,
- reduce or otherwise adversely affect the powers of the institutional
trustee in contravention of the Trust Indenture Act or
- cause Trust XXIV to be deemed an investment company which is required to
be registered under the Investment Company Act.
MERGER, CONSOLIDATION OR AMALGAMATION OF TARGETS TRUST XXIV
Trust XXIV may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other entity, except as
described below. Trust XXIV may, with the consent of the individual trustees or,
if there are more than two, a majority of the individual trustees and without
the consent of the holders of the trust securities, the Delaware trustee or the
institutional trustee consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any state, provided that
- the successor entity either (A) expressly assumes all of the obligations
of Trust XXIV under the trust securities or (B) substitutes for the
TARGETS other successor securities having substantially the
41
same terms as the trust securities, so long as the successor securities
rank the same as the trust securities with respect to distributions and
payments upon liquidation, maturity and otherwise,
- Citigroup Global Markets Holdings expressly acknowledges a trustee of
such successor entity possessing the same powers and duties as the
institutional trustee in its capacity as the holder of the forward
contract and the treasury securities,
- successor securities to the TARGETS are listed, or any successor
securities to the TARGETS will be listed upon notification of issuance,
on any national securities exchange or with any organization on which the
TARGETS are then listed or quoted,
- the merger, consolidation, amalgamation or replacement does not cause the
TARGETS, including any successor securities, to be downgraded by any
nationally recognized statistical rating organization,
- the merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the trust
securities, including any successor securities, in any material respect,
other than with respect to any dilution of the holder's interest in the
new entity,
- the successor entity has a purpose identical to that of Trust XXIV,
- prior to the merger, consolidation, amalgamation or replacement, Trust
XXIV has received an opinion of a nationally recognized independent
counsel to Trust XXIV experienced in such matters to the effect that:
(A) the merger, consolidation, amalgamation or replacement will not
adversely affect the rights, preferences and privileges of the
holders of the trust securities, including any successor securities,
in any material respect, other than with respect to any dilution of
the holders' interest in the new entity,
(B) following the merger, consolidation, amalgamation or replacement,
neither Trust XXIV nor such successor entity will be required to
register as an investment company under the Investment Company Act,
and
(C) following the merger, consolidation, amalgamation or replacement,
Trust XXIV or the successor entity will continue to be classified as
a grantor trust for U.S. federal income tax purposes, and
- Citigroup Global Markets Holdings guarantees the obligations of the
successor entity under the successor securities at least to the extent
provided by the guarantee.
Notwithstanding the foregoing, Trust XXIV will not, without the consent of
holders of all of the trust securities, consolidate, amalgamate, merge with or
into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if, in the opinion of
a nationally recognized independent tax counsel experienced in such matters, the
consolidation, amalgamation, merger or replacement would cause Trust XXIV or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes. In addition, so long as any TARGETS are
outstanding and are not held entirely by Citigroup Global Markets Holdings,
Trust XXIV may not voluntarily liquidate, dissolve, wind-up or terminate except
as described above under "-- Acceleration of Maturity Date; Enforcement of
Rights."
BOOK-ENTRY ONLY ISSUANCE
The Depository Trust Company will act as securities depositary for the
TARGETS. The TARGETS will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global TARGETS certificates, representing the total aggregate
number of TARGETS, will be issued and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. These laws
may impair the ability to transfer beneficial interests in the global TARGETS as
represented by a global certificate.
42
DTC has advised Citigroup Global Markets Holdings as follows: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC holds securities that
its participants deposit with DTC. DTC also facilitates the settlement among
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct participants in DTC include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its direct participants and by the
New York Stock Exchange, the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others, such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a direct
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of the TARGETS within the DTC system must be made by or through
direct participants, which will receive a credit for the TARGETS on DTC's
records. The ownership interest of each beneficial owner actually purchasing the
TARGETS will be recorded on the direct participants' and indirect participants'
records. Beneficial owners will not receive written confirmation from DTC of
their purchases, but beneficial owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the direct or indirect participants through
which the beneficial owners purchased the TARGETS. Transfers of ownership
interests in the TARGETS are to be accomplished by entries made on the books of
participants and indirect participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing their ownership
interests in the TARGETS, except in the event that use of the book-entry system
for the TARGETS is discontinued. Account holders in the Euroclear or
Clearstream, Luxembourg clearance systems may hold beneficial interests in the
TARGETS through the accounts each such system maintains as a participant in DTC.
To facilitate subsequent transfers, all the TARGETS deposited by
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of the TARGETS with DTC and their registration in the name of Cede &
Co. effect no change in beneficial ownership, and DTC has no knowledge of the
actual beneficial owners of the TARGETS. DTC's records reflect only the identity
of the direct participants to whose accounts such TARGETS are credited, which
may or may not be the beneficial owners. The participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Although voting with respect to the TARGETS is limited, in those cases
where a vote is required, neither DTC nor Cede & Co. will itself consent or vote
with respect to TARGETS. Under its usual procedures, DTC would mail an Omnibus
Proxy to Trust XXIV as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co. consenting or voting rights for those direct participants to
whose accounts the TARGETS are credited on the record date, identified in a
listing attached to the Omnibus Proxy. Citigroup Global Markets Holdings and
Trust XXIV believe that the arrangements among DTC, direct and indirect
participants, and beneficial owners will enable the beneficial owners to
exercise rights equivalent in substance to the rights that can be directly
exercised by a holder of a beneficial interest in Trust XXIV.
Payments on the TARGETS will be made to DTC. DTC's practice is to credit
direct participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
participants to beneficial owners will be governed by standing instructions and
customary practices, as is the case with securities held for the account of
customers in bearer form or registered in "street name," and such payments will
be the responsibility of such participant and not of DTC, Trust XXIV or
Citigroup Global Markets Holdings, subject to any statutory or regulatory
requirements to the contrary that may be in effect
43
from time to time. Payment of distributions to DTC is the responsibility of
Trust XXIV, disbursement of such payments to direct participants is the
responsibility of DTC, and disbursement of such payments to the beneficial
owners is the responsibility of direct and indirect participants.
Except as provided in the next paragraph, a beneficial owner in a global
TARGETS will not be entitled to receive physical delivery of TARGETS.
Accordingly, each beneficial owner must rely on the procedures of DTC to
exercise any rights under the TARGETS.
DTC may discontinue providing its services as securities depositary with
respect to the TARGETS at any time by giving reasonable notice to Trust XXIV.
Under such circumstances, in the event that a successor securities depositary is
not obtained, TARGETS certificates are required to be printed and delivered.
Additionally, the individual trustees, with the consent of Citigroup Global
Markets Holdings, may decide to discontinue use of the system of book-entry
transfers through DTC or any successor depositary with respect to the TARGETS.
In that event, certificates for the TARGETS will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Citigroup Global Markets Holdings and Trust
XXIV believe to be reliable, but neither Citigroup Global Markets Holdings nor
Trust XXIV takes responsibility for the accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The institutional trustee, prior to the occurrence of a default with
respect to the trust securities, and after the curing of all defaults that may
have occurred, undertakes to perform only the duties that are specifically set
forth in the amended and restated declaration of trust. If such a default occurs
and the institutional trustee has actual knowledge of it, the institutional
trustee will exercise the rights and powers vested in it by the amended and
restated declaration of trust and will use the same degree of care and skill in
the exercise of such rights and powers as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to those provisions, the
institutional trustee is under no obligation to exercise any of the rights or
powers vested in it by the amended and restated declaration of trust at the
request of any holder of TARGETS, unless offered reasonable security and
indemnity by the holder against the costs, expenses and liabilities which the
institutional trustee might incur thereby. Notwithstanding the foregoing, the
holders of TARGETS will not be required to offer the indemnity in the event the
holders, by exercising their voting rights, direct the institutional trustee to
take any action following an acceleration event.
PAYING AGENT
In the event that the TARGETS do not remain in book-entry only form, the
institutional trustee will act as paying agent for the TARGETS and may designate
an additional or substitute paying agent at any time. In addition, registration
of transfers of TARGETS will be effected without charge by or on behalf of Trust
XXIV, but upon payment, with the giving of such indemnity as Trust XXIV or
Citigroup Global Markets Holdings may require, in respect of any tax or other
government charges which may be imposed in relation to it.
GOVERNING LAW
The amended and restated declaration of trust and the TARGETS will be
governed by, and construed in accordance with, the internal laws of the State of
Delaware.
MISCELLANEOUS
The individual trustees are authorized and directed to operate Trust XXIV
in such a way so that Trust XXIV will not be required to register as an
investment company under the Investment Company Act or be characterized as other
than a grantor trust for United States federal income tax purposes. Citigroup
Global Markets Holdings and the individual trustees are authorized to take any
action, not inconsistent with applicable law, the amended and restated
declaration of trust or the restated certificate of incorporation of Citigroup
Global Markets Holdings, that each of Citigroup Global Markets Holdings and the
individual trustees in their discretion deem to be necessary or desirable to
achieve such end as long as the action does not adversely affect the interests
of the holders of the TARGETS or vary the terms thereof.
Holders of the TARGETS have no preemptive rights.
44
DESCRIPTION OF THE FORWARD CONTRACT
Citigroup Global Markets Holdings is also by this prospectus offering its
related forward contract with respect to Intel common stock. The terms of the
forward contract will be set forth in an indenture between Citigroup Global
Markets Holdings and JPMorgan Chase Bank, N.A. The indenture will be qualified
under the Trust Indenture Act. The indenture trustee will act as trustee for the
forward contract under the indenture for purposes of compliance with the
provisions of the Trust Indenture Act. The terms of the forward contract will
include those stated in the indenture and those made part of the indenture by
the Trust Indenture Act. The forward contract will rank equally with all other
unsecured contractual obligations of Citigroup Global Markets Holdings and the
unsecured and unsubordinated debt of Citigroup Global Markets Holdings. Since
Citigroup Global Markets Holdings is a holding company, the forward contract
will be effectively subordinated to the claims of creditors of Citigroup Global
Markets Holdings' subsidiaries.
Under the forward contract, Citigroup Global Markets Holdings will pay an
amount equal to the aggregate maturity payments or the aggregate accelerated
maturity payments, as the case may be, in respect of the TARGETS and the common
securities to Trust XXIV at maturity of the forward contract as described above.
The forward contract provides, among other things, for a payment by Citigroup
Global Markets Holdings to Trust XXIV of an amount determined by reference to
the 10-day closing price as of the maturity date or accelerated maturity date,
as the case may be. See "Description of the TARGETS" in this prospectus.
Pursuant to the terms of the forward contract, Citigroup Global Markets
Holdings will pay yield enhancement payments, which are on the amount paid by
Trust XXIV to Citigroup Global Markets Holdings for the forward contract. The
yield enhancement payments will take the form of quarterly cash payments in the
amount of approximately $ (except that the payment on May 15, 2005 will
be approximately $ ), accruing from the date of issuance of the
TARGETS, computed on the basis of a 360-day year of twelve 30-day months and for
any period less than a full calendar month, the number of days elapsed in such
month. Depending on market conditions at the time of pricing of the TARGETS for
initial sale to the public, the amount of the yield enhancement payments may be
zero or a nominal amount. The yield enhancement payments, together with
distributions received by Trust XXIV with respect to the treasury securities,
will be used by the Trust XXIV to pay the quarterly distributions to the holders
of the TARGETS and the common securities. See "Description of the
TARGETS -- Quarterly Distributions" in this prospectus.
The forward contract is a contract in the form of an indenture between
Citigroup Global Markets Holdings and a trustee for the benefit of the holder of
the interests in the forward contract. The forward contract is a prepaid
"cash-settled" forward contract, whereby the obligor settles its obligation in
cash rather than in securities. The indenture will provide that Citigroup Global
Markets Holdings will pay all fees and expenses related to
- the offering of the trust securities and the forward contract,
- the organization, maintenance and dissolution of Trust XXIV,
- the retention of the trustees, and
- the enforcement by the institutional trustee of the rights of the holders
of the TARGETS.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the guarantee that
will be executed and delivered by Citigroup Global Markets Holdings for the
benefit of the holders of TARGETS. The guarantee will be qualified as an
indenture under the Trust Indenture Act. JPMorgan Chase Bank, N.A. will act as
indenture trustee under the guarantee. The terms of the guarantee will be those
set forth in the guarantee and those made part of the guarantee by the Trust
Indenture Act. The summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference to,
the form of guarantee, which is filed as an exhibit to the registration
statement of which this prospectus forms a part, and the Trust Indenture Act.
The guarantee will be held by the guarantee trustee for the benefit of the
holders of the TARGETS.
45
GENERAL
Under the guarantee, Citigroup Global Markets Holdings will irrevocably and
unconditionally agree to pay in full to the holders of the TARGETS, except to
the extent paid by Trust XXIV, as and when due, regardless of any defense, right
of set off or counterclaim which Trust XXIV may have or assert, the following
payments:
- any maturity payment that is required to be made in respect of the
TARGETS, to the extent Trust XXIV has funds available,
- any accelerated maturity payment that is required to be made in respect
of the TARGETS, to the extent Trust XXIV has funds available,
- any treasury proceeds that are required to be distributed in respect of
the TARGETS, to the extent that Trust XXIV has funds available,
- any quarterly distributions that are required to be made in respect of
the TARGETS, to the extent Trust XXIV has funds available,
- any accrued and unpaid yield enhancement payments as of the maturity date
or accelerated maturity, as the case may be, to the extent Trust XXIV has
funds available, and
- any other remaining assets of Trust XXIV upon liquidation of Trust XXIV.
Citigroup Global Markets Holdings' obligation to make a guarantee payment
may be satisfied by direct payment of the required amounts by Citigroup Global
Markets Holdings to the holders of TARGETS or by causing Trust XXIV to pay such
amounts to such holders.
The guarantee will be a guarantee with respect to the TARGETS from the time
of issuance of the TARGETS but will not apply to any payment of quarterly
distributions, maturity payments, accelerated maturity payments, treasury
proceeds, accrued and unpaid yield enhancement payments or to payments upon the
dissolution, winding-up or termination of Trust XXIV, except to the extent Trust
XXIV has funds available. If Citigroup Global Markets Holdings does not pay the
aggregate maturity payments or the aggregate accelerated maturity payments to
Trust XXIV upon maturity of the forward contract, including maturity as a result
of acceleration, Trust XXIV will not pay any maturity payment or accelerated
maturity payment to holders of the TARGETS and will not have funds available to
make the payments. If the U.S. federal government, as the issuer of the treasury
securities, does not make periodic payments to Trust XXIV with respect to the
treasury securities, or Citigroup Global Markets Holdings does not pay the yield
enhancement payments to Trust XXIV under the forward contract, then, in either
event, Trust XXIV will not pay the full amount of the quarterly distributions to
holders of the TARGETS and will not have funds available to make the payments.
The guarantee, when taken together with Citigroup Global Markets Holdings'
obligations under the forward contract, the indenture and the declaration,
including its obligations to pay costs, expenses, debts and liabilities of Trust
XXIV, other than with respect to trust securities, will provide a full and
unconditional guarantee by Citigroup Global Markets Holdings of Trust XXIV's
obligations under the TARGETS.
MODIFICATIONS OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of TARGETS, in which case no vote will be required, the guarantee may
be amended only with the prior approval of the holders of a majority of the
outstanding TARGETS. All guarantees and agreements contained in the guarantee
will bind the successors, assignees, receivers, trustees and representatives of
Citigroup Global Markets Holdings and shall inure to the benefit of the holders
of the TARGETS then outstanding.
GUARANTEE ENFORCEMENT EVENTS
An enforcement event under the guarantee will occur upon the failure of
Citigroup Global Markets Holdings to perform any of its payment or other
obligations thereunder. The holders of a majority of the
46
TARGETS have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee in respect of the
guarantee or to direct the exercise of any trust or power conferred upon the
guarantee trustee under the guarantee. If the guarantee trustee fails to enforce
the guarantee trustee's rights under the guarantee, any holder of TARGETS may
directly institute a legal proceeding against Citigroup Global Markets Holdings
to enforce the guarantee trustee's rights under the guarantee, without first
instituting a legal proceeding against Trust XXIV, the guarantee trustee or any
other person or entity. A holder of TARGETS may also directly institute a legal
proceeding against Citigroup Global Markets Holdings to enforce such holder's
right to receive payment under the guarantee without first directing the
guarantee trustee to enforce the terms of the guarantee or instituting a legal
proceeding against Trust XXIV or any other person or entity.
Citigroup Global Markets Holdings will be required to provide annually to
the guarantee trustee a statement as to the performance by Citigroup Global
Markets Holdings of certain of its obligations under the guarantee and as to any
default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, prior to the occurrence of a default with respect to
the guarantee and after the curing of all defaults that may have occurred,
undertakes to perform only the duties that are specifically set forth in the
guarantee. If any default occurs with respect to the guarantee that has not been
cured or waived and the guarantee trustee has actual knowledge of it, the
guarantee trustee will exercise its rights and powers under the guarantee, and
use the same degree of care and skill in the exercise of such rights and powers
as a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the guarantee trustee is under no obligation to
exercise any of the powers vested in it by the guarantee at the request of any
holder of the TARGETS unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The guarantee will terminate as to the TARGETS upon full payment to the
holders of the TARGETS of
- the maturity payments and all quarterly distributions,
- the accelerated maturity payments, the treasury proceeds and any accrued
but unpaid yield enhancement payments or
- the amounts payable in accordance with the declaration upon liquidation
of Trust XXIV.
The guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of TARGETS must restore payment of any sum
paid under the TARGETS or the guarantee.
STATUS OF THE GUARANTEE
The guarantee will constitute a guarantee of payment and not of collection.
The guaranteed party may institute a legal proceeding directly against the
guarantor to enforce its rights under the guarantee without first instituting a
legal proceeding against any other person or entity.
GOVERNING LAW
The guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
DESCRIPTION OF THE TREASURY SECURITIES
The treasury securities will consist of a portfolio of stripped
self-amortizing securities issued by the U.S. Treasury and maturing on a
quarterly basis through the maturity date. The treasury securities will bear
quarterly payments corresponding to the payment dates of the quarterly
distributions payable on the
47
TARGETS. Upon acceleration of maturity to an accelerated maturity date, any
treasury securities then held by the institutional trustee on behalf of Trust
XXIV will be sold and the treasury proceeds will be distributed to holders of
the trust securities. See "Description of the TARGETS -- Acceleration of
Maturity Date; Enforcement of Rights" in this prospectus.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax consequences
of the purchase, ownership and disposition of the TARGETS. Unless otherwise
specifically indicated herein, this summary only addresses U.S. Holders. A "U.S.
Holder" is a holder of the TARGETS that is an individual who is a citizen or
resident of the United States, a U.S. domestic corporation, or any other person
that is subject to U.S. federal income taxation on a net income basis in respect
of its investment in the TARGETS. The discussion below is based on the advice of
Cleary Gottlieb Steen & Hamilton LLP.
The summary is based on U.S. federal income tax laws, regulations, rulings
and decisions now in effect, all of which are subject to change, possibly on a
retroactive basis. Except to the extent discussed below in "-- Tax Consequences
to Non-U.S. Holders" and "-- Backup Withholding and Information Reporting," the
summary deals only with U.S. Holders that will hold the TARGETS as capital
assets and that purchased the TARGETS in the initial offering. The summary does
not address tax considerations that may be relevant to a particular holder in
light of such holder's individual circumstances or that are applicable to
holders subject to special tax rules, such as banks, tax-exempt entities,
insurance companies, dealers in securities or currencies, traders in securities
electing to mark to market, persons that will hold the TARGETS as a position in
a "straddle" for tax purposes or as part of a "synthetic security" or a
"conversion transaction" or other integrated investment comprised of the TARGETS
and one or more other investments, or persons that have a functional currency
other than the U.S. dollar. It does not include any description of the tax laws
of any state, local or foreign government that may be applicable to the TARGETS
or to the holders thereof. Prospective purchasers of the TARGETS should consult
their tax advisors in determining the tax consequences to them of purchasing,
owning or disposing of the TARGETS, including the application to their
particular situation of the U.S. federal income tax considerations discussed
below, as well as the application of state, local, foreign income or other tax
laws.
There are no regulations, published rulings or judicial decisions
addressing the characterization for U.S. federal income tax purposes of the
TARGETS. Pursuant to the amended and restated declaration of trust, every holder
of the TARGETS and Trust XXIV agrees to treat the TARGETS for U.S. federal
income tax purposes as a beneficial interest in a trust that holds the treasury
securities and the forward contract. In addition, pursuant to the forward
contract and the amended and restated declaration of trust, every holder of the
TARGETS, Trust XXIV and Citigroup Global Markets Holdings agree to characterize
for U.S. federal income tax purposes, in the absence of an administrative
determination or judicial ruling to the contrary, (1) the forward contract as a
cash-settled forward purchase contract and (2) an amount equal to the purchase
price of the TARGETS less the purchase price of the treasury securities as a
cash deposit to be applied on the maturity date or accelerated maturity date in
full satisfaction of the holder's payment obligation under the forward contract.
Trust XXIV intends to report holders' income to the Internal Revenue Service in
accordance with this agreed treatment.
Under this agreed approach, the tax consequences of holding a TARGETS
should be as described below. Prospective investors in the TARGETS should be
aware, however, that no ruling is being requested from the Internal Revenue
Service with respect to the TARGETS and the Internal Revenue Service might take
a different view as to the proper characterization of the TARGETS or of the
forward contract and of the U.S. federal income tax consequences to a holder
thereof.
TAX STATUS OF TRUST XXIV
The Trust will be treated as a grantor trust owned solely by the present
and future holders of trust securities for U.S. federal income tax purposes, and
accordingly, income received by Trust XXIV will be treated as income of the
holders of the TARGETS in the manner set forth below.
48
TAX CONSEQUENCES TO U.S. HOLDERS
Tax Basis in the Treasury Securities and the Forward Contract. Each U.S.
Holder should be considered the owner of its pro rata portion of the treasury
securities and the forward contract in Trust XXIV. The cost to the U.S. Holder
of its TARGETS should be allocated among the holder's pro rata portion of the
treasury securities and the forward contract, in proportion to the fair market
values thereof on the date on which the holder acquires its TARGETS, in order to
determine the holder's tax basis in such assets. It is currently anticipated
that approximately 10% to 15% and 85% to 90% of the net proceeds of the offering
will be used by Trust XXIV to purchase the treasury securities and the forward
contract, respectively.
Recognition of Original Issue Discount on the Treasury Securities. The
treasury securities in Trust XXIV will consist of stripped, self-amortizing U.S.
Treasury securities. A U.S. Holder should be required to treat its pro rata
portion of each treasury security in Trust XXIV as a bond that was originally
issued on the date the holder purchased its TARGETS and at an original issue
discount equal to the excess of the holder's pro rata portion of the amounts
payable on such treasury security over the holder's tax basis therein, as
discussed above. The amount of such excess, however, should constitute only a
portion of the total amounts payable with respect to the treasury securities
held by Trust XXIV and, accordingly, a substantial portion of the quarterly cash
distributions from Trust XXIV to holders should be treated as a tax-free return
of the holder's investment in the treasury securities and should reduce the
holder's tax basis in its pro rata portion of the treasury securities. A U.S.
Holder, whether using the cash or accrual method of tax accounting, should be
required to include original issue discount, other than original issue discount
on short-term treasury securities as described below, in gross income for U.S.
federal income tax purposes as it accrues, in accordance with a constant yield
method, prior to the receipt of cash attributable to such income. A U.S.
Holder's tax basis in a treasury security held by Trust XXIV should be increased
by the amount of any original issue discount included in gross income by the
holder with respect to such treasury security and reduced to the extent that any
payment received on maturity, sale or other disposition of the TARGETS
represents a repayment of accrued original issue discount.
With respect to any short-term treasury security (a treasury security with
a maturity of one year or less from the date it is purchased) held by Trust
XXIV, U.S. Holders using the cash method of tax accounting should generally be
required to include interest payments on such treasury securities in gross
income as such payments are received. In addition, such cash method U.S. Holders
may be denied a deduction for any related interest expense until such payments
are received. U.S. Holders using the accrual method of tax accounting should be
required to include original issue discount on any short-term treasury security
held by Trust XXIV in gross income as such original issue discount accrues.
Unless a U.S. Holder elects to accrue the original issue discount on a
short-term treasury security according to a constant yield method based on daily
compounding, such original issue discount should be accrued on a straight-line
basis.
Treatment of the Forward Contract. Each U.S. Holder should be treated as
having entered into a pro rata portion of the forward contract and, at the
maturity date or accelerated maturity date, as having received a pro rata
portion of the maturity payment or accelerated maturity payment, as the case may
be, received by Trust XXIV. Under current law, a U.S. Holder should not
recognize income, gain or loss upon entry into the forward contract and should
not be required to include in gross income additional amounts over the term of
the forward contract, except with respect to the yield enhancement payments, as
described below. The Internal Revenue Service and the U.S. Treasury Department
have indicated that they may publish guidance with respect to accrual of income
on prepaid forward contracts. If such guidance were issued with retroactive
application, it could increase the amount of income required to be included over
the term of the forward contract. See "-- Possible Alternative
Characterizations" below.
Treatment of the Yield Enhancement Payments. Consistent with the agreed
characterization, any yield enhancement payments, including amounts payable with
respect to any deferred yield enhancement payments, should be characterized as
interest payable on the amount of the cash deposit and should generally be
includible in the income of a U.S. Holder on an accrual basis.
Sale or Other Disposition of the TARGETS. Upon a sale or other disposition
of all or some of a U.S. Holder's TARGETS, such holder should be treated as
having sold its pro rata portions of the treasury
49
securities and the forward contract underlying the TARGETS. The selling U.S.
Holder should recognize capital gain or loss equal to the difference between the
amount realized from such sale or other disposition and the holder's aggregate
tax bases in its pro rata portions of the treasury securities and the forward
contract, except to the extent of any (1) accrued interest with respect to the
holder's pro rata portion of short-term treasury securities includible in gross
income as ordinary income and (2) accrued but unpaid yield enhancement payments
to the extent not previously taken into account in determining the U.S. Holder's
tax basis. Any such gain or loss will be long-term capital gain or loss if the
U.S. Holder's holding period for the TARGETS is more than one year. The
distinction between capital gain or loss and ordinary income or loss is
important for purposes of the limitations on a holder's ability to offset
capital losses against ordinary income. In addition, long-term capital gains
recognized by an individual U.S. Holder generally are subject to a maximum rate
of 15 percent.
Distributions of Cash at the Maturity Date or Accelerated Maturity
Date. On the receipt of cash by Trust XXIV with respect to the forward contract
on the maturity date or accelerated maturity date, a U.S. Holder should realize
capital gain or loss equal to the difference between the holder's pro rata
portion of the amount of cash received by Trust XXIV and the holder's tax basis
in its pro rata portion of the forward contract at that time, except to the
extent such cash is attributable to any accrued but unpaid yield enhancement
payments to the extent not previously taken into account in determining the U.S.
Holder's tax basis. Under certain circumstances, on or following the accelerated
maturity date, Trust XXIV may sell all or a portion of the treasury securities
and distribute the treasury proceeds to holders. Upon such a sale by Trust XXIV,
a U.S. Holder should realize capital gain or loss equal to the difference
between the amount of cash received by the holder, except to the extent of any
accrued interest with respect to the holder's pro rata portion of short-term
treasury securities includible in gross income as ordinary income, and the
holder's tax basis in its pro rata portion of the treasury securities sold by
Trust XXIV. Any such capital gain or loss described in this paragraph will be
long-term capital gain or loss if the U.S. Holder's holding period for the
TARGETS is more than one year and will be subject to the same maximum U.S.
federal income tax rates for individuals discussed above under "-- Sale or Other
Disposition of the TARGETS."
Possible Alternative Characterizations. It is possible that the Internal
Revenue Service could seek to characterize the TARGETS in a manner that results
in tax consequences different from those described above. Under alternative
characterizations of the TARGETS, it is possible, for example, that the forward
contract could be treated as a contingent payment debt instrument, or as
including a debt instrument and a forward contract or two or more options. It is
also possible that the Internal Revenue Service could take the view that a U.S.
Holder should include in gross income the amount of cash actually received each
year in respect of the TARGETS or that the TARGETS as a whole constitute a
contingent payment debt instrument. Under these alternative characterizations,
the timing and character of income from the TARGETS could differ substantially.
It is also possible that future regulations or other Internal Revenue
Service guidance could require U.S. Holders to increase the amount of income
accrued on a current basis over the term of the TARGETS. The Internal Revenue
Service and U.S. Treasury Department recently issued proposed regulations that
require current accrual of income with respect to contingent nonperiodic
payments made under certain notional principal contracts. The preamble to the
regulations states that the "wait and see" method of tax accounting does not
properly reflect the economic accrual of income on such contracts, and requires
current accrual of income with respect to some contracts already in existence at
the time the proposed regulations were released. While the proposed regulations
do not apply to forward contracts such as the forward contract held by Trust
XXIV, the preamble to the proposed regulations expresses the view that similar
timing issues exist in the case of prepaid forward contracts. If the Internal
Revenue Service published future guidance requiring current accrual of income
with respect to contingent payments on prepaid forward contracts, it is possible
that U.S. Holders could be required to increase the amount of income accrued on
a current basis over the term of the TARGETS.
Potential Application of Constructive Ownership Rules. Some or all of the
net long-term capital gain arising from certain "constructive ownership"
transactions may be characterized as ordinary income, in which case an interest
charge would be imposed on any such ordinary income. These rules have no
immediate
50
application to forward contracts in respect of the stock of a domestic operating
company, including the forward contract underlying the TARGETS. The rules,
however, grant discretionary authority to the U.S. Treasury Department to expand
the scope of "constructive ownership" transactions to include forward contracts
in respect of the stock of all corporations. The rules separately also direct
the Treasury to promulgate regulations excluding a forward contract that does
not convey "substantially all" of the economic return on an underlying asset
from the scope of "constructive ownership" transactions. This category may
include the TARGETS. It is not possible to predict whether such regulations will
be promulgated by the Treasury, or the form or effective date that any
regulations that may be promulgated might take.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
A "Non-U.S. Holder" is a holder of the TARGETS that is a non-resident alien
individual or foreign corporation. In the case of a Non-U.S. Holder:
(1) quarterly distributions made with respect to the TARGETS should not be
subject to U.S. withholding tax, provided that the beneficial owner of
the TARGETS complies with applicable certification requirements,
including in general the furnishing of an Internal Revenue Service Form
W-8BEN or a substitute form; and
(2) any capital gain realized upon the sale or other disposition of the
TARGETS should not be subject to U.S. federal income tax unless (A) the
gain is effectively connected with a U.S. trade or business of such
holder or (B) in the case of an individual, the individual is present
in the United States for 183 days or more in the taxable year of the
sale or other disposition and either (i) the gain is attributable to a
fixed place of business maintained by such individual in the United
States or (ii) such holder has a tax home in the United States.
For purpose of applying the rules set forth above to an entity that is
treated as fiscally transparent (e.g., a partnership) for U.S. federal income
tax purpose, the beneficial owner means each of the ultimate beneficial owners
of the entity.
A Non-U.S. Holder that is subject to U.S. federal income taxation on a net
income basis with respect to its investment in the TARGETS should see the
discussion in "-- Tax Consequences to U.S. Holders".
BACKUP WITHHOLDING AND INFORMATION REPORTING
A holder of the TARGETS, including a Non-U.S. Holder, may be subject to
information reporting and to backup withholding tax on certain amounts paid to
the holder unless such holder:
(1) is a corporation or comes within certain other exempt categories and,
when required, provides proof of such exemption, or
(2) provides a correct taxpayer identification number, certifies as to no
loss of exemption from backup withholding tax and otherwise complies
with applicable requirements of the backup withholding rules.
Backup withholding is not an additional tax and any amounts withheld may be
credited against the holder's U.S. federal income tax liability, provided that
the required information is furnished to the Internal Revenue Service.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended, imposes
certain requirements on "employee benefit plans", as defined in Section 3(3) of
ERISA, subject to ERISA, including entities such as collective investment funds
and separate accounts whose underlying assets include the assets of such plans
(collectively, "ERISA Plans") and on those persons who are fiduciaries with
respect to ERISA Plans. Section 406 of ERISA and Section 4975 of the Internal
Revenue Code of 1986 prohibit certain transactions involving the assets of an
ERISA Plan or a plan, such as a Keogh plan or an individual retirement account,
51
that is not subject to ERISA but which is subject to Section 4975 of the
Internal Revenue Code (together with ERISA Plans, "Plans") and certain persons,
referred to as "parties in interest" under ERISA or "disqualified persons" under
the Internal Revenue Code, having certain relationships to such Plans, unless a
statutory or administrative exception or exemption is applicable to the
transaction. As used below, the term "Pension Type Accounts" shall include
Plans, entities the assets of which may be deemed to be "plan assets" under
ERISA regulations, and governmental plans subject to any substantially similar
federal, state or local laws.
The U.S. Department of Labor has promulgated a regulation, 29 C.F.R.
Section 2510.3-101, describing what constitutes the assets of a Plan with
respect to the Plan's investment in an entity for purposes of certain provisions
of ERISA, including the fiduciary responsibility provisions of Title I of ERISA
and Section 4975 of the Internal Revenue Code. Under this regulation, if a Plan
invests in a beneficial interest in a trust or a profits interest in a
partnership, the Plan's assets include both the equity interest and an undivided
interest in each of the entity's underlying assets, unless the interest is a
"publicly-offered security" or certain other conditions are satisfied. It is
anticipated that the TARGETS should constitute "publicly-offered securities"
within the meaning of the regulation, and that, consequently, transactions
engaged in by the Trust, including the forward contract, should not be subject
to the provisions of ERISA or Section 4975 of the Internal Revenue Code.
Any Pension Type Account which proposes to purchase the TARGETS should
consult with its counsel regarding the applicability of the fiduciary
responsibility and prohibited transaction provisions of ERISA, Section 4975 of
the Internal Revenue Code and any substantially similar applicable law to such
an investment, and to confirm that such investment will not constitute or result
in a prohibited transaction or any other violation of an applicable legal
requirement for which an exemption is not available.
By its purchase of any TARGETS, each initial purchaser and subsequent
transferee will be deemed to have represented and warranted on each day from the
date on which the purchaser or transferee acquires the TARGETS through and
including the date on which the purchaser or transferee disposes of its interest
in the TARGETS, either that (A) it is not a Pension Type Account or subject to
any federal, state, or local law that is substantially similar to the provisions
of Section 406 of ERISA or Section 4975 of the Internal Revenue Code or (B) its
purchase, holding and disposition of such TARGETS does not result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the
Internal Revenue Code or any other violation of an applicable legal requirement,
and it has not relied on advice of Citigroup Global Markets Inc. or any of its
affiliates or their employees as a primary basis for its decision to purchase
the TARGETS.
52
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, Citigroup Global Markets Inc., as underwriter, has agreed
to purchase from Trust XXIV, and Trust XXIV has agreed to sell to Citigroup
Global Markets Inc., TARGETS.
The underwriting agreement provides that the obligation of Citigroup Global
Markets Inc. to purchase the TARGETS included in this offering is subject to
approval of certain legal matters by counsel and to other conditions. Citigroup
Global Markets Inc. is obligated to purchase all of the TARGETS if it purchases
any TARGETS.
Citigroup Global Markets Inc. proposes to offer some of the TARGETS
directly to the public at the public offering price set forth on the cover page
of this prospectus and some of the TARGETS to certain dealers at the public
offering price less a concession not to exceed of $ per TARGETS. Citigroup
Global Markets Inc. may allow, and these dealers may reallow, a concession not
to exceed of $ per TARGETS on sales to certain other dealers. Sales may also
be made though Citicorp Investment Services, a broker-dealer affiliated with
Citigroup Global Markets Inc., acting as agent. Citicorp Investment Services
will receive as remuneration a portion of the underwriting discount set forth on
the cover of this prospectus equal to $ per TARGETS for the TARGETS it
sells. If all of the TARGETS are not sold at the initial offering price,
Citigroup Global Markets Inc. may change the public offering price and other
selling terms.
Trust XXIV and Citigroup Global Markets Holdings have agreed that, for the
period beginning on the date of the underwriting agreement and continuing to and
including the closing date for the purchase of the TARGETS, they will not,
without the prior written consent of Citigroup Global Markets Inc., dispose of
or hedge any securities, including any backup undertakings for such securities,
of Citigroup Global Markets Holdings or of Trust XXIV, in each case that are
substantially similar to the TARGETS, or any security convertible into or
exchangeable for the TARGETS or such substantially similar securities. Citigroup
Global Markets Inc. may release any of the securities subject to this lock-up at
any time without notice.
The underwriting agreement provides that Trust XXIV and Citigroup Global
Markets Holdings will indemnify Citigroup Global Markets Inc. against certain
liabilities, including liabilities under the Securities Act of 1933, and will
make certain contributions in respect thereof, or will contribute to payments
that Citigroup Global Markets Inc. may be required to make in respect of any of
those liabilities and will reimburse Citigroup Global Markets Inc. for certain
legal and other expenses.
Prior to this offering, there has been no public market for the TARGETS.
Consequently, the initial public offering price for the TARGETS was determined
by negotiations between Trust XXIV and Citigroup Global Markets Inc. There can
be no assurance, however, that the prices at which the TARGETS will sell in the
public market after this offering will not be lower than the price at which they
are sold by Citigroup Global Markets Inc. or that an active trading market in
the TARGETS will develop and continue after this offering.
Citigroup Global Markets Holdings and Trust XXIV will apply to list the
TARGETS on the American Stock Exchange under the symbol "TOI."
In view of the fact that the proceeds of the sale of the TARGETS will
ultimately be used by Trust XXIV to purchase the forward contract, the
underwriting agreement provides that Citigroup Global Markets Holdings will pay
to Citigroup Global Markets Inc. an underwriting discount of $ per TARGETS
for the account of Citigroup Global Markets Inc.
In connection with the offering, Citigroup Global Markets Inc., as the
underwriter, may purchase and sell TARGETS and Intel common stock in the open
market. These transactions may include covering transactions and stabilizing
transactions. Covering transactions involve purchases of TARGETS in the open
market after the distribution has been completed to cover short positions.
Stabilizing transactions consist of bids or purchases of TARGETS or Intel common
stock made for the purpose of preventing a decline in the market price of the
TARGETS or Intel common stock while the offering is in progress.
Any of these activities may have the effect of preventing or retarding a
decline in the market price of the TARGETS. They may also cause the price of the
TARGETS to be higher than the price that otherwise would
53
exist in the open market in the absence of these transactions. Citigroup Global
Markets Inc. may conduct these transactions in the over-the-counter market or
otherwise. If Citigroup Global Markets Inc. commences any of these transactions,
it may discontinue them at any time.
In order to hedge its obligations under the TARGETS, Citigroup Global
Markets Holdings expects to enter into one or more swaps or other derivatives
transactions with one or more of its affiliates. See "Use of Proceeds and
Hedging Activities" in this prospectus. You should refer to the sections "Use of
Proceeds and Hedging Activities," "Risk Factors -- The Market Value of the
TARGETS May Be Affected by Purchases and Sales of Intel Common Stock or
Derivative Instruments Related to Intel Common Stock by Affiliates of Citigroup
Global Markets Holdings" and "-- Citigroup Global Markets Holdings' Hedging
Activity Could Result in a Conflict of Interest" in this prospectus.
We estimate that our total expenses for this offering will be $ .
Citigroup Global Markets Inc. is a subsidiary of Citigroup Global Markets
Holdings. Accordingly, the offering will conform with the requirements set forth
in Rule 2810 of the Conduct Rules of the National Association of Securities
Dealers, Inc. regarding direct participation programs. Citigroup Global Markets
Inc. may not confirm sales to any discretionary account without the prior
specific written approval of a customer.
This prospectus may also be used by Citigroup Global Markets Holdings'
broker-dealer subsidiaries or affiliates in connection with offers and sales of
the TARGETS (subject to obtaining any necessary approval of the American Stock
Exchange for any of these offers and sales) in market-making transactions at
negotiated prices related to prevailing market prices at the time of sale. Any
of these subsidiaries or affiliates may act as principal or agent in these
transactions. None of these subsidiaries or affiliates is obligated to make a
market in the TARGETS and any may discontinue any market making at any time
without notice, at its sole discretion.
LEGAL MATTERS
The validity of the TARGETS, the forward contract, the guarantee and
certain matters relating thereto will be passed upon for Citigroup Global
Markets Holdings and Trust XXIV by Edward F. Greene, Esq. Mr. Greene, General
Counsel of Citigroup Global Markets Holdings, beneficially owns, or has rights
to acquire under Citigroup employee benefit plans, an aggregate of less than one
percent of the common stock of Citigroup. Certain legal matters will be passed
upon for the underwriter by Cleary Gottlieb Steen & Hamilton LLP, New York, New
York. Cleary Gottlieb Steen & Hamilton LLP has also acted as special tax counsel
to Citigroup Global Markets Holdings in connection with the TARGETS. Cleary
Gottlieb Steen & Hamilton LLP has from time to time acted as counsel for
Citigroup Global Markets Holdings and certain of its affiliates and may do so in
the future.
EXPERTS
The consolidated financial statements of Citigroup Global Markets Holdings
as of and for the years ended December 31, 2003, 2002 and 2001 have been audited
by KPMG LLP, independent certified public accountants, as set forth in their
report dated February 26, 2004 on the consolidated financial statements. The
consolidated financial statements are included in Citigroup Global Markets
Holdings' annual report on Form 10-K for the year ended December 31, 2003 and
incorporated by reference in this prospectus. The report of KPMG LLP also is
incorporated by reference in this prospectus. The report of KPMG LLP refers to
changes, in 2003, in Citigroup Global Markets Holdings' methods of accounting
for variable interest entities and stock-based compensation, in 2002, in
Citigroup Global Markets Holdings' methods of accounting for goodwill and
intangible assets, and, in 2001, in Citigroup Global Markets Holdings' methods
of accounting for derivative instruments and hedging activities. The
consolidated financial statements of Citigroup Global Markets Holdings referred
to above are incorporated by reference in this prospectus in reliance upon such
report and upon the authority of said firm as experts in accounting and
auditing. To the extent that KPMG LLP audits and reports on consolidated
financial statements of Citigroup Global Markets Holdings issued at future
dates, and consents to the use of their report thereon, such consolidated
financial statements also will be incorporated by reference in the registration
statement in reliance upon their report and said authority.
54
================================================================================
You should rely only on the information contained or incorporated by reference
in this prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information contained
or incorporated by reference in this prospectus is accurate as of any date other
than the date on the cover of this prospectus.
TABLE OF CONTENTS
Page
Summary 2
Summary Information -- Q&A 3
Risk Factors 9
Available Information 14
Citigroup Global Markets Holdings Inc. 16
Use of Proceeds and Hedging Activities 17
Intel Corporation 18
Historical Data on the Common Stock
of Intel Corporation 19
TARGETS Trust XXIV 20
Description of the TARGETS 22
Description of the Forward Contract 45
Description of the Guarantee 45
Description of the Treasury Securities 47
Certain United States Federal Income
Tax Considerations 48
ERISA Considerations 51
Underwriting 53
Legal Matters 54
Experts 54
TARGETS TRUST XXIV
TARGETED GROWTH
ENHANCED TERMS SECURITIES
(TARGETS(R))
WITH RESPECT TO
THE COMMON STOCK OF
INTEL CORPORATION
DUE ON
, 2008
$10.00 PER TARGETS
PAYMENTS DUE FROM
TARGETS TRUST XXIV
GUARANTEED BY
CITIGROUP GLOBAL MARKETS
HOLDINGS INC.
PROSPECTUS
, 2005
(CITIGROUP LOGO)
================================================================================