United States Federal Tax Considerations
|
You should read carefully the discussion under “United States Federal Tax Considerations” and “Risk Factors Relating to the Securities” in the accompanying product supplement and “Summary Risk Factors” in this pricing supplement.
In the opinion of our counsel, Davis Polk & Wardwell LLP, which is based on current market conditions, a Security should be treated as a prepaid forward contract for U.S. federal income tax purposes. By purchasing the Securities, you agree (in the absence of an administrative determination or judicial ruling to the contrary) to this treatment. There is uncertainty regarding this treatment, and the IRS or a court might not agree with it.
Assuming this treatment of the Securities is respected and subject to the discussion in “United States Federal Tax Considerations” in the accompanying product supplement, the following U.S. federal income tax consequences should result under current law:
|
·
|
You should not recognize taxable income over the term of the Securities prior to maturity, other than pursuant to a sale or exchange.
|
|
·
|
Upon a sale or exchange of the Securities (including retirement upon an automatic redemption or at maturity), you should recognize capital gain or loss equal to the difference between the amount realized and your tax basis in the Securities. Such gain or loss should be long-term capital gain or loss if you held the Securities for more than one year.
|
Under current law, if you are a Non-U.S. Holder (as defined in the accompanying product supplement) of the Securities, you generally should not be subject to U.S. federal withholding or income tax in respect of any amount paid to you with respect to the Securities, provided that (i) income in respect of the Securities is not effectively connected with your conduct of a trade or business in the United States, and (ii) you comply with the applicable certification requirements.
In 2007, the U.S. Treasury Department and the IRS released a notice requesting comments on the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. The notice focuses in particular on whether to require holders of these instruments to accrue income over the term of their investment. It also asks for comments on a number of related topics, including the character of income or loss with respect to these instruments; whether short-term instruments should be subject to any such accrual regime; the relevance of factors such as the exchange-traded status of the instruments and the nature of the underlying property to which the instruments are linked; the degree, if any, to which income (including any mandated accruals) realized by non-U.S. investors should be subject to withholding tax; and whether these instruments are or should be subject to the “constructive ownership” regime, which very generally can operate to recharacterize certain long-term capital gain as ordinary income and impose an interest charge. While the notice requests comments on appropriate transition rules and effective dates, any Treasury regulations or other guidance promulgated after consideration of these issues could materially and adversely affect the tax consequences of an investment in the Securities, including the character and timing of income or loss and the degree, if any, to which income realized by non-U.S. persons should be subject to withholding tax, possibly with retroactive effect. If withholding tax applies to the Securities, we will not be required to pay any additional amounts with respect to amounts so withheld.
You should read the section entitled “United States Federal Tax Considerations” in the accompanying product supplement. The preceding discussion, when read in combination with that section, constitutes the full opinion of Davis Polk & Wardwell LLP regarding the material U.S. federal tax consequences of owning and disposing of the Securities.
You should also consult your tax adviser regarding all aspects of the U.S. federal income and estate tax consequences of an investment in the Securities and any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.
Information About
the
Underlying Shares
|
Included on the following pages is a brief description of the issuer of each of the Underlying Shares. This information has been obtained from publicly available sources, without independent verification. Also included on the following pages is a table for each of the Underlying Shares that sets forth the high, low and end-of-quarter closing prices of each of the Underlying Shares for each quarter in the period shown. The graph associated with each such table shows the closing prices of each of the Underlying Shares for each day such prices were available in that same period. We obtained the information in the tables and graphs below from Bloomberg L.P., without independent verification. These historical data on each of the Underlying Shares are not indicative of the future performance of the Underlying Shares or what the value of the Securities may be. Any historical upward or downward trend in the value of the applicable Underlying Shares during any period set forth below is not an indication that the price of the applicable Underlying Shares is more or less likely to increase or decrease at any time during the term of the Securities, and no assurance can be given as to the closing price of the applicable Underlying Shares on any Valuation Date.
The Underlying Shares are each registered under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”). Companies with securities registered under the Exchange Act are required to file financial and other information specified by the SEC periodically. Information filed by each issuer of the Underlying Shares with the SEC can be reviewed electronically through a website maintained by the SEC at http://www.sec.gov. Information filed with the SEC by each of these issuers can be located by reference to its SEC file number provided below. In addition, information regarding each of these issuers may be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated documents.
This pricing supplement relates only to the Securities offered hereby and does not relate to the applicable Underlying Shares or other securities of any issuer of Underlying Shares. We have derived all disclosures contained in this pricing supplement regarding the issuers of the Underlying Shares from the publicly available documents described in the preceding paragraph. In connection with the offering of the Securities, none of Citigroup, CGMI or UBS has participated in the preparation of such documents or made any due diligence inquiry with respect to the issuers of the Underlying Shares, such publicly available documents or any other publicly available information regarding those issuers
.
The Securities represent obligations of Citigroup only. The issuers of the Underlying Shares are not involved in any way in this offering and have no obligation relating to the Securities or to holders of the Securities.
None of Citigroup, UBS or any of their respective subsidiaries makes any representation to you as to the performance of the applicable Underlying Shares
.
According to its publicly available filings with the SEC, Terex Corporation, which we refer to as Terex, is a lifting and material handling solutions company. Information provided to or filed with the SEC by Terex pursuant to the Exchange Act can be located by reference to the SEC file number 001-10702. The common stock of Terex, par value $0.01 per share (Bloomberg ticker: TEX), is listed on the New York Stock Exchange
.
Historical Information Regarding the Common Stock of Terex
The following table sets forth, for each of the quarterly periods indicated, the high, low and end-of-quarter closing prices of one share of the common stock of Terex from January 2, 2008 through July 18, 2014
.
The closing price of one share of the common stock of Terex on July 18, 2014 was $39.00. We obtained the closing prices and other information below from Bloomberg, L.P., without independent verification. The closing prices and this other information may be adjusted by Bloomberg, L.P. for corporate actions such as stock splits, public offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy.
Since its inception, the price of the common stock of Terex has experienced significant fluctuations. The historical performance of the common stock of Terex should not be taken as an indication of future performance, and no assurance can be given as to the closing prices of one share of the common stock of Terex during the term of the Securities. We cannot give you assurance that the performance of the common stock of Terex will result in the return of any of your initial investment. We make no representation as to the amount of dividends, if any, that Terex will pay in the future. In any event, as an investor in the Securities, you will not be entitled to receive dividends, if any, that may be payable on the common stock of Terex
.
Quarter
Begin
|
Quarter
End
|
Quarterly
High
|
Quarterly
Low
|
Close
|
1/2/2008
|
3/31/2008
|
$70.88
|
$49.19
|
$62.50
|
4/1/2008
|
6/30/2008
|
$74.80
|
$51.33
|
$51.37
|
7/1/2008
|
9/30/2008
|
$51.83
|
$29.28
|
$30.52
|
10/1/2008
|
12/31/2008
|
$29.43
|
$9.33
|
$17.32
|
1/2/2009
|
3/31/2009
|
$20.46
|
$7.57
|
$9.25
|
4/1/2009
|
6/30/2009
|
$17.90
|
$9.74
|
$12.07
|
7/1/2009
|
9/30/2009
|
$20.87
|
$10.60
|
$20.73
|
10/1/2009
|
12/31/2009
|
$24.11
|
$18.11
|
$19.81
|
1/4/2010
|
3/31/2010
|
$23.64
|
$17.97
|
$22.71
|
4/1/2010
|
6/30/2010
|
$28.19
|
$18.74
|
$18.74
|
7/1/2010
|
9/30/2010
|
$22.92
|
$17.30
|
$22.92
|
10/1/2010
|
12/31/2010
|
$31.04
|
$22.04
|
$31.04
|
1/3/2011
|
3/31/2011
|
$38.30
|
$28.80
|
$37.04
|
4/1/2011
|
6/30/2011
|
$38.02
|
$24.98
|
$28.45
|
7/1/2011
|
9/30/2011
|
$29.73
|
$10.26
|
$10.26
|
10/3/2011
|
12/30/2011
|
$17.86
|
$9.61
|
$13.51
|
1/3/2012
|
3/30/2012
|
$26.41
|
$14.43
|
$22.50
|
4/2/2012
|
6/29/2012
|
$24.85
|
$15.65
|
$17.83
|
7/2/2012
|
9/28/2012
|
$25.55
|
$14.11
|
$22.58
|
10/1/2012
|
12/31/2012
|
$28.11
|
$21.00
|
$28.11
|
1/2/2013
|
3/28/2013
|
$36.66
|
$28.43
|
$34.42
|
4/1/2013
|
6/28/2013
|
$35.87
|
$26.01
|
$26.30
|
7/1/2013
|
9/30/2013
|
$34.37
|
$26.92
|
$33.60
|
10/1/2013
|
12/31/2013
|
$41.99
|
$32.96
|
$41.99
|
1/2/2014
|
3/31/2014
|
$44.74
|
$37.92
|
$44.30
|
4/1/2014
|
6/30/2014
|
$44.19
|
$38.30
|
$41.10
|
7/1/2014
|
7/18/2014*
|
$42.31
|
$38.41
|
$39.00
|
*
|
As of the date of this pricing supplement, available information for the third calendar quarter of 2014 includes data for the period from July 1, 2014 through July 18, 2014. Accordingly, the “Quarterly High,” “Quarterly Low” and “Close” data indicated are for this shortened period only and do not reflect complete data for the third calendar quarter of 2014
.
|
The graph below illustrates the daily performance of the common stock of Terex from January 2, 2008 through July 18, 2014, based on information from Bloomberg, L.P., without independent verification. The dotted line represents the Trigger Price, equal to 75% of the closing price on July 18, 2014.
Past performance of the Underlying Shares is not indicative of the future performance of the Underlying Shares
.
Common Stock of Terex Corporation Closing Prices
January 2, 2008 to July 18, 2014
According to its publicly available filings with the SEC, Palo Alto Networks, Inc., which we refer to as Palo Alto Networks, is a provider of network security solutions
.
Information provided to or filed with the SEC by Palo Alto Networks pursuant to the Exchange Act can be located by reference to the SEC file number 001
-
35594. The common stock of Palo Alto Networks, par value $0.0001 per share (Bloomberg ticker: PANW), is listed on the New York Stock Exchange
.
Historical Information Regarding the Common Stock of Palo Alto Networks
The following table sets forth, for each of the quarterly periods indicated, the high, low and end-of-quarter closing prices of one share of the common stock of Palo Alto Networks from July 20, 2012 through July 18, 2014. The closing price of one share of the common stock of Palo Alto Networks on July 18, 2014 was $79.21
.
We obtained the closing prices and other information below from Bloomberg, L.P., without independent verification. The closing prices and this other information may be adjusted by Bloomberg, L.P. for corporate actions such as stock splits, public offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy.
Since its inception, the price of the common stock of Palo Alto Networks has experienced significant fluctuations. The historical performance of the common stock of Palo Alto Networks should not be taken as an indication of future performance, and no assurance can be given as to the closing prices of one share of the common stock of Palo Alto Networks during the term of the Securities. We cannot give you assurance that the performance of the common stock of Palo Alto Networks will result in the return of any of your initial investment. We make no representation as to the amount of dividends, if any, that Palo Alto Networks will pay in the future. In any event, as an investor in the Securities, you will not be entitled to receive dividends, if any, that may be payable on the common stock of Palo Alto Networks
.
Quarter
Begin
|
Quarter
End
|
Quarterly
High
|
Quarterly
Low
|
Close
|
7/2
0
/2012*
|
9/28/2012
|
$71.75
|
$51.51
|
$61.57
|
10/1/2012
|
12/31/2012
|
$65.86
|
$48.82
|
$53.52
|
1/2/2013
|
3/30/2013
|
$61.13
|
$47.23
|
$56.60
|
4/1/2013
|
6/28/2013
|
$56.43
|
$39.56
|
$42.16
|
7/1/2013
|
9/30/2013
|
$50.04
|
$41.15
|
$45.82
|
10/1/2013
|
12/31/2013
|
$57.80
|
$40.99
|
$57.47
|
1/2/2014
|
3/31/2014
|
$79.82
|
$55.66
|
$68.60
|
4/1/2014
|
6/30/2014
|
$83.85
|
$58.51
|
$83.85
|
7/1/2014
|
7/18/2014**
|
$82.26
|
$75.36
|
$79.21
|
*
|
The common stock of PANW commenced trading on July 20, 2012. Accordingly, the “Quarterly High,” “Quarterly Low” and “Close” data indicated for the third calendar quarter of 2012 are for the shortened period from July 20, 2012 through September 30, 2012
.
|
**
|
As of the date of this pricing supplement, available information for the third calendar quarter of 2014 includes data for the period from July 1, 2014 through July 18, 2014.Accordingly, the “Quarterly High,” “Quarterly Low” and “Close” data indicated are for this shortened period only and do not reflect complete data for the third calendar quarter of 2014
.
|
The graph below illustrates the daily performance of the common stock of Palo Alto Networks from July 20, 2012 through July 18, 2014, based on information from Bloomberg, L.P., without independent verification. The dotted line represents the Trigger Price, equal to 70% of the closing price on July 18, 2014
.
Past performance of the Underlying Shares is not indicative of the future performance of the Underlying Shares
.
Common Stock of Palo Alto Networks, Inc. Closing Prices
July 20, 2012 to July 18, 2014
The common stock of PANW commenced trading on July 20, 2012 and has a limited historical performance.
Salix Pharmaceuticals, Ltd.
|
According to its publicly available filings with the SEC, Salix Pharmaceuticals, Ltd., which we refer to as Salix, is a pharmaceutical company focused on acquiring, developing and commercializing prescription drugs and medical devices used in the treatment of a variety of gastrointestinal disorders
.
Information provided to or filed with the SEC by Salix pursuant to the Exchange Act can be located by reference to the SEC file number
00
0-23265. The common stock of Salix, par value $0.001 per share (Bloomberg ticker: SLXP), is listed on the Nasdaq Global Market
.
Historical Information Regarding the Common Stock of Salix
The following table sets forth, for each of the quarterly periods indicated, the high, low and end-of-quarter closing prices of one share of the common stock of Salix from January 2, 2008 through July 18, 2014. The closing price of one share of the common stock of Salix on July 18, 2014 was $131.85
.
We obtained the closing prices and other information below from Bloomberg, L.P., without independent verification. The closing prices and this other information may be adjusted by Bloomberg, L.P. for corporate actions such as stock splits, public offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy.
Since its inception, the price of the common stock of Salix has experienced significant fluctuations. The historical performance of the common stock of Salix should not be taken as an indication of future performance, and no assurance can be given as to the closing prices of one share of the common stock of Salix during the term of the Securities. We cannot give you assurance that the performance of the common stock of Salix will result in the return of any of your initial investment. We make no representation as to the amount of dividends, if any, that Salix will pay in the future. In any event, as an investor in the Securities, you will not be entitled to receive dividends, if any, that may be payable on the common stock of Salix
.
Quarter
Begin
|
Quarter
End
|
Quarterly
High
|
Quarterly
Low
|
Close
|
1/2/2008
|
3/31/2008
|
$8.02
|
$5.64
|
$6.28
|
4/1/2008
|
6/30/2008
|
$7.81
|
$6.25
|
$7.03
|
7/1/2008
|
9/30/2008
|
$8.90
|
$5.62
|
$6.41
|
10/1/2008
|
12/31/2008
|
$10.17
|
$5.68
|
$8.83
|
1/2/2009
|
3/31/2009
|
$9.84
|
$6.15
|
$9.50
|
4/1/2009
|
6/30/2009
|
$11.27
|
$8.98
|
$9.87
|
7/1/2009
|
9/30/2009
|
$21.26
|
$9.73
|
$21.26
|
10/1/2009
|
12/31/2009
|
$25.53
|
$18.39
|
$25.40
|
1/4/2010
|
3/31/2010
|
$37.41
|
$24.25
|
$37.25
|
4/1/2010
|
6/30/2010
|
$42.57
|
$33.95
|
$39.03
|
7/1/2010
|
9/30/2010
|
$44.64
|
$37.59
|
$39.72
|
10/1/2010
|
12/31/2010
|
$48.61
|
$35.96
|
$46.96
|
1/3/2011
|
3/31/2011
|
$48.03
|
$31.63
|
$35.03
|
4/1/2011
|
6/30/2011
|
$40.57
|
$34.69
|
$39.83
|
7/1/2011
|
9/30/2011
|
$40.90
|
$26.18
|
$29.60
|
10/3/2011
|
12/30/2011
|
$47.85
|
$29.24
|
$47.85
|
1/3/2012
|
3/30/2012
|
$53.75
|
$45.72
|
$52.50
|
4/2/2012
|
6/29/2012
|
$54.44
|
$47.82
|
$54.44
|
7/2/2012
|
9/28/2012
|
$55.65
|
$41.92
|
$42.34
|
10/1/2012
|
12/31/2012
|
$42.90
|
$37.94
|
$40.48
|
1/2/2013
|
3/28/2013
|
$51.37
|
$42.48
|
$51.18
|
4/1/2013
|
6/28/2013
|
$66.83
|
$47.72
|
$66.15
|
7/1/2013
|
9/30/2013
|
$75.54
|
$65.73
|
$66.88
|
10/1/2013
|
12/31/2013
|
$90.01
|
$68.30
|
$89.94
|
1/2/2014
|
3/31/2014
|
$114.64
|
$89.09
|
$103.61
|
4/1/2014
|
6/30/2014
|
$125.07
|
$97.70
|
$123.35
|
7/1/2014
|
7/18/2014*
|
$140.02
|
$130.74
|
$131.85
|
*
|
As of the date of this pricing supplement, available information for the third calendar quarter of 2014 includes data for the period from July 1, 2014 through July 18, 2014. Accordingly, the “Quarterly High,” “Quarterly Low” and “Close” data indicated are for this shortened period only and do not reflect complete data for the third calendar quarter of 2014
.
|
The graph below illustrates the daily performance of the common stock of Salix from January 2, 2008 through July 18, 2014, based on information from Bloomberg, L.P., without independent verification. The dotted line represents the Trigger Price, equal to 70% of the closing price on July 18, 2014.
Past performance of the Underlying Shares is not indicative of the future performance of the Underlying Shares
.
Common Stock of Salix Pharmaceuticals, Ltd. Closing Prices
January 2, 2008 to July 18, 2014
McDermott International, Inc.
|
According to its publicly available filings with the SEC, McDermott International, Inc., which we refer to as McDermott, is an engineering, procurement, construction and installation company focused on designing and executing offshore oil and gas projects worldwide. Information provided to or filed with the SEC by McDermott pursuant to the Exchange Act can be located by reference to the SEC file number 001-08430. The common stock of McDermott, par value $1.00 per share (Bloomberg ticker: MDR), is listed on the New York Stock Exchange.
Historical Information Regarding the Common Stock of McDermott
The following table sets forth, for each of the quarterly periods indicated, the high, low and end-of-quarter closing prices of one share of the common stock of McDermott from January 2, 2008 through July 18 2014. The closing price of one share of the common stock of McDermott on July 18, 2014 was $7.71. We obtained the closing prices and other information below from Bloomberg, L.P., without independent verification. The closing prices and this other information may be adjusted by Bloomberg, L.P. for corporate actions such as stock splits, public offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy.
Since its inception, the price of the common stock of McDermott has experienced significant fluctuations. The historical performance of the common stock of McDermott should not be taken as an indication of future performance, and no assurance can be given as to the closing prices of one share of the common stock of McDermott during the term of the Securities. We cannot give you assurance that the performance of the common stock of McDermott will result in the return of any of your initial investment. We make no representation as to the amount of dividends, if any, that McDermott will pay in the future. In any event, as an investor in the Securities, you will not be entitled to receive dividends, if any, that may be payable on the common stock of McDermott.
Quarter
Begin
|
Quarter
End
|
Quarterly
High
|
Quarterly
Low
|
Close
|
1/2/2008
|
3/31/2008
|
$32.06
|
$21.81
|
$28.30
|
4/1/2008
|
6/30/2008
|
$34.23
|
$26.80
|
$31.95
|
7/1/2008
|
9/30/2008
|
$32.30
|
$12.37
|
$13.19
|
10/1/2008
|
12/31/2008
|
$12.85
|
$3.16
|
$5.10
|
1/2/2009
|
3/31/2009
|
$7.69
|
$5.09
|
$6.91
|
4/1/2009
|
6/30/2009
|
$12.41
|
$7.23
|
$10.48
|
7/1/2009
|
9/30/2009
|
$14.18
|
$8.59
|
$13.04
|
10/1/2009
|
12/31/2009
|
$13.46
|
$10.66
|
$12.39
|
1/4/2010
|
3/31/2010
|
$13.90
|
$11.36
|
$13.90
|
4/1/2010
|
6/30/2010
|
$14.86
|
$10.57
|
$11.18
|
7/1/2010
|
9/30/2010
|
$14.78
|
$10.90
|
$14.78
|
10/1/2010
|
12/31/2010
|
$20.69
|
$14.30
|
$20.69
|
1/3/2011
|
3/31/2011
|
$25.64
|
$19.42
|
$25.39
|
4/1/2011
|
6/30/2011
|
$25.73
|
$17.94
|
$19.81
|
7/1/2011
|
9/30/2011
|
$21.51
|
$10.76
|
$10.76
|
10/3/2011
|
12/30/2011
|
$14.78
|
$9.84
|
$11.51
|
1/3/2012
|
3/30/2012
|
$14.86
|
$11.42
|
$12.81
|
4/2/2012
|
6/29/2012
|
$13.14
|
$9.24
|
$11.14
|
7/2/2012
|
9/28/2012
|
$13.32
|
$10.94
|
$12.22
|
10/1/2012
|
12/31/2012
|
$12.16
|
$9.83
|
$11.02
|
1/2/2013
|
3/28/2013
|
$13.47
|
$10.50
|
$10.99
|
4/1/2013
|
6/28/2013
|
$11.03
|
$8.18
|
$8.18
|
7/1/2013
|
9/30/2013
|
$8.93
|
$6.73
|
$7.43
|
10/1/2013
|
12/31/2013
|
$9.16
|
$6.93
|
$9.16
|
1/2/2014
|
3/31/2014
|
$9.18
|
$7.37
|
$7.82
|
4/1/2014
|
6/30/2014
|
$8.35
|
$6.73
|
$8.09
|
7/1/2014
|
7/18/2014*
|
$7.98
|
$7.37
|
$7.71
|
*
|
As of the date of this pricing supplement, available information for the third calendar quarter of 2014 includes data for the period from July 1, 2014 through July 18, 2014. Accordingly, the “Quarterly High,” “Quarterly Low” and “Close” data indicated are for this shortened period only and do not reflect complete data for the third calendar quarter of 2014
.
|
The graph below illustrates the daily performance of the common stock of McDermott from January 2, 2008 through July 18, 2014, based on information from Bloomberg, L.P., without independent verification. The dotted line represents the Trigger Price, equal to 75% of the closing price on July 18, 2014
.
Past performance of the Underlying Shares is not indicative of the future performance of the Underlying Shares
.
Common Stock of McDermott International, Inc. Closing Prices
January 2, 2008 to July 18, 2014