CAPITALIZATION

The following table sets forth the consolidated capitalization of Goldman Sachs as of February 26, 1999:

  • on an historical basis;

  • on a pro forma basis after giving effect to the Pro Forma Adjustments described under "Pro Forma Consolidated Financial Information"; and

  • as adjusted for the sale of 51,000,000 shares of common stock by The Goldman Sachs Group, Inc. in the offerings at the initial public offering price of $53.00 per share, after deduction of the underwriting discounts and estimated expenses payable by Goldman Sachs in the offerings.

This table should be read in conjunction with the consolidated financial statements and their notes and the Pro Forma Consolidated Financial Information and their notes.

As of February 26, 1999

Historical

Pro Forma

Pro Forma
as Adjusted
for Offerings

($ in millions)
Short-term borrowings (including commercial paper)(1) $33,863

$33,863

$33,863

Long-term borrowings(2):
   Senior debt(3) $20,405 $20,405 $20,405
   Junior subordinated debentures(4)

371

371

         Total long-term borrowings 20,405 20,776 20,776
Partners' capital 6,612
Stockholders' equity:
   Preferred stock, par value $0.01 per share; 150,000,000
      shares authorized, no shares issued and outstanding
   Common stock, par value $0.01 per share; 4,000,000,000
      shares authorized, 386,245,963 shares issued and
      outstanding (437,245,963 shares issued and
      outstanding as adjusted)(5)
4 4
   Restricted stock units; 63,318,815 units issued and outstanding(6) 3,356 3,356
   Nonvoting common stock, par value $0.01 per share;
      200,000,000 shares authorized, 7,440,362 shares
      issued and outstanding
0 0
   Additional paid-in capital 4,271 6,839
   Retained earnings (807)
(807)
   Unearned compensation(7)

(1,765)

(1,765)

         Total stockholders' equity

5,059

7,627

               Total capitalization $27,017

$25,835

$28,403


(1) Includes current portion of long-term borrowings of $6,285 million. See Note 4 to the unaudited condensed consolidated financial statements as of February 26, 1999 for further information regarding Goldman Sachs' short-term borrowings.

(2) After the offerings and subject to market conditions, we intend to raise additional funds in the public debt securities market, including through an anticipated $1 billion offering of long-term debt securities and an anticipated 1 billion offering of long-term debt securities payable in euros.

(3) Includes subordinated debt of Goldman, Sachs & Co. of $275 million.

(4) Consists of junior subordinated debentures issued to the retired limited partners as part of the incorporation transactions. See "Certain Relationships and Related Transactions — Incorporation and Related Transactions" for further information regarding the issuance of the debentures.

(5) Common stock outstanding includes 12,555,866 shares of common stock irrevocably contributed to the defined contribution plan. Common stock outstanding excludes 40,127,592 shares of common stock deliverable pursuant to the options awarded to employees on a discretionary basis. See "Management — The Employee Initial Public Offering Awards" for more detailed information regarding these awards.

(6) Restricted stock units include 30,025,946 shares of common stock underlying the restricted stock units awarded to employees based on a formula and 33,292,869 shares of common stock underlying the restricted stock units awarded to employees on a discretionary basis.

(7) Unearned compensation relates to the award of the restricted stock units awarded to employees on a discretionary basis.
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