UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2013
or
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Commission File Number: 001-14965
The Goldman Sachs Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
13-4019460 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
200 West Street, New York, N.Y. | 10282 | |
(Address of principal executive offices) | (Zip Code) |
(212) 902-1000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer ¨ | ||
Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨ Yes x No
APPLICABLE ONLY TO CORPORATE ISSUERS
As of April 26, 2013, there were 458,505,280 shares of the registrants common stock outstanding.
THE GOLDMAN SACHS GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2013
Form 10-Q Item Number |
Page No. | |||
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Condensed Consolidated Statements of Financial Condition as of March 31, 2013 and December 31, 2012 |
4 | |||
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6 | ||||
7 | ||||
7 | ||||
7 | ||||
8 | ||||
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87 | ||||
88 | ||||
89 | ||||
89 | ||||
90 | ||||
94 | ||||
95 | ||||
108 | ||||
109 | ||||
Managements Discussion and Analysis of Financial Condition and Results of Operations |
111 | |||
179 | ||||
179 | ||||
179 | ||||
179 | ||||
180 | ||||
181 | ||||
182 |
Goldman Sachs March 2013 Form 10-Q | 1 |
Item 1. Financial Statements (Unaudited)
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
Three Months Ended March |
||||||||
in millions, except per share amounts | 2013 | 2012 | ||||||
Revenues |
||||||||
Investment banking |
$ 1,568 | $1,160 | ||||||
Investment management |
1,250 | 1,105 | ||||||
Commissions and fees |
829 | 860 | ||||||
Market making |
3,437 | 3,905 | ||||||
Other principal transactions |
2,081 | 1,938 | ||||||
Total non-interest revenues |
9,165 | 8,968 | ||||||
Interest income |
2,608 | 2,833 | ||||||
Interest expense |
1,683 | 1,852 | ||||||
Net interest income |
925 | 981 | ||||||
Net revenues, including net interest income |
10,090 | 9,949 | ||||||
Operating expenses |
||||||||
Compensation and benefits |
4,339 | 4,378 | ||||||
Brokerage, clearing, exchange and distribution fees |
561 | 567 | ||||||
Market development |
141 | 117 | ||||||
Communications and technology |
188 | 196 | ||||||
Depreciation and amortization |
302 | 433 | ||||||
Occupancy |
218 | 212 | ||||||
Professional fees |
246 | 234 | ||||||
Insurance reserves |
127 | 157 | ||||||
Other expenses |
595 | 474 | ||||||
Total non-compensation expenses |
2,378 | 2,390 | ||||||
Total operating expenses |
6,717 | 6,768 | ||||||
Pre-tax earnings |
3,373 | 3,181 | ||||||
Provision for taxes |
1,113 | 1,072 | ||||||
Net earnings |
2,260 | 2,109 | ||||||
Preferred stock dividends |
72 | 35 | ||||||
Net earnings applicable to common shareholders |
$ 2,188 | $2,074 | ||||||
Earnings per common share |
||||||||
Basic |
$ 4.53 | $ 4.05 | ||||||
Diluted |
4.29 | 3.92 | ||||||
Dividends declared per common share |
$ 0.50 | $ 0.35 | ||||||
Average common shares outstanding |
||||||||
Basic |
482.1 | 510.8 | ||||||
Diluted |
509.8 | 529.2 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended March |
||||||||
in millions | 2013 | 2012 | ||||||
Net earnings |
$2,260 | $2,109 | ||||||
Other comprehensive income/(loss), net of tax: |
||||||||
Currency translation adjustment, net of tax |
(26 | ) | (28 | ) | ||||
Pension and postretirement liability adjustments, net of tax |
(4 | ) | 7 | |||||
Net unrealized gains on available-for-sale securities, net of tax |
15 | 30 | ||||||
Other comprehensive income/(loss) |
(15 | ) | 9 | |||||
Comprehensive income |
$2,245 | $2,118 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Goldman Sachs March 2013 Form 10-Q | 3 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition
(Unaudited)
As of | ||||||||
in millions, except share and per share amounts |
|
March 2013 |
|
|
December 2012 |
| ||
Assets |
||||||||
Cash and cash equivalents |
$ 63,333 | $ 72,669 | ||||||
Cash and securities segregated for regulatory and other purposes (includes $22,676 and $30,484 at fair value as of March 2013 and December 2012, respectively) |
41,044 | 49,671 | ||||||
Collateralized agreements: |
||||||||
Securities purchased under agreements to resell and federal funds sold (includes $158,283 and $141,331 at fair value as of March 2013 and December 2012, respectively) |
158,506 | 141,334 | ||||||
Securities borrowed (includes $54,879 and $38,395 at fair value as of March 2013 and December 2012, respectively) |
172,041 | 136,893 | ||||||
Receivables from brokers, dealers and clearing organizations |
20,501 | 18,480 | ||||||
Receivables from customers and counterparties (includes $7,154 and $7,866 at fair value as of March 2013 and December 2012, respectively) |
77,917 | 72,874 | ||||||
Financial instruments owned, at fair value (includes $67,891 and $67,177 pledged as collateral as of March 2013 and December 2012, respectively) |
387,393 | 407,011 | ||||||
Other assets (includes $13,448 and $13,426 at fair value as of March 2013 and December 2012, respectively) |
38,488 | 39,623 | ||||||
Total assets |
$959,223 | $938,555 | ||||||
Liabilities and shareholders equity |
||||||||
Deposits (includes $7,070 and $5,100 at fair value as of March 2013 and December 2012, respectively) |
$ 72,685 | $ 70,124 | ||||||
Collateralized financings: |
||||||||
Securities sold under agreements to repurchase, at fair value |
155,356 | 171,807 | ||||||
Securities loaned (includes $2,423 and $1,558 at fair value as of March 2013 and December 2012, respectively) |
20,669 | 13,765 | ||||||
Other secured financings (includes $28,482 and $30,337 at fair value as of March 2013
and |
29,468 | 32,010 | ||||||
Payables to brokers, dealers and clearing organizations |
6,949 | 5,283 | ||||||
Payables to customers and counterparties |
196,578 | 189,202 | ||||||
Financial instruments sold, but not yet purchased, at fair value |
153,749 | 126,644 | ||||||
Unsecured short-term borrowings, including the current portion of unsecured long-term borrowings (includes $18,298 and $17,595 at fair value as of March 2013 and December 2012, respectively) |
40,980 | 44,304 | ||||||
Unsecured long-term borrowings (includes $12,248 and $12,593 at fair value as of March 2013 and December 2012, respectively) |
167,008 | 167,305 | ||||||
Other liabilities and accrued expenses (includes $11,842 and $12,043 at fair value as of March 2013 and December 2012, respectively) |
38,553 | 42,395 | ||||||
Total liabilities |
881,995 | 862,839 | ||||||
Commitments, contingencies and guarantees |
||||||||
Shareholders equity |
||||||||
Preferred stock, par value $0.01 per share; aggregate liquidation preference of $6,200 as of both March 2013 and December 2012 |
6,200 | 6,200 | ||||||
Common stock, par value $0.01 per share; 4,000,000,000 shares authorized, 822,358,425 and 816,807,400 shares issued as of March 2013 and December 2012, respectively, and 460,782,218 and 465,148,387 shares outstanding as of March 2013 and December 2012, respectively |
8 | 8 | ||||||
Restricted stock units and employee stock options |
3,679 | 3,298 | ||||||
Nonvoting common stock, par value $0.01 per share; 200,000,000 shares authorized, no shares issued and outstanding |
| | ||||||
Additional paid-in capital |
48,732 | 48,030 | ||||||
Retained earnings |
67,164 | 65,223 | ||||||
Accumulated other comprehensive loss |
(208 | ) | (193 | ) | ||||
Stock held in treasury, at cost, par value $0.01 per share; 361,576,209 and 351,659,015 shares as of March 2013 and December 2012, respectively |
(48,347 | ) | (46,850 | ) | ||||
Total shareholders equity |
77,228 | 75,716 | ||||||
Total liabilities and shareholders equity |
$959,223 | $938,555 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Shareholders Equity
(Unaudited)
Three Months Ended | Year Ended | |||||||||||
in millions |
|
March 2013 |
|
|
December 2012 |
| ||||||
Preferred stock |
||||||||||||
Balance, beginning of year |
$ 6,200 | $ 3,100 | ||||||||||
Issued |
| 3,100 | ||||||||||
Balance, end of period |
6,200 | 6,200 | ||||||||||
Common stock |
||||||||||||
Balance, beginning of year |
8 | 8 | ||||||||||
Issued |
| | ||||||||||
Balance, end of period |
8 | 8 | ||||||||||
Restricted stock units and employee stock options |
||||||||||||
Balance, beginning of year |
3,298 | 5,681 | ||||||||||
Issuance and amortization of restricted stock units and employee stock options |
1,502 | 1,368 | ||||||||||
Delivery of common stock underlying restricted stock units |
(1,099 | ) | (3,659 | ) | ||||||||
Forfeiture of restricted stock units and employee stock options |
(18 | ) | (90 | ) | ||||||||
Exercise of employee stock options |
(4 | ) | (2 | ) | ||||||||
Balance, end of period |
3,679 | 3,298 | ||||||||||
Additional paid-in capital |
||||||||||||
Balance, beginning of year |
48,030 | 45,553 | ||||||||||
Delivery of common stock underlying share-based awards |
1,102 | 3,939 | ||||||||||
Cancellation of restricted stock units in satisfaction of withholding tax requirements |
(458 | ) | (1,437 | ) | ||||||||
Preferred stock issuance costs |
| (13 | ) | |||||||||
Excess net tax benefit/(provision) related to share-based awards |
58 | (11 | ) | |||||||||
Cash settlement of share-based compensation |
| (1 | ) | |||||||||
Balance, end of period |
48,732 | 48,030 | ||||||||||
Retained earnings |
||||||||||||
Balance, beginning of year |
65,223 | 58,834 | ||||||||||
Net earnings |
2,260 | 7,475 | ||||||||||
Dividends and dividend equivalents declared on common stock and restricted stock units |
(247 | ) | (903 | ) | ||||||||
Dividends declared on preferred stock |
(72 | ) | (183 | ) | ||||||||
Balance, end of period |
67,164 | 65,223 | ||||||||||
Accumulated other comprehensive loss |
||||||||||||
Balance, beginning of year |
(193 | ) | (516 | ) | ||||||||
Other comprehensive income/(loss) |
(15 | ) | 323 | |||||||||
Balance, end of period |
(208 | ) | (193 | ) | ||||||||
Stock held in treasury, at cost |
||||||||||||
Balance, beginning of year |
(46,850 | ) | (42,281 | ) | ||||||||
Repurchased |
(1,525 | ) | (4,637 | ) | ||||||||
Reissued |
38 | 77 | ||||||||||
Other |
(10 | ) | (9 | ) | ||||||||
Balance, end of period |
(48,347 | ) | (46,850 | ) | ||||||||
Total shareholders equity |
$ 77,228 | $ 75,716 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Goldman Sachs March 2013 Form 10-Q | 5 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March |
||||||||
in millions | 2013 | 2012 | ||||||
Cash flows from operating activities |
||||||||
Net earnings |
$ 2,260 | $ 2,109 | ||||||
Adjustments to reconcile net earnings to net cash provided by/(used for) operating activities |
||||||||
Depreciation and amortization |
302 | 433 | ||||||
Share-based compensation |
1,509 | 643 | ||||||
Changes in operating assets and liabilities |
||||||||
Cash and securities segregated for regulatory and other purposes |
8,527 | 11,165 | ||||||
Net receivables from brokers, dealers and clearing organizations |
(339 | ) | (2,671 | ) | ||||
Net payables to customers and counterparties |
3,356 | 7,290 | ||||||
Securities borrowed, net of securities loaned |
(28,245 | ) | (14,813 | ) | ||||
Securities sold under agreements to repurchase, net of securities purchased under agreements to resell and federal funds sold |
(33,576 | ) | 15,328 | |||||
Financial instruments owned, at fair value |
20,028 | (22,023 | ) | |||||
Financial instruments sold, but not yet purchased, at fair value |
27,227 | 6,304 | ||||||
Other, net |
(6,747 | ) | 11 | |||||
Net cash provided by/(used for) operating activities |
(5,698 | ) | 3,776 | |||||
Cash flows from investing activities |
||||||||
Purchase of property, leasehold improvements and equipment |
(171 | ) | (390 | ) | ||||
Proceeds from sales of property, leasehold improvements and equipment |
17 | 13 | ||||||
Business acquisitions, net of cash acquired |
(160 | ) | (39 | ) | ||||
Proceeds from sales of investments |
526 | 130 | ||||||
Purchase of available-for-sale securities |
(501 | ) | (653 | ) | ||||
Proceeds from sales of available-for-sale securities |
709 | 699 | ||||||
Loans held for investment, net |
(1,373 | ) | (238 | ) | ||||
Net cash used for investing activities |
(953 | ) | (478 | ) | ||||
Cash flows from financing activities |
||||||||
Unsecured short-term borrowings, net |
(435 | ) | (869 | ) | ||||
Other secured financings (short-term), net |
(4,824 | ) | (483 | ) | ||||
Proceeds from issuance of other secured financings (long-term) |
1,829 | 798 | ||||||
Repayment of other secured financings (long-term), including the current portion |
(969 | ) | (4,334 | ) | ||||
Proceeds from issuance of unsecured long-term borrowings |
13,069 | 9,358 | ||||||
Repayment of unsecured long-term borrowings, including the current portion |
(12,530 | ) | (11,134 | ) | ||||
Derivative contracts with a financing element, net |
380 | 208 | ||||||
Deposits, net |
2,562 | 4,765 | ||||||
Common stock repurchased |
(1,525 | ) | (365 | ) | ||||
Dividends and dividend equivalents paid on common stock, preferred stock and restricted stock units |
(319 | ) | (220 | ) | ||||
Proceeds from issuance of common stock, including stock option exercises |
14 | 39 | ||||||
Excess tax benefit related to share-based compensation |
63 | 70 | ||||||
Cash settlement of share-based compensation |
| (1 | ) | |||||
Net cash used for financing activities |
(2,685 | ) | (2,168 | ) | ||||
Net increase/(decrease) in cash and cash equivalents |
(9,336 | ) | 1,130 | |||||
Cash and cash equivalents, beginning of year |
72,669 | 56,008 | ||||||
Cash and cash equivalents, end of period |
$ 63,333 | $ 57,138 |
SUPPLEMENTAL DISCLOSURES:
Cash payments for interest, net of capitalized interest, were $1.96 billion and $4.04 billion during the three months ended March 2013 and March 2012, respectively.
Cash payments for income taxes, net of refunds were $464 million during the three months ended March 2013. Income tax refunds, net of cash payments were $29 million during the three months ended March 2012.
The accompanying notes are an integral part of these condensed consolidated financial statements.
6 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 7 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 3. Significant Accounting Policies
Significant Accounting Policies
8 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 9 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
10 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 11 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
12 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4. Financial Instruments Owned, at Fair Value and Financial Instruments Sold, But Not Yet Purchased, at Fair Value
Financial Instruments Owned, at Fair Value and Financial Instruments Sold, But Not Yet Purchased, at Fair Value |
As of March 2013 | As of December 2012 | |||||||||||||||||
in millions | |
Financial Instruments Owned |
|
|
Financial Instruments Sold, But Not Yet Purchased |
|
|
Financial Instruments Owned |
|
|
Financial Instruments Sold, But Not Yet Purchased |
| ||||||
Commercial paper, certificates of deposit, time deposits and other |
$ 5,705 | $ | $ 6,057 | $ | ||||||||||||||
U.S. government and federal agency obligations |
96,930 | 25,894 | 93,241 | 15,905 | ||||||||||||||
Non-U.S. government and agency obligations |
57,657 | 42,754 | 62,250 | 32,361 | ||||||||||||||
Mortgage and other asset-backed loans and securities: |
||||||||||||||||||
Loans and securities backed by commercial real estate |
6,909 | 11 | 9,805 | | ||||||||||||||
Loans and securities backed by residential real estate |
7,570 | 2 | 8,216 | 4 | ||||||||||||||
Bank loans and bridge loans |
22,467 | 1,479 | 3 | 22,407 | 1,779 | 3 | ||||||||||||
Corporate debt securities |
20,442 | 6,874 | 20,981 | 5,761 | ||||||||||||||
State and municipal obligations |
2,219 | 7 | 2,477 | 1 | ||||||||||||||
Other debt obligations |
2,481 | | 2,251 | | ||||||||||||||
Equities and convertible debentures |
89,278 | 24,381 | 96,454 | 20,406 | ||||||||||||||
Commodities 1 |
7,695 | | 11,696 | | ||||||||||||||
Derivatives 2 |
68,040 | 52,347 | 71,176 | 50,427 | ||||||||||||||
Total |
$387,393 | $153,749 | $407,011 | $126,644 |
1. | Includes commodities that have been transferred to third parties, which were accounted for as collateralized financings rather than sales, of $2.77 billion and $4.29 billion as of March 2013 and December 2012, respectively. |
2. | Reported on a net-by-counterparty basis when a legal right of setoff exists under an enforceable netting agreement and reported net of cash collateral received or posted under enforceable credit support agreements. |
3. | Primarily relates to the fair value of unfunded lending commitments for which the fair value option was elected. |
Goldman Sachs March 2013 Form 10-Q | 13 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
14 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
As of | ||||||||
$ in millions |
|
March 2013 |
|
|
December 2012 |
| ||
Total level 1 financial assets |
$175,729 | $ 190,737 | ||||||
Total level 2 financial assets |
512,909 | 502,293 | ||||||
Total level 3 financial assets |
46,023 | 47,095 | ||||||
Cash collateral and counterparty netting 1 |
(90,828 | ) | (101,612 | ) | ||||
Total financial assets at fair value |
$643,833 | $ 638,513 | ||||||
Total assets |
$959,223 | $ 938,555 | ||||||
Total level 3 financial assets as a percentage of Total assets |
4.8 | % | 5.0 | % | ||||
Total level 3 financial assets as a percentage of Total financial assets at fair value |
7.1 | % | 7.4 | % | ||||
Total level 1 financial liabilities |
$ 90,186 | $ 65,994 | ||||||
Total level 2 financial liabilities |
304,217 | 318,764 | ||||||
Total level 3 financial liabilities |
24,759 | 25,679 | ||||||
Cash collateral and counterparty netting 1 |
(29,694 | ) | (32,760 | ) | ||||
Total financial liabilities at fair value |
$389,468 | $ 377,677 | ||||||
Total level 3 financial liabilities as a percentage of Total financial liabilities at fair value |
6.4 | % | 6.8 | % |
1. | Represents the impact on derivatives of cash collateral, and counterparty netting across levels of the fair value hierarchy. Netting among positions classified in the same level is included in that level. |
Goldman Sachs March 2013 Form 10-Q | 15 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 6. Cash Instruments
Cash Instruments
16 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Valuation Techniques and Significant Inputs
Level 3 Cash Instruments | Valuation Techniques and Significant Inputs | |||
Loans and securities backed by commercial real estate
Collateralized by a single commercial real estate property or a portfolio of properties
May include tranches of varying levels of subordination |
Valuation techniques vary by instrument, but are generally based on discounted cash flow techniques. | |||
Significant inputs are generally determined based on relative value analyses and include: | ||||
Transaction prices in both the underlying collateral and instruments with the same or similar underlying collateral and the basis, or price difference, to such prices | ||||
Market yields implied by transactions of similar or related assets and/or current levels and changes in market indices such as the CMBX (an index that tracks the performance of commercial mortgage bonds) | ||||
Recovery rates implied by the value of the underlying collateral, which is mainly driven by current performance of the underlying collateral, capitalization rates and multiples | ||||
Timing of expected future cash flows (duration)
| ||||
Loans and securities backed by residential real estate
Collateralized by portfolios of residential real estate
May include tranches of varying levels of subordination |
Valuation techniques vary by instrument, but are generally based on discounted cash flow techniques. | |||
Significant inputs are generally determined based on relative value analyses, which incorporate comparisons to instruments with similar collateral and risk profiles, including relevant indices such as the ABX (an index that tracks the performance of subprime residential mortgage bonds). Significant inputs include: | ||||
Transaction prices in both the underlying collateral and instruments with the same or similar underlying collateral | ||||
Market yields implied by transactions of similar or related assets | ||||
Cumulative loss expectations, driven by default rates, home price projections, residential property liquidation timelines and related costs | ||||
Duration, driven by underlying loan prepayment speeds and residential property liquidation timelines
| ||||
Bank loans and bridge loans |
Valuation techniques vary by instrument, but are generally based on discounted cash flow techniques. | |||
Significant inputs are generally determined based on relative value analyses, which incorporate comparisons both to prices of credit default swaps that reference the same or similar underlying instrument or entity and to other debt instruments for the same issuer for which observable prices or broker quotations are available. Significant inputs include: | ||||
Market yields implied by transactions of similar or related assets and/or current levels and trends of market indices such as CDX and LCDX (indices that track the performance of corporate credit and loans, respectively) | ||||
Current performance and recovery assumptions and, where the firm uses credit default swaps to value the related cash instrument, the cost of borrowing the underlying reference obligation | ||||
Duration
| ||||
Non-U.S. government and agency obligations
Corporate debt securities
State and municipal obligations
Other debt obligations |
Valuation techniques vary by instrument, but are generally based on discounted cash flow techniques. | |||
Significant inputs are generally determined based on relative value analyses, which incorporate comparisons both to prices of credit default swaps that reference the same or similar underlying instrument or entity and to other debt instruments for the same issuer for which observable prices or broker quotations are available. Significant inputs include: | ||||
Market yields implied by transactions of similar or related assets and/or current levels and trends of market indices such as CDX, LCDX and MCDX (an index that tracks the performance of municipal obligations) | ||||
Current performance and recovery assumptions and, where the firm uses credit default swaps to value the related cash instrument, the cost of borrowing the underlying reference obligation | ||||
Duration
| ||||
Equities and convertible debentures (including private equity investments and investments in real estate entities) |
Recent third-party completed or pending transactions (e.g., merger proposals, tender offers, debt restructurings) are considered to be the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate: | |||
Industry multiples (primarily EBITDA multiples) and public comparables | ||||
Transactions in similar instruments | ||||
Discounted cash flow techniques | ||||
Third-party appraisals | ||||
The firm also considers changes in the outlook for the relevant industry and financial performance of the issuer as compared to projected performance. Significant inputs include: | ||||
Market and transaction multiples | ||||
Discount rates, long-term growth rates, earnings compound annual growth rates and capitalization rates | ||||
For equity instruments with debt-like features: market yields implied by transactions of similar or related assets, current performance and recovery assumptions, and duration
|
Goldman Sachs March 2013 Form 10-Q | 17 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Significant Unobservable Inputs
Level 3 Cash Instruments
|
Level 3 Assets as of (in millions)
|
Significant Unobservable Inputs by Valuation Technique
|
Range of Significant Unobservable as of March 2013
| |||
Loans and securities backed by commercial real estate
Collateralized by a single commercial real estate property or a portfolio of properties
May include tranches of varying levels of subordination
|
$3,164 |
Discounted cash flows: |
||||
Yield |
3.6% to 27.9% (8.6%) | |||||
Recovery rate 3 |
36.0% to 98.3% (71.4%) | |||||
Duration (years) 4 |
0.6 to 7.0 (2.9) | |||||
Basis
|
(19) points to 16 points (3 points) | |||||
Loans and securities backed by residential real estate
Collateralized by portfolios of residential real estate
May include tranches of varying levels of subordination |
$1,683 |
Discounted cash flows: |
||||
Yield |
3.6% to 16.9% (9.1%) | |||||
Cumulative loss rate |
0.0% to 61.8% (29.6%) | |||||
Duration (years) 4
|
1.4 to 8.7 (3.5) | |||||
Bank loans and bridge loans |
$11,688 |
Discounted cash flows: |
||||
Yield |
0.4% to 36.5% (8.6%) | |||||
Recovery rate 3 |
28.1% to 85.0% (59.5%) | |||||
Duration (years) 4
|
0.4 to 4.6 (2.2) | |||||
Non-U.S. government and agency obligations
Corporate debt securities
State and municipal obligations
Other debt obligations |
$3,678 |
Discounted cash flows: |
||||
Yield |
0.5% to 35.3% (7.8%) | |||||
Recovery rate 3 |
0.0% to 70.0% (64.9%) | |||||
Duration (years) 4
|
0.4 to 14.6 (4.0) | |||||
Equities and convertible debentures (including private equity investments and investments in real estate entities) |
$15,224 2 |
Comparable multiples: |
||||
Multiples |
0.7x to 25.7x (7.0x) | |||||
Discounted cash flows: |
||||||
Discount rate |
10.0% to 25.0% (13.9%) | |||||
Long-term growth rate/compound annual growth rate |
0.7% to 25.0% (9.0%) | |||||
Capitalization rate
|
3.3% to 11.4% (6.9%) |
1. | Weighted averages are calculated by weighting each input by the relative fair value of the respective financial instruments. |
2. | The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparables and discounted cash flows may be used together to determine fair value. Therefore, the level 3 balance encompasses both of these techniques. |
3. | Recovery rate is a measure of expected future cash flows in a default scenario, expressed as a percentage of notional or face value of the instrument, and reflects the benefit of credit enhancement on certain instruments. |
4. | Duration is an estimate of the timing of future cash flows and, in certain cases, may incorporate the impact of other unobservable inputs (e.g., prepayment speeds). |
18 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Cash Instruments
|
Level 3 Assets as of December 2012 (in millions)
|
Significant Unobservable Inputs by Valuation Technique
|
Range of Significant Unobservable Inputs (Weighted Average 1) as of December 2012
| |||
Loans and securities backed by commercial real estate
Collateralized by a single commercial real estate property or a portfolio of properties
May include tranches of varying levels of subordination |
$3,389 |
Discounted cash flows:
|
||||
Yield
|
4.0% to 43.3% (9.8%) | |||||
Recovery rate 3
|
37.0% to 96.2% (81.7%) | |||||
Duration (years) 4
|
0.1 to 7.0 (2.6) | |||||
Basis
|
(13) points to 18 points (2 points) | |||||
Loans and securities backed by residential real estate
Collateralized by portfolios of residential real estate
May include tranches of varying levels of subordination |
$1,619 |
Discounted cash flows:
|
||||
Yield
|
3.1% to 17.0% (9.7%) | |||||
Cumulative loss rate
|
0.0% to 61.6% (31.6%) | |||||
Duration (years) 4
|
1.3 to 5.9 (3.7) | |||||
Bank loans and bridge loans |
$11,235 |
Discounted cash flows:
|
||||
Yield
|
0.3% to 34.5% (8.3%) | |||||
Recovery rate 3
|
16.5% to 85.0% (56.0%) | |||||
Duration (years) 4
|
0.2 to 4.4 (1.9) | |||||
Non-U.S. government and agency obligations
Corporate debt securities
State and municipal obligations
Other debt obligations |
$4,651 |
Discounted cash flows:
|
||||
Yield
|
0.6% to 33.7% (8.6%) | |||||
Recovery rate 3
|
0.0% to 70.0% (53.4%) | |||||
Duration (years) 4
|
0.5 to 15.5 (4.0) | |||||
Equities and convertible debentures (including private equity investments and investments in real estate entities) |
$14,855 2 |
Comparable multiples:
|
||||
Multiples
|
0.7x to 21.0x (7.2x) | |||||
Discounted cash flows:
|
||||||
Discount rate
|
10.0% to 25.0% (14.3%) | |||||
Long-term growth rate/ compound annual growth rate
|
0.7% to 25.0% (9.3%)
| |||||
Capitalization rate
|
3.9% to 11.4% (7.3%) |
1. | Weighted averages are calculated by weighting each input by the relative fair value of the respective financial instruments. |
2. | The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparables and discounted cash flows may be used together to determine fair value. Therefore, the level 3 balance encompasses both of these techniques. |
3. | Recovery rate is a measure of expected future cash flows in a default scenario, expressed as a percentage of notional or face value of the instrument, and reflects the benefit of credit enhancement on certain instruments. |
4. | Duration is an estimate of the timing of future cash flows and, in certain cases, may incorporate the impact of other unobservable inputs (e.g., prepayment speeds). |
Goldman Sachs March 2013 Form 10-Q | 19 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Fair Value of Cash Instruments by Level
Cash Instrument Assets at Fair Value as of March 2013 | ||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Commercial paper, certificates of deposit, time deposits and other money market instruments |
$ 1,294 | $ 4,411 | $ | $ 5,705 | ||||||||||||
U.S. government and federal agency obligations |
46,973 | 49,957 | | 96,930 | ||||||||||||
Non-U.S. government and agency obligations |
40,379 | 17,231 | 47 | 57,657 | ||||||||||||
Mortgage and other asset-backed loans and securities 1: |
||||||||||||||||
Loans and securities backed by commercial real estate |
| 3,745 | 3,164 | 6,909 | ||||||||||||
Loans and securities backed by residential real estate |
| 5,887 | 1,683 | 7,570 | ||||||||||||
Bank loans and bridge loans |
| 10,779 | 11,688 | 22,467 | ||||||||||||
Corporate debt securities 2 |
132 | 17,868 | 2,442 | 20,442 | ||||||||||||
State and municipal obligations |
| 1,885 | 334 | 2,219 | ||||||||||||
Other debt obligations 2 |
| 1,626 | 855 | 2,481 | ||||||||||||
Equities and convertible debentures |
64,850 | 9,204 | 15,224 | 3 | 89,278 | |||||||||||
Commodities |
| 7,695 | | 7,695 | ||||||||||||
Total |
$153,628 | $130,288 | $35,437 | $319,353 | ||||||||||||
Cash Instrument Liabilities at Fair Value as of March 2013 | ||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
U.S. government and federal agency obligations |
$ 25,665 | $ 229 | $ | $ 25,894 | ||||||||||||
Non-U.S. government and agency obligations |
41,389 | 1,365 | | 42,754 | ||||||||||||
Mortgage and other asset-backed loans and securities: |
||||||||||||||||
Loans and securities backed by commercial real estate |
| 11 | | 11 | ||||||||||||
Loans and securities backed by residential real estate |
| 2 | | 2 | ||||||||||||
Bank loans and bridge loans |
| 1,044 | 435 | 1,479 | ||||||||||||
Corporate debt securities |
10 | 6,862 | 2 | 6,874 | ||||||||||||
State and municipal obligations |
| 7 | | 7 | ||||||||||||
Equities and convertible debentures |
22,974 | 1,403 | 4 | 24,381 | ||||||||||||
Total |
$ 90,038 | $ 10,923 | $ 441 | $101,402 |
1. | Includes $609 million and $452 million of collateralized debt obligations (CDOs) backed by real estate in level 2 and level 3, respectively. |
2. | Includes $583 million and $1.46 billion of CDOs and collateralized loan obligations (CLOs) backed by corporate obligations in level 2 and level 3, respectively. |
3. | Includes $13.27 billion of private equity investments, $1.45 billion of investments in real estate entities and $508 million of convertible debentures. |
20 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Cash Instrument Assets at Fair Value as of December 2012 | ||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Commercial paper, certificates of deposit, time deposits and other money market instruments |
$ 2,155 | $ 3,902 | $ | $ 6,057 | ||||||||||||
U.S. government and federal agency obligations |
42,856 | 50,385 | | 93,241 | ||||||||||||
Non-U.S. government and agency obligations |
46,715 | 15,509 | 26 | 62,250 | ||||||||||||
Mortgage and other asset-backed loans and securities 1: |
||||||||||||||||
Loans and securities backed by commercial real estate |
| 6,416 | 3,389 | 9,805 | ||||||||||||
Loans and securities backed by residential real estate |
| 6,597 | 1,619 | 8,216 | ||||||||||||
Bank loans and bridge loans |
| 11,172 | 11,235 | 22,407 | ||||||||||||
Corporate debt securities 2 |
111 | 18,049 | 2,821 | 20,981 | ||||||||||||
State and municipal obligations |
| 1,858 | 619 | 2,477 | ||||||||||||
Other debt obligations 2 |
| 1,066 | 1,185 | 2,251 | ||||||||||||
Equities and convertible debentures |
72,875 | 8,724 | 14,855 | 3 | 96,454 | |||||||||||
Commodities |
| 11,696 | | 11,696 | ||||||||||||
Total |
$164,712 | $135,374 | $35,749 | $335,835 | ||||||||||||
Cash Instrument Liabilities at Fair Value as of December 2012 | ||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
U.S. government and federal agency obligations |
$ 15,475 | $ 430 | $ | $ 15,905 | ||||||||||||
Non-U.S. government and agency obligations |
31,011 | 1,350 | | 32,361 | ||||||||||||
Mortgage and other asset-backed loans and securities: |
||||||||||||||||
Loans and securities backed by residential real estate |
| 4 | | 4 | ||||||||||||
Bank loans and bridge loans |
| 1,143 | 636 | 1,779 | ||||||||||||
Corporate debt securities |
28 | 5,731 | 2 | 5,761 | ||||||||||||
State and municipal obligations |
| 1 | | 1 | ||||||||||||
Equities and convertible debentures |
19,416 | 986 | 4 | 20,406 | ||||||||||||
Total |
$ 65,930 | $ 9,645 | $ 642 | $ 76,217 |
1. | Includes $489 million and $446 million of CDOs backed by real estate in level 2 and level 3, respectively. |
2. | Includes $284 million and $1.76 billion of CDOs and CLOs backed by corporate obligations in level 2 and level 3, respectively. |
3. | Includes $12.67 billion of private equity investments, $1.58 billion of investments in real estate entities and $600 million of convertible debentures. |
Transfers Between Levels of the Fair Value Hierarchy
Goldman Sachs March 2013 Form 10-Q | 21 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Rollforward
Level 3 Cash Instrument Assets at Fair Value for the Three Months Ended March 2013 | ||||||||||||||||||||||||||||||||||||
in millions | |
Balance, beginning of period |
|
|
Net realized gains/ (losses) |
|
|
Net unrealized gains/(losses) relating to instruments still held at period-end |
|
Purchases | 1 | Sales | Settlements | |
Transfers into level 3 |
|
|
Transfers out of level 3 |
|
|
Balance, end of period |
| ||||||||||||||
Non-U.S. government and agency obligations |
$ 26 | $ 3 | $ 2 | $ 28 | $ (9 | ) | $ (1 | ) | $ 1 | $ (3 | ) | $ 47 | ||||||||||||||||||||||||
Mortgage and other asset-backed loans and securities: |
||||||||||||||||||||||||||||||||||||
Loans and securities backed by commercial real estate |
3,389 | 36 | 91 | 50 | (249 | ) | (277 | ) | 318 | (194 | ) | 3,164 | ||||||||||||||||||||||||
Loans and securities backed by residential real estate |
1,619 | 38 | 25 | 268 | (172 | ) | (56 | ) | 104 | (143 | ) | 1,683 | ||||||||||||||||||||||||
Bank loans and bridge loans |
11,235 | 153 | 97 | 1,460 | (543 | ) | (1,361 | ) | 1,688 | (1,041 | ) | 11,688 | ||||||||||||||||||||||||
Corporate debt securities |
2,821 | 116 | 157 | 301 | (728 | ) | (141 | ) | 116 | (200 | ) | 2,442 | ||||||||||||||||||||||||
State and municipal obligations |
619 | 2 | 1 | 19 | (269 | ) | (1 | ) | | (37 | ) | 334 | ||||||||||||||||||||||||
Other debt obligations |
1,185 | 19 | 21 | 192 | (210 | ) | (201 | ) | 61 | (212 | ) | 855 | ||||||||||||||||||||||||
Equities and convertible debentures |
14,855 | 70 | 481 | 185 | (378 | ) | (543 | ) | 1,000 | (446 | ) | 15,224 | ||||||||||||||||||||||||
Total |
$35,749 | $437 | 2 | $875 | 2 | $2,503 | $(2,558 | ) | $(2,581 | ) | $3,288 | $(2,276 | ) | $35,437 | ||||||||||||||||||||||
Level 3 Cash Instrument Liabilities at Fair Value for the Three Months Ended March 2013 | ||||||||||||||||||||||||||||||||||||
in millions | |
Balance, beginning of period |
|
|
Net realized (gains)/ losses |
|
|
Net unrealized (gains)/losses relating to instruments still held at period-end |
|
Purchases | 1 | Sales | Settlements | |
Transfers into level 3 |
|
|
Transfers out of level 3 |
|
|
Balance, end of period |
| ||||||||||||||
Total |
$ 642 | $ (4 | ) | $ (11 | ) | $ (147 | ) | $ 97 | $ 3 | $ 22 | $ (161 | ) | $ 441 |
1. | Includes both originations and secondary market purchases. |
2. | The aggregate amounts include approximately $317 million, $687 million and $308 million reported in Market making, Other principal transactions and Interest income, respectively. |
22 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Cash Instrument Assets at Fair Value for the Three Months Ended March 2012 | ||||||||||||||||||||||||||||||||||||
in millions | |
Balance, beginning of period |
|
|
Net realized gains/ (losses) |
|
|
Net unrealized gains/(losses) relating to instruments still held at period-end |
|
Purchases | 1 | Sales | Settlements | |
Transfers into level 3 |
|
|
Transfers out of level 3 |
|
|
Balance, end of period |
| ||||||||||||||
Commercial paper, certificates of deposit, time deposits and other money market instruments |
$ | $ | $ | $ 8 | $ | $ | $ | $ | $ 8 | |||||||||||||||||||||||||||
Non-U.S. government and agency obligations |
148 | (1 | ) | (59 | ) | 7 | (8 | ) | | 20 | (2 | ) | 105 | |||||||||||||||||||||||
Mortgage and other asset-backed |
||||||||||||||||||||||||||||||||||||
Loans and securities backed by commercial real estate |
3,346 | 39 | 96 | 295 | (276 | ) | (289 | ) | 486 | (541 | ) | 3,156 | ||||||||||||||||||||||||
Loans and securities backed by residential real estate |
1,709 | 43 | 23 | 254 | (181 | ) | (101 | ) | 14 | (151 | ) | 1,610 | ||||||||||||||||||||||||
Bank loans and bridge loans |
11,285 | 150 | 206 | 1,188 | (1,246 | ) | (792 | ) | 960 | (700 | ) | 11,051 | ||||||||||||||||||||||||
Corporate debt securities |
2,480 | 92 | 158 | 295 | (422 | ) | (128 | ) | 260 | (223 | ) | 2,512 | ||||||||||||||||||||||||
State and municipal obligations |
599 | 2 | 8 | 20 | (39 | ) | (2 | ) | 25 | (1 | ) | 612 | ||||||||||||||||||||||||
Other debt obligations |
1,451 | 44 | 24 | 99 | (120 | ) | (56 | ) | 123 | (16 | ) | 1,549 | ||||||||||||||||||||||||
Equities and convertible debentures |
13,667 | 39 | 332 | 558 | (150 | ) | (194 | ) | 779 | (157 | ) | 14,874 | ||||||||||||||||||||||||
Total |
$34,685 | $408 | 2 | $788 | 2 | $2,724 | $(2,442 | ) | $(1,562 | ) | $2,667 | $(1,791 | ) | $35,477 | ||||||||||||||||||||||
Level 3 Cash Instrument Liabilities at Fair Value for the Three Months Ended March 2012 | ||||||||||||||||||||||||||||||||||||
in millions | |
Balance, beginning of period |
|
|
Net realized (gains)/ losses |
|
|
Net unrealized (gains)/losses relating to instruments still held at period-end |
|
Purchases | 1 | Sales | Settlements | |
Transfers into level 3 |
|
|
Transfers out of level 3 |
|
|
Balance, end of period |
| ||||||||||||||
Total |
$ 905 | $ (34 | ) | $ (68 | ) | $ (326 | ) | $ 87 | $ 195 | $ 102 | $ (114 | ) | $ 747 |
1. | Includes both originations and secondary market purchases. |
2. | The aggregate amounts include approximately $167 million, $654 million and $375 million reported in Market making, Other principal transactions and Interest income, respectively. |
Goldman Sachs March 2013 Form 10-Q | 23 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Investments in Funds That Calculate Net Asset Value Per Share |
As of March 2013 | As of December 2012 | |||||||||||||||||
in millions | |
Fair Value of Investments |
|
|
Unfunded Commitments |
|
|
Fair Value of Investments |
|
|
Unfunded Commitments |
| ||||||
Private equity funds 1 |
$ 7,183 | $2,453 | $ 7,680 | $2,778 | ||||||||||||||
Credit funds 2 |
3,976 | 2,884 | 3,927 | 2,843 | ||||||||||||||
Hedge funds 3 |
2,339 | | 2,167 | | ||||||||||||||
Real estate funds 4 |
2,058 | 868 | 2,006 | 870 | ||||||||||||||
Total |
$15,556 | $6,205 | $15,780 | $6,491 |
1. | These funds primarily invest in a broad range of industries worldwide in a variety of situations, including leveraged buyouts, recapitalizations, growth investments and distressed investments. |
2. | These funds generally invest in loans and other fixed income instruments and are focused on providing private high-yield capital for mid- to large-sized leveraged and management buyout transactions, recapitalizations, financings, refinancings, acquisitions and restructurings for private equity firms, private family companies and corporate issuers. |
3. | These funds are primarily multi-disciplinary hedge funds that employ a fundamental bottom-up investment approach across various asset classes and strategies including long/short equity, credit, convertibles, risk arbitrage, special situations and capital structure arbitrage. |
4. | These funds invest globally, primarily in real estate companies, loan portfolios, debt recapitalizations and direct property. |
24 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 7. Derivatives and Hedging Activities
Derivatives and Hedging Activities
Derivative Activities
As of March 2013 | As of December 2012 | |||||||||||||||||
in millions | |
Derivative Assets |
|
|
Derivative Liabilities |
|
|
Derivative Assets |
|
|
Derivative Liabilities |
| ||||||
Exchange-traded |
$ 4,455 | $ 3,581 | $ 3,772 | $ 2,937 | ||||||||||||||
OTC |
63,585 | 48,766 | 67,404 | 47,490 | ||||||||||||||
Total |
$68,040 | $52,347 | $71,176 | $50,427 |
Goldman Sachs March 2013 Form 10-Q | 25 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
As of March 2013 | As of December 2012 | |||||||||||||||||||||||||
in millions |
|
Derivative Assets |
|
|
Derivative Liabilities |
|
|
Notional Amount |
|
|
Derivative Assets |
|
|
Derivative Liabilities |
|
|
Notional Amount |
| ||||||||
Derivatives not accounted for as hedges |
||||||||||||||||||||||||||
Interest rates |
$ 518,022 | $ 482,433 | $36,083,019 | $ 584,584 | $ 545,605 | $34,891,763 | ||||||||||||||||||||
Exchange-traded |
86 | 70 | 2,621,038 | 47 | 26 | 2,502,867 | ||||||||||||||||||||
OTC-cleared |
14,700 | 15,837 | 16,298,152 | 8,847 | 11,011 | 14,678,349 | ||||||||||||||||||||
Bilateral OTC |
503,236 | 466,526 | 17,163,829 | 575,690 | 534,568 | 17,710,547 | ||||||||||||||||||||
Credit |
81,669 | 72,495 | 3,632,242 | 85,816 | 74,927 | 3,615,757 | ||||||||||||||||||||
OTC-cleared |
3,595 | 3,348 | 323,457 | 3,359 | 2,638 | 304,100 | ||||||||||||||||||||
Bilateral OTC |
78,074 | 69,147 | 3,308,785 | 82,457 | 72,289 | 3,311,657 | ||||||||||||||||||||
Currencies |
69,534 | 62,197 | 4,053,493 | 72,128 | 60,808 | 3,833,114 | ||||||||||||||||||||
Exchange-traded |
45 | 68 | 13,815 | 31 | 82 | 12,341 | ||||||||||||||||||||
OTC-cleared |
31 | 20 | 8,723 | 14 | 14 | 5,487 | ||||||||||||||||||||
Bilateral OTC |
69,458 | 62,109 | 4,030,955 | 72,083 | 60,712 | 3,815,286 | ||||||||||||||||||||
Commodities |
22,246 | 21,752 | 819,726 | 23,320 | 24,350 | 774,115 | ||||||||||||||||||||
Exchange-traded |
5,491 | 4,640 | 396,230 | 5,360 | 5,040 | 344,823 | ||||||||||||||||||||
OTC-cleared |
31 | 40 | 874 | 26 | 23 | 327 | ||||||||||||||||||||
Bilateral OTC |
16,724 | 17,072 | 422,622 | 17,934 | 19,287 | 428,965 | ||||||||||||||||||||
Equities |
51,672 | 48,082 | 1,339,285 | 49,483 | 43,681 | 1,202,181 | ||||||||||||||||||||
Exchange-traded |
9,636 | 9,606 | 495,994 | 9,409 | 8,864 | 441,494 | ||||||||||||||||||||
Bilateral OTC |
42,036 | 38,476 | 843,291 | 40,074 | 34,817 | 760,687 | ||||||||||||||||||||
Subtotal |
743,143 | 686,959 | 45,927,765 | 815,331 | 749,371 | 44,316,930 | ||||||||||||||||||||
Derivatives accounted for as hedges |
||||||||||||||||||||||||||
Interest rates |
20,825 | 180 | 132,886 | 23,772 | 66 | 128,302 | ||||||||||||||||||||
OTC-cleared |
9 | | 66 | | | | ||||||||||||||||||||
Bilateral OTC |
20,816 | 180 | 132,820 | 23,772 | 66 | 128,302 | ||||||||||||||||||||
Currencies |
37 | 39 | 8,427 | 21 | 86 | 8,452 | ||||||||||||||||||||
OTC-cleared |
| | 84 | | | 3 | ||||||||||||||||||||
Bilateral OTC |
37 | 39 | 8,343 | 21 | 86 | 8,449 | ||||||||||||||||||||
Subtotal |
20,862 | 219 | 141,313 | 23,793 | 152 | 136,754 | ||||||||||||||||||||
Gross fair value/notional amount of derivatives |
$ 764,005 | 1 | $ 687,178 | 1 | $46,069,078 | $ 839,124 | 1 | $ 749,523 | 1 | $44,453,684 | ||||||||||||||||
Amounts that have been offset in the condensed consolidated statements of financial condition |
||||||||||||||||||||||||||
Counterparty netting |
(607,096 | ) | (607,096 | ) | (668,460 | ) | (668,460 | ) | ||||||||||||||||||
Exchange-traded |
(10,803 | ) | (10,803 | ) | (11,075 | ) | (11,075 | ) | ||||||||||||||||||
OTC-cleared |
(17,146 | ) | (17,146 | ) | (11,507 | ) | (11,507 | ) | ||||||||||||||||||
Bilateral OTC |
(579,147 | ) | (579,147 | ) | (645,878 | ) | (645,878 | ) | ||||||||||||||||||
Cash collateral |
(88,869 | ) | (27,735 | ) | (99,488 | ) | (30,636 | ) | ||||||||||||||||||
OTC-cleared |
(335 | ) | (2,028 | ) | (468 | ) | (2,160 | ) | ||||||||||||||||||
Bilateral OTC |
(88,534 | ) | (25,707 | ) | (99,020 | ) | (28,476 | ) | ||||||||||||||||||
Fair value included in financial instruments owned/financial instruments sold, but not yet purchased |
$ 68,040 | $ 52,347 | $ 71,176 | $ 50,427 | ||||||||||||||||||||||
Amounts that have not been offset in the condensed consolidated statements of financial condition |
||||||||||||||||||||||||||
Cash collateral received/posted |
(937 | ) | (3,706 | ) | (812 | ) | (2,994 | ) | ||||||||||||||||||
Securities collateral received/posted |
(16,172 | ) | (14,384 | ) | (17,225 | ) | (14,262 | ) | ||||||||||||||||||
Total |
$ 50,931 | $ 34,257 | $ 53,139 | $ 33,171 |
1. | Includes derivative assets and derivative liabilities of $25.43 billion and $27.30 billion, respectively, as of March 2013, and derivative assets and derivative liabilities of $24.62 billion and $25.73 billion, respectively, as of December 2012, which are not subject to an enforceable netting agreement or are subject to a netting agreement that the firm has not yet determined to be enforceable. |
26 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 27 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
28 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Significant Unobservable Inputs
Level 3 Derivative Product Type |
Net Level 3 Assets/(Liabilities) as of March 2013 (in millions) |
Significant Unobservable Inputs of Derivative Pricing Models |
Range of Significant Unobservable Inputs (Average / Median) 1 as of March 2013 | |||
Interest rates |
$(305) |
Correlation 2
Volatility |
22% to 84% (64% / 65%)
37 basis points per annum (bpa) to 59 bpa (48 bpa / 47 bpa)
| |||
Credit |
$5,882 |
Correlation 2
Credit spreads
Recovery rates |
5% to 96% (52% / 50%)
3 bps to 6,149 bps (319 bps / 136 bps) 3
20% to 88% (53% / 50%)
| |||
Currencies |
$(289) |
Correlation 2
|
65% to 84% (75% / 77%) | |||
Commodities |
$(27) |
Volatility
Spread per million British Thermal units (MMBTU) of natural gas
Price per megawatt hour of power
Price per barrel of oil
|
9% to 56% (23% / 23%)
$(0.71) to $3.80 ($(0.02) / $(0.01))
$17.26 to $60.18 ($36.21 / $35.82)
$88.68 to $103.73 ($94.06 / $94.31) | |||
Equities |
$(1,135) |
Correlation 2
Volatility
|
29% to 98% (55% / 53%)
9% to 67% (27% / 25%) |
1. | Averages represent the arithmetic average of the inputs and are not weighted by the relative fair value or notional of the respective financial instruments. An average greater than the median indicates that the majority of inputs are below the average. |
2. | The range of unobservable inputs for correlation across derivative product types (i.e., cross-asset correlation) was (58)% to 82% (Average: 24% / Median: 33%) as of March 2013. |
3. | The difference between the average and the median for the credit spreads input indicates that the majority of the inputs fall in the lower end of the range. |
Goldman Sachs March 2013 Form 10-Q | 29 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Derivative Product Type |
Net Level 3 Assets/(Liabilities) as of December 2012 (in millions) |
Significant Unobservable Inputs of Derivative Pricing Models |
Range of Significant Unobservable Inputs (Average / Median) 1 as of December 2012 | |||
Interest rates |
$(355) |
Correlation 2
Volatility
|
22% to 97% (67% / 68%)
37 bpa to 59 bpa (48 bpa / 47 bpa) | |||
Credit |
$6,228 |
Correlation 2
Credit spreads
Recovery rates
|
5% to 95% (50% / 50%)
9 bps to 2,341 bps (225 bps / 140 bps) 3
15% to 85% (54% / 53%) | |||
Currencies |
$35 |
Correlation 2
|
65% to 87% (76% / 79%) | |||
Commodities |
$(304) |
Volatility
Spread per MMBTU of natural gas
Price per megawatt hour of power
Price per barrel of oil
|
13% to 53% (30% / 29%)
$(0.61) to $6.07 ($0.02 / $0.00)
$17.30 to $57.39 ($33.17 / $32.80)
$86.64 to $98.43 ($92.76 / $93.62) | |||
Equities |
$(1,248) |
Correlation 2
Volatility
|
48% to 98% (68% / 67%)
15% to 73% (31% / 30%) |
1. | Averages represent the arithmetic average of the inputs and are not weighted by the relative fair value or notional of the respective financial instruments. An average greater than the median indicates that the majority of inputs are below the average. |
2. | The range of unobservable inputs for correlation across derivative product types (i.e., cross-asset correlation) was (51)% to 66% (Average: 30% / Median: 35%) as of December 2012. |
3. | The difference between the average and the median for the credit spreads input indicates that the majority of the inputs fall in the lower end of the range. |
30 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 31 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Fair Value of Derivatives by Level
Derivative Assets at Fair Value as of March 2013 | ||||||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | |
Cross-Level Netting |
|
Total | |||||||||||||
Interest rates |
$ 26 | $ 538,655 | $ 166 | $ | $ 538,847 | |||||||||||||||
Credit |
| 71,039 | 10,630 | | 81,669 | |||||||||||||||
Currencies |
| 68,953 | 618 | | 69,571 | |||||||||||||||
Commodities |
| 21,765 | 481 | | 22,246 | |||||||||||||||
Equities |
28 | 51,062 | 582 | | 51,672 | |||||||||||||||
Gross fair value of derivative assets |
54 | 751,474 | 12,477 | | 764,005 | |||||||||||||||
Counterparty netting 1 |
| (601,944 | ) | (3,193 | ) | (1,959 | ) 3 | (607,096 | ) | |||||||||||
Subtotal |
$ 54 | $ 149,530 | $ 9,284 | $(1,959 | ) | $ 156,909 | ||||||||||||||
Cash collateral 2 |
(88,869 | ) | ||||||||||||||||||
Fair value included in financial instruments owned |
$ 68,040 | |||||||||||||||||||
Derivative Liabilities at Fair Value as of March 2013 | ||||||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 |
|
Cross-Level Netting |
|
Total | |||||||||||||
Interest rates |
$ 29 | $ 482,113 | $ 471 | $ | $ 482,613 | |||||||||||||||
Credit |
| 67,747 | 4,748 | | 72,495 | |||||||||||||||
Currencies |
| 61,329 | 907 | | 62,236 | |||||||||||||||
Commodities |
| 21,244 | 508 | | 21,752 | |||||||||||||||
Equities |
119 | 46,246 | 1,717 | | 48,082 | |||||||||||||||
Gross fair value of derivative liabilities |
148 | 678,679 | 8,351 | | 687,178 | |||||||||||||||
Counterparty netting 1 |
| (601,944 | ) | (3,193 | ) | (1,959 | ) 3 | (607,096 | ) | |||||||||||
Subtotal |
$148 | $ 76,735 | $ 5,158 | $(1,959 | ) | $ 80,082 | ||||||||||||||
Cash collateral 2 |
(27,735 | ) | ||||||||||||||||||
Fair value included in financial instruments sold, |
$ 52,347 |
1. | Represents the netting of receivable balances with payable balances for the same counterparty under enforceable netting agreements. |
2. | Represents the netting of cash collateral received and posted on a counterparty basis under enforceable credit support agreements. |
3. | Represents the netting of receivable balances with payable balances for the same counterparty across levels of the fair value hierarchy under enforceable netting agreements. |
32 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Derivative Assets at Fair Value as of December 2012 | ||||||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | |
Cross-Level Netting |
|
Total | |||||||||||||
Interest rates |
$13 | $ 608,151 | $ 192 | $ | $ 608,356 | |||||||||||||||
Credit |
| 74,907 | 10,909 | | 85,816 | |||||||||||||||
Currencies |
| 71,157 | 992 | | 72,149 | |||||||||||||||
Commodities |
| 22,697 | 623 | | 23,320 | |||||||||||||||
Equities |
43 | 48,698 | 742 | | 49,483 | |||||||||||||||
Gross fair value of derivative assets |
56 | 825,610 | 13,458 | | 839,124 | |||||||||||||||
Counterparty netting 1 |
| (662,798 | ) | (3,538 | ) | (2,124 | ) 3 | (668,460 | ) | |||||||||||
Subtotal |
$56 | $ 162,812 | $ 9,920 | $(2,124 | ) | $ 170,664 | ||||||||||||||
Cash collateral 2 |
(99,488 | ) | ||||||||||||||||||
Fair value included in financial instruments owned |
$ 71,176 | |||||||||||||||||||
Derivative Liabilities at Fair Value as of December 2012 | ||||||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 |
|
Cross-Level Netting |
|
Total | |||||||||||||
Interest rates |
$14 | $ 545,110 | $ 547 | $ | $ 545,671 | |||||||||||||||
Credit |
| 70,246 | 4,681 | | 74,927 | |||||||||||||||
Currencies |
| 59,937 | 957 | | 60,894 | |||||||||||||||
Commodities |
| 23,423 | 927 | | 24,350 | |||||||||||||||
Equities |
50 | 41,641 | 1,990 | | 43,681 | |||||||||||||||
Gross fair value of derivative liabilities |
64 | 740,357 | 9,102 | | 749,523 | |||||||||||||||
Counterparty netting 1 |
| (662,798 | ) | (3,538 | ) | (2,124 | ) 3 | (668,460 | ) | |||||||||||
Subtotal |
$64 | $ 77,559 | $ 5,564 | $(2,124 | ) | $ 81,063 | ||||||||||||||
Cash collateral 2 |
(30,636 | ) | ||||||||||||||||||
Fair value included in financial instruments sold, |
$ 50,427 |
1. | Represents the netting of receivable balances with payable balances for the same counterparty under enforceable netting agreements. |
2. | Represents the netting of cash collateral received and posted on a counterparty basis under enforceable credit support agreements. |
3. | Represents the netting of receivable balances with payable balances for the same counterparty across levels of the fair value hierarchy under enforceable netting agreements. |
Goldman Sachs March 2013 Form 10-Q | 33 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Rollforward
Level 3 Derivative Assets and Liabilities at Fair Value for the Three Months Ended March 2013 | ||||||||||||||||||||||||||||||||||||
in millions | |
Asset/ (liability) |
|
|
Net realized |
|
|
Net unrealized gains/(losses) relating to instruments still held at period-end |
|
Purchases | Sales | Settlements |
|
Transfers into level 3 |
|
|
Transfers out of level 3 |
|
|
Asset/ (liability) balance, period |
| |||||||||||||||
Interest rates net |
$ (355 | ) | $ (6 | ) | $ 30 | $ 5 | $ | $ 51 | $ (14 | ) | $ (16 | ) | $ (305 | ) | ||||||||||||||||||||||
Credit net |
6,228 | (3 | ) | 18 | 75 | (46 | ) | (527 | ) | 230 | (93 | ) | 5,882 | |||||||||||||||||||||||
Currencies net |
35 | (8 | ) | (329 | ) | 2 | (3 | ) | 26 | 40 | (52 | ) | (289 | ) | ||||||||||||||||||||||
Commodities net |
(304 | ) | 22 | 167 | 38 | (21 | ) | (22 | ) | 19 | 74 | (27 | ) | |||||||||||||||||||||||
Equities net |
(1,248 | ) | (32 | ) | (170 | ) | 39 | (488 | ) | 141 | (51 | ) | 674 | (1,135 | ) | |||||||||||||||||||||
Total derivatives net |
$ 4,356 | $(27 | ) 1 | $(284 | ) 1, 2 | $159 | $(558 | ) | $(331 | ) | $224 | $587 | $ 4,126 |
1. | The aggregate amounts include approximately $(193) million and $(118) million reported in Market making and Other principal transactions, respectively. |
2. | Principally resulted from changes in level 2 inputs. |
34 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Derivative Assets and Liabilities at Fair Value for the Three Months Ended March 2012 | ||||||||||||||||||||||||||||||||||||
in millions | |
Asset/ (liability) |
|
|
Net realized |
|
|
Net unrealized gains/(losses) relating to instruments still held at period-end |
|
Purchases | Sales | Settlements |
|
Transfers into level 3 |
|
|
Transfers out of level 3 |
|
|
Asset/ (liability) balance, period |
| |||||||||||||||
Interest rates net |
$ (371 | ) | $(63 | ) | $ 32 | $ 3 | $ (1 | ) | $ 164 | $ 8 | $ (12 | ) | $ (240 | ) | ||||||||||||||||||||||
Credit net |
6,300 | 10 | (308 | ) | 75 | (73 | ) | (553 | ) | 1,332 | (281 | ) | 6,502 | |||||||||||||||||||||||
Currencies net |
842 | (6 | ) | (266 | ) | 1 | (7 | ) | (234 | ) | 2 | 58 | 390 | |||||||||||||||||||||||
Commodities net |
(605 | ) | 40 | 206 | 99 | (99 | ) | 41 | 100 | 119 | (99 | ) | ||||||||||||||||||||||||
Equities net |
(432 | ) | (25 | ) | (277 | ) | 73 | (100 | ) | 306 | 15 | (80 | ) | (520 | ) | |||||||||||||||||||||
Total derivatives net |
$5,734 | $(44 | ) 1 | $(613 | ) 1, 2 | $251 | $(280 | ) | $(276 | ) | $1,457 | $(196 | ) | $6,033 |
1. | The aggregate amounts include approximately $(444) million and $(213) million reported in Market making and Other principal transactions, respectively. |
2. | Principally resulted from changes in level 2 inputs. |
Goldman Sachs March 2013 Form 10-Q | 35 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
OTC Derivatives
in millions | OTC Derivatives as of March 2013 | |||||||||||||||
Assets Product Type |
|
0 - 12 Months |
|
|
1 - 5 Years |
|
|
5 Years or Greater |
|
Total | ||||||
Interest rates |
$ 8,817 | $27,020 | $72,111 | $107,948 | ||||||||||||
Credit |
2,025 | 11,105 | 7,804 | 20,934 | ||||||||||||
Currencies |
11,086 | 7,780 | 8,561 | 27,427 | ||||||||||||
Commodities |
4,037 | 3,666 | 398 | 8,101 | ||||||||||||
Equities |
5,326 | 7,626 | 6,235 | 19,187 | ||||||||||||
Netting across product types 1 |
(2,279 | ) | (5,857 | ) | (4,380 | ) | (12,516 | ) | ||||||||
Subtotal |
$29,012 | $51,340 | $90,729 | $171,081 | ||||||||||||
Cross maturity netting 2 |
(18,627 | ) | ||||||||||||||
Cash collateral 3 |
(88,869 | ) | ||||||||||||||
Total |
$ 63,585 | |||||||||||||||
Liabilities Product Type |
|
0 - 12 Months |
|
|
1 - 5 Years |
|
|
5 Years or Greater |
|
Total | ||||||
Interest rates |
$ 4,126 | $17,437 | $30,165 | $ 51,728 | ||||||||||||
Credit |
764 | 7,645 | 3,352 | 11,761 | ||||||||||||
Currencies |
9,732 | 5,161 | 5,176 | 20,069 | ||||||||||||
Commodities |
3,815 | 2,597 | 2,046 | 8,458 | ||||||||||||
Equities |
6,189 | 5,487 | 3,952 | 15,628 | ||||||||||||
Netting across product types 1 |
(2,279 | ) | (5,857 | ) | (4,380 | ) | (12,516 | ) | ||||||||
Subtotal |
$22,347 | $32,470 | $40,311 | $ 95,128 | ||||||||||||
Cross maturity netting 2 |
(18,627 | ) | ||||||||||||||
Cash collateral 3 |
(27,735 | ) | ||||||||||||||
Total |
$ 48,766 |
1. | Represents the netting of receivable balances with payable balances for the same counterparty across product types within a tenor category under enforceable netting agreements. Receivable and payable balances with the same counterparty in the same product type and tenor category are netted within such product type and tenor category. |
2. | Represents the netting of receivable balances with payable balances for the same counterparty across tenor categories under enforceable netting agreements. |
3. | Represents the netting of cash collateral received and posted on a counterparty basis under enforceable credit support agreements. |
36 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
in millions | OTC Derivatives as of December 2012 | |||||||||||||||
Assets Product Type |
|
0 - 12 Months |
|
|
1 - 5 Years |
|
|
5 Years or Greater |
|
Total | ||||||
Interest rates |
$10,318 | $28,445 | $ 80,449 | $119,212 | ||||||||||||
Credit |
2,190 | 12,244 | 7,970 | 22,404 | ||||||||||||
Currencies |
11,100 | 8,379 | 11,044 | 30,523 | ||||||||||||
Commodities |
3,840 | 3,862 | 304 | 8,006 | ||||||||||||
Equities |
3,757 | 7,730 | 6,957 | 18,444 | ||||||||||||
Netting across product types 1 |
(2,811 | ) | (5,831 | ) | (5,082 | ) | (13,724 | ) | ||||||||
Subtotal |
$28,394 | $54,829 | $101,642 | $184,865 | ||||||||||||
Cross maturity netting 2 |
(17,973 | ) | ||||||||||||||
Cash collateral 3 |
(99,488 | ) | ||||||||||||||
Total |
$ 67,404 | |||||||||||||||
Liabilities Product Type |
|
0 - 12 Months |
|
|
1 - 5 Years |
|
|
5 Years or Greater |
|
Total | ||||||
Interest rates |
$ 6,266 | $17,860 | $ 32,422 | $ 56,548 | ||||||||||||
Credit |
809 | 7,537 | 3,168 | 11,514 | ||||||||||||
Currencies |
8,586 | 4,849 | 5,782 | 19,217 | ||||||||||||
Commodities |
3,970 | 3,119 | 2,267 | 9,356 | ||||||||||||
Equities |
3,775 | 5,476 | 3,937 | 13,188 | ||||||||||||
Netting across product types 1 |
(2,811 | ) | (5,831 | ) | (5,082 | ) | (13,724 | ) | ||||||||
Subtotal |
$20,595 | $33,010 | $ 42,494 | $ 96,099 | ||||||||||||
Cross maturity netting 2 |
(17,973 | ) | ||||||||||||||
Cash collateral 3 |
(30,636 | ) | ||||||||||||||
Total |
$ 47,490 |
1. | Represents the netting of receivable balances with payable balances for the same counterparty across product types within a tenor category under enforceable netting agreements. Receivable and payable balances with the same counterparty in the same product type and tenor category are netted within such product type and tenor category. |
2. | Represents the netting of receivable balances with payable balances for the same counterparty across tenor categories under enforceable netting agreements. |
3. | Represents the netting of cash collateral received and posted on a counterparty basis under enforceable credit support agreements. |
Goldman Sachs March 2013 Form 10-Q | 37 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
38 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Maximum Payout/Notional Amount of Written Credit Derivatives by Tenor |
Maximum Payout/Notional Amount of Purchased Credit Derivatives |
Fair Value of Written Credit Derivatives |
||||||||||||||||||||||||||||||||||||||
$ in millions |
|
0 - 12 Months |
|
|
1 - 5 Years |
|
|
5 Years or Greater |
|
Total | |
Offsetting Purchased Credit Derivatives |
1 |
|
Other Purchased Credit Derivatives |
2 |
Asset | Liability |
|
Net Asset/ (Liability) |
| |||||||||||||||||||
As of March 2013 |
||||||||||||||||||||||||||||||||||||||||
Credit spread on underlying (basis points) |
||||||||||||||||||||||||||||||||||||||||
0-250 |
$364,116 | $ 990,658 | $118,650 | $1,473,424 | $1,353,367 | $203,517 | $29,211 | $ 7,923 | $21,288 | |||||||||||||||||||||||||||||||
251-500 |
12,780 | 143,576 | 37,314 | 193,670 | 174,983 | 19,548 | 4,290 | 8,350 | (4,060 | ) | ||||||||||||||||||||||||||||||
501-1,000 |
5,061 | 42,215 | 5,520 | 52,796 | 50,663 | 5,137 | 440 | 3,326 | (2,886 | ) | ||||||||||||||||||||||||||||||
Greater than 1,000 |
10,214 | 40,936 | 2,936 | 54,086 | 47,216 | 8,291 | 520 | 20,588 | (20,068 | ) | ||||||||||||||||||||||||||||||
Total |
$392,171 | $1,217,385 | $164,420 | $1,773,976 | $1,626,229 | $236,493 | $34,461 | $40,187 | $ (5,726 | ) | ||||||||||||||||||||||||||||||
As of December 2012 |
||||||||||||||||||||||||||||||||||||||||
Credit spread on underlying (basis points) |
||||||||||||||||||||||||||||||||||||||||
0-250 |
$360,289 | $ 989,941 | $103,481 | $1,453,711 | $1,343,561 | $201,459 | $28,817 | $ 8,249 | $20,568 | |||||||||||||||||||||||||||||||
251-500 |
13,876 | 126,659 | 35,086 | 175,621 | 157,371 | 19,063 | 4,284 | 7,848 | (3,564 | ) | ||||||||||||||||||||||||||||||
501-1,000 |
9,209 | 52,012 | 5,619 | 66,840 | 60,456 | 8,799 | 769 | 4,499 | (3,730 | ) | ||||||||||||||||||||||||||||||
Greater than 1,000 |
11,453 | 49,721 | 3,622 | 64,796 | 57,774 | 10,812 | 568 | 21,970 | (21,402 | ) | ||||||||||||||||||||||||||||||
Total |
$394,827 | $1,218,333 | $147,808 | $1,760,968 | $1,619,162 | $240,133 | $34,438 | $42,566 | $ (8,128 | ) |
1. | Offsetting purchased credit derivatives represent the notional amount of purchased credit derivatives to the extent they economically hedge written credit derivatives with identical underlyings. |
2. | This purchased protection represents the notional amount of purchased credit derivatives in excess of the notional amount included in Offsetting Purchased Credit Derivatives. |
Hedge Accounting
Goldman Sachs March 2013 Form 10-Q | 39 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
40 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 8. Fair Value Option
Fair Value Option
Other Financial Assets and Financial Liabilities at Fair Value |
Goldman Sachs March 2013 Form 10-Q | 41 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
42 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 43 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Fair Value of Other Financial Assets and Financial Liabilities by Level |
Other Financial Assets at Fair Value as of March 2013 | ||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Securities segregated for regulatory and other purposes 1 |
$17,670 | $ 5,006 | $ | $ 22,676 | ||||||||||||
Securities purchased under agreements to resell |
| 158,179 | 104 | 158,283 | ||||||||||||
Securities borrowed |
| 54,879 | | 54,879 | ||||||||||||
Receivables from customers and counterparties |
| 6,521 | 633 | 7,154 | ||||||||||||
Other assets 2 |
4,377 | 8,506 | 565 | 3 | 13,448 | |||||||||||
Total |
$22,047 | $233,091 | $ 1,302 | $256,440 | ||||||||||||
Other Financial Liabilities at Fair Value as of March 2013 | ||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Deposits |
$ | $ 6,672 | $ 398 | $ 7,070 | ||||||||||||
Securities sold under agreements to repurchase |
| 153,579 | 1,777 | 155,356 | ||||||||||||
Securities loaned |
| 2,423 | | 2,423 | ||||||||||||
Other secured financings |
| 27,317 | 1,165 | 28,482 | ||||||||||||
Unsecured short-term borrowings |
| 15,563 | 2,735 | 18,298 | ||||||||||||
Unsecured long-term borrowings |
| 10,440 | 1,808 | 12,248 | ||||||||||||
Other liabilities and accrued expenses |
| 565 | 11,277 | 4 | 11,842 | |||||||||||
Total |
$ | $216,559 | $19,160 | $235,719 |
1. | Includes securities segregated for regulatory and other purposes accounted for at fair value under the fair value option, which consists of securities borrowed and resale agreements. The table above includes $17.67 billion of level 1 securities segregated for regulatory and other purposes accounted for at fair value under other U.S. GAAP, consisting of U.S. Treasury securities and money market instruments. |
2. | Consists of assets classified as held for sale related to the firms reinsurance business, primarily consisting of securities accounted for as available-for-sale and insurance separate account assets which are accounted for at fair value under other U.S. GAAP. |
3. | Substantially all of the balance consists of insurance contracts and derivatives classified as held for sale. See Insurance and Reinsurance Contracts above and Note 7 for further information about valuation techniques and inputs related to insurance contracts and derivatives, respectively. |
4. | Includes $873 million of liabilities classified as held for sale related to the firms reinsurance business accounted for at fair value under the fair value option. |
44 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Other Financial Assets at Fair Value as of December 2012 | ||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Securities segregated for regulatory and other purposes 1 |
$21,549 | $ 8,935 | $ | $ 30,484 | ||||||||||||
Securities purchased under agreements to resell |
| 141,053 | 278 | 141,331 | ||||||||||||
Securities borrowed |
| 38,395 | | 38,395 | ||||||||||||
Receivables from customers and counterparties |
| 7,225 | 641 | 7,866 | ||||||||||||
Other assets 2 |
4,420 | 8,499 | 507 | 3 | 13,426 | |||||||||||
Total |
$25,969 | $204,107 | $ 1,426 | $231,502 | ||||||||||||
Other Financial Liabilities at Fair Value as of December 2012 | ||||||||||||||||
in millions | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Deposits |
$ | $ 4,741 | $ 359 | $ 5,100 | ||||||||||||
Securities sold under agreements to repurchase |
| 169,880 | 1,927 | 171,807 | ||||||||||||
Securities loaned |
| 1,558 | | 1,558 | ||||||||||||
Other secured financings |
| 28,925 | 1,412 | 30,337 | ||||||||||||
Unsecured short-term borrowings |
| 15,011 | 2,584 | 17,595 | ||||||||||||
Unsecured long-term borrowings |
| 10,676 | 1,917 | 12,593 | ||||||||||||
Other liabilities and accrued expenses |
| 769 | 11,274 | 4 | 12,043 | |||||||||||
Total |
$ | $231,560 | $19,473 | $251,033 |
1. | Includes securities segregated for regulatory and other purposes accounted for at fair value under the fair value option, which consists of securities borrowed and resale agreements. The table above includes $21.55 billion of level 1 securities segregated for regulatory and other purposes accounted for at fair value under other U.S. GAAP, consisting of U.S. Treasury securities and money market instruments. |
2. | Consists of assets classified as held for sale related to the firms reinsurance business, primarily consisting of securities accounted for as available-for-sale and insurance separate account assets which are accounted for at fair value under other U.S. GAAP. |
3. | Consists of insurance contracts and derivatives classified as held for sale. See Insurance and Reinsurance Contracts above and Note 7 for further information about valuation techniques and inputs related to insurance contracts and derivatives, respectively. |
4. | Includes $692 million of liabilities classified as held for sale related to the firms reinsurance business accounted for at fair value under the fair value option. |
Goldman Sachs March 2013 Form 10-Q | 45 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Other Financial Assets at Fair Value for the Three Months Ended March 2013 | ||||||||||||||||||||||||||||||||||||||||
in millions | |
Balance, beginning of period |
|
|
Net realized gains/ (losses) |
|
|
Net unrealized gains/(losses) relating to instruments still held at period-end |
|
Purchases | Sales | Issuances | Settlements | |
Transfers into |
|
|
Transfers out of level 3 |
|
|
Balance, end of period |
| ||||||||||||||||||
Securities purchased under agreements to resell |
$ 278 | $ 1 | $ | $ | $ | $ | $ (16 | ) | $ | $(159 | ) | $ 104 | ||||||||||||||||||||||||||||
Receivables from customers and counterparties |
641 | | (8 | ) | | | | | | | 633 | |||||||||||||||||||||||||||||
Other assets |
507 | | 4 | 7 | | | | 47 | | 565 | ||||||||||||||||||||||||||||||
Total |
$ 1,426 | $ 1 | 1 | $ (4 | ) 1 | $ 7 | $ | $ | $ (16 | ) | $ 47 | $(159 | ) | $ 1,302 | ||||||||||||||||||||||||||
1. The aggregate amounts include gains/(losses) of approximately $(4) million and $1 million reported in Market making and Interest income, respectively. |
| |||||||||||||||||||||||||||||||||||||||
Level 3 Other Financial Liabilities at Fair Value for the Three Months Ended March 2013 | ||||||||||||||||||||||||||||||||||||||||
in millions | |
Balance, beginning of period |
|
|
Net realized (gains)/ losses |
|
|
Net unrealized (gains)/losses relating to instruments still held at period-end |
|
Purchases | Sales | Issuances | Settlements | |
Transfers into |
|
|
Transfers out of level 3 |
|
|
Balance, end of period |
| ||||||||||||||||||
Deposits |
$ 359 | $ | $ 4 | $ | $ | $ 36 | $ (1 | ) | $ | $ | $ 398 | |||||||||||||||||||||||||||||
Securities sold under agreements to repurchase, at fair value |
1,927 | | | | | | (150 | ) | | | 1,777 | |||||||||||||||||||||||||||||
Other secured financings |
1,412 | 1 | (19 | ) | | | 394 | (750 | ) | 127 | | 1,165 | ||||||||||||||||||||||||||||
Unsecured short-term borrowings |
2,584 | 3 | (11 | ) | | | 453 | (491 | ) | 290 | (93 | ) | 2,735 | |||||||||||||||||||||||||||
Unsecured long-term borrowings |
1,917 | 9 | (42 | ) | (3 | ) | | 175 | (214 | ) | 59 | (93 | ) | 1,808 | ||||||||||||||||||||||||||
Other liabilities and accrued expenses |
11,274 | (13 | ) | (191 | ) | 304 | | | (97 | ) | | | 11,277 | |||||||||||||||||||||||||||
Total |
$19,473 | $ | 1 | $(259 | ) 1 | $301 | $ | $1,058 | $(1,703 | ) | $476 | $(186 | ) | $19,160 |
1. | The aggregate amounts include gains/(losses) of approximately $337 million, $(77) million and $(1) million reported in Market making, Other principal transactions and Interest expense, respectively. |
46 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Other Financial Assets at Fair Value for the Three Months Ended March 2012 | ||||||||||||||||||||||||||||||||||||||||
in millions | |
Balance, beginning of period |
|
|
Net realized gains/ (losses) |
|
|
Net unrealized gains/(losses) relating to instruments still held at period-end |
|
Purchases | Sales | Issuances | Settlements | |
Transfers into |
|
|
Transfers out of level 3 |
|
|
Balance, end of period |
| ||||||||||||||||||
Securities purchased under |
$ 557 | $ 1 | $ 30 | $535 | $ | $ | $(167 | ) | $ | $ | $ 956 | |||||||||||||||||||||||||||||
Receivables from customers and counterparties |
795 | | 9 | | | | | | (373 | ) | 431 | |||||||||||||||||||||||||||||
Total |
$ 1,352 | $ 1 | 1 | $ 39 | 1 | $535 | $ | $ | $(167 | ) | $ | $(373 | ) | $ 1,387 | ||||||||||||||||||||||||||
1. The aggregate amounts include gains of approximately $37 million and $3 million reported in Market making and Interest income, respectively. |
| |||||||||||||||||||||||||||||||||||||||
Level 3 Other Financial Liabilities at Fair Value for the Three Months Ended March 2012 | ||||||||||||||||||||||||||||||||||||||||
in millions | |
Balance, beginning of period |
|
|
Net realized (gains)/ losses |
|
|
Net unrealized (gains)/losses relating to instruments still held at period-end |
|
Purchases | Sales | Issuances | Settlements | |
Transfers into |
|
|
Transfers out of level 3 |
|
|
Balance, end of period |
| ||||||||||||||||||
Deposits |
$ 13 | $ | $ (6 | ) | $ | $ | $ 89 | $ | $ | $ | $ 96 | |||||||||||||||||||||||||||||
Securities sold under agreements to repurchase, at fair value |
2,181 | | | | | | (133 | ) | | | 2,048 | |||||||||||||||||||||||||||||
Other secured financings |
1,752 | 1 | (1 | ) | | | 24 | (465 | ) | 14 | (43 | ) | 1,282 | |||||||||||||||||||||||||||
Unsecured short-term borrowings |
3,294 | (16 | ) | 152 | (13 | ) | | 129 | (118 | ) | 167 | (220 | ) | 3,375 | ||||||||||||||||||||||||||
Unsecured long-term borrowings |
2,191 | 11 | 176 | | | 155 | (116 | ) | 134 | (241 | ) | 2,310 | ||||||||||||||||||||||||||||
Other liabilities and accrued expenses |
8,996 | 4 | 50 | | | | (85 | ) | | | 8,965 | |||||||||||||||||||||||||||||
Total |
$18,427 | $ | 1 | $371 | 1 | $ (13 | ) | $ | $397 | $(917 | ) | $315 | $(504 | ) | $18,076 |
1. | The aggregate amounts include losses of approximately $355 million, $15 million and $1 million reported in Market making, Other principal transactions and Interest expense, respectively. |
Goldman Sachs March 2013 Form 10-Q | 47 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Gains and Losses on Financial Assets and Financial Liabilities Accounted for at Fair Value Under the Fair Value Option |
Gains/(Losses) on Financial Assets Under the Fair Value Option |
||||||||
Three Months Ended March | ||||||||
in millions | 2013 | 2012 | ||||||
Receivables from customers and counterparties 1 |
$ (12 | ) | $ 44 | |||||
Other secured financings |
(110 | ) | (148 | ) | ||||
Unsecured short-term borrowings 2 |
(148 | ) | (895 | ) | ||||
Unsecured long-term borrowings 3 |
198 | (599 | ) | |||||
Other liabilities and accrued expenses 4 |
192 | (61 | ) | |||||
Other 5 |
(15 | ) | (12 | ) | ||||
Total |
$ 105 | $(1,671 | ) |
1. | Primarily consists of gains/(losses) on certain reinsurance contracts and certain transfers accounted for as receivables rather than purchases. |
2. | Includes losses on the embedded derivative component of hybrid financial instruments of $130 million and $853 million for the three months ended March 2013 and March 2012, respectively. |
3. | Includes gains/(losses) on the embedded derivative component of hybrid financial instruments of $284 million and $(368) million for the three months ended March 2013 and March 2012, respectively. |
4. | Primarily consists of gains/(losses) on certain insurance contracts. |
5. | Primarily consists of gains/(losses) on resale and repurchase agreements, securities borrowed and loaned and deposits. |
48 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 49 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 9. Collateralized Agreements and Financings
Collateralized Agreements and Financings |
50 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Securities Borrowed and Loaned Transactions
Goldman Sachs March 2013 Form 10-Q | 51 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Offsetting Arrangements
As of March 2013 | ||||||||||||||||||
Assets | Liabilities | |||||||||||||||||
in millions |
|
Securities purchased under agreements to resell |
|
|
Securities borrowed |
|
|
Securities sold under agreements to repurchase |
|
|
Securities loaned |
| ||||||
Amounts included in the condensed consolidated statements of financial condition |
||||||||||||||||||
Gross carrying value |
$ 202,217 | $ 182,905 | $ 194,714 | $ 30,894 | ||||||||||||||
Counterparty netting |
(39,162 | ) | (10,225 | ) | (39,162 | ) | (10,225 | ) | ||||||||||
Total |
163,055 | 1, 2 | 172,680 | 1 | 155,552 | 2 | 20,669 | |||||||||||
Amounts that have not been offset in the condensed consolidated statements of financial condition |
||||||||||||||||||
Counterparty netting |
(15,014 | ) | (4,797 | ) | (15,014 | ) | (4,797 | ) | ||||||||||
Collateral |
(134,711 | ) | (143,812 | ) | (105,163 | ) | (14,077 | ) | ||||||||||
Total |
$ 13,330 | $ 24,071 | $ 35,375 | $ 1,795 | ||||||||||||||
As of December 2012 | ||||||||||||||||||
Assets | Liabilities | |||||||||||||||||
in millions |
|
Securities purchased under agreements to resell |
|
|
Securities borrowed |
|
|
Securities sold under agreements to repurchase |
|
|
Securities loaned |
| ||||||
Amounts included in the condensed consolidated statements of financial condition |
||||||||||||||||||
Gross carrying value |
$ 175,656 | $ 151,162 | $ 201,688 | $ 23,509 | ||||||||||||||
Counterparty netting |
(29,766 | ) | (9,744 | ) | (29,766 | ) | (9,744 | ) | ||||||||||
Total |
145,890 | 1, 2 | 141,418 | 1 | 171,922 | 2 | 13,765 | |||||||||||
Amounts that have not been offset in the condensed consolidated statements of financial condition |
||||||||||||||||||
Counterparty netting |
(27,512 | ) | (2,583 | ) | (27,512 | ) | (2,583 | ) | ||||||||||
Collateral |
(104,344 | ) | (117,552 | ) | (106,638 | ) | (10,990 | ) | ||||||||||
Total |
$ 14,034 | $ 21,283 | $ 37,772 | $ 192 |
1. | As of March 2013 and December 2012, the firm had $4.37 billion and $4.41 billion, respectively, of securities received under resale agreements and $639 million and $4.53 billion, respectively, of securities borrowed transactions that were segregated to satisfy certain regulatory requirements. These securities are included in Cash and securities segregated for regulatory and other purposes. |
2. | As of March 2013 and December 2012, the firm classified $183 million and $148 million, respectively, of resale agreements and $196 million and $115 million, respectively, of repurchase agreements as held for sale. See Note 12 for further information. |
52 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Other Secured Financings
Goldman Sachs March 2013 Form 10-Q | 53 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
As of March 2013 | As of December 2012 | |||||||||||||||||||||||||
$ in millions | |
U.S. Dollar |
|
|
Non-U.S. Dollar |
|
Total | |
U.S. Dollar |
|
|
Non-U.S. Dollar |
|
Total | ||||||||||||
Other secured financings (short-term): |
||||||||||||||||||||||||||
At fair value |
$15,109 | $5,362 | $20,471 | $16,504 | $6,181 | $22,685 | ||||||||||||||||||||
At amortized cost |
26 | | 26 | 34 | 326 | 360 | ||||||||||||||||||||
Interest rates 1 |
6.37 | % | | % | 6.18 | % | 0.10 | % | ||||||||||||||||||
Other secured financings (long-term): |
||||||||||||||||||||||||||
At fair value |
6,134 | 1,877 | 8,011 | 6,134 | 1,518 | 7,652 | ||||||||||||||||||||
At amortized cost |
247 | 713 | 960 | 577 | 736 | 1,313 | ||||||||||||||||||||
Interest rates 1 |
4.67 | % | 2.54 | % | 3.38 | % | 2.55 | % | ||||||||||||||||||
Total 2 |
$21,516 | $7,952 | $29,468 | $23,249 | $8,761 | $32,010 | ||||||||||||||||||||
Amount of other secured financings collateralized by: |
||||||||||||||||||||||||||
Financial instruments 3 |
$21,307 | $7,517 | $28,824 | $22,323 | $8,442 | $30,765 | ||||||||||||||||||||
Other assets 4 |
209 | 435 | 644 | 926 | 319 | 1,245 |
1. | The weighted average interest rates exclude secured financings at fair value and include the effect of hedging activities. See Note 7 for further information about hedging activities. |
2. | Includes $9.23 billion and $8.68 billion related to transfers of financial assets accounted for as financings rather than sales as of March 2013 and December 2012, respectively. Such financings were collateralized by financial assets included in Financial instruments owned, at fair value of $9.74 billion and $8.92 billion as of March 2013 and December 2012, respectively. |
3. | Includes $15.32 billion and $17.24 billion of other secured financings collateralized by financial instruments owned, at fair value as of March 2013 and December 2012, respectively, and includes $13.50 billion and $13.53 billion of other secured financings collateralized by financial instruments received as collateral and repledged as of March 2013 and December 2012, respectively. |
4. | Primarily real estate and cash. |
54 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Collateral Received and Pledged
Goldman Sachs March 2013 Form 10-Q | 55 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 10. Securitization Activities
Securitization Activities
56 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
As of March 2013 | As of December 2012 | |||||||||||||||||||||||||
in millions | |
Outstanding Principal Amount |
|
|
Fair Value of Retained Interests |
|
|
Fair Value of Purchased Interests |
|
|
Outstanding Principal Amount |
|
|
Fair Value of Retained Interests |
|
|
Fair Value of Purchased |
| ||||||||
U.S. government agency-issued collateralized mortgage obligations 1 |
$58,541 | $4,761 | $ | $57,685 | $4,654 | $ | ||||||||||||||||||||
Other residential mortgage-backed 2 |
3,465 | 104 | | 3,656 | 106 | | ||||||||||||||||||||
Other commercial mortgage-backed 3 |
2,874 | 214 | 82 | 1,253 | 1 | 56 | ||||||||||||||||||||
CDOs, CLOs and other 4 |
8,592 | 72 | 331 | 8,866 | 51 | 331 | ||||||||||||||||||||
Total 5 |
$73,472 | $5,151 | $413 | $71,460 | $4,812 | $387 |
1. | Outstanding principal amount and fair value of retained interests primarily relate to securitizations during 2013, 2012 and 2011 as of March 2013, and securitizations during 2012 and 2011 as of December 2012. |
2. | Outstanding principal amount and fair value of retained interests as of both March 2013 and December 2012 primarily relate to prime and Alt-A securitizations during 2007 and 2006. |
3. | Outstanding principal amount as of both March 2013 and December 2012 primarily relate to securitizations during 2012 and 2007. Fair value of retained interests as of both March 2013 and December 2012 primarily relate to securitizations during 2012. |
4. | Outstanding principal amount and fair value of retained interests as of both March 2013 and December 2012 primarily relate to CDO and CLO securitizations during 2007 and 2006. |
5. | Outstanding principal amount includes $631 million and $835 million as of March 2013 and December 2012, respectively, related to securitization entities in which the firms only continuing involvement is retained servicing which is not a variable interest. |
Goldman Sachs March 2013 Form 10-Q | 57 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
As of March 2013 | As of December 2012 | |||||||||||||||||
Type of Retained Interests | Type of Retained Interests | |||||||||||||||||
$ in millions | Mortgage-Backed | Other | 1 | Mortgage-Backed | Other | 1 | ||||||||||||
Fair value of retained interests |
$5,079 | $ 72 | $4,761 | $ 51 | ||||||||||||||
Weighted average life (years) |
8.3 | 1.9 | 8.2 | 2.0 | ||||||||||||||
Constant prepayment rate 2 |
8.6 | % | N.M. | 10.9 | % | N.M. | ||||||||||||
Impact of 10% adverse change 2 |
$ (39 | ) | N.M. | $ (57 | ) | N.M. | ||||||||||||
Impact of 20% adverse change 2 |
(81 | ) | N.M. | (110 | ) | N.M. | ||||||||||||
Discount rate 3 |
3.8 | % | N.M. | 4.6 | % | N.M. | ||||||||||||
Impact of 10% adverse change |
$ (86 | ) | N.M. | $ (96 | ) | N.M. | ||||||||||||
Impact of 20% adverse change |
(168 | ) | N.M. | (180 | ) | N.M. |
1. | Due to the nature and current fair value of certain of these retained interests, the weighted average assumptions for constant prepayment and discount rates and the related sensitivity to adverse changes are not meaningful as of March 2013 and December 2012. The firms maximum exposure to adverse changes in the value of these interests is the carrying value of $72 million and $51 million as of March 2013 and December 2012, respectively. |
2. | Constant prepayment rate is included only for positions for which constant prepayment rate is a key assumption in the determination of fair value. |
3. | The majority of mortgage-backed retained interests are U.S. government agency-issued collateralized mortgage obligations, for which there is no anticipated credit loss. For the remainder of retained interests, the expected credit loss assumptions are reflected in the discount rate. |
58 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 11. Variable Interest Entities
Variable Interest Entities
Goldman Sachs March 2013 Form 10-Q | 59 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
60 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Nonconsolidated VIEs | ||||||||||||||||||||||||||||
As of March 2013 | ||||||||||||||||||||||||||||
in millions |
|
Mortgage- backed |
|
|
Corporate CDOs and CLOs |
|
|
Real estate, credit-related and other investing |
|
|
Other asset- backed |
|
|
Power- related |
|
|
Investment funds |
|
Total | |||||||||
Assets in VIE |
$86,199 | 2 | $21,037 | $6,900 | $3,373 | $110 | $1,840 | $119,459 | ||||||||||||||||||||
Carrying Value of the Firms Variable Interests |
||||||||||||||||||||||||||||
Assets |
7,027 | 1,107 | 1,695 | 280 | 49 | 4 | 10,162 | |||||||||||||||||||||
Liabilities |
| 9 | 1 | 37 | | | 47 | |||||||||||||||||||||
Maximum Exposure to Loss in Nonconsolidated VIEs |
||||||||||||||||||||||||||||
Retained interests |
5,079 | 71 | | 1 | | | 5,151 | |||||||||||||||||||||
Purchased interests |
1,596 | 576 | | 263 | | | 2,435 | |||||||||||||||||||||
Commitments and guarantees 1 |
| 1 | 414 | | 111 | 1 | 527 | |||||||||||||||||||||
Derivatives 1 |
1,487 | 5,666 | | 854 | | | 8,007 | |||||||||||||||||||||
Loans and investments |
38 | | 1,695 | | 49 | 4 | 1,786 | |||||||||||||||||||||
Total |
$ 8,200 | 2 | $ 6,314 | $2,109 | $1,118 | $160 | $ 5 | $ 17,906 | ||||||||||||||||||||
Nonconsolidated VIEs | ||||||||||||||||||||||||||||
As of December 2012 | ||||||||||||||||||||||||||||
in millions |
|
Mortgage- backed |
|
|
Corporate CDOs and CLOs |
|
|
Real estate, credit-related and other investing |
|
|
Other asset- backed |
|
|
Power- related |
|
|
Investment funds |
|
Total | |||||||||
Assets in VIE |
$79,171 | 2 | $23,842 | $9,244 | $3,510 | $147 | $1,898 | $117,812 | ||||||||||||||||||||
Carrying Value of the Firms Variable Interests |
||||||||||||||||||||||||||||
Assets |
6,269 | 1,193 | 1,801 | 220 | 32 | 4 | 9,519 | |||||||||||||||||||||
Liabilities |
| 12 | | 30 | | | 42 | |||||||||||||||||||||
Maximum Exposure to Loss in Nonconsolidated VIEs |
||||||||||||||||||||||||||||
Retained interests |
4,761 | 51 | | | | | 4,812 | |||||||||||||||||||||
Purchased interests |
1,162 | 659 | | 204 | | | 2,025 | |||||||||||||||||||||
Commitments and guarantees 1 |
| 1 | 438 | | | 1 | 440 | |||||||||||||||||||||
Derivatives 1 |
1,574 | 6,761 | | 952 | | | 9,287 | |||||||||||||||||||||
Loans and investments |
39 | | 1,801 | | 32 | 4 | 1,876 | |||||||||||||||||||||
Total |
$ 7,536 | 2 | $ 7,472 | $2,239 | $1,156 | $ 32 | $ 5 | $ 18,440 |
1. | The aggregate amounts include $3.08 billion and $3.25 billion as of March 2013 and December 2012, respectively, related to guarantees and derivative transactions with VIEs to which the firm transferred assets. |
2. | Assets in VIE and maximum exposure to loss include $4.48 billion and $1.80 billion, respectively, as of March 2013, and $3.57 billion and $1.72 billion, respectively, as of December 2012, related to CDOs backed by mortgage obligations. |
Goldman Sachs March 2013 Form 10-Q | 61 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Consolidated VIEs
Consolidated VIEs | ||||||||||||||||
As of March 2013 | ||||||||||||||||
in millions | |
Real estate, credit-related and other investing |
|
|
CDOs, mortgage- other asset- |
|
|
Principal- protected notes |
|
Total | ||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ 336 | $245 | $ 1 | $ 582 | ||||||||||||
Cash and securities segregated for regulatory and other purposes |
62 | | 92 | 154 | ||||||||||||
Receivables from brokers, dealers and clearing organizations |
49 | | | 49 | ||||||||||||
Financial instruments owned, at fair value |
2,188 | 494 | 348 | 3,030 | ||||||||||||
Other assets |
903 | | | 903 | ||||||||||||
Total |
$3,538 | $739 | $ 441 | $4,718 | ||||||||||||
Liabilities |
||||||||||||||||
Other secured financings |
$ 484 | $578 | $ 301 | $1,363 | ||||||||||||
Financial instruments sold, but not yet purchased, at fair value |
| 87 | | 87 | ||||||||||||
Unsecured short-term borrowings, including the current portion of |
| | 1,466 | 1,466 | ||||||||||||
Unsecured long-term borrowings |
4 | | 310 | 314 | ||||||||||||
Other liabilities and accrued expenses |
1,096 | | | 1,096 | ||||||||||||
Total |
$1,584 | $665 | $2,077 | $4,326 |
62 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Consolidated VIEs | ||||||||||||||||
As of December 2012 | ||||||||||||||||
in millions | |
Real estate, credit-related and other investing |
|
|
CDOs, mortgage-backed and other asset-backed |
|
|
Principal- protected notes |
|
Total | ||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ 236 | $107 | $ | $ 343 | ||||||||||||
Cash and securities segregated for regulatory and other purposes |
134 | | 92 | 226 | ||||||||||||
Receivables from brokers, dealers and clearing organizations |
5 | | | 5 | ||||||||||||
Financial instruments owned, at fair value |
2,958 | 763 | 124 | 3,845 | ||||||||||||
Other assets |
1,080 | | | 1,080 | ||||||||||||
Total |
$4,413 | $870 | $ 216 | $5,499 | ||||||||||||
Liabilities |
||||||||||||||||
Other secured financings |
$ 594 | $699 | $ 301 | $1,594 | ||||||||||||
Financial instruments sold, but not yet purchased, at fair value |
| 107 | | 107 | ||||||||||||
Unsecured short-term borrowings, including the current portion of |
| | 1,584 | 1,584 | ||||||||||||
Unsecured long-term borrowings |
4 | | 334 | 338 | ||||||||||||
Other liabilities and accrued expenses |
1,478 | | | 1,478 | ||||||||||||
Total |
$2,076 | $806 | $2,219 | $5,101 |
Goldman Sachs March 2013 Form 10-Q | 63 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 12. Other Assets
Other Assets
64 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 13. Goodwill and Identifiable Intangible Assets
Goodwill and Identifiable Intangible Assets |
Goldman Sachs March 2013 Form 10-Q | 65 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Identifiable Intangible Assets
As of | ||||||||||||
$ in millions |
|
March 2013 |
|
Weighted Average Remaining Lives (years) |
|
December 2012 |
| |||||
Customer lists |
Gross carrying amount | $ 1,099 | $ 1,099 | |||||||||
Accumulated amortization | (659 | ) | (643 | ) | ||||||||
Net carrying amount | 440 | 8 | 456 | |||||||||
Commodities-related intangibles 1 |
Gross carrying amount | 508 | 513 | |||||||||
Accumulated amortization | (242 | ) | (226 | ) | ||||||||
Net carrying amount | 266 | 10 | 287 | |||||||||
Television broadcast royalties 2 |
Gross carrying amount | | 560 | |||||||||
Accumulated amortization | | (186 | ) | |||||||||
Net carrying amount | | N/A 2 | 374 | |||||||||
Insurance-related intangibles 3 |
Gross carrying amount | 380 | 380 | |||||||||
Accumulated amortization | (228 | ) | (231 | ) | ||||||||
Net carrying amount | 152 | N/A 3 | 149 | |||||||||
Other 4 |
Gross carrying amount | 941 | 950 | |||||||||
Accumulated amortization | (818 | ) | (819 | ) | ||||||||
Net carrying amount | 123 | 12 | 131 | |||||||||
Total |
Gross carrying amount | 2,928 | 3,502 | |||||||||
Accumulated amortization | (1,947 | ) | (2,105 | ) | ||||||||
Net carrying amount | $ 981 | 9 | $ 1,397 |
1. | Primarily includes commodity-related customer contracts and relationships, permits and access rights. |
2. | These assets were sold in the first quarter of 2013 and total proceeds received approximated carrying value. |
3. | Related to the firms reinsurance business, which is classified as held for sale. See Note 12 for further information. |
4. | Primarily includes the firms exchange-traded fund lead market maker rights. |
66 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 67 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 15. Short-Term Borrowings
Short-Term Borrowings
68 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 16. Long-Term Borrowings
Long-Term Borrowings
Long-term borrowings were comprised of the following:
As of | ||||||||
in millions |
|
March 2013 |
|
|
December 2012 |
| ||
Other secured financings (long-term) |
$ 8,971 | $ 8,965 | ||||||
Unsecured long-term borrowings |
167,008 | 167,305 | ||||||
Total |
$175,979 | $176,270 |
As of March 2013 | As of December 2012 | |||||||||||||||||||||||||
in millions |
|
U.S. Dollar |
|
|
Non-U.S. Dollar |
|
Total |
|
U.S. Dollar |
|
|
Non-U.S. Dollar |
|
Total | ||||||||||||
Fixed-rate obligations 1 |
$ 91,305 | $34,911 | $126,216 | $ 88,561 | $36,869 | $125,430 | ||||||||||||||||||||
Floating-rate obligations 2 |
21,110 | 19,682 | 40,792 | 20,794 | 21,081 | 41,875 | ||||||||||||||||||||
Total |
$112,415 | $54,593 | $167,008 | $109,355 | $57,950 | $167,305 |
1. | Interest rates on U.S. dollar-denominated debt ranged from 0.20% to 10.04% (with a weighted average rate of 5.02%) and 0.20% to 10.04% (with a weighted average rate of 5.48%) as of March 2013 and December 2012, respectively. Interest rates on non-U.S. dollar-denominated debt ranged from 0.10% to 14.85% (with a weighted average rate of 4.47%) and 0.10% to 14.85% (with a weighted average rate of 4.66%) as of March 2013 and December 2012, respectively. |
2. | Floating interest rates generally are based on LIBOR or the federal funds target rate. Equity-linked and indexed instruments are included in floating-rate obligations. |
Goldman Sachs March 2013 Form 10-Q | 69 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
70 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Subordinated Borrowings
As of March 2013 | As of December 2012 | |||||||||||||||||||||||||
$ in millions |
|
Par Amount |
|
|
Carrying Amount |
|
Rate | 1 |
|
Par Amount |
|
|
Carrying Amount |
|
Rate | 1 | ||||||||||
Subordinated debt |
$14,270 | $17,106 | 4.19 | % | $14,409 | $17,358 | 4.24 | % | ||||||||||||||||||
Junior subordinated debt |
2,835 | 4,135 | 3.01 | % | 2,835 | 4,228 | 3.16 | % | ||||||||||||||||||
Total subordinated borrowings |
$17,105 | $21,241 | 3.99 | % | $17,244 | $21,586 | 4.06 | % |
1. | Weighted average interest rate after giving effect to fair value hedges used to convert these fixed-rate obligations into floating-rate obligations. See Note 7 for further information about hedging activities. See below for information about interest rates on junior subordinated debt. |
Junior Subordinated Debt
Goldman Sachs March 2013 Form 10-Q | 71 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
72 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 18. Commitments, Contingencies and Guarantees
Commitments, Contingencies and Guarantees
Commitments
The table below presents the firms commitments.
Commitment Amount by Period of Expiration as of March 2013 |
Total Commitments as of |
|||||||||||||||||||||||||
in millions | |
Remainder of 2013 |
|
|
2014- 2015 |
|
|
2016- 2017 |
|
|
2018- Thereafter |
|
|
March 2013 |
|
|
December 2012 |
| ||||||||
Commitments to extend credit 1 |
||||||||||||||||||||||||||
Commercial lending: |
||||||||||||||||||||||||||
Investment-grade |
$ 6,301 | $11,203 | $30,997 | $ 5,702 | $ 54,203 | $ 53,736 | ||||||||||||||||||||
Non-investment-grade |
1,603 | 5,086 | 8,976 | 3,450 | 19,115 | 21,102 | ||||||||||||||||||||
Warehouse financing |
259 | 524 | | | 783 | 784 | ||||||||||||||||||||
Total commitments to extend credit |
8,163 | 16,813 | 39,973 | 9,152 | 74,101 | 75,622 | ||||||||||||||||||||
Contingent and forward starting resale and securities borrowing agreements 2 |
72,068 | | | | 72,068 | 47,599 | ||||||||||||||||||||
Forward starting repurchase and secured lending agreements 2 |
13,268 | | | | 13,268 | 6,144 | ||||||||||||||||||||
Letters of credit 3 |
533 | 179 | | 15 | 727 | 789 | ||||||||||||||||||||
Investment commitments |
1,627 | 1,908 | 239 | 3,608 | 7,382 | 7,339 | ||||||||||||||||||||
Other |
3,483 | 80 | 27 | 69 | 3,659 | 4,624 | ||||||||||||||||||||
Total commitments |
$99,142 | $18,980 | $40,239 | $12,844 | $171,205 | $142,117 |
1. | Commitments to extend credit are presented net of amounts syndicated to third parties. |
2. | These agreements generally settle within three business days. |
3. | Consists of commitments under letters of credit issued by various banks which the firm provides to counterparties in lieu of securities or cash to satisfy various collateral and margin deposit requirements. |
Commitments to Extend Credit
Goldman Sachs March 2013 Form 10-Q | 73 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
74 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Contingencies
Goldman Sachs March 2013 Form 10-Q | 75 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
76 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
As of March 2013 | ||||||||||||||||||||||||||
Maximum Payout/Notional Amount by Period of Expiration | ||||||||||||||||||||||||||
in millions |
|
Carrying Value of Net Liability |
|
|
Remainder of 2013 |
|
|
2014- 2015 |
|
|
2016- 2017 |
|
|
2018- Thereafter |
|
Total | ||||||||||
Derivatives 1 |
$8,083 | $318,426 | $275,467 | $53,158 | $58,370 | $705,421 | ||||||||||||||||||||
Securities lending indemnifications 2 |
| 30,360 | | | | 30,360 | ||||||||||||||||||||
Other financial guarantees 3 |
142 | 751 | 455 | 1,268 | 1,028 | 3,502 |
1. | These derivatives are risk managed together with derivatives that do not meet the definition of a guarantee, and therefore these amounts do not reflect the firms overall risk related to its derivative activities. As of December 2012, the carrying value of the net liability and the notional amount related to derivative guarantees were $8.58 billion and $663.15 billion, respectively. |
2. | Collateral held by the lenders in connection with securities lending indemnifications was $31.24 billion as of March 2013. Because the contractual nature of these arrangements requires the firm to obtain collateral with a market value that exceeds the value of the securities lent to the borrower, there is minimal performance risk associated with these guarantees. As of December 2012, the maximum payout and collateral held related to securities lending indemnifications were $27.12 billion and $27.89 billion, respectively. |
3. | Other financial guarantees excludes certain commitments to issue standby letters of credit that are included in Commitments to extend credit. See table in Commitments above for a summary of the firms commitments. As of December 2012, the carrying value of the net liability and the maximum payout related to other financial guarantees were $152 million and $3.48 billion, respectively. |
Goldman Sachs March 2013 Form 10-Q | 77 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
78 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 79 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Preferred Equity
The table below presents perpetual preferred stock issued and outstanding as of March 2013.
Series | Shares Authorized |
Shares Issued |
Shares Outstanding |
Dividend Rate | Redemption Value (in millions) |
|||||||||||||
A |
50,000 | 30,000 | 29,999 | 3 month LIBOR + 0.75%, with floor of 3.75% per annum |
$ 750 | |||||||||||||
B |
50,000 | 32,000 | 32,000 | 6.20% per annum | 800 | |||||||||||||
C |
25,000 | 8,000 | 8,000 | 3 month LIBOR + 0.75%, with floor of 4.00% per annum |
200 | |||||||||||||
D |
60,000 | 54,000 | 53,999 | 3 month LIBOR + 0.67%, with floor of 4.00% per annum |
1,350 | |||||||||||||
E |
17,500 | 17,500 | 17,500 | 3 month LIBOR + 0.77%, with floor of 4.00% per annum |
1,750 | |||||||||||||
F |
5,000 | 5,000 | 5,000 | 3 month LIBOR + 0.77%, with floor of 4.00% per annum |
500 | |||||||||||||
I |
34,500 | 34,000 | 34,000 | 5.95% per annum | 850 | |||||||||||||
242,000 | 180,500 | 180,498 | $6,200 |
80 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The table below presents preferred dividends declared on preferred stock.
Three Months Ended March | ||||||||||||||||||
2013 | 2012 | |||||||||||||||||
per share | in millions | per share | in millions | |||||||||||||||
Series A |
$234.38 | $ 7 | $239.58 | $ 7 | ||||||||||||||
Series B |
387.50 | 12 | 387.50 | 12 | ||||||||||||||
Series C |
250.00 | 2 | 255.56 | 2 | ||||||||||||||
Series D |
250.00 | 14 | 255.56 | 14 | ||||||||||||||
Series E |
977.78 | 17 | | | ||||||||||||||
Series F |
977.78 | 5 | | | ||||||||||||||
Series I |
437.99 | 15 | | | ||||||||||||||
Total |
$72 | $35 |
Accumulated Other Comprehensive Income/(Loss)
The tables below present accumulated other comprehensive income/(loss) by type.
As of March 2013 | ||||||||||||||||
in millions | |
Currency translation adjustment, net of tax |
|
|
Pension and postretirement liability adjustments, |
|
|
Net unrealized gains/(losses) on available-for-sale securities, net of tax |
|
|
Accumulated other comprehensive income/(loss), net of tax |
| ||||
Balance, beginning of year |
$(314 | ) | $(206 | ) | $327 | $(193 | ) | |||||||||
Other comprehensive income/(loss) |
(26 | ) | (4 | ) | 15 | (15 | ) | |||||||||
Balance, end of period |
$(340 | ) | $(210 | ) | $342 | 1 | $(208 | ) | ||||||||
As of December 2012 | ||||||||||||||||
in millions | |
Currency translation adjustment, net of tax |
|
|
Pension and postretirement liability adjustments, |
|
|
Net unrealized gains/(losses) on available-for-sale securities, net of tax |
|
|
Accumulated other comprehensive income/(loss), net of tax |
| ||||
Balance, beginning of year |
$(225 | ) | $(374 | ) | $ 83 | $(516 | ) | |||||||||
Other comprehensive income/(loss) |
(89 | ) | 168 | 244 | 323 | |||||||||||
Balance, end of year |
$(314 | ) | $(206 | ) | $327 | 1 | $(193 | ) |
1. | Substantially all consists of net unrealized gains on securities held by the firms insurance subsidiaries as of both March 2013 and December 2012. |
Goldman Sachs March 2013 Form 10-Q | 81 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 20. Regulation and Capital Adequacy
Regulation and Capital Adequacy
82 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 83 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
84 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Bank Subsidiaries
Goldman Sachs March 2013 Form 10-Q | 85 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
86 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 21. Earnings Per Common Share
Earnings Per Common Share
Three Months Ended March |
||||||||
in millions, except per share amounts | 2013 | 2012 | ||||||
Numerator for basic and diluted EPS net earnings applicable to common shareholders |
$2,188 | $2,074 | ||||||
Denominator for basic EPS weighted average number of common shares |
482.1 | 510.8 | ||||||
Effect of dilutive securities: |
||||||||
RSUs |
6.1 | 9.2 | ||||||
Stock options and warrants |
21.6 | 9.2 | ||||||
Dilutive potential common shares |
27.7 | 18.4 | ||||||
Denominator for diluted EPS weighted average number of common shares and
dilutive |
509.8 | 529.2 | ||||||
Basic EPS |
$ 4.53 | $ 4.05 | ||||||
Diluted EPS |
4.29 | 3.92 |
Three Months Ended March |
||||||||
in millions | 2013 | 2012 | ||||||
Number of antidilutive RSUs and common shares underlying antidilutive stock options and warrants |
6.1 | 52.5 |
Goldman Sachs March 2013 Form 10-Q | 87 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 22. Transactions with Affiliated Funds
Transactions with Affiliated Funds
88 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 23. Interest Income and Interest Expense
Interest Income and Interest Expense
Three Months Ended March |
||||||||
in millions | 2013 | 2012 | ||||||
Interest income |
||||||||
Deposits with banks |
$ 48 | $ 38 | ||||||
Securities borrowed, securities purchased under agreements to resell and federal funds sold 1 |
(24 | ) | (14 | ) | ||||
Financial instruments owned, at fair value |
2,238 | 2,442 | ||||||
Other interest 2 |
346 | 367 | ||||||
Total interest income |
2,608 | 2,833 | ||||||
Interest expense |
||||||||
Deposits |
93 | 91 | ||||||
Securities loaned and securities sold under agreements to repurchase |
164 | 211 | ||||||
Financial instruments sold, but not yet purchased, at fair value |
511 | 525 | ||||||
Short-term borrowings 3 |
106 | 168 | ||||||
Long-term borrowings 3 |
910 | 1,009 | ||||||
Other interest 4 |
(101 | ) | (152 | ) | ||||
Total interest expense |
1,683 | 1,852 | ||||||
Net interest income |
$ 925 | $ 981 |
1. | Includes rebates paid and interest income on securities borrowed. |
2. | Includes interest income on customer debit balances and other interest-earning assets. |
3. | Includes interest on unsecured borrowings and other secured financings. |
4. | Includes rebates received on other interest-bearing liabilities and interest expense on customer credit balances. |
Note 24. Income Taxes
Income Taxes
Goldman Sachs March 2013 Form 10-Q | 89 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
90 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
For the Three Months Ended or as of March |
||||||||||
in millions | 2013 | 2012 | ||||||||
Investment Banking |
Net revenues |
$ 1,568 | $ 1,154 | |||||||
Operating expenses |
1,064 | 871 | ||||||||
Pre-tax earnings |
$ 504 | $ 283 | ||||||||
Segment assets |
$ 1,873 | $ 1,944 | ||||||||
Institutional Client Services |
Net revenues 1 |
$ 5,139 | $ 5,709 | |||||||
Operating expenses |
3,566 | 3,938 | ||||||||
Pre-tax earnings |
$ 1,573 | $ 1,771 | ||||||||
Segment assets |
$848,375 | $842,587 | ||||||||
Investing & Lending |
Net revenues |
$ 2,068 | $ 1,911 | |||||||
Operating expenses |
996 | 958 | ||||||||
Pre-tax earnings |
$ 1,072 | $ 953 | ||||||||
Segment assets |
$ 97,303 | $ 94,457 | ||||||||
Investment Management |
Net revenues |
$ 1,315 | $ 1,175 | |||||||
Operating expenses |
1,090 | 989 | ||||||||
Pre-tax earnings |
$ 225 | $ 186 | ||||||||
Segment assets |
$ 11,672 | $ 11,944 | ||||||||
Total |
Net revenues |
$ 10,090 | $ 9,949 | |||||||
Operating expenses |
6,717 | 6,768 | ||||||||
Pre-tax earnings |
$ 3,373 | $ 3,181 | ||||||||
Total assets |
$959,223 | $950,932 |
1. | Includes $40 million and $29 million for the three months ended March 2013 and March 2012, respectively, of realized gains on available-for-sale securities held in the firms reinsurance subsidiaries. |
Goldman Sachs March 2013 Form 10-Q | 91 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
92 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Three Months Ended March | ||||||||||||||||
$ in millions | 2013 | 2012 | ||||||||||||||
Net revenues |
||||||||||||||||
Americas 1 |
$ 6,005 | 60 | % | $5,787 | 58 | % | ||||||||||
EMEA 2 |
2,421 | 24 | 2,708 | 27 | ||||||||||||
Asia 3 |
1,664 | 16 | 1,454 | 15 | ||||||||||||
Total net revenues |
$10,090 | 100 | % | $9,949 | 100 | % | ||||||||||
Pre-tax earnings |
||||||||||||||||
Americas 1 |
$ 1,851 | 55 | % | $1,668 | 52 | % | ||||||||||
EMEA 2 |
907 | 27 | 1,062 | 33 | ||||||||||||
Asia 3 |
616 | 18 | 463 | 15 | ||||||||||||
Subtotal |
3,374 | 100 | % | 3,193 | 100 | % | ||||||||||
Corporate 4 |
(1 | ) | (12 | ) | ||||||||||||
Total pre-tax earnings |
$ 3,373 | $3,181 |
1. | Substantially all relates to the U.S. |
2. | EMEA (Europe, Middle East and Africa). |
3. | Asia also includes Australia and New Zealand. |
4. | Consists of real estate-related exit costs of $1 million for the three months ended March 2013, and charitable contributions of $12 million for the three months ended March 2012. Net provisions for litigation and regulatory proceedings, previously included in Corporate, have now been allocated to the geographic regions. Reclassifications have been made to previously reported geographic region amounts to conform to the current presentation. |
Goldman Sachs March 2013 Form 10-Q | 93 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 26. Credit Concentrations
Credit Concentrations
94 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 27. Legal Proceedings
Legal Proceedings
Goldman Sachs March 2013 Form 10-Q | 95 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
96 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 97 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
98 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 99 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
100 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 101 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
102 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 103 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
104 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 105 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
106 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goldman Sachs March 2013 Form 10-Q | 107 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and the Shareholders of
The Goldman Sachs Group, Inc.:
108 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Distribution of Assets, Liabilities and Shareholders Equity
The table below presents a summary of consolidated average balances and interest rates.
Three Months Ended March | ||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||
in millions, except rates |
|
Average balance |
|
Interest |
|
Average Rate (annualized) |
|
|
Average balance |
|
Interest |
|
Average rate (annualized) |
| ||||||||||||
Assets |
||||||||||||||||||||||||||
Deposits with banks |
$ 64,007 | $ 48 | 0.30 | % | $ 48,029 | $ 38 | 0.32 | % | ||||||||||||||||||
U.S. |
60,919 | 43 | 0.29 | 43,939 | 29 | 0.27 | ||||||||||||||||||||
Non-U.S. |
3,088 | 5 | 0.66 | 4,090 | 9 | 0.89 | ||||||||||||||||||||
Securities borrowed, securities purchased under agreements to resell and |
316,390 | (24 | ) | (0.03 | ) | 348,873 | (14 | ) | (0.02 | ) | ||||||||||||||||
U.S. |
180,008 | (85 | ) | (0.19 | ) | 200,486 | (112 | ) | (0.22 | ) | ||||||||||||||||
Non-U.S. |
136,382 | 61 | 0.18 | 148,387 | 98 | 0.27 | ||||||||||||||||||||
Financial instruments owned, at fair value 1, 2 |
316,072 | 2,238 | 2.87 | 294,257 | 2,442 | 3.34 | ||||||||||||||||||||
U.S. |
193,652 | 1,510 | 3.16 | 181,376 | 1,590 | 3.53 | ||||||||||||||||||||
Non-U.S. |
122,420 | 728 | 2.41 | 112,881 | 852 | 3.04 | ||||||||||||||||||||
Other interest-earning assets 3 |
134,889 | 346 | 1.04 | 133,707 | 367 | 1.10 | ||||||||||||||||||||
U.S. |
82,295 | 239 | 1.18 | 87,609 | 236 | 1.08 | ||||||||||||||||||||
Non-U.S. |
52,594 | 107 | 0.83 | 46,098 | 131 | 1.14 | ||||||||||||||||||||
Total interest-earning assets |
831,358 | 2,608 | 1.27 | 824,866 | 2,833 | 1.38 | ||||||||||||||||||||
Cash and due from banks |
6,074 | 6,770 | ||||||||||||||||||||||||
Other non-interest-earning assets 2 |
124,476 | 110,222 | ||||||||||||||||||||||||
Total assets |
$961,908 | $941,858 | ||||||||||||||||||||||||
Liabilities |
||||||||||||||||||||||||||
Interest-bearing deposits |
$ 69,118 | $ 93 | 0.55 | % | $ 48,096 | $ 91 | 0.76 | % | ||||||||||||||||||
U.S. |
61,704 | 88 | 0.58 | 40,571 | 81 | 0.80 | ||||||||||||||||||||
Non-U.S. |
7,414 | 5 | 0.27 | 7,525 | 10 | 0.53 | ||||||||||||||||||||
Securities loaned and securities sold under agreements to repurchase |
187,101 | 164 | 0.36 | 176,115 | 211 | 0.48 | ||||||||||||||||||||
U.S. |
122,299 | 80 | 0.27 | 121,092 | 84 | 0.28 | ||||||||||||||||||||
Non-U.S. |
64,802 | 84 | 0.53 | 55,023 | 127 | 0.93 | ||||||||||||||||||||
Financial instruments sold, but not yet purchased, at fair value 1, 2 |
95,490 | 511 | 2.17 | 91,587 | 525 | 2.31 | ||||||||||||||||||||
U.S. |
37,028 | 167 | 1.83 | 40,292 | 162 | 1.62 | ||||||||||||||||||||
Non-U.S. |
58,462 | 344 | 2.39 | 51,295 | 363 | 2.85 | ||||||||||||||||||||
Short-term borrowings 4 |
62,993 | 106 | 0.68 | 75,367 | 168 | 0.90 | ||||||||||||||||||||
U.S. |
43,053 | 97 | 0.91 | 49,891 | 136 | 1.10 | ||||||||||||||||||||
Non-U.S. |
19,940 | 9 | 0.18 | 25,476 | 32 | 0.51 | ||||||||||||||||||||
Long-term borrowings 4 |
177,257 | 910 | 2.08 | 182,239 | 1,009 | 2.23 | ||||||||||||||||||||
U.S. |
170,652 | 881 | 2.09 | 175,006 | 947 | 2.18 | ||||||||||||||||||||
Non-U.S. |
6,605 | 29 | 1.78 | 7,233 | 62 | 3.45 | ||||||||||||||||||||
Other interest-bearing liabilities 5 |
197,393 | (101 | ) | (0.21 | ) | 204,166 | (152 | ) | (0.30 | ) | ||||||||||||||||
U.S. |
141,253 | (221 | ) | (0.63 | ) | 150,736 | (251 | ) | (0.67 | ) | ||||||||||||||||
Non-U.S. |
56,140 | 120 | 0.87 | 53,430 | 99 | 0.75 | ||||||||||||||||||||
Total interest-bearing liabilities |
789,352 | 1,683 | 0.86 | 777,570 | 1,852 | 0.96 | ||||||||||||||||||||
Non-interest-bearing deposits |
750 | 184 | ||||||||||||||||||||||||
Other non-interest-bearing liabilities 2 |
95,104 | 93,280 | ||||||||||||||||||||||||
Total liabilities |
885,206 | 871,034 | ||||||||||||||||||||||||
Shareholders equity |
||||||||||||||||||||||||||
Preferred stock |
6,200 | 3,100 | ||||||||||||||||||||||||
Common stock |
70,502 | 67,724 | ||||||||||||||||||||||||
Total shareholders equity |
76,702 | 70,824 | ||||||||||||||||||||||||
Total liabilities and shareholders equity |
$961,908 | $941,858 | ||||||||||||||||||||||||
Interest rate spread |
0.41 | % | 0.42 | % | ||||||||||||||||||||||
Net interest income and net yield on interest-earning assets |
$ 925 | 0.45 | $ 981 | 0.48 | ||||||||||||||||||||||
U.S. |
615 | 0.48 | 584 | 0.46 | ||||||||||||||||||||||
Non-U.S. |
310 | 0.40 | 397 | 0.51 | ||||||||||||||||||||||
Percentage of interest-earning assets and interest-bearing liabilities attributable to non-U.S. operations 6 |
||||||||||||||||||||||||||
Assets |
37.83 | % | 37.76 | % | ||||||||||||||||||||||
Liabilities |
27.03 | 25.72 |
1. | Consists of cash financial instruments, including equity securities and convertible debentures. |
2. | Derivative instruments and commodities are included in other non-interest-earning assets and other non-interest-bearing liabilities. |
3. | Primarily consists of cash and securities segregated for regulatory and other purposes and certain receivables from customers and counterparties. |
4. | Interest rates include the effects of interest rate swaps accounted for as hedges. |
5. | Primarily consists of certain payables to customers and counterparties. |
6. | Assets, liabilities and interest are attributed to U.S. and non-U.S. based on the location of the legal entity in which the assets and liabilities are held. |
Goldman Sachs March 2013 Form 10-Q | 109 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Statistical Disclosures
Ratios
The table below presents selected financial ratios.
Three Months Ended March |
||||||||
2013 | 2012 | |||||||
Annualized net earnings to average assets |
0.9 | % | 0.9 | % | ||||
Annualized return on average common shareholders equity 1 |
12.4 | 12.2 | ||||||
Annualized return on average total shareholders equity 2 |
11.8 | 11.9 | ||||||
Total average equity to average assets |
8.0 | 7.5 | ||||||
Dividend payout ratio 3 |
11.7 | 8.9 |
1. | Based on annualized net earnings applicable to common shareholders divided by average monthly common shareholders equity. |
2. | Based on annualized net earnings divided by average monthly total shareholders equity. |
3. | Dividends declared per common share as a percentage of diluted earnings per common share. |
110 | Goldman Sachs March 2013 Form 10-Q |
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
INDEX
Page No. | ||||
112 | ||||
112 | ||||
114 | ||||
115 | ||||
119 | ||||
120 | ||||
130 | ||||
133 | ||||
140 | ||||
147 | ||||
149 | ||||
154 | ||||
161 | ||||
167 | ||||
174 | ||||
176 | ||||
177 | ||||
178 | ||||
Cautionary Statement Pursuant to the U.S. Private Securities Litigation Reform Act of 1995 |
178 |
Goldman Sachs March 2013 Form 10-Q | 111 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
1. | See Results of Operations Financial Overview below for further information about our calculation of annualized ROE. |
2. | Tangible book value per common share is a non-GAAP measure and may not be comparable to similar non-GAAP measures used by other companies. See Equity Capital Other Capital Metrics below for further information about our calculation of tangible book value per common share. |
3. | Tier 1 common ratio is a non-GAAP measure and may not be comparable to similar non-GAAP measures used by other companies. See Equity Capital Consolidated Regulatory Capital Ratios below for further information about our Tier 1 common ratio. |
112 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
1. | Assets under supervision include assets under management and other client assets. Assets under management include client assets where we earn a fee for managing assets on a discretionary basis. Other client assets include client assets invested with third-party managers, private bank deposits and advisory relationships where we earn a fee for advisory and other services, but do not have investment discretion. |
Goldman Sachs March 2013 Form 10-Q | 113 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
114 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Fair Value
Goldman Sachs March 2013 Form 10-Q | 115 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
116 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
As of March 2013 | As of December 2012 | |||||||||||||||||
in millions |
|
Total at Fair Value |
|
|
Level 3 Total |
|
|
Total at Fair Value |
|
|
Level 3 Total |
| ||||||
Commercial paper, certificates of deposit, time deposits |
$ 5,705 | $ | $ 6,057 | $ | ||||||||||||||
U.S. government and federal agency obligations |
96,930 | | 93,241 | | ||||||||||||||
Non-U.S. government and agency obligations |
57,657 | 47 | 62,250 | 26 | ||||||||||||||
Mortgage and other asset-backed loans and securities: |
||||||||||||||||||
Loans and securities backed by commercial real estate |
6,909 | 3,164 | 9,805 | 3,389 | ||||||||||||||
Loans and securities backed by residential real estate |
7,570 | 1,683 | 8,216 | 1,619 | ||||||||||||||
Bank loans and bridge loans |
22,467 | 11,688 | 22,407 | 11,235 | ||||||||||||||
Corporate debt securities |
20,442 | 2,442 | 20,981 | 2,821 | ||||||||||||||
State and municipal obligations |
2,219 | 334 | 2,477 | 619 | ||||||||||||||
Other debt obligations |
2,481 | 855 | 2,251 | 1,185 | ||||||||||||||
Equities and convertible debentures |
89,278 | 15,224 | 96,454 | 14,855 | ||||||||||||||
Commodities |
7,695 | | 11,696 | | ||||||||||||||
Total cash instruments |
319,353 | 35,437 | 335,835 | 35,749 | ||||||||||||||
Derivatives |
68,040 | 9,284 | 71,176 | 9,920 | ||||||||||||||
Financial instruments owned, at fair value |
387,393 | 44,721 | 407,011 | 45,669 | ||||||||||||||
Securities segregated for regulatory and other purposes |
22,676 | | 30,484 | | ||||||||||||||
Securities purchased under agreements to resell |
158,283 | 104 | 141,331 | 278 | ||||||||||||||
Securities borrowed |
54,879 | | 38,395 | | ||||||||||||||
Receivables from customers and counterparties |
7,154 | 633 | 7,866 | 641 | ||||||||||||||
Other assets 1 |
13,448 | 565 | 13,426 | 507 | ||||||||||||||
Total |
$643,833 | $46,023 | $638,513 | $47,095 |
1. | Consists of assets classified as held for sale related to our reinsurance business, primarily consisting of securities accounted for as available-for-sale and insurance separate account assets. See Note 12 to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information about assets held for sale. |
Goldman Sachs March 2013 Form 10-Q | 117 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goodwill and Identifiable Intangible Assets
118 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 119 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Three Months Ended March |
||||||||
$ in millions, except per share amounts | 2013 | 2012 | ||||||
Net revenues |
$10,090 | $9,949 | ||||||
Pre-tax earnings |
3,373 | 3,181 | ||||||
Net earnings |
2,260 | 2,109 | ||||||
Net earnings applicable to common shareholders |
2,188 | 2,074 | ||||||
Diluted earnings per common share |
4.29 | 3.92 | ||||||
Annualized return on average common shareholders equity 1 |
12.4 | % | 12.2 | % |
1. | Annualized ROE is computed by dividing annualized net earnings applicable to common shareholders by average monthly common shareholders equity. The table below presents our average common shareholders equity. |
Average for the Three Months Ended March |
||||||||
in millions | 2013 | 2012 | ||||||
Total shareholders equity |
$76,702 | $70,824 | ||||||
Preferred stock |
(6,200 | ) | (3,100 | ) | ||||
Common shareholders equity |
$70,502 | $67,724 |
120 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 121 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
122 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 123 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Segment Operating Results
The table below presents the net revenues, operating expenses and pre-tax earnings of our segments.
Three Months Ended March |
||||||||||
in millions | 2013 | 2012 | ||||||||
Investment Banking |
Net revenues | $ 1,568 | $1,154 | |||||||
Operating expenses | 1,064 | 871 | ||||||||
Pre-tax earnings | $ 504 | $ 283 | ||||||||
Institutional Client Services |
Net revenues | $ 5,139 | $5,709 | |||||||
Operating expenses | 3,566 | 3,938 | ||||||||
Pre-tax earnings | $ 1,573 | $1,771 | ||||||||
Investing & Lending |
Net revenues | $ 2,068 | $1,911 | |||||||
Operating expenses | 996 | 958 | ||||||||
Pre-tax earnings | $ 1,072 | $ 953 | ||||||||
Investment Management |
Net revenues | $ 1,315 | $1,175 | |||||||
Operating expenses | 1,090 | 989 | ||||||||
Pre-tax earnings | $ 225 | $ 186 | ||||||||
Total |
Net revenues | $10,090 | $9,949 | |||||||
Operating expenses | 6,717 | 6,768 | ||||||||
Pre-tax earnings | $ 3,373 | $3,181 |
124 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Investment Banking
Goldman Sachs March 2013 Form 10-Q | 125 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
126 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 127 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
128 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 129 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
130 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 131 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
132 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Balance Sheet and Funding Sources
Balance Sheet Management
Goldman Sachs March 2013 Form 10-Q | 133 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
134 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 135 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
As of March 2013 | ||||||||||||||||||||||||
in millions | |
Excess Liquidity and Cash |
1 |
|
Secured Client Financing |
|
|
Institutional Client Services |
|
|
Investing & Lending |
|
|
Other Assets |
|
|
Total Assets |
| ||||||
Cash and cash equivalents |
$ 63,333 | $ | $ | $ | $ | $ 63,333 | ||||||||||||||||||
Cash and securities segregated for regulatory and other purposes |
| 41,044 | | | | 41,044 | ||||||||||||||||||
Securities purchased under agreements to resell and federal funds sold |
37,803 | 73,253 | 46,832 | 618 | | 158,506 | ||||||||||||||||||
Securities borrowed |
36,913 | 75,469 | 59,659 | | | 172,041 | ||||||||||||||||||
Receivables from brokers, dealers and clearing organizations |
| 5,662 | 14,802 | 37 | | 20,501 | ||||||||||||||||||
Receivables from customers and counterparties |
| 42,601 | 27,095 | 8,221 | | 77,917 | ||||||||||||||||||
Financial instruments owned, at fair value |
43,826 | | 297,813 | 45,754 | | 387,393 | ||||||||||||||||||
Other assets |
| | | | 38,488 | 38,488 | ||||||||||||||||||
Total assets |
$181,875 | $238,029 | $446,201 | $54,630 | $38,488 | $959,223 | ||||||||||||||||||
As of December 2012 | ||||||||||||||||||||||||
in millions | |
Excess Liquidity and Cash |
1 |
|
Secured Client Financing |
|
|
Institutional Client Services |
|
|
Investing & Lending |
|
|
Other Assets |
|
|
Total Assets |
| ||||||
Cash and cash equivalents |
$ 72,669 | $ | $ | $ | $ | $ 72,669 | ||||||||||||||||||
Cash and securities segregated for regulatory and other purposes |
| 49,671 | | | | 49,671 | ||||||||||||||||||
Securities purchased under agreements to resell and federal funds sold |
28,018 | 84,064 | 28,960 | 292 | | 141,334 | ||||||||||||||||||
Securities borrowed |
41,699 | 47,877 | 47,317 | | | 136,893 | ||||||||||||||||||
Receivables from brokers, dealers and clearing organizations |
| 4,400 | 14,044 | 36 | | 18,480 | ||||||||||||||||||
Receivables from customers and counterparties |
| 43,430 | 22,229 | 7,215 | | 72,874 | ||||||||||||||||||
Financial instruments owned, at fair value |
39,075 | | 318,323 | 49,613 | | 407,011 | ||||||||||||||||||
Other assets |
| | | | 39,623 | 39,623 | ||||||||||||||||||
Total assets |
$181,461 | $229,442 | $430,873 | $57,156 | $39,623 | $938,555 |
1. | Includes unencumbered cash, U.S. government and federal agency obligations (including highly liquid U.S. federal agency mortgage-backed obligations), and German, French, Japanese and United Kingdom government obligations. |
136 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Balance Sheet Analysis and Metrics
Goldman Sachs March 2013 Form 10-Q | 137 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
138 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 139 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
140 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 141 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
142 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Risk-Weighted Assets
Goldman Sachs March 2013 Form 10-Q | 143 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
144 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 145 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
146 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Off-Balance-Sheet Arrangements
and Contractual Obligations
Off-Balance-Sheet Arrangements
Type of Off-Balance-Sheet Arrangement | Disclosure in Form 10-Q | |||
Variable interests and other obligations, including contingent obligations, arising from variable interests in nonconsolidated VIEs |
See Note 11 to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q. | |||
Leases, letters of credit, and lending and other commitments |
See Contractual Obligations below and Note 18 to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q. | |||
Guarantees |
See Contractual Obligations below and Note 18 to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q. | |||
Derivatives |
See Credit Risk Management Credit Exposures OTC Derivatives below and Notes 4, 5, 7 and 18 to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q. |
Goldman Sachs March 2013 Form 10-Q | 147 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Contractual Obligations
in millions | |
Remainder of 2013 |
|
|
2014- 2015 |
|
|
2016- 2017 |
|
|
2018- Thereafter |
|
Total | |||||||
Amounts related to on-balance-sheet obligations |
||||||||||||||||||||
Time deposits 1 |
$ | $ 6,781 | $ 4,421 | $ 5,517 | $ 16,719 | |||||||||||||||
Secured long-term financings 2 |
| 6,429 | 1,197 | 1,345 | 8,971 | |||||||||||||||
Unsecured long-term borrowings 3 |
| 37,121 | 42,269 | 87,618 | 167,008 | |||||||||||||||
Contractual interest payments 4 |
4,933 | 12,974 | 9,959 | 33,812 | 61,678 | |||||||||||||||
Insurance liabilities 5 |
355 | 923 | 905 | 13,731 | 15,914 | |||||||||||||||
Subordinated liabilities issued by consolidated VIEs |
7 | 55 | 30 | 901 | 993 | |||||||||||||||
Amounts related to off-balance-sheet arrangements |
||||||||||||||||||||
Commitments to extend credit |
8,163 | 16,813 | 39,973 | 9,152 | 74,101 | |||||||||||||||
Contingent and forward starting resale and securities borrowing agreements |
72,068 | | | | 72,068 | |||||||||||||||
Forward starting repurchase and secured lending agreements |
13,268 | | | | 13,268 | |||||||||||||||
Letters of credit |
533 | 179 | | 15 | 727 | |||||||||||||||
Investment commitments |
1,627 | 1,908 | 239 | 3,608 | 7,382 | |||||||||||||||
Other commitments |
3,483 | 80 | 27 | 69 | 3,659 | |||||||||||||||
Minimum rental payments |
304 | 730 | 558 | 1,363 | 2,955 | |||||||||||||||
Derivative guarantees |
318,426 | 275,467 | 53,158 | 58,370 | 705,421 | |||||||||||||||
Securities lending indemnifications |
30,360 | | | | 30,360 | |||||||||||||||
Other financial guarantees |
751 | 455 | 1,268 | 1,028 | 3,502 |
1. | Excludes $10.21 billion of time deposits maturing within one year. |
2. | The aggregate contractual principal amount of secured long-term financings for which the fair value option was elected, primarily consisting of transfers of financial assets accounted for as financings rather than sales and certain other nonrecourse financings, exceeded their related fair value by $134 million. |
3. | Includes $9.84 billion related to interest rate hedges on certain unsecured long-term borrowings. In addition, the fair value of unsecured long-term borrowings (principal and non-principal-protected) for which the fair value option was elected exceeded the related aggregate contractual principal amount by $140 million. Excludes $82 million of unsecured long-term borrowings related to our reinsurance business classified as held for sale as of March 2013. See Note 17 to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information. |
4. | Represents estimated future interest payments related to unsecured long-term borrowings, secured long-term financings and time deposits based on applicable interest rates as of March 2013. Includes stated coupons, if any, on structured notes. |
5. | Represents estimated undiscounted payments related to future benefits and unpaid claims arising from policies associated with our insurance activities, excluding separate accounts and estimated recoveries under reinsurance contracts. Excludes $13.02 billion of insurance liabilities related to our reinsurance business classified as held for sale as of March 2013. See Note 17 to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information. |
148 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 149 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
150 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 151 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
152 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 153 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
154 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 155 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
156 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 157 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
158 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Credit Ratings
The table below presents the unsecured credit ratings and outlook of Group Inc.
As of March 2013 | ||||||||||||||||||||||||
|
Short-Term Debt |
|
|
Long-Term Debt |
|
|
Subordinated Debt |
|
|
Trust Preferred |
1 |
|
Preferred Stock |
|
|
Ratings Outlook |
| |||||||
DBRS, Inc. |
R-1 (middle | ) | A (high | ) | A | A | BBB | 3 | Stable | |||||||||||||||
Fitch, Inc. |
F1 | A | 2 | A- | BBB- | BB+ | 3 | Stable | ||||||||||||||||
Moodys Investors Service (Moodys) |
P-2 | A3 | 2 | Baa1 | Baa3 | Ba2 | 3 | Negative | 4 | |||||||||||||||
Standard & Poors Ratings Services (S&P) |
A-2 | A- | 2 | BBB+ | BB+ | BB+ | 3 | Negative | ||||||||||||||||
Rating and Investment Information, Inc. |
a-1 | A+ | A | N/A | N/A | Negative |
1. | Trust preferred securities issued by Goldman Sachs Capital I. |
2. | Includes the senior guaranteed trust securities issued by Murray Street Investment Trust I and Vesey Street Investment Trust I. |
3. | Includes Group Inc.s non-cumulative preferred stock and the APEX issued by Goldman Sachs Capital II and Goldman Sachs Capital III. |
4. | The ratings outlook for trust preferred and preferred stock is stable. |
The table below presents the unsecured credit ratings of GS Bank USA, GS&Co. and GSI.
As of March 2013 | ||||||||||||||||
|
Short-Term Debt |
|
|
Long-Term Debt |
|
|
Short-Term Bank Deposits |
|
|
Long-Term Bank Deposits |
| |||||
Fitch, Inc. |
||||||||||||||||
GS Bank USA |
F1 | A | F1 | A+ | ||||||||||||
GS&Co. |
F1 | A | N/A | N/A | ||||||||||||
GSI |
F1 | A | N/A | N/A | ||||||||||||
Moodys |
||||||||||||||||
GS Bank USA |
P-1 | A2 | P-1 | A2 | ||||||||||||
S&P |
||||||||||||||||
GS Bank USA |
A-1 | A | N/A | N/A | ||||||||||||
GS&Co. |
A-1 | A | N/A | N/A | ||||||||||||
GSI |
A-1 | A | N/A | N/A |
Goldman Sachs March 2013 Form 10-Q | 159 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
160 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 161 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
162 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 163 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Metrics
164 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
The chart below reflects the VaR over the last four quarters.
Goldman Sachs March 2013 Form 10-Q | 165 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Sensitivity Measures
166 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 167 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
168 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Credit Exposures
As of March 2013 | ||||||||||||||||||||||||||||
in millions
Credit Rating Equivalent |
|
0 - 12 Months |
|
|
1 - 5 Years |
|
|
5 Years or Greater |
|
Total | Netting | |
OTC Derivative Assets |
|
|
Net Credit Exposure |
| |||||||||||
AAA/Aaa |
$ 650 | $ 1,655 | $ 2,798 | $ 5,103 | $ (1,505 | ) | $ 3,598 | $ 3,243 | ||||||||||||||||||||
AA/Aa2 |
4,990 | 6,706 | 21,383 | 33,079 | (16,128 | ) | 16,951 | 10,039 | ||||||||||||||||||||
A/A2 |
12,439 | 25,669 | 37,078 | 75,186 | (52,356 | ) | 22,830 | 13,592 | ||||||||||||||||||||
BBB/Baa2 |
7,316 | 11,174 | 24,935 | 43,425 | (31,695 | ) | 11,730 | 4,061 | ||||||||||||||||||||
BB/Ba2 or lower |
2,941 | 5,183 | 4,214 | 12,338 | (5,782 | ) | 6,556 | 4,830 | ||||||||||||||||||||
Unrated |
676 | 953 | 321 | 1,950 | (30 | ) | 1,920 | 1,509 | ||||||||||||||||||||
Total |
$29,012 | $51,340 | $ 90,729 | $171,081 | $(107,496 | ) | $63,585 | $37,274 | ||||||||||||||||||||
As of December 2012 | ||||||||||||||||||||||||||||
in millions
Credit Rating Equivalent |
|
0 - 12 Months |
|
|
1 - 5 Years |
|
|
5 Years or Greater |
|
Total | Netting | |
OTC Derivative Assets |
|
|
Net Credit Exposure |
| |||||||||||
AAA/Aaa |
$ 494 | $ 1,934 | $ 2,778 | $ 5,206 | $ (1,476 | ) | $ 3,730 | $ 3,443 | ||||||||||||||||||||
AA/Aa2 |
4,631 | 7,483 | 20,357 | 32,471 | (16,026 | ) | 16,445 | 10,467 | ||||||||||||||||||||
A/A2 |
13,422 | 26,550 | 42,797 | 82,769 | (57,868 | ) | 24,901 | 16,326 | ||||||||||||||||||||
BBB/Baa2 |
7,032 | 12,173 | 27,676 | 46,881 | (32,962 | ) | 13,919 | 4,577 | ||||||||||||||||||||
BB/Ba2 or lower |
2,489 | 5,762 | 7,676 | 15,927 | (9,116 | ) | 6,811 | 4,544 | ||||||||||||||||||||
Unrated |
326 | 927 | 358 | 1,611 | (13 | ) | 1,598 | 1,259 | ||||||||||||||||||||
Total |
$28,394 | $54,829 | $101,642 | $184,865 | $(117,461 | ) | $67,404 | $40,616 |
Goldman Sachs March 2013 Form 10-Q | 169 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
170 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Credit Exposure by Industry
Cash | OTC Derivatives | Loans and
Lending Commitments 1 |
||||||||||||||||||||||||||
As of | As of | As of | ||||||||||||||||||||||||||
in millions |
|
March 2013 |
|
|
December 2012 |
|
|
March 2013 |
|
|
December 2012 |
|
|
March 2013 |
|
|
December 2012 |
| ||||||||||
Asset Managers & Funds |
$ | $ | $ 9,836 | $10,552 | $ 2,111 | $ 1,673 | ||||||||||||||||||||||
Banks, Brokers & Other Financial Institutions |
10,398 | 10,507 | 17,397 | 21,310 | 8,474 | 6,192 | ||||||||||||||||||||||
Consumer Products, Non-Durables & Retail |
| | 2,156 | 1,516 | 14,139 | 13,304 | ||||||||||||||||||||||
Government & Central Banks |
52,935 | 62,162 | 15,178 | 14,729 | 1,695 | 1,782 | ||||||||||||||||||||||
Healthcare & Education |
| | 3,952 | 3,764 | 8,220 | 7,717 | ||||||||||||||||||||||
Insurance |
| | 3,628 | 4,214 | 3,224 | 3,199 | ||||||||||||||||||||||
Natural Resources & Utilities |
| | 4,830 | 4,383 | 16,972 | 16,360 | ||||||||||||||||||||||
Real Estate |
| | 330 | 381 | 4,332 | 3,796 | ||||||||||||||||||||||
Technology, Media, Telecommunications & Services |
| | 1,744 | 2,016 | 16,403 | 17,674 | ||||||||||||||||||||||
Transportation |
| | 904 | 1,207 | 6,415 | 6,557 | ||||||||||||||||||||||
Other |
| | 3,630 | 3,332 | 5,373 | 4,650 | ||||||||||||||||||||||
Total 2 |
$63,333 | $72,669 | $63,585 | $67,404 | $87,358 | $82,904 |
Credit Exposure by Region
Cash | OTC Derivatives | Loans and
Lending Commitments 1 |
||||||||||||||||||||||||||
As of | As of | As of | ||||||||||||||||||||||||||
in millions |
|
March 2013 |
|
|
December 2012 |
|
|
March 2013 |
|
|
December 2012 |
|
|
March 2013 |
|
|
December 2012 |
| ||||||||||
Americas |
$55,124 | $65,193 | $28,793 | $32,968 | $60,433 | $59,792 | ||||||||||||||||||||||
EMEA 3 |
2,486 | 1,683 | 27,858 | 26,739 | 24,485 | 21,104 | ||||||||||||||||||||||
Asia |
5,723 | 5,793 | 6,934 | 7,697 | 2,440 | 2,008 | ||||||||||||||||||||||
Total 2 |
$63,333 | $72,669 | $63,585 | $67,404 | $87,358 | $82,904 |
Credit Exposure by Credit Quality
Cash | OTC Derivatives | Loans and
Lending Commitments 1 |
||||||||||||||||||||||||||
As of | As of | As of | ||||||||||||||||||||||||||
in millions Credit Rating Equivalent |
|
March 2013 |
|
|
December 2012 |
|
|
March 2013 |
|
|
December 2012 |
|
|
March 2013 |
|
|
December 2012 |
| ||||||||||
AAA/Aaa |
$50,679 | $59,825 | $ 3,598 | $ 3,730 | $ 2,164 | $ 2,179 | ||||||||||||||||||||||
AA/Aa2 |
5,580 | 6,356 | 16,951 | 16,445 | 6,996 | 7,220 | ||||||||||||||||||||||
A/A2 |
5,850 | 5,068 | 22,830 | 24,901 | 21,887 | 21,901 | ||||||||||||||||||||||
BBB/Baa2 |
228 | 326 | 11,730 | 13,919 | 27,903 | 26,313 | ||||||||||||||||||||||
BB/Ba2 or lower |
996 | 1,094 | 6,556 | 6,811 | 28,243 | 25,291 | ||||||||||||||||||||||
Unrated |
| | 1,920 | 1,598 | 165 | | ||||||||||||||||||||||
Total 2 |
$63,333 | $72,669 | $63,585 | $67,404 | $87,358 | $82,904 |
1. | Includes approximately $17 billion and $12 billion of loans as of March 2013 and December 2012, respectively, and approximately $70 billion and $71 billion of lending commitments as of March 2013 and December 2012, respectively. Excludes certain bank loans and bridge loans and certain lending commitments that are risk managed as part of market risk using VaR and sensitivity measures. |
2. | The firm bears credit risk related to resale agreements and securities borrowed only to the extent that cash advanced or the value of securities pledged or delivered to the counterparty exceeds the value of the collateral received. The firm also has credit exposure on repurchase agreements and securities loaned to the extent that the value of securities pledged or delivered to the counterparty for these transactions exceeds the amount of cash or collateral received. We had approximately $40 billion and $37 billion as of March 2013 and December 2012, respectively, in credit exposure related to securities financing transactions reflecting both netting agreements and collateral that management considers when determining credit risk. |
3. | EMEA (Europe, Middle East and Africa). |
Goldman Sachs March 2013 Form 10-Q | 171 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Selected Country Exposures
As of March 2013 | ||||||||||||||||||||||||||||||||||||||||
Credit Exposure | Market Exposure | |||||||||||||||||||||||||||||||||||||||
in millions | Loans | |
OTC Derivatives |
|
Other | Gross Funded | Hedges | Total Net Funded Credit Exposure |
Unfunded Credit Exposure |
Total Credit Exposure | Debt | |
Equities and Other |
|
|
Credit Derivatives |
|
|
Total Market |
| ||||||||||||||||||||
Greece |
||||||||||||||||||||||||||||||||||||||||
Sovereign |
$ | $ 92 | $ | $ 92 | $ | $ 92 | $ | $ 92 | $ 36 | $ | $ | $ 36 | ||||||||||||||||||||||||||||
Non-Sovereign |
| 18 | 6 | 24 | | 24 | | 24 | 60 | 32 | (28 | ) | 64 | |||||||||||||||||||||||||||
Total Greece |
| 110 | 6 | 116 | | 116 | | 116 | 96 | 32 | (28 | ) | 100 | |||||||||||||||||||||||||||
Ireland |
||||||||||||||||||||||||||||||||||||||||
Sovereign |
| 1 | | 1 | | 1 | | 1 | (11 | ) | | (240 | ) | (251 | ) | |||||||||||||||||||||||||
Non-Sovereign |
454 | 281 | 83 | 818 | (13 | ) | 805 | 28 | 833 | 210 | 60 | 149 | 419 | |||||||||||||||||||||||||||
Total Ireland |
454 | 282 | 83 | 819 | (13 | ) | 806 | 28 | 834 | 199 | 60 | (91 | ) | 168 | ||||||||||||||||||||||||||
Italy |
||||||||||||||||||||||||||||||||||||||||
Sovereign |
| 1,809 | 64 | 1,873 | (1,717 | ) | 156 | | 156 | (566 | ) | | (418 | ) | (984 | ) | ||||||||||||||||||||||||
Non-Sovereign |
100 | 611 | 114 | 825 | (29 | ) | 796 | 439 | 1,235 | 167 | 1 | (1,492 | ) | (1,324 | ) | |||||||||||||||||||||||||
Total Italy |
100 | 2,420 | 178 | 2,698 | (1,746 | ) | 952 | 439 | 1,391 | (399 | ) | 1 | (1,910 | ) | (2,308 | ) | ||||||||||||||||||||||||
Portugal |
||||||||||||||||||||||||||||||||||||||||
Sovereign |
| 128 | 53 | 181 | | 181 | | 181 | 257 | | (188 | ) | 69 | |||||||||||||||||||||||||||
Non-Sovereign |
| 22 | 2 | 24 | | 24 | | 24 | 167 | (8 | ) | (322 | ) | (163 | ) | |||||||||||||||||||||||||
Total Portugal |
| 150 | 55 | 205 | | 205 | | 205 | 424 | (8 | ) | (510 | ) | (94 | ) | |||||||||||||||||||||||||
Spain |
||||||||||||||||||||||||||||||||||||||||
Sovereign |
| 54 | | 54 | | 54 | | 54 | (23 | ) | | 6 | (17 | ) | ||||||||||||||||||||||||||
Non-Sovereign |
1,173 | 182 | 80 | 1,435 | (65 | ) | 1,370 | 735 | 2,105 | 1,465 | 61 | (278 | ) | 1,248 | ||||||||||||||||||||||||||
Total Spain |
1,173 | 236 | 80 | 1,489 | (65 | ) | 1,424 | 735 | 2,159 | 1,442 | 61 | (272 | ) | 1,231 | ||||||||||||||||||||||||||
Total |
$1,727 | 1 | $3,198 | 2 | $402 | $5,327 | $(1,824 | ) 3 | $3,503 | $1,202 | $4,705 | $1,762 | $146 | $(2,811 | ) 3 | $ (903 | ) |
1. | Principally consists of collateralized loans. |
2. | Includes the benefit of $6.6 billion of cash and U.S. Treasury securities collateral and excludes non-U.S. government and agency obligations and corporate securities collateral of $393 million. |
3. | Includes written and purchased credit derivative notionals reduced by the fair values of such credit derivatives. |
172 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
As of December 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Exposure | Market Exposure | |||||||||||||||||||||||||||||||||||||||||||||||||
in millions | Loans | |
OTC Derivatives |
|
Other | |
Gross Funded |
|
Hedges |
|
Total Net Funded Credit Exposure |
|
|
Unfunded Credit |
|
|
Total Credit Exposure |
|
Debt | |
Equities and Other |
|
|
Credit Derivatives |
|
|
Total Market |
| ||||||||||||||||||||||
Greece |
||||||||||||||||||||||||||||||||||||||||||||||||||
Sovereign |
$ | $ | $ | $ | $ | $ | $ | $ | $ 30 | $ | $ | $ 30 | ||||||||||||||||||||||||||||||||||||||
Non-Sovereign |
| 5 | 1 | 6 | | 6 | | 6 | 65 | 15 | (5 | ) | 75 | |||||||||||||||||||||||||||||||||||||
Total Greece |
| 5 | 1 | 6 | | 6 | | 6 | 95 | 15 | (5 | ) | 105 | |||||||||||||||||||||||||||||||||||||
Ireland |
||||||||||||||||||||||||||||||||||||||||||||||||||
Sovereign |
| 1 | 103 | 104 | | 104 | | 104 | 8 | | (150 | ) | (142 | ) | ||||||||||||||||||||||||||||||||||||
Non-Sovereign |
| 126 | 36 | 162 | | 162 | | 162 | 801 | 74 | 155 | 1,030 | ||||||||||||||||||||||||||||||||||||||
Total Ireland |
| 127 | 139 | 266 | | 266 | | 266 | 809 | 74 | 5 | 888 | ||||||||||||||||||||||||||||||||||||||
Italy |
||||||||||||||||||||||||||||||||||||||||||||||||||
Sovereign |
| 1,756 | 1 | 1,757 | (1,714 | ) | 43 | | 43 | (415 | ) | | (603 | ) | (1,018 | ) | ||||||||||||||||||||||||||||||||||
Non-Sovereign |
43 | 560 | 129 | 732 | (33 | ) | 699 | 587 | 1,286 | 434 | 65 | (996 | ) | (497 | ) | |||||||||||||||||||||||||||||||||||
Total Italy |
43 | 2,316 | 130 | 2,489 | (1,747 | ) | 742 | 587 | 1,329 | 19 | 65 | (1,599 | ) | (1,515 | ) | |||||||||||||||||||||||||||||||||||
Portugal |
||||||||||||||||||||||||||||||||||||||||||||||||||
Sovereign |
| 141 | 61 | 202 | | 202 | | 202 | 155 | | (226 | ) | (71 | ) | ||||||||||||||||||||||||||||||||||||
Non-Sovereign |
| 44 | 2 | 46 | | 46 | | 46 | 168 | (6 | ) | (133 | ) | 29 | ||||||||||||||||||||||||||||||||||||
Total Portugal |
| 185 | 63 | 248 | | 248 | | 248 | 323 | (6 | ) | (359 | ) | (42 | ) | |||||||||||||||||||||||||||||||||||
Spain |
||||||||||||||||||||||||||||||||||||||||||||||||||
Sovereign |
| 75 | | 75 | | 75 | | 75 | 986 | | (268 | ) | 718 | |||||||||||||||||||||||||||||||||||||
Non-Sovereign |
1,048 | 259 | 23 | 1,330 | (95 | ) | 1,235 | 733 | 1,968 | 1,268 | 83 | (186 | ) | 1,165 | ||||||||||||||||||||||||||||||||||||
Total Spain |
1,048 | 334 | 23 | 1,405 | (95 | ) | 1,310 | 733 | 2,043 | 2,254 | 83 | (454 | ) | 1,883 | ||||||||||||||||||||||||||||||||||||
Total |
$1,091 | 1 | $2,967 | 2 | $356 | $4,414 | $(1,842 | ) 3 | $2,572 | $1,320 | $3,892 | $3,500 | $231 | $(2,412 | ) 3 | $1,319 |
1. | Principally consists of collateralized loans. |
2. | Includes the benefit of $6.6 billion of cash and U.S. Treasury securities collateral and excludes non-U.S. government and agency obligations and corporate securities collateral of $357 million. |
3. | Includes written and purchased credit derivative notionals reduced by the fair values of such credit derivatives. |
Goldman Sachs March 2013 Form 10-Q | 173 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
174 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 175 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
176 | Goldman Sachs March 2013 Form 10-Q |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
Goldman Sachs March 2013 Form 10-Q | 177 |
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Managements Discussion and Analysis
178 | Goldman Sachs March 2013 Form 10-Q |
Goldman Sachs March 2013 Form 10-Q | 179 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
Period | |
Total Number of Shares |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
1 |
|
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs |
1 | ||||
Month #1 (January 1, 2013 to January 31, 2013) |
2,701,284 | 2 | $144.82 | 2,630,530 | 18,858,321 | |||||||||||
Month #2 (February 1, 2013 to February 28, 2013) |
4,761,527 | 152.15 | 4,761,527 | 14,096,794 | ||||||||||||
Month #3 (March 1, 2013 to March 31, 2013) |
2,738,346 | 153.11 | 2,738,346 | 11,358,448 | 3 | |||||||||||
Total |
10,201,157 | 10,130,403 |
1. | On March 21, 2000, we announced that the Board of Directors of Group Inc. (Board) had approved a repurchase program, pursuant to which up to 15 million shares of our common stock may be repurchased. This repurchase program was increased by an aggregate of 355 million shares by resolutions of our Board adopted from June 2001 through July 2011. We use our share repurchase program to help maintain the appropriate level of common equity. The repurchase program is effected primarily through regular open-market purchases, the amounts and timing of which are determined primarily by the firms current and projected capital position (i.e., comparisons of our desired level and composition of capital to our actual level and composition of capital), but which may also be influenced by general market conditions and the prevailing price and trading volumes of our common stock. The repurchase program has no set expiration or termination date. Any repurchase of our common stock requires approval by the Federal Reserve Board. |
2. | Includes 70,754 shares remitted by employees to satisfy minimum statutory withholding taxes on equity-based awards that were delivered to employees during the period. |
3. | On April 15, 2013, the Board authorized the repurchase of an additional 75.0 million shares of common stock pursuant to the firms existing share repurchase program. As of April 15, 2013, under the share repurchase program approved by the Board, we can repurchase up to 86.4 million additional shares of common stock, including the newly authorized amount; however, any such repurchases are subject to the approval of the Federal Reserve Board. |
180 | Goldman Sachs March 2013 Form 10-Q |
Exhibits
3.1 |
Restated Certificate of Incorporation of The Goldman Sachs Group, Inc., amended as of May 6, 2013. | |
4.1 |
Form of Amendment to Warrant (originally issued on October 1, 2008), dated as of March 25, 2013, between The Goldman Sachs Group, Inc. and each Warrantholder named therein (incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K, filed March 26, 2013). | |
12.1 |
Statement re: Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends. | |
15.1 |
Letter re: Unaudited Interim Financial Information. | |
31.1 |
Rule 13a-14(a) Certifications. | |
32.1 |
Section 1350 Certifications.* | |
101 |
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Earnings for the three months ended March 31, 2013 and March 31, 2012, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2013 and March 31, 2012, (iii) the Condensed Consolidated Statements of Financial Condition as of March 31, 2013 and December 31, 2012, (iv) the Condensed Consolidated Statements of Changes in Shareholders Equity for the three months ended March 31, 2013 and year ended December 31, 2012, (v) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and March 31, 2012, and (vi) the notes to the Condensed Consolidated Financial Statements. | |
* This information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934. |
Goldman Sachs March 2013 Form 10-Q | 181 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE GOLDMAN SACHS GROUP, INC. | ||
By: |
/s/ Harvey M. Schwartz | |
Name: Harvey M. Schwartz | ||
Title: Chief Financial Officer | ||
By: |
/s/ Sarah E. Smith | |
Name: Sarah E. Smith | ||
Title: Principal Accounting Officer |
Date: May 8, 2013
182 | Goldman Sachs March 2013 Form 10-Q |
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
THE GOLDMAN SACHS GROUP, INC.
THE GOLDMAN SACHS GROUP, INC., a corporation organized and existing under the Delaware General Corporation Law (the Corporation), DOES HEREBY CERTIFY:
1. The name of the Corporation is The Goldman Sachs Group, Inc. The date of filing of its original certificate of incorporation with the Secretary of State of the State of Delaware was July 21, 1998.
2. This Restated Certificate of Incorporation restates and integrates and does not further amend the provisions of the certificate of incorporation of the Corporation as heretofore amended or supplemented. There is no discrepancy between the provisions of this Restated Certificate of Incorporation and the provisions of the certificate of incorporation of the Corporation as heretofore amended or supplemented. This Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Section 245 of the General Corporation Law of the State of Delaware. The text of the certificate of incorporation is hereby restated to read herein as set forth in full:
FIRST. The name of the Corporation is The Goldman Sachs Group, Inc.
SECOND. The address of the Corporations registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law. Without limiting the generality of the foregoing, the Corporation shall have all of the powers conferred on corporations by the Delaware General Corporation Law and other law, including the power and authority to make an initial charitable contribution (as defined in Section 170(c) of the Internal Revenue Code of 1986, as currently in effect or as the same may hereafter be amended) of up to an aggregate of $200,000,000 to one or more entities (the Contribution), and to make other charitable contributions from time to time thereafter, in such amounts, on such terms and conditions and for such purposes as may be lawful.
FOURTH. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 4,350,000,000, of which 4,000,000,000 shares of the par value of $0.01 per share shall be a separate class designated as Common Stock, 200,000,000 shares of the par value of $0.01 per share shall be a separate class designated as Nonvoting Common Stock and 150,000,000 shares of the par value of $0.01 per share shall be a separate class designated as Preferred Stock.
COMMON STOCK AND NONVOTING COMMON STOCK
Except as set forth in this Article FOURTH, the Common Stock and the Nonvoting Common Stock (together, the Common Shares) shall have the same rights and privileges and shall rank equally, share ratably and be identical in all respects as to all matters.
(i) Voting. Except as may be provided in this Restated Certificate of Incorporation or required by law, the Common Stock shall have voting rights in the election of directors and on all other matters presented to stockholders, with each holder of Common Stock being entitled to one vote for each share of Common Stock held of record by such holder on such matters. The Nonvoting Common Stock shall have no voting rights other than such rights as may be required by the first sentence of Section 242(b)(2) of the Delaware General Corporation Law or any similar provision hereafter enacted; provided that an amendment of this Restated Certificate of Incorporation to increase or decrease the number of authorized shares of Nonvoting Common Stock (but not below the number of shares thereof then outstanding) may be adopted by resolution adopted by the board of directors of the Corporation and approved by the affirmative vote of the holders of a majority of the voting power of all outstanding shares of Common Stock of the Corporation and all other outstanding shares of stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporation Law or any similar provision hereafter enacted, with such outstanding shares of Common Stock and other stock considered for this purpose as a single class, and no vote of the holders of any shares of Nonvoting Common Stock, voting separately as a class, shall be required therefor.
(ii) Dividends. Subject to the rights of the holders of any series of Preferred Stock, holders of Common Stock and holders of Nonvoting Common Stock shall be entitled to receive such dividends and distributions (whether payable in cash or otherwise) as may be declared on the Common Shares by the board of directors of the Corporation from time to time out of assets or funds of the Corporation legally available therefor; provided that the board of directors of the Corporation shall declare no dividend, and no dividend shall be paid, with respect to any outstanding share of Common Stock or Nonvoting Common Stock, whether in cash or otherwise (including any dividend in shares of Common Stock on or with respect to shares of Common Stock or any dividend in shares of Nonvoting Common Stock on or with respect to shares of Nonvoting Common Stock (collectively, Stock Dividends)), unless, simultaneously, the same dividend is declared or paid with respect to each share of Common Stock and Nonvoting Common Stock. If a Stock Dividend is declared or paid with respect to one class, then a Stock Dividend shall likewise be declared or paid with respect to the other class and shall consist of shares of such other class in a number that bears the same relationship to the total number of shares of such other class, issued and outstanding immediately prior to the payment of such dividend, as the number of shares comprising the Stock Dividend with respect to the first referenced class bears to the total number of
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shares of such first referenced class, issued and outstanding immediately prior to the payment of such dividend. Stock Dividends with respect to Common Stock may be paid only with shares of Common Stock. Stock Dividends with respect to Nonvoting Common Stock may be paid only with shares of Nonvoting Common Stock. Notwithstanding the foregoing, in the case of any dividend in the form of capital stock of a subsidiary of the Corporation, the capital stock of the subsidiary distributed to holders of Common Stock shall be identical to the capital stock of the subsidiary distributed to holders of Nonvoting Common Stock, except that the capital stock distributed to holders of Common Stock may have full or any other voting rights and the capital stock distributed to holders of Nonvoting Common Stock shall be non-voting to the same extent as the Nonvoting Common Stock is non-voting.
(iii) Subdivisions, Combinations and Mergers. If the Corporation shall in any manner split, subdivide or combine the outstanding shares of Common Stock or the outstanding shares of Nonvoting Common Stock, the outstanding shares of the other such class of the Common Shares shall likewise be split, subdivided or combined in the same manner proportionately and on the same basis per share. In the event of any merger, statutory share exchange, consolidation or similar form of corporate transaction involving the Corporation (whether or not the Corporation is the surviving entity), the holders of Common Stock and the holders of Nonvoting Common Stock shall be entitled to receive the same per share consideration, if any, except that any securities received by holders of Common Stock in consideration of such stock may have full or any other voting rights and any securities received by holders of Nonvoting Common Stock in consideration of such stock shall be non-voting to the same extent as the Nonvoting Common Stock is non-voting.
(iv) Rights on Liquidation. Subject to the rights of the holders of any series of Preferred Stock, in the event of any liquidation, dissolution or winding-up of the Corporation (whether voluntary or involuntary), the assets of the Corporation available for distribution to stockholders shall be distributed in equal amounts per share to the holders of Common Stock and the holders of Nonvoting Common Stock, as if such classes constituted a single class. For purposes of this paragraph, a merger, statutory share exchange, consolidation or similar corporate transaction involving the Corporation (whether or not the Corporation is the surviving entity), or the sale, transfer or lease by the Corporation of all or substantially all its assets, shall not constitute or be deemed a liquidation, dissolution or winding-up of the Corporation.
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PREFERRED STOCK
Shares of Preferred Stock may be issued in one or more series from time to time as determined by the board of directors of the Corporation, and the board of directors of the Corporation is authorized to fix by resolution or resolutions the designations and the powers, preferences and rights, and the qualifications, limitations and restrictions thereof, of the shares of each series of Preferred Stock, including the following:
(i) the distinctive serial designation of such series which shall distinguish it from other series;
(ii) the number of shares included in such series;
(iii) whether dividends shall be payable to the holders of the shares of such series and, if so, the basis on which such holders shall be entitled to receive dividends (which may include, without limitation, a right to receive such dividends or distributions as may be declared on the shares of such series by the board of directors of the Corporation, a right to receive such dividends or distributions, or any portion or multiple thereof, as may be declared on the Common Stock or any other class of stock or, in addition to or in lieu of any other right to receive dividends, a right to receive dividends at a particular rate or at a rate determined by a particular method, in which case such rate or method of determining such rate may be set forth), the form of such dividend, any conditions on which such dividends shall be payable and the date or dates, if any, on which such dividends shall be payable;
(iv) whether dividends on the shares of such series shall be cumulative and, if so, the date or dates or method of determining the date or dates from which dividends on the shares of such series shall be cumulative;
(v) the amount or amounts, if any, which shall be payable out of the assets of the Corporation to the holders of the shares of such series upon the voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, and the relative rights of priority, if any, of payment of the shares of such series;
(vi) the price or prices (in cash, securities or other property or a combination thereof) at which, the period or periods within which and the terms and conditions upon which the shares of such series may be redeemed, in whole or in part, at the option of the Corporation or at the option of the holder or holders thereof or upon the happening of a specified event or events;
(vii) the obligation, if any, of the Corporation to purchase or redeem shares of such series pursuant to a sinking fund or otherwise and the price or prices (in cash, securities or other property or a combination thereof) at which, the period or periods within which and the terms and conditions upon which the shares of such series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
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(viii) whether or not the shares of such series shall be convertible or exchangeable, at any time or times at the option of the holder or holders thereof or at the option of the Corporation or upon the happening of a specified event or events, into shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or any other securities or property of the Corporation or any other entity, and the price or prices (in cash, securities or other property or a combination thereof) or rate or rates of conversion or exchange and any adjustments applicable thereto; and
(ix) whether or not the holders of the shares of such series shall have voting rights, in addition to the voting rights provided by law, and if so the terms of such voting rights, which may provide, among other things and subject to the other provisions of this Restated Certificate of Incorporation, that each share of such series shall carry one vote or more or less than one vote per share, that the holders of such series shall be entitled to vote on certain matters as a separate class (which for such purpose may be comprised solely of such series or of such series and one or more other series or classes of stock of the Corporation) and that all the shares of such series entitled to vote on a particular matter shall be deemed to be voted on such matter in the manner that a specified portion of the voting power of the shares of such series or separate class are voted on such matter.
For all purposes, this Restated Certificate of Incorporation shall include each certificate of designations (if any) setting forth the terms of a series of Preferred Stock.
Subject to the rights, if any, of the holders of any series of Preferred Stock set forth in a certificate of designations, an amendment of this Restated Certificate of Incorporation to increase or decrease the number of authorized shares of any series of Preferred Stock (but not below the number of shares thereof then outstanding) may be adopted by resolution adopted by the board of directors of the Corporation and approved by the affirmative vote of the holders of a majority of the voting power of all outstanding shares of Common Stock of the Corporation and all other outstanding shares of stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporation Law or any similar provision hereafter enacted, with such outstanding shares of Common Stock and other stock considered for this purpose as a single class, and no vote of the holders of any series of Preferred Stock, voting as a separate class, shall be required therefor.
Except as otherwise required by law or provided in the certificate of designations for the relevant series, holders of Common Shares, as such, shall not be entitled to vote on any amendment of this Restated Certificate of Incorporation that alters or changes the powers, preferences, rights or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other series of Preferred Stock, to vote thereon as a separate class pursuant to this Restated Certificate of Incorporation or pursuant to the Delaware General Corporation Law as then in effect.
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Pursuant to the authority conferred by this Article FOURTH upon the board of directors of the Corporation and authority delegated by the board of directors to the Securities Issuance Committee of the board of directors of the Corporation (the Securities Issuance Committee), the Securities Issuance Committee created a series of shares of Preferred Stock designated as Floating Rate Non-Cumulative Preferred Stock, Series A, by filing a certificate of designations of the Corporation with the Secretary of State of the State of Delaware on April 22, 2005, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Corporations Floating Rate Non-Cumulative Preferred Stock, Series A, are set forth in Appendix A hereto and are incorporated herein by reference.
Pursuant to the authority conferred by this Article FOURTH upon the board of directors of the Corporation and authority delegated by the board of directors to the Securities Issuance Committee, the Securities Issuance Committee created a series of shares of Preferred Stock designated as 6.20% Non-Cumulative Preferred Stock, Series B, by filing a certificate of designations of the Corporation with the Secretary of State of the State of Delaware on October 28, 2005, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Corporations 6.20% Non-Cumulative Preferred Stock, Series B, are set forth in Appendix B hereto and are incorporated herein by reference.
Pursuant to the authority conferred by this Article FOURTH upon the board of directors of the Corporation and authority delegated by the board of directors to the Securities Issuance Committee, the Securities Issuance Committee created a series of shares of Preferred Stock designated as Floating Rate Non-Cumulative Preferred Stock, Series C, by filing a certificate of designations of the Corporation with the Secretary of State of the State of Delaware on October 28, 2005, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Corporations Floating Rate Non-Cumulative Preferred Stock, Series C, are set forth in Appendix C hereto and are incorporated herein by reference.
Pursuant to the authority conferred by this Article FOURTH upon the board of directors of the Corporation and authority delegated by the board of directors to the Securities Issuance Committee, the Securities Issuance Committee created a series of shares of Preferred Stock designated as Floating Rate Non-Cumulative Preferred Stock, Series D, by filing a certificate of designations of the Corporation with the Secretary of State of the State of Delaware on May 23, 2006, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Corporations Floating Rate Non-Cumulative Preferred Stock, Series D, are set forth in Appendix D hereto and are incorporated herein by reference.
Pursuant to the authority conferred by this Article FOURTH upon the board of directors of the Corporation and authority delegated by the board of directors to the
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Securities Issuance Committee, the Securities Issuance Committee created a series of shares of Preferred Stock designated as Perpetual Non-Cumulative Preferred Stock, Series E, by filing a certificate of designations of the Corporation with the Secretary of State of the State of Delaware on May 14, 2007, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Corporations Perpetual Non-Cumulative Preferred Stock, Series E, are set forth in Appendix E hereto and are incorporated herein by reference.
Pursuant to the authority conferred by this Article FOURTH upon the board of directors of the Corporation and authority delegated by the board of directors to the Securities Issuance Committee, the Securities Issuance Committee created a series of shares of Preferred Stock designated as Perpetual Non-Cumulative Preferred Stock, Series F, by filing a certificate of designations of the Corporation with the Secretary of State of the State of Delaware on May 14, 2007, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Corporations Perpetual Non-Cumulative Preferred Stock, Series F, are set forth in Appendix F hereto and are incorporated herein by reference.
Pursuant to the authority conferred by this Article FOURTH upon the board of directors of the Corporation and authority delegated by the board of directors to the Securities Issuance Committee, the Securities Issuance Committee created a series of shares of Preferred Stock designated as 5.95% Non-Cumulative Preferred Stock, Series I, by filing a certificate of designations of the Corporation with the Secretary of State of the State of Delaware on October 23, 2012, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Corporations 5.95% Non-Cumulative Preferred Stock, Series I, are set forth in Appendix G hereto and are incorporated herein by reference.
Pursuant to the authority conferred by this Article FOURTH upon the board of directors of the Corporation and authority delegated by the board of directors to the Securities Issuance Committee, the Securities Issuance Committee created a series of shares of Preferred Stock designated as 5.50% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series J, by filing a certificate of designations of the Corporation with the Secretary of State of the State of Delaware on April 23, 2013, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Corporations 5.50% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series J, are set forth in Appendix H hereto and are incorporated herein by reference.
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OPTIONS, WARRANTS AND OTHER RIGHTS
The board of directors of the Corporation is authorized to create and issue options, warrants and other rights from time to time entitling the holders thereof to purchase securities or other property of the Corporation or any other entity, including any class or series of stock of the Corporation or any other entity and whether or not in connection with the issuance or sale of any securities or other property of the Corporation, for such consideration (if any), at such times and upon such other terms and conditions as may be determined or authorized by the board of directors of the Corporation and set forth in one or more agreements or instruments. Among other things and without limitation, such terms and conditions may provide for the following:
(i) adjusting the number or exercise price of such options, warrants or other rights or the amount or nature of the securities or other property receivable upon exercise thereof in the event of a subdivision or combination of any securities, or a recapitalization, of the Corporation, the acquisition by any person of beneficial ownership of securities representing more than a designated percentage of the voting power of any outstanding series, class or classes of securities, a change in ownership of the Corporations securities or a merger, statutory share exchange, consolidation, reorganization, sale of assets or other occurrence relating to the Corporation or any of its securities, and restricting the ability of the Corporation to enter into an agreement with respect to any such transaction absent an assumption by another party or parties thereto of the obligations of the Corporation under such options, warrants or other rights;
(ii) restricting, precluding or limiting the exercise, transfer or receipt of such options, warrants or other rights by any person that becomes the beneficial owner of a designated percentage of the voting power of any outstanding series, class or classes of securities of the Corporation or any direct or indirect transferee of such a person, or invalidating or voiding such options, warrants or other rights held by any such person or transferee; and
(iii) permitting the board of directors (or certain directors specified or qualified by the terms of the governing instruments of such options, warrants or other rights) to redeem, terminate or exchange such options, warrants or other rights.
This paragraph shall not be construed in any way to limit the power of the board of directors of the Corporation to create and issue options, warrants or other rights.
FIFTH. [Reserved]
SIXTH. All corporate powers shall be exercised by the board of directors of the Corporation, except as otherwise specifically required by law or as otherwise provided in this Restated Certificate of Incorporation. Any meeting of stockholders may be postponed by action of the board of directors at any time in advance of such meeting. The board of directors of the Corporation shall have the power to adopt such rules and regulations for the conduct of the meetings and management of the affairs of the
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Corporation as they may deem proper and the power to adjourn any meeting of stockholders without a vote of the stockholders, which powers may be delegated by the board of directors to the chairman of such meeting either in such rules and regulations or pursuant to the by-laws of the Corporation.
Special meetings of stockholders of the Corporation may be called at any time by, but only by, the board of directors of the Corporation or, as and to the extent required by the by-laws of the Corporation, by the Secretary of the Corporation upon the written request of the holders of record of not less than 25% of the voting power of all outstanding shares of Common Stock of the Corporation, such voting power to be calculated and determined in the manner specified, and with any limitations as may be set forth, in the Corporations by-laws (the Requisite Percent). Each special meeting shall be held at such date, time and place either within or without the State of Delaware as may be stated in the notice of the meeting.
The board of directors of the Corporation is authorized to adopt, amend or repeal by-laws of the Corporation. No adoption, amendment or repeal of a by-law by action of stockholders shall be effective unless approved by the affirmative vote of not less than a majority of shares present in person or represented by proxy at the meeting and entitled to vote on such matter, with all shares of Common Stock of the Corporation and other stock of the Corporation entitled to vote on such matter considered for this purpose as a single class; for purposes of this sentence votes cast for or against and abstentions with respect to such matter shall be counted as shares of stock of the Corporation entitled to vote on such matter, while broker nonvotes (or other shares of stock of the Corporation similarly not entitled to vote) shall not be counted as shares entitled to vote on such matter. Any vote of stockholders required by this Article SIXTH shall be in addition to any other vote of stockholders that may be required by law, this Restated Certificate of Incorporation, the by-laws of the Corporation, any agreement with a national securities exchange or otherwise.
SEVENTH. Elections of directors need not be by written ballot except and to the extent provided in the by-laws of the Corporation.
EIGHTH. The number of directors of the Corporation shall be fixed only by resolution of the board of directors of the Corporation from time to time. Each director who is serving as a director on the date of this Restated Certificate of Incorporation shall hold office until the next annual meeting of stockholders after such date and until his or her successor has been duly elected and qualified, notwithstanding that such director may have been elected for a term that extended beyond the date of such next annual meeting of stockholders. At each annual meeting of stockholders after the date of this Restated Certificate of Incorporation, directors elected at such annual meeting shall hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified.
Vacancies and newly created directorships resulting from any increase in the authorized number of directors or from any other cause (other than vacancies and newly created directorships which the holders of any class or classes of stock or series
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thereof are expressly entitled by this Restated Certificate of Incorporation to fill) shall be filled by, and only by, a majority of the directors then in office, although less than a quorum, or by the sole remaining director. Any director appointed to fill a vacancy or a newly created directorship shall hold office until the next annual meeting of stockholders, and until his or her successor is elected and qualified or until his or her earlier resignation or removal.
Notwithstanding the foregoing, in the event that the holders of any class or series of Preferred Stock of the Corporation shall be entitled, voting separately as a class, to elect any directors of the Corporation, then the number of directors that may be elected by such holders voting separately as a class shall be in addition to the number fixed pursuant to a resolution of the board of directors of the Corporation. Except as otherwise provided in the terms of such class or series, (i) the terms of the directors elected by such holders voting separately as a class shall expire at the annual meeting of stockholders next succeeding their election and (ii) any director or directors elected by such holders voting separately as a class may be removed, with or without cause, by the holders of a majority of the voting power of all outstanding shares of stock of the Corporation entitled to vote separately as a class in an election of such directors.
NINTH. In taking any action, including action that may involve or relate to a change or potential change in the control of the Corporation, a director of the Corporation may consider, among other things, both the long-term and short-term interests of the Corporation and its stockholders and the effects that the Corporations actions may have in the short term or long term upon any one or more of the following matters:
(i) the prospects for potential growth, development, productivity and profitability of the Corporation;
(ii) the Corporations current employees;
(iii) the retired former partners of The Goldman Sachs Group, L.P. (GS Group) and the Corporations employees and other beneficiaries receiving or entitled to receive retirement, welfare or similar benefits from or pursuant to any plan sponsored, or agreement entered into, by the Corporation;
(iv) the Corporations customers and creditors;
(v) the ability of the Corporation to provide, as a going concern, goods, services, employment opportunities and employment benefits and otherwise to contribute to the communities in which it does business; and
(vi) such other additional factors as a director may consider appropriate in such circumstances.
Nothing in this Article NINTH shall create any duty owed by any director of the Corporation to any person or entity to consider, or afford any particular weight to, any of the foregoing matters or to limit his or her consideration to the foregoing matters. No such employee, retired former partner of GS Group, former employee, beneficiary, customer, creditor or community or member thereof shall have any rights against any director of the Corporation or the Corporation under this Article NINTH.
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TENTH. From and after the consummation of the initial public offering of the shares of Common Stock of the Corporation, no action of stockholders of the Corporation required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting of stockholders, without prior notice and without a vote, and the power of stockholders of the Corporation to consent in writing to the taking of any action without a meeting is specifically denied. Notwithstanding this Article TENTH, the holders of any series of Preferred Stock of the Corporation shall be entitled to take action by written consent to such extent, if any, as may be provided in the terms of such series.
ELEVENTH. [Reserved]
TWELFTH. A director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director of the Corporation, except to the extent that such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as currently in effect or as the same may hereafter be amended.
Pursuant to the Plan of Incorporation of GS Group, dated as of March 8, 1999, as currently in effect or as the same may hereafter be amended (the Plan), the Corporation has the right, but not the obligation, to make special arrangements with any person who was a partner of GS Group participating in the Plan to ameliorate, in whole or in part, certain significantly disproportionate tax or other burdens. The board of directors of the Corporation is authorized to cause the Corporation to make such arrangements (which may include special payments) as the board of directors of the Corporation may, in its sole discretion, deem appropriate to effectuate the intent of the relevant provision of the Plan and the Corporation and each stockholder of the Corporation shall, to the fullest extent permitted by law, be deemed to have approved and ratified any such determination and to have waived any claim or objection on behalf of the Corporation or any such stockholder arising out of the making of such arrangements.
Pursuant to the Plan, the Corporation has the right, but not the obligation, to register with the Securities and Exchange Commission the resale of certain securities of the Corporation by directors, employees and former directors and employees of the Corporation and its subsidiaries and affiliates and former partners and employees of GS Group and its subsidiaries and affiliates and to undertake various actions and to enter into agreements and arrangements in connection therewith (collectively, the Registration Arrangements). The board of directors of the Corporation is authorized to cause the Corporation to undertake such Registration Arrangements as the board of directors of the Corporation may, in its sole discretion, deem appropriate and the Corporation and each stockholder of the Corporation shall, to the fullest extent permitted by law, be deemed to have approved and ratified any such determination and to have waived any claim or objection on behalf of the Corporation or any such stockholder arising out of the undertaking of such Registration Arrangements.
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The Corporation and each stockholder of the Corporation shall, to the fullest extent permitted by law, be deemed to have approved and ratified any decision by the board of directors of the Corporation to make the Contribution referred to in Article THIRD, including the amount thereof (up to the limit specified in Article THIRD) and to have waived any claim or objection on behalf of the Corporation or any such stockholder arising out of any such decision to make, or the making of, the Contribution.
The authorizations, approvals and ratifications contained in the second, third and fourth paragraphs of this Article TWELFTH shall not be construed to indicate that any other arrangements or contributions not specifically referred to in such paragraphs are, by reason of such omission, not within the power and authority of the board of directors of the Corporation or that the determination of the board of directors of the Corporation with respect thereto should be judged by any legal standard other than that which would have applied but for the inclusion of the second, third and fourth paragraphs of this Article TWELFTH.
No amendment, modification or repeal of this Article TWELFTH shall adversely affect any right or protection of a director of the Corporation that exists at the time of such amendment, modification or repeal.
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IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of Incorporation to be signed and attested by its duly authorized officer on this 6th day of May, 2013.
By: |
/s/ Gregory K. Palm | |
Name: Gregory K. Palm | ||
Title: Executive Vice President and General Counsel |
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Appendix A
CERTIFICATE OF DESIGNATIONS
OF
FLOATING RATE NON-CUMULATIVE PREFERRED STOCK, SERIES A
OF
THE GOLDMAN SACHS GROUP, INC.
THE GOLDMAN SACHS GROUP, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the Corporation), in accordance with the provisions of Sections 103 and 151 thereof, DOES HEREBY CERTIFY:
The Securities Issuance Committee (the Committee) of the board of directors of the Corporation (the Board of Directors), in accordance with the resolutions of the Board of Directors dated April 6, 2005, the provisions of the amended and restated certificate of incorporation and bylaws of the Corporation and applicable law, by unanimous written consent dated April 18, 2005, adopted the following resolution creating a series of 50,000 shares of Preferred Stock of the Corporation designated as Floating Rate Non-Cumulative Preferred Stock, Series A.
RESOLVED, that pursuant to the authority vested in the Committee and in accordance with the resolutions of the Board of Directors dated April 6, 2005, the provisions of the amended and restated certificate of incorporation and bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
Section 1. Designation. The distinctive serial designation of such series of Preferred Stock is Floating Rate Non-Cumulative Preferred Stock, Series A (Series A). Each share of Series A shall be identical in all respects to every other share of Series A, except as to the respective dates from which dividends thereon shall accrue, to the extent such dates may differ as permitted pursuant to Section 4(a) below.
Section 2. Number of Shares. The authorized number of shares of Series A shall be 50,000. Shares of Series A that are redeemed, purchased or otherwise acquired by the Corporation, or converted into another series of Preferred Stock, shall be cancelled and shall revert to authorized but unissued shares of Series A.
Section 3. Definitions. As used herein with respect to Series A:
(a) Board of Directors means the board of directors of the Corporation.
(b) ByLaws means the amended and restated bylaws of the Corporation, as they may be amended from time to time.
(c) Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City generally are authorized or obligated by law, regulation or executive order to close.
(d) Calculation Agent means, at any time, the person or entity appointed by the Corporation and serving as such agent at such time. The Corporation may terminate any such appointment and may appoint a successor agent at any time and from time to time, provided that the Corporation shall use its best efforts to ensure that there is, at all relevant times when the Series A is outstanding, a person or entity appointed and serving as such agent. The Calculation Agent may be a person or entity affiliated with the Corporation.
(e) Certificate of Designations means this Certificate of Designations relating to the Series A, as it may be amended from time to time.
(f) Certification of Incorporation shall mean the amended and restated certificate of incorporation of the Corporation, as it may be amended from time to time, and shall include this Certificate of Designations.
(g) Common Stock means the common stock, par value $0.01 per share, of the Corporation.
(h) Junior Stock means the Common Stock and any other class or series of stock of the Corporation (other than Series A) that ranks junior to Series A either or both as to the payment of dividends and/or as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(i) London Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is a day on which dealings in U.S. dollars are transacted in the London interbank market.
(j) Moneyline Telerate Page means the display on Moneyline Telerate, Inc., or any successor service, on the page or pages specified in Section 4 below or any replacement page or pages on that service.
(k) Parity Stock means any class or series of stock of the Corporation (other than Series A) that ranks equally with Series A both in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(l) Preferred Stock means any and all series of Preferred Stock, having a par value of $0.01 per share, of the Corporation, including the Series A.
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(m) Representative Amount means, at any time, an amount that, in the Calculation Agents judgment, is representative of a single transaction in the relevant market at the relevant time.
(n) Voting Preferred Stock means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 8(b) below) or any other matter as to which the holders of Series A are entitled to vote as specified in Section 8 of this Certificate of Designations, any and all series of Preferred Stock (other than Series A) that rank equally with Series A either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 4. Dividends.
(a) Rate. Holders of Series A shall be entitled to receive, when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) out of funds legally available for the payment of dividends under Delaware law, non-cumulative cash dividends at the rate determined as set forth below in this Section (4) applied to the liquidation preference amount of $25,000 per share of Series A. Such dividends shall be payable quarterly in arrears (as provided below in this Section 4(a)), but only when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), on February 10, May 10, August 10 and November 10 (Dividend Payment Dates), commencing on August 10, 2005; provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on Series A on such Dividend Payment Date shall instead be payable on) the immediately succeeding Business Day, unless such immediately succeeding Business Day falls in the next calendar month, in which case such Dividend Payment Date shall instead be (and any such dividend shall instead be payable on) the immediately preceding Business Day. Dividends on Series A shall not be cumulative; holders of Series A shall not be entitled to receive any dividends not declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.
Dividends that are payable on Series A on any Dividend Payment Date will be payable to holders of record of Series A as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such Dividend Payment Date or such other record date fixed by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a Dividend Record Date). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Each dividend period (a Dividend Period) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence
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on and include the date of original issue of the Series A, provided that, for any share of Series A issued after such original issue date, the initial Dividend Period for such shares may commence on and include such other date as the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) shall determine and publicly disclose) and shall end on and include the calendar day next preceding the next Dividend Payment Date. Dividends payable on the Series A in respect of any Dividend Period shall be computed by the Calculation Agent on the basis of a 360-day year and the actual number of days elapsed in such Dividend Period. Dividends payable in respect of a Dividend Period shall be payable in arrears i.e., on the first Dividend Payment Date after such Dividend Period.
The dividend rate on the Series A, for each Dividend Period, shall be a rate per annum equal to the greater of (1) 0.75% above LIBOR (as defined below) for such Dividend Period and (2) 3.75%. LIBOR, with respect to any Dividend Period, means the offered rate expressed as a percentage per annum for three-month deposits in U.S. dollars on the first day of such Dividend Period, as that rate appears on Moneyline Telerate Page 3750 as of 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period.
If the rate described in the preceding paragraph does not appear on Moneyline Telerate Page 3750, LIBOR shall be determined on the basis of the rates, at approximately 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period, at which deposits of the following kind are offered to prime banks in the London interbank market by four major banks in that market selected by the Calculation Agent: three-month deposits in U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount. The Calculation Agent shall request the principal London office of each of these banks to provide a quotation of its rate at approximately 11:00 A.M., London time. If at least two quotations are provided, LIBOR for such Dividend Period shall be the arithmetic mean of such quotations.
If fewer than two quotations are provided as described in the preceding paragraph, LIBOR for such Dividend Period shall be the arithmetic mean of the rates for loans of the following kind to leading European banks quoted, at approximately 11:00 A.M. New York City time, on the second London Business Day immediately preceding the first day of such Dividend Period, by three major banks in New York City selected by the Calculation Agent: three-month loans of U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount.
If fewer than three banks selected by the Calculation Agent are quoting as described in the preceding paragraph, LIBOR for such Dividend Period shall be LIBOR in effect for the prior Dividend Period.
The Calculation Agents determination of any dividend rate, and its calculation of the amount of dividends for any Dividend Period, will be maintained on file at the Corporations principal offices and will be available to any stockholder upon request and will be final and binding in the absence of manifest error.
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Holders of Series A shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series A as specified in this Section 4 (subject to the other provisions of this Certificate of Designations).
(b) Priority of Dividends. So long as any share of Series A remains outstanding, no dividend shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), and no Common Stock or other Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock and other than through the use of the proceeds of a substantially contemporaneous sale of Junior Stock) during a Dividend Period, unless the full dividends for the latest completed Dividend Period on all outstanding shares of Series A have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). The foregoing provision shall not restrict the ability of Goldman, Sachs & Co., or any other affiliate of the Corporation, to engage in any market-making transactions in Junior Stock in the ordinary course of business.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period) in full upon the Series A and any shares of Parity Stock, all dividends declared on the Series A and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of parity stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid dividends per share on the Series A and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) bear to each other.
Subject to the foregoing, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and the Series A shall not be entitled to participate in any such dividends.
Section 5. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series A shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to
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stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to the Series A as to such distribution, in full an amount equal to $25,000 per share (the Series A Liquidation Amount), together with an amount equal to all dividends (if any) that have been declared but not paid prior to the date of payment of such distribution (but without any amount in respect of dividends that have not been declared prior to such payment date).
(b) Partial Payment. If in any distribution described in Section 5(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the Liquidation Preferences (as defined below) in full to all holders of Series A and all holders of any stock of the Corporation ranking equally with the Series A as to such distribution, the amounts paid to the holders of Series A and to the holders of all such other stock shall be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series A and the holders of all such other stock. In any such distribution, the Liquidation Preference of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock other than Series A and on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series A, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series A receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 6. Redemption.
(a) Optional Redemption. The Series A may not be redeemed by the Corporation prior to April 25, 2010. On or after April 25, 2010, the Corporation, at its option, may redeem, in whole at any time or in part from time to time, the shares of Series A at the time outstanding, upon notice given as provided in Section 6(c) below, at a redemption price equal to $25,000 per share, together (except as otherwise provided herein below) with an amount equal to any dividends that have been declared but not paid prior to the redemption date (but with no amount in respect of any dividends that have not been declared prior to such date). The redemption price for any shares of Series A shall be payable on the redemption date to the holder of such shares against surrender of the
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certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above.
(b) No Sinking Fund. The Series A will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series A will have no right to require redemption of any shares of Series A.
(c) Notice of Redemption. Notice of every redemption of shares of Series A shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series A designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series A. Notwithstanding the foregoing, if the Series A or any depositary shares representing interests in the Series A are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Series A at such time and in any manner permitted by such facility. Each such notice given to a holder shall state: (1) the redemption date; (2) the number of shares of Series A to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d) Partial Redemption. In case of any redemption of only part of the shares of Series A at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Corporation may determine to be fair and equitable. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series A shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed
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outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
Section 7. Conversion Upon Regulatory Changes. If both (i) and (ii) below occur:
(i) after the date of the issuance of the Series A, the Corporation (by election or otherwise) becomes subject to any law, rule, regulation or guidance (together, Regulations) relating to its capital adequacy, which Regulation (x) modifies the existing requirements for treatment as Allowable Capital (as defined under the Securities and Exchange Commission rules relating to consolidated supervised entities as in effect from time to time), (y) provides for a type or level of capital characterized as Tier 1 or its equivalent pursuant to Regulations of any governmental agency, authority or other body having regulatory jurisdiction over the Corporation (or any of its subsidiaries or consolidated affiliates) and implementing the capital standards published by the Basel Committee on Banking Supervision, the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System or any other United States national governmental agency, authority or other body, or any other applicable regime based on capital standards published by the Basel Committee on Banking Supervision or its successor, or (z) provides for a type or level of capital that in the judgment of the Corporation (after consultation with legal counsel of recognized standing) is substantially equivalent to such Tier 1 capital (such capital described in either (y) or (z) above is referred to below as Tier 1 Capital Equivalent), and
(ii) the Corporation affirmatively elects to qualify the Series A for treatment as Allowable Capital or Tier 1 Capital Equivalent without any sublimit or other quantitative restriction on the inclusion of the Series A in Allowable Capital or Tier 1 Capital Equivalent (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) under such Regulations,
then, upon such affirmative election, the Series A shall be convertible at the Corporations option into a new series of Preferred Stock having terms and provisions substantially identical to those of the Series A, except that such new series may have such additional or modified rights, preferences, privileges and voting powers, and limitations and restrictions thereof, as are necessary in the judgment of the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) (after consultation with legal counsel of recognized standing) to comply with the Required Unrestricted Capital Provisions (as defined below), provided that the Corporation will not cause any such conversion unless the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) determines that the rights, preferences, privileges and
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voting powers, and the qualifications, limitations and restrictions thereof, of such new series of Preferred Stock, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and the qualifications, limitations and restrictions thereof, of the Series A, taken as a whole.
As used above, the term Required Unrestricted Capital Provisions means such terms and provisions as are, in the judgment of the Corporation (after consultation with counsel of recognized standing), required for preferred stock to be treated as Allowable Capital or Tier 1 Capital Equivalent, as applicable, without any sublimit or other quantitative restriction on the inclusion of such preferred stock in Allowable Capital or Tier 1 Capital Equivalent, as applicable (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) pursuant to the applicable Regulations.
The Corporation shall provide notice to the holders of Series A of any election to qualify the Series A for Allowable Capital or Tier 1 Capital Equivalent treatment and of any determination to convert the Series A into a new series of Preferred Stock pursuant to the terms of this Section 7, promptly upon the effectiveness of any such election or determination. A copy of such notice and of the relevant Regulations shall be maintained on file at the principal offices of the Corporation and, upon request, will be made available to any stockholder of the Corporation. Any conversion of the Series A pursuant to this Section 7 shall be effected pursuant to such procedures as the Corporation may determine and publicly disclose.
Except as specified in this Section 7, holders of Series A shares shall have no right to exchange or convert such shares into any other securities.
Section 8. Voting Rights.
(a) General. The holders of Series A shall not have any voting rights except as set forth below or as otherwise from to time required by law.
(b) Right To Elect Two Directors Upon Nonpayment Events. If and whenever dividends on any shares of Series A shall not have been declared and paid for at least six Dividend Periods, whether or not consecutive (a Nonpayment Event), the number of directors then constituting the Board of Directors shall automatically be increased by two and the holders of Series A, together with the holders of any outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect the two additional directors (the Preferred Stock Directors), provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors.
In the event that the holders of the Series A, and such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock
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Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the Series A or of any other series of Voting Preferred Stock then outstanding (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of stockholders), and at each subsequent annual meeting of stockholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series A or Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 10 below, or as may otherwise be required by law.
When dividends have been paid (or declared and a sum sufficient for payment thereof set aside) in full on the Series A for at least four Dividend Periods (whether or not consecutive) after a Nonpayment Event, then the right of the holders of Series A to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series A and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of the Series A and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of the Series A and all Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office shall not have previously terminated as above provided.
(c) Other Voting Rights. So long as any shares of Series A are outstanding, in addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, the vote or consent of the holders of at least 66 2/3% of the
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shares of Series A and any Voting Preferred Stock at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series A with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii) Amendment of Series A. Any amendment, alteration or repeal of any provision of the Certificate of Incorporation so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series A, taken as a whole; or
(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series A, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series A remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series A immediately prior to such consummation, taken as a whole;
provided, however, that for all purposes of this Section 8(c), any increase in the amount of the authorized or issued Series A or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with and/or junior to the Series A with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the special rights, preferences, privileges or voting powers of the Series A. In addition, any conversion of the Series A pursuant to Section 7 above shall not be deemed to adversely affect the rights, preferences, privileges and voting powers of the Series A.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series A and one or more but not all other series of Preferred Stock, then only the Series A and such series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
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(d) Changes for Clarification. Without the consent of the holders of the Series A, so long as such action does not adversely affect the special rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series A, the Corporation may amend, alter, supplement or repeal any terms of the Series A:
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or
(ii) to make any provision with respect to matters or questions arising with respect to the Series A that is not inconsistent with the provisions of this Certificate of Designations.
(e) Changes after Provision for Redemption. No vote or consent of the holders of Series A shall be required pursuant to Section 8(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series A shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series A (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation, the Bylaws, applicable law and any national securities exchange or other trading facility on which the Series A is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series A and any Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series A are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
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Section 9. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series A may deem and treat the record holder of any share of Series A as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 10. Notices. All notices or communications in respect of Series A shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or Bylaws or by applicable law.
Section 11. No Preemptive Rights. No share of Series A shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 12. Other Rights. The shares of Series A shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law.
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Appendix B
CERTIFICATE OF DESIGNATIONS
OF
6.20% NON-CUMULATIVE PREFERRED STOCK, SERIES B
OF
THE GOLDMAN SACHS GROUP, INC.
THE GOLDMAN SACHS GROUP, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the Corporation), in accordance with the provisions of Sections 103 and 151 thereof, DOES HEREBY CERTIFY:
The Securities Issuance Committee (the Committee) of the board of directors of the Corporation (the Board of Directors), in accordance with the resolutions of the Board of Directors dated September 16, 2005, the provisions of the amended and restated certificate of incorporation and bylaws of the Corporation and applicable law, by unanimous written consent dated October 25, 2005, adopted the following resolution creating a series of 50,000 shares of Preferred Stock of the Corporation designated as 6.20% Non-Cumulative Preferred Stock, Series B.
RESOLVED, that pursuant to the authority vested in the Committee and in accordance with the resolutions of the Board of Directors dated September 16, 2005, the provisions of the amended and restated certificate of incorporation and bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
Section 1. Designation. The distinctive serial designation of such series of Preferred Stock is 6.20% Non-Cumulative Preferred Stock, Series B (Series B). Each share of Series B shall be identical in all respects to every other share of Series B, except as to the respective dates from which dividends thereon shall accrue, to the extent such dates may differ as permitted pursuant to Section 4(a) below.
Section 2. Number of Shares. The authorized number of shares of Series B shall be 50,000. Shares of Series B that are redeemed, purchased or otherwise acquired by the Corporation, or converted into another series of Preferred Stock, shall be cancelled and shall revert to authorized but unissued shares of Series B.
Section 3. Definitions. As used herein with respect to Series B:
(a) Board of Directors means the board of directors of the Corporation.
(b) ByLaws means the amended and restated bylaws of the Corporation, as they may be amended from time to time.
(c) Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City generally are authorized or obligated by law, regulation or executive order to close.
(d) Certificate of Designations means this Certificate of Designations relating to the Series B, as it may be amended from time to time.
(e) Certification of Incorporation shall mean the amended and restated certificate of incorporation of the Corporation, as it may be amended from time to time, and shall include this Certificate of Designations.
(f) Common Stock means the common stock, par value $0.01 per share, of the Corporation.
(g) Junior Stock means the Common Stock and any other class or series of stock of the Corporation (other than Series B) that ranks junior to Series B either or both as to the payment of dividends and/or as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(h) Parity Stock means any class or series of stock of the Corporation (other than Series B) that ranks equally with Series B both in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(i) Preferred Stock means any and all series of Preferred Stock, having a par value of $0.01 per share, of the Corporation, including the Series B.
(j) Voting Preferred Stock means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 8(b) below) or any other matter as to which the holders of Series B are entitled to vote as specified in Section 8 of this Certificate of Designations, any and all series of Preferred Stock (other than Series B) that rank equally with Series B either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 4. Dividends.
(a) Rate. Holders of Series B shall be entitled to receive, when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) out of funds legally available for the payment of dividends under Delaware law, non-cumulative cash dividends at a rate per annum of 6.20% applied to the liquidation preference amount of $25,000 per share of Series B. Such dividends shall be payable quarterly in arrears (as provided below in this Section 4(a)), but
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only when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), on February 10, May 10, August 10 and November 10 (Dividend Payment Dates), commencing on February 10, 2006; provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on Series B on such Dividend Payment Date shall instead be payable on) the immediately succeeding Business Day. Dividends on Series B shall not be cumulative; holders of Series B shall not be entitled to receive any dividends not declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.
Dividends that are payable on Series B on any Dividend Payment Date will be payable to holders of record of Series B as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such Dividend Payment Date or such other record date fixed by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a Dividend Record Date). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Each dividend period (a Dividend Period) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence on and include the date of original issue of the Series B, provided that, for any share of Series B issued after such original issue date, the initial Dividend Period for such shares may commence on and include such other date as the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) shall determine and publicly disclose) and shall end on and include the calendar day next preceding the next Dividend Payment Date. Dividends payable on the Series B in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends payable in respect of a Dividend Period shall be payable in arrears i.e., on the first Dividend Payment Date after such Dividend Period.
Holders of Series B shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series B as specified in this Section 4 (subject to the other provisions of this Certificate of Designations).
(b) Priority of Dividends. So long as any share of Series B remains outstanding, no dividend shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), and no Common Stock or other Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock and other than through the use of the proceeds of a substantially contemporaneous sale of Junior Stock) during a Dividend Period, unless the full dividends for the latest completed
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Dividend Period on all outstanding shares of Series B have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). The foregoing provision shall not restrict the ability of Goldman, Sachs & Co., or any other affiliate of the Corporation, to engage in any market-making transactions in Junior Stock in the ordinary course of business.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period) in full upon the Series B and any shares of Parity Stock, all dividends declared on the Series B and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of parity stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid dividends per share on the Series B and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) bear to each other.
Subject to the foregoing, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and the Series B shall not be entitled to participate in any such dividends.
Section 5. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series B shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to the Series B as to such distribution, in full an amount equal to $25,000 per share (the Series B Liquidation Amount), together with an amount equal to all dividends (if any) that have been declared but not paid prior to the date of payment of such distribution (but without any amount in respect of dividends that have not been declared prior to such payment date).
(b) Partial Payment. If in any distribution described in Section 5(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the Liquidation Preferences (as defined below) in full to all holders of Series B and all holders of any stock of the Corporation ranking equally with the Series B as to such distribution, the amounts paid to the holders of Series B and to the holders of all such other stock shall
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be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series B and the holders of all such other stock. In any such distribution, the Liquidation Preference of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock other than Series B and on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series B, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series B receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 6. Redemption.
(a) Optional Redemption. The Series B may not be redeemed by the Corporation prior to October 31, 2010. On or after October 31, 2010, the Corporation, at its option, may redeem, in whole at any time or in part from time to time, the shares of Series B at the time outstanding, upon notice given as provided in Section 6(c) below, at a redemption price equal to $25,000 per share, together (except as otherwise provided herein below) with an amount equal to any dividends that have been declared but not paid prior to the redemption date (but with no amount in respect of any dividends that have not been declared prior to such date). The redemption price for any shares of Series B shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above.
(b) No Sinking Fund. The Series B will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series B will have no right to require redemption of any shares of Series B.
(c) Notice of Redemption. Notice of every redemption of shares of Series B shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the
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books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series B designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series B. Notwithstanding the foregoing, if the Series B or any depositary shares representing interests in the Series B are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Series B at such time and in any manner permitted by such facility. Each such notice given to a holder shall state: (1) the redemption date; (2) the number of shares of Series B to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d) Partial Redemption. In case of any redemption of only part of the shares of Series B at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Corporation may determine to be fair and equitable. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series B shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
Section 7. Conversion Upon Regulatory Changes. If both (i) and (ii) below occur:
(i) after the date of the issuance of the Series B, the Corporation (by election or otherwise) becomes subject to any law, rule, regulation or guidance (together, Regulations) relating to its capital adequacy, which Regulation (x) modifies the existing requirements for treatment as Allowable Capital (as defined
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under the Securities and Exchange Commission rules relating to consolidated supervised entities as in effect from time to time), (y) provides for a type or level of capital characterized as Tier 1 or its equivalent pursuant to Regulations of any governmental agency, authority or other body having regulatory jurisdiction over the Corporation (or any of its subsidiaries or consolidated affiliates) and implementing the capital standards published by the Basel Committee on Banking Supervision, the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System or any other United States national governmental agency, authority or other body, or any other applicable regime based on capital standards published by the Basel Committee on Banking Supervision or its successor, or (z) provides for a type or level of capital that in the judgment of the Corporation (after consultation with legal counsel of recognized standing) is substantially equivalent to such Tier 1 capital (such capital described in either (y) or (z) above is referred to below as Tier 1 Capital Equivalent), and
(ii) the Corporation affirmatively elects to qualify the Series B for treatment as Allowable Capital or Tier 1 Capital Equivalent without any sublimit or other quantitative restriction on the inclusion of the Series B in Allowable Capital or Tier 1 Capital Equivalent (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) under such Regulations,
then, upon such affirmative election, the Series B shall be convertible at the Corporations option into a new series of Preferred Stock having terms and provisions substantially identical to those of the Series B, except that such new series may have such additional or modified rights, preferences, privileges and voting powers, and limitations and restrictions thereof, as are necessary in the judgment of the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) (after consultation with legal counsel of recognized standing) to comply with the Required Unrestricted Capital Provisions (as defined below), provided that the Corporation will not cause any such conversion unless the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) determines that the rights, preferences, privileges and voting powers, and the qualifications, limitations and restrictions thereof, of such new series of Preferred Stock, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and the qualifications, limitations and restrictions thereof, of the Series B, taken as a whole.
As used above, the term Required Unrestricted Capital Provisions means such terms and provisions as are, in the judgment of the Corporation (after consultation with counsel of recognized standing), required for preferred stock to be treated as Allowable Capital or Tier 1 Capital Equivalent, as applicable, without any sublimit or other quantitative restriction on the inclusion of such preferred stock in Allowable Capital or Tier 1 Capital Equivalent, as applicable (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) pursuant to the applicable Regulations.
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The Corporation shall provide notice to the holders of Series B of any election to qualify the Series B for Allowable Capital or Tier 1 Capital Equivalent treatment and of any determination to convert the Series B into a new series of Preferred Stock pursuant to the terms of this Section 7, promptly upon the effectiveness of any such election or determination. A copy of such notice and of the relevant Regulations shall be maintained on file at the principal offices of the Corporation and, upon request, will be made available to any stockholder of the Corporation. Any conversion of the Series B pursuant to this Section 7 shall be effected pursuant to such procedures as the Corporation may determine and publicly disclose.
Except as specified in this Section 7, holders of Series B shares shall have no right to exchange or convert such shares into any other securities.
Section 8. Voting Rights.
(a) General. The holders of Series B shall not have any voting rights except as set forth below or as otherwise from to time required by law.
(b) Right To Elect Two Directors Upon Nonpayment Events. If and whenever dividends on any shares of Series B shall not have been declared and paid for at least six Dividend Periods, whether or not consecutive (a Nonpayment Event), the number of directors then constituting the Board of Directors shall automatically be increased by two and the holders of Series B, together with the holders of any outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect the two additional directors (the Preferred Stock Directors), provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors and provided further that the Board of Directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Preferred Stock are entitled to elect pursuant to like voting rights).
In the event that the holders of the Series B, and such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the Series B or of any other series of Voting Preferred Stock then outstanding (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of stockholders), and at each subsequent annual meeting of stockholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series B or Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 10 below, or as may otherwise be required by law.
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When dividends have been paid (or declared and a sum sufficient for payment thereof set aside) in full on the Series B for at least four Dividend Periods (whether or not consecutive) after a Nonpayment Event, then the right of the holders of Series B to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series B and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of the Series B and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of the Series B and all Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office shall not have previously terminated as above provided.
(c) Other Voting Rights. So long as any shares of Series B are outstanding, in addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, the vote or consent of the holders of at least 66 2/3% of the shares of Series B and any Voting Preferred Stock at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series B with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
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(ii) Amendment of Series B. Any amendment, alteration or repeal of any provision of the Certificate of Incorporation so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series B, taken as a whole; or
(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series B, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series B remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series B immediately prior to such consummation, taken as a whole;
provided, however, that for all purposes of this Section 8(c), any increase in the amount of the authorized or issued Series B or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with and/or junior to the Series B with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series B. In addition, any conversion of the Series B pursuant to Section 7 above shall not be deemed to adversely affect the rights, preferences, privileges and voting powers of the Series B.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series B and one or more but not all other series of Preferred Stock, then only the Series B and such series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
(d) Changes for Clarification. Without the consent of the holders of the Series B, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series B, the Corporation may amend, alter, supplement or repeal any terms of the Series B:
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or
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(ii) to make any provision with respect to matters or questions arising with respect to the Series B that is not inconsistent with the provisions of this Certificate of Designations.
(e) Changes after Provision for Redemption. No vote or consent of the holders of Series B shall be required pursuant to Section 8(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series B shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series B (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation, the Bylaws, applicable law and any national securities exchange or other trading facility on which the Series B is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series B and any Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series B are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
Section 9. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series B may deem and treat the record holder of any share of Series B as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 10. Notices. All notices or communications in respect of Series B shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or Bylaws or by applicable law.
Section 11. No Preemptive Rights. No share of Series B shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 12. Other Rights. The shares of Series B shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law.
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Appendix C
CERTIFICATE OF DESIGNATIONS
OF
FLOATING RATE NON-CUMULATIVE PREFERRED STOCK, SERIES C
OF
THE GOLDMAN SACHS GROUP, INC.
THE GOLDMAN SACHS GROUP, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the Corporation), in accordance with the provisions of Sections 103 and 151 thereof, DOES HEREBY CERTIFY:
The Securities Issuance Committee (the Committee) of the board of directors of the Corporation (the Board of Directors), in accordance with the resolutions of the Board of Directors dated September 16, 2005, the provisions of the amended and restated certificate of incorporation and bylaws of the Corporation and applicable law, by unanimous written consent dated October 25, 2005, adopted the following resolution creating a series of 25,000 shares of Preferred Stock of the Corporation designated as Floating Rate Non-Cumulative Preferred Stock, Series C.
RESOLVED, that pursuant to the authority vested in the Committee and in accordance with the resolutions of the Board of Directors dated September 16, 2005, the provisions of the amended and restated certificate of incorporation and bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
Section 1. Designation. The distinctive serial designation of such series of Preferred Stock is Floating Rate Non-Cumulative Preferred Stock, Series C (Series C). Each share of Series C shall be identical in all respects to every other share of Series C, except as to the respective dates from which dividends thereon shall accrue, to the extent such dates may differ as permitted pursuant to Section 4(a) below.
Section 2. Number of Shares. The authorized number of shares of Series C shall be 25,000. Shares of Series C that are redeemed, purchased or otherwise acquired by the Corporation, or converted into another series of Preferred Stock, shall be cancelled and shall revert to authorized but unissued shares of Series C.
Section 3. Definitions. As used herein with respect to Series C:
(a) Board of Directors means the board of directors of the Corporation.
(b) ByLaws means the amended and restated bylaws of the Corporation, as they may be amended from time to time.
(c) Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City generally are authorized or obligated by law, regulation or executive order to close.
(d) Calculation Agent means, at any time, the person or entity appointed by the Corporation and serving as such agent at such time. The Corporation may terminate any such appointment and may appoint a successor agent at any time and from time to time, provided that the Corporation shall use its best efforts to ensure that there is, at all relevant times when the Series C is outstanding, a person or entity appointed and serving as such agent. The Calculation Agent may be a person or entity affiliated with the Corporation.
(e) Certificate of Designations means this Certificate of Designations relating to the Series C, as it may be amended from time to time.
(f) Certification of Incorporation shall mean the amended and restated certificate of incorporation of the Corporation, as it may be amended from time to time, and shall include this Certificate of Designations.
(g) Common Stock means the common stock, par value $0.01 per share, of the Corporation.
(h) Junior Stock means the Common Stock and any other class or series of stock of the Corporation (other than Series C) that ranks junior to Series C either or both as to the payment of dividends and/or as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(i) London Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is a day on which dealings in U.S. dollars are transacted in the London interbank market.
(j) Moneyline Telerate Page means the display on Moneyline Telerate, Inc., or any successor service, on the page or pages specified in Section 4 below or any replacement page or pages on that service.
(k) Parity Stock means any class or series of stock of the Corporation (other than Series C) that ranks equally with Series C both in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(l) Preferred Stock means any and all series of Preferred Stock, having a par value of $0.01 per share, of the Corporation, including the Series C.
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(m) Representative Amount means, at any time, an amount that, in the Calculation Agents judgment, is representative of a single transaction in the relevant market at the relevant time.
(n) Voting Preferred Stock means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 8(b) below) or any other matter as to which the holders of Series C are entitled to vote as specified in Section 8 of this Certificate of Designations, any and all series of Preferred Stock (other than Series C) that rank equally with Series C either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 4. Dividends.
(a) Rate. Holders of Series C shall be entitled to receive, when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) out of funds legally available for the payment of dividends under Delaware law, non-cumulative cash dividends at the rate determined as set forth below in this Section (4) applied to the liquidation preference amount of $25,000 per share of Series C. Such dividends shall be payable quarterly in arrears (as provided below in this Section 4(a)), but only when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), on February 10, May 10, August 10 and November 10 (Dividend Payment Dates), commencing on February 10, 2006; provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on Series C on such Dividend Payment Date shall instead be payable on) the immediately succeeding Business Day, unless such immediately succeeding Business Day falls in the next calendar month, in which case such Dividend Payment Date shall instead be (and any such dividend shall instead be payable on) the immediately preceding Business Day. Dividends on Series C shall not be cumulative; holders of Series C shall not be entitled to receive any dividends not declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.
Dividends that are payable on Series C on any Dividend Payment Date will be payable to holders of record of Series C as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such Dividend Payment Date or such other record date fixed by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a Dividend Record Date). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Each dividend period (a Dividend Period) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence
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on and include the date of original issue of the Series C, provided that, for any share of Series C issued after such original issue date, the initial Dividend Period for such shares may commence on and include such other date as the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) shall determine and publicly disclose) and shall end on and include the calendar day next preceding the next Dividend Payment Date. Dividends payable on the Series C in respect of any Dividend Period shall be computed by the Calculation Agent on the basis of a 360-day year and the actual number of days elapsed in such Dividend Period. Dividends payable in respect of a Dividend Period shall be payable in arrears i.e., on the first Dividend Payment Date after such Dividend Period.
The dividend rate on the Series C, for each Dividend Period, shall be a rate per annum equal to the greater of (1) 0.75% above LIBOR (as defined below) for such Dividend Period and (2) 4.00%. LIBOR, with respect to any Dividend Period, means the offered rate expressed as a percentage per annum for three-month deposits in U.S. dollars on the first day of such Dividend Period, as that rate appears on Moneyline Telerate Page 3750 as of 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period.
If the rate described in the preceding paragraph does not appear on Moneyline Telerate Page 3750, LIBOR shall be determined on the basis of the rates, at approximately 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period, at which deposits of the following kind are offered to prime banks in the London interbank market by four major banks in that market selected by the Calculation Agent: three-month deposits in U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount. The Calculation Agent shall request the principal London office of each of these banks to provide a quotation of its rate at approximately 11:00 A.M., London time. If at least two quotations are provided, LIBOR for such Dividend Period shall be the arithmetic mean of such quotations.
If fewer than two quotations are provided as described in the preceding paragraph, LIBOR for such Dividend Period shall be the arithmetic mean of the rates for loans of the following kind to leading European banks quoted, at approximately 11:00 A.M. New York City time, on the second London Business Day immediately preceding the first day of such Dividend Period, by three major banks in New York City selected by the Calculation Agent: three-month loans of U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount.
If fewer than three banks selected by the Calculation Agent are quoting as described in the preceding paragraph, LIBOR for such Dividend Period shall be LIBOR in effect for the prior Dividend Period.
The Calculation Agents determination of any dividend rate, and its calculation of the amount of dividends for any Dividend Period, will be maintained on file at the Corporations principal offices and will be available to any stockholder upon request and will be final and binding in the absence of manifest error.
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Holders of Series C shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series C as specified in this Section 4 (subject to the other provisions of this Certificate of Designations).
(b) Priority of Dividends. So long as any share of Series C remains outstanding, no dividend shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), and no Common Stock or other Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock and other than through the use of the proceeds of a substantially contemporaneous sale of Junior Stock) during a Dividend Period, unless the full dividends for the latest completed Dividend Period on all outstanding shares of Series C have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). The foregoing provision shall not restrict the ability of Goldman, Sachs & Co., or any other affiliate of the Corporation, to engage in any market-making transactions in Junior Stock in the ordinary course of business.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period) in full upon the Series C and any shares of Parity Stock, all dividends declared on the Series C and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of parity stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid dividends per share on the Series C and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) bear to each other.
Subject to the foregoing, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and the Series C shall not be entitled to participate in any such dividends.
Section 5. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series C shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to
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stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to the Series C as to such distribution, in full an amount equal to $25,000 per share (the Series C Liquidation Amount), together with an amount equal to all dividends (if any) that have been declared but not paid prior to the date of payment of such distribution (but without any amount in respect of dividends that have not been declared prior to such payment date).
(b) Partial Payment. If in any distribution described in Section 5(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the Liquidation Preferences (as defined below) in full to all holders of Series C and all holders of any stock of the Corporation ranking equally with the Series C as to such distribution, the amounts paid to the holders of Series C and to the holders of all such other stock shall be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series C and the holders of all such other stock. In any such distribution, the Liquidation Preference of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock other than Series C and on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series C, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series C receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 6. Redemption.
(a) Optional Redemption. The Series C may not be redeemed by the Corporation prior to October 31, 2010. On or after October 31, 2010, the Corporation, at its option, may redeem, in whole at any time or in part from time to time, the shares of Series C at the time outstanding, upon notice given as provided in Section 6(c) below, at a redemption price equal to $25,000 per share, together (except as otherwise provided herein below) with an amount equal to any dividends that have been declared but not paid prior to the redemption date (but with no amount in respect of any dividends that have not been declared prior to such date). The redemption price for any shares of Series C shall be payable on the redemption date to the holder of such shares against surrender of the
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certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above.
(b) No Sinking Fund. The Series C will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series C will have no right to require redemption of any shares of Series C.
(c) Notice of Redemption. Notice of every redemption of shares of Series C shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series C designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series C. Notwithstanding the foregoing, if the Series C or any depositary shares representing interests in the Series C are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Series C at such time and in any manner permitted by such facility. Each such notice given to a holder shall state: (1) the redemption date; (2) the number of shares of Series C to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d) Partial Redemption. In case of any redemption of only part of the shares of Series C at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Corporation may determine to be fair and equitable. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series C shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed
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outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
Section 7. Conversion Upon Regulatory Changes. If both (i) and (ii) below occur:
(i) after the date of the issuance of the Series C, the Corporation (by election or otherwise) becomes subject to any law, rule, regulation or guidance (together, Regulations) relating to its capital adequacy, which Regulation (x) modifies the existing requirements for treatment as Allowable Capital (as defined under the Securities and Exchange Commission rules relating to consolidated supervised entities as in effect from time to time), (y) provides for a type or level of capital characterized as Tier 1 or its equivalent pursuant to Regulations of any governmental agency, authority or other body having regulatory jurisdiction over the Corporation (or any of its subsidiaries or consolidated affiliates) and implementing the capital standards published by the Basel Committee on Banking Supervision, the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System or any other United States national governmental agency, authority or other body, or any other applicable regime based on capital standards published by the Basel Committee on Banking Supervision or its successor, or (z) provides for a type or level of capital that in the judgment of the Corporation (after consultation with legal counsel of recognized standing) is substantially equivalent to such Tier 1 capital (such capital described in either (y) or (z) above is referred to below as Tier 1 Capital Equivalent), and
(ii) the Corporation affirmatively elects to qualify the Series C for treatment as Allowable Capital or Tier 1 Capital Equivalent without any sublimit or other quantitative restriction on the inclusion of the Series C in Allowable Capital or Tier 1 Capital Equivalent (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) under such Regulations,
then, upon such affirmative election, the Series C shall be convertible at the Corporations option into a new series of Preferred Stock having terms and provisions substantially identical to those of the Series C, except that such new series may have such additional or modified rights, preferences, privileges and voting powers, and limitations and restrictions thereof, as are necessary in the judgment of the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) (after consultation with legal counsel of recognized standing) to comply with the Required Unrestricted Capital Provisions (as defined below), provided that the Corporation will not cause any such conversion unless the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) determines that the rights, preferences, privileges and
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voting powers, and the qualifications, limitations and restrictions thereof, of such new series of Preferred Stock, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and the qualifications, limitations and restrictions thereof, of the Series C, taken as a whole.
As used above, the term Required Unrestricted Capital Provisions means such terms and provisions as are, in the judgment of the Corporation (after consultation with counsel of recognized standing), required for preferred stock to be treated as Allowable Capital or Tier 1 Capital Equivalent, as applicable, without any sublimit or other quantitative restriction on the inclusion of such preferred stock in Allowable Capital or Tier 1 Capital Equivalent, as applicable (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) pursuant to the applicable Regulations.
The Corporation shall provide notice to the holders of Series C of any election to qualify the Series C for Allowable Capital or Tier 1 Capital Equivalent treatment and of any determination to convert the Series C into a new series of Preferred Stock pursuant to the terms of this Section 7, promptly upon the effectiveness of any such election or determination. A copy of such notice and of the relevant Regulations shall be maintained on file at the principal offices of the Corporation and, upon request, will be made available to any stockholder of the Corporation. Any conversion of the Series C pursuant to this Section 7 shall be effected pursuant to such procedures as the Corporation may determine and publicly disclose.
Except as specified in this Section 7, holders of Series C shares shall have no right to exchange or convert such shares into any other securities.
Section 8. Voting Rights.
(a) General. The holders of Series C shall not have any voting rights except as set forth below or as otherwise from to time required by law.
(b) Right To Elect Two Directors Upon Nonpayment Events. If and whenever dividends on any shares of Series C shall not have been declared and paid for at least six Dividend Periods, whether or not consecutive (a Nonpayment Event), the number of directors then constituting the Board of Directors shall automatically be increased by two and the holders of Series C, together with the holders of any outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect the two additional directors (the Preferred Stock Directors), provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors and provided further that the Board of Directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Preferred Stock are entitled to elect pursuant to like voting rights).
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In the event that the holders of the Series C, and such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the Series C or of any other series of Voting Preferred Stock then outstanding (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of stockholders), and at each subsequent annual meeting of stockholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series C or Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 10 below, or as may otherwise be required by law.
When dividends have been paid (or declared and a sum sufficient for payment thereof set aside) in full on the Series C for at least four Dividend Periods (whether or not consecutive) after a Nonpayment Event, then the right of the holders of Series C to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series C and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of the Series C and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of the Series C and all Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office shall not have previously terminated as above provided.
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(c) Other Voting Rights. So long as any shares of Series C are outstanding, in addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, the vote or consent of the holders of at least 66 2/3% of the shares of Series C and any Voting Preferred Stock at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series C with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii) Amendment of Series C. Any amendment, alteration or repeal of any provision of the Certificate of Incorporation so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series C, taken as a whole; or
(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series C, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series C remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series C immediately prior to such consummation, taken as a whole;
provided, however, that for all purposes of this Section 8(c), any increase in the amount of the authorized or issued Series C or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with and/or junior to the Series C with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series C. In addition, any conversion of the Series C pursuant to Section 7 above shall not be deemed to adversely affect the rights, preferences, privileges and voting powers of the Series C.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series C and one or more but not all other series of Preferred Stock, then only the Series C and such
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series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
(d) Changes for Clarification. Without the consent of the holders of the Series C, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series C, the Corporation may amend, alter, supplement or repeal any terms of the Series C:
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or
(ii) to make any provision with respect to matters or questions arising with respect to the Series C that is not inconsistent with the provisions of this Certificate of Designations.
(e) Changes after Provision for Redemption. No vote or consent of the holders of Series C shall be required pursuant to Section 8(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series C shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series C (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation, the Bylaws, applicable law and any national securities exchange or other trading facility on which the Series C is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series C and any Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series C are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
Section 9. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series C may deem and treat the record holder of any share of Series C as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 10. Notices. All notices or communications in respect of Series C shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or Bylaws or by applicable law.
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Section 11. No Preemptive Rights. No share of Series C shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 12. Other Rights. The shares of Series C shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law.
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Appendix D
CERTIFICATE OF DESIGNATIONS
OF
FLOATING RATE NON-CUMULATIVE PREFERRED STOCK, SERIES D
OF
THE GOLDMAN SACHS GROUP, INC.
THE GOLDMAN SACHS GROUP, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the Corporation), in accordance with the provisions of Sections 103 and 151 thereof, DOES HEREBY CERTIFY:
The Securities Issuance Committee (the Committee) of the board of directors of the Corporation (the Board of Directors), in accordance with the resolutions of the Board of Directors dated September 16, 2005, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, by unanimous written consent dated May 16, 2005, adopted the following resolution creating a series of 60,000 shares of Preferred Stock of the Corporation designated as Floating Rate Non-Cumulative Preferred Stock, Series D.
RESOLVED, that pursuant to the authority vested in the Committee and in accordance with the resolutions of the Board of Directors dated September 16, 2005, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
Section 1. Designation. The distinctive serial designation of such series of Preferred Stock is Floating Rate Non-Cumulative Preferred Stock, Series D (Series D). Each share of Series D shall be identical in all respects to every other share of Series D, except as to the respective dates from which dividends thereon shall accrue, to the extent such dates may differ as permitted pursuant to Section 4(a) below.
Section 2. Number of Shares. The authorized number of shares of Series D shall be 60,000. Shares of Series D that are redeemed, purchased or otherwise acquired by the Corporation, or converted into another series of Preferred Stock, shall be cancelled and shall revert to authorized but unissued shares of Series D.
Section 3. Definitions. As used herein with respect to Series D:
(a) Board of Directors means the board of directors of the Corporation.
(b) ByLaws means the amended and restated bylaws of the Corporation, as they may be amended from time to time.
(c) Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City generally are authorized or obligated by law, regulation or executive order to close.
(d) Calculation Agent means, at any time, the person or entity appointed by the Corporation and serving as such agent at such time. The Corporation may terminate any such appointment and may appoint a successor agent at any time and from time to time, provided that the Corporation shall use its best efforts to ensure that there is, at all relevant times when the Series D is outstanding, a person or entity appointed and serving as such agent. The Calculation Agent may be a person or entity affiliated with the Corporation.
(e) Certificate of Designations means this Certificate of Designations relating to the Series D, as it may be amended from time to time.
(f) Certification of Incorporation shall mean the restated certificate of incorporation of the Corporation, as it may be amended from time to time, and shall include this Certificate of Designations.
(g) Common Stock means the common stock, par value $0.01 per share, of the Corporation.
(h) Junior Stock means the Common Stock and any other class or series of stock of the Corporation (other than Series D) that ranks junior to Series D either or both as to the payment of dividends and/or as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(i) London Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is a day on which dealings in U.S. dollars are transacted in the London interbank market.
(j) Moneyline Telerate Page means the display on Moneyline Telerate, Inc., or any successor service, on the page or pages specified in Section 4 below or any replacement page or pages on that service.
(k) Parity Stock means any class or series of stock of the Corporation (other than Series D) that ranks equally with Series D both in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(l) Preferred Stock means any and all series of Preferred Stock, having a par value of $0.01 per share, of the Corporation, including the Series D.
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(m) Representative Amount means, at any time, an amount that, in the Calculation Agents judgment, is representative of a single transaction in the relevant market at the relevant time.
(n) Voting Preferred Stock means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 8(b) below) or any other matter as to which the holders of Series D are entitled to vote as specified in Section 8 of this Certificate of Designations, any and all series of Preferred Stock (other than Series D) that rank equally with Series D either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 4. Dividends.
(a) Rate. Holders of Series D shall be entitled to receive, when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) out of funds legally available for the payment of dividends under Delaware law, non-cumulative cash dividends at the rate determined as set forth below in this Section (4) applied to the liquidation preference amount of $25,000 per share of Series D. Such dividends shall be payable quarterly in arrears (as provided below in this Section 4(a)), but only when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), on February 10, May 10, August 10 and November 10 (Dividend Payment Dates), commencing on August 10, 2006; provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on Series D on such Dividend Payment Date shall instead be payable on) the immediately succeeding Business Day, unless such immediately succeeding Business Day falls in the next calendar month, in which case such Dividend Payment Date shall instead be (and any such dividend shall instead be payable on) the immediately preceding Business Day. Dividends on Series D shall not be cumulative; holders of Series D shall not be entitled to receive any dividends not declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.
Dividends that are payable on Series D on any Dividend Payment Date will be payable to holders of record of Series D as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such Dividend Payment Date or such other record date fixed by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a Dividend Record Date). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Each dividend period (a Dividend Period) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence
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on and include the date of original issue of the Series D, provided that, for any share of Series D issued after such original issue date, the initial Dividend Period for such shares may commence on and include such other date as the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) shall determine and publicly disclose) and shall end on and include the calendar day next preceding the next Dividend Payment Date. Dividends payable on the Series D in respect of any Dividend Period shall be computed by the Calculation Agent on the basis of a 360-day year and the actual number of days elapsed in such Dividend Period. Dividends payable in respect of a Dividend Period shall be payable in arrears i.e., on the first Dividend Payment Date after such Dividend Period.
The dividend rate on the Series D, for each Dividend Period, shall be a rate per annum equal to the greater of (1) 0.67% above LIBOR (as defined below) for such Dividend Period and (2) 4.00%. LIBOR, with respect to any Dividend Period, means the offered rate expressed as a percentage per annum for three-month deposits in U.S. dollars on the first day of such Dividend Period, as that rate appears on Moneyline Telerate Page 3750 (or any successor or replacement page) as of 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period.
If the rate described in the preceding paragraph does not appear on Moneyline Telerate Page 3750 (or any successor or replacement page), LIBOR shall be determined on the basis of the rates, at approximately 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period, at which deposits of the following kind are offered to prime banks in the London interbank market by four major banks in that market selected by the Calculation Agent: three-month deposits in U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount. The Calculation Agent shall request the principal London office of each of these banks to provide a quotation of its rate at approximately 11:00 A.M., London time. If at least two quotations are provided, LIBOR for such Dividend Period shall be the arithmetic mean of such quotations.
If fewer than two quotations are provided as described in the preceding paragraph, LIBOR for such Dividend Period shall be the arithmetic mean of the rates for loans of the following kind to leading European banks quoted, at approximately 11:00 A.M. New York City time, on the second London Business Day immediately preceding the first day of such Dividend Period, by three major banks in New York City selected by the Calculation Agent: three-month loans of U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount.
If fewer than three banks selected by the Calculation Agent are quoting as described in the preceding paragraph, LIBOR for such Dividend Period shall be LIBOR in effect for the prior Dividend Period.
The Calculation Agents determination of any dividend rate, and its calculation of the amount of dividends for any Dividend Period, will be maintained on file at the Corporations principal offices and will be available to any stockholder upon request and will be final and binding in the absence of manifest error.
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Holders of Series D shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series D as specified in this Section 4 (subject to the other provisions of this Certificate of Designations).
(b) Priority of Dividends. So long as any share of Series D remains outstanding, no dividend shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), and no Common Stock or other Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock and other than through the use of the proceeds of a substantially contemporaneous sale of Junior Stock) during a Dividend Period, unless the full dividends for the latest completed Dividend Period on all outstanding shares of Series D have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). The foregoing provision shall not restrict the ability of Goldman, Sachs & Co., or any other affiliate of the Corporation, to engage in any market-making transactions in Junior Stock in the ordinary course of business.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period) in full upon the Series D and any shares of Parity Stock, all dividends declared on the Series D and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of parity stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid dividends per share on the Series D and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) bear to each other.
Subject to the foregoing, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and the Series D shall not be entitled to participate in any such dividends.
Section 5. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series D shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to
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stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to the Series D as to such distribution, in full an amount equal to $25,000 per share (the Series D Liquidation Amount), together with an amount equal to all dividends (if any) that have been declared but not paid prior to the date of payment of such distribution (but without any amount in respect of dividends that have not been declared prior to such payment date).
(b) Partial Payment. If in any distribution described in Section 5(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the Liquidation Preferences (as defined below) in full to all holders of Series D and all holders of any stock of the Corporation ranking equally with the Series D as to such distribution, the amounts paid to the holders of Series D and to the holders of all such other stock shall be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series D and the holders of all such other stock. In any such distribution, the Liquidation Preference of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock other than Series D and on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series D, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series D receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 6. Redemption.
(a) Optional Redemption. The Series D may not be redeemed by the Corporation prior to May 24, 2011. On or after May 24, 2011, the Corporation, at its option, may redeem, in whole at any time or in part from time to time, the shares of Series D at the time outstanding, upon notice given as provided in Section 6(c) below, at a redemption price equal to $25,000 per share, together (except as otherwise provided hereinbelow) with an amount equal to any dividends that have been declared but not paid prior to the redemption date (but with no amount in respect of any dividends that have not been declared prior to such date). The redemption price for any shares of Series D shall be payable on the redemption date to the holder of such shares against surrender of the
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certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above.
(b) No Sinking Fund. The Series D will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series D will have no right to require redemption of any shares of Series D.
(c) Notice of Redemption. Notice of every redemption of shares of Series D shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series D designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series D. Notwithstanding the foregoing, if the Series D or any depositary shares representing interests in the Series D are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Series D at such time and in any manner permitted by such facility. Each such notice given to a holder shall state: (1) the redemption date; (2) the number of shares of Series D to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d) Partial Redemption. In case of any redemption of only part of the shares of Series D at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Corporation may determine to be fair and equitable. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series D shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed
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outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
Section 7. Conversion Upon Regulatory Changes. If both (i) and (ii) below occur:
(i) after the date of the issuance of the Series D, the Corporation (by election or otherwise) becomes subject to any law, rule, regulation or guidance (together, Regulations) relating to its capital adequacy, which Regulation (x) modifies the existing requirements for treatment as Allowable Capital (as defined under the Securities and Exchange Commission rules relating to consolidated supervised entities as in effect from time to time), (y) provides for a type or level of capital characterized as Tier 1 or its equivalent pursuant to Regulations of any governmental agency, authority or other body having regulatory jurisdiction over the Corporation (or any of its subsidiaries or consolidated affiliates) and implementing the capital standards published by the Basel Committee on Banking Supervision, the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System or any other United States national governmental agency, authority or other body, or any other applicable regime based on capital standards published by the Basel Committee on Banking Supervision or its successor, or (z) provides for a type or level of capital that in the judgment of the Corporation (after consultation with legal counsel of recognized standing) is substantially equivalent to such Tier 1 capital (such capital described in either (y) or (z) above is referred to below as Tier 1 Capital Equivalent), and
(ii) the Corporation affirmatively elects to qualify the Series D for treatment as Allowable Capital or Tier 1 Capital Equivalent without any sublimit or other quantitative restriction on the inclusion of the Series D in Allowable Capital or Tier 1 Capital Equivalent (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) under such Regulations,
then, upon such affirmative election, the Series D shall be convertible at the Corporations option into a new series of Preferred Stock having terms and provisions substantially identical to those of the Series D, except that such new series may have such additional or modified rights, preferences, privileges and voting powers, and limitations and restrictions thereof, as are necessary in the judgment of the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) (after consultation with legal counsel of recognized standing) to comply with the Required Unrestricted Capital Provisions (as defined below), provided that the Corporation will not cause any such conversion unless the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) determines that the rights, preferences, privileges and
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voting powers, and the qualifications, limitations and restrictions thereof, of such new series of Preferred Stock, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and the qualifications, limitations and restrictions thereof, of the Series D, taken as a whole.
As used above, the term Required Unrestricted Capital Provisions means such terms and provisions as are, in the judgment of the Corporation (after consultation with counsel of recognized standing), required for preferred stock to be treated as Allowable Capital or Tier 1 Capital Equivalent, as applicable, without any sublimit or other quantitative restriction on the inclusion of such preferred stock in Allowable Capital or Tier 1 Capital Equivalent, as applicable (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) pursuant to the applicable Regulations.
The Corporation shall provide notice to the holders of Series D of any election to qualify the Series D for Allowable Capital or Tier 1 Capital Equivalent treatment and of any determination to convert the Series D into a new series of Preferred Stock pursuant to the terms of this Section 7, promptly upon the effectiveness of any such election or determination. A copy of such notice and of the relevant Regulations shall be maintained on file at the principal offices of the Corporation and, upon request, will be made available to any stockholder of the Corporation. Any conversion of the Series D pursuant to this Section 7 shall be effected pursuant to such procedures as the Corporation may determine and publicly disclose.
Except as specified in this Section 7, holders of Series D shares shall have no right to exchange or convert such shares into any other securities.
Section 8. Voting Rights.
(a) General. The holders of Series D shall not have any voting rights except as set forth below or as otherwise from to time required by law.
(b) Right To Elect Two Directors Upon Nonpayment Events. If and whenever dividends on any shares of Series D shall not have been declared and paid for at least six Dividend Periods, whether or not consecutive (a Nonpayment Event), the number of directors then constituting the Board of Directors shall automatically be increased by two and the holders of Series D, together with the holders of any outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect the two additional directors (the Preferred Stock Directors), provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors and provided further that the Board of Directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Preferred Stock are entitled to elect pursuant to like voting rights).
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In the event that the holders of the Series D, and such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the Series D or of any other series of Voting Preferred Stock then outstanding (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of stockholders), and at each subsequent annual meeting of stockholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series D or Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 10 below, or as may otherwise be required by law.
When dividends have been paid (or declared and a sum sufficient for payment thereof set aside) in full on the Series D for at least four Dividend Periods (whether or not consecutive) after a Nonpayment Event, then the right of the holders of Series D to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series D and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of the Series D and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of the Series D and all Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office shall not have previously terminated as above provided.
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(c) Other Voting Rights. So long as any shares of Series D are outstanding, in addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, the vote or consent of the holders of at least 66 2/3% of the shares of Series D and any Voting Preferred Stock at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series D with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii) Amendment of Series D. Any amendment, alteration or repeal of any provision of the Certificate of Incorporation so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series D, taken as a whole; or
(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series D, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series D remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series D immediately prior to such consummation, taken as a whole;
provided, however, that for all purposes of this Section 8(c), any increase in the amount of the authorized or issued Series D or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with and/or junior to the Series D with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series D. In addition, any conversion of the Series D pursuant to Section 7 above shall not be deemed to adversely affect the rights, preferences, privileges and voting powers of the Series D.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series D and one or more but not all other series of Preferred Stock, then only the Series D and such
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series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
(d) Changes for Clarification. Without the consent of the holders of the Series D, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series D, the Corporation may amend, alter, supplement or repeal any terms of the Series D:
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or
(ii) to make any provision with respect to matters or questions arising with respect to the Series D that is not inconsistent with the provisions of this Certificate of Designations.
(e) Changes after Provision for Redemption. No vote or consent of the holders of Series D shall be required pursuant to Section 8(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series D shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series D (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation, the Bylaws, applicable law and any national securities exchange or other trading facility on which the Series D is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series D and any Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series D are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
Section 9. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series D may deem and treat the record holder of any share of Series D as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 10. Notices. All notices or communications in respect of Series D shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or Bylaws or by applicable law.
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Section 11. No Preemptive Rights. No share of Series D shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 12. Other Rights. The shares of Series D shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law.
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Appendix E
CERTIFICATE OF DESIGNATIONS
OF
PERPETUAL NON-CUMULATIVE PREFERRED STOCK, SERIES E
OF
THE GOLDMAN SACHS GROUP, INC.
THE GOLDMAN SACHS GROUP, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the Corporation), in accordance with the provisions of Sections 103 and 151 thereof, DOES HEREBY CERTIFY:
The Securities Issuance Committee (the Committee) of the board of directors of the Corporation (the Board of Directors), in accordance with the resolutions of the Board of Directors dated September 16, 2005 and September 29, 2006, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, by unanimous written consent dated May 14, 2007, adopted the following resolution creating a series of 17,500.1 shares of Preferred Stock of the Corporation designated as Perpetual Non-Cumulative Preferred Stock, Series E.
RESOLVED, that pursuant to the authority vested in the Committee and in accordance with the resolutions of the Board of Directors dated September 16, 2005 and September 29, 2006, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
Section 1. Designation. The distinctive serial designation of such series of Preferred Stock is Perpetual Non-Cumulative Preferred Stock, Series E (Series E). Each share of Series E shall be identical in all respects to every other share of Series E.
Section 2. Number of Shares. The authorized number of shares of Series E shall be 17,500.1. Shares of Series E that are redeemed, purchased or otherwise acquired by the Corporation, or converted into another series of Preferred Stock, shall be cancelled and shall revert to authorized but unissued shares of Series E.
Section 3. Definitions. As used herein with respect to Series E:
(a) Board of Directors means the board of directors of the Corporation.
(b) ByLaws means the amended and restated bylaws of the Corporation, as they may be amended from time to time.
(c) Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City generally are authorized or obligated by law, regulation or executive order to close.
(d) Calculation Agent means, at any time, the person or entity appointed by the Corporation and serving as such agent at such time. The Corporation may terminate any such appointment and may appoint a successor agent at any time and from time to time, provided that the Corporation shall use its best efforts to ensure that there is, at all relevant times when the Series E is outstanding, a person or entity appointed and serving as such agent. The Calculation Agent may be a person or entity affiliated with the Corporation.
(e) Certificate of Designations means this Certificate of Designations relating to the Series E, as it may be amended from time to time.
(f) Certification of Incorporation shall mean the restated certificate of incorporation of the Corporation, as it may be amended from time to time, and shall include this Certificate of Designations.
(g) Common Stock means the common stock, par value $0.01 per share, of the Corporation.
(h) Junior Stock means the Common Stock and any other class or series of stock of the Corporation (other than Series E) that ranks junior to Series E either or both as to the payment of dividends and/or as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(i) London Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is a day on which dealings in U.S. dollars are transacted in the London interbank market.
(j) Parity Stock means any class or series of stock of the Corporation (other than Series E) that ranks equally with Series E both in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(k) Preferred Stock means any and all series of Preferred Stock, having a par value of $0.01 per share, of the Corporation, including the Series E.
(l) Representative Amount means, at any time, an amount that, in the Calculation Agents judgment, is representative of a single transaction in the relevant market at the relevant time.
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(m) Reuters Screen LIBOR01 means the display designated on the Reuters 3000 Xtra (or such other page as may replace that page on that service or such other service as may be nominated by the British Bankers Association for the purpose of displaying London interbank offered rates for U.S. Dollar deposits).
(n) Voting Preferred Stock means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 8(b) below) or any other matter as to which the holders of Series E are entitled to vote as specified in Section 8 of this Certificate of Designations, any and all series of Preferred Stock (other than Series E) that rank equally with Series E either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 4. Dividends.
(a) Rate. Holders of Series E shall be entitled to receive, when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) out of funds legally available for the payment of dividends under Delaware law, non-cumulative cash dividends at the rate determined as set forth below in this Section (4) applied to the liquidation preference amount of $100,000 per share of Series E. Such dividends shall be payable in arrears (as provided below in this Section 4(a)), but only when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), (a) if the shares of Series E are issued prior to June 1, 2012 (or if such date is not a Business Day, the next Business Day), on June 1 and December 1 of each year until June 1, 2012, and (b) thereafter, on March 1, June 1, September 1 and December 1 of each year (each a Dividend Payment Date); provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on Series E on such Dividend Payment Date shall instead be payable on) the immediately succeeding Business Day. If a Dividend Payment Date prior to June 1, 2012 is not a Business Day, the applicable dividend shall be paid on the first Business Day following that day without adjustment. Dividends on Series E shall not be cumulative; holders of Series E shall not be entitled to receive any dividends not declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.
Dividends that are payable on Series E on any Dividend Payment Date will be payable to holders of record of Series E as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such Dividend Payment Date or such other record date fixed by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a Dividend Record Date). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
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Each dividend period (a Dividend Period) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence on and include the date of original issue of the Series E) and shall end on and include the calendar day next preceding the next Dividend Payment Date. Dividends payable on the Series E in respect of a Dividend Period shall be computed by the Calculation Agent (i) if shares of Series E are issued prior to June 1, 2012, on the basis of a 360-day year consisting of twelve-30 day months until the Dividend Payment Date in June 2012 and (ii) thereafter, on the basis of a 360-day year and the actual number of days elapsed in such Dividend Period. Dividends payable in respect of a Dividend Period shall be payable in arrears i.e., on the first Dividend Payment Date after such Dividend Period.
The dividend rate on the Series E, for each Dividend Period, shall be (a) if the shares of Series E are issued prior to June 1, 2012, a rate per annum equal to 5.793% until the Dividend Payment date in June 2012, and (b) thereafter, a rate per annum that will reset quarterly and shall be equal to the greater of (i) three-month LIBOR for such Dividend Period plus 0.7675% and (ii) 4.000%. Three-month LIBOR, with respect to any Dividend Period, means the offered rate expressed as a percentage per annum for three-month deposits in U.S. dollars on the first day of such Dividend Period, as that rate appears on Reuters Screen LIBOR01 (or any successor or replacement page) as of 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period.
If the rate described in the preceding paragraph does not appear on Reuters Screen LIBOR01(or any successor or replacement page), LIBOR shall be determined on the basis of the rates, at approximately 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period, at which deposits of the following kind are offered to prime banks in the London interbank market by four major banks in that market selected by the Calculation Agent: three-month deposits in U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount. The Calculation Agent shall request the principal London office of each of these banks to provide a quotation of its rate at approximately 11:00 A.M., London time. If at least two quotations are provided, LIBOR for such Dividend Period shall be the arithmetic mean of such quotations.
If fewer than two quotations are provided as described in the preceding paragraph, LIBOR for such Dividend Period shall be the arithmetic mean of the rates for loans of the following kind to leading European banks quoted, at approximately 11:00 A.M. New York City time, on the second London Business Day immediately preceding the first day of such Dividend Period, by three major banks in New York City selected by the Calculation Agent: three-month loans of U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount.
If fewer than three banks selected by the Calculation Agent are quoting as described in the preceding paragraph, LIBOR for such Dividend Period shall be LIBOR in effect for the prior Dividend Period.
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The Calculation Agents determination of any dividend rate, and its calculation of the amount of dividends for any Dividend Period, will be maintained on file at the Corporations principal offices and will be available to any stockholder upon request and will be final and binding in the absence of manifest error.
Holders of Series E shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series E as specified in this Section 4 (subject to the other provisions of this Certificate of Designations).
(b) Priority of Dividends. So long as any share of Series E remains outstanding, no dividend shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), and no Common Stock or other Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock and other than through the use of the proceeds of a substantially contemporaneous sale of Junior Stock) during a Dividend Period, unless the full dividends for the latest completed Dividend Period on all outstanding shares of Series E have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). The foregoing provision shall not restrict the ability of Goldman, Sachs & Co., or any other affiliate of the Corporation, to engage in any market-making transactions in Junior Stock in the ordinary course of business.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period) in full upon the Series E and any shares of Parity Stock, all dividends declared on the Series E and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of parity stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid dividends per share on the Series E and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) bear to each other.
Subject to the foregoing, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and the Series E shall not be entitled to participate in any such dividends.
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Section 5. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series E shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to the Series E as to such distribution, in full an amount equal to $100,000 per share (the Series E Liquidation Amount), together with an amount equal to all dividends (if any) that have been declared but not paid prior to the date of payment of such distribution (but without any amount in respect of dividends that have not been declared prior to such payment date).
(b) Partial Payment. If in any distribution described in Section 5(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the Liquidation Preferences (as defined below) in full to all holders of Series E and all holders of any stock of the Corporation ranking equally with the Series E as to such distribution, the amounts paid to the holders of Series E and to the holders of all such other stock shall be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series E and the holders of all such other stock. In any such distribution, the Liquidation Preference of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock other than Series E and on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series E, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series E receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 6. Redemption.
(a) Optional Redemption. The Series E may not be redeemed by the Corporation prior to the later of June 1, 2012 and the date of original issue of Series E. On or after that date, the Corporation, at its option, may redeem, in whole at any time or in part
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from time to time, the shares of Series E at the time outstanding, upon notice given as provided in Section 6(c) below, at a redemption price equal to $100,000 per share, together (except as otherwise provided herein) with an amount equal to any dividends that have been declared but not paid prior to the redemption date (but with no amount in respect of any dividends that have not been declared prior to such date). The redemption price for any shares of Series E shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above.
(b) No Sinking Fund. The Series E will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series E will have no right to require redemption of any shares of Series E.
(c) Notice of Redemption. Notice of every redemption of shares of Series E shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series E designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series E. Notwithstanding the foregoing, if the Series E or any depositary shares representing interests in the Series E are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Series E at such time and in any manner permitted by such facility. Each such notice given to a holder shall state: (1) the redemption date; (2) the number of shares of Series E to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d) Partial Redemption. In case of any redemption of only part of the shares of Series E at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Corporation may determine to be fair and equitable. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series E shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds
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necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
Section 7. Conversion Upon Regulatory Changes. If both (i) and (ii) below occur:
(i) after the date of the issuance of the Series E, the Corporation (by election or otherwise) becomes subject to any law, rule, regulation or guidance (together, Regulations) relating to its capital adequacy, which Regulation (x) modifies the existing requirements for treatment as Allowable Capital (as defined under the Securities and Exchange Commission rules relating to consolidated supervised entities as in effect from time to time), (y) provides for a type or level of capital characterized as Tier 1 or its equivalent pursuant to Regulations of any governmental agency, authority or other body having regulatory jurisdiction over the Corporation (or any of its subsidiaries or consolidated affiliates) and implementing the capital standards published by the Basel Committee on Banking Supervision, the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System or any other United States national governmental agency, authority or other body, or any other applicable regime based on capital standards published by the Basel Committee on Banking Supervision or its successor, or (z) provides for a type or level of capital that in the judgment of the Corporation (after consultation with legal counsel of recognized standing) is substantially equivalent to such Tier 1 capital (such capital described in either (y) or (z) above is referred to below as Tier 1 Capital Equivalent), and
(ii) the Corporation affirmatively elects to qualify the Series E for treatment as Allowable Capital or Tier 1 Capital Equivalent without any sublimit or other quantitative restriction on the inclusion of the Series E in Allowable Capital or Tier 1 Capital Equivalent (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) under such Regulations,
then, upon such affirmative election, the Series E shall be convertible at the Corporations option into a new series of Preferred Stock having terms and provisions substantially identical to those of the Series E, except that such new series may have such additional or modified rights, preferences, privileges and voting powers, and limitations and restrictions
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thereof, as are necessary in the judgment of the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) (after consultation with legal counsel of recognized standing) to comply with the Required Unrestricted Capital Provisions (as defined below), provided that the Corporation will not cause any such conversion unless the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) determines that the rights, preferences, privileges and voting powers, and the qualifications, limitations and restrictions thereof, of such new series of Preferred Stock, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and the qualifications, limitations and restrictions thereof, of the Series E, taken as a whole.
As used above, the term Required Unrestricted Capital Provisions means such terms and provisions as are, in the judgment of the Corporation (after consultation with counsel of recognized standing), required for preferred stock to be treated as Allowable Capital or Tier 1 Capital Equivalent, as applicable, without any sublimit or other quantitative restriction on the inclusion of such preferred stock in Allowable Capital or Tier 1 Capital Equivalent, as applicable (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) pursuant to the applicable Regulations.
The Corporation shall provide notice to the holders of Series E of any election to qualify the Series E for Allowable Capital or Tier 1 Capital Equivalent treatment and of any determination to convert the Series E into a new series of Preferred Stock pursuant to the terms of this Section 7, promptly upon the effectiveness of any such election or determination. A copy of such notice and of the relevant Regulations shall be maintained on file at the principal offices of the Corporation and, upon request, will be made available to any stockholder of the Corporation. Any conversion of the Series E pursuant to this Section 7 shall be effected pursuant to such procedures as the Corporation may determine and publicly disclose.
Except as specified in this Section 7, holders of Series E shares shall have no right to exchange or convert such shares into any other securities.
Section 8. Voting Rights.
(a) General. The holders of Series E shall not have any voting rights except as set forth below or as otherwise from to time required by law.
(b) Right To Elect Two Directors Upon Nonpayment Events. If and whenever dividends on any shares of Series E shall not have been declared and paid for Dividend Periods, whether or not consecutive, equivalent to at least eighteen months (a Nonpayment Event), the number of directors then constituting the Board of Directors shall automatically be increased by two and the holders of Series E, together with the holders of any outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect the two additional directors (the Preferred Stock Directors), provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate
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the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors and provided further that the Board of Directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Preferred Stock are entitled to elect pursuant to like voting rights).
In the event that the holders of the Series E, and such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the Series E or of any other series of Voting Preferred Stock then outstanding (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of stockholders), and at each subsequent annual meeting of stockholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series E or Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 10 below, or as may otherwise be required by law.
When dividends have been paid (or declared and a sum sufficient for payment thereof set aside) in full on the Series E for Dividend Periods, whether or not consecutive, equivalent to at least one year after a Nonpayment Event, then the right of the holders of Series E to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series E and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of the Series E and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of the Series E and all Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at
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such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office shall not have previously terminated as above provided.
(c) Other Voting Rights. So long as any shares of Series E are outstanding, in addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, the vote or consent of the holders of at least 66 2/3% of the shares of Series E and any Voting Preferred Stock at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series E with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii) Amendment of Series E. Any amendment, alteration or repeal of any provision of the Certificate of Incorporation so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series E, taken as a whole; or
(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series E, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series E remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series E immediately prior to such consummation, taken as a whole;
provided, however, that for all purposes of this Section 8(c), any increase in the amount of the authorized or issued Series E or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with and/or junior to the Series E with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will
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not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series E. In addition, any conversion of the Series E pursuant to Section 7 above shall not be deemed to adversely affect the rights, preferences, privileges and voting powers of the Series E.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series E and one or more but not all other series of Preferred Stock, then only the Series E and such series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
(d) Changes for Clarification. Without the consent of the holders of the Series E, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series E, the Corporation may amend, alter, supplement or repeal any terms of the Series E:
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or
(ii) to make any provision with respect to matters or questions arising with respect to the Series E that is not inconsistent with the provisions of this Certificate of Designations.
(e) Changes after Provision for Redemption. No vote or consent of the holders of Series E shall be required pursuant to Section 8(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series E shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series E (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation, the Bylaws, applicable law and any national securities exchange or other trading facility on which the Series E is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series E and any Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series E are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
Section 9. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series E may deem and treat
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the record holder of any share of Series E as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 10. Notices. All notices or communications in respect of Series E shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or Bylaws or by applicable law.
Section 11. No Preemptive Rights. No share of Series E shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 12. Other Rights. The shares of Series E shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law.
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Appendix F
CERTIFICATE OF DESIGNATIONS
OF
PERPETUAL NON-CUMULATIVE PREFERRED STOCK, SERIES F
OF
THE GOLDMAN SACHS GROUP, INC.
THE GOLDMAN SACHS GROUP, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the Corporation), in accordance with the provisions of Sections 103 and 151 thereof, DOES HEREBY CERTIFY:
The Securities Issuance Committee (the Committee) of the board of directors of the Corporation (the Board of Directors), in accordance with the resolutions of the Board of Directors dated September 16, 2005 and September 29, 2006, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, by unanimous written consent dated May 14, 2007, adopted the following resolution creating a series of 5,000.1 shares of Preferred Stock of the Corporation designated as Perpetual Non-Cumulative Preferred Stock, Series F.
RESOLVED, that pursuant to the authority vested in the Committee and in accordance with the resolutions of the Board of Directors dated September 16, 2005 and September 29, 2006, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
Section 1. Designation. The distinctive serial designation of such series of Preferred Stock is Perpetual Non-Cumulative Preferred Stock, Series F (Series F). Each share of Series F shall be identical in all respects to every other share of Series F.
Section 2. Number of Shares. The authorized number of shares of Series F shall be 5,000.1. Shares of Series F that are redeemed, purchased or otherwise acquired by the Corporation, or converted into another series of Preferred Stock, shall be cancelled and shall revert to authorized but unissued shares of Series F.
Section 3. Definitions. As used herein with respect to Series F:
(a) Board of Directors means the board of directors of the Corporation.
(b) ByLaws means the amended and restated bylaws of the Corporation, as they may be amended from time to time.
(c) Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City generally are authorized or obligated by law, regulation or executive order to close.
(d) Calculation Agent means, at any time, the person or entity appointed by the Corporation and serving as such agent at such time. The Corporation may terminate any such appointment and may appoint a successor agent at any time and from time to time, provided that the Corporation shall use its best efforts to ensure that there is, at all relevant times when the Series F is outstanding, a person or entity appointed and serving as such agent. The Calculation Agent may be a person or entity affiliated with the Corporation.
(e) Certificate of Designations means this Certificate of Designations relating to the Series F, as it may be amended from time to time.
(f) Certification of Incorporation shall mean the restated certificate of incorporation of the Corporation, as it may be amended from time to time, and shall include this Certificate of Designations.
(g) Common Stock means the common stock, par value $0.01 per share, of the Corporation.
(h) Junior Stock means the Common Stock and any other class or series of stock of the Corporation (other than Series F) that ranks junior to Series F either or both as to the payment of dividends and/or as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(i) London Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is a day on which dealings in U.S. dollars are transacted in the London interbank market.
(j) Parity Stock means any class or series of stock of the Corporation (other than Series F) that ranks equally with
Series F both in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(k) Preferred Stock means any and all series of Preferred Stock, having a par value of $0.01 per share, of the Corporation, including the Series F.
(l) Representative Amount means, at any time, an amount that, in the Calculation Agents judgment, is representative of a single transaction in the relevant market at the relevant time.
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(m) Reuters Screen LIBOR01 means the display designated on the Reuters 3000 Xtra (or such other page as may replace that page on that service or such other service as may be nominated by the British Bankers Association for the purpose of displaying London interbank offered rates for U.S. Dollar deposits).
(n) Voting Preferred Stock means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 8(b) below) or any other matter as to which the holders of Series F are entitled to vote as specified in Section 8 of this Certificate of Designations, any and all series of Preferred Stock (other than Series F) that rank equally with Series F either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 4. Dividends.
(a) Rate. Holders of Series F shall be entitled to receive, when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) out of funds legally available for the payment of dividends under Delaware law, non-cumulative cash dividends at the rate determined as set forth below in this Section (4) applied to the liquidation preference amount of $100,000 per share of Series F. Such dividends shall be payable quarterly in arrears (as provided below in this Section 4(a)), but only when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), on March 1, June 1, September 1 and December 1 of each year (each a Dividend Payment Date); provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on Series F on such Dividend Payment Date shall instead be payable on) the immediately succeeding Business Day. If a Dividend Payment Date is not a Business Day, the applicable dividend shall be paid on the first Business Day following that day. Dividends on Series F shall not be cumulative; holders of Series F shall not be entitled to receive any dividends not declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.
Dividends that are payable on Series F on any Dividend Payment Date will be payable to holders of record of Series F as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such Dividend Payment Date or such other record date fixed by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a Dividend Record Date). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Each dividend period (a Dividend Period) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence on and include the date of original issue of the Series F) and shall end on and include the
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calendar day next preceding the next Dividend Payment Date. Dividends payable on the Series F in respect of any Dividend Period shall be computed by the Calculation Agent on the basis of a 360-day year and the actual number of days elapsed in such Dividend Period. Dividends payable in respect of a Dividend Period shall be payable in arrears i.e., on the first Dividend Payment Date after such Dividend Period.
The dividend rate on the Series F, for each Dividend Period, shall be (a) if the shares of Series F are issued prior to September 1, 2012, a rate per annum equal to three-month LIBOR plus 0.77% until the Dividend Payment date in September 2012, and (b) thereafter, a rate per annum that will reset quarterly and shall be equal to the greater of (i) three-month LIBOR for such Dividend Period plus 0.77 % and (ii) 4.000%. Three-month LIBOR, with respect to any Dividend Period, means the offered rate expressed as a percentage per annum for three-month deposits in U.S. dollars on the first day of such Dividend Period, as that rate appears on Reuters Screen LIBOR01 (or any successor or replacement page) as of 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period.
If the rate described in the preceding paragraph does not appear on Reuters Screen LIBOR01(or any successor or replacement page), LIBOR shall be determined on the basis of the rates, at approximately 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period, at which deposits of the following kind are offered to prime banks in the London interbank market by four major banks in that market selected by the Calculation Agent: three-month deposits in U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount. The Calculation Agent shall request the principal London office of each of these banks to provide a quotation of its rate at approximately 11:00 A.M., London time. If at least two quotations are provided, LIBOR for such Dividend Period shall be the arithmetic mean of such quotations.
If fewer than two quotations are provided as described in the preceding paragraph, LIBOR for such Dividend Period shall be the arithmetic mean of the rates for loans of the following kind to leading European banks quoted, at approximately 11:00 A.M. New York City time, on the second London Business Day immediately preceding the first day of such Dividend Period, by three major banks in New York City selected by the Calculation Agent: three-month loans of U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount.
If fewer than three banks selected by the Calculation Agent are quoting as described in the preceding paragraph, LIBOR for such Dividend Period shall be LIBOR in effect for the prior Dividend Period.
The Calculation Agents determination of any dividend rate, and its calculation of the amount of dividends for any Dividend Period, will be maintained on file at the Corporations principal offices and will be available to any stockholder upon request and will be final and binding in the absence of manifest error.
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Holders of Series F shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series F as specified in this Section 4 (subject to the other provisions of this Certificate of Designations).
(b) Priority of Dividends. So long as any share of Series F remains outstanding, no dividend shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), and no Common Stock or other Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock and other than through the use of the proceeds of a substantially contemporaneous sale of Junior Stock) during a Dividend Period, unless the full dividends for the latest completed Dividend Period on all outstanding shares of Series F have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). The foregoing provision shall not restrict the ability of Goldman, Sachs & Co., or any other affiliate of the Corporation, to engage in any market-making transactions in Junior Stock in the ordinary course of business.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period) in full upon the Series F and any shares of Parity Stock, all dividends declared on the Series F and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of parity stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid dividends per share on the Series F and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) bear to each other.
Subject to the foregoing, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and the Series F shall not be entitled to participate in any such dividends.
Section 5. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series F shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to
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stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to the Series F as to such distribution, in full an amount equal to $100,000 per share (the Series F Liquidation Amount), together with an amount equal to all dividends (if any) that have been declared but not paid prior to the date of payment of such distribution (but without any amount in respect of dividends that have not been declared prior to such payment date).
(b) Partial Payment. If in any distribution described in Section 5(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the Liquidation Preferences (as defined below) in full to all holders of Series F and all holders of any stock of the Corporation ranking equally with the Series F as to such distribution, the amounts paid to the holders of Series F and to the holders of all such other stock shall be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series F and the holders of all such other stock. In any such distribution, the Liquidation Preference of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock other than Series F and on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series F, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series F receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 6. Redemption.
(a) Optional Redemption. The Series F may not be redeemed by the Corporation prior to the later of September 1, 2012 and the date of original issue of Series F. On or after that date, the Corporation, at its option, may redeem, in whole at any time or in part from time to time, the shares of Series F at the time outstanding, upon notice given as provided in Section 6(c) below, at a redemption price equal to $100,000 per share, together (except as otherwise provided herein) with an amount equal to any dividends that have been declared but not paid prior to the redemption date (but with no amount in respect of any dividends that have not been declared prior to such date). The redemption price for any shares of Series F shall be payable on the redemption date to the holder of such shares
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against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above.
(b) No Sinking Fund. The Series F will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series F will have no right to require redemption of any shares of Series F.
(c) Notice of Redemption. Notice of every redemption of shares of Series F shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series F designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series F. Notwithstanding the foregoing, if the Series F or any depositary shares representing interests in the Series F are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Series F at such time and in any manner permitted by such facility. Each such notice given to a holder shall state: (1) the redemption date; (2) the number of shares of Series F to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d) Partial Redemption. In case of any redemption of only part of the shares of Series F at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Corporation may determine to be fair and equitable. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series F shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed
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outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
Section 7. Conversion Upon Regulatory Changes. If both (i) and (ii) below occur:
(i) after the date of the issuance of the Series F, the Corporation (by election or otherwise) becomes subject to any law, rule, regulation or guidance (together, Regulations) relating to its capital adequacy, which Regulation (x) modifies the existing requirements for treatment as Allowable Capital (as defined under the Securities and Exchange Commission rules relating to consolidated supervised entities as in effect from time to time), (y) provides for a type or level of capital characterized as Tier 1 or its equivalent pursuant to Regulations of any governmental agency, authority or other body having regulatory jurisdiction over the Corporation (or any of its subsidiaries or consolidated affiliates) and implementing the capital standards published by the Basel Committee on Banking Supervision, the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System or any other United States national governmental agency, authority or other body, or any other applicable regime based on capital standards published by the Basel Committee on Banking Supervision or its successor, or (z) provides for a type or level of capital that in the judgment of the Corporation (after consultation with legal counsel of recognized standing) is substantially equivalent to such Tier 1 capital (such capital described in either (y) or (z) above is referred to below as Tier 1 Capital Equivalent), and
(ii) the Corporation affirmatively elects to qualify the Series F for treatment as Allowable Capital or Tier 1 Capital Equivalent without any sublimit or other quantitative restriction on the inclusion of the Series F in Allowable Capital or Tier 1 Capital Equivalent (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) under such Regulations,
then, upon such affirmative election, the Series F shall be convertible at the Corporations option into a new series of Preferred Stock having terms and provisions substantially identical to those of the Series F, except that such new series may have such additional or modified rights, preferences, privileges and voting powers, and limitations and restrictions thereof, as are necessary in the judgment of the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) (after consultation with legal counsel of recognized standing) to comply with the Required Unrestricted Capital Provisions (as defined below), provided that the Corporation will not cause any such conversion unless the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) determines that the rights, preferences, privileges and
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voting powers, and the qualifications, limitations and restrictions thereof, of such new series of Preferred Stock, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and the qualifications, limitations and restrictions thereof, of the Series F, taken as a whole.
As used above, the term Required Unrestricted Capital Provisions means such terms and provisions as are, in the judgment of the Corporation (after consultation with counsel of recognized standing), required for preferred stock to be treated as Allowable Capital or Tier 1 Capital Equivalent, as applicable, without any sublimit or other quantitative restriction on the inclusion of such preferred stock in Allowable Capital or Tier 1 Capital Equivalent, as applicable (other than any limitation the Corporation elects to accept and any limitation requiring that common equity or a specified form of common equity constitute the dominant form of Allowable Capital or Tier 1 Capital Equivalent) pursuant to the applicable Regulations.
The Corporation shall provide notice to the holders of Series F of any election to qualify the Series F for Allowable Capital or Tier 1 Capital Equivalent treatment and of any determination to convert the Series F into a new series of Preferred Stock pursuant to the terms of this Section 7, promptly upon the effectiveness of any such election or determination. A copy of such notice and of the relevant Regulations shall be maintained on file at the principal offices of the Corporation and, upon request, will be made available to any stockholder of the Corporation. Any conversion of the Series F pursuant to this Section 7 shall be effected pursuant to such procedures as the Corporation may determine and publicly disclose.
Except as specified in this Section 7, holders of Series F shares shall have no right to exchange or convert such shares into any other securities.
Section 8. Voting Rights.
(a) General. The holders of Series F shall not have any voting rights except as set forth below or as otherwise from to time required by law.
(b) Right To Elect Two Directors Upon Nonpayment Events. If and whenever dividends on any shares of Series F shall not have been declared and paid for at least six Dividend Periods, whether or not consecutive (a Nonpayment Event), the number of directors then constituting the Board of Directors shall automatically be increased by two and the holders of Series F, together with the holders of any outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect the two additional directors (the Preferred Stock Directors), provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors and provided further that the Board of Directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Preferred Stock are entitled to elect pursuant to like voting rights).
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In the event that the holders of the Series F, and such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the Series F or of any other series of Voting Preferred Stock then outstanding (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of stockholders), and at each subsequent annual meeting of stockholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series F or Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 10 below, or as may otherwise be required by law.
When dividends have been paid (or declared and a sum sufficient for payment thereof set aside) in full on the Series F for at least four Dividend Periods (whether or not consecutive) after a Nonpayment Event, then the right of the holders of Series F to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series F and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of the Series F and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of the Series F and all Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office shall not have previously terminated as above provided.
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(c) Other Voting Rights. So long as any shares of Series F are outstanding, in addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, the vote or consent of the holders of at least 66 2/3% of the shares of Series F and any Voting Preferred Stock at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series F with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii) Amendment of Series F. Any amendment, alteration or repeal of any provision of the Certificate of Incorporation so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series F, taken as a whole; or
(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series F, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series F remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series F immediately prior to such consummation, taken as a whole;
provided, however, that for all purposes of this Section 8(c), any increase in the amount of the authorized or issued Series F or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with and/or junior to the Series F with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series F. In addition, any conversion of the Series F pursuant to Section 7 above shall not be deemed to adversely affect the rights, preferences, privileges and voting powers of the Series F.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series F and one or more but not all other series of Preferred Stock, then only the Series F and such
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series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
(d) Changes for Clarification. Without the consent of the holders of the Series F, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series F, the Corporation may amend, alter, supplement or repeal any terms of the Series F:
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or
(ii) to make any provision with respect to matters or questions arising with respect to the Series F that is not inconsistent with the provisions of this Certificate of Designations.
(e) Changes after Provision for Redemption. No vote or consent of the holders of Series F shall be required pursuant to Section 8(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series F shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series F (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation, the Bylaws, applicable law and any national securities exchange or other trading facility on which the Series F is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series F and any Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series F are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
Section 9. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series F may deem and treat the record holder of any share of Series F as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 10. Notices. All notices or communications in respect of Series F shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or Bylaws or by applicable law.
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Section 11. No Preemptive Rights. No share of Series F shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 12. Other Rights. The shares of Series F shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law.
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Appendix G
CERTIFICATE OF DESIGNATIONS
OF
5.95% NON-CUMULATIVE PREFERRED STOCK, SERIES I
OF
THE GOLDMAN SACHS GROUP, INC.
THE GOLDMAN SACHS GROUP, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the Corporation), in accordance with the provisions of Sections 103 and 151 thereof, DOES HEREBY CERTIFY:
The Securities Issuance Committee (the Committee) of the board of directors of the Corporation (the Board of Directors), in accordance with the resolutions of the Board of Directors dated October 28, 2011, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, at a meeting duly called and held on October 22, 2012, adopted the following resolution creating a series of 34,500 shares of Preferred Stock of the Corporation designated as 5.95% Non-Cumulative Preferred Stock, Series I.
RESOLVED, that pursuant to the authority vested in the Committee and in accordance with the resolutions of the Board of Directors dated October 28, 2011, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
Section 1. Designation. The distinctive serial designation of such series of Preferred Stock is 5.95% Non-Cumulative Preferred Stock, Series I (Series I). Each share of Series I shall be identical in all respects to every other share of Series I, except as to the respective dates from which dividends thereon shall accrue, to the extent such dates may differ as permitted pursuant to Section 4(a) below.
Section 2. Number of Shares. The authorized number of shares of Series I shall be 34,500. Shares of Series I that are redeemed, purchased or otherwise acquired by the Corporation shall be cancelled and shall revert to authorized but unissued shares of Series I.
Section 3. Definitions. As used herein with respect to Series I:
(a) Appropriate Federal Banking Agency means the appropriate federal banking agency with respect to the Corporation as that term is defined in Section 3(q) of the Federal Deposit Insurance Act or any successor provision.
(b) Board of Directors means the board of directors of the Corporation.
(c) ByLaws means the amended and restated bylaws of the Corporation, as they may be amended from time to time.
(d) Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City generally are authorized or obligated by law, regulation or executive order to close.
(e) Certificate of Designations means this Certificate of Designations relating to the Series I, as it may be amended from time to time.
(f) Certification of Incorporation shall mean the restated certificate of incorporation of the Corporation, as it may be amended from time to time, and shall include this Certificate of Designations.
(g) Common Stock means the common stock, par value $0.01 per share, of the Corporation.
(h) Junior Stock means the Common Stock and any other class or series of stock of the Corporation (other than Series I) that ranks junior to Series I either or both as to the payment of dividends and/or as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(i) Parity Stock means any class or series of stock of the Corporation (other than Series I) that ranks equally with Series I both in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(j) Preferred Stock means any and all series of Preferred Stock, having a par value of $0.01 per share, of the Corporation, including the Series I.
(k) Regulatory Capital Treatment Event means the good faith determination by the Corporation that, as a result of (i) any amendment to, or change in, the laws or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after the initial issuance of any share of the Series I, (ii) any proposed change in those laws or regulations that is announced or becomes effective after the initial issuance of any share of Series I, or (iii) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying
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those laws or regulations that is announced after the initial issuance of any share of Series I, there is more than an insubstantial risk that the Corporation will not be entitled to treat the full liquidation preference amount of $25,000 per share of Series I then outstanding as tier 1 capital (or its equivalent) for purposes of the capital adequacy guidelines of the Board of Governors of the Federal Reserve System (or, as and if applicable, the capital adequacy guidelines or regulations of any successor Appropriate Federal Banking Agency) as then in effect and applicable, for so long as any share of Series I is outstanding.
(l) Voting Preferred Stock means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 7(b) below) or any other matter as to which the holders of Series I are entitled to vote as specified in Section 7 of this Certificate of Designations, any and all series of Preferred Stock (other than Series I) that rank equally with Series I either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 4. Dividends.
(a) Rate. Holders of Series I shall be entitled to receive, when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) out of funds legally available for the payment of dividends under Delaware law, non-cumulative cash dividends at the rate per annum equal to 5.95% applied to the liquidation preference amount of $25,000 per share of Series I. Such dividends shall be payable quarterly in arrears (as provided below in this Section 4(a)), but only when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), on February 10, May 10, August 10 and November 10 (Dividend Payment Dates), commencing on February 10, 2013; provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on Series I on such Dividend Payment Date shall instead be payable on) the immediately succeeding Business Day. Dividends on Series I shall not be cumulative; holders of Series I shall not be entitled to receive any dividends not declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.
Dividends on the Series I shall not be declared or set aside for payment if and to the extent such dividends would cause the Corporation to fail to comply with the capital adequacy guidelines of the Board of Governors of the Federal Reserve System (or, as and if applicable, the capital adequacy guidelines or regulations of any successor Appropriate Federal Banking Agency) applicable to the Corporation.
Dividends that are payable on Series I on any Dividend Payment Date will be payable to holders of record of Series I as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such
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Dividend Payment Date or such other record date fixed by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a Dividend Record Date). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Each dividend period (a Dividend Period) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence on and include the date of original issue of the Series I, provided that, for any share of Series I issued after such original issue date, the initial Dividend Period for such shares may commence on and include such other date as the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) shall determine and publicly disclose) and shall end on and include the calendar day next preceding the next Dividend Payment Date. Dividends payable on the Series I in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends payable in respect of a Dividend Period shall be payable in arrears i.e., on the first Dividend Payment Date after such Dividend Period.
Holders of Series I shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series I as specified in this Section 4 (subject to the other provisions of this Certificate of Designations).
(b) Priority of Dividends. So long as any share of Series I remains outstanding, no dividend shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), and no Common Stock or other Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock and other than through the use of the proceeds of a substantially contemporaneous sale of Junior Stock) during a Dividend Period, unless the full dividends for the latest completed Dividend Period on all outstanding shares of Series I have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). The foregoing provision shall not restrict the ability of Goldman, Sachs & Co., or any other affiliate of the Corporation, to engage in any market-making transactions in Junior Stock in the ordinary course of business.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period) in full upon the Series I and any shares of Parity Stock, all dividends declared on the Series I and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of parity stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all
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accrued but unpaid dividends per share on the Series I and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) bear to each other.
Subject to the foregoing, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and the Series I shall not be entitled to participate in any such dividends.
Section 5. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series I shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to the Series I as to such distribution, in full an amount equal to $25,000 per share (the Series I Liquidation Amount), together with an amount equal to all dividends (if any) that have been declared but not paid prior to the date of payment of such distribution (but without any amount in respect of dividends that have not been declared prior to such payment date).
(b) Partial Payment. If in any distribution described in Section 5(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the Liquidation Preferences (as defined below) in full to all holders of Series I and all holders of any stock of the Corporation ranking equally with the Series I as to such distribution, the amounts paid to the holders of Series I and to the holders of all such other stock shall be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series I and the holders of all such other stock. In any such distribution, the Liquidation Preference of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock other than Series I and on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series I, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
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(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series I receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 6. Redemption.
(a) Optional Redemption. The Series I is perpetual and has no maturity date. The Corporation may, at its option, redeem the shares of Series I at the time outstanding, upon notice given as provided in Section 6(c) below, (i) in whole or in part, from time to time, on any date on or after November 10, 2017, or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Treatment Event, in each case, at a redemption price equal to $25,000 per share, together (except as otherwise provided hereinbelow) with an amount equal to any dividends that have accrued but not been paid for the then-current Dividend Period to but excluding the redemption date, whether or not such dividends have been declared. The redemption price for any shares of Series I shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above. Notwithstanding the foregoing, the Corporation may not redeem shares of Series I without having received the prior approval of the Appropriate Federal Banking Agency if then required under capital guidelines applicable to the Corporation.
(b) No Sinking Fund. The Series I will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series I will have no right to require redemption of any shares of Series I.
(c) Notice of Redemption. Notice of every redemption of shares of Series I shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series I designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series I. Notwithstanding the foregoing, if the Series I or any depositary shares representing interests in the Series I are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Series I at such time and in any manner permitted by such facility. Each such notice given
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to a holder shall state: (1) the redemption date; (2) the number of shares of Series I to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d) Partial Redemption. In case of any redemption of only part of the shares of Series I at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Corporation may determine to be fair and equitable. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series I shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
Section 7. Voting Rights.
(a) General. The holders of Series I shall not have any voting rights except as set forth below or as otherwise from to time required by law.
(b) Right To Elect Two Directors Upon Nonpayment Events. If and whenever dividends on any shares of Series I shall not have been declared and paid for at least six Dividend Periods, whether or not consecutive (a Nonpayment Event), the number of directors then constituting the Board of Directors shall automatically be increased by two and the holders of Series I, together with the holders of any outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect the two additional directors (the Preferred Stock Directors), provided that it shall be a qualification for election for any such Preferred Stock Director that the election of such director shall not cause the Corporation to violate the corporate governance requirement of the New York Stock Exchange (or any other securities exchange or other trading facility on which securities of the Corporation may then be listed or traded) that listed or traded companies must have a majority of independent directors and provided further that the
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Board of Directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Preferred Stock are entitled to elect pursuant to like voting rights).
In the event that the holders of the Series I, and such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the Series I or of any other series of Voting Preferred Stock then outstanding (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of stockholders), and at each subsequent annual meeting of stockholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series I or Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 9 below, or as may otherwise be required by law.
When dividends have been paid (or declared and a sum sufficient for payment thereof set aside) in full on the Series I for at least four Dividend Periods (whether or not consecutive) after a Nonpayment Event, then the right of the holders of Series I to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series I and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of the Series I and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of the Series I and all Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office shall not have previously terminated as above provided.
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(c) Other Voting Rights. So long as any shares of Series I are outstanding, in addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, the vote or consent of the holders of at least 66 2/3% of the shares of Series I and any Voting Preferred Stock at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series I with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii) Amendment of Series I. Any amendment, alteration or repeal of any provision of the Certificate of Incorporation so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series I, taken as a whole; or
(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series I, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series I remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series I immediately prior to such consummation, taken as a whole;
provided, however, that for all purposes of this Section 7(c), any increase in the amount of the authorized or issued Series I or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with and/or junior to the Series I with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series I.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series I
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and one or more but not all other series of Preferred Stock, then only the Series I and such series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
(d) Changes for Clarification. Without the consent of the holders of the Series I, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series I, the Corporation may amend, alter, supplement or repeal any terms of the Series I:
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or
(ii) to make any provision with respect to matters or questions arising with respect to the Series I that is not inconsistent with the provisions of this Certificate of Designations.
(e) Changes after Provision for Redemption. No vote or consent of the holders of Series I shall be required pursuant to Section 7(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series I shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series I (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation, the Bylaws, applicable law and any national securities exchange or other trading facility on which the Series I is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series I and any Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series I are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
Section 8. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series I may deem and treat the record holder of any share of Series I as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 9. Notices. All notices or communications in respect of Series I shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or Bylaws or by applicable law.
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Section 10. No Preemptive Rights. No share of Series I shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 11. Other Rights. The shares of Series I shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law.
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Appendix H
CERTIFICATE OF DESIGNATIONS
OF
5.50% FIXED-TO-FLOATING RATE NON-CUMULATIVE
PREFERRED STOCK, SERIES J
OF
THE GOLDMAN SACHS GROUP, INC.
THE GOLDMAN SACHS GROUP, INC., a corporation organized and existing under the General Corporation Law of the State of Delaware (the Corporation), in accordance with the provisions of Sections 103 and 151 thereof, DOES HEREBY CERTIFY:
The Securities Issuance Committee (the Committee) of the board of directors of the Corporation (the Board of Directors), in accordance with the resolutions of the Board of Directors dated October 28, 2011, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, at a meeting duly called and held on April 22, 2013, adopted the following resolution creating a series of 46,000 shares of Preferred Stock of the Corporation designated as 5.50% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series J.
RESOLVED, that pursuant to the authority vested in the Committee and in accordance with the resolutions of the Board of Directors dated October 28, 2011, the provisions of the restated certificate of incorporation and the amended and restated bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:
Section 1. Designation. The distinctive serial designation of such series of Preferred Stock is 5.50% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series J (Series J). Each share of Series J shall be identical in all respects to every other share of Series J, except as to the respective dates from which dividends thereon shall accrue, to the extent such dates may differ as permitted pursuant to Section 4(a) below.
Section 2. Number of Shares. The authorized number of shares of Series J shall be 46,000. Shares of Series J that are redeemed, purchased or otherwise acquired by the Corporation shall be cancelled and shall revert to authorized but unissued shares of Series J.
Section 3. Definitions. As used herein with respect to Series J:
(a) Appropriate Federal Banking Agency means the appropriate federal banking agency with respect to the Corporation as that term is defined in Section 3(q) of the Federal Deposit Insurance Act or any successor provision.
(b) Board of Directors means the board of directors of the Corporation.
(c) ByLaws means the amended and restated bylaws of the Corporation, as they may be amended from time to time.
(d) Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City generally are authorized or obligated by law, regulation or executive order to close.
(e) Calculation Agent means, at any time, the person or entity appointed by the Corporation and serving as such agent at such time. The Corporation may terminate any such appointment and may appoint a successor agent at any time and from time to time, provided that the Corporation shall use its best efforts to ensure that there is, at all relevant times when the Series J is outstanding, a person or entity appointed and serving as such agent. The Calculation Agent may be a person or entity affiliated with the Corporation.
(f) Certificate of Designations means this Certificate of Designations relating to the Series J, as it may be amended from time to time.
(g) Certification of Incorporation shall mean the restated certificate of incorporation of the Corporation, as it may be amended from time to time, and shall include this Certificate of Designations.
(h) Common Stock means the common stock, par value $0.01 per share, of the Corporation.
(i) Junior Stock means the Common Stock and any other class or series of stock of the Corporation (other than Series J) that ranks junior to Series J either or both as to the payment of dividends and/or as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(j) London Business Day means a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is a day on which dealings in U.S. dollars are transacted in the London interbank market.
(k) Parity Stock means any class or series of stock of the Corporation (other than Series J) that ranks equally with Series J both in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
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(l) Preferred Stock means any and all series of Preferred Stock, having a par value of $0.01 per share, of the Corporation, including the Series J.
(m) Regulatory Capital Treatment Event means the good faith determination by the Corporation that, as a result of (i) any amendment to, or change in, the laws or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after the initial issuance of any share of the Series J (ii) any proposed change in those laws or regulations that is announced or becomes effective after the initial issuance of any share of Series J, or (iii) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the initial issuance of any share of Series J, there is more than an insubstantial risk that the Corporation will not be entitled to treat the full liquidation preference amount of $25,000 per share of Series J then outstanding as tier 1 capital (or its equivalent) for purposes of the capital adequacy guidelines of the Board of Governors of the Federal Reserve System (or, as and if applicable, the capital adequacy guidelines or regulations of any successor Appropriate Federal Banking Agency) as then in effect and applicable, for so long as any share of Series J is outstanding.
(n) Representative Amount means, at any time, an amount that, in the Calculation Agents judgment, is representative of a single transaction in the relevant market at the relevant time.
(o) Reuters screen means the display on the Reuters 3000 Xtra service, or any successor or replacement service.
(p) Voting Preferred Stock means, with regard to any election or removal of a Preferred Stock Director (as defined in Section 7(b) below) or any other matter as to which the holders of Series J are entitled to vote as specified in Section 7 of this Certificate of Designations, any and all series of Preferred Stock (other than Series J) that rank equally with Series J either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up of the Corporation and upon which like voting rights have been conferred and are exercisable with respect to such matter.
Section 4. Dividends.
(a) Rate. Holders of Series J shall be entitled to receive, when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) out of funds legally available for the payment of dividends under Delaware law, non-cumulative cash dividends at the rate determined as set forth below in this Section (4) applied to the liquidation preference amount of $25,000 per share of Series J. Such dividends shall be payable quarterly in arrears (as provided below in this Section 4(a)), but only when, as and if declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), on February 10, May 10, August 10 and November 10 (Dividend Payment Dates), commencing on
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August 10, 2013; provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on Series J on such Dividend Payment Date shall instead be payable on) the immediately succeeding Business Day unless, after May 10, 2023, such immediately succeeding Business Day falls in the next calendar month, in which case such Dividend Payment Date shall instead be (and any such Dividend shall instead be payable on) the immediately preceding Business Day. Dividends on Series J shall not be cumulative; holders of Series J shall not be entitled to receive any dividends not declared by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend not so declared.
Dividends on the Series J shall not be declared or set aside for payment if and to the extent such dividends would cause the Corporation to fail to comply with the capital adequacy guidelines of the Board of Governors of the Federal Reserve System (or, as and if applicable, the capital adequacy guidelines or regulations of any successor Appropriate Federal Banking Agency) applicable to the Corporation.
Dividends that are payable on Series J on any Dividend Payment Date will be payable to holders of record of Series J as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such Dividend Payment Date or such other record date fixed by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a Dividend Record Date). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Each dividend period (a Dividend Period) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence on and include the date of original issue of the Series J, provided that, for any share of Series J issued after such original issue date, the initial Dividend Period for such shares may commence on and include such other date as the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) shall determine and publicly disclose) and shall end on and include the calendar day next preceding the next Dividend Payment Date. Dividends payable on the Series J in respect of any Dividend Period beginning prior to May 10, 2023 shall be calculated on the basis of a 360-day year consisting of twelve 30-day months, and dividends payable on the Series J in respect of any Dividend Period beginning on or after May 10, 2023 shall be calculated by the Calculation Agent on the basis of a 360-day year and the actual number of days elapsed in such Dividend Period. Dividends payable in respect of a Dividend Period shall be payable in arrears i.e., on the first Dividend Payment Date after such Dividend Period.
The dividend rate on the Series J, for each Dividend Period beginning prior to May 10, 2023, shall be a rate per annum equal to 5.50%, and the dividend rate on the Series J, for each Dividend Period beginning on or after May 10, 2023, shall be a rate per annum equal to LIBOR (as defined below) for such Dividend Period plus 3.64%. LIBOR, with respect to any Dividend Period beginning on or after May 10, 2023, means the offered
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rate expressed as a percentage per annum for three-month deposits in U.S. dollars on the first day of such Dividend Period, as that rate appears on Reuters screen LIBOR01 (or any successor or replacement page) as of approximately 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period.
If the rate described in the preceding paragraph does not appear on the Reuters screen LIBOR01 (or any successor or replacement page), LIBOR shall be determined on the basis of the rates, at approximately 11:00 A.M., London time, on the second London Business Day immediately preceding the first day of such Dividend Period, at which deposits of the following kind are offered to prime banks in the London interbank market by four major banks in that market selected by the Calculation Agent: three-month deposits in U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount. The Calculation Agent shall request the principal London office of each of these banks to provide a quotation of its rate at approximately 11:00 A.M., London time. If at least two quotations are provided, LIBOR for such Dividend Period shall be the arithmetic mean of such quotations.
If fewer than two quotations are provided as described in the preceding paragraph, LIBOR for such Dividend Period shall be the arithmetic mean of the rates for loans of the following kind to leading European banks quoted, at approximately 11:00 A.M., New York City time, on the second London Business Day immediately preceding the first day of such Dividend Period, by three major banks in New York City selected by the Calculation Agent: three-month loans of U.S. dollars, beginning on the first day of such Dividend Period, and in a Representative Amount.
If no quotation is provided as described in the preceding paragraph, then the Calculation Agent, after consulting such sources as it deems comparable to any of the foregoing quotations or display page, or any such source as it deems reasonable from which to estimate LIBOR or any of the foregoing lending rates, shall determine LIBOR for such Dividend Period in its sole discretion.
The Calculation Agents determination of any dividend rate, and its calculation of the amount of dividends for any Dividend Period, will be maintained on file at the Corporations principal offices, will be made available to any stockholder upon request and will be final and binding in the absence of manifest error.
Holders of Series J shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series J as specified in this Section 4 (subject to the other provisions of this Certificate of Designations).
(b) Priority of Dividends. So long as any share of Series J remains outstanding, no dividend shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), and no Common Stock or other Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or
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conversion of one share of Junior Stock for or into another share of Junior Stock and other than through the use of the proceeds of a substantially contemporaneous sale of Junior Stock) during a Dividend Period, unless the full dividends for the latest completed Dividend Period on all outstanding shares of Series J have been declared and paid (or declared and a sum sufficient for the payment thereof has been set aside). The foregoing provision shall not restrict the ability of Goldman, Sachs & Co., or any other affiliate of the Corporation, to engage in any market-making transactions in Junior Stock in the ordinary course of business.
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period) in full upon the Series J and any shares of Parity Stock, all dividends declared on the Series J and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of parity stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid dividends per share on the Series J and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) bear to each other.
Subject to the foregoing, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors) may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and the Series J shall not be entitled to participate in any such dividends.
Section 5. Liquidation Rights.
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series J shall be entitled to receive, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Corporation ranking junior to the Series J as to such distribution, in full an amount equal to $25,000 per share (the Series J Liquidation Amount), together with an amount equal to all dividends (if any) that have been declared but not paid prior to the date of payment of such distribution (but without any amount in respect of dividends that have not been declared prior to such payment date).
(b) Partial Payment. If in any distribution described in Section 5(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the
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Liquidation Preferences (as defined below) in full to all holders of Series J and all holders of any stock of the Corporation ranking equally with the Series J as to such distribution, the amounts paid to the holders of Series J and to the holders of all such other stock shall be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series J and the holders of all such other stock. In any such distribution, the Liquidation Preference of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock other than Series J and on which dividends accrue on a cumulative basis, an amount equal to any unpaid, accrued, cumulative dividends, whether or not declared, as applicable).
(c) Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Series J, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series J receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
Section 6. Redemption.
(a) Optional Redemption. The Series J is perpetual and has no maturity date. The Corporation may, at its option, redeem the shares of Series J at the time outstanding, upon notice given as provided in Section 6(c) below, (i) in whole or in part, from time to time, on any date on or after May 10, 2023, or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Treatment Event, in each case, at a redemption price equal to $25,000 per share, together (except as otherwise provided hereinbelow) with an amount equal to any dividends that have accrued but not been paid for the then-current Dividend Period to but excluding the redemption date, whether or not such dividends have been declared. The redemption price for any shares of Series J shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 4 above. Notwithstanding the foregoing, the Corporation may not redeem shares of Series J without having received the prior approval of the Appropriate Federal Banking Agency if then required under capital guidelines applicable to the Corporation.
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(b) No Sinking Fund. The Series J will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series J will have no right to require redemption of any shares of Series J.
(c) Notice of Redemption. Notice of every redemption of shares of Series J shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series J designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series J. Notwithstanding the foregoing, if the Series J or any depositary shares representing interests in the Series J are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Series J at such time and in any manner permitted by such facility. Each such notice given to a holder shall state: (1) the redemption date; (2) the number of shares of Series J to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d) Partial Redemption. In case of any redemption of only part of the shares of Series J at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Corporation may determine to be fair and equitable. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series J shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e) Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.
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Section 7. Voting Rights.
(a) General. The holders of Series J shall not have any voting rights except as set forth below or as otherwise from time to time required by law.
(b) Right To Elect Two Directors Upon Nonpayment Events. If and whenever dividends on any shares of Series J shall not have been declared and paid for at least six Dividend Periods, whether or not consecutive (a Nonpayment Event), the number of directors then constituting the Board of Directors shall automatically be increased by two and the holders of Series J, together with the holders of any outstanding shares of Voting Preferred Stock, voting together as a single class, shall be entitled to elect the two additional directors (the Preferred Stock Directors), provided that the Board of Directors shall at no time include more than two Preferred Stock Directors (including, for purposes of this limitation, all directors that the holders of any series of Voting Preferred Stock are entitled to elect pursuant to like voting rights).
In the event that the holders of the Series J, and such other holders of Voting Preferred Stock, shall be entitled to vote for the election of the Preferred Stock Directors following a Nonpayment Event, such directors shall be initially elected following such Nonpayment Event only at a special meeting called at the request of the holders of record of at least 20% of the Series J or of any other series of Voting Preferred Stock then outstanding (unless such request for a special meeting is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders of the Corporation, in which event such election shall be held only at such next annual or special meeting of stockholders), and at each subsequent annual meeting of stockholders of the Corporation. Such request to call a special meeting for the initial election of the Preferred Stock Directors after a Nonpayment Event shall be made by written notice, signed by the requisite holders of Series J or Voting Preferred Stock, and delivered to the Secretary of the Corporation in such manner as provided for in Section 9 below, or as may otherwise be required by law.
When dividends have been paid (or declared and a sum sufficient for payment thereof set aside) in full on the Series J for four consecutive Dividend Periods after a Nonpayment Event, then the right of the holders of Series J to elect the Preferred Stock Directors shall cease (but subject always to revesting of such voting rights in the case of any future Nonpayment Event), and, if and when any rights of holders of Series J and Voting Preferred Stock to elect the Preferred Stock Directors shall have ceased, the terms of office of all the Preferred Stock Directors shall forthwith terminate and the number of directors constituting the Board of Directors shall automatically be reduced accordingly.
Any Preferred Stock Director may be removed at any time without cause by the holders of record of a majority of the outstanding shares of the Series J and Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). So long as a Nonpayment Event shall continue, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment Event) may be filled by the written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of
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record of a majority of the outstanding shares of the Series J and all Voting Preferred Stock, when they have the voting rights described above (voting together as a single class). Any such vote of stockholders to remove, or to fill a vacancy in the office of, a Preferred Stock Director may be taken only at a special meeting of such stockholders, called as provided above for an initial election of Preferred Stock Director after a Nonpayment Event (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders, in which event such election shall be held at such next annual or special meeting of stockholders). The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote. Each Preferred Stock Director elected at any special meeting of stockholders or by written consent of the other Preferred Stock Director shall hold office until the next annual meeting of the stockholders if such office shall not have previously terminated as above provided.
(c) Other Voting Rights. So long as any shares of Series J are outstanding, in addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, the vote or consent of the holders of at least 66 2/3% of the shares of Series J and any Voting Preferred Stock at the time outstanding and entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
(i) Authorization of Senior Stock. Any amendment or alteration of the Certificate of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior to the Series J with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;
(ii) Amendment of Series J. Any amendment, alteration or repeal of any provision of the Certificate of Incorporation so as to materially and adversely affect the special rights, preferences, privileges or voting powers of the Series J, taken as a whole; or
(iii) Share Exchanges, Reclassifications, Mergers and Consolidations. Any consummation of a binding share exchange or reclassification involving the Series J, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Series J remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series J immediately prior to such consummation, taken as a whole;
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provided, however, that for all purposes of this Section 7(c), any increase in the amount of the authorized or issued Series J or authorized Preferred Stock, or the creation and issuance, or an increase in the authorized or issued amount, of any other series of Preferred Stock ranking equally with and/or junior to the Series J with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and/or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the rights, preferences, privileges or voting powers of the Series J.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the Series J and one or more but not all other series of Preferred Stock, then only the Series J and such series of Preferred Stock as are adversely affected by and entitled to vote on the matter shall vote on the matter together as a single class (in lieu of all other series of Preferred Stock).
(d) Changes for Clarification. Without the consent of the holders of the Series J, so long as such action does not adversely affect the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of the Series J, the Corporation may amend, alter, supplement or repeal any terms of the Series J:
(i) to cure any ambiguity, or to cure, correct or supplement any provision contained in this Certificate of Designations that may be defective or inconsistent; or
(ii) to make any provision with respect to matters or questions arising with respect to the Series J that is not inconsistent with the provisions of this Certificate of Designations.
(e) Changes after Provision for Redemption. No vote or consent of the holders of Series J shall be required pursuant to Section 7(b), (c) or (d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series J shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been set aside for such redemption, in each case pursuant to Section 6 above.
(f) Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Series J (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors or the Committee (or another duly authorized committee of the Board of Directors), in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation, the Bylaws, applicable law and any national securities exchange or other trading facility on which the Series J is listed or traded at the time. Whether the vote or consent of the holders of a plurality, majority or other portion of the shares of Series J and any Voting Preferred Stock has been cast or given on any matter on which the holders of shares of Series J are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amounts of the shares voted or covered by the consent.
H-11
Section 8. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the transfer agent for the Series J may deem and treat the record holder of any share of Series J as the true and lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent shall be affected by any notice to the contrary.
Section 9. Notices. All notices or communications in respect of Series J shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or Bylaws or by applicable law.
Section 10. No Preemptive Rights. No share of Series J shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.
Section 11. Other Rights. The shares of Series J shall not have any voting powers, preferences or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law.
H-12
EXHIBIT 12.1
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND RATIOS OF EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Three Months Ended March |
Year Ended December | Year Ended November |
One Month Ended December |
|||||||||||||||||||||||||
$ in millions | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2008 | |||||||||||||||||||||
Net earnings/(loss) |
$2,260 | $ 7,475 | $ 4,442 | $ 8,354 | $13,385 | $ 2,322 | $ (780 | ) | ||||||||||||||||||||
Add: |
||||||||||||||||||||||||||||
Provision/(benefit) for taxes |
1,113 | 3,732 | 1,727 | 4,538 | 6,444 | 14 | (478 | ) | ||||||||||||||||||||
Portion of rents representative of an interest factor |
28 | 125 | 159 | 169 | 145 | 146 | 13 | |||||||||||||||||||||
Interest expense on all indebtedness |
1,683 | 7,501 | 7,982 | 6,806 | 6,500 | 31,357 | 1,002 | |||||||||||||||||||||
Pre-tax earnings/(loss), as adjusted |
$5,084 | $18,833 | $14,310 | $19,867 | $26,474 | $33,839 | $ (243 | ) | ||||||||||||||||||||
Fixed charges 1: |
||||||||||||||||||||||||||||
Portion of rents representative of an interest factor |
$ 28 | $ 125 | $ 159 | $ 169 | $ 145 | $ 146 | $ 13 | |||||||||||||||||||||
Interest expense on all indebtedness |
1,684 | 7,509 | 7,987 | 6,810 | 6,570 | 31,444 | 1,008 | |||||||||||||||||||||
Total fixed charges |
$1,712 | $ 7,634 | $ 8,146 | $ 6,979 | $ 6,715 | $31,590 | $1,021 | |||||||||||||||||||||
Preferred stock dividend requirements |
107 | 274 | 2,683 | 989 | 1,767 | 283 | 400 | |||||||||||||||||||||
Total combined fixed charges and preferred stock dividends |
$1,819 | $ 7,908 | $10,829 | $ 7,968 | $ 8,482 | $31,873 | $1,421 | |||||||||||||||||||||
Ratio of earnings to fixed charges |
2.97 | x | 2.47 | x | 1.76 | x | 2.85 | x | 3.94 | x | 1.07 | x | N/A | 2 | ||||||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends |
2.79 | x | 2.38 | x | 1.32 | x | 2.49 | x | 3.12 | x | 1.06 | x | N/A | 2 |
1. | Fixed charges include capitalized interest of $1 million, $8 million, $5 million, $4 million, $70 million, $87 million and $6 million for the three months ended March 2013, years ended December 2012, December 2011, December 2010, December 2009, November 2008 and one month ended December 2008, respectively. |
2. | Earnings for the one month ended December 2008 were inadequate to cover total fixed charges and total combined fixed charges and preferred stock dividends. The coverage deficiencies for total fixed charges and total combined fixed charges and preferred stock dividends were $1.26 billion and $1.66 billion, respectively. |
EXHIBIT 15.1
May 8, 2013
Securities and Exchange Commission
100 F Street N.E.
Washington, D.C. 20549
Re: | The Goldman Sachs Group, Inc. |
Registration Statements on Form S-8 |
(No. 333-80839) |
(No. 333-42068) |
(No. 333-106430) |
(No. 333-120802) |
Registration Statements on Form S-3 |
(No. 333-176914) |
Commissioners:
We are aware that our report dated May 8, 2013 on our review of the condensed consolidated statement of financial condition of The Goldman Sachs Group, Inc. and subsidiaries (the Company) as of March 31, 2013, the related condensed consolidated statements of earnings for the three months ended March 31, 2013 and 2012, the condensed consolidated statements of comprehensive income for the three months ended March 31, 2013 and 2012, the condensed consolidated statement of changes in shareholders equity for the three months ended March 31, 2013, and the condensed consolidated statements of cash flows for the three months ended March 31, 2013 and 2012 included in the Companys quarterly report on Form 10-Q for the quarter ended March 31, 2013 is incorporated by reference in the registration statements referred to above. Pursuant to Rule 436(c) under the Securities Act of 1933 (the Act), such report should not be considered a part of such registration statements, and is not a report within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ PRICEWATERHOUSECOOPERS LLP
EXHIBIT 31.1
CERTIFICATIONS
I, Lloyd C. Blankfein, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 of The Goldman Sachs Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 8, 2013 |
/s/ Lloyd C. Blankfein |
|||
Name: Lloyd C. Blankfein |
||||
Title: Chief Executive Officer |
CERTIFICATIONS
I, Harvey M. Schwartz, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 of The Goldman Sachs Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 8, 2013 |
/s/ Harvey M. Schwartz |
|||
Name: Harvey M. Schwartz |
||||
Title: Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION
Pursuant to 18 U.S.C. § 1350, the undersigned officer of The Goldman Sachs Group, Inc. (the Company) hereby certifies that the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (the Report) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 8, 2013 |
/s/ Lloyd C. Blankfein |
|||
Name: Lloyd C. Blankfein |
||||
Title: Chief Executive Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
CERTIFICATION
Pursuant to 18 U.S.C. § 1350, the undersigned officer of The Goldman Sachs Group, Inc. (the Company) hereby certifies that the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (the Report) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 8, 2013 |
/s/ Harvey M. Schwartz |
|||
Name: Harvey M. Schwartz |
||||
Title: Chief Financial Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
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