Goldman Sachs 2003 Annual Report Download - page 55

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Management’s Discussion and Analysis
GOLDMAN SACHS 2003 ANNUAL REPORT 53
The following table sets forth our contractual obligations as of November 2003:
CONTRACTUAL OBLIGATIONS
2009-
(IN MILLIONS) 2004 2005-2006 2007-2008 THEREAFTER TOTAL
Long-term borrowings by contract maturity(1)(2) $ — $20,161 $7,489 $29,832 $57,482
Minimum rental payments 422 688 592 2,220 3,922
(1) Long-term borrowings maturing within one year and certain long-term borrowings that may be redeemable within one year at the option of the
holder are included as short-term borrowings in the consolidated statements of financial condition.
(2) Long-term borrowings redeemable at the option of Goldman Sachs are reflected at their contractual maturity dates. Certain long-term borrowings
redeemable prior to maturity at the option of the holder are reflected at the date such options first become exercisable.
As of November 2003, our long-term borrowings were
$57.48 billion. Substantially all of our long-term bor-
rowings were unsecured and consisted principally of
senior borrowings with maturities extending to 2033. As
of November 2003, long-term borrowings included non-
recourse debt of $5.4 billion, consisting of $3.2 billion
issued during the year by William Street Funding
Corporation (Funding Corp) (a wholly owned subsidiary
of The Goldman Sachs Group, Inc. (Group Inc.) formed
to raise funding to support loan commitments made by
another wholly owned William Street entity to invest-
ment-grade clients), $1.6 billion issued by consolidated
VIEs and $0.6 billion issued by other consolidated enti-
ties, primarily associated with our ownership of East
Coast Power L.L.C. Nonrecourse debt is debt that Group
Inc. is not directly or indirectly obligated to repay
through a guarantee, general partnership interest or con-
tractual arrangement. See Note 3 and Note 5, respec-
tively, to the consolidated financial statements for further
information regarding financial instruments, including
VIEs, and our long-term borrowings.
As of November 2003, our future minimum rental pay-
ments, net of minimum sublease rentals, under non-
cancelable leases were $3.92 billion. These lease
commitments, principally for office space, expire on var-
ious dates through 2029. Certain agreements are subject
to periodic escalation provisions for increases in real
estate taxes and other charges.
Our occupancy expenses include costs associated with office
space held in excess of our current requirements. This excess
space, the cost of which is charged to earnings as incurred,
is being held for potential growth or to replace currently
occupied space that we may exit in the future. We continu-
ally evaluate our current and future space capacity in rela-
tion to current and projected future staffing levels. In 2003,
we reduced our global office space and incurred exit costs
of $153 million. We may incur additional exit costs in 2004
and thereafter to the extent we (i) further reduce our capac-
ity or (ii) commit to new properties in the locations in which
we operate and, consequently, dispose of existing space that
had been held for potential growth. Such exit costs may be
material to our results of operations in a given period.
The following table sets forth our contingent commitments as of November 2003:
CONTINGENT COMMITMENTS
COMMITMENT AMOUNT BY PERIOD OF EXPIRATION
2009-
(IN MILLIONS) 2004 2005-2006 2007-2008 THEREAFTER TOTAL
Commitments to extend credit $ 8,276 $1,814 $2,087 $3,653 $15,830
Commitments under letters of credit
issued by banks to counterparties 12,451 14 2 132 12,599
Other commercial commitments(1) 249 645 408 420 1,722
Total $20,976 $2,473 $2,497 $4,205 $30,151
(1) Includes our corporate and real estate investment fund commitments, construction-related obligations and other purchase commitments.
Contractual Obligations and
Contingent Commitments
Goldman Sachs has contractual obligations to make
future payments under long-term debt and long-term
noncancelable lease agreements and has contingent com-
mitments under a variety of commercial arrangements.
See Note 6 to the consolidated financial statements for
further information regarding our commitments, contin-
gencies and guarantees.