Goldman Sachs 2007 Annual Report Download - page 119

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Notes to Consolidated Financial Statements
NOTE 7
Shareholders’ Equity
Dividends declared per common share were $1.40 in 2007,
$1.30 in 2006, and $1.00 in 2005. On December 17, 2007, the
Board of Directors of Group Inc. (the Board) declared a dividend
of $0.35 per common share to be paid on February 28, 2008,
to common shareholders of record on January 29, 2008.
During 2007 and 2006, the firm repurchased 41.2 million
and 50.2 million shares of its common stock at a total cost of
$8.96 billion and $7.82 billion, respectively. The average price
paid per share for repurchased shares was $217.29 and $155.64
for the years ended November 2007 and November 2006,
respectively. In addition, to satisfy minimum statutory employee
tax withholding requirements related to the delivery of
common stock underlying restricted stock units, the firm
cancelled 4.7 million and 3.0 million of restricted stock units
with a total value of $929 million and $375 million in 2007
and 2006, respectively.
The firm’s share repurchase program is intended to help maintain
the appropriate level of common equity and to substantially
offset increases in share count over time resulting from
employee share-based compensation. The repurchase program
is effected primarily through regular open-market purchases,
the amounts and timing of which are determined primarily
by the firm’s current and projected capital positions (i.e.,
comparisons of the firm’s desired level of capital to its actual
level of capital) but which may also be influenced by general
market conditions and the prevailing price and trading volumes
of the firm’s common stock.
may issue loan guarantees under which it may be liable in
the event of fraud, misappropriation, environmental liabilities
and certain other matters involving the borrower. The firm is
unable to develop an estimate of the maximum payout under
these guarantees and indemnifications. However, management
believes that it is unlikely the firm will have to make any material
payments under these arrangements, and no liabilities related
to these guarantees and indemnifications have been recognized
in the consolidated statements of financial condition as of
November 2007 and November 2006.
The firm provides representations and warranties to counter-
parties in connection with a variety of commercial transactions
and occasionally indemnifies them against potential losses
caused by the breach of those representations and warranties.
The firm may also provide indemnifications protecting against
changes in or adverse application of certain U.S. tax laws in
connection with ordinary-course transactions such as securities
issuances, borrowings or derivatives. In addition, the firm may
provide indemnifications to some counterparties to protect
them in the event additional taxes are owed or payments are
withheld, due either to a change in or an adverse application
of certain non-U.S. tax laws. These indemnifications generally
are standard contractual terms and are entered into in the
ordinary course of business. Generally, there are no stated or
notional amounts included in these indemnifications, and the
contingencies triggering the obligation to indemnify are not
expected to occur. The firm is unable to develop an estimate of the
maximum payout under these guarantees and indemnifications.
However, management believes that it is unlikely the firm will have
to make any material payments under these arrangements, and
no liabilities related to these arrangements have been recognized
in the consolidated statements of financial condition as of
November 2007 and November 2006.
As of November 2007, the firm had 124,000 shares of perpetual non-cumulative preferred stock issued and outstanding in four
series as set forth in the following table:
Shares Shares Earliest Redemption Value
Series Issued Authorized Dividend Rate Redemption Date (in millions)
A 30,000 50,000 3 month LIBOR + 0.75%, with floor of 3.75% per annum April 25, 2010 $ 750
B 32,000 50,000 6.20% per annum October 31, 2010 800
C 8,000 25,000 3 month LIBOR + 0.75%, with floor of 4% per annum October 31, 2010 200
D 54,000 60,000 3 month LIBOR + 0.67%, with floor of 4% per annum May 24, 2011 1,350
124,000 185,000
$3,100
117Goldman Sachs 2007 Annual Report