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Management’s Discussion and Analysis
Contractual Obligations and Commitments
Goldman Sachs has contractual obligations to make future payments related to our unsecured long-term borrowings, secured
long-term financings, long-term noncancelable lease agreements and purchase obligations and has commitments under a variety
of commercial arrangements.
The following table sets forth our contractual obligations by fiscal maturity date as of November 2007:
Contractual Obligations
(in millions) 2008 2009 – 2010 2011– 2012 2013 – Thereafter Total
Unsecured long-term borrowings
(1) (2) (3) $ — $36,885 $29,295 $97,994 $164,174
Secured long-term financings
(1) (2) (4) — 5,204 7,400 20,696 33,300
Minimum rental payments 450 850 568 2,022 3,890
Purchase obligations
(5)
2,176 309 21 27 2,533
(1)
Obligations maturing within one year of our financial statement date or redeemable within one year of our financial statement date at the option of the holder are excluded
from this table and are treated as short-term obligations. See Note 3 to the consolidated financial statements for further information regarding our secured financings.
(2) Obligations that are repayable prior to maturity at the option of Goldman Sachs are reflected at their contractual maturity dates. Obligations that are redeemable prior to
maturity at the option of the holder are reflected at the dates such options become exercisable.
(3) Includes $15.93 billion accounted for at fair value under SFAS No. 155 or SFAS No. 159 as of November 2007, primarily consisting of hybrid financial instruments.
(4)
These obligations are reported within “Other secured financings” in the consolidated statements of financial condition and include $18.53 billion accounted for at fair
value under SFAS No. 159 as of November 2007.
(5) Primarily includes amounts related to the acquisition of Litton Loan Servicing LP (Litton) and construction-related obligations.
As of November 2007 and November 2006, we had construction-
related obligations of $769 million and $1.63 billion, respectively,
including outstanding commitments of $642 million and
$500 million as of November 2007 and November 2006,
respectively, related to our new world headquarters in New
York City, which is expected to cost between $2.3 billion and
$2.5 billion. We are partially financing this construction
project with tax-exempt Liberty Bonds. We borrowed
approximately $1.40 billion and approximately $250 million
in 2005 and 2007, respectively, through the issuance of
Liberty Bonds.
In addition, we entered into an agreement in 2007 to acquire
Litton, the mortgage servicing unit of Credit-Based Asset
Servicing and Securitization LLC (C-BASS). The transaction
closed in December 2007 at a purchase price of $428 million,
plus repayment of $916 million of outstanding Litton debt
obligations.
As of November 2007, our unsecured long-term borrowings
were $164.17 billion, with maturities extending to 2043, and
consisted principally of senior borrowings. See Note 5 to the
consolidated financial statements for further information
regarding our unsecured long-term borrowings.
As of November 2007, our future minimum rental payments,
net of minimum sublease rentals, under noncancelable leases
were $3.89 billion. These lease commitments, principally for
office space, expire on various dates through 2069. Certain
agreements are subject to periodic escalation provisions for
increases in real estate taxes and other charges. See Note 6 to
the consolidated financial statements for further information
regarding our leases.
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 regularly evaluate our
current and future space capacity in relation to current and
projected staffing levels. In 2007, we incurred exit costs of
$128 million (included in “occupancy” and “depreciation and
amortization” expenses in the consolidated statements of
earnings). We may incur additional exit costs in 2008 and
thereafter to the extent we (i) reduce our space capacity or
(ii) commit to, or occupy, new properties in the locations in
which we operate and, consequently, dispose of existing space
that had been held for potential growth. These exit costs may
be material to our results of operations in a given period.
66 Goldman Sachs 2007 Annual Report