Goldman Sachs 2015 Annual Report Download - page 95

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis
In the table above:
‰The “2016” column includes $2.53 billion of investment
commitments to covered funds (as defined by the Volcker
Rule). We expect that substantially all of these
commitments will not be called.
‰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 holders are
excluded as they are treated as short-term obligations.
‰Obligations that are repayable prior to maturity at our
option are reflected at their contractual maturity dates
and obligations that are redeemable prior to maturity at
the option of the holders are reflected at the earliest dates
such options become exercisable.
‰Amounts included in the table do not necessarily reflect
the actual future cash flow requirements for these
arrangements because commitments and guarantees
represent notional amounts and may expire unused or be
reduced or cancelled at the counterparty’s request.
‰Due to the uncertainty of the timing and amounts that
will ultimately be paid, our liability for unrecognized tax
benefits has been excluded. See Note 24 to the
consolidated financial statements for further information
about our unrecognized tax benefits.
‰Unsecured long-term borrowings includes $8.34 billion
of adjustments to the carrying value of certain unsecured
long-term borrowings resulting from the application of
hedge accounting.
‰The aggregate contractual principal amount of secured
long-term financings and unsecured long-term
borrowings for which the fair value option was elected
exceeded the related fair value by $362 million and
$1.12 billion, respectively.
‰Contractual interest payments 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
December 2015, and includes stated coupons, if any, on
structured notes.
See Notes 15 and 18 to the consolidated financial
statements for further information about our short-term
borrowings and commitments and guarantees, respectively.
As of December 2015, our unsecured long-term borrowings
were $175.42 billion, with maturities extending to 2061,
and consisted principally of senior borrowings. See Note 16
to the consolidated financial statements for further
information about our unsecured long-term borrowings.
As of December 2015, our future minimum rental
payments, net of minimum sublease rentals under
noncancelable leases, were $2.58 billion. These lease
commitments 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 18 to the consolidated financial
statements for further information about 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. For 2015,
total occupancy expenses for space held in excess of our
current requirements and exit costs related to our office
space were not material. We may incur exit costs in the
future 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.
Risk Management
Risks are inherent in our business and include liquidity,
market, credit, operational, legal, regulatory and
reputational risks. For further information about our risk
management processes, see “— Overview and Structure of
Risk Management” below. Our risks include the risks
across our risk categories, regions or global businesses, as
well as those which have uncertain outcomes and have the
potential to materially impact our financial results, our
liquidity and our reputation. For further information about
our areas of risk, see “— Liquidity Risk Management,”
“— Market Risk Management,” “— Credit Risk
Management,” “— Operational Risk Management,”
“— Model Risk Management” and “Risk Factors” in
Part I, Item 1A of the 2015 Form 10-K.
Goldman Sachs 2015 Form 10-K 83