Goldman Sachs 2002 Annual Report Download - page 79

The effective weighted average interest rates for long-term borrowings, after hedging activities, are set forth below:
AS OF NOVEMBER
2002 2001
($ IN MILLIONS) AMOUNT RATE AMOUNT RATE
Fixed rate obligations $ 1,057 8.35% $ 757 10.58%
Floating rate obligations 37,654 2.24 30,259 3.02
Total $38,711 2.40 $31,016 3.20
N otes to Consolidated Financial Statem ents
76 G O L D M A N SA CH S 2002 AN N UA L R EPO RT
N O T E 7
COMMITMENTS AND CONTINGENCIES
Litigation
The firm is involved in a number of judicial, regulatory
and arbitration proceedings concerning matters arising in
connection with the conduct of its businesses.
Management believes, based on currently available infor-
mation, that the results of such proceedings, in the aggre-
gate, will not have a material adverse effect on the firm’s
financial condition, but may be material to the firm’s
operating results for any particular period, depending, in
part, upon the operating results for such period.
On December 20, 2002, as part of a proposed global set-
tlement involving the leading securities firms operating in
the United States, agreements in principle were announced
among the firm’s U.S. broker-dealer subsidiary GS& Co.
and various regulatory authorities to resolve their investi-
gations of GS&Co. relating to investment research ana-
lysts’ conflicts of interest. Pursuant to the agreements in
principle, GS& Co. has agreed, among other things, to
(i) pay $50 million in retrospective relief, (ii) contribute
$50 million over five years to provide independent third-
party research to clients, (iii) contribute $10 million for
investor education and (iv) adopt internal structural and
other safeguards to further ensure the integrity of
GS&Co. investment research. The cost of the agreements
in principle has been provided for in the firm’s consoli-
dated financial statements. In connection with the agree-
ments, the firm also expects to be joining the other leading
securities firms who are a part of the proposed global set-
tlement in an initiative that generally will prohibit the
allocation of shares in initial public offerings to executives
and directors of public companies. Current or future civil
lawsuits implicating investment research analysts’ con-
flicts of interest were not settled as part of the agreements
in principle. The firm’s total potential liability in respect of
such civil cases cannot be reasonably estimated but could
be material to results of operations in a given period.
Leases
The firm has obligations under long-term noncancelable
lease agreements, principally for office space, expiring on
various dates through 2029. Certain agreements are sub-
ject to periodic escalation provisions for increases in real
estate taxes and other charges. Minimum rental commit-
ments, net of minimum sublease rentals, under non-
cancelable leases for 2003 and the succeeding four years
and thereafter and rent charged to operating expense for
the last three years are set forth below:
(IN MILLIONS)
Minimum rental commitments
2003 $ 350
2004 354
2005 266
2006 280
2007 225
2008-thereafter 1,827
Total $3,302
Net rent expense
2000 $ 240
2001 299
2002 359
Other Commitments
The firm had commitments to enter into forward secured
financing transactions, including certain repurchase and
resale agreements and secured borrowing and lending
arrangements, of $40.04 billion and $47.54 billion as of
November 2002 and November 2001, respectively.
In connection with its lending activities, the firm had out-
standing commitments of $9.41 billion and $13.35 bil-
lion as of November 2002 and November 2001,
respectively. These commitments are agreements to lend
to counterparties, have fixed termination dates and are