Goldman Sachs 2004 Annual Report Download - page 89

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GOLDMAN฀SAC H S ฀ 2004฀ A N N U A L ฀ R E P ORT ฀ ฀ ฀ 8 7
notes฀to฀consolidated฀financial฀statements
GOLDMAN฀SAC H S ฀ 2004฀ A N N U A L ฀ R E P ORT ฀ ฀ ฀ 8 7
SECURED฀BORROWING฀ AND฀ LENDING฀ACTIVITIES
The firm obtains secured short-term financing principally
through the use of repurchase agreements and securities lending
agreements to obtain securities for settlement, finance inventory
positions and meet customers’ needs. In these transactions, the
firm either provides or receives collateral, including cash, U.S.
government, federal agency, mortgage-backed, investment-grade
foreign sovereign obligations, equity securities, convertible
bonds, letters of credit and corporate bonds.
The firm receives collateral in connection with resale agreements,
securities lending transactions, derivative transactions, customer
margin loans and other secured lending activities. In many cases,
the firm is permitted to sell or repledge securities held as collateral.
These securities may be used to secure repurchase agreements,
enter into securities lending or derivative transactions, or cover
short positions. As of November 2004 and November 2003,
the fair value of securities received as collateral by the firm that it
was permitted to sell or repledge was $511.98 billion and
$410.01 billion, respectively, of which the firm sold or repledged
$451.79 billion and $350.57 billion, respectively.
The firm also pledges its own assets to collateralize repurchase
agreements and other secured financings. As of November 2004
and November 2003, the carrying value of securities included in
“Financial instruments owned, at fair value” that had been
loaned or pledged to counterparties that did not have the right
to sell or repledge was $46.86 billion and $47.39 billion,
respectively.
NOTE฀4
Short-Term Borrowings
The firm obtains secured and unsecured short-term borrowings
primarily through issuance of promissory notes, commercial paper
and bank loans. As of November 2004 and November 2003,
secured short-term borrowings were $8.56 billion and
$3.32 billion, respectively, and unsecured short-term borrowings
were $46.40 billion and $40.88 billion, respectively. Short-
term borrowings also include the portion of 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. The carrying value of these short-term
obligations approximates fair value due to their short-term
nature.
Short-term borrowings are set forth below:
฀ ฀ AS฀OF฀NOVEMBER
(IN฀MILLIONS)฀ 2004฀ 2003
Promissory notes $19,513 $24,119
Commercial paper 4,355 4,767
Bank loans and other 13,474 8,183
Current portion of long-term
borrowings 17,617 7,133
Total(1) $54,959 $44,202
(1)฀฀As฀of฀November฀ 2004฀and฀November฀ 2003,฀the฀weighted฀ average฀interest฀
rates฀ for฀ short-term฀ borrowings,฀ including฀ commercial฀ paper,฀ were฀ 2.73%฀
and฀ 1.48%,฀ respectively.฀ The฀ weighted฀ average฀ interest฀ rates,฀ after฀ giving฀
effect฀to฀ hedging฀activities,฀ were฀2.30%฀ and฀1.25%฀ as฀of฀ November฀2004฀
and฀November฀2003,฀respectively.฀
NOTE฀5
Long-Term Borrowings
The firm obtains secured and unsecured long-term borrowings,
which consist principally of senior borrowings with maturities
extending to 2034. As of November 2004 and November 2003,
secured long-term borrowings were $12.09 billion and
$6.04 billion, respectively, and unsecured long-term borrowings
were $68.61 billion and $51.44 billion, respectively.
Long-term borrowings are set forth below:
฀ ฀ AS฀OF฀NOVEMBER
(IN฀MILLIONS)฀ 2004฀ 2003
Fixed rate obligations(1)
U.S. dollar $32,078฀ $28,242
Non-U.S. dollar 12,553฀ 8,703
Floating rate obligations(2)
U.S. dollar 26,033฀ 13,269
Non-U.S. dollar 10,032฀ 7,268
Total $80,696฀ $57,482
(1)฀฀As฀of฀November฀2004฀and฀November฀2003,฀interest฀rates฀on฀U.S.฀dollar฀fixed฀
rate฀obligations฀ranged฀from฀2.85%฀to฀12.00%฀and฀from฀4.13%฀to฀12.00%,฀
respectively.฀As฀of฀both฀November฀2004฀and฀November฀2003,฀interest฀rates฀
on฀non-U.S.฀dollar฀fixed฀rate฀obligations฀ranged฀from฀0.70%฀to฀8.88%.
(2)฀฀Floating฀interest฀ rates฀generally฀ are฀based฀ on฀LIBOR,฀ the฀U.S.฀Treasury฀ bill฀
rate฀or฀the฀federal฀funds฀rate.฀Certain฀equity-linked฀and฀indexed฀instruments฀
are฀included฀in฀floating฀rate฀obligations.
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