Filed Pursuant to Rule 424(b)(3)
Registration No. 333-112367
Pricing Supplement to the Prospectus Supplement No. 372 dated February 6,
2004 -- No. 402
(GOLDMAN SACHS LOGO)
THE GOLDMAN SACHS GROUP, INC.
Medium-Term Notes, Series B
----------------------
$10,000,000
2.125% Aggregate Mandatory Exchangeable Notes due December 2004
(Exchangeable for Common Stock of a Basket of Three Stocks)
----------------------
This pricing supplement and the accompanying prospectus supplement no. 372,
relating to the aggregate mandatory exchangeable notes, should be read together.
Because the aggregate mandatory exchangeable notes are part of a series of our
debt securities called Medium-Term Notes, Series B, this pricing supplement and
the accompanying prospectus supplement no. 372 should also be read with the
accompanying prospectus dated February 6, 2004, as supplemented by the
accompanying prospectus supplement dated February 6, 2004. Terms used here have
the meanings given them in the accompanying prospectus supplement no. 372,
unless the context requires otherwise.
The aggregate mandatory exchangeable notes offered by this pricing
supplement, which we call the "offered notes", have the terms described in the
accompanying prospectus supplement no. 372, as supplemented or modified by the
following:
ISSUER: The Goldman Sachs Group, Inc.
BASKET STOCKS: the common stock of BJ Services Company, ENSCO International
Incorporated and Rowan Companies, Inc., with each stock having a relative weight
on the trade date of 25.00%, 37.00% and 38.00%, respectively
FACE AMOUNT: each offered note will have a face amount equal to $100; the
aggregate face amount for all the offered notes is $10,000,000
ORIGINAL ISSUE PRICE: 100% of the face amount
NET PROCEEDS TO THE ISSUER: 99.95% of the face amount
TRADE DATE: June 3, 2004
SETTLEMENT DATE (ORIGINAL ISSUE DATE): June 10, 2004
STATED MATURITY DATE: December 10, 2004, unless extended for up to six business
days
INTEREST RATE (COUPON): 2.125% per year
INTEREST PAYMENT DATES: September 10 and December 10, commencing on September
10, 2004
REGULAR RECORD DATES: for the interest payment dates specified above, September
2 and December 3, respectively
CUSIP NO.: 38143U374
Your investment in the notes involves certain risks. We encourage you to
read "Additional Risk Factors Specific to Your Note" beginning on page S-3 of
the accompanying prospectus supplement no. 372 so that you may better understand
those risks. The offered notes are not principal-protected and the payment
amount is capped.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PRICING SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------
Goldman Sachs may use this pricing supplement in the initial sale of the
offered notes. In addition, Goldman, Sachs & Co. or any other affiliate of
Goldman Sachs may use this pricing supplement in a market-making transaction in
an offered note after its initial sale. UNLESS GOLDMAN SACHS OR ITS AGENT
INFORMS THE PURCHASER OTHERWISE IN THE CONFIRMATION OF SALE, THIS PRICING
SUPPLEMENT IS BEING USED IN A MARKET-MAKING TRANSACTION.
GOLDMAN, SACHS & CO.
----------------------
PRICING SUPPLEMENT DATED JUNE 3, 2004.
PRINCIPAL AMOUNT: On the stated maturity date, each offered
note will be exchanged for, with respect
to each basket stock, a number of shares
of that basket stock equal to the exchange
rate for that basket stock or, at the
option of Goldman Sachs, for the cash
value of that basket stock based on the
relevant final basket stock price.
EXCHANGE RATE FOR EACH BASKET
STOCK: If the final basket stock price equals or
exceeds the relevant threshold
appreciation price, then the exchange rate
will equal a number of shares of that
basket stock equal to the relevant
threshold fraction multiplied by the
weighting amount for that basket stock for
each offered note outstanding. The face
amount for one offered note equals $100.
Otherwise, the exchange rate for the
relevant basket stock will equal a number
of shares of that basket stock equal to
the weighting amount for that basket stock
for each offered note outstanding. The
exchange rate is subject, in certain
circumstances, to anti-dilution adjustment
as described in the accompanying
prospectus supplement no. 372.
Please note that the amount you receive
for each $100 of outstanding face amount
on the stated maturity date could be
substantially less than $100 and will not
in any event exceed $130, which represents
the sum of the products, with respect to
each basket stock, of the relevant
threshold appreciation price multiplied by
the relevant weighting amount. You could
lose your entire investment in the offered
notes.
INITIAL BASKET STOCK PRICE: The initial stock price for each of the
basket stocks is as follows:
<Table>
1. BJ Services Company.......... $42.283 per share
2. ENSCO International
Incorporated................. $26.619 per share
3. Rowan Companies, Inc. ....... $22.075 per share
</Table>
FINAL BASKET STOCK PRICE: The closing price of one share of the
relevant basket stock on the determination
date, subject to anti-dilution adjustment.
THRESHOLD APPRECIATION PRICE: For each basket stock, the initial basket
stock price times 1.30. The threshold
appreciation price for each of the basket
stocks is as follows:
<Table>
1. BJ Services Company.......... $54.968 per share
2. ENSCO International
Incorporated................. $34.605 per share
3. Rowan Companies, Inc. ....... $28.698 per share
</Table>
S-2
WEIGHTING AMOUNT: The weighting amount for each of the
basket stocks is as follows:
<Table>
1. BJ Services Company.......... 0.5913 per note
2. ENSCO International
Incorporated................. 1.3900 per note
3. Rowan Companies, Inc. ....... 1.7214 per note
</Table>
THRESHOLD FRACTION: For each basket stock, the threshold
appreciation price divided by the final
basket stock price for that basket stock.
NO LISTING: The offered notes will not be listed on
any securities exchange or interdealer
market quotation system.
HYPOTHETICAL PAYMENT AMOUNT: The tables below show several examples of
hypothetical payment amounts that we would
deliver on the stated maturity date in
exchange for each $100 of the outstanding
face amount of your note, if the final
basket stock prices were any of the
hypothetical prices shown in the final
basket stock price columns. For this
purpose, we have assumed that there will
be no anti-dilution adjustments to the
exchange rates for the basket stocks and
no market disruption events.
The prices in the final basket stock price
column represent hypothetical closing
prices for one share of the relevant
basket stock on the determination date.
The amounts in the exchange amount at
maturity column represent the hypothetical
cash value of each basket stock to be
exchanged for each outstanding note, based
on the hypothetical final basket stock
price for that basket stock.
EXAMPLE 1: ALL BASKET STOCK PRICES INCREASE BY 10%.
<Table>
<Caption>
INITIAL THRESHOLD EXCHANGE
BASKET APPRECIATION WEIGHTING FINAL BASKET AMOUNT AT
STOCK WEIGHT STOCK PRICE PRICE AMOUNT STOCK PRICE MATURITY
- ----- ------ ----------- ------------ --------- ------------ ---------
BJ Services Company........... 25.00% $42.283 $54.968 0.5913 $46.511 $ 27.502
ENSCO International
Incorporated................ 37.00% $26.619 $34.605 1.3900 $29.281 $ 40.700
Rowan Companies, Inc. ........ 38.00% $22.075 $28.698 1.7214 $24.283 $ 41.800
Exchange amount at maturity for each $100 face amount of note: $110.00
</Table>
S-3
EXAMPLE 2: ALL BASKET STOCK PRICES INCREASE BY 40%.
<Table>
<Caption>
INITIAL THRESHOLD EXCHANGE
BASKET APPRECIATION WEIGHTING FINAL BASKET AMOUNT AT
STOCK WEIGHT STOCK PRICE PRICE AMOUNT STOCK PRICE MATURITY
- ----- ------ ----------- ------------ --------- ------------ ---------
BJ Services Company........... 25.00% $42.283 $54.968 0.5913 $59.196 $ 32.503
ENSCO International
Incorporated................ 37.00% $26.619 $34.605 1.3900 $37.267 $ 48.101
Rowan Companies, Inc.......... 38.00% $22.075 $28.698 1.7214 $30.905 $ 49.400
Exchange amount at maturity for each $100 face amount of note: $130.00
</Table>
EXAMPLE 3: ALL BASKET STOCK PRICES DECREASE BY 10%.
<Table>
<Caption>
INITIAL THRESHOLD EXCHANGE
BASKET APPRECIATION WEIGHTING FINAL BASKET AMOUNT AT
STOCK WEIGHT STOCK PRICE PRICE AMOUNT STOCK PRICE MATURITY
- ----- ------ ----------- ------------ --------- ------------ ---------
BJ Services Company........... 25.00% $42.283 $54.968 0.5913 $38.055 $22.502
ENSCO International
Incorporated................ 37.00% $26.619 $34.605 1.3900 $23.957 $33.300
Rowan Companies, Inc. ........ 38.00% $22.075 $28.698 1.7214 $19.868 $34.200
Exchange amount at maturity for each $100 face amount of note: $90.00
</Table>
EXAMPLE 4: THE BASKET STOCK PRICES OF BJ SERVICES COMPANY AND ENSCO
INTERNATIONAL INCORPORATED BOTH DECREASE BY 10%. THE BASKET STOCK
PRICE OF ROWAN COMPANIES, INC. INCREASES BY 5%.
<Table>
<Caption>
INITIAL THRESHOLD EXCHANGE
BASKET APPRECIATION WEIGHTING FINAL BASKET AMOUNT AT
STOCK WEIGHT STOCK PRICE PRICE AMOUNT STOCK PRICE MATURITY
- ----- ------ ----------- ------------ --------- ------------ ---------
BJ Services Company........... 25.00% $42.283 $54.968 0.5913 $38.055 $22.502
ENSCO International
Incorporated................ 37.00% $26.619 $34.605 1.3900 $23.957 $33.300
Rowan Companies, Inc. ........ 38.00% $22.075 $28.698 1.7214 $23.179 $39.900
Exchange amount at maturity for each $100 face amount of note: $95.70
</Table>
EXAMPLE 5: THE BASKET STOCK PRICE OF BJ SERVICES COMPANY DECREASES BY 80%. THE
BASKET STOCK PRICES OF ENSCO INTERNATIONAL INCORPORATED AND ROWAN
COMPANIES, INC. BOTH INCREASE BY 60%.
<Table>
<Caption>
INITIAL THRESHOLD EXCHANGE
BASKET APPRECIATION WEIGHTING FINAL BASKET AMOUNT AT
STOCK WEIGHT STOCK PRICE PRICE AMOUNT STOCK PRICE MATURITY
- ----- ------ ----------- ------------ --------- ------------ ---------
BJ Services Company........... 25.00% $42.283 $54.968 0.5913 $ 8.457 $ 5.000
ENSCO International
Incorporated................ 37.00% $26.619 $34.605 1.3900 $42.590 $ 48.101
Rowan Companies, Inc. ........ 38.00% $22.075 $28.698 1.7214 $35.320 $ 49.400
Exchange amount at maturity for each $100 face amount of note: $102.50
</Table>
S-4
The payment amounts shown above in
examples one to five are entirely
hypothetical; they are based on market
prices for the basket stocks that may not
be achieved on the determination date and
on assumptions that may prove to be
erroneous. The actual market value of your
note on the stated maturity date or at any
other time, including any time you may
wish to sell your note, may bear little
relation to the hypothetical exchange
amounts shown above, and those amounts
should not be viewed as an indication of
the financial return on an investment in
the offered notes or on an investment in
any of the basket stocks. Please read
"Additional Risk Factors Specific to Your
Note" and "Hypothetical Payment Amounts on
Your Note" in the accompanying prospectus
supplement no. 372.
Payments on your note may be economically
equivalent to the amounts that would be
paid on a combination of other
instruments. For example, payments on your
note may be economically equivalent to the
amounts that would be paid on a
combination of an interest bearing bond
bought, and an option sold, by the holder
(with an implicit option premium paid over
time to the holder). The discussion in
this paragraph does not modify or affect
the terms of the offered notes or the
United States income tax treatment of the
offered notes as described under
"Supplemental Discussion of Federal Income
Tax Consequences" in the accompanying
prospectus supplement no. 372.
HEDGING: In anticipation of the sale of the offered
notes, we and/or our affiliates have
entered into hedging transactions
involving purchases of all of the basket
stocks on the trade date. For a
description of how our hedging and other
trading activities may affect the value of
your note, see "Additional Risk Factors
Specific to Your Note -- Our Business
Activities May Create Conflicts of
Interest Between You and Us" and "Use of
Proceeds and Hedging" in the accompanying
prospectus supplement no. 372.
DESCRIPTION OF THE BASKET STOCK
ISSUERS: According to its publicly available
documents, BJ Services Company is a
provider of pressure pumping and other
oilfield services serving the petroleum
industry worldwide. Information filed with
the SEC by BJ Services Company under the
Exchange Act can be located by referencing
its SEC file number: 001-10570.
According to its publicly available
documents, ENSCO International
Incorporated is an international offshore
contract drilling company that also
provides marine transportation services in
the Gulf of Mexico.
S-5
Information filed with the SEC by ENSCO
International Incorporated under the
Exchange Act can be located by referencing
its SEC file number: 001-08097.
According to its publicly available
documents, Rowan Companies, Inc. is a
provider of international and domestic
contract drilling and aviation services.
Information filed with the SEC by Rowan
Companies, Inc. under the Exchange Act can
be located by referencing its SEC file
number: 001-05491.
HISTORICAL TRADING PRICE
INFORMATION: The three basket stocks are traded on the
New York Stock Exchange, under the symbols
"BJS", "ESV" and "RDC", respectively. The
following tables show the quarterly high,
low and closing prices on the New York
Stock Exchange for each of the three
basket stocks traded on that exchange, in
each case for the four calendar quarters
in each of 2002 and 2003 and for the two
calendar quarters in 2004, through June 3,
2004. We obtained the trading price
information shown below from Bloomberg
Financial Services, without independent
verification.
BJ SERVICES COMPANY
<Table>
<Caption>
HIGH LOW CLOSE
------ ------ ------
2002
Quarter ended March 31................. 35.9 25.3 34.47
Quarter ended June 30.................. 39.49 31.75 33.88
Quarter ended September 30............. 35.16 23 26
Quarter ended December 31.............. 35.45 24.31 32.31
2003
Quarter ended March 31................. 36.1 29.25 34.39
Quarter ended June 30.................. 42.4 33.8 37.36
Quarter ended September 30............. 39.19 32.51 34.17
Quarter ended December 31.............. 37.19 30.5 35.9
2004
Quarter ended March 31................. 45.78 34.85 43.27
Quarter ending June 30
(through June 3, 2004)............... 47.75 39.71 41.75
Closing price on June 3, 2004.......... 41.75
</Table>
S-6
ENSCO INTERNATIONAL INCORPORATED
<Table>
<Caption>
HIGH LOW CLOSE
------ ------ ------
2002
Quarter ended March 31................. 30.7 20.87 30.14
Quarter ended June 30.................. 35.5 26.7 27.26
Quarter ended September 30............. 28.98 21.19 25.04
Quarter ended December 31.............. 31.62 24.15 29.45
2003
Quarter ended March 31................. 30.75 24.24 25.51
Quarter ended June 30.................. 31.1 24.32 26.9
Quarter ended September 30............. 28.43 23.58 26.82
Quarter ended December 31.............. 29 24.49 27.17
2004
Quarter ended March 31................. 30.79 26.35 28.17
Quarter ending June 30
(through June 3, 2004)............... 28.98 24.95 26.23
Closing price on June 3, 2004.......... 26.23
</Table>
ROWAN COMPANIES, INC.
<Table>
<Caption>
HIGH LOW CLOSE
------ ------- ------
2002
Quarter ended March 31................ 23.48 16.04 23.04
Quarter ended June 30................. 27.03 20.2 21.45
Quarter ended September 30............ 22.57 16.36 18.64
Quarter ended December 31............. 24.6 17.4 22.7
2003
Quarter ended March 31................ 23.77 17.7 19.66
Quarter ended June 30................. 25.9 19.28 22.4
Quarter ended September 30............ 25.62 20.8 24.58
Quarter ended December 31............. 26.72 20.45 23.17
2004
Quarter ended March 31................ 25.11 20.61 21.09
Quarter ending June 30
(through June 3, 2004).............. 23.57 20.44 21.8
Closing price on June 3, 2004......... 21.8
</Table>
As indicated above, the market prices of
basket stocks have been highly volatile during
recent periods. It is impossible to predict
whether the price of any of the basket stocks
will rise or fall and you should not view the
historical prices of the basket stocks as an
indication of future performance. See
"Additional Risk Factors Specific to Your
Note -- The Market Price of Your Note May Be
Influenced by Many Unpredictable Factors" in
the accompanying prospectus supplement no.
372.
S-7