Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-112367
PRICING SUPPLEMENT TO THE PROSPECTUS SUPPLEMENT NO. 371
DATED FEBRUARY 6, 2004-- NO. 435
[GOLDMAN SACHS LOGO]
THE GOLDMAN SACHS GROUP, INC.
Medium-Term Notes, Series B
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$15,600,009.40
6.125% Mandatory Exchangeable Notes due September 2005
(Exchangeable for Common Stock of EMC Corporation)
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This pricing supplement and the accompanying prospectus supplement no. 371,
relating to the mandatory exchangeable notes, should be read together. Because
the 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. 371 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. 371, unless the context
requires otherwise.
The mandatory exchangeable notes offered by this pricing supplement, which
we call the "offered notes" or the "notes", have the terms described in the
accompanying prospectus supplement no. 371, as supplemented or modified by the
following:
ISSUER: The Goldman Sachs Group, Inc.
FACE AMOUNT: each offered note will have a face amount equal to $10.942, which
is the initial index stock price; the aggregate face amount for all the offered
notes is $15,600,009.40
INITIAL INDEX STOCK PRICE: $10.942
ORIGINAL ISSUE PRICE: 100% of the face amount
NET PROCEEDS TO THE ISSUER: 99.9% of the face amount
TRADE DATE: September 21, 2004
SETTLEMENT DATE (ORIGINAL ISSUE DATE): September 28, 2004
STATED MATURITY DATE: September 29, 2005, unless extended for up to six business
days
INTEREST RATE (COUPON): 6.125% per year
INTEREST PAYMENT DATES: March 29, June 29, September 29 and December 29 of each
year, beginning December 29, 2004
REGULAR RECORD DATES: for the interest payment dates specified above, five
business days before March 29, June 29, September 29 and December 29 ,
respectively
INDEX STOCK AND INDEX STOCK ISSUER: common stock of EMC Corporation
CUSIP NO.: 38143U143
Your investment in the notes involves certain risks. In particular,
assuming no changes in market conditions or any other relevant factors, the
value of your note on the date of this pricing supplement (as determined by
reference to pricing models used by Goldman, Sachs & Co.) is significantly less
than the original issue price. We encourage you to read "Additional Risk Factors
Specific to Your Note" beginning on page S-2 of this pricing supplement and on
page S-3 of the accompanying prospectus supplement no. 371 so that you may
better understand those risks. The offered notes are not principal-protected and
the payment amount is capped.
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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.
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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.
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PRICING SUPPLEMENT DATED SEPTEMBER 21, 2004.
PRINCIPAL AMOUNT: On the stated maturity date, each offered
note will be exchanged for index stock at the
exchange rate or, at the option of
Goldman Sachs, for the cash value of that
stock based on the final index stock price.
EXCHANGE RATE: If the final index stock price equals
or exceeds the threshold appreciation price,
then the exchange rate will equal the
threshold fraction times one share of index
stock for each $10.942 of the outstanding
face amount. Otherwise, the exchange rate
will equal one share of the index stock for
each $10.942 of the outstanding face amount.
The exchange rate is subject to anti-dilution
adjustment as described in the accompanying
prospectus supplement no. 371.
Please note that the amount you receive for
each $10.942 of outstanding face amount on
the stated maturity date will not exceed
the threshold appreciation price and that it
could be substantially less than $10.942.
You could lose your entire investment in
the offered notes.
INITIAL INDEX STOCK PRICE: $10.942 per share.
FINAL INDEX STOCK PRICE: The closing price of one share of the index
stock on the determination date, subject to
anti-dilution adjustment.
THRESHOLD APPRECIATION PRICE: The initial index stock price times 1.25,
which equals $13.6775 per share.
THRESHOLD FRACTION: The threshold appreciation price divided
by the final index stock price.
DETERMINATION DATE: The fifth business day prior to September 29,
2005 unless extended for up to five business
days.
NO LISTING: The offered notes will not be listed on any
securities exchange or interdealer market
quotation system.
ADDITIONAL RISK ASSUMING NO CHANGES IN MARKET CONDITIONS OR
FACTORS SPECIFIC TO YOUR NOTE: ANY OTHER RELEVANT FACTORS, THE VALUE OF
YOUR NOTE ON THE DATE OF THIS PRICING
SUPPLEMENT (AS DETERMINED BY REFERENCE TO
PRICING MODELS USED BY GOLDMAN, SACHS & CO.)
IS SIGNIFICANTLY LESS THAN THE ORIGINAL ISSUE
PRICE
The value or quoted price of your note at any
time will reflect many factors and cannot be
predicted. If Goldman, Sachs & Co. makes a
market in the offered notes, the price quoted
by Goldman, Sachs & Co. would reflect any
changes in market conditions and other
relevant factors, and the quoted price could
be higher or lower than the original issue
price, and may be higher or lower than the
value of your note as determined by reference
to pricing models used by Goldman, Sachs &
Co.
If at any time a third party dealer quotes a
price to purchase your note or otherwise
values your note, that price may be
S-2
significantly different (higher or lower)
than any price quoted by Goldman, Sachs & Co.
You should read "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. 371.
Furthermore, if you sell your note, you will
likely be charged a commission for secondary
market transactions, or the price will likely
reflect a dealer discount.
There is no assurance that Goldman, Sachs &
Co. or any other party will be willing to
purchase your note; and, in this regard,
Goldman, Sachs & Co. is not obligated to make
a market in the notes. See "Additional Risk
Factors Specific to Your Note -- Your Note
May Not Have an Active Trading Market" in the
accompanying prospectus supplement no. 371.
EMC CORPORATION: According to its publicly available
documents, EMC Corporation and its
subsidiaries design, manufacture, market and
support networked storage products and
information storage and management software.
Information filed with the SEC by the index
stock issuer under the Exchange Act can be
located by referencing its SEC file number:
001-9853.
HISTORICAL TRADING PRICE The index stock is traded on the New York
INFORMATION: Stock Exchange under the symbol "EMC". The
following table shows the quarterly high and
low trading prices and the quarterly closing
prices for the index stock on the New York
Stock Exchange for the four calendar quarters
in each of 2002 and 2003 and the three
calendar quarters in 2004, through September
21, 2004. We obtained the trading price
information shown below from Bloomberg
Financial Services, without independent
verification.
HIGH LOW CLOSE
---- --- -----
2002
Quarter ended March 31...........
Quarter ended June 30............ 17.37 10.68 11.92
Quarter ended September 30....... 12.20 6.28 7.55
Quarter ended December 31........ 9.10 4.57 4.57
2003 7.50 3.83 6.14
Quarter ended March 31...........
Quarter ended June 30............ 8.50 6.35 7.23
Quarter ended September 30....... 11.00 7.39 10.47
Quarter ended December 31........ 13.93 9.80 12.63
2004 14.49 12.26 12.92
Quarter ended March 31...........
Quarter ended June 30............ 15.59 12.29 13.61
Quarter ending September 30 13.50 10.15 11.40
(through September 21, 2004) ..
Closing price on September 21, 15.59 9.37 10.97
2004........................... 10.97
S-3
As indicated above, the market price of the
index stock has been highly volatile during
recent periods. It is impossible to predict
whether the price of the index stock will
rise or fall, and you should not view the
historical prices of the index stock 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.
371.
HYPOTHETICAL PAYMENT AMOUNT: The table below shows the hypothetical
payment amounts that we would deliver on the
stated maturity date in exchange for each
$10.942 of the outstanding face amount of
your note, if the final index stock price
were any of the hypothetical prices shown in
the left column. For this purpose, we have
assumed that there will be no anti-dilution
adjustments to the exchange rate and no
market disruption events.
The prices in the left column represent
hypothetical closing prices for one share of
index stock on the determination date and are
expressed as percentages of the initial index
stock price, which equals $10.942 per share.
The amounts in the right column represent the
hypothetical cash value of the index stock to
be exchanged, based on the corresponding
hypothetical final index stock prices, and
are expressed as percentages of the initial
index stock price. Thus, a hypothetical
payment amount of 100% means that the cash
value of the index stock that we would
deliver in exchange for each $10.942 of the
outstanding face amount of your note on the
stated maturity date would equal 100% of the
initial index stock price, or $10.942, based
on the corresponding hypothetical final index
stock price and the assumptions noted above.
HYPOTHETICAL FINAL INDEX HYPOTHETICAL PAYMENT
STOCK PRICE AS % OF AMOUNTS AS % OF
INITIAL INDEX STOCK PRICE $19.98 FACE AMOUNT
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200% 125%
175% 125%
150% 125%
125% 125%
110% 110%
100% 100%
75% 75%
50% 50%
0% 0%
S-4
The payment amounts shown above are entirely
hypothetical; they are based on market prices
for the index stock 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
payment 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 the
index stock. Please read "Additional Risk
Factors Specific to Your Note" and
"Hypothetical Payment Amounts on Your Note"
in the accompanying prospectus supplement no.
371.
Payments on your note are economically
equivalent to the amounts that would be paid
on a combination of other instruments. For
example, payments on your note are
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. 371.
HEDGING: In anticipation of the sale of the offered
notes, we and/or our affiliates have entered
into hedging transactions involving purchases
of the index stock 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. 371.
S-5