Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-112367
PRICING SUPPLEMENT TO THE PROSPECTUS SUPPLEMENT NO. 373 DATED FEBRUARY 6,
2004 -- NO. 454
(GOLDMAN SACHS LOGO)
THE GOLDMAN SACHS GROUP, INC.
Medium-Term Notes, Series B
-------------------------
$3,500,000
2% Exchangeable Notes due November 2011
(Exchangeable for Common Stock of Chiron Corporation)
-------------------------
This pricing supplement and the accompanying prospectus supplement no. 373,
relating to the exchangeable notes, should be read together. Because the
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. 373 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. 373, unless the context
requires otherwise.
The exchangeable notes offered by this pricing supplement, which we call
the "notes" or the "offered notes", have the terms described in the accompanying
prospectus supplement no. 373, as supplemented or modified by the following:
ISSUER: The Goldman Sachs Group, Inc.
FACE AMOUNT: $3,500,000 in the aggregate for all the offered notes
ORIGINAL ISSUE PRICE: 100% of the face amount
NET PROCEEDS TO THE ISSUER: 99.60% of the face amount
TRADE DATE: November 16, 2004
SETTLEMENT DATE (ORIGINAL ISSUE DATE): November 23, 2004
STATED MATURITY DATE: November 23, 2011, unless extended for up to six business
days
INTEREST RATE (COUPON): 2% per year
INTEREST PAYMENT DATES: May 23 and November 23 of each year, commencing on May
23, 2005
REGULAR RECORD DATES: the business day before the related interest payment date
as long as the note is in global form
INDEX STOCK AND INDEX STOCK ISSUER: common stock of Chiron Corporation
PRINCIPAL AMOUNT: on the stated maturity date, we will pay the holder of an
offered note cash equal to 100% of the outstanding face amount of the note,
unless the holder exercises the exchange right, we exercise the call right or an
automatic exchange occurs
EXCHANGE RATE: 23.5164 shares of index stock for each $1,000 of outstanding face
amount exchanged, subject to anti-dilution adjustment. Upon any voluntary or
automatic exchange, we may, in our sole discretion, elect to pay the cash value
of the index stock we would otherwise be obligated to deliver, as described in
the accompanying prospectus supplement no. 373
EARLIEST CALL DATE; REDEMPTION PRICE: we may, in our sole discretion, redeem the
offered notes at any time after November 23, 2006, at a redemption price equal
to 100% of the outstanding face amount, provided, however, that the holder will
be entitled to the benefit, if any, of an automatic exchange. If we call the
offered notes, we will give notice to the holders not less than 5 nor more than
15 business days before the call date
REFERENCE PRICE OF INDEX STOCK: $31.4989 per share
DENOMINATIONS: face amount of $1,000 and integral multiples of $1,000 thereof
CUSIP NO.: 38141GDW1
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. 373 so that you may better understand
those risks.
----------------------
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 November 16, 2004
EXPIRATION OF EXCHANGE
RIGHT: If a holder wishes to exercise the exchange
right, the required deliveries described in the
accompanying prospectus supplement no. 373 under
"General Terms of the Exchangeable
Notes -- Holder's Exchange Right -- Exercise
Requirements" must be made no later than 11:00
A.M., New York City time, on the business day
before the determination date or any call notice
date, whichever is earlier.
NO LISTING: The offered notes will not be listed on any
securities exchange or interdealer market
quotation system.
CHIRON CORPORATION: According to its publicly available documents,
Chiron Corporation is a global pharmaceutical
company that participates in three healthcare
markets: blood testing, vaccines and
biopharmaceuticals. Information filed with the
SEC by Chiron Corporation under the Exchange Act
can be located by referencing its SEC file
number: 000-12798.
HISTORICAL TRADING PRICE
INFORMATION: The index stock is traded on the Nasdaq National
Market System under the symbol "CHIR". The
following table shows the quarterly high and low
trading prices and the quarterly closing prices
for the index stock on the Nasdaq National
Market System for the four calendar quarters in
each of 2002 and 2003 and the four calendar
quarters in 2004, through November 16, 2004. We
obtained the trading price information shown
below from Bloomberg Financial Services, without
independent verification.
The actual performance of the index stock over
the life of the offered notes may bear little
relation to the historical trading prices of the
index stock shown below.
<Table>
<Caption>
HIGH LOW CLOSE
------ ------ ------
2002
Quarter ended March 31................ $48.68 $39.80 $45.89
Quarter ended June 30................. $46.68 $33.36 $35.35
Quarter ended September 30............ $41.98 $27.41 $34.94
Quarter ended December 31............. $42.51 $35.47 $37.60
2003
Quarter ended March 31................ $40.72 $34.41 $37.50
Quarter ended June 30................. $49.00 $37.68 $43.86
Quarter ended September 30............ $56.75 $43.23 $51.82
Quarter ended December 31............. $56.98 $51.75 $56.98
2004
Quarter ended March 31................ $56.38 $44.01 $44.01
Quarter ended June 30................. $48.59 $42.25 $44.64
Quarter ended September 30............ $48.01 $42.38 $44.20
Quarter ending December 31 (through
November 16, 2004).................. $45.42 $30.76 $31.37
Closing price on November 16, 2004.... $31.37
</Table>
As indicated above, the market price of the
index stock has been highly volatile during
recent periods. It is impossible to
S-2
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. 373.
HYPOTHETICAL RETURNS TABLE: In the table below, we compare the total pretax
return on owning the index stock to the total
pretax return on owning your note, in each case
during the period from the trade date to the
stated maturity date. The information in the
table is based on hypothetical market values for
the index stock and your note at the end of this
period, and on the key terms and assumptions
stated in the box below.
The index stock has been highly volatile in the
past and its performance cannot be predicted for
any future period. The actual performance of the
index stock over the life of the offered notes,
as well as the amount payable at maturity, may
bear little relation to the historical trading
prices of the index stock shown above or to the
hypothetical return examples shown below.
<Table>
--------------------------------------------------------
KEY TERMS AND ASSUMPTIONS
Original issue price, expressed as a
percentage of the face amount..... 100%
Exchange rate....................... 23.5164 shares
Reference price of index stock...... $31.4989 per share
Annual index stock dividend yield,
expressed as a percentage of the
reference price of the index stock
(assumed)......................... 0%
Automatic exchange in full on the
stated maturity date -- i.e., no
prior redemption or voluntary
exchange (assumed)
No anti-dilution adjustments to
exchange rate (assumed)
No market disruption event occurs
(assumed)
--------------------------------------------------------
</Table>
We calculate the total pretax return on your
note based on the exchange rate of 23.5164
shares of the index stock for each $1,000 of the
outstanding face amount of your note.
The closing price of the index stock must be, on
the determination date, more than $42.5235 per
share in order for the holder of a note to
receive stock or cash having a value in excess
of the principal amount (100% of the outstanding
face amount) on the stated maturity date. This
closing price is substantially higher than the
reference price of $31.4989 per share.
S-3
The following table assumes that no dividends
will be paid on the index stock, as shown in the
box above, from the trade date to the stated
maturity date. We do not know, however, whether
or to what extent the issuer of the index stock
will pay dividends in the future. These are
matters that will be determined by the issuer of
the index stock and not by us. Consequently, the
amount of dividends actually paid on the index
stock by its issuer, and, therefore, the rate of
pretax return on the index stock during the life
of the offered notes, may differ substantially
from the information reflected in the table
below.
<Table>
<Caption>
INDEX STOCK YOUR NOTE
----------------------------------------------- ------------------------------
HYPOTHETICAL HYPOTHETICAL HYPOTHETICAL
HYPOTHETICAL CLOSING PRICE ON PRETAX TOTAL MARKET VALUE ON HYPOTHETICAL
CLOSING PRICE STATED MATURITY RETURN ON STATED MATURITY PRETAX TOTAL
ON STATED DATE AS % OF THE INDEX DATE AS % OF RETURN ON
MATURITY DATE REFERENCE PRICE STOCK FACE AMOUNT YOUR NOTE
------------- ---------------- ------------ --------------- ------------
$ -- 0% (100.0)% 100.0% 14.0%
$15.75 50% (50.0)% 100.0% 14.0%
$18.90 60% (40.0)% 100.0% 14.0%
$22.05 70% (30.0)% 100.0% 14.0%
$25.20 80% (20.0)% 100.0% 14.0%
$28.35 90% (10.0)% 100.0% 14.0%
$31.50 100% 0.0% 100.0% 14.0%
$34.65 110% 10.0% 100.0% 14.0%
$37.80 120% 20.0% 100.0% 14.0%
$40.95 130% 30.0% 100.0% 14.0%
$42.52 135% 35.0% 100.0% 14.0%
$44.10 140% 40.0% 103.7% 17.7%
$47.25 150% 50.0% 111.1% 25.1%
$50.40 160% 60.0% 118.5% 32.5%
$53.55 170% 70.0% 125.9% 39.9%
$56.70 180% 80.0% 133.3% 47.3%
$59.85 190% 90.0% 140.7% 54.7%
$63.00 200% 100.0% 148.1% 62.1%
</Table>
The hypothetical pretax total return on the
index stock represents the difference between
the hypothetical closing price of one share of
index stock on the stated maturity date and the
reference price of the index stock. This
difference is expressed as a percentage of the
reference price.
The hypothetical pretax total return on your
note represents the difference between (a) the
hypothetical market value of your note on the
stated maturity date plus the amount of interest
that would be payable on your note during the
period from the trade date to the stated
maturity date (or to the prior interest payment
date as described below), without reinvestment
of that interest, and (b) the original issue
price of your note. This difference is expressed
as a percentage of the original issue price of
your note.
We have assumed that the market value of your
note on the stated maturity date will equal the
greater of the principal
S-4
amount (100% of outstanding face amount) of your
note and the cash value (based on the
hypothetical closing prices shown above) of the
index stock that we would be obligated to
deliver on that date in an automatic exchange of
your note. There will be no automatic exchange
on the stated maturity date, however, unless
that cash value exceeds the sum of the
outstanding principal amount plus the amount of
the regular interest installment payable on your
note on that date. Moreover, if an automatic
exchange occurs, the holder of your note will
not be entitled to receive that interest
installment (as a result, where the hypothetical
market value of your note is assumed to equal
the automatic exchange amount, the hypothetical
total return on your note is assumed to include
interest accruing only to the interest payment
date before the stated maturity date).
Therefore, we have assumed that, unless that
cash value exceeds that sum, the market value of
your note on the stated maturity date will equal
the principal amount.
We have also assumed that the closing price of
the index stock will be the same on the
determination date and the stated maturity date.
Because the amount of stock that we will deliver
on your note on the stated maturity date will
depend on the closing price of the index stock
on the determination date, changes in the
closing price between the determination date and
the stated maturity date could cause the pretax
returns on your note to be substantially
different from those reflected in the table
above.
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 or no relation to the
hypothetical values shown above, and those
values 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. The pretax rates of return shown above
are entirely hypothetical; they are based on
market values that may not be achieved on the
relevant date and on assumptions that may prove
to be erroneous and do not take into account the
effects of any applicable taxes. Please read
"Additional Risk Factors Specific to Your Note"
and "Hypothetical Returns on Your Note" in the
accompanying prospectus supplement no. 373.
Payments on this note are economically
equivalent to the amounts that would be paid on
a combination of other instruments. For example,
payments on the note are economically equivalent
to the amounts that would be paid on a
combination of an interest-bearing bond and an
option, in each case, bought by the holder (with
an implicit option premium paid over time by the
holder). The discussion in this paragraph does
not modify or affect the terms of the note or
the United States income tax treatment of the
note as described under "Supplemental Discussion
of Federal Income
S-5
Tax Consequences" in the accompanying prospectus
supplement no. 373.
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. 373.
S-6
NOTICE OF EXCHANGE
Dated:
The Bank of New York
Corporate Trust Administration
101 Barclay Street, 21W
New York, New York 10286
Attn: Caroline Hyunji Lee (212-815-4991)
Hector Herrera (212-815-4293)
Fax: (212-815-5802)
with a copy to:
Goldman, Sachs & Co.
85 Broad Street
Options and Derivatives Operations
New York, New York 10004
Attn: Sharon Seibold (212-902-7921)
Stephen Barnitz (212-357-4217)
Fax: (212-902-7993)
Re: 2% Exchangeable Notes due November 2011, issued by The Goldman Sachs
Group, Inc. (Exchangeable for Common Stock of Chiron Corporation)
Dear Sirs:
The undersigned is, or is acting on behalf of, the beneficial owner of a portion
of one of the notes specified above, which portion has an outstanding face
amount equal to or greater than the amount set forth at the end of this notice
of exchange. The undersigned hereby irrevocably elects to exercise the exchange
right described in the pricing supplement no. 454, dated November 16, 2004, to
the prospectus supplement no. 373, dated February 6, 2004, with respect to the
outstanding face amount of the note set forth at the end of this notice of
exchange. The exercise is to be effective on the business day on which the
trustee has received this notice of exchange, together with all other items
required to be delivered on exercise, and the calculation agent has received a
copy of this notice of exchange, unless all required items have not been
received by 11:00 A.M., New York City time, on that business day, in which case
the exercise will be effective as of the next business day. We understand,
however, that the effective date in all cases must be no later than the earlier
of (i) the business day before the determination date and (ii) any call notice
date. The effective date will be the exchange notice date.
If the note to be exchanged is in global form, the undersigned is delivering
this notice of exchange to the trustee and to the calculation agent, in each
case by facsimile transmission to the relevant number stated above, or such
other number as the trustee or calculation agent may have designated for this
purpose to the holder. In addition, the beneficial interest in the face amount
indicated below is being transferred on the books of the depositary to an
account of the trustee at the depositary.
If the note to be exchanged is not in global form, the undersigned or the
beneficial owner is the holder of the note and is delivering this notice of
exchange to the trustee and to the calculation agent by facsimile transmission
as described above. In addition, the certificate representing the note and any
payment required in respect of accrued interest are being delivered to the
trustee.
If the undersigned is not the beneficial owner of the note to be exchanged, the
undersigned hereby represents that it has been duly authorized by the beneficial
owner to act on behalf of the beneficial owner.
Terms used and not defined in this notice have the meanings given to them in the
pricing supplement no. 454, dated November 16, 2004, and the prospectus
supplement no. 373, dated February 6, 2004. The exchange of the note will be
governed by the terms of the note.
The calculation agent should internally acknowledge receipt of the copy of this
notice of exchange, in the place provided below, on the business day of receipt,
noting the date and time of receipt. The consideration to be delivered or paid
in the requested exchange should be made on the fifth business day after the
exchange notice date in accordance with the terms of the note.
Face amount of note to be exchanged:
$
- --------------------------------------
(must be a minimum of $1,000 and
$1,000 integral multiples thereof)
Very truly yours,
----------------------------------------
(Name of beneficial owner or person
authorized to act on its behalf)
----------------------------------------
(Title)
----------------------------------------
(Telephone No.)
----------------------------------------
(Fax No.)
----------------------------------------
(DTC participant account number for
delivery of index stock, if any)
FOR INTERNAL USE ONLY:
Receipt of the above notice of
exchange
is hereby acknowledged:
GOLDMAN, SACHS & CO., as calculation
agent
By:
- ----------------------------------------------------
(Title)
Date and time of receipt:
- ----------------------------------------
(Date)
- ----------------------------------------
(Time)