Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-112367
PRICING SUPPLEMENT TO THE PROSPECTUS SUPPLEMENT NO. 410
DATED JULY 6, 2004 -- NO. 469
[GOLDMAN SACHS LOGO] THE GOLDMAN SACHS GROUP, INC.
Medium-Term Notes, Series B
$7,001,545.85
4.65% Trigger Mandatory Exchangeable Notes due February 2006
(Exchangeable for Common Stock of Yahoo! Inc.)
This pricing supplement and the accompanying prospectus supplement no.
410, relating to the trigger mandatory exchangeable notes, should be read
together. Because the trigger 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. 410 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. 410,
unless the context requires otherwise.
The trigger 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. 410, 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 $34.567, which
is the initial index stock price; the aggregate face amount for all the offered
notes is $7,001,545.85
INITIAL INDEX STOCK PRICE: $34.567
ORIGINAL ISSUE PRICE: 100% of the face amount
NET PROCEEDS TO THE ISSUER: 99.9% of the face amount
TRADE DATE: January 24, 2005
SETTLEMENT DATE (ORIGINAL ISSUE DATE): January 31, 2005
STATED MATURITY DATE: February 1, 2006, unless extended for up to six business
days
INTEREST RATE (COUPON): 4.65% per year
INTEREST PAYMENT DATES: May 1, August 1, November 1 and February 1 until
Maturity, commencing on May 1, 2005
REGULAR RECORD DATES: for the interest payment dates specified above, five
business days before each interest payment date
INDEX STOCK AND INDEX STOCK ISSUER: common stock of Yahoo! Inc.
CUSIP NO.: 38143Y798
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-3 of this pricing supplement and on
page S-3 of the accompanying prospectus supplement no. 410 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 JANUARY 24, 2005.
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 cap price, then the exchange rate will equal
the cap fraction times one share of index stock
for each $34.567 of the outstanding face amount,
regardless of whether the market price of the
index stock falls below the threshold price at any
time during the measurement period.
If the market price of the index stock does not
fall below the threshold price at any time during
the measurement period, then:
- if the final index stock price is less than
the cap price but equals or exceeds the
initial stock price, the exchange rate will
equal one share of the index stock for each
$34.567 of the outstanding face amount; or
- if the final index stock price is less than
the initial index stock price, the exchange
rate will equal the threshold fraction times
one share of index stock for each $34.567 of
the outstanding face amount.
If the market price of the index stock falls below
the threshold price at any time during the
measurement period, then:
- the exchange rate will equal one share of
the index stock for each $34.567 of the
outstanding face amount.
The exchange rate is subject to anti-dilution
adjustment as described in the accompanying
prospectus supplement no. 410.
Please note that the amount you receive for each
$34.567 of outstanding face amount on the stated
maturity date will not exceed the cap price and
that it could be substantially less than $34.567.
You could lose your entire investment in the
offered notes.
INITIAL INDEX STOCK PRICE: $34.567 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.
CAP PRICE: The initial index stock price times 1.20, which
equals $41.4804 per share.
CAP FRACTION: The cap price divided by the final index stock
price.
THRESHOLD PRICE: The initial index stock price times 0.70, which
equals $24.1969 per share.
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THRESHOLD FRACTION: The initial index stock price divided by the final
index stock price.
MEASUREMENT PERIOD: Any trading day from but not including the trade
date up to and including the determination date.
DETERMINATION DATE: The fifth business day prior to the stated
maturity date unless extended for up to five
business days.
BUSINESS DAY: As described on page S-17 of the accompanying
prospectus supplement no. 410.
TRADING DAY: A day on which the principal securities market of
the index stock is open for business.
NO LISTING: The offered notes will not be listed on any
securities exchange or interdealer market
quotation system.
ADDITIONAL RISK FACTORS ASSUMING NO CHANGES IN MARKET CONDITIONS OR ANY
SPECIFIC TO YOUR NOTE: 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, however, 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 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. 410.
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. 410.
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YAHOO! INC.: According to its publicly available documents,
Yahoo! Inc. is a provider of comprehensive
Internet products and services to consumers and
businesses through its worldwide network of online
properties. Information filed with the SEC by
Yahoo! Inc. under the Exchange Act can be located
by referencing its SEC file number: 000-28018.
HISTORICAL TRADING The index stock is traded on the Nasdaq National
PRICE INFORMATION: Market System under the symbol "YHOO". The
following table shows the quarterly high, low and
final closing prices for the index stock as traded
on the Nasdaq National Market System for the four
calendar quarters in each of 2003 and 2004 and the
first calendar quarter in 2005, through January
24, 2005. We obtained the trading price
information shown below from Bloomberg Financial
Services, without independent verification.
HIGH LOW CLOSE
----- --- -----
2003
Quarter ended March 31.................... $ 12.38 $ 8.77 $ 12.01
Quarter ended June 30..................... $ 16.45 $ 11.395 $ 16.35
Quarter ended September 30................ $ 18.91 $ 14.435 $ 17.695
Quarter ended December 31................. $ 22.515 $ 18.20 $ 22.515
2004
Quarter ended March 31.................... $ 24.87 $ 20.825 $ 24.235
Quarter ended June 30..................... $ 36.40 $ 24.175 $ 36.40
Quarter ended September 30................ $ 34.30 $ 25.70 $ 33.91
Quarter ended December 31................. $ 39.14 $ 34.021 $ 37.68
2005
Quarter ending March 31
(through January 24, 2005)............. $ 38.18 $ 33.93 $ 33.93
Closing price on January 24, 2005......... $ 33.93
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. 410.
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HYPOTHETICAL PAYMENT AMOUNT: The tables below show the hypothetical payment
amounts that we would deliver on the stated
maturity date in exchange for each $34.567 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 first table shows
the hypothetical payment amounts in the case where
the market price of the index stock does not fall
below $24.1969, the threshold price, at any time
during the measurement period. The second table
shows the hypothetical payment amounts in the case
where the market price does fall below $24.1969 at
any time during the measurement period.
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 $34.567 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 $34.567 of the outstanding face
amount of your note on the stated maturity date
would equal 100% of the initial index stock price,
or $34.567, based on the corresponding
hypothetical final index stock price and the
assumptions noted above.
If the market price of the index stock does not
fall below the threshold price at any time during
the measurement period:
HYPOTHETICAL FINAL INDEX HYPOTHETICAL PAYMENT
STOCK PRICE AS % OF AMOUNTS AS % OF
INITIAL INDEX STOCK PRICE $34.567 FACE AMOUNT
------------------------- --------------------
200% 120%
175% 120%
150% 120%
120% 120%
110% 110%
100% 100%
70% 100%
If the market price of the index stock does fall
below the threshold price at any time during the
measurement period:
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HYPOTHETICAL FINAL INDEX HYPOTHETICAL PAYMENT
STOCK PRICE AS % OF AMOUNTS AS % OF
INITIAL INDEX STOCK PRICE $34.567 FACE AMOUNT
------------------------- --------------------
200% 120%
175% 120%
150% 120%
120% 120%
110% 110%
100% 100%
90% 90%
80% 80%
70% 70%
50% 50%
0% 0%
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. 410.
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. 410 and below.
S-6
SUPPLEMENTAL DISCUSSION The following section supplements the discussion
OF FEDERAL INCOME TAX of U.S. federal income taxation in the
CONSEQUENCES: accompanying prospectus and prospectus supplement
no. 410 with respect to United States holders.
Except as described below, the discussion of U.S.
federal income taxation in the accompanying
prospectus supplement no. 410 does not apply to
your note.
The following section is the opinion of Sullivan &
Cromwell LLP, counsel to The Goldman Sachs Group,
Inc. In addition, it is the opinion of Sullivan &
Cromwell LLP that the characterization of the note
for U.S. federal income tax purposes that will be
required under the terms of the note, as discussed
below, is a reasonable interpretation of current
law. This section applies to you only if you are a
United States holder (as defined in the
accompanying prospectus supplement no. 410) that
holds your note as a capital asset for tax
purposes. This section does not apply to you if
you are a member of a class of holders subject to
special rules, as described in the accompanying
prospectus supplement no. 410.
Although this section is based on the U.S.
Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed
regulations under the Internal Revenue Code,
published rulings and court decisions, all as
currently in effect, no statutory, judicial or
administrative authority directly discusses how
your note should be treated for U.S. federal
income tax purposes and as a result, the U.S.
federal income tax consequences of your investment
in your note are uncertain. Moreover, these laws
are subject to change, possibly on a retroactive
basis.
YOU SHOULD CONSULT YOUR TAX ADVISOR CONCERNING THE
U.S. FEDERAL INCOME TAX AND OTHER TAX CONSEQUENCES
OF YOUR INVESTMENT IN THE NOTE, INCLUDING THE
APPLICATION OF STATE, LOCAL OR OTHER TAX LAWS AND
THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
You will be obligated pursuant to the terms of the
note -- in the absence of an administrative
determination or judicial ruling to the contrary
-- to characterize your note for all tax purposes
as a forward contract to purchase the index stock
at the stated maturity date, under the terms of
which contract:
(1) at the time of issuance of your note you
deposit irrevocably with us a fixed amount of cash
equal to the purchase price of your note to assure
the fulfillment of your purchase obligation
described in clause (3) below, which deposit will
unconditionally and irrevocably be applied at the
stated maturity date to satisfy that obligation,
S-7
(2) until the stated maturity date we will be
obligated to pay interest on the deposit at a rate
equal to the stated rate of interest on your note
as compensation to you for our use of the cash
deposit during the term of the note, and
(3) at the stated maturity date the cash deposit
unconditionally and irrevocably will be applied by
us in full satisfaction of your obligation under
the forward purchase contract, and we will deliver
to you the number of shares of the index stock --
or, at our option, an amount of cash equal to the
value of the shares of the index stock -- that you
are entitled to receive at that time pursuant to
the terms of your note.
Although you will be obligated to treat the
payment of the purchase price for your note as a
deposit for U.S. federal income tax purposes, the
cash proceeds that we will receive from the
offering will not be segregated by us during the
term of your note, but instead will be commingled
with our other assets.
Consistent with the above characterization,
amounts paid to us in respect of the original
issue of your note will be treated as allocable in
their entirety to the amount of the cash deposit
attributable to your note, and amounts denominated
as interest that are payable with respect to your
note will be characterized as interest payable on
the amount of the deposit. Interest will be
includible annually in your income in accordance
with your method of accounting.
If your note is characterized as described above,
you are an initial purchaser of your note who has
purchased your note at the original issue price
and we elect to deliver shares of the index stock
at the stated maturity date, you would not
recognize gain or loss on the purchase of the
stock. You would have an aggregate tax basis in
the index stock equal to your tax basis in your
note, less the portion of the tax basis of your
note allocable to any fractional shares, as
described in the next sentence, and would have a
holding period in the index stock beginning on the
date after the stated maturity date. You would
recognize short-term capital gain or loss with
respect to cash received in lieu of any fractional
shares, in an amount equal to the difference
between the cash received and the portion of the
basis of your note allocable to the fractional
shares.
S-8
If we deliver cash at the stated maturity date,
you would generally recognize capital gain or loss
equal to the difference between the amount of cash
received and your tax basis in the note and the
holding period for purposes of such capital gain
and loss will begin on the day following the first
day you held the note.
If your note is characterized as described above
and you purchase your note at a price other than
the adjusted issue price as determined for tax
purposes, you would likely be required to allocate
your purchase price for the note between the
deposit component and forward contract component
of your note. If the amount allocated to the
deposit component of your note is not equal to the
principal amount of the note, you may be subject
to the market discount rules described in the
accompanying prospectus under "United States
Taxation -- Taxation of Debt Securities -- United
States Holders -- Original Issue Discount --
Market Discount". Your note may also be subject to
the amortizable bond premium rules described in
the accompanying prospectus under "United States
Taxation -- Taxation of Debt Securities -- United
States Holders -- Original Issue Discount -- Debt
Securities Purchased at a Premium". You would
generally be treated upon maturity of your note in
the same manner described above with respect to
initial purchasers of notes, except that (1) you
would be required to recognize gain or loss with
respect to the deposit component of your note in
an amount equal to any market discount (including
any de minimis market discount) or premium,
respectively, not previously taken into account by
you with respect to the deposit component of your
notes, and (2) for purposes of computing any gain
or loss recognized at such time or your basis in
any stock received at such time, you would be
required to adjust your purchase price for your
note to take into account any market discount
(including de minimis market discount) or premium
previously taken into account (either over the
term of your note or upon maturity of your note)
with respect to your note. Because the appropriate
U.S. federal income tax treatment of persons who
purchase notes at a price other than the adjusted
issue price as determined for tax purposes is
unclear, those persons are urged to consult their
tax advisors regarding the tax consequences of
their purchase of notes.
S-9
If your note is characterized as described above,
your tax basis in your note generally would equal
your cost for your note, as adjusted for any
accruals of market discount or amortization of
bond premium. Upon the sale or exchange of your
note, you would recognize gain or loss equal to
the difference between the amount realized on the
sale or exchange and your tax basis in your note.
The gain or loss generally will be long-term
capital gain or loss, except to the extent
attributable to accrued but unpaid interest and
any accrued market discount not previously
included in income, if you hold your note for more
than one year. If you hold your note for less than
one year, the gain or loss generally will be
short-term capital gain or loss, except to the
extent attributable to accrued but unpaid interest
and any accrued market discount not previously
included in income.
There is no judicial or administrative authority
discussing how your note should be treated for
U.S. federal income tax purposes. Therefore, the
Internal Revenue Service might assert that
treatment other than that described above is more
appropriate. For example, the Internal Revenue
Service could treat your note as a single debt
instrument subject to special rules governing
contingent payment obligations. Under those rules,
the amount of interest you are required to take
into account for each accrual period would be
determined by constructing a projected payment
schedule for the note and applying rules similar
to those for accruing original issue discount on a
hypothetical noncontingent debt instrument with
that projected payment schedule. This method is
applied by first determining the comparable yield
-- i.e., the yield at which we would issue a
noncontingent fixed rate debt instrument with
terms and conditions similar to your note -- and
then determining a payment schedule as of the
issue date that would produce the comparable
yield. These rules may have the effect of
requiring you to include interest in income in
respect of your note prior to your receipt of cash
attributable to that income.
S-10
If the rules governing contingent payment
obligations apply, you would recognize gain or
loss upon the sale or maturity of your note --
including if you receive index stock at that time
-- in an amount equal to the difference, if any,
between the fair market value of the amount you
receive at that time -- which, in the case of
index stock, would equal the fair market value of
the index stock at the stated maturity date -- and
your adjusted basis in your note. In general, your
adjusted basis in your note would equal the amount
you paid for your note, increased by the amount of
interest you previously accrued with respect to
your note, in accordance with the comparable yield
and the projected payment schedule for your note,
and decreased by the amount of interest payments
you received with respect to your note. Your
holding period in any index stock you receive upon
the maturity of your note would begin on the day
after the stated maturity date.
If the rules governing contingent payment
obligations apply, any gain you recognize upon the
sale or maturity of your note would be ordinary
interest income. Any loss you recognize at that
time would be ordinary loss to the extent of
interest you included as income in the current or
previous taxable years in respect of your note,
and thereafter, as capital loss.
If the rules governing contingent payment
obligations apply, special rules would apply to
persons who purchase a note at a price other than
the adjusted issue price as determined for tax
purposes.
It is possible that the Internal Revenue Service
could seek to characterize your note in a manner
that results in tax consequences to you different
from those described above. For example, the
Internal Revenue Service could seek to allocate
less than all the amounts you paid for your note
to the cash deposit described above and treat the
cash deposit as a debt instrument acquired at a
discount. In that case, you would be required to
include such original issue discount in income as
it accrues in addition to stated interest on your
note. The Internal Revenue Service could also seek
to characterize your note as a notional principal
contract, or as a prepaid forward without a cash
deposit component. You should consult your tax
advisors as to possible alternative
characterizations of your note for U.S. federal
income tax purposes.
S-11
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. 410.
S-12