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. 475
[GOLDMAN SACHS LOGO]
THE GOLDMAN SACHS GROUP, INC.
Medium-Term Notes, Series B
-------------------------
$10,000,000
2% Exchangeable Notes due February 2012
(Exchangeable for Common Stock of Newell Rubbermaid Inc.)
-------------------------
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: $10,000,000 in the aggregate for all the offered notes
ORIGINAL ISSUE PRICE: 100% of the face amount
NET PROCEEDS TO THE ISSUER: 99.525% of the face amount
TRADE DATE: February 8, 2005
SETTLEMENT DATE (ORIGINAL ISSUE DATE): February 15, 2005
STATED MATURITY DATE: February 15, 2012, unless extended for up to six business
days
INTEREST RATE (COUPON): 2% per year
INTEREST PAYMENT DATES: February 15 and August 15 of each year, until maturity,
commencing on August 15, 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 Newell Rubbermaid Inc.
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: 38.241 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 February 15, 2007, 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: $22.543 per share
DENOMINATIONS: face amount of $1,000 and $1,000 integral multiples thereof
CUSIP NO.: 38141GEB6
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. 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 February 8, 2005.
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.
ADDITIONAL RISK FACTORS
SPECIFIC TO YOUR NOTE: 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
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. 373.
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. 373.
NEWELL RUBBERMAID INC.: According to its publicly available documents,
Newell Rubbermaid Inc. is a global manufacturer
and full-service marketer of name-brand consumer
products serving the needs of volume purchasers,
including department/specialty stores and
warehouse clubs, home centers and hardware
stores, and office superstores and contract
stationers. Information filed with the SEC by
Newell Rubbermaid Inc. under the Exchange Act
can be located by referencing its SEC file
number: 001-09608.
S-2
HISTORICAL TRADING
PRICE INFORMATION: The index stock is traded on the New York Stock
Exchange ("NYSE") under the symbol "NWL". The
following table shows the quarterly high, low
and final closing prices for the index stock as
traded on the NYSE for the four calendar
quarters in each of 2003 and 2004 and for the
first calendar quarter in 2005, through February
8, 2005. 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
---- --- -----
2003
Quarter ended March 31......... 31.41 25.09 28.35
Quarter ended June 30.......... 31.22 27.54 28.00
Quarter ended September 30..... 29.39 21.33 21.67
Quarter ended December 31...... 23.44 21.00 22.77
2004
Quarter ended March 31......... 26.16 22.58 23.20
Quarter ended June 30.......... 24.89 22.63 23.50
Quarter ended September 30..... 23.31 19.99 20.04
Quarter ended December 31...... 24.19 19.11 24.19
2005
Quarter ending March 31
(through February 8, 2005)..... 24.02 21.52 22.74
Closing price on February 8,
2005........................... 22.74
</Table>
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. 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
S-3
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 38.241 shares
Reference price of index stock $22.543 per share
Annual index stock dividend yield, expressed
as a percentage of the reference price of
the index stock (assumed) 3.700%
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 38.241 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 $26.1499 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 $22.543 per share.
The following table assumes that dividends will
be paid on the index stock, at the annual index
stock dividend yield 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
S-4
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
HYPOTHETICAL CLOSING PRICE ON PRETAX TOTAL MARKET VALUE ON PRETAX
CLOSING PRICE ON STATED MATURITY RETURN ON STATED MATURITY TOTAL RETURN
STATED DATE AS % OF THE INDEX DATE AS % OF ON YOUR
MATURITY DATE REFERENCE PRICE STOCK FACE AMOUNT NOTE
---------------- ---------------- ------------ --------------- ------------
$ 0.00 0.0% -74.1% 100.0% 14.0%
$11.27 50.0% -24.1% 100.0% 14.0%
$15.78 70.0% -4.1% 100.0% 14.0%
$22.54 100.0% 25.9% 100.0% 14.0%
$24.80 110.0% 35.9% 100.0% 14.0%
$26.15 116.0% 41.9% 100.0% 14.0%
$27.05 120.0% 45.9% 103.4% 17.4%
$29.31 130.0% 55.9% 112.1% 26.1%
$31.56 140.0% 65.9% 120.7% 34.7%
$33.81 150.0% 75.9% 129.3% 43.3%
$40.58 180.0% 105.9% 155.2% 69.2%
$45.09 200.0% 125.9% 172.4% 86.4%
</Table>
The hypothetical pretax total return on the
index stock represents the difference between
(a) the hypothetical closing price of one share
of index stock on the stated maturity date plus
the dividends that would be paid on one share of
the index stock at the assumed dividend yield
rate during the period from the trade date to
the stated maturity date, without reinvestment
of those dividends, and (b) 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 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
S-5
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 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 February 2012, issued by The Goldman Sachs
Group, Inc. (Exchangeable for Common Stock of Newell Rubbermaid Inc.)
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. 475, dated February 8,
2005, 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. 475, dated February 8, 2005, 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)