SELECTED CONSOLIDATED FINANCIAL DATA

The selected historical consolidated income statement and balance sheet data set forth below have been derived from Goldman Sachs' consolidated financial statements and their notes. Goldman Sachs' consolidated financial statements have been audited by PricewaterhouseCoopers LLP, independent public accountants, as of November 28, 1997 and November 27, 1998 and for the years ended November 29, 1996, November 28, 1997 and November 27, 1998. Goldman Sachs' condensed consolidated financial statements have been reviewed by PricewaterhouseCoopers LLP as of February 26, 1999 and for the three months ended February 27, 1998 and February 26, 1999. These financial statements are included elsewhere in this prospectus, together with the reports thereon of PricewaterhouseCoopers LLP.

The selected historical consolidated income statement and balance sheet data set forth below as of November 25, 1994, November 24, 1995 and November 29, 1996 and for the years ended November 25, 1994 and November 24, 1995 have been derived from audited consolidated financial statements of Goldman Sachs not included in this prospectus.

The selected historical consolidated income statement and balance sheet data set forth below as of and for the three months ended February 26, 1999 and for the three months ended February 27, 1998 have been derived from Goldman Sachs' unaudited condensed consolidated financial statements that, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The interim results set forth below for the three months ended February 26, 1999 may not be indicative of results for the full year.

The pro forma data set forth below for the year ended November 27, 1998 and as of and for the three months ended February 26, 1999 have been derived from the pro forma data set forth in "Pro Forma Consolidated Financial Information" included elsewhere in this prospectus. The pro forma consolidated income statement information set forth in "Pro Forma Consolidated Financial Information" for the year ended November 27, 1998 have been examined by PricewaterhouseCoopers LLP. The pro forma consolidated financial information as of and for the three months ended February 26, 1999 has been reviewed by PricewaterhouseCoopers LLP.

The selected consolidated financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Pro Forma Consolidated Financial Information" and the consolidated financial statements and their notes.

As of or for Year Ended November
As of or for
Three Months
Ended February
1994
 1995
 1996
 1997
 1998
 1998
 1999
(unaudited)
(in millions, except per share amounts)
Income Statement Data:
   Total revenues $12,452 $ 14,324 $ 17,289 $ 20,433 $ 22,478 $ 5,903 $ 5,856
   Interest expense 8,915
9,841
11,160
12,986
13,958
3,431
2,861
   Net revenues 3,537 4,483 6,129 7,447 8,520 2,472 2,995
   Compensation and benefits(1) 1,789 2,005 2,421 3,097 3,838 1,100 1,275
   Other operating expenses 1,240
1,110
1,102
1,336
1,761
350
532
   Pre-tax earnings(1) $ 508
$ 1,368
$ 2,606
$ 3,014
$ 2,921
$ 1,022
$ 1,188
Balance Sheet Data:
   Total assets(2) $95,296 $100,066 $152,046 $178,401 $217,380 — $230,624
   Long-term borrowings 14,418 13,358 12,376 15,667 19,906 — 20,405
   Total liabilities(2) 89,981 94,686 145,753 171,864 210,996 — 223,633
   Partners' capital 4,771 4,905 5,309 6,107 6,310 — 6,612
Pro Forma Data:(3)              
   Pro forma net earnings — — — — $ 1,256 — $ 516
   Pro forma diluted earnings per
      share(4) 		— — — — 2.93 — 1.18
   Pro forma diluted earnings per share
       as adjusted for the offerings(5) 		— — — — 2.62 — 1.06
   Pro forma diluted shares as adjusted
       for the offerings(5) 		— — — — 479 — 488
   Pro forma stockholders' equity as
       adjusted for the offerings 		— — — — — — $ 7,627
   Pro forma book value per share as
       adjusted for the offerings		 — — — — — — 16.07

SELECTED CONSOLIDATED FINANCIAL DATA

As of or for Year Ended November
As of or for
Three Months
Ended February
1994
 1995
 1996
 1997
 1998
 1998
 1999
($ in millions)
Selected Data and Ratios (unaudited):

   Pre-tax return on average
        partners' capital(1)

10% 28% 51% 53%  47% — —
    Ratio of compensation
        and benefits to net
        revenues(1) 		51 45 40 42 45 44% 43%
    Employees:
        United States 5,822 5,356 5,818 6,879 8,349 7,008 8,244
        International 3,176
2,803
3,159
3,743
4,684
3,891
4,634
    Total employees(6) 8,998
8,159
8,977
10,622
13,033
10,899
12,878
    Assets under supervision:
        Assets under management $43,671 $ 52,358 $ 94,599 $135,929 $194,821 $151,189 $206,380
        Other client assets 49,061
57,716
76,892
102,033
142,018
114,928
163,315
    Total assets under supervision $92,732
$110,074
$171,491
$237,962
$336,839
$266,117
$369,695

 

(1) Since we have historically operated in partnership form, payments to our profit participating limited partners have been accounted for as distributions of partners' capital rather than as compensation expense. As a result, our pre-tax earnings and compensation and benefits expense have not reflected any payments for services rendered by our managing directors who were profit participating limited partners. Accordingly, our historical pre-tax earnings understate the expected operating costs to be incurred by us after the offerings. As a corporation, we will include payments for services rendered by our managing directors who were profit participating limited partners in compensation and benefits expense. For financial information that reflects pro forma compensation and benefits expense as if we had been a corporation, see "Pro Forma Consolidated Financial Information".

(2) Total assets and liabilities were increased by $11.64 billion as of November 27, 1998 and $8.99 billion as of February 26, 1999 due to the adoption of the provisions of Statement of Financial Accounting Standards No. 125 that were deferred by Statement of Financial Accounting Standards No. 127. For a discussion of Statement of Financial Accounting Standards Nos. 125 and 127, see "Accounting Developments" in Note 2 to the audited consolidated financial statements.

(3) Reflects such adjustments as are necessary, in the opinion of management, for a fair presentation of the results of operations and stockholders' equity of Goldman Sachs on a pro forma basis. See "Pro Forma Consolidated Financial Information" for more detailed information concerning these adjustments.

(4) Calculated based on weighted-average diluted shares outstanding after giving effect to the Pro Forma Adjustments. See "Pro Forma Consolidated Financial Information" for more detailed information concerning these adjustments and the calculation of pro forma earnings per share.

(5) Calculated based on weighted-average diluted shares outstanding after giving effect to the Pro Forma Adjustments and as adjusted to reflect the issuance of 51,000,000 shares of common stock offered by The Goldman Sachs Group, Inc. at the initial public offering price set forth on the cover page of this prospectus. See "Pro Forma Consolidated Financial Information" for more detailed information concerning these adjustments and the calculation of pro forma earnings per share.

(6) Excludes employees of Goldman Sachs' two property management subsidiaries, The Archon Group, L.P. and Archon Group (France) S.C.A. Substantially all of the costs of these employees are reimbursed to Goldman Sachs by the real estate investment funds to which the two companies provide property management services. In addition, as of February 26, 1999, we had 3,400 temporary staff and consultants. For more detailed information regarding our employees, see "Business — Employees".
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