As of February 26, 1999, the pro forma net tangible book value of
Goldman Sachs was approximately $4.89 billion, or approximately $11.55 per share
(which includes the shares of nonvoting common stock, the shares of common stock
irrevocably contributed to the defined contribution plan and the shares of
common stock underlying the restricted stock units awarded to employees based on
a formula). "Pro forma net tangible book value" per share represents the amount
of Goldman Sachs' total consolidated tangible assets minus total consolidated
liabilities, divided by the 423,712,271 shares outstanding on a pro forma basis
after giving effect to the Pro Forma Adjustments described under "Pro Forma
Consolidated Financial Information". After giving effect to the sale by The
Goldman Sachs Group, Inc. of 51,000,000 shares of common stock in the offerings
at the initial public offering price of $53.00 per share and after deducting the
underwriting discounts and estimated expenses payable by Goldman Sachs in the
offerings, the pro forma net tangible book value of Goldman Sachs as of February
26, 1999 would have been approximately $7.46 billion, or approximately $15.72
per share. This represents an immediate increase in net tangible book value of
$4.17 per share to existing shareholders and an immediate dilution in net
tangible book value of $37.28 per share to new investors purchasing shares of
common stock at the initial public offering price.
The following table illustrates this dilution on a per share basis:
(1) Goldman Sachs' intangible assets as of February 26, 1999 were
$166 million, comprised primarily of goodwill, equivalent to
$0.39 per share, after giving effect to the Pro Forma
Adjustments described under "Pro Forma Consolidated Financial
Information", and $0.35 per share after giving effect to the
offerings.
(2) After deducting the underwriting discounts and estimated
expenses payable by Goldman Sachs in the offerings.
(3) Dilution is determined by subtracting pro forma net tangible
book value per share after giving effect to the offerings from
the initial public offering price per share paid by a new
investor.
Shares outstanding excludes 40,127,592 shares of common stock deliverable pursuant to the options awarded to employees on a discretionary basis, 33,292,869 shares of common stock deliverable pursuant to the restricted stock units awarded to employees on a discretionary basis and shares of common stock that may be awarded in the future under the stock incentive plan. See "Management The Employee Initial Public Offering Awards" for a description of these awards and the stock incentive plan.
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