<PAGE> 1
PRICING SUPPLEMENT NO. 1
dated
August 5, 1996
to the
Prospectus
dated
December 28, 1995
and
Prospectus Supplement
dated
January 3, 1996
______________________
$73,000,000
GS FINANCIAL PRODUCTS U.S., L.P.
MEDIUM-TERM NOTES, SERIES B
S&P ENHANCED STOCK INDEX GROWTH NOTES DUE AUGUST 9, 2002
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See "Certain Factors" in this Pricing Supplement and in the
accompanying Prospectus, dated December 28, 1995 (the "Prospectus"), for a
discussion of certain factors that should be considered by potential
investors in the E-SIGNS, including that the payment at the maturity of the
E-SIGNS will depend upon fluctuations in the value of the S&P 500 Composite
Stock Price Index* (the "Index" or the "S&P 500 Index") (but in no event
will be less than the Principal Amount of the Notes) and that no periodic
payments of interest will be made on the E-SIGNS.
The following summary of certain terms of the E-SIGNS is subject to
the more detailed terms of the E-SIGNS included elsewhere in this Pricing
Supplement.
Medium-Term Notes,
Series B, Offered: S&P 500 Enhanced Stock Index Growth Notes
due August 9, 2002 (the "E-SIGNS")
Principal Amount: $73,000,000
Denominations: $25 and any integral multiple in excess of
$25.
Specified Currency: U.S. Dollars
Stated Maturity Date: August 9, 2002
Issue Price ($): $25 per E-SIGN for investors purchasing less
than 200,000 E-SIGNS; $24.625 per E-SIGN for
persons purchasing an aggregate of 200,000
or more E-SIGNS (representing a minimum
aggregate face amount of at least
$5,000,000)
Participation Factor
(%): 113%
Commission (%): 0%
* "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard &
Poor's 500", and "500" are trademarks of Standard & Poor's
Corporation and have been licensed for use by Goldman,
Sachs & Co. and its affiliates (including the Issuer).
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Net proceeds to the Issuer (%):
100%
Settlement Date: August 9, 1996
Calculation Agent: Goldman, Sachs & Co. Goldman, Sachs & Co.
is an affiliate of the Issuer, and will have
no liability to the Issuer or any holder of
the E-SIGNS for any action taken or omitted
to be taken by it as Calculation Agent in
good faith. See "Certain Factors -- Certain
Relationships and Related Transactions" for
a discussion of certain conflicts of
interest that may arise with respect to
Goldman, Sachs & Co.'s responsibilities as
Calculation Agent.
Form of Note: Global Note.
Interest Payments: No periodic payments of interest will be
made with respect to the E-SIGNS.
Redemption Amount: The amount of any E-SIGN payable on the
Stated Maturity Date will be calculated by
the Calculation Agent and will be determined
by the following formula:
Final Index Value
Principal Amount {1 + 113% x [(-------------------) - 1]}
Initial Index Value
; provided, however, that in no event will
such amount be less than 100% of the
Principal Amount of such E-SIGN or be
greater than the product of the Maximum
Return and the Principal Amount of such
E-SIGN; provided further, however, that if
the Closing Index Value on any Business Day
prior to the Valuation Period is greater
than or equal to the Threshold Value, then
the Redemption Amount will equal the product
of the Maximum Return and the Principal
Amount of such E-SIGN.
"Business Day" means any day on which the
New York Stock Exchange, Inc. (the "NYSE")
is open for business.
"Calculation Date" means the fifth Business
Day prior to the Stated Maturity Date.
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"Closing Index Value" means the closing
value of the Index (such value as calculated
by Standard & Poor's, a division of the
McGraw-Hill Companies, Inc. ("S&P")) at the
close of business on any Business Day.
"Final Index Value" means the unweighted
arithmetic average of the closing values of
the Index (such values as calculated by S&P)
at the close of business on the five
Business Days immediately preceding and
including the Calculation Date.
"Initial Index Value" means 660.23.
"Maximum Return" means 213%.
"Threshold Value" means (200% x Initial
Index Value).
"Valuation Period" means the five Business
Days immediately preceding and including the
Calculation Date.
Events of Default and
Acceleration: The amount payable upon an acceleration of
the E-SIGNS prior to the Calculation Date is
described under "Description of
E-SIGNS--Events of Default and
Acceleration".
Redemption: The E-SIGNS to which this Pricing Supplement
relates are redeemable, at the option of the
Issuer, as provided under the first
paragraph of "Description of Notes--
Redemption" in the Prospectus as
supplemented and superseded by the following
sentence. Upon any such redemption, the
E-SIGNS will be redeemable as a whole and
not in part and the amount payable upon any
such redemption will be the greater of
(i) 105% of the average of the Closing
Values (as defined under "Description of
E-SIGNS--Redemption of E-SIGNS") of the
E-SIGNS on the 10 trading days immediately
preceding the date of the mailing of the
notice of redemption or (ii) 100% of the
Principal Amount of the E-SIGNS to be
redeemed.
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Defeasance: The provisions described in the Prospectus
under "Description of Notes--Defeasance and
Covenant Defeasance" do not apply to the
E-SIGNS.
Listing: The E-SIGNS have been approved for listing
on the NYSE subject to official notice of
issuance. The NYSE symbol for the E-SIGNS
is "GSA".
Use of Proceeds: The net proceeds will be added to the
Issuer's working capital to support its
Derivative Transactions activities. A
portion of the net proceeds from the sale of
the E-SIGNS may be used by the Issuer or one
or more of its affiliates in connection with
hedging the obligations represented by the
E-SIGNS. See "Use of Proceeds" in the
accompanying Prospectus.
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THE E-SIGNS OFFERED HEREBY ARE NOT AN APPROPRIATE INVESTMENT
FOR INVESTORS WHO ARE NOT SOPHISTICATED WITH RESPECT TO EQUITY
INDICES, OPTIONS AND OPTION TRANSACTIONS
CERTAIN FACTORS
Prior to making an investment decision with respect to the E-SIGNS,
potential investors are urged to consider those factors presented below and
in the Prospectus under "Certain Factors" and "Risks Relating to Indexed
Securities".
Payment at Maturity
Redemption Amount of E-SIGNS
If the Final Index Value is equal to or less than the Initial Index
Value (unless the Closing Index Value exceeded the Threshold Value prior to
the Valuation Period), the holders of the E-SIGNS will be entitled to
receive only the Principal Amount of the E-SIGNS at the Stated Maturity
Date. This will be true even though the value of the Index as of some
interim date or dates prior to the Calculation Date may have exceeded the
Initial Index Value because the Redemption Amount payable on the E-SIGNS is
calculated based on only the Final Index Value. However, if the Closing
Index Value on any Business Day prior to the Valuation Period exceeds the
Threshold Value, the Redemption Amount of the E-SIGNS will be fixed at the
product of the Maximum Return and the Principal Amount of the E-SIGNS
regardless of the subsequent performance of the Index.
Capped Redemption Amount
Because the maximum Redemption Amount of the E-SIGNS is capped at the
product of the Maximum Return and the Principal Amount of the E-SIGNS, the
yield to maturity on the E-SIGNS may be lower than the yield provided by
investing directly in the stocks underlying the Index over an identical
period of time, particularly in the event that the Final Index Value
exceeds the Threshold Value. This maximum Redemption Amount is $53.25.
Time Value of Money
No interest payments will be made on the E-SIGNS. The minimum
Redemption Amount to be received by holders of the E-SIGNS at the Stated
Maturity Date does not reflect any opportunity cost implied by inflation
and other factors relating to the time value of money.
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Redemption Amount of the E-SIGNS Does not Reflect Dividends Paid on the
Index
The Redemption Amount is calculated based only on the price
appreciation, if any, of the Index. Because the Redemption Amount
calculation does not account for the payment of dividends on the individual
stocks comprising the Index, the yield to maturity of the E-SIGNS may
produce a lower yield than if such stocks underlying the Index were
purchased and held for a similar period.
Trading
The E-SIGNS have been approved for listing on the NYSE subject to
official notice of issuance. The NYSE symbol for the E-SIGNS is
GSA. It is expected that the secondary market for the E-SIGNS
will be affected by the creditworthiness of the Issuer and by a number of
other factors.
The trading values of the E-SIGNS may be affected by a number of
interrelated factors, including, but not limited to, those listed below.
The relationship among these factors is complex. Accordingly, investors
should be aware that factors other than the level of the Index are likely
to affect their trading value. The likely effect on the trading value of
the E-SIGNS of each of the factors listed below, assuming in each case that
all other factors are held constant, is as follows:
Price Appreciation of Index
The trading value of the E-SIGNS is expected to depend primarily on
the extent of the appreciation, if any, of the Index over the Initial Index
Value. If, however, E-SIGNS are sold prior to the Stated Maturity Date at
a time when the Index exceeds the Initial Index Value, the sale price may
be at a discount from the amount expected to be payable to the holder if
such excess of the Index over the Initial Index Value were to prevail until
the Stated Maturity Date of the E-SIGNS because of the possible fluctuation
of the Index between the time of such sale and the Stated Maturity Date.
The Index has on occasion been highly volatile. (See "The Standard &
Poor's 500 Composite Stock Price Index--Historical Data on the S&P 500
Index".) Furthermore, the price at which a holder will be able to sell
E-SIGNS prior to the Stated Maturity Date may be at a discount, which could
be substantial, from the Principal Amount thereof if, at such time, the
Index is below, equal to or not sufficiently above the Initial Index Value.
A discount could also result from rising interest rates in the U.S.
Redemption Amount Cap
The trading performance of the E-SIGNS will be influenced by the
maximum Redemption Amount of the E-SIGNS, which is capped at the product of
the Maximum Return and the Principal Amount of the E-SIGNS. The value of
the E-SIGNS should never
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exceed this cap. In the event the Closing Index Value on any Business Day
prior to the Valuation Period exceeds the Threshold Amount, the Redemption
Amount will be fixed at the product of the Maximum Return and the Principal
Amount of the E-SIGNS, and at that time the E-SIGNS will be the economic
equivalent of a zero coupon bond. As such, the price at which a holder
will be able to sell the E-SIGNS prior to the Stated Maturity Date would
likely be at a discount, which could be substantial, from that fixed
Redemption Amount to reflect the time value of money.
Volatility of the Index
If the volatility of the Index increases, the trading value of the
E-SIGNS would likely increase. If the volatility of the Index decreases,
the trading value of the E-SIGNS would likely decrease.
U.S. Dollar Interest Rates
If U.S. interest rates increase, the value of the E-SIGNS would
likely decrease. If U.S. interest rates decrease, the value of the E-SIGNS
would likely increase. Interest rates may also affect the U.S. economy,
and, in turn, the value of the Index.
Dividend Rates in the U.S.
If dividend rates on the stocks comprising the Index increase, the
value of the E-SIGNS would likely decrease. If dividend rates on the
stocks comprising the Index decrease, the value of the E-SIGNS would likely
increase. General U.S. corporate dividend rates may also affect the Index,
and, in turn, the value of the E-SIGNS.
Time Remaining to Maturity
The E-SIGNS may trade at a value above that which may be inferred
from the level of interest rates and the Index. The difference would
reflect a "time premium" due to expectations concerning the value of the
Index during the period prior to the Calculation Date. As the time
remaining to the Calculation Date decreases, however, this time premium
will likely decrease, thus decreasing the trading value of the E-SIGNS.
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Uncertain United States Federal Income Tax Consequences
The United States federal income tax treatment of the E-SIGNS is
uncertain. See "Certain United States Federal Income Tax Considerations"
in this Pricing Supplement. Investors should consult their own tax
advisors as to the consequences, in their particular circumstances, of
ownership of the E-SIGNS.
Certain Relationships and Related Transactions
Under certain circumstances, conflicts of interest may arise with
respect to Goldman, Sachs & Co.'s responsibilities as Calculation Agent.
Goldman, Sachs & Co., an affiliate of the Issuer, in its capacity as
Calculation Agent, has been granted certain discretionary powers to
determine the value of the Index in the event of a Market Disruption Event
or in the event that the Index Sponsor ceases to publish the Index or in
the event of certain material changes in the Index. As such, the decisions
of the Calculation Agent may influence the Redemption Amount of the
E-SIGNS, but in no event will the Redemption Amount be less than 100% of
the Principal Amount of the E-SIGNS. Goldman, Sachs & Co., in its capacity
as Calculation Agent, is under no obligation to take the interests of the
holders of the E-SIGNS into consideration in the event it determines the
Final Index Value.
Goldman, Sachs & Co., as Calculation Agent, is also responsible for
calculating the amounts payable upon a redemption of the E-SIGNS as
described under "Description of E-SIGNS--Redemption". The discretion
exercised by Goldman, Sachs & Co. in determining the amount payable upon
such a redemption may adversely affect the amount payable to holders upon a
redemption of the E-SIGNS.
Goldman, Sachs & Co. will have no liability to the Issuer or any
holder of E-SIGNS for any action taken or omitted to be taken by it as
Calculation Agent in good faith.
Goldman Sachs Capital Markets, L.P., an affiliate of Goldman, Sachs &
Co. and the Issuer, has provided a hedge to the Issuer against its exposure
to price movements in the Index. Goldman, Sachs & Co. and its affiliates
may from time to time engage in transactions involving the underlying
stocks of, and options and futures on, the Index for their proprietary
accounts and for other accounts under their management, which may influence
the value of such underlying stocks and therefore the value of the E-SIGNS.
DESCRIPTION OF E-SIGNS
See "Certain Factors" in this Pricing Supplement and "Certain
Factors" and "Risks Relating to Indexed Securities" in the Prospectus for a
discussion of certain factors that should be considered by prospective
investors in the E-SIGNS.
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The following description of E-SIGNS offered hereby supplements and,
to the extent inconsistent therewith, supersedes the general terms and
provisions of the Notes set forth in the accompanying Prospectus, dated
December 28, 1995 (the "Prospectus"), and the Prospectus Supplement, dated
January 3, 1996 (the "Prospectus Supplement"). For purposes of the general
description of Notes set forth in the Prospectus and the Prospectus
Supplement, the E-SIGNS offered hereby constitute "Indexed Notes". All
capitalized and undefined terms used herein have the meanings assigned to
them in the Prospectus or the Prospectus Supplement.
General
The S&P 500 Enhanced Stock Index Growth Notes due August 9, 2002
(the "E-SIGNS") are being offered at an initial public offering price of
$25 per E-SIGN, for persons purchasing less than 200,000 E-SIGNS, and
$24.625 per E-SIGN, for persons purchasing an aggregate of 200,000 or more
E-SIGNS (representing a face minimum aggregate amount of at least
$5,000,000), will provide for no periodic payments of interest and will
mature on August 9, 2002 (the "Stated Maturity Date"). The Redemption
Amount (as defined below under "--Redemption Amount") payable on the Stated
Maturity Date will be determined by reference to the S&P 500 Composite
Stock Price Index (the "Index" or the "S&P 500 Index").
The E-SIGNS will be issued in the form of one or more Global Notes
as described under "Description of Notes--Book-Entry Notes" in the
Prospectus Supplement.
Settlement for the E-SIGNS will be made in immediately available
funds. The E-SIGNS will trade in the Depositary's Same Day Funds
Settlement System and secondary market trading activity for the E-SIGNS
will settle in immediately available funds.
The E-SIGNS will be redeemable, at the option of the Issuer, as
described below under "--Redemption of E-SIGNS". The E-SIGNS are not
repayable at the option of the holder thereof and are not entitled to the
benefits of a sinking fund.
Solely for purposes of determining whether holders of the aggregate
principal amount of E-SIGNS required for any consent, waiver, authorization
or other action to be taken by holders of E-SIGNS pursuant to the E-SIGNS
and the Indenture have taken such action, the principal amount of the
E-SIGNS offered hereby will equal, with respect to any such determination
prior to the Calculation Date, the Principal Amount of the E-SIGNS and,
with respect to any such determination on or after the Calculation Date,
the Redemption Amount.
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The Specified Currency for the E-SIGNS is U.S. dollars.
Goldman, Sachs & Co. will act as Calculation Agent with respect to
the E-SIGNS. See "Certain Factors--Certain Relationships and Related
Transactions" in this Pricing Supplement.
Redemption Amount
The amount payable on an E-SIGN on the Stated Maturity Date (the
"Redemption Amount") will be calculated by the Calculation Agent on the
Calculation Date and will be determined in accordance with the following
formula:
Final Index Value
Principal Amount {1 + 113% x [(-------------------) - 1]}
Initial Index Value
; provided, however, that in no event will the Redemption Amount of any
E-SIGN be less than 100% of its Principal Amount or be greater than the
product of the Maximum Return and the Principal Amount of such E-SIGN;
provided further, however, that if the Closing Index Value on any Business
Day prior to the Valuation Period is greater than or equal to the Threshold
Value, then the Redemption Amount shall be equal to the product of the
Maximum Return and the Principal Amount of such E-SIGN (the "Capped
Redemption Amount").
"Calculation Date" means the fifth Business Day prior to the Stated
Maturity Date.
"Closing Index Value" means the closing value of the Index (such
value as calculated by the Index Sponsor) at the close of business on
any Business Day.
"Final Index Value" means the unweighted arithmetic average of the
closing values of the Index (such values as calculated by the Index
Sponsor) at the close of business on the five Business Days
immediately preceding and including the Calculation Date (the
"Valuation Period").
"Business Day" means any day on which the NYSE is open for business.
"Index Sponsor" or "S&P" means Standard & Poor's, a division of the
McGraw-Hill Companies, Inc.
"Initial Index Value" means 660.23.
"Maximum Return" means 213%.
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"Threshold Value" means (200% x Initial Index Value).
The Final Index Value of the Index shall be determined by Goldman,
Sachs & Co. (the "Calculation Agent"), by the following method: (i) the
Calculation Agent shall add the closing values of the Index as calculated
by S&P on and for the five Business Days during the Valuation Period and
then divide such sum by five; or (ii) if S&P discontinues publication of
the Index and S&P or another entity publishes a successor or substitute
index that the Calculation Agent determines, in its sole discretion, to be
comparable to the Index (any such index being referred to hereinafter as a
"Successor Index"), then, upon the Calculation Agent's notification of such
determination to the Issuer, the Calculation Agent shall add the closing
values of the Successor Index as calculated by S&P or such other entity for
the Valuation Period and shall divide such sum by the applicable number of
Business Days.
Notwithstanding the foregoing, if the Calculation Agent determines on
any day during the Valuation Period that a Market Disruption Event (as
hereinafter defined) has occurred, then the Redemption Amount shall be
calculated by omitting the Closing Index Value of the Index for such day
and dividing the sum of the remaining Closing Index Values during the
Valuation Period by the remaining number of Business Days during the
Valuation Period; provided, however, that if, there are no Business Days
during the Valuation Period on which there is not a Market Disruption Event
occuring or continuing (i) the Valuation Period shall be deemed to be the
Calculation Date, notwithstanding the Market Disruption Event, and (ii) the
Calculation Agent shall determine the Final Index Value as the closing
value of the Index on the Calculation Date in accordance with the method
for calculating the Index last in effect prior to the commencement of the
Market Disruption Event using the closing value (or, if trading in any
relevant security has been materially suspended or materially limited, its
good faith estimate of the closing value that would have prevailed but for
that suspension or limitation) on the Calculation Date of each security
comprising the Index.
Market Disruption Event
Market Disruption Event means the occurrence or existence on any
Business Day of:
(i) a suspension, absence or material limitation of trading of 100
or more of the securities included in the Index on the primary
market for such securities for more than two hours of trading
or during the one-half hour period preceding the close of
trading in such market; or the suspension, absence or material
limitation of trading on the primary market for trading in
futures or options contracts related to the Index during the
one-half hour period preceding the close of trading in the
applicable market, in each case as determined by the
Calculation Agent in its sole discretion; and
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(ii) a determination by the Calculation Agent in its sole discretion
that the event described in clause (i) above materially
interfered with the ability of the Issuer or any of its
affiliates to unwind all or a material portion of the hedge
with respect to the E-SIGNS.
For purposes of determining whether a Market Disruption Event has
occurred: (1) a limitation on the hours or number of days of trading will
not constitute a Market Disruption Event if it results from an announced
change in the regular business hours of the relevant exchange or market,
(2) a decision to permanently discontinue trading in the relevant futures
or options contract will not constitute a Market Disruption Event, (3)
limitations pursuant to NYSE Rule 80A (or any applicable rule or regulation
enacted or promulgated by the NYSE, any other self-regulatory organization
or the Securities and Exchange Commission of similar scope, as determined
by the Calculation Agent) on trading during significant market fluctuations
shall constitute a Market Disruption Event, (4) a suspension of trading in
a futures or options contract on the Index by the primary securities market
related to such contract by reason of (x) a price change exceeding limits
set by such exchange or market, (y) an imbalance of orders relating to such
contracts or (z) a disparity in bid and ask quotes relating to such
contracts will constitute a suspension or material limitation of trading in
futures or options contracts related to the Index and (5) "a suspension,
absence or material limitation on trading" on the primary market on which
futures or options contracts relating to the Index are traded will not
include any time when such market is itself closed for trading under
ordinary circumstances.
All determinations made by the Calculation Agent shall, in the
absence of manifest error, be conclusive for all purposes and binding on
the Issuer and holders of the E-SIGNS.
Under certain circumstances, the duties of Goldman, Sachs & Co. as
Calculation Agent in determining the existence of Market Disruption Events
could conflict with the interests of Goldman, Sachs & Co. as an affiliate
of the Issuer. See "Certain Factors--Certain Relationships and Related
Transactions" in this Pricing Supplement.
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Hypothetical Redemption Amounts
The following table illustrates, for a range of hypothetical Final
Index Values, the Redemption Amount that would be payable on the E-SIGNS
and the pre-tax annualized rate of return, assuming that the E-SIGNS are
held to the Stated Maturity Date, that the Initial Index Value is 660.23
(the Closing Index Value on August 5, 1996), that the Participation Factor
is 113%, that the Maximum Return is 213% and that at no time prior to the
Valuation Period does the Closing Index Value of the Index exceed the
Threshold Value.
Value of
Final S&P E-SIGN
Final S&P 500 Value at Maturity 6 Year 6 Year
500 as % of of E-SIGN as Annualized Annualized
Index Initial at % of $25 Return of S&P Price
Value Index Maturity Issue Price E-SIGN (1) Return
528.18 80% $25.00 100.00% 0.00% -3.65%
594.21 90% $25.00 100.00% 0.00% -1.74%
660.23 100% $25.00 100.00% 0.00% 0.00%
726.25 110% $27.83 111.30% 1.80% 1.60%
792.28 120% $30.65 122.60% 3.45% 3.09%
858.30 130% $33.48 133.90% 4.99% 4.47%
924.32 140% $36.30 145.20% 6.41% 5.77%
990.35 150% $39.13 156.50% 7.75% 6.99%
1056.37 160% $41.95 167.80% 9.01% 8.15%
1122.39 170% $44.78 179.10% 10.20% 9.25%
1188.41 180% $47.60 190.40% 11.33% 10.29%
1254.44 190% $50.43 201.70% 12.40% 11.29%
1320.46 200% $53.25 213.00% 13.43% 12.25%
1386.48 210% $53.25 213.00% 13.43% 13.16%
1452.51 220% $53.25 213.00% 13.43% 14.04%
______________
(1) Annualized rate of return from the Settlement Date (assumed to be
August 9, 1996 for purposes of this calculation) to the Stated
Maturity Date, assuming annual compounding, calculated on the basis
of a 360 day year consisting of twelve 30 day months.
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The above figures are for purposes of illustration only. The actual
Redemption Amount payable on the E-SIGNS and the pre-tax annualized rate of
return represented thereby will depend entirely (unless the Closing Index
Value exceeds the Threshold Value prior to the Calculation Date) upon the
actual Final Index Value determined by the Calculation Agent as described
under "Redemption Amount". See "Certain Factors--Payment at Maturity" in
this Pricing Supplement. Historical data regarding the Index is included
in this Pricing Supplement under "The Standard & Poor's 500 Composite Stock
Price Index".
Discontinuance of the Index
If S&P discontinues publication of the Index and a Successor Index is
available, then the Redemption Amount will be determined by reference to
the Successor Index as provided above.
If the publication of the Index is discontinued and S&P or another
entity does not publish a Successor Index on any of the five Business Days
during the Valuation Period of the E-SIGNS, the Redemption Amount at
maturity, if any, will be computed by the Calculation Agent by reference to
the following:
(1) determining the component stocks of the Index or any
Successor Index as of the last date on which either of such indices
was calculated by S&P or another entity and quoted on any publicly
available information source (each such component stock a "Last
Component Stock");
(2) for each Last Component Stock, calculating as of each
Business Day the product of the market price per share and the number
of the then outstanding shares (such product referred to as the
"Market Value" of such stock), by reference to (a) the closing market
price per share of such Last Component Stock as quoted by the NYSE or
the American Stock Exchange or any other nationally recognized stock
exchange, or if no such quotation is available, then the closing
market price as quoted by any major regional stock exchange or the
Nasdaq National Market System ("NASDAQ") (collectively the
"Exchanges") and (b) the most recent publicly available statement of
the number of outstanding shares of such Last Component Stock;
(3) aggregating the Market Values obtained in clause (2) of all
Last Component Stocks;
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(4) determining the S&P Base Value (as defined below under "The
Standard & Poor's 500 Composite Stock Price Index--Computation of the
Index") as of the last day on which either the Index or any Successor
Index was published by S&P or another entity, as adjusted thereafter
as described below;
(5) dividing the aggregate Market Value of all Last Component
Stocks by the S&P Base Value (adjusted as aforesaid); and
(6) multiplying the resulting quotient (expressed in decimals)
by ten.
If any Last Component Stock is no longer publicly traded on any
Exchange, the last available market price per share for such Last Component
Stock as quoted by any Exchange, and the number of outstanding shares
thereof at such time, will be used in computing the last available Market
Value of such Last Component Stock. Such Market Value will be used in all
computations of the Index thereafter.
If a company that has issued a Last Component Stock and another
company that has issued a Last Component Stock are consolidated to form a
new company, the common stock of such new company will be considered a Last
Component Stock and the common stocks of the constituent companies will no
longer be considered Last Component Stocks. If any company that has issued
a Last Component Stock merges with, or acquires, a company that has not
issued a Last Component Stock, the common stock of the surviving
corporation will, upon the effectiveness of such merger or acquisition, be
considered a Last Component Stock. However, in each case, the S&P Base
Value will be adjusted (in accordance with the formula set forth in the
last paragraph under "The Standard & Poor's 500 Composite Stock Price
Index--Computation of the Index"). As a result of this adjustment, the
S&P Base Value immediately after such consolidation, merger or acquisition
will equal (a) the S&P Base Value immediately prior to such event,
multiplied by (b) the quotient of the aggregate Market Value of all Last
Component Stocks immediately after such event, divided by the aggregate
Market Value for all Last Component Stocks immediately prior to such event.
If a company that has issued a Last Component Stock issues a stock
dividend, declares a stock split or issues new shares pursuant to the
acquisition of another company, then, in each case, the S&P Base Value will
be adjusted (in accordance with the formula described below) so that the
S&P Base Value immediately after the time the particular Last Component
Stock commences trading ex-dividend, the effectiveness of the stock split
or the time new shares of such Last Component Stock commence trading equals
(a) the S&P Base Value immediately prior to such event, multiplied by
(b) the quotient of the aggregate Market Value for all Last Component
Stocks immediately after such event, divided by the aggregate Market Value
of all Last Component Stocks immediately prior to such event. The S&P Base
Value will not be adjusted in all cases in which S&P, in its discretion,
might adjust the S&P Base Value (as described below under "The Standard &
Poor's 500 Composite Stock Price Index--Computation of the Index").
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<PAGE> 17
If at any time the method of calculating the Index or a Successor
Index, or the value thereof, is changed in a material respect, of if the
Index or a Successor Index is in any other way modified so that such Index
does not, in the opinion of the Calculation Agent, fairly represent the
value of the Index or such Successor Index had such changes or
modifications not been made, then, from and after such time, the
Calculation Agent shall, at the close of business in New York, New York, on
each Business Day, make such adjustments as, in the good faith judgment of
the Calculation Agent, may be necessary in order to arrive at a calculation
of a value of a stock index comparable to the Index or such Successor
Index, as the case may be, as if such changes or modifications had not been
made, and calculate the Closing Index Value with reference to the Index or
such Successor Index, as adjusted. Accordingly, if the method of
calculating the Index or a Successor Index is modified so that the value of
such Index is a fraction of what it would have been if it had not been
modified (e.g., due to a split in the Index), then the Calculation Agent
shall adjust such Index in order to arrive at a value of the Index or such
Successor Index as if it had not been modified (e.g., as if such split had
not occurred).
Upon any adoption by the Calculation Agent of a Successor Index, it
shall cause notice thereof to be published in The Wall Street Journal (or
another newspaper of general circulation) within three Business Days of
such determination. If S&P discontinues publication of the Index prior to
the Valuation Period and the Calculation Agent determines that no Successor
Index is available at such time, then on each Business Day until the
earlier to occur of (i) the commencement of the Valuation Period and (ii) a
determination by the Calculation Agent that a Successor Index is available,
the Calculation Agent shall determine the value that would be used in
computing the Redemption Amount by reference to the method set forth in
clauses (1) through (6) above as if such day were one of the five Business
Days used in calculating the Redemption Amount. The Calculation Agent
shall cause notice of each such value to be published on each succeeding
Business Day in The Wall Street Journal (or another newspaper of general
circulation). Notwithstanding these alternative arrangements,
discontinuance of the publication of the Index may adversely affect trading
in the E-SIGNS.
Redemption of E-SIGNS
The E-SIGNS to which this Pricing Supplement relates are redeemable,
at the option of the Issuer, under the circumstances and in the manner
described in the first paragraph of "Description of Notes--Redemption" in
the Prospectus as supplemented and superseded by the following discussion.
Any such redemption of the E-SIGNS will be made as a whole and not in part,
and the E-SIGNS will be redeemed at a redemption price equal to the greater
of (i) 105% of the average of the Closing Values of the E-SIGNS on the
10 trading days immediately preceding the date of the mailing of the notice
of redemption (the "Mailing Date") or (ii) 100% of the Principal Amount of
the E-SIGNS to be redeemed. Closing Value means, with respect to any
trading day, the closing price of the E-SIGNS, regular way, as reported by
the NYSE on such trading day or, if there is no such closing price on
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<PAGE> 18
such trading day, the average of the bid and ask prices as reported by the
NYSE on such trading day or, if the E-SIGNS are not then listed on the
NYSE, the Issuer will select a broker-dealer (which may be the Calculation
Agent) to determine the Closing Value.
Events of Default and Acceleration
In case an Event of Default with respect to the E-SIGNS shall have
occurred and be continuing prior to the Calculation Date, the amount
payable to a holder of an E-SIGN upon any acceleration permitted by the
E-SIGNS will be equal to the amount that would be payable as though the
Stated Maturity Date of the E-SIGNS was the date on which early repayment
is due, and the Final Index Value was calculated based on the Closing Index
Value of the Index on the date of early repayment, or the first succeeding
Business Day in the event that the date of early repayment is not a
Business Day. If prior to the date of such early repayment, the Closing
Index Value exceeds the Threshold Value, the amount payable to a holder of
an E-SIGN upon acceleration will be equal to the sum of (x) 100% of the
Principal Amount of such E-SIGN, plus (y) 113% of the Principal Amount
of such E-SIGN. In either event, the amount in excess of the Principal
Amount of such E-SIGN determined pursuant to either of the preceding two
sentences will be discounted from the Stated Maturity Date to the date of
early repayment in accordance with generally accepted financial practice on
a semi-annual basis at a discount rate equal to the LIBOR rate, determined
by the Calculation Agent in accordance with the procedures set forth in the
accompanying Prospectus Supplement for LIBOR Notes using the rate for an
Index Maturity similar to the period from the date of early repayment to
the Stated Maturity Date. If an Event of Default occurs on or after the
Calculation Date, the amount payable upon acceleration shall equal the
Redemption Amount as calculated as described under "Redemption Amount".
If a bankruptcy proceeding is commenced in respect of the Issuer, the
claim of the holder of an E-SIGN may be limited, under Section 502(b)(2) of
Title 11 of the United States Code, to the amount of the E-SIGN that would
be due if the Stated Maturity Date of the E-SIGNS were the date of the
commencement of the proceeding.
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<PAGE> 19
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
This summary of the principal United States federal income tax
consequences of ownership of the E-SIGNS deals only with a E-SIGN held as a
capital asset by an initial purchaser who purchases an E-SIGN prior to
August 13, 1996 without more than "de minimis original issue discount" (as
defined under "Taxation--United States Taxation" in the Prospectus
Supplement), and not with special classes of holders, such as dealers in
securities or currencies, banks, tax-exempt organizations, life insurance
companies, persons that hold an E-SIGN as a hedge or hedged against
currency risks or as part of a straddle or conversion transaction, persons
that are not "United States Holders", as defined below, persons whose
functional currency is not the U.S. dollar or persons that have previously
adopted accounting methods for contingent interest that differ from those
described below. For purposes of this discussion, a "United States Holder"
is a beneficial owner who or that is (i) a citizen or resident of the
United States, (ii) a domestic corporation or (iii) otherwise subject to
United States federal income taxation on a net income basis in respect of
an E-SIGN. This discussion supplements the general discussion of the
United States federal income tax consequences of the ownership of the Notes
contained under "Taxation--United States Taxation" in the Prospectus
Supplement.
The United States federal income tax treatment of the E-SIGNS is
uncertain. In June 1996, the Internal Revenue Service issued final
regulations under the original issue discount ("OID") provisions of the
Code dealing with contingent payment debt instruments. The final
regulations are not currently in effect and they will only apply to debt
instruments issued on or after August 13, 1996. In the absence of
specifically applicable regulatory provisions, the principles of tax
accounting generally applicable to the accrual of income should apply.
Although the matter is not free from doubt, except as discussed below
United States Holders should not be required to include amounts in income
prior to maturity, or if the E-SIGNS are redeemed or sold, prior to the
date of redemption or sale. The difference between the purchase price of
an E-SIGN and the total payments made at maturity or upon redemption should
be ordinary income or loss to a United States Holder.
It is unclear under existing law what the result would be if a
Payment Fixing Date (as defined below) were to occur and the amount payable
at maturity thus became fixed. It is likely, however, that United States
Holders using an accrual method of accounting for United States federal
income tax purposes (an "accrual basis taxpayer") would be required to
include some amount in income at such time. Under the circumstances, it
would be reasonable for such United States Holders to include in income the
present value of the future right to receive income on the Payment Fixing
Date and thereafter to include in income for each subsequent taxable year
the amount of the difference between such present value and the Capped
Redemption Amount that accretes during such taxable year on a constant
yield-to-maturity basis. Alternatively, accrual basis taxpayers might
include amounts in income over the remaining life of the E-SIGN on a
constant yield-to-maturity basis. For these purposes, the Payment Fixing
Date would be treated as the issue date, the Principal Amount would be
treated as the issue price and the Capped Redemption Amount would be
treated as the
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<PAGE> 20
amount payable at maturity for purposes of determining inclusions in
income. There can be no assurance, however, that the Internal Revenue
Service could not successfully contend that another method of accrual is
proper. Such alternative methods could include the inclusion in income of
an amount equal to the difference between the Capped Redemption Amount and
the Principal Amount of an E-SIGN on the date that is a Payment Fixing
Date.
Based in part on existing statutory provisions and regulations
governing original issue discount, it would be reasonable for United States
Holders using the cash receipts and disbursement method of accounting for
United States federal income tax purposes (a "cash basis taxpayer") to
report income in respect of an E-SIGN in the same manner as accrual basis
taxpayers. Cash basis United States Holders should consult their own tax
advisors as to whether any amount must be included in income prior to
retirement, redemption or sale under existing law and regulations.
On the sale of an E-SIGN, a United States Holder will recognize gain
or loss equal to the difference between the amount received for the E-SIGN
and the United States Holder's adjusted federal income tax basis
(determined as discussed below) therefor. In the absence of authority
under existing law as to whether gain on the sale of an E-SIGN will be
treated as capital gain, it would be reasonable to treat gains (except with
respect to gains attributable to the Capped Redemption Amount, if any,
which becomes payable at maturity because the Closing Index Value equals or
exceeds the Threshold Value on any Business Day prior to the Valuation
Period (the date, if any, on which the Issuer becomes obligated to pay such
Capped Redemption Amount at maturity, the "Payment Fixing Date")) as
capital gains. There can be no assurance, however, that the Internal
Revenue Service will not successfully challenge this treatment. Losses on
the sale of an E-SIGN will be treated as capital losses.
For the purpose of determining gain or loss on the sale, redemption
or retirement of an E-SIGN, a United States Holder's adjusted basis in an
E-SIGN will generally be equal to such United States Holder's initial
investment in an E-SIGN plus any amounts included in income with respect to
such E-SIGN prior to the sale, redemption or retirement thereof.
Prospective purchasers of an E-SIGN should consult their own tax
advisors concerning the consequences, in their particular circumstances, of
ownership of the E-SIGNS.
<PAGE>
<PAGE> 21
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
All disclosure contained in this Pricing Supplement regarding the
Index, including, without limitation, its make-up, method of calculation
and changes in its components, are derived from publicly-available
information prepared by S&P. The Issuer takes no responsibility for the
accuracy or completeness of such information.
General
The Index is published by S&P and is intended to provide an
indication of the pattern of common stock price movement. The calculation
of the value of the Index (discussed below in further detail) is based on
the relative value of the aggregate Market Value (as defined above under
"Description of E-SIGNS--Discontinuance of the Index") of the common stocks
of 500 companies as compared to the aggregate average Market Value of the
common stocks of 500 similar companies during the base period of the years
1941 through 1943. As of July 31, 1996, the 500 companies included in the
Index represented approximately 76% of the aggregate Market Value of common
stocks traded on the NYSE; however, the 500 companies are not the 500
largest companies listed on the NYSE and not all 500 companies are listed
on the NYSE. S&P chooses companies for inclusion in the Index with the aim
of achieving a distribution by broad industry groupings that approximates
the distribution of these groupings in the common stock population of the
NYSE, which S&P uses as an assumed model for the composition of the total
market. Relevant criteria employed by S&P include: the viability of the
particular company, the extent to which that company represents the
industry group to which it is assigned, the extent to which the market
price of that company's common stock is generally responsive to changes in
the affairs of the respective industry and the Market Value and trading
activity of the common stock of that company. S&P may from time to time, in
its sole discretion, add companies to, or delete companies from, the Index
to achieve the objectives stated above.
Computation of the Index
S&P currently computes the S&P 500 Index as of a particular time as
follows:
(1) the Market Value of all component stocks as of such time;
(2) the Market Value of all component stocks as of such time
(as determined under clause (1) above) are aggregated;
(3) the mean average of the Market Values as of each week in
the base period of the years 1941 through 1943 of the common stock of
each company in a group of 500 similar companies is determined;
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<PAGE> 22
(4) the mean average Market Values of all such common stocks
over such base period (as determined under clause (3) above) are
aggregated (such aggregate amount, as adjusted by S&P from time to
time in the manner described below, being hereinafter referred to as
the "S&P Base Value");
(5) the aggregate Market Value of all component stocks as of
such time (as determined under clause (2) above) is divided by the
S&P Base Value; and
(6) the resulting quotient (expressed in decimals) is
multiplied by ten.
While S&P currently employs the above methodology to calculate the Index,
no assurance can be given that S&P will not modify or change such
methodology in a manner that may affect the Redemption Amount, if any,
payable to holders of E-SIGNS at the Stated Maturity Date or otherwise.
S&P adjusts the foregoing formula to negate the effect of changes in
the Market Value of a component stock that are determined by S&P to be
arbitrary or not due to true market fluctuations. These changes may result
from such causes as the issuance of stock dividends, stock splits, the
granting to shareholders of rights to purchase additional shares of such
stock, the purchase of such stock by employees pursuant to employee benefit
plans, certain consolidations and acquisitions, the granting to
shareholders of rights to purchase other securities of the company, the
substitution by S&P of particular component stocks in the Index and other
reasons. In all such cases, S&P first recalculates the aggregate Market
Value of all component stocks (after taking account of the new market price
per share of the particular component stock or the new number of
outstanding shares thereof or both, as the case may be) and then adjusts
the S&P Base Value in accordance with the following formula:
New Market Value
Old S&P Base Value X ---------------- = New S&P Base Value
Old Market Value
The result is that the S&P Base Value will be adjusted in proportion to any
change in the aggregate Market Value of all component stocks resulting from
the causes referred to above to the extent necessary to negate the effect
of such causes upon the Index.
Historical Data on the S&P 500 Index
The following table sets forth the high, low and closing values of
the Index for each quarter in the period from January 1990 through June 30,
1996, as published by S&P. The recent historical experience of the S&P 500
Index should not be taken as an indication of future performance and no
assurance can be given that the value of the S&P 500 Index will not decline
and thereby reduce the Redemption Amount which may be payable to holders of
E-SIGNS at the Stated Maturity Date or otherwise.
<PAGE>
<PAGE> 23
Highest Lowest Closing
Level Level Level
1990:
1st Quarter 360.59 319.83 339.94
2nd Quarter 368.78 327.76 358.02
3rd Quarter 369.78 295.98 306.05
4th Quarter 333.98 294.51 330.22
1991:
1st Quarter 379.66 309.35 375.22
2nd Quarter 391.26 365.83 371.16
3rd Quarter 397.62 370.92 387.86
4th Quarter 418.32 371.36 417.09
1992:
1st Quarter 421.18 401.94 403.69
2nd Quarter 418.75 392.41 408.14
3rd Quarter 425.27 407.20 417.80
4th Quarter 442.65 396.80 435.71
1993:
1st Quarter 456.76 426.88 451.67
2nd Quarter 455.63 432.30 450.53
3rd Quarter 463.80 441.40 458.93
4th Quarter 471.29 454.36 466.45
1994:
1st Quarter 482.85 436.16 445.77
2nd Quarter 463.23 435.86 444.27
3rd Quarter 477.59 443.58 462.69
4th Quarter 474.74 442.88 459.27
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<PAGE> 24
1995:
1st Quarter 508.15 457.20 500.71
2nd Quarter 551.07 500.20 544.75
3rd Quarter 587.61 542.51 584.41
4th Quarter 622.88 571.55 615.93
1996:
1st Quarter 664.23 597.29 645.60
2nd Quarter 681.10 658.75 670.63
The official closing value of the S&P 500 Index on August 5, 1996 was
660.23, as quoted by S&P.
LICENSE AGREEMENT
S&P and Goldman, Sachs & Co. have entered into a non-exclusive
license agreement providing for the license to Goldman, Sachs & Co. and its
affiliates (including the Issuer), in exchange for a fee, of the right to
use indices owned and published by S&P in connection with certain
securities, including the E-SIGNS.
The E-SIGNS are not sponsored, endorsed, sold or promoted by S&P.
S&P makes no representation or warranty, express or implied, to the holders
of the E-SIGNS or any member of the public regarding the advisability of
investing in securities generally or in the E-SIGNS particularly or the
ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to Goldman, Sachs & Co. and the Issuer is the
licensing of certain trademarks and trade names of S&P and of the S&P 500
Index which is determined, composed and calculated by S&P without regard to
the Issuer or the E-SIGNS. S&P has no obligation to take the needs of the
Issuer or the holders of the E-SIGNS into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for and
has not participated in the determination of the timing of, prices at, or
quantities of the E-SIGNS to be issued or in the determination or
calculation of the equation by which the E-SIGNS are to be converted into
cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the E-SIGNS.
<PAGE>
<PAGE> 25
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
S&P 500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY
FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER,
GOLDMAN, SACHS & CO., HOLDERS OF THE E-SIGNS, OR ANY OTHER PERSON OR ENTITY
FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES
NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO
THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF
THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN
IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
VALIDITY OF E-SIGNS
The validity of the E-SIGNS offered hereby will be passed upon by
Maples and Calder, George Town, Grand Cayman, Cayman Islands, British West
Indies, and by Sullivan & Cromwell, New York, New York. Sullivan &
Cromwell will rely as to all matters of Cayman Islands law upon the opinion
of Maples and Calder. See "Validity of Notes" in the Prospectus.
_________________
The Issuer's Medium-Term Notes, Series B will be offered for
sale in the aggregate principal amount of up to $500,000,000 (or the
equivalent thereof in any foreign currencies or currency units) (provided
that the Issuer reserves the right to increase such aggregate principal
amount from time to time). After giving effect to the issuance of the
E-SIGNS to which this Pricing Supplement relates, $73,000,000 principal
amount of Medium-Term Notes, Series B have been issued by the Issuer.
_________________
Goldman, Sachs & Co.
The date of this Pricing Supplement is August 5, 1996.
