EX-99.1 2 y76096exv99w1.htm EX-99.1: PRESS RELEASE EX-99.1
Exhibit 99.1
The Goldman Sachs Group, Inc.  |  85 Broad Street  |  New York, New York 10004
         
    GOLDMAN SACHS REPORTS FIRST QUARTER
EARNINGS PER COMMON SHARE OF $3.39
  (GOLDMAN SACHS LOGO)
NEW YORK, April 13, 2009 — The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $9.43 billion and net earnings of $1.81 billion for its first quarter ended March 27, 2009. Diluted earnings per common share were $3.39 compared with $3.23 for the first quarter ended February 29, 2008 and a diluted loss per common share of $4.97 for the fourth quarter ended November 28, 2008. Annualized return on average common shareholders’ equity (1) was 14.3% for the first quarter of 2009.
Business Highlights
  Goldman Sachs ranked first in worldwide completed mergers and acquisitions for the calendar year-to-date. (2)
 
  Fixed Income, Currency and Commodities (FICC) generated record quarterly net revenues of $6.56 billion, 34% higher than its previous record, reflecting strength across most businesses, including record results in interest rate products and commodities.
 
  The firm’s Tier 1 Ratio under Basel II (3) was 16.0% at the end of the first quarter of 2009, up from 15.6% as of November 28, 2008. The firm’s Tier 1 Ratio under Basel I (3) was 13.7% at the end of the first quarter of 2009.
 
  The firm’s average global core excess (4) liquidity was $163.74 billion for the first quarter of 2009, up from $111.43 billion for the fourth quarter of 2008.
 
“Given the difficult market conditions, we are pleased with this quarter’s performance,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “Our results reflect the strength and diversity of our client franchise, the resilience of our business model and the dedication and focus of our people. We believe these attributes position the firm to continue to create value for our clients and actively fulfill our role in the capital markets.”
 
Media Relations: Lucas van Praag 212-902-5400   |   Investor Relations: Dane E. Holmes 212-902-3580

 


 

Net Revenues
Investment Banking
Net revenues in Investment Banking were $823 million, 30% lower than the first quarter of 2008 and 20% lower than the fourth quarter of 2008.
Net revenues in Financial Advisory were $527 million, 21% lower than the first quarter of 2008, reflecting lower levels of deal activity. Net revenues in the firm’s Underwriting business were $296 million, 42% lower than the first quarter of 2008. Net revenues in equity underwriting were significantly lower, primarily reflecting a significant decline in industry-wide equity and equity-related offerings. Net revenues in debt underwriting were also significantly lower, primarily due to a decline in leveraged finance activity. The firm’s investment banking transaction backlog decreased from the end of fiscal year 2008. (5)
Trading and Principal Investments
Net revenues in Trading and Principal Investments were $7.15 billion, compared with net revenues of $5.12 billion for the first quarter of 2008 and negative net revenues of $4.36 billion for the fourth quarter of 2008.
Net revenues in FICC were $6.56 billion, more than double the amount in the first quarter of 2008. These results reflected particularly strong performance in interest rate products, commodities and credit products, as FICC operated in a generally favorable environment characterized by client-driven activity, particularly in more liquid products, and high levels of volatility. However, illiquid assets generally continued to decline in value. Net revenues in currencies were solid, but lower compared with a particularly strong first quarter of 2008. Results in mortgages were higher compared with a difficult first quarter of 2008. During the quarter, credit products included losses from corporate debt and private equity investments, and mortgages included a loss of approximately $800 million (excluding hedges) on commercial mortgage loans and securities. In the first quarter of 2008, credit products included a loss of approximately $1 billion, net of hedges, related to non-investment-grade credit origination activities, and mortgages included a net loss of approximately $1 billion on residential mortgage loans and securities.
Net revenues in Equities were $2.00 billion, 20% lower than the first quarter of 2008. Net revenues in the shares business were lower compared with the first quarter of 2008 due to lower commissions, primarily reflecting lower levels of activity outside of the U.S. Net revenues in derivatives were solid, but lower compared with the first quarter of 2008. Results in principal strategies were also lower compared with the first quarter of 2008. During the quarter, Equities operated in an environment generally characterized by continued weakness in global equity markets and high, but declining, levels of volatility.
Principal Investments recorded a net loss of $1.41 billion for the first quarter of 2009. These results included net losses of $640 million from real estate principal investments and $621 million from corporate principal investments, as well as a $151 million loss related to the firm’s investment in the ordinary shares of Industrial and Commercial Bank of China Limited (ICBC).

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Asset Management and Securities Services
Net revenues in Asset Management and Securities Services were $1.45 billion, 29% lower than the first quarter of 2008 and 17% lower than the fourth quarter of 2008.
Asset Management net revenues were $949 million, 28% lower than the first quarter of 2008, due to lower management and other fees, reflecting lower assets under management, principally due to market depreciation, and lower incentive fees. During the quarter, assets under management decreased $27 billion to $771 billion (6), due to $16 billion of market depreciation, primarily in equity assets, and $11 billion of net outflows.
Securities Services net revenues were $503 million, 30% lower than the first quarter of 2008. The decrease in net revenues primarily reflected the impact of lower customer balances compared with the first quarter of 2008.
Expenses
Operating expenses were $6.80 billion, 10% higher than the first quarter of 2008.
Compensation and Benefits
Compensation and benefits expenses (including salaries, discretionary compensation, amortization of prior year equity awards and other items such as payroll taxes, severance costs and benefits) were $4.71 billion, 18% higher than the first quarter of 2008, primarily due to higher net revenues. The ratio of compensation and benefits to net revenues was 50.0%, compared with 48.0% for the first quarter of 2008. Employment levels decreased 7% compared with the end of fiscal year 2008.
Non-Compensation Expenses
Non-compensation expenses, excluding consolidated entities held for investment purposes (7), were $1.62 billion, 21% lower than the first quarter of 2008 and 25% lower than the fourth quarter of 2008. More than one-half of the decrease compared with the first quarter of 2008 was attributable to lower brokerage, clearing, exchange and distribution fees, principally reflecting lower transaction volumes in Equities. The remainder of the decrease compared with the first quarter of 2008 generally reflected lower levels of business activity, the impact of reduced employment levels and the effect of expense reduction initiatives. The increase in non-compensation expenses related to consolidated entities held for investment purposes primarily reflected impairment charges of approximately $300 million related to real estate assets during the first quarter of 2009. Including consolidated entities held for investment purposes, non-compensation expenses were $2.08 billion, 5% lower than the first quarter of 2008 and 17% lower than the fourth quarter of 2008.
Provision for Taxes
The effective income tax rate for the first quarter of 2009 was 31.0%, up from approximately 1% for fiscal year 2008 and 29.5% for the first quarter of 2008. The increases in the effective tax rate were primarily due to changes in geographic earnings mix.

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Capital
As of March 27, 2009, total capital was $252.08 billion, consisting of $63.55 billion in total shareholders’ equity (common shareholders’ equity of $47.05 billion and preferred stock of $16.51 billion) and $188.53 billion in unsecured long-term borrowings. Book value per common share was $98.82 and tangible book value per common share (8) was $88.02, both essentially unchanged from November 28, 2008. Book value and tangible book value per common share are based on common shares outstanding, including restricted stock units granted to employees with no future service requirements, of 476.1 million at period end.
Under the capital guidelines applicable to the firm when it was regulated by the SEC as a Consolidated Supervised Entity, the firm’s Tier 1 Ratio under Basel II (3) was 16.0% as of March 27, 2009. Under the regulatory capital guidelines currently applicable to bank holding companies, the firm’s Tier 1 Ratio under Basel I (3) was 13.7% as of March 27, 2009.
Other Balance Sheet and Liquidity Metrics
  Total assets (9) were $925 billion as of March 27, 2009, up 5% from November 28, 2008.
 
  Level 3 assets (10) were approximately $59 billion as of March 27, 2009 (down from $66 billion as of November 28, 2008) and represented 6.4% of total assets.
 
  Average global core excess (4) liquidity was $163.74 billion for the first quarter of 2009, up from $111.43 billion for the fourth quarter of 2008.
Dividends
The Board of Directors of The Goldman Sachs Group, Inc. (the Board) declared a dividend of $0.35 per common share to be paid on June 25, 2009 to common shareholders of record on May 26, 2009. The Board also declared dividends of $234.38, $387.50, $250.00 and $250.00 per share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, respectively (represented by depositary shares, each representing a 1/1,000th interest in a share of preferred stock), to be paid on May 11, 2009 to preferred shareholders of record on April 26, 2009. In addition, the Board declared dividends of $2,500 per share of Series G Preferred Stock to be paid on May 11, 2009 to preferred shareholders of record on April 25, 2009 and dividends of $12.50 per share of Series H Preferred Stock to be paid on May 15, 2009 to preferred shareholders of record on April 30, 2009.
 

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The Goldman Sachs Group, Inc. is a leading global financial services firm providing investment banking, securities and investment management services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only the firm’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the firm’s control. It is possible that the firm’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the firm’s future results and financial condition, see “Risk Factors” in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the fiscal year ended November 28, 2008 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the firm’s Annual Report on Form 10-K for the fiscal year ended November 28, 2008.
Certain of the information regarding the firm’s Tier 1 Ratios, risk-weighted assets, total assets, level 3 assets and average global core excess liquidity consist of preliminary estimates; these estimates are forward-looking statements and are subject to change, possibly materially, as the firm completes its quarterly financial statements.
Statements about the firm’s investment banking transaction backlog also may constitute forward-looking statements. Such statements are subject to the risk that the terms of these transactions may be modified or that they may not be completed at all; therefore, the net revenues, if any, that the firm actually earns from these transactions may differ, possibly materially, from those currently expected. Important factors that could result in a modification of the terms of a transaction or a transaction not being completed include, in the case of underwriting transactions, a decline or continued weakness in general economic conditions, outbreak of hostilities, volatility in the securities markets generally or an adverse development with respect to the issuer of the securities and, in the case of financial advisory transactions, a decline in the securities markets, an inability to obtain adequate financing, an adverse development with respect to a party to the transaction or a failure to obtain a required regulatory approval. For a discussion of other important factors that could adversely affect the firm’s investment banking transactions, see “Risk Factors” in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the fiscal year ended November 28, 2008 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the firm’s Annual Report on Form 10-K for the fiscal year ended November 28, 2008.
Conference Call
A conference call to discuss the firm’s results, outlook and related matters will be held Tuesday, April 14, 2009 at 7:00 am (ET). The call will be open to the public. Members of the public who would like to listen to the conference call should dial 1-888-281-7154 (U.S. domestic) or 1-706-679-5627 (international). The number should be dialed at least 10 minutes prior to the start of the conference call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the firm’s web site, www.gs.com/shareholders. There is no charge to access the call. For those unable to listen to the live broadcast, a replay will be available on the firm’s web site or by dialing 1-800-642-1687 (U.S. domestic) or 1-706-645-9291 (international) passcode number 91133807, beginning approximately two hours after the event. Please direct any questions regarding obtaining access to the conference call to Goldman Sachs Investor Relations, via e-mail, at gs-investor-relations@gs.com.

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THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
SEGMENT NET REVENUES
(UNAUDITED)

$ in millions
                                         
    Three Months Ended     % Change From  
    Mar. 27,     Nov. 28,     Feb. 29,     Nov. 28,     Feb. 29,  
    2009     2008     2008     2008     2008  
Investment Banking
                                       
Financial Advisory
  $ 527     $ 574     $ 663       (8 )%     (21 )%
 
                                       
Equity underwriting
    48       273       172       (82 )     (72 )
Debt underwriting
    248       187       337       33       (26 )
 
                             
Total Underwriting
    296       460       509       (36 )     (42 )
 
                                       
 
                             
Total Investment Banking
    823       1,034       1,172       (20 )     (30 )
 
                             
 
                                       
Trading and Principal Investments
                                       
FICC
    6,557       (3,403 )     3,142       N.M.       109  
 
                                       
Equities trading
    1,027       1,325       1,276       (22 )     (20 )
Equities commissions
    974       1,318       1,238       (26 )     (21 )
 
                             
Total Equities
    2,001       2,643       2,514       (24 )     (20 )
 
                                       
ICBC
    (151 )     (631 )     (135 )     N.M.       N.M.  
Other corporate and real estate gains and losses
    (1,261 )     (2,965 )     (410 )     N.M.       N.M.  
Overrides
    4             13       N.M.       (69 )
 
                             
Total Principal Investments
    (1,408 )     (3,596 )     (532 )     N.M.       N.M.  
 
                                       
 
                             
Total Trading and Principal Investments
    7,150       (4,356 )     5,124       N.M.       40  
 
                             
 
                                       
Asset Management and Securities Services
                                       
Management and other fees
    931       930       1,123             (17 )
Incentive fees
    18       15       194       20       (91 )
 
                             
Total Asset Management
    949       945       1,317             (28 )
 
                                       
Securities Services
    503       799       722       (37 )     (30 )
 
                                       
 
                             
Total Asset Management and Securities Services
    1,452       1,744       2,039       (17 )     (29 )
 
                             
 
                                       
 
                             
Total net revenues
  $ 9,425     $ (1,578 )   $ 8,335       N.M.       13  
 
                             

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THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

In millions, except per share amounts and employees
                                         
    Three Months Ended     % Change From  
    Mar. 27,     Nov. 28,     Feb. 29,     Nov. 28,     Feb. 29,  
    2009     2008     2008     2008     2008  
Revenues
                                       
Investment banking
  $ 823     $ 1,034     $ 1,166       (20 )%     (29 )%
Trading and principal investments
    5,706       (4,461 )     4,877       N.M.       17  
Asset management and securities services
    989       936       1,341       6       (26 )
Interest income
    4,362       6,173       11,245       (29 )     (61 )
 
                             
Total revenues
    11,880       3,682       18,629       N.M.       (36 )
 
                                       
Interest expense
    2,455       5,260       10,294       (53 )     (76 )
 
                             
 
                                       
Revenues, net of interest expense
    9,425       (1,578 )     8,335       N.M.       13  
 
                             
 
       
Operating expenses
                                       
Compensation and benefits
    4,712       (490 )     4,001       N.M.       18  
 
                                       
Brokerage, clearing, exchange and distribution fees
    536       733       790       (27 )     (32 )
Market development
    68       96       144       (29 )     (53 )
Communications and technology
    173       188       187       (8 )     (7 )
Depreciation and amortization
    511       418       170       22       N.M.  
Amortization of identifiable intangible assets
    38       70       84       (46 )     (55 )
Occupancy
    241       253       236       (5 )     2  
Professional fees
    135       248       178       (46 )     (24 )
Other expenses
    382       505       402       (24 )     (5 )
 
                             
Total non-compensation expenses
    2,084       2,511       2,191       (17 )     (5 )
 
                                       
 
                             
Total operating expenses
    6,796       2,021       6,192       N.M.       10  
 
                             
 
                                       
Pre-tax earnings / (loss)
    2,629       (3,599 )     2,143       N.M.       23  
Provision / (benefit) for taxes
    815       (1,478 )     632       N.M.       29  
 
                             
Net earnings / (loss)
    1,814       (2,121 )     1,511       N.M.       20  
 
                                       
Preferred stock dividends
    155       166       44       (7 )     N.M.  
 
                             
Net earnings / (loss) applicable to common shareholders
  $ 1,659     $ (2,287 )   $ 1,467       N.M.       13  
 
                             
 
                                       
Earnings / (loss) per common share
                                       
Basic
  $ 3.48     $ (4.97 )   $ 3.39       N.M. %     3 %
Diluted
    3.39       (4.97 )     3.23       N.M.       5  
 
                                       
Average common shares outstanding
                                       
Basic
    477.4       459.9       432.8       4       10  
Diluted
    489.2       459.9       453.5       6       8  
 
                                       
Selected Data
                                       
Employees at period end (11)
    27,898       30,067       31,874       (7 )     (12 )

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NON-COMPENSATION EXPENSES
(UNAUDITED)

$ in millions
                                         
    Three Months Ended     % Change From  
    Mar. 27,     Nov. 28,     Feb. 29,     Nov. 28,     Feb. 29,  
    2009     2008     2008     2008     2008  
 
                                       
Non-compensation expenses of consolidated
investments (7)
  $ 460     $ 337     $ 125       36 %     N.M. %
 
                                       
Non-compensation expenses excluding consolidated investments
                                       
Brokerage, clearing, exchange and distribution fees
    536       733       790       (27 )     (32 )
Market development
    66       93       141       (29 )     (53 )
Communications and technology
    172       186       186       (8 )     (8 )
Depreciation and amortization
    166       182       146       (9 )     14  
Amortization of identifiable intangible assets
    35       67       83       (48 )     (58 )
Occupancy
    208       224       217       (7 )     (4 )
Professional fees
    133       246       176       (46 )     (24 )
Other expenses
    308       443       327       (30 )     (6 )
 
                             
Subtotal
    1,624       2,174       2,066       (25 )     (21 )
 
                                       
 
                             
Total non-compensation expenses, as reported
  $ 2,084     $ 2,511     $ 2,191       (17 )     (5 )
 
                             

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THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(UNAUDITED)
Average Daily VaR (12)
$ in millions
                                         
    Three Months Ended                  
    Mar. 27,     Nov. 28,     Feb. 29,                  
    2009     2008     2008                  
Risk Categories
                                       
Interest rates
  $ 218     $ 178     $ 106                  
Equity prices
    38       51       89                  
Currency rates
    38       32       31                  
Commodity prices
    40       38       38                  
Diversification effect (13)
    (94 )     (102 )     (107 )                
 
                                 
Total
  $ 240     $ 197     $ 157                  
 
                                 
Assets Under Management (14)
$ in billions
                                         
    As of     % Change From  
    Mar. 31,     Nov. 30,     Feb. 29,     Nov. 30,     Feb. 29,  
    2009     2008     2008     2008     2008  
Asset Class
                                       
Alternative investments
  $ 141     $ 146     $ 148       (3 )%     (5 )%
Equity
    101       112       214       (10 )     (53 )
Fixed income
    248       248       259             (4 )
 
                             
Total non-money market assets
    490       506       621       (3 )     (21 )
 
       
Money markets
    281       273       252       3       12  
 
                             
Total assets under management
  $ 771   (6)   $ 779     $ 873       (1 )     (12 )
 
                             
                                         
    Three Months Ended                  
    Mar. 31,     Nov. 30,     Feb. 29,                  
    2009     2008     2008                  
Balance, beginning of period
  $ 798   (15)   $ 863     $ 868                  
 
       
Net inflows / (outflows)
                                       
Alternative investments
    (2     4       (2 )                
Equity
    (1 )     (8 )     (17 )                
Fixed income
    (3 )     (1 )     2                  
 
                                 
Total non-money market net inflows / (outflows)
    (6 )     (5 )     (17 )                
 
       
Money markets
    (5 )     11       46                  
 
                                 
Total net inflows / (outflows)
    (11 ) (6)     6       29                  
 
       
Net market appreciation / (depreciation)
    (16 )     (90 )     (24 )                
 
                                 
 
       
Balance, end of period
  $ 771     $ 779     $ 873                  
 
                                 
Principal Investments (16)
$ in millions
                                         
    As of March 27, 2009                  
    Corporate     Real Estate     Total                  
 
                                       
Private
  $ 8,911     $ 1,914     $ 10,825                  
Public
    1,609       27       1,636                  
 
                                 
Subtotal
    10,520       1,941       12,461                  
ICBC ordinary shares (17)
    5,754             5,754                  
 
                                 
Total
  $ 16,274  (18)   $ 1,941     $ 18,215                  
 
                                 

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THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
RESULTS FOR THE ONE MONTH ENDED DECEMBER 26, 2008
(UNAUDITED)

In millions, except assets under management (in billions), per share amounts and employees
SEGMENT NET REVENUES
 
         
    One Month Ended  
    Dec. 26,  
    2008  
Investment Banking
       
Financial Advisory
  $ 72  
 
       
Equity underwriting
    19  
Debt underwriting
    44  
 
     
Total Underwriting
    63  
 
       
 
     
Total Investment Banking
    135  
 
     
 
       
Trading and Principal Investments
       
FICC (19)
    (320 )
 
       
Equities trading
    363  
Equities commissions
    251  
 
     
Total Equities
    614  
 
       
ICBC
    228  
Other corporate and real estate gains and losses
    (1,030 )
Overrides
    1  
 
     
Total Principal Investments
    (801 )
 
       
 
     
Total Trading and Principal Investments
    (507 )
 
     
 
       
Asset Management and Securities Services
       
Management and other fees
    318  
Incentive fees
    1  
 
     
Total Asset Management
    319  
 
       
Securities Services
    236  
 
       
 
     
Total Asset Management and Securities Services
    555  
 
     
 
       
 
     
Total net revenues
  $ 183  
 
     
ASSETS UNDER MANAGEMENT (14)
 
         
    As of  
    Dec. 31,  
    2008  
Asset Class
       
Alternative investments
  $ 145  
Equity
    114  
Fixed income
    253  
 
     
Total non-money market assets
    512  
 
       
Money markets
    286  
 
     
Total assets under management
  $ 798  
 
     
         
    One Month Ended  
    Dec. 31,  
    2008  
Balance, beginning of period
  $ 779  
 
       
Net outflows
       
Alternative investments
    (2 )
Equity
    (2 )
Fixed income
    (3 )
 
     
Total non-money market net outflows
    (7 )
 
       
Money markets
    13  
 
     
Total net inflows
    6  
 
       
Net market appreciation
    13  
 
       
 
     
Balance, end of period
  $ 798  
 
     
CONSOLIDATED STATEMENT OF EARNINGS
 
         
    One Month Ended  
    Dec. 26,  
    2008  
Revenues
       
Investment banking
  $ 135  
Trading and principal investments
    (964 )
Asset management and securities services
    327  
Interest income
    1,687  
 
     
Total revenues
    1,185  
 
       
Interest expense
    1,002  
 
     
 
       
Revenues, net of interest expense
    183  
 
     
 
       
Operating expenses
       
Compensation and benefits
    744  
 
       
Brokerage, clearing, exchange and distribution fees
    165  
Market development
    16  
Communications and technology
    62  
Depreciation and amortization
    72  
Amortization of identifiable intangible assets
    39  
Occupancy
    82  
Professional fees
    58  
Other expenses
    203  
 
     
Total non-compensation expenses
    697  
 
       
 
     
Total operating expenses
    1,441  
 
     
 
       
Pre-tax loss
    (1,258 )
Benefit for taxes
    (478 )
 
     
Net loss
    (780 )
 
       
Preferred stock dividends
    248  
 
     
Net loss applicable to common shareholders
  $ (1,028 )
 
     
 
       
Loss per common share (20)
       
Basic
  $ (2.15 )
Diluted
    (2.15 )
 
       
Average common shares outstanding
       
Basic
    485.5  
Diluted
    485.5  
 
       
Selected Data
       
Employees at period end (11)
    29,182  
NON-COMPENSATION EXPENSES
 
         
    One Month Ended  
    Dec. 26,  
    2008  
Non-compensation expenses of consolidated investments (7)
  $ 60  
 
       
Non-compensation expenses excluding consolidated investments
       
Brokerage, clearing, exchange and distribution fees
    165  
Market development
    15  
Communications and technology
    62  
Depreciation and amortization
    49  
Amortization of identifiable intangible assets
    38  
Occupancy
    72  
Professional fees
    57  
Other expenses
    179  
 
     
Subtotal
    637  
 
       
 
     
Total non-compensation expenses, as reported
  $ 697  
 
     


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Footnotes
(1)   Annualized return on average common shareholders’ equity (ROE) is computed by dividing annualized net earnings applicable to common shareholders by average monthly common shareholders’ equity.
         
    Average for the  
    Three Months Ended  
    March 27, 2009  
    (unaudited, $ in millions)  
Total shareholders’ equity
  $ 63,061  
Preferred stock
    (16,495 )
 
     
Common shareholders’ equity
  $ 46,566  
 
     
(2)   Thomson Reuters — January 1, 2009 through March 27, 2009.
 
(3)   The Tier 1 Ratio equals Tier 1 capital divided by total risk-weighted assets. The firm continues to report its Tier 1 Ratio in accordance with the capital guidelines applicable to it when the firm was regulated by the SEC as a Consolidated Supervised Entity. These guidelines were generally consistent with those set out in the Revised Framework for the International Convergence of Capital Measurement and Capital Standards issued by the Basel Committee on Banking Supervision (Basel II). The firm’s risk-weighted assets under Basel II were approximately $385 billion as of March 27, 2009. This ratio represents a preliminary estimate as of the date of this earnings release and may be revised in the firm’s Quarterly Report on Form 10-Q for the fiscal period ended March 27, 2009. As a bank holding company, the firm is subject to regulatory capital requirements administered by the U.S. federal banking agencies. Beginning in the first quarter of 2009, the firm is reporting its Tier 1 Ratio in accordance with the regulatory capital guidelines currently applicable to bank holding companies, which are based on the Capital Accord of the Basel Committee on Banking Supervision (Basel I). The firm’s risk-weighted assets under Basel I were approximately $415 billion as of March 27, 2009. As of the date of this earnings release, the calculation of this estimated ratio has not been reviewed with the Federal Reserve Board and, accordingly, the ratio may be revised in the firm’s Quarterly Report on Form 10-Q for the fiscal period ended March 27, 2009. For a further discussion of the firm’s capital requirements, see “Equity Capital” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the firm’s Annual Report on Form 10-K for the fiscal year ended November 28, 2008.
 
(4)   The firm’s global core excess represents a pool of excess liquidity consisting of unencumbered, highly liquid securities that may be sold or pledged to provide same-day liquidity, as well as overnight cash deposits. This liquidity is intended to allow the firm to meet immediate obligations without the need to sell other assets or depend on additional funding from credit-sensitive markets in a difficult funding environment. This amount represents the average loan value (the estimated amount of cash that would be advanced by counterparties against these securities), as well as overnight cash deposits, of the global core excess. For a further discussion of the firm’s global core excess liquidity pool, please see “Liquidity and Funding Risk” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the firm’s Annual Report on Form 10-K for the fiscal year ended November 28, 2008. This amount represents a preliminary estimate as of the date of this earnings release and may be revised in the firm’s Quarterly Report on Form 10-Q for the fiscal period ended March 27, 2009.
 
(5)   The firm’s investment banking transaction backlog represents an estimate of the firm’s future net revenues from investment banking transactions where management believes that future revenue realization is more likely than not.
 
(6)   Excludes the federal agency pass-through mortgage-backed securities account managed for the Federal Reserve.
 
(7)   Consolidated entities held for investment purposes are entities that are held strictly for capital appreciation, have a defined exit strategy and are engaged in activities that are not closely related to the firm’s principal businesses. For example, these investments include consolidated entities that hold real estate assets, such as hotels, but exclude investments in entities that primarily hold financial assets. Management believes that it is meaningful to review non-compensation expenses excluding expenses related to these consolidated entities in order to evaluate trends in non-compensation expenses related to the firm’s principal business activities.
 
(8)   Tangible common shareholders’ equity equals total shareholders’ equity less preferred stock, goodwill and identifiable intangible assets. Tangible book value per common share is computed by dividing tangible common shareholders’ equity by the number of common shares outstanding, including restricted stock units granted to employees with no future service requirements. Management believes that tangible common shareholders’ equity is meaningful because it is one of the measures that the firm and investors use to assess capital adequacy. The following table sets forth a reconciliation of total shareholders’ equity to tangible common shareholders’ equity:
         
    As of  
    March 27, 2009  
    (unaudited, $ in millions)  
Total shareholders’ equity
  $ 63,553  
Preferred stock
    (16,507 )
 
     
Common shareholders’ equity
    47,046  
Goodwill and identifiable intangible assets
    (5,138 )
 
     
Tangible common shareholders’ equity
  $ 41,908  
 
     

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Footnotes (continued)
(9)   This amount represents a preliminary estimate as of the date of this earnings release and may be revised in the firm’s Quarterly Report on Form 10-Q for the fiscal period ended March 27, 2009.
 
(10)   SFAS No. 157, “Fair Value Measurements,” establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). Level 3 assets reflect prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. For a further discussion of the firm’s level 3 assets, see “Critical Accounting Policies — Fair Value — Fair Value Hierarchy — Level 3” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the firm’s Annual Report on Form 10-K for the fiscal year ended November 28, 2008. This amount represents a preliminary estimate as of the date of this earnings release and may be revised in the firm’s Quarterly Report on Form 10-Q for the fiscal period ended March 27, 2009.
 
(11)   Excludes 3,930, 4,631, 4,671 and 4,818 employees as of March 27, 2009, December 26, 2008, November 28, 2008 and February 29, 2008, respectively, of consolidated entities held for investment purposes. Compensation and benefits includes $70 million, $23 million, $70 million and $63 million for the three months ended March 27, 2009, one month ended December 26, 2008, and three months ended November 28, 2008 and February 29, 2008, respectively, attributable to these consolidated entities.
 
(12)   VaR is the potential loss in value of Goldman Sachs’ trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. The modeling of the risk characteristics of the firm’s trading positions involves a number of assumptions and approximations. While management believes that these assumptions and approximations are reasonable, there is no standard methodology for estimating VaR, and different assumptions and/or approximations could produce materially different VaR estimates. For a further discussion of the calculation of VaR, see Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in the firm’s Annual Report on Form 10-K for the fiscal year ended November 28, 2008.
 
(13)   Equals the difference between total VaR and the sum of the VaRs for the four risk categories. This effect arises because the four market risk categories are not perfectly correlated.
 
(14)   Substantially all assets under management are valued as of calendar month-end. Assets under management do not include the firm’s investments in funds that it manages.
 
(15)   Includes market appreciation of $13 billion and net inflows of $6 billion in December 2008.
 
(16)   Represents investments included within the Principal Investments component of the firm’s Trading and Principal Investments segment.
 
(17)   Includes interests of $3.64 billion as of March 27, 2009 held by investment funds managed by the firm. The fair value of the investment in the ordinary shares of ICBC, which trade on The Stock Exchange of Hong Kong, includes the effect of foreign exchange revaluation for which the firm maintains an economic currency hedge. During the quarter ended March 27, 2009, the firm committed to supplemental transfer restrictions in relation to its investment in ICBC. Under the prior transfer restrictions, the ICBC shares held by the firm would have become free from transfer restrictions in equal installments on April 28, 2009 and October 20, 2009. Under the new transfer restrictions, the firm will not liquidate 80% of the ICBC shares currently held by the firm at any time prior to April 28, 2010.
 
(18)   Excludes the firm’s investment in the convertible preferred stock of Sumitomo Mitsui Financial Group, Inc. The firm has hedged all of the common stock underlying this investment.
 
(19)   Includes writedowns of approximately $1 billion related to non-investment-grade credit origination activities and approximately $625 million (excluding hedges) related to commercial mortgage loans and securities.
 
(20)   In June 2008, the FASB issued FASB Staff Position (FSP) No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” effective for fiscal years beginning after December 15, 2008. The FSP requires unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents to be treated as a separate class of securities in calculating earnings per share. There was no impact from the adoption of FSP No. EITF 03-6-1 to earnings per common share for the quarter ended March 27, 2009. The loss per common share for the one month ended December 26, 2008 was computed in accordance with the FSP and the impact was a loss per common share of $0.03. Prior periods have not been restated due to immateriality.

- 12 -