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Goldman Sachs Reports Earnings Per Common Share Of $14.13 For 2012

Conference Call

A conference call to discuss the firm’s results, outlook and related matters will be held at 10:30 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 1-855-859-2056 (U.S. domestic) or 1-404-537-3406 (international) passcode number 75327207, 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.

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

  Year Ended       % Change From
December 31,       December 31, December 31,
2012 2011 2011
Investment Banking
Financial Advisory $ 1,975 $ 1,987 (1 )

%

 
Equity underwriting 987 1,085 (9 )
Debt underwriting   1,964     1,283   53  
Total Underwriting 2,951 2,368 25
         
Total Investment Banking   4,926     4,355   13  
 
Institutional Client Services

Fixed Income, Currency and

Commodities Client Execution

9,914 9,018 10
 
Equities client execution (13) 3,171 3,031 5
Commissions and fees 3,053 3,633 (16 )
Securities services   1,986     1,598   24  
Total Equities 8,210 8,262 (1 )
         
Total Institutional Client Services   18,124     17,280   5  
 
Investing & Lending
ICBC 408 (517 ) N.M.
Equity securities (excluding ICBC) 2,392 1,120 114
Debt securities and loans 1,850 96 N.M.
Other 1,241 1,443 (14 )
         
Total Investing & Lending   5,891     2,142   175  
 
Investment Management
Management and other fees 4,105 4,188 (2 )
Incentive fees 701 323 117
Transaction revenues 416 523 (20 )
         
Total Investment Management   5,222     5,034   4  
         
Total net revenues $ 34,163   $ 28,811   19  
 

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

  Three Months Ended       % Change From
December 31,       September 30,       December 31, September 30,   December 31,
2012 2012 2011 2012 2011
Investment Banking
Financial Advisory $ 508 $ 509 $ 470 - % 8 %
 
Equity underwriting 304 189 191 61 59
Debt underwriting   593     466     196   27   N.M.  
Total Underwriting 897 655 387 37 132
                 
Total Investment Banking   1,405     1,164     857   21   64  
 
Institutional Client Services

Fixed Income, Currency and

Commodities Client Execution

2,038 2,224 1,363 (8 ) 50
 

Equities client execution  (13)

764 847 526 (10 ) 45
Commissions and fees 722 721 782 - (8 )
Securities services   818     392     385   109   112  
Total Equities 2,304 1,960 1,693 18 36
                 
Total Institutional Client Services   4,342     4,184     3,056   4   42  
 
Investing & Lending
ICBC 334 99 388 N.M. (14 )
Equity securities (excluding ICBC) 789 824 384 (4 ) 105
Debt securities and loans 485 558 (221 ) (13 ) N.M.
Other 365 323 321 13 14
                 
Total Investing & Lending   1,973     1,804     872   9   126  
 
Investment Management
Management and other fees 1,067 1,016 1,016 5 5
Incentive fees 344 82 141 N.M. 144
Transaction revenues 105 101 107 4 (2 )
                 
Total Investment Management   1,516     1,199     1,264   26   20  
                 
Total net revenues $ 9,236   $ 8,351   $ 6,049   11   53  
 

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) In millions, except per share amounts

        Year Ended       % Change From
December 31,   December 31, December 31,
2012 2011 2011
Revenues
Investment banking $ 4,941 $ 4,361 13 %
Investment management 4,968 4,691 6
Commissions and fees 3,161 3,773 (16 )
Market making 11,348

(14)

9,287 22
Other principal transactions   5,865     1,507   N.M.  
Total non-interest revenues 30,283 23,619 28
 
Interest income 11,381 13,174 (14 )
Interest expense   7,501     7,982   (6 )
Net interest income   3,880     5,192   (25 )
 
Net revenues, including net interest income   34,163     28,811   19  
 
Operating expenses
Compensation and benefits 12,944 12,223 6
 
Brokerage, clearing, exchange and distribution fees 2,208 2,463 (10 )
Market development 509 640 (20 )
Communications and technology 782 828 (6 )
Depreciation and amortization 1,738 1,865 (7 )
Occupancy 875 1,030 (15 )
Professional fees 867 992 (13 )
Insurance reserves 598 529 13
Other expenses   2,435     2,072   18  
Total non-compensation expenses 10,012 10,419 (4 )
           
Total operating expenses   22,956     22,642   1  
 
Pre-tax earnings 11,207 6,169 82
Provision for taxes   3,732     1,727   116  
Net earnings 7,475 4,442 68
 
Preferred stock dividends   183     1,932   (91 )
Net earnings applicable to common shareholders $ 7,292   $ 2,510   191  
 
 
Earnings per common share
Basic (15) $ 14.63 $ 4.71 N.M. %
Diluted 14.13 4.51 N.M.
 
Average common shares outstanding
Basic 496.2 524.6 (5 )
Diluted 516.1 556.9 (7 )
 

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) In millions, except per share amounts and total staff

  Three Months Ended       % Change From
December 31, September 30,       December 31, September 30,   December 31,
2012 2012 2011 2012 2011
Revenues
Investment banking $ 1,407 $ 1,168 $ 863 20 % 63 %
Investment management 1,450 1,147 1,196 26 21
Commissions and fees 754 748 804 1 (6 )
Market making 2,696

(14)

2,650 1,289 2 109
Other principal transactions   1,956     1,802     832   9   135  
Total non-interest revenues 8,263 7,515 4,984 10 66
 
Interest income 2,864 2,629 3,032 9 (6 )
Interest expense   1,891     1,793     1,967   5   (4 )
Net interest income   973     836     1,065   16   (9 )
 
Net revenues, including net interest income   9,236     8,351     6,049   11   53  
 
Operating expenses
Compensation and benefits 1,976 3,675 2,208 (46 ) (11 )
 
Brokerage, clearing, exchange and distribution fees 550 547 560 1 (2 )
Market development 140 123 138 14 1
Communications and technology 194 190 211 2 (8 )
Depreciation and amortization 500 396 514 26 (3 )
Occupancy 232 217 249 7 (7 )
Professional fees 215 205 243 5 (12 )
Insurance reserves 167 153 127 9 31
Other expenses   949     547     552   73   72  
Total non-compensation expenses 2,947 2,378 2,594 24 14
                 
Total operating expenses   4,923     6,053     4,802   (19 ) 3  
 
Pre-tax earnings 4,313 2,298 1,247 88 N.M.
Provision for taxes   1,421     786     234   81   N.M.  
Net earnings 2,892 1,512 1,013 91 185
 
Preferred stock dividends   59     54     35   9   69  
Net earnings applicable to common shareholders $ 2,833   $ 1,458   $ 978   94   190  
 
 
Earnings per common share
Basic (15) $ 5.87 $ 2.95 $ 1.91 99 % N.M. %
Diluted 5.60 2.85 1.84 96 N.M.
 
Average common shares outstanding
Basic 481.5 491.2 508.0 (2 ) (5 )
Diluted 505.6 510.9 531.8 (1 ) (5 )
 
Selected Data

Total staff at period-end  (11)

32,400 32,600 33,300 (1 ) (3 )
 

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED)

Average Daily VaR (16)
$ in millions
                 
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2012 2012 2011 2012 2011
Risk Categories
Interest rates $ 67 $ 73 $ 123 $ 78 $ 94
Equity prices 31 21 23 26 33
Currency rates 11 12 21 14 20
Commodity prices 20 22 26 22 32

Diversification effect  (16)

  (53 )   (47 )   (58 )   (54 )   (66 )
Total $ 76   $ 81   $ 135   $ 86   $ 113  
 
 
Assets Under Supervision (9)
$ in billions
 
As of % Change From
December 31, September 30, December 31, September 30, December 31,
2012 2012 2011 2012 2011
Asset Class
Alternative investments $ 133 $ 136 $ 142 (2 ) % (6 ) %
Equity 133 135 126 (1 ) 6
Fixed income   370     378     340     (2 )   9  
Total non-money market assets 636 649 608 (2 ) 5
 
Money markets   218     207     220     5     (1 )

Total assets under

management (AUM)

854 856 828 - 3
 
Other client assets   111     95     67     17     66  

Total assets under

supervision (AUS)

$ 965   $ 951   $ 895     1     8  
 
 
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2012 2012 2011 2012 2011
 
Balance, beginning of period $ 951 $ 916 $ 889 $ 895 $ 917
 
Net inflows / (outflows)
Alternative investments (3 ) (3 ) (2 ) (11 ) (5 )
Equity (5 ) (1 ) (7 ) (13 ) (9 )
Fixed income   (10 )   5     (12 )   8     (15 )
Total non-money market net inflows / (outflows) (18 ) 1 (21 ) (16 ) (29 )
 
Money markets   11     (2 )   13     (2 )   12  
Total AUM net inflows / (outflows) (7 ) (1 ) (8 ) (18 ) (17 )

(17)

 
Other client assets   15     14     (3 )   39     (10 )
Total AUS net inflows / (outflows) 8

(10)

13 (11 ) 21

(10)

(27 )
 
Net market appreciation / (depreciation) 6 22 17 49 5
         
Balance, end of period $ 965   $ 951   $ 895   $ 965   $ 895  
 

Footnotes

(1) ROE is computed by dividing net earnings (or annualized net earnings for annualized ROE) applicable to common shareholders by average monthly common shareholders’ equity. The table below presents the firm’s average common shareholders’ equity:
 
                                                                Average for the  
Year Ended         Three Months Ended
Unaudited, in millions                                                          

  December 31, 2012  

         

  December 31, 2012  

 
Total shareholders' equity

$

72,530 $

74,767

Preferred stock                                                           (4,392 )           (5,988 )
Common shareholders’ equity                                                        

$

68,138           $ 68,779  
 

(2)

 

Thomson Reuters – January 1, 2012 through December 31, 2012.

 

(3)

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 and tangible book value per common share are meaningful because they are measures that the firm and investors use to assess capital adequacy. Tangible common shareholders’ equity and tangible book value per common share are non-GAAP measures and may not be comparable to similar non-GAAP measures used by other companies. The table below presents the reconciliation of total shareholders' equity to tangible common shareholders' equity:

 
                                                                                                      As of
Unaudited, in millions                                                                                                

  December 31, 2012  

Total shareholders' equity $

75,716

Preferred stock                                                                                                 (6,200 )
Common shareholders’ equity

69,516

Goodwill and identifiable intangible assets                                                                                                 (5,099 )
Tangible common shareholders’ equity                                                                                               $ 64,417  
 

(4)

 

The firm’s global core excess represents a pool of excess liquidity consisting of unencumbered, highly liquid securities and cash. For a further discussion of the firm's global core excess liquidity pool, see “Liquidity Risk Management” in Part I, Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2012.

 

(5)

Represents a preliminary estimate as of the date of this earnings release and may be revised in the firm’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

(6)

The Tier 1 capital ratio equals Tier 1 capital divided by risk-weighted assets. The firm’s risk-weighted assets under the Board of Governors of the Federal Reserve System’s risk-based capital requirements (Basel 1) were approximately $400 billion as of December 31, 2012. For a further discussion of the firm's capital ratios, see “Equity Capital” in Part I, Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2012.

 

(7)

The Tier 1 common ratio equals Tier 1 common capital divided by risk-weighted assets. As of December 31, 2012, Tier 1 common capital was $58.05 billion, consisting of Tier 1 capital of $66.98 billion less preferred stock of $6.20 billion and junior subordinated debt issued to trusts of $2.73 billion. Management believes that the Tier 1 common ratio is meaningful because it is one of the measures that the firm and investors use to assess capital adequacy. The Tier 1 common ratio is a non-GAAP measure and may not be comparable to similar non-GAAP measures used by other companies. For a further discussion of the firm's capital ratios, see “Equity Capital” in Part I, Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2012.

 

(8)

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.

 

(9)

Assets under supervision include assets under management and other client assets. Assets under management include client assets where the firm earns a fee for managing assets on a discretionary basis. Other client assets include client assets invested with third party managers, private bank deposits and assets related to advisory relationships where the firm earns a fee for advisory and other services.

 

(10)

Includes $34 billion of fixed income asset inflows in connection with the firm’s acquisition of Dwight Asset Management Company LLC, including $17 billion in assets under management and $17 billion in other client assets, for the year ended December 31, 2012. Includes $5 billion of fixed income and equity asset outflows in connection with the firm’s liquidation of Goldman Sachs Asset Management Korea Co., Ltd. (formerly known as Macquarie – IMM Investment Management), all related to assets under management, for both the three months and the year ended December 31, 2012.

 

(11)

Includes employees, consultants and temporary staff.

 

(12)

The remaining share authorization represents the shares that may be repurchased under the repurchase program approved by the Board of Directors. As disclosed in “Note 19. Shareholders’ Equity” in Part I, Item 1 “Financial Statements” in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2012, share repurchases require approval by the Board of Governors of the Federal Reserve System.

 

(13)

Includes net revenues related to reinsurance of $1.08 billion and $880 million for the years ended December 31, 2012 and December 31, 2011, respectively, and $317 million, $297 million and $158 million for the three months ended December 31, 2012, September 30, 2012 and December 31, 2011, respectively.

 

(14)

Includes a gain of approximately $500 million on the sale of the firm’s hedge fund administration business.

 

(15)

Unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents are treated as a separate class of securities in calculating earnings per common share. The impact of applying this methodology was a reduction in basic earnings per common share of $0.07 for both the years ended December 31, 2012 and December 31, 2011, $0.01 for the three months ended December 31, 2012 and $0.02 for both the three months ended September 30, 2012 and December 31, 2011.

 

(16)

VaR is the potential loss in value of the firm’s inventory positions due to adverse market movements over a one-day time horizon with a 95% confidence level. Diversification effect equals the difference between total VaR and the sum of the VaRs for the four risk categories. For a further discussion of VaR and the diversification effect, see “Market Risk Management” in Part I, Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the firm's Quarterly Report on Form 10-Q for the period ended September 30, 2012.

 

(17)

Includes $6 billion of asset inflows across all asset classes in connection with the firm’s acquisitions of Goldman Sachs Australia Pty Ltd and Benchmark Asset Management Company Private Limited.





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