Delaware | No. 001-14965 | No. 13-4019460 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
200 West Street New York, New York |
10282 |
|
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition. | ||||||||
Item 8.01 Other Events. | ||||||||
Item 9.01 Financial Statements and Exhibits. | ||||||||
Signature | ||||||||
EX-99.1: PRESS RELEASE |
Item 2.02 | Results of Operations and Financial Condition. |
Item 8.01 | Other Events. |
- 2 -
- 3 -
- 4 -
| Total assets (8) were $933 billion as of March 31, 2011, compared with $911 billion as of December 31, 2010. |
| Level 3 assets (8) were $46 billion as of March 31, 2011 (compared with $45
billion as of December 31, 2010) and represented 4.9% of total
assets. |
| The firms global core excess liquidity (9) was $171 billion as of March 31,
2011 and averaged $168 billion for the first quarter of 2011, compared with an average of $170
billion for the fourth quarter of 2010. |
- 5 -
- 6 -
Three Months Ended | % Change From | |||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Investment Banking |
||||||||||||||||||||
Financial Advisory |
$ | 357 | $ | 628 | $ | 464 | (43 | )% | (23 | )% | ||||||||||
Equity underwriting |
426 | 555 | 372 | (23 | ) | 15 | ||||||||||||||
Debt underwriting |
486 | 324 | 367 | 50 | 32 | |||||||||||||||
Total Underwriting |
912 | 879 | 739 | 4 | 23 | |||||||||||||||
Total Investment Banking |
1,269 | 1,507 | 1,203 | (16 | ) | 5 | ||||||||||||||
Institutional Client Services |
||||||||||||||||||||
Fixed Income, Currency and Commodities Client Execution |
4,325 | 1,636 | 6,017 | 164 | (28 | ) | ||||||||||||||
Equities client execution |
979 | 772 | 1,287 | 27 | (24 | ) | ||||||||||||||
Commissions and fees |
971 | 863 | 844 | 13 | 15 | |||||||||||||||
Securities services |
372 | 368 | 359 | 1 | 4 | |||||||||||||||
Total Equities |
2,322 | 2,003 | 2,490 | 16 | (7 | ) | ||||||||||||||
Total Institutional Client Services |
6,647 | 3,639 | 8,507 | 83 | (22 | ) | ||||||||||||||
Investing & Lending |
||||||||||||||||||||
ICBC |
316 | 55 | (222 | ) | N.M. | N.M. | ||||||||||||||
Equity securities (excluding ICBC) |
1,054 | 1,066 | 847 | (1 | ) | 24 | ||||||||||||||
Debt securities and loans |
1,024 | 537 | 1,130 | 91 | (9 | ) | ||||||||||||||
Other (10) |
311 | 330 | 215 | (6 | ) | 45 | ||||||||||||||
Total Investing & Lending |
2,705 | 1,988 | 1,970 | 36 | 37 | |||||||||||||||
Investment Management |
||||||||||||||||||||
Management and other fees |
1,048 | 1,057 | 932 | (1 | ) | 12 | ||||||||||||||
Incentive fees |
74 | 310 | 26 | (76 | ) | 185 | ||||||||||||||
Transaction revenues |
151 | 141 | 137 | 7 | 10 | |||||||||||||||
Total Investment Management |
1,273 | 1,508 | 1,095 | (16 | ) | 16 | ||||||||||||||
Total net revenues |
$ | 11,894 | $ | 8,642 | $ | 12,775 | 38 | (7 | ) | |||||||||||
- 7 -
Three Months Ended | % Change From | |||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Revenues |
||||||||||||||||||||
Investment banking |
$ | 1,269 | $ | 1,507 | $ | 1,203 | (16 | )% | 5 | % | ||||||||||
Investment management |
1,174 | 1,415 | 1,008 | (17 | ) | 16 | ||||||||||||||
Commissions and fees |
1,019 | 904 | 880 | 13 | 16 | |||||||||||||||
Market making |
4,462 | 1,594 | 6,385 | 180 | (30 | ) | ||||||||||||||
Other principal transactions |
2,612 | 1,884 | 1,881 | 39 | 39 | |||||||||||||||
Total non-interest revenues |
10,536 | 7,304 | 11,357 | 44 | (7 | ) | ||||||||||||||
Interest income |
3,107 | 3,069 | 3,001 | 1 | 4 | |||||||||||||||
Interest expense |
1,749 | 1,731 | 1,583 | 1 | 10 | |||||||||||||||
Net interest income |
1,358 | 1,338 | 1,418 | 1 | (4 | ) | ||||||||||||||
Net revenues, including net interest income |
11,894 | 8,642 | 12,775 | 38 | (7 | ) | ||||||||||||||
Operating expenses |
||||||||||||||||||||
Compensation and benefits |
5,233 | 2,253 | 5,493 | 132 | (5 | ) | ||||||||||||||
U.K. bank payroll tax |
| (135 | ) | | N.M. | | ||||||||||||||
Brokerage, clearing, exchange and distribution fees |
620 | 578 | 562 | 7 | 10 | |||||||||||||||
Market development |
179 | 175 | 110 | 2 | 63 | |||||||||||||||
Communications and technology |
198 | 204 | 176 | (3 | ) | 13 | ||||||||||||||
Depreciation and amortization |
590 | 725 | 372 | (19 | ) | 59 | ||||||||||||||
Occupancy |
267 | 259 | 256 | 3 | 4 | |||||||||||||||
Professional fees |
233 | 262 | 182 | (11 | ) | 28 | ||||||||||||||
Other expenses |
534 | 847 | 465 | (37 | ) | 15 | ||||||||||||||
Total non-compensation expenses |
2,621 | 3,050 | 2,123 | (14 | ) | 23 | ||||||||||||||
Total operating expenses |
7,854 | 5,168 | 7,616 | 52 | 3 | |||||||||||||||
Pre-tax earnings |
4,040 | 3,474 | 5,159 | 16 | (22 | ) | ||||||||||||||
Provision for taxes |
1,305 | 1,087 | 1,703 | 20 | (23 | ) | ||||||||||||||
Net earnings |
2,735 | 2,387 | 3,456 | 15 | (21 | ) | ||||||||||||||
Preferred stock dividends |
1,827 | 160 | 160 | N.M. | N.M. | |||||||||||||||
Net earnings applicable to common shareholders |
$ | 908 | $ | 2,227 | $ | 3,296 | (59 | ) | (72 | ) | ||||||||||
Earnings per common share |
||||||||||||||||||||
Basic (11) |
$ | 1.66 | $ | 4.10 | $ | 6.02 | (60 | )% | (72 | )% | ||||||||||
Diluted |
1.56 | 3.79 | 5.59 | (59 | ) | (72 | ) | |||||||||||||
Average common shares outstanding |
||||||||||||||||||||
Basic |
540.6 | 541.0 | 546.0 | | (1 | ) | ||||||||||||||
Diluted |
583.0 | 587.5 | 590.0 | (1 | ) | (1 | ) | |||||||||||||
Selected Data |
||||||||||||||||||||
Total staff at period end (12) |
35,400 | 35,700 | 33,100 | (1 | ) | 7 | ||||||||||||||
Total staff at period end including consolidated entities held for
investment purposes (13) |
38,300 | 38,700 | 38,500 | (1 | ) | (1 | ) |
- 8 -
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||||||
2011 | 2010 | 2010 | ||||||||||||||||||
Risk Categories |
||||||||||||||||||||
Interest rates |
$ | 87 | $ | 86 | $ | 109 | ||||||||||||||
Equity prices |
49 | 65 | 88 | |||||||||||||||||
Currency rates |
24 | 32 | 35 | |||||||||||||||||
Commodity prices |
37 | 23 | 49 | |||||||||||||||||
Diversification effect (15) |
(84 | ) | (86 | ) | (120 | ) | ||||||||||||||
Total |
$ | 113 | $ | 120 | $ | 161 | ||||||||||||||
Assets Under Management (16) $ in billions |
||||||||||||||||||||
As of | % Change From | |||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Asset Class |
||||||||||||||||||||
Alternative investments |
$ | 151 | $ | 148 | $ | 147 | 2 | % | 3 | % | ||||||||||
Equity |
150 | 144 | 150 | 4 | | |||||||||||||||
Fixed income |
338 | 340 | 324 | (1 | ) | 4 | ||||||||||||||
Total non-money market assets |
639 | 632 | 621 | 1 | 3 | |||||||||||||||
Money markets |
201 | 208 | 219 | (3 | ) | (8 | ) | |||||||||||||
Total assets under management |
$ | 840 | $ | 840 | $ | 840 | | | ||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||||||
2011 | 2010 | 2010 | ||||||||||||||||||
Balance, beginning of period |
$ | 840 | $ | 823 | $ | 871 | ||||||||||||||
Net inflows / (outflows) |
||||||||||||||||||||
Alternative investments |
| (2 | ) | 1 | ||||||||||||||||
Equity |
| (2 | ) | (2 | ) | |||||||||||||||
Fixed income |
(5 | ) | | 7 | ||||||||||||||||
Total non-money market net inflows / (outflows) |
(5 | ) | (4 | ) | 6 | |||||||||||||||
Money markets |
(7 | ) | 9 | (45 | ) | |||||||||||||||
Total net inflows / (outflows) |
(12 | ) | 5 | (39 | ) | |||||||||||||||
Net market appreciation / (depreciation) |
12 | 12 | 8 | |||||||||||||||||
Balance, end of period |
$ | 840 | $ | 840 | $ | 840 | ||||||||||||||
- 9 -
(1) | Annualized ROE is computed by dividing annualized net earnings applicable to common
shareholders by average monthly common shareholders equity. The impact of the $1.64 billion
Series G Preferred Stock dividend was not annualized in the calculation of
annualized net earnings applicable to common shareholders as this amount has no impact on
other quarters in the year. The table below presents the firms average common shareholders
equity: |
Average for the | ||||
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited, | ||||
$ in millions) | ||||
Total shareholders equity |
$ | 76,052 | ||
Preferred stock |
(5,993 | ) | ||
Common shareholders equity |
$ | 70,059 | ||
(2) | Management believes that presenting the firms results excluding the impact of the $1.64
billion preferred dividend related to the redemption of the firms Series G
Preferred Stock (calculated as the difference between the carrying value and the redemption
value of the preferred stock) is meaningful because it increases the comparability of
period-to-period results. The tables below present the calculation of net earnings applicable
to common shareholders, diluted earnings per common share and average common shareholders
equity excluding the impact of this dividend: |
For the | ||||
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited, in millions, | ||||
except per share | ||||
amounts) | ||||
Net earnings applicable to common shareholders |
$ | 908 | ||
Impact of the Series G Preferred Stock dividend |
1,643 | |||
Net earnings applicable to common shareholders, excluding the impact
of the Series G Preferred Stock dividend |
$ | 2,551 | ||
Divided by: average diluted common shares outstanding |
583.0 | |||
Diluted earnings per common share, excluding the impact of the
Series G Preferred Stock dividend |
$ | 4.38 | ||
Average for the | ||||
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited, | ||||
$ in millions) | ||||
Total shareholders equity |
$ | 76,052 | ||
Preferred stock |
(5,993 | ) | ||
Common shareholders equity |
70,059 | |||
Impact of the Series G Preferred Stock dividend |
411 | |||
Common shareholders equity, excluding the impact of the Series G Preferred Stock dividend |
$ | 70,470 | ||
(3) | The firms investment banking transaction backlog represents an estimate of the firms
future net revenues from investment banking transactions where management believes that
future revenue realization is more likely than not. |
|
(4) | The effective income tax rate for the first quarter of 2011 was 32.3%, compared with 32.7%
for 2010, which excluded the impact of the $465 million U.K. bank payroll tax and the $550
million SEC settlement, substantially all of which was non-deductible. Management believes
that presenting the firms effective income tax rate for 2010 excluding the impact of these
items is meaningful as excluding them increases the comparability of period-to-period
results. Including the impact of these items, the effective income tax rate was 35.2% for
2010. The table below presents the calculation of the effective income tax rate excluding the
impact of these amounts: |
For the | ||||||||||||
Year Ended December 31, 2010 | ||||||||||||
Pre-tax | Provision | Effective income | ||||||||||
earnings | for taxes | tax rate | ||||||||||
(unaudited, $ in millions) | ||||||||||||
As reported |
$ | 12,892 | $ | 4,538 | 35.2 | % | ||||||
Add back: |
||||||||||||
Impact of the U.K. bank payroll tax |
465 | | ||||||||||
Impact of the SEC settlement |
550 | 6 | ||||||||||
As adjusted |
$ | 13,907 | $ | 4,544 | 32.7 | % | ||||||
- 10 -
(5) | 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. In addition, management believes that presenting the change in book
value and tangible book value per common share excluding the impact of the $1.64 billion
Series G Preferred Stock dividend provides a meaningful period-to-period comparison
of these measures. The table below presents the reconciliation of total shareholders equity
to tangible common shareholders equity, as well as the calculation of common shareholders
equity and tangible common shareholders equity excluding the impact of the $1.64 billion
Series G Preferred Stock dividend: |
As of March 31, 2011 | ||||||||||||
Add back: | Excluding the | |||||||||||
impact of the | impact of the | |||||||||||
Series G Preferred Stock | Series G Preferred Stock | |||||||||||
As reported | dividend | dividend | ||||||||||
(unaudited, $ in millions) | ||||||||||||
Total shareholders equity |
$ | 72,469 | $ | 1,643 | $ | 74,112 | ||||||
Preferred stock |
(3,100 | ) | | (3,100 | ) | |||||||
Common shareholders equity |
69,369 | 1,643 | 71,012 | |||||||||
Goodwill and identifiable intangible assets |
(5,238 | ) | | (5,238 | ) | |||||||
Tangible common shareholders equity |
$ | 64,131 | $ | 1,643 | $ | 65,774 | ||||||
(6) | The Tier 1 capital ratio equals Tier 1 capital divided by risk-weighted assets. The firms
risk-weighted assets under Basel 1 were approximately
$456 billion as of
March 31, 2011. This
ratio represents a preliminary estimate as of the date of this Report on Form 8-K and may be
revised in the firms Quarterly Report on Form 10-Q for the period ended March 31, 2011. For
a further discussion of the firms capital ratios, see Equity Capital in Part II, Item 7
Managements Discussion and Analysis of Financial Condition and Results of Operations in
the firms Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(7) | The Tier 1 common ratio equals Tier 1 common capital divided by risk-weighted assets. As of
March 31, 2011, Tier 1 common capital was $58.3 billion,
consisting of Tier 1 capital of
$66.4 billion less preferred stock of $3.1 billion and junior subordinated debt issued to
trusts of $5.0 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.
This ratio represents a preliminary estimate as of the date of this Report on Form 8-K and may
be revised in the firms Quarterly Report on Form 10-Q for the period ended March 31, 2011.
For a further discussion of the firms capital ratios, see Equity Capital in Part II, Item
7 Managements Discussion and Analysis of Financial Condition and Results of Operations in
the firms Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(8) | This amount represents a preliminary estimate as of the date of this Report on Form 8-K and
may be revised in the firms Quarterly Report on Form 10-Q for the period ended March 31,
2011. |
|
(9) | The firms global core excess represents a pool of excess liquidity consisting of
unencumbered, highly liquid securities and cash. These amounts represent preliminary
estimates as of the date of this Report on Form 8-K and may be revised in the firms Quarterly
Report on Form 10-Q for the period ended March 31, 2011. For a further discussion of the
firms global core excess liquidity pool, see Liquidity Risk in Part II, Item 7
Managements Discussion and Analysis of Financial Condition and Results of Operations in
the firms Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(10) | Primarily includes net revenues related to the firms consolidated entities held for
investment purposes. |
|
(11) | 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 to basic earnings
per common share of $0.02 for each of the three months ended March 31, 2011, December 31,
2010 and March 31, 2010. |
|
(12) | Includes employees, consultants and temporary staff. |
|
(13) | Compensation and benefits and non-compensation expenses related to consolidated
entities held for investment purposes are included in their respective line items in the
consolidated statements of earnings. |
|
(14) | VaR is the potential loss in value of the firms inventory positions due to adverse market
movements over a one-day time horizon with a 95% confidence level. For a further discussion
of VaR, see Market Risk Management in Part II, Item 7 Managements Discussion and Analysis
of Financial Condition and Results of Operations in the firms Annual Report on Form 10-K
for the year ended December 31, 2010. |
|
(15) | 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. |
|
(16) | Assets under management include only those client assets where the firm earns a fee for
managing assets on a discretionary basis. |
- 11 -
Item 9.01 | Financial Statements and Exhibits. |
99.1 | Press release of Group Inc. dated April 19, 2011 containing financial
information for its first quarter ended March 31, 2011. |
- 12 -
THE GOLDMAN SACHS GROUP, INC. (Registrant) |
|||||
Date: April 19, 2011 | By: | /s/ David A. Viniar | |||
Name: | David A. Viniar | ||||
Title: | Chief Financial Officer |
- 13 -
![]() |
||||
GOLDMAN SACHS REPORTS FIRST
QUARTER EARNINGS PER COMMON SHARE OF $1.56 |
||||
EXCLUDING A PREFERRED DIVIDEND OF $1.64 BILLION RELATED TO THE REDEMPTION OF THE FIRMS SERIES G PREFERRED STOCK, EARNINGS PER COMMON SHARE WERE $4.38 (1) |
| The firm ranked first in worldwide equity and equity-related offerings, common stock
offerings and initial public offerings for the
year-to-date.
(3) |
|
| Institutional Client Services generated net revenues of $6.65 billion, including Fixed
Income, Currency and Commodities Client Execution net revenues of $4.33 billion, which
reflected improved client activity levels. |
|
| During the quarter, the firm gave notice of redemption for the firms Series G Preferred
Stock held by Berkshire Hathaway. Despite the impact of the preferred dividend of
$1.64 billion related to the redemption, both book value per common share and tangible book
value per common share (4) increased slightly during the quarter. Excluding the
impact of this preferred dividend, both book value per common share and tangible
book value per common share (4) increased approximately 3% (4) during
the quarter. |
Media Relations: Lucas van Praag 212-902-5400 | | | Investor Relations: Dane E. Holmes 212-902-0300 |
- 2 -
- 3 -
| Total assets (9) were $933 billion as of March 31, 2011, compared with $911 billion as of December 31, 2010. | |
| Level 3 assets (9) were $46 billion as of March 31, 2011 (compared
with $45 billion as of December 31, 2010) and represented
4.9% of total assets. |
|
| The firms global core excess liquidity (10) was $171 billion as of
March 31, 2011 and averaged $168 billion for the first quarter of 2011, compared with an
average of $170 billion for the fourth quarter of 2010. |
- 4 -
- 5 -
Three Months Ended | % Change From | |||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Investment Banking |
||||||||||||||||||||
Financial Advisory |
$ | 357 | $ | 628 | $ | 464 | (43 | )% | (23 | )% | ||||||||||
Equity underwriting |
426 | 555 | 372 | (23 | ) | 15 | ||||||||||||||
Debt underwriting |
486 | 324 | 367 | 50 | 32 | |||||||||||||||
Total Underwriting |
912 | 879 | 739 | 4 | 23 | |||||||||||||||
Total Investment Banking |
1,269 | 1,507 | 1,203 | (16 | ) | 5 | ||||||||||||||
Institutional Client Services |
||||||||||||||||||||
Fixed Income, Currency and Commodities Client Execution |
4,325 | 1,636 | 6,017 | 164 | (28 | ) | ||||||||||||||
Equities client execution |
979 | 772 | 1,287 | 27 | (24 | ) | ||||||||||||||
Commissions and fees |
971 | 863 | 844 | 13 | 15 | |||||||||||||||
Securities services |
372 | 368 | 359 | 1 | 4 | |||||||||||||||
Total Equities |
2,322 | 2,003 | 2,490 | 16 | (7 | ) | ||||||||||||||
Total Institutional Client Services |
6,647 | 3,639 | 8,507 | 83 | (22 | ) | ||||||||||||||
Investing & Lending |
||||||||||||||||||||
ICBC |
316 | 55 | (222 | ) | N.M. | N.M. | ||||||||||||||
Equity securities (excluding ICBC) |
1,054 | 1,066 | 847 | (1 | ) | 24 | ||||||||||||||
Debt securities and loans |
1,024 | 537 | 1,130 | 91 | (9 | ) | ||||||||||||||
Other (11) |
311 | 330 | 215 | (6 | ) | 45 | ||||||||||||||
Total Investing & Lending |
2,705 | 1,988 | 1,970 | 36 | 37 | |||||||||||||||
Investment Management |
||||||||||||||||||||
Management and other fees |
1,048 | 1,057 | 932 | (1 | ) | 12 | ||||||||||||||
Incentive fees |
74 | 310 | 26 | (76 | ) | 185 | ||||||||||||||
Transaction revenues |
151 | 141 | 137 | 7 | 10 | |||||||||||||||
Total Investment Management |
1,273 | 1,508 | 1,095 | (16 | ) | 16 | ||||||||||||||
Total net revenues |
$ | 11,894 | $ | 8,642 | $ | 12,775 | 38 | (7 | ) | |||||||||||
- 6 -
Three Months Ended | % Change From | |||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Revenues |
||||||||||||||||||||
Investment banking |
$ | 1,269 | $ | 1,507 | $ | 1,203 | (16 | )% | 5 | % | ||||||||||
Investment management |
1,174 | 1,415 | 1,008 | (17 | ) | 16 | ||||||||||||||
Commissions and fees |
1,019 | 904 | 880 | 13 | 16 | |||||||||||||||
Market making |
4,462 | 1,594 | 6,385 | 180 | (30 | ) | ||||||||||||||
Other principal transactions |
2,612 | 1,884 | 1,881 | 39 | 39 | |||||||||||||||
Total non-interest revenues |
10,536 | 7,304 | 11,357 | 44 | (7 | ) | ||||||||||||||
Interest income |
3,107 | 3,069 | 3,001 | 1 | 4 | |||||||||||||||
Interest expense |
1,749 | 1,731 | 1,583 | 1 | 10 | |||||||||||||||
Net interest income |
1,358 | 1,338 | 1,418 | 1 | (4 | ) | ||||||||||||||
Net revenues, including net interest income |
11,894 | 8,642 | 12,775 | 38 | (7 | ) | ||||||||||||||
Operating expenses |
||||||||||||||||||||
Compensation and benefits |
5,233 | 2,253 | 5,493 | 132 | (5 | ) | ||||||||||||||
U.K. bank payroll tax |
| (135 | ) | | N.M. | | ||||||||||||||
Brokerage, clearing, exchange and distribution fees |
620 | 578 | 562 | 7 | 10 | |||||||||||||||
Market development |
179 | 175 | 110 | 2 | 63 | |||||||||||||||
Communications and technology |
198 | 204 | 176 | (3 | ) | 13 | ||||||||||||||
Depreciation and amortization |
590 | 725 | 372 | (19 | ) | 59 | ||||||||||||||
Occupancy |
267 | 259 | 256 | 3 | 4 | |||||||||||||||
Professional fees |
233 | 262 | 182 | (11 | ) | 28 | ||||||||||||||
Other expenses |
534 | 847 | 465 | (37 | ) | 15 | ||||||||||||||
Total non-compensation expenses |
2,621 | 3,050 | 2,123 | (14 | ) | 23 | ||||||||||||||
Total operating expenses |
7,854 | 5,168 | 7,616 | 52 | 3 | |||||||||||||||
Pre-tax earnings |
4,040 | 3,474 | 5,159 | 16 | (22 | ) | ||||||||||||||
Provision for taxes |
1,305 | 1,087 | 1,703 | 20 | (23 | ) | ||||||||||||||
Net earnings |
2,735 | 2,387 | 3,456 | 15 | (21 | ) | ||||||||||||||
Preferred stock dividends |
1,827 | 160 | 160 | N.M. | N.M. | |||||||||||||||
Net earnings applicable to common shareholders |
$ | 908 | $ | 2,227 | $ | 3,296 | (59 | ) | (72 | ) | ||||||||||
Earnings per common share |
||||||||||||||||||||
Basic (12) |
$ | 1.66 | $ | 4.10 | $ | 6.02 | (60 | )% | (72 | )% | ||||||||||
Diluted |
1.56 | 3.79 | 5.59 | (59 | ) | (72 | ) | |||||||||||||
Average common shares outstanding |
||||||||||||||||||||
Basic |
540.6 | 541.0 | 546.0 | | (1 | ) | ||||||||||||||
Diluted |
583.0 | 587.5 | 590.0 | (1 | ) | (1 | ) | |||||||||||||
Selected Data |
||||||||||||||||||||
Total staff at period end (13) |
35,400 | 35,700 | 33,100 | (1 | ) | 7 | ||||||||||||||
Total staff at period end including consolidated entities held for
investment purposes (14) |
38,300 | 38,700 | 38,500 | (1 | ) | (1 | ) |
- 7 -
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||||||
2011 | 2010 | 2010 | ||||||||||||||||||
Risk Categories |
||||||||||||||||||||
Interest rates |
$ | 87 | $ | 86 | $ | 109 | ||||||||||||||
Equity prices |
49 | 65 | 88 | |||||||||||||||||
Currency rates |
24 | 32 | 35 | |||||||||||||||||
Commodity prices |
37 | 23 | 49 | |||||||||||||||||
Diversification effect (16) |
(84 | ) | (86 | ) | (120 | ) | ||||||||||||||
Total |
$ | 113 | $ | 120 | $ | 161 | ||||||||||||||
Assets Under Management (17) $ in billions |
||||||||||||||||||||
As of | % Change From | |||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Asset Class |
||||||||||||||||||||
Alternative investments |
$ | 151 | $ | 148 | $ | 147 | 2 | % | 3 | % | ||||||||||
Equity |
150 | 144 | 150 | 4 | | |||||||||||||||
Fixed income |
338 | 340 | 324 | (1 | ) | 4 | ||||||||||||||
Total non-money market assets |
639 | 632 | 621 | 1 | 3 | |||||||||||||||
Money markets |
201 | 208 | 219 | (3 | ) | (8 | ) | |||||||||||||
Total assets under management |
$ | 840 | $ | 840 | $ | 840 | | | ||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||||||
2011 | 2010 | 2010 | ||||||||||||||||||
Balance, beginning of period |
$ | 840 | $ | 823 | $ | 871 | ||||||||||||||
Net inflows / (outflows) |
||||||||||||||||||||
Alternative investments |
| (2 | ) | 1 | ||||||||||||||||
Equity |
| (2 | ) | (2 | ) | |||||||||||||||
Fixed income |
(5 | ) | | 7 | ||||||||||||||||
Total non-money market net inflows / (outflows) |
(5 | ) | (4 | ) | 6 | |||||||||||||||
Money markets |
(7 | ) | 9 | (45 | ) | |||||||||||||||
Total net inflows / (outflows) |
(12 | ) | 5 | (39 | ) | |||||||||||||||
Net market appreciation / (depreciation) |
12 | 12 | 8 | |||||||||||||||||
Balance, end of period |
$ | 840 | $ | 840 | $ | 840 | ||||||||||||||
- 8 -
(1) | Management believes that presenting the firms results excluding the impact of the $1.64
billion preferred dividend related to the redemption of the firms Series G
Preferred Stock (calculated as the difference between the carrying value and the redemption
value of the preferred stock) is meaningful because it increases the comparability of
period-to-period results. The tables below present the calculation of net earnings applicable
to common shareholders, diluted earnings per common share and average common shareholders
equity excluding the impact of this dividend: |
For the | ||||
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited, in millions, | ||||
except per share | ||||
amounts) | ||||
Net earnings applicable to common shareholders |
$ | 908 | ||
Impact of the Series G Preferred Stock dividend |
1,643 | |||
Net earnings applicable to common shareholders, excluding the impact
of the Series G Preferred Stock dividend |
$ | 2,551 | ||
Divided by: average diluted common shares outstanding |
583.0 | |||
Diluted earnings per common share, excluding the impact of the
Series G Preferred Stock dividend |
$ | 4.38 | ||
Average for the | ||||
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited, | ||||
$ in millions) | ||||
Total shareholders equity |
$ | 76,052 | ||
Preferred stock |
(5,993 | ) | ||
Common shareholders equity |
70,059 | |||
Impact of the Series G Preferred Stock dividend |
411 | |||
Common shareholders equity, excluding the impact of the Series G Preferred Stock dividend |
$ | 70,470 | ||
(2) | Annualized ROE is computed by dividing annualized net earnings applicable to common
shareholders by average monthly common shareholders equity. The impact of the $1.64 billion
Series G Preferred Stock dividend was not annualized in the calculation of
annualized net earnings applicable to common shareholders as this amount has no impact on
other quarters in the year. The table below presents the firms average common shareholders
equity: |
Average for the | ||||
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited, | ||||
$ in millions) | ||||
Total shareholders equity |
$ | 76,052 | ||
Preferred stock |
(5,993 | ) | ||
Common shareholders equity |
$ | 70,059 | ||
(3) | Thomson Reuters January 1, 2011 through March 31, 2011. | |
(4) | 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. In addition, management believes that presenting the change in book
value and tangible book value per common share excluding the impact of the $1.64 billion
Series G Preferred Stock dividend provides a meaningful period-to-period comparison
of these measures. The table below presents the reconciliation of total shareholders equity
to tangible common shareholders equity, as well as the calculation of common shareholders
equity and tangible common shareholders equity excluding the impact of the $1.64 billion
Series G Preferred Stock dividend: |
As of March 31, 2011 | ||||||||||||
Add back: | Excluding the | |||||||||||
impact of the | impact of the | |||||||||||
Series G Preferred Stock | Series G Preferred Stock | |||||||||||
As reported | dividend | dividend | ||||||||||
(unaudited, $ in millions) | ||||||||||||
Total shareholders equity |
$ | 72,469 | $ | 1,643 | $ | 74,112 | ||||||
Preferred stock |
(3,100 | ) | | (3,100 | ) | |||||||
Common shareholders equity |
69,369 | 1,643 | 71,012 | |||||||||
Goodwill and identifiable intangible assets |
(5,238 | ) | | (5,238 | ) | |||||||
Tangible common shareholders equity |
$ | 64,131 | $ | 1,643 | $ | 65,774 | ||||||
- 9 -
(5) | The firms investment banking transaction backlog represents an estimate of the firms
future net revenues from investment banking transactions where management believes that
future revenue realization is more likely than not. |
|
(6) | The effective income tax rate for the first quarter of 2011 was 32.3%, compared with 32.7%
for 2010, which excluded the impact of the $465 million U.K. bank payroll tax and the $550
million SEC settlement, substantially all of which was non-deductible. Management believes
that presenting the firms effective income tax rate for 2010 excluding the impact of these
items is meaningful as excluding them increases the comparability of period-to-period
results. Including the impact of these items, the effective income tax rate was 35.2% for
2010. The table below presents the calculation of the effective income tax rate excluding the
impact of these amounts: |
For the | ||||||||||||
Year Ended December 31, 2010 | ||||||||||||
Pre-tax | Provision | Effective income | ||||||||||
earnings | for taxes | tax rate | ||||||||||
(unaudited, $ in millions) | ||||||||||||
As reported |
$ | 12,892 | $ | 4,538 | 35.2 | % | ||||||
Add back: |
||||||||||||
Impact of the U.K. bank payroll tax |
465 | | ||||||||||
Impact of the SEC settlement |
550 | 6 | ||||||||||
As adjusted |
$ | 13,907 | $ | 4,544 | 32.7 | % | ||||||
(7) | The Tier 1 capital ratio equals Tier 1 capital divided by risk-weighted assets. The firms
risk-weighted assets under Basel 1 were approximately
$456 billion as of
March 31, 2011. This
ratio represents a preliminary estimate as of the date of this earnings release and may be
revised in the firms Quarterly Report on Form 10-Q for the period ended March 31, 2011. For
a further discussion of the firms capital ratios, see Equity Capital in Part II, Item 7
Managements Discussion and Analysis of Financial Condition and Results of Operations in
the firms Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(8) | The Tier 1 common ratio equals Tier 1 common capital divided by risk-weighted assets. As of
March 31, 2011, Tier 1 common capital was $58.3 billion,
consisting of Tier 1 capital of
$66.4 billion less preferred stock of $3.1 billion and junior subordinated debt issued to
trusts of $5.0 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.
This ratio represents a preliminary estimate as of the date of this earnings release and may
be revised in the firms Quarterly Report on Form 10-Q for the period ended March 31, 2011.
For a further discussion of the firms capital ratios, see Equity Capital in Part II, Item
7 Managements Discussion and Analysis of Financial Condition and Results of Operations in
the firms Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(9) | This amount represents a preliminary estimate as of the date of this earnings release and
may be revised in the firms Quarterly Report on Form 10-Q for the period ended March 31,
2011. |
|
(10) | The firms global core excess represents a pool of excess liquidity consisting of
unencumbered, highly liquid securities and cash. These amounts represent preliminary
estimates as of the date of this earnings release and may be revised in the firms Quarterly
Report on Form 10-Q for the period ended March 31, 2011. For a further discussion of the
firms global core excess liquidity pool, see Liquidity Risk in Part II, Item 7
Managements Discussion and Analysis of Financial Condition and Results of Operations in
the firms Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(11) | Primarily includes net revenues related to the firms consolidated entities held for
investment purposes. |
|
(12) | 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 to basic earnings
per common share of $0.02 for each of the three months ended March 31, 2011, December 31,
2010 and March 31, 2010. |
|
(13) | Includes employees, consultants and temporary staff. |
|
(14) | Compensation and benefits and non-compensation expenses related to consolidated
entities held for investment purposes are included in their respective line items in the
consolidated statements of earnings. |
|
(15) | VaR is the potential loss in value of the firms inventory positions due to adverse market
movements over a one-day time horizon with a 95% confidence level. For a further discussion
of VaR, see Market Risk Management in Part II, Item 7 Managements Discussion and Analysis
of Financial Condition and Results of Operations in the firms Annual Report on Form 10-K
for the year ended December 31, 2010. |
|
(16) | 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. |
|
(17) | Assets under management include only those client assets where the firm earns a fee for
managing assets on a discretionary basis. |
- 10 -