Goldman Sachs 10-Q

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

≤

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 27, 2009or

n

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934.

For the transition period from toCommission File Number: 001-14965

The Goldman Sachs Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware 13-4019460

(State or other jurisdiction ofincorporation or organization)(I.R.S. EmployerIdentification No.)

85 Broad Street, New York, NY 10004

(Address of principal executive offices) (Zip Code)

(212) 902-1000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

≤

Yes

n

NoIndicate by check mark whether the registrant has submitted electronically and posted on itscorporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant toRule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post such files).

n

Yes

n

NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,”“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.Large accelerated filer

≤

Accelerated filer

n

Non-accelerated filer

n

(Do not check if a smaller reporting company) Smaller reporting company

n

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).

n

Yes

≤

No

APPLICABLE ONLY TO CORPORATE ISSUERS

As of April 24, 2009, there were 503,420,969 shares of the registrant’s common stock outstanding.

THE GOLDMAN SACHS GROUP, INC.QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED MARCH 27, 2009INDEXForm 10-Q Item Number:PageNo.

PART I: FINANCIAL INFORMATIONItem 1: Financial Statements (Unaudited)Condensed Consolidated Statements of Earnings for the three months endedMarch 27, 2009 and February 29, 2008 and one month endedDecember 26, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Condensed Consolidated Statements of Financial Condition as of March 27, 2009,November 28, 2008 and December 26, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Condensed Consolidated Statements of Changes in Shareholders’ Equity for thethree months ended March 27, 2009, year ended November 28, 2008 and onemonth ended December 26, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Condensed Consolidated Statements of Cash Flows for the three months endedMarch 27, 2009 and February 29, 2008 and one month endedDecember 26, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Condensed Consolidated Statements of Comprehensive Income for the threemonths ended March 27, 2009 and February 29, 2008 and one month endedDecember 26, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Notes to Condensed Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . 7Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . 77Statistical Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78Item 2: Management’s Discussion and Analysis of Financial Condition and Results ofOperations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81Item 3: Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . 143Item 4: Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143PART II: OTHER INFORMATIONItem 1: Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144Item 2: Unregistered Sales of Equity Securities and Use of Proceeds . . . . . . . . . . . . . . . . . 146Item 6: Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481

PART I: FINANCIAL INFORMATIONItem 1: Financial Statements (Unaudited)THE GOLDMAN SACHS GROUP, INC. and SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF EARNINGS(UNAUDITED)

Three MonthsEnded MarchThree MonthsEnded FebruaryOne MonthEnded December2009 2008 2008

(in millions, except per share amounts)

Revenues

Investment banking. . . . . . . . . . . . . . . . . . . . . . . . . . $ 823 $ 1,166 $ 135Trading and principal investments . . . . . . . . . . . . . . . 5,706 4,877 (964)Asset management and securities services. . . . . . . . 989 1,341 327Total non-interest revenues . . . . . . . . . . . . . . . . . . 7,518 7,384 (502)Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,362 11,245 1,687Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,455 10,294 1,002Net interest income . . . . . . . . . . . . . . . . . . . . . . . . 1,907 951 685Net revenues, including net interest income. . . . . . 9,425 8,335 183

Operating expenses

Compensation and benefits. . . . . . . . . . . . . . . . . . . . 4,712 4,001 744Brokerage, clearing, exchange and distribution fees . . . 536 790 165Market development . . . . . . . . . . . . . . . . . . . . . . . . . 68 144 16Communications and technology. . . . . . . . . . . . . . . . 173 187 62Depreciation and amortization. . . . . . . . . . . . . . . . . . 511 170 72Amortization of identifiable intangible assets . . . . . . . 38 84 39Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 236 82Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 178 58Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382 402 203Total non-compensation expenses. . . . . . . . . . . . . 2,084 2,191 697Total operating expenses. . . . . . . . . . . . . . . . . . . . 6,796 6,192 1,441Pre-tax earnings/(loss) . . . . . . . . . . . . . . . . . . . . . . . 2,629 2,143 (1,258)Provision/(benefit) for taxes. . . . . . . . . . . . . . . . . . . . 815 632 (478)Net earnings/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,814 1,511 (780)Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . 155 44 248Net earnings/(loss) applicable to commonshareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,659 $ 1,467 $(1,028)

Earnings/(loss) per common share

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.48 $ 3.39 $ (2.15)Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.39 3.23 (2.15)

Dividends declared per common share

. . . . . . . . . $ — $ 0.35 $ 0.47

(1)

Average common shares outstanding

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477.4 432.8 485.5Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489.2 453.5 485.5

(1)

Rounded to the nearest penny. Exact dividend amount was $0.4666666 per common share and was reflective of afour-month period (December 2008 through March 2009), due to the change in the firm’s fiscal year-end.

The accompanying notes are an integral part of these condensed consolidated financial statements.2