Goldman Sachs 2015 Annual Report Download - page 203

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 21.
Earnings Per Common Share
Basic earnings per common share (EPS) is calculated by
dividing net earnings applicable to common shareholders
by the weighted average number of common shares
outstanding. Common shares outstanding includes
common stock and RSUs for which no future service is
required as a condition to the delivery of the underlying
common stock. Diluted EPS includes the determinants of
basic EPS and, in addition, reflects the dilutive effect of the
common stock deliverable for stock options, warrants and
for RSUs for which future service is required as a condition
to the delivery of the underlying common stock.
The table below presents the computations of basic and
diluted EPS.
Year Ended December
in millions, except per share amounts 2015 2014 2013
Numerator for basic and diluted
EPS — net earnings applicable
to common shareholders $5,568 $8,077 $7,726
Denominator for basic EPS —
weighted average number
of common shares 448.9 458.9 471.3
Effect of dilutive securities:
RSUs 5.3 6.1 7.2
Stock options and warrants 4.4 8.2 21.1
Dilutive potential common shares 9.7 14.3 28.3
Denominator for diluted EPS —
weighted average number of
common shares and dilutive
potential common shares 458.6 473.2 499.6
Basic EPS $12.35 $17.55 $16.34
Diluted EPS 12.14 17.07 15.46
In the table above, unvested share-based awards that have
non-forfeitable rights to dividends or dividend equivalents
are treated as a separate class of securities in calculating
EPS. The impact of applying this methodology was a
reduction in basic EPS of $0.05 for 2015, 2014 and 2013.
The diluted EPS computations in the table above do not
include antidilutive RSUs and common shares underlying
antidilutive stock options of 6.0 million for 2015, 2014 and
2013.
Note 22.
Transactions with Affiliated Funds
The firm has formed numerous nonconsolidated investment
funds with third-party investors. As the firm generally acts
as the investment manager for these funds, it is entitled to
receive management fees and, in certain cases, advisory fees
or incentive fees from these funds. Additionally, the firm
invests alongside the third-party investors in certain funds.
The tables below present fees earned from affiliated funds,
fees receivable from affiliated funds and the aggregate
carrying value of the firm’s interests in affiliated funds.
Year Ended December
$ in millions 2015 2014 2013
Fees earned from funds $3,293 $3,232 $2,897
As of December
$ in millions 2015 2014
Fees receivable from funds $ 599 $ 724
Aggregate carrying value of interests in funds 7,768 9,099
As of December 2015 and December 2014, the firm had
outstanding guarantees on behalf of its funds of
$300 million and $304 million, respectively. This amount
primarily related to a guarantee that the firm has
voluntarily provided in connection with a financing
agreement with a third-party lender executed by one of the
firm’s real estate funds that is not covered by the Volcker
Rule. As of December 2015 and December 2014, the firm
had no outstanding loans or commitments to extend credit
to affiliated funds.
The Volcker Rule restricts the firm from providing financial
support to covered funds (as defined in the rule) after the
expiration of any applicable conformance period. As a
general matter, in the ordinary course of business, the firm
does not expect to provide additional voluntary financial
support to any covered funds but may choose to do so with
respect to funds that are not subject to the Volcker Rule;
however, in the event that such support is provided, the
amount is not expected to be material.
In addition, in the ordinary course of business, the firm may
also engage in other activities with its affiliated funds
including, among others, securities lending, trade
execution, market making, custody, and acquisition and
bridge financing. See Note 18 for the firm’s investment
commitments related to these funds.
Goldman Sachs 2015 Form 10-K 191