Goldman Sachs 2002 Annual Report Download - page 34

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32 G O L D M A N SA CH S 2002 AN N UA L R EPO RT
Financial Overview
The following table sets forth an overview of our financial results:
FINANCIAL OVERVIEW YEAR ENDED NOVEMBER
($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2002 2001 2000(1)
Net revenues $13,986 $15,811 $16,590
Pre-tax earnings 3,253 3,696 5,020
Net earnings 2,114 2,310 3,067
Diluted earnings per share 4.03 4.26 6.00
Return on average shareholders’ equity(2) 11.3% 13.0% 26.9%
Return on average tangible shareholders’ equity(3) 15.3% 17.8% 28.9%
(1) As part of the combination with SLK, a $702 million retention pool of restricted stock units was established for SLK employees. A charge of $290
million ($180 million after taxes) related to restricted stock units for which future service was not required as a condition to the delivery of the under-
lying shares of common stock was included in our operating results in 2000. Excluding this charge, our diluted earnings per share were $6.35.
(2) Return on average shareholders’ equity is computed by dividing net earnings by average monthly shareholders’ equity. Return on average share-
holders’ equity for 2000 excludes the charge related to our combination with SLK.
(3) Tangible shareholders’ equity equals total shareholders’ equity less goodwill and identifiable intangible assets. We believe that return on average
tangible shareholders’ equity is a meaningful measure of our financial performance because it reflects the return on the equity deployed in our
businesses. Return on average tangible shareholders’ equity is computed by dividing net earnings by average monthly tangible shareholders’
equity. Return on average tangible shareholders’ equity for 2000 excludes the charge related to our combination with SLK. The following table
sets forth the reconciliation of average shareholders’ equity to average tangible shareholders’ equity:
YEAR ENDED NOVEMBER
(IN MILLIONS) 2002 2001 2000
Average shareholders’ equity $18,659 $17,704 $12,078
Less: Average goodwill and identifiable intangible assets 4,837 4,727 818
Average tangible shareholders’ equity $13,822 $12,977 $11,260
The following table sets forth the net revenues, operating expenses and pre-tax earnings of our segments:
OPERATING RESULTS BY SEGMENT
YEAR ENDED NOVEMBER
(IN MILLIONS) 2002 2001 2000
Investment Banking Net revenues $ 2,830 $ 3,836 $ 5,371
Operating expenses 2,454 3,117 3,645
Pre-tax earnings $ 376 $ 719 $ 1,726
Trading and Principal Net revenues $ 5,249 $ 6,349 $ 6,627
Investments Operating expenses 4,273 5,134 4,199
Pre-tax earnings $ 976 $ 1,215 $ 2,428
Asset Management and Net revenues $ 5,907 $ 5,626 $ 4,592
Securities Services Operating expenses 3,794 3,501 3,008
Pre-tax earnings $ 2,113 $ 2,125 $ 1,584
Total Net revenues $13,986 $15,811 $16,590
Operating expenses(1) 10,733 12,115 11,570
Pre-tax earnings $ 3,253 $ 3,696 $ 5,020
(1) Includes the following expenses that have not been allocated to our segments: (i) amortization of employee initial public offering awards of
$212 million, $363 million and $428 million for the years ended November 2002, November 2001 and November 2000, respectively, and (ii) nonrecurring
acquisition awards of $290 million related to our combination with SLK for the year ended November 2000.
Managem ent’s D iscussion and A nalysis