Goldman Sachs 2012 Annual Report Download - page 53

Management’s Discussion and Analysis
Segment Operating Results
The table below presents the net revenues, operating expenses and pre-tax earnings of our segments.
Year Ended December
in millions 2012 2011 2010
Investment Banking Net revenues $ 4,926 $ 4,355 $ 4,810
Operating expenses 3,330 2,995 3,459
Pre-tax earnings $ 1,596 $ 1,360 $ 1,351
Institutional Client Services Net revenues $18,124 $17,280 $21,796
Operating expenses 12,480 12,837 14,994
Pre-tax earnings $ 5,644 $ 4,443 $ 6,802
Investing & Lending Net revenues $ 5,891 $ 2,142 $ 7,541
Operating expenses 2,666 2,673 3,361
Pre-tax earnings/(loss) $ 3,225 $ (531) $ 4,180
Investment Management Net revenues $ 5,222 $ 5,034 $ 5,014
Operating expenses 4,294 4,020 4,082
Pre-tax earnings $ 928 $ 1,014 $ 932
Total Net revenues $34,163 $28,811 $39,161
Operating expenses 22,956 22,642 26,269
Pre-tax earnings $11,207 $ 6,169 $12,892
Total operating expenses in the table above include the
following expenses that have not been allocated to
our segments:
‰charitable contributions of $169 million, $103 million
and $345 million for the years ended December 2012,
December 2011 and December 2010, respectively; and
‰real estate-related exit costs of $17 million, $14 million
and $28 million for the years ended December 2012,
December 2011 and December 2010, respectively. Real
estate-related exit costs are included in “Depreciation and
amortization” and “Occupancy” in the consolidated
statements of earnings.
Operating expenses related to net provisions for litigation
and regulatory proceedings, previously not allocated to our
segments, have now been allocated. This allocation is
consistent with the manner in which management currently
views the performance of our segments. Reclassifications
have been made to previously reported segment amounts to
conform to the current presentation.
Net revenues in our segments include allocations of interest
income and interest expense to specific securities,
commodities and other positions in relation to the cash
generated by, or funding requirements of, such underlying
positions. See Note 25 to the consolidated financial
statements for further information about our
business segments.
The cost drivers of Goldman Sachs taken as a whole —
compensation, headcount and levels of business activity —
are broadly similar in each of our business segments.
Compensation and benefits expenses within our segments
reflect, among other factors, the overall performance of
Goldman Sachs as well as the performance of individual
businesses. Consequently, pre-tax margins in one segment
of our business may be significantly affected by the
performance of our other business segments. A discussion
of segment operating results follows.
Goldman Sachs 2012 Annual Report 51