SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
March 21, 2000
THE GOLDMAN SACHS GROUP, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE NO. 001-14965 NO. 13-4019460
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(State or Other Jurisdic- (Commission (IRS Employer
tion of Incorporation) File Number) Identification No.)
85 BROAD STREET
NEW YORK, NEW YORK 10004
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 902-1000
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On March 21, 2000, The Goldman Sachs Group, Inc. reported net earnings
of $887 million, or $1.76 per diluted share, for its fiscal first quarter ended
February 25, 2000.
BUSINESS SEGMENTS
GLOBAL CAPITAL MARKETS
Net revenues in Global Capital Markets, which includes Investment
Banking and Trading and Principal Investments, were $3.3 billion, a 30% increase
from the prior quarter and 47% above last year's first quarter.
INVESTMENT BANKING. Investment Banking generated net revenues of $1.2
billion, a 5% decrease from the record prior quarter and 37% above last year's
first quarter. Underwriting revenues increased significantly over the same
period in 1999 as strong investor demand in global equity markets continued to
create a favorable environment for new issue activity. Net revenues in the
Financial Advisory business increased 12% over the same period in 1999,
resulting from an active global mergers and acquisitions market and an increase
in the number of large transactions. Net revenue growth was particularly strong
in the high technology and communications, media and entertainment sectors as
compared with the first quarter of 1999. Net revenues increased in all major
regions compared to the first quarter of 1999.
TRADING AND PRINCIPAL INVESTMENTS. Net revenues in Trading and
Principal Investments were $2.1 billion for the quarter, significantly above
both the fourth quarter of 1999 and last year's first quarter. FICC net revenues
increased 16% compared to the first quarter of 1999, primarily due to increased
customer activity in fixed income derivatives, partially offset by a reduction
in net revenues from the firm's government bond business. Net revenues in
Equities increased substantially over the same 1999 period, primarily due to
favorable conditions in global equity markets that resulted in higher
transaction volumes in the firm's global shares businesses, particularly in
Europe, and increased customer flow in equity derivatives. Net revenues in
Principal Investments increased substantially over the same 1999 period,
primarily due to mark-to-market gains on certain of the firm's merchant banking
investments in the high technology and telecommunications sectors.
ASSET MANAGEMENT AND SECURITIES SERVICES
Net revenues in Asset Management and Securities Services were $1.2
billion, an increase of 27% over the fourth quarter and 59% above the same prior
year period. Asset Management revenues increased 51% over last year's first
quarter, primarily reflecting a 33% increase in average assets under management
as well as favorable changes in the composition of assets managed. Securities
Services net revenues were 15% higher than the same 1999 period, primarily due
to growth in the firm's prime brokerage business and increased customer balances
in securities lending and margin lending. Commissions nearly doubled compared to
the same prior year period as healthy global equity markets led worldwide
transaction volumes to record levels. Revenues from the increased share of gains
from the firm's merchant banking funds also contributed to the growth in
Commissions.
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EXPENSES
Operating expenses were $3.0 billion for the quarter. The ratio of
compensation and benefits to net revenues was 50% for the first quarter of 2000.
Non-compensation-related expenses rose 23% compared to the same period in 1999,
primarily due to costs associated with higher employment levels, global
expansion and growth in business activity. The firm's effective tax rate for the
first quarter was 40%.
CAPITAL
As of February 25, 2000, total capital was $33.8 billion, consisting of
$11.1 billion in stockholders' equity and $22.7 billion in long-term debt. Book
value per share was $22.90, based on common shares outstanding, including
restricted stock units granted to employees with no future service requirements,
of 484,613,335 at period end.
DIVIDEND
On March 20, 2000, the Board of Directors of The Goldman Sachs Group,
Inc. (the "Board") declared a dividend of $0.12 per share to be paid on May 25,
2000, to voting and nonvoting common shareholders of record on April 24, 2000.
SHARE REPURCHASE PROGRAM
On March 20, 2000, the Board approved a share repurchase program
authorizing the repurchase of up to 15 million shares of common stock of The
Goldman Sachs Group, Inc. The repurchase program will be effected from time to
time, depending on market conditions, through open market purchases and
privately negotiated transactions.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this Current Report on Form 8-K may constitute
"forward-looking statements". These forward-looking statements represent only
the firm's belief regarding future events, many of which, by their nature, are
inherently uncertain and outside of its control. For a discussion of some of the
risks and factors that could affect the firm's future results, see "Business -
Certain Factors That May Affect Our Business" in the firm's Annual Report on
Form 10-K for the fiscal year ended November 26, 1999.
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<TABLE>
<CAPTION>
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENT NET REVENUES
(unaudited)
($ in millions)
THREE MONTHS ENDED CHANGE FROM
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FEBRUARY 25, NOVEMBER 26, FEBRUARY 26, NOVEMBER 26, FEBRUARY 26,
2000 1999 1999 1999 1999
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<S> <C> <C> <C> <C> <C>
Global Capital Markets
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Financial Advisory $ 583 $ 622 $ 522 (6)% 12%
Underwriting 653 683 380 (4) 72
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Investment Banking $1,236 $1,305 $ 902 (5) 37
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FICC $1,016 $ 414 $ 876 145 16
Equities 858 430 455 100 89
Principal Investments 214 407 26 (47) N.M.
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Trading and Principal $2,088 $1,251 $1,357 67 54
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Total Global Capital
Markets $3,324 $2,556 $2,259 30 47
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Asset Management and
Securities Services
Asset Management $ 306 $ 282 $ 202 9% 51%
Securities Services 238 196 207 21 15
Commissions 625 439 327 42 91
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Total Asset Management and
Securities Services $1,169 $ 917 $ 736 27 59
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Total net revenues $4,493 $3,473 $2,995 29 50
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</TABLE>
* * *
<TABLE>
<CAPTION>
ASSETS UNDER SUPERVISION
(unaudited)
($ in millions)
AS OF CHANGE FROM
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FEBRUARY 25, NOVEMBER 26, FEBRUARY 26, NOVEMBER 26, FEBRUARY 26,
2000 1999 1999 1999 1999
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<S> <C> <C> <C> <C> <C>
Assets under management $ 279,617 $ 258,045 $ 206,380 8% 35%
Other client assets 272,991 227,424 163,315 20 67
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Total assets under
supervision $ 552,608 $ 485,469 $ 369,695 14 49
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</TABLE>
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<TABLE>
<CAPTION>
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
THREE MONTHS ENDED
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FEBRUARY 25, NOVEMBER 26, FEBRUARY 26,
2000 1999 1999
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(in millions, except share and per share amounts)
<S> <C> <C> <C>
Revenues
Global capital markets
Investment banking $ 1,230 $ 1,305 $ 902
Trading and principal investments 2,096 1,218 1,398
Asset management and securities services 944 736 543
Interest income 3,694 3,453 3,013
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Total revenues 7,964 6,712 5,856
Interest expense 3,471 3,239 2,861
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Revenues, net of interest expense 4,493 3,473 2,995
Operating expenses
Compensation and benefits, excluding employee initial
public offering awards 2,247 1,527 1,275
Amortization of employee initial public offering awards 111 114 -
Brokerage, clearing and exchange fees 129 118 111
Market development 106 117 77
Communications and technology 93 82 78
Depreciation and amortization 101 108 97
Occupancy 95 93 78
Professional services and other 132 105 91
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Total operating expenses 3,014 2,264 1,807
Pre-tax earnings 1,479 1,209 1,188
Provision for taxes 592 486 181
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Net earnings $ 887 $ 723 $ 1,007
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Earnings per share
Basic $ 1.83 $ 1.51
Diluted 1.76 1.48
Average common shares outstanding
Basic 484,576,498 477,395,104
Diluted 505,387,044 489,011,804
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE GOLDMAN SACHS GROUP, INC.
(Registrant)
Date: March 21, 2000 By: /s/ David A. Viniar
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Name: David A. Viniar
Title: Chief Financial Officer
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