Text: Goldman Sachs 8-K filing showing 2010 earnings under new disclosure standards

The Goldman Sachs Group, Inc. (together with its consolidated subsidiaries, the firm) will be making certain changes to its business segments, commencing with its earnings release for the fourth quarter of 2010, which will be issued on January 19, 2011.

Prior to the fourth quarter of 2010, the firm had three business segments: Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services. Beginning with the fourth quarter of 2010, the firm will report its results in the following four business segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. Prior results beginning with the firm’s 2008 fiscal year are presented on a comparable basis in the tables below.
The changes made were as follows:

• Trading and Principal Investments has been disaggregated into two new segments: Institutional Client Services, which includes results from the firm’s market making in various products for and on behalf of clients, and Investing & Lending, which includes results from the firm’s investing and lending activities. These changes reflect the increased importance of providing greater transparency with respect to the firm’s revenues from client execution activities related to making markets for clients in various products, and revenues from investing and lending activities. Accordingly, the firm’s revenues will now be aggregated based on the nature of the firm’s activities, rather than its products.
- The results from client execution activities related to making markets for clients, previously reported in Equities and Fixed Income, Currency and Commodities, are now included in Institutional Client Services.
- The results previously reported in Principal Investments are now included in Investing & Lending (except for overrides, which are included in Investment Management as described below). In addition, the results related to investing and lending activities across various asset classes, primarily including debt and equity securities, loans, private equity and real estate, previously reported in Equities and Fixed Income, Currency and Commodities, are now included in Investing & Lending.

• Asset Management and Securities Services has been disaggregated, with the results previously reported in Asset Management now included in Investment Management. The results previously reported in Securities Services are now included in Institutional Client Services, together with the firm’s other client execution businesses.

• Derivative transactions that are directly related to client advisory and underwriting assignments, previously reported in Equities and Fixed Income, Currency and Commodities, are now included in Investment Banking, together with the advisory and underwriting assignments to which they are directly related.

• Transaction revenues and custody fees related to the firm’s Private Wealth Management business, previously reported in Securities Services, Equities and Fixed Income, Currency and Commodities, are now included in Investment Management, together with the firm’s other investment management activities.

• Overrides, which represent the increased share of the income and gains derived from the firm’s merchant banking funds when the return on a fund’s investments over the life of the fund exceeds certain threshold returns, previously reported in Principal Investments, are now included in Investment Management (within incentive fees), together with the firm’s other investment management activities.

The firm’s new business segments are as follows:

Investment Banking
Investment Banking is comprised of:
• Financial Advisory, which includes advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense activities, restructurings and spin-offs, and derivative transactions directly related to such client advisory assignments.

• Underwriting, which includes public offerings and private placements of a wide range of securities and other financial instruments, and derivative transactions directly related to such client underwriting activities.

Institutional Client Services
Institutional Client Services is comprised of: • Fixed Income, Currency and Commodities, which includes client execution activities related to making markets in credit products, interest rate products, mortgages, currencies and commodities.

• Equities, which includes client execution activities related to making markets in equities, commissions and fees, and the firm’s securities services business.

Investing & Lending
Investing & Lending includes the following activities:
• The firm’s investing and lending activities across various asset classes, primarily including debt and equity securities, loans, private equity and real estate. These activities include both direct investing and investing through funds.

• The firm’s investments in consolidated investment entities.

Investment Management
Investment Management includes the following activities:
• Management and other fees related to the firm’s asset management businesses, including Goldman Sachs Asset Management, Private Wealth Management and the firm’s merchant banking funds.
• Incentive fees related to the firm’s asset management and merchant banking funds.

• Transaction revenues related to the firm’s Private Wealth Management business, including commissions and spreads.

These changes to the firm’s business segments have no effect on the firm’s historical consolidated results of operations. Prior period segment results have been conformed to the new business segments.