Summary of GOLDMAN SACHS GROUP INC

Item 2.02 Results of Operations and Financial Condition.
On December 16, 2008, The Goldman Sachs Group, Inc. (Group Inc. and, together with its consolidated subsidiaries, the firm) reported its earnings for its fiscal fourth quarter and fiscal year ended November 28, 2008. A copy of Group Inc.'s press release containing this information is being furnished as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference. The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Group Inc. under the Securities Act of 1933 or the Exchange Act. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) On December 15, 2008, Group Inc.'s Board of Directors, upon the recommendation of its Compensation Committee, approved the termination of Group Inc.'s Non-Qualified Deferred Compensation Plan for U.S. Participating Managing Directors (the NQDC Plan). The NQDC Plan was described in Group Inc.'s proxy statement dated March 7, 2008. No payments under the NQDC Plan will be accelerated for any of Group Inc.'s current named executive officers in connection with this termination.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
(b) On December 15, 2008, Group Inc.'s Board of Directors determined to change Group Inc.'s fiscal year end from the last Friday of November to the last Friday of December, beginning with fiscal 2009. Fiscal 2009 will begin on December 27, 2008 and will end on December 25, 2009. Information on the one-month transition period beginning on November 29, 2008 and ending on December 26, 2008 will be included in Group Inc.'s Quarterly Report on Form 10-Q for the three months ended March 27, 2009. Item 8.01 Other Events.
On December 16, 2008, Group Inc. reported net revenues of $22.22 billion and net earnings of $2.32 billion for the year ended November 28, 2008. Diluted earnings per common share were $4.47 compared with $24.73 for the year ended November 30, 2007. Return on average tangible common shareholders' equity (1) (ROTE) was 5.5% and return on average common shareholders' equity (ROE) was 4.9% for 2008. Group Inc. reported fourth quarter negative net revenues of $1.58 billion and a net loss of $2.12 billion. The diluted loss per common share was $4.97 compared with diluted earnings per common share of $7.01 for the fourth quarter of 2007 and $1.81 for the third quarter of 2008.

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Net Revenues Investment Banking
Full Year
Net revenues in Investment Banking were $5.19 billion for the year, 31% lower than 2007. Net revenues in Financial Advisory were $2.66 billion, 37% lower than particularly strong net revenues in 2007, primarily reflecting a decline in industry-wide completed mergers and acquisitions. Net revenues in the firm's Underwriting business were $2.53 billion, 24% lower than 2007, principally due to significantly lower net revenues in debt underwriting. The decrease in debt underwriting was primarily due to a decline in leveraged finance and mortgage-related activity, reflecting difficult market conditions. Net revenues in equity underwriting were slightly lower compared with 2007, reflecting a decrease in industry-wide equity and equity-related offerings. Fourth Quarter
Net revenues in Investment Banking were $1.03 billion, 48% lower than the fourth quarter of 2007 and 20% lower than the third quarter of 2008. Net revenues in Financial Advisory were $574 million, 54% lower than a particularly strong fourth quarter of 2007, primarily reflecting a decline in industry-wide completed mergers and acquisitions. Net revenues in the firm's Underwriting business were $460 million, 37% lower than the fourth quarter of 2007. Net revenues in both debt and equity underwriting were significantly lower, reflecting lower levels of activity.
The firm's investment banking transaction backlog decreased during the quarter and ended the year significantly lower than at the end of 2007. (2) Trading and Principal Investments
Full Year
Net revenues in Trading and Principal Investments were $9.06 billion for the year, 71% lower than 2007.
Net revenues in Fixed Income, Currency and Commodities (FICC) were $3.71 billion for the year, 77% lower than 2007, primarily reflecting losses in credit products, which included a loss of approximately $3.1 billion (net of hedges) related to non-investment-grade credit origination activities and losses from investments, including corporate debt and private and public equities. Results in mortgages included net losses of approximately $1.7 billion on residential mortgage loans and securities and approximately $1.4 billion on commercial mortgage loans and securities. Interest rate products, currencies and commodities each produced particularly strong results and net revenues were higher compared with 2007. During 2008, although client-driven activity was generally solid, FICC operated in a challenging environment characterized by broad-based declines in asset values, wider mortgage and corporate credit spreads, reduced levels of liquidity and broad-based investor deleveraging.

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Net revenues in Equities were $9.21 billion for the year, 19% lower than a particularly strong 2007, reflecting losses in principal strategies, partially offset by higher net revenues in the client franchise businesses. Commissions were particularly strong and were higher than 2007. During 2008, Equities operated in an environment characterized by a significant decline in global equity prices, broad-based investor deleveraging and very high levels of volatility, particularly in the second half of the year.
Principal Investments recorded a net loss of $3.86 billion for 2008. These results included net losses of $2.53 billion from corporate principal investments and $949 million from real estate principal investments, as well as a $446 million loss related to the firm's investment in the ordinary shares of Industrial and Commercial Bank of China Limited (ICBC). Fourth Quarter
Trading and Principal Investments recorded negative net revenues of $4.36 billion, compared with net revenues of $6.93 billion for the fourth quarter of 2007 and $2.70 billion for the third quarter of 2008.
FICC recorded negative net revenues of $3.40 billion compared with net revenues of $3.30 billion for the fourth quarter of 2007. The negative net revenues for FICC in the quarter were due to losses from investments, including corporate debt and private and public equities, and trading in credit products. These results were adversely impacted by unprecedented weakness across the broader credit markets, reflecting broad-based declines in asset values, substantially reduced levels of liquidity and dislocation between prices for cash instruments and the related derivative contracts and between credit indices and the underlying single names. Credit products also included a loss of approximately $1.3 billion ($1 billion, net of hedges) related to non-investment-grade credit origination activities and mortgages included a net loss of approximately $700 million on commercial mortgage loans and securities. Net revenues in commodities and currencies were solid, but lower compared with the fourth quarter of 2007. Interest rate products had strong results, which were significantly higher compared with the fourth quarter of 2007.
Net revenues in Equities were $2.64 billion, 2% higher than the fourth quarter of 2007, primarily reflecting significantly higher net revenues in derivatives, partially offset by losses in principal strategies. Commissions were particularly strong and were higher compared with the fourth quarter of 2007. During the quarter, Equities operated in an environment characterized by a significant decline in global equity prices, a significant increase in volatility levels and generally strong client-driven activity.

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Principal Investments recorded a net loss of $3.60 billion for the fourth quarter of 2008. These results included net losses of $2.00 billion from corporate principal investments and $961 million from real estate principal investments, as well as a $631 million loss related to the firm's investment in the ordinary shares of ICBC.
Asset Management and Securities Services Full Year
Net revenues in Asset Management and Securities Services were $7.97 billion for the year, 11% higher than 2007.
Asset Management net revenues were $4.55 billion for the year, 1% higher than 2007. During the year, assets under management decreased $89 billion to $779 billion, due to $123 billion of market depreciation, primarily in equity assets, partially offset by $34 billion of net inflows. Net inflows reflected inflows in money market, fixed income and alternative investment assets, partially offset by outflows in equity assets.
Securities Services net revenues were $3.42 billion for the year, 26% higher than 2007, reflecting the impact of changes in the composition of securities lending customer balances, as well as higher total average customer balances. Fourth Quarter
Net revenues in Asset Management and Securities Services were $1.74 billion, 5% lower than the fourth quarter of 2007 and 15% lower than the third quarter of 2008.
Asset Management net revenues were $945 million, 19% lower than the fourth quarter of 2007, primarily due to lower management and other fees, principally due to market depreciation and net outflows in equity assets. During the quarter, assets under management decreased $84 billion to $779 billion, due to $90 billion of market depreciation, primarily in equity assets, partially offset by $6 billion of net inflows. Net inflows reflected inflows in money market and alternative investment assets, partially offset by outflows in equity and fixed income assets.
Securities Services net revenues were $799 million, 19% higher than the fourth quarter of 2007. The increase in net revenues reflected the impact of changes in the composition of securities lending customer balances, partially offset by the impact of lower total average customer balances.

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Expenses Operating expenses were $19.89 billion for 2008, 30% lower than 2007. Compensation and Benefits
Compensation and benefits expenses (including salaries, bonuses, amortization of prior year equity awards and other items such as payroll taxes and benefits) were $10.93 billion for 2008, 46% lower than 2007, reflecting lower levels of discretionary compensation due to lower net revenues. The ratio of compensation and benefits (excluding severance costs of approximately $275 million in the fourth quarter of 2008) to net revenues was 48.0% for 2008. The ratio of compensation and benefits to net revenues was 43.9% for 2007. Employment levels decreased 1% compared with the end of 2007, reflecting an 8% decrease during the fourth quarter.
Non-Compensation Expenses
Full Year
Non-compensation expenses were $8.95 billion for 2008, 9% higher than 2007. Excluding consolidated entities held for investment purposes (3), non-compensation expenses were 5% higher than 2007. The majority of this increase was attributable to higher brokerage, clearing, exchange and distribution fees, principally reflecting higher activity levels in Equities and FICC.
Fourth Quarter
Non-compensation expenses were $2.51 billion, 4% higher than the fourth quarter of 2007 and 15% higher than the third quarter of 2008. Excluding consolidated entities held for investment purposes (3), non-compensation expenses were 4% lower than the fourth quarter of 2007 and 9% higher than the third quarter of 2008. The decrease compared with the fourth quarter of 2007 was due to lower occupancy and market development expenses. The decrease in occupancy expenses was attributable to exit costs incurred during the fourth quarter of 2007 related to the firm's office space. The decrease in market development expenses primarily reflected lower levels of business activity during the fourth quarter of 2008.
Provision for Taxes
The effective income tax rate was approximately 1% for 2008, down from 25.1% for the first nine months of 2008 and down from 34.1% for fiscal year 2007. The decreases in the effective income tax rate were primarily due to an increase in permanent benefits as a percentage of lower earnings and changes in geographic earnings mix.
Capital As of November 28, 2008, total capital was $232.59 billion, consisting of $64.37 billion in total shareholders' equity (common shareholders' equity of $47.90 billion and preferred stock of $16.47 billion) and $168.22 billion in unsecured long-term borrowings.

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Book value per common share was $98.68, an increase of 9% compared with the end of 2007 and essentially unchanged from the end of the third quarter of 2008. Tangible book value per common share (1) was $88.00, an increase of 12% compared with the end of 2007 and essentially unchanged from the end of the third quarter of 2008. Book value and tangible book value per common share are based on common . . .