Goldman Sachs Reports Record Earnings Per Common Share of $24.73 for 2007

The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $45.99 billion and net earnings of $11.60 billion for the year ended November 30, 2007. Diluted earnings per common share were $24.73, an increase of 26% compared with $19.69 for the year ended November 24, 2006. Return on average tangible common shareholders’ equity (1) (ROTE) was 38.2% and return on average common shareholders’ equity (ROE) was 32.7% for 2007. Fourth quarter net revenues were $10.74 billion and net earnings were $3.22 billion. Diluted earnings per common share were $7.01 compared with $6.59 for the same 2006 quarter and $6.13 for the third quarter of 2007. Annualized ROTE (1) was 40.1% and annualized ROE was 34.6% for the fourth quarter of 2007.                       Annual Business Highlights Goldman Sachs achieved record net revenues, net earnings and diluted earnings per common share in 2007. Book value per common share increased 25% to $90.43 in 2007. The firm repurchased 41.2 million shares of its common stock for a total cost of $8.96 billion. The firm produced record results in the Americas, Europe and Asia, and derived over one-half of its pre-tax earnings outside of the Americas. Investment Banking produced net revenues of $7.56 billion, 34% higher than the previous record set in 2006. The firm ranked first in worldwide announced mergers and acquisitions. (2) Fixed Income, Currency and Commodities (FICC) generated net revenues of $16.17 billion, 13% higher than the previous record set in 2006, reflecting strong performance in all major businesses. Equities produced net revenues of $11.30 billion, 33% above the previous record set in 2006. Principal Investments achieved net revenues of $3.76 billion, reflecting records in both corporate and real estate investing. Asset Management generated record net revenues of $4.49 billion, as assets under management increased $192 billion, or 28%, to $868 billion. Net inflows were $161 billion in 2007. Securities Services achieved record net revenues of $2.72 billion.                            ______________ "The talent of our people and our focus on teamwork were at the core of our ability to support our clients while delivering strong returns for our shareholders,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. "Inherent in our commitment to our clients is the need to help them execute their transactions in all market conditions and, as a result, we are ever mindful of the importance of effective risk management. Looking forward, we continue to see significant growth opportunities across the global economy.”                              Net Revenues Investment Banking Full Year Net revenues in Investment Banking were $7.56 billion for the year, 34% higher than 2006. Net revenues in Financial Advisory were $4.22 billion, 64% higher than 2006, primarily reflecting growth in industry-wide completed mergers and acquisitions. Net revenues in the firm’s Underwriting business were $3.33 billion, 9% higher than 2006, due to higher net revenues in debt underwriting, primarily reflecting strength in leveraged finance during the first half of the year. Net revenues in equity underwriting were also strong, but essentially unchanged from 2006. Fourth Quarter Net revenues in Investment Banking were $1.97 billion, 47% higher than the fourth quarter of 2006 and 8% lower than a particularly strong third quarter of 2007. Net revenues in Financial Advisory were $1.24 billion, 98% higher than the fourth quarter of 2006, reflecting increased client activity. Net revenues in the firm’s Underwriting business were $733 million, essentially unchanged from the fourth quarter of 2006. Net revenues in equity underwriting were higher, primarily reflecting an increase in initial public offerings. Results in debt underwriting were lower, primarily due to a decrease in leveraged finance and mortgage-related activity, reflecting challenging market conditions, partially offset by an increase in investment-grade activity. The firm’s investment banking transaction backlog decreased during the quarter, but was higher than at the end of 2006. (3) Trading and Principal Investments Full Year Net revenues in Trading and Principal Investments were $31.23 billion for the year, 22% higher than 2006. Net revenues in FICC were $16.17 billion for the year, 13% higher than 2006, reflecting significantly higher net revenues in currencies and interest rate products. In addition, net revenues in mortgages were higher despite a significant deterioration in the mortgage market throughout the year, while net revenues in credit products were strong, but slightly lower compared with the prior year. Credit products included substantial gains from equity investments, including a gain of approximately $900 million related to the disposition of Horizon Wind Energy L.L.C., as well as a loss of approximately $1 billion, net of hedges, related to non-investment-grade credit origination activities. Net revenues in commodities were also strong but lower compared with 2006. During 2007, FICC operated in an environment generally characterized by strong customer-driven activity and favorable market opportunities. However, during the year, the mortgage market experienced significant deterioration and, in the second half of the year, the broader credit markets were characterized by wider spreads and reduced levels of liquidity. Net revenues in Equities were $11.30 billion for the year, 33% higher than 2006, reflecting significantly higher net revenues in both the firm’s customer franchise businesses and principal strategies. The customer franchise businesses benefited from significantly higher commission volumes. During 2007, Equities operated in an environment characterized by strong customer-driven activity, generally higher equity prices and higher levels of volatility, particularly during the second half of the year. Principal Investments recorded net revenues of $3.76 billion for the year, reflecting gains and overrides from corporate and real estate principal investments. Results in Principal Investments included a $495 million gain related to the firm's investment in the ordinary shares of Industrial and Commercial Bank of China Limited (ICBC) and a $129 million loss related to the firm's investment in the convertible preferred stock of Sumitomo Mitsui Financial Group, Inc. (SMFG). Fourth Quarter Net revenues in Trading and Principal Investments were $6.93 billion, 4% higher than the fourth quarter of 2006 and 16% lower than the third quarter of 2007. Net revenues in FICC were $3.30 billion, 6% higher than the fourth quarter of 2006, reflecting significantly higher net revenues in currencies and commodities. The increase in commodities reflected a gain of approximately $800 million from the sale of a majority interest in 14 power generation facilities held by Cogentrix Energy, Inc. In addition, net revenues in mortgages and interest rate products were higher. Net revenues in credit products declined significantly, reflecting lower results from equity investments, partially offset by a gain of approximately $500 million, net of hedges, related to non-investment-grade credit origination activities. Results from equity investments declined in part due to a gain of approximately $500 million on Accordia Golf Co., Ltd. during the fourth quarter of 2006. During the quarter, while customer-driven activity was generally solid, FICC operated in a challenging environment characterized by continued deterioration in the mortgage market and weakness in the corporate credit market. Net revenues in Equities were $2.59 billion, 22% higher than the fourth quarter of 2006, primarily reflecting significantly higher net revenues in the firm’s customer franchise businesses. The customer franchise businesses benefited from significantly higher commission volumes. During the quarter, Equities operated in an environment characterized by strong customer-driven activity and volatile markets. Principal Investments recorded net revenues of $1.04 billion for the fourth quarter of 2007, reflecting gains and overrides from corporate and real estate principal investments. Results in Principal Investments included a $163 million gain 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 $7.21 billion for the year, 11% higher than 2006. Asset Management net revenues were $4.49 billion for the year, 5% higher than 2006, reflecting a 29% increase in management and other fees, partially offset by significantly lower incentive fees. Incentive fees were $187 million for 2007 compared with $962 million for 2006. During the year, assets under management increased $192 billion, or 28%, to $868 billion, reflecting non-money market net inflows of $73 billion (4), primarily in fixed income and equity assets, money market net inflows of $88 billion, and net market appreciation of $31 billion, reflecting appreciation in fixed income and equity assets, partially offset by depreciation in alternative investment assets. Securities Services net revenues were $2.72 billion for the year, 25% higher than 2006, as the firm’s prime brokerage business continued to generate strong results, primarily reflecting significantly higher customer balances in securities lending and margin lending. Fourth Quarter Net revenues in Asset Management and Securities Services were $1.84 billion, 29% higher than the fourth quarter of 2006 and 6% lower than the third quarter of 2007. Asset Management net revenues were $1.17 billion, 25% higher than the fourth quarter of 2006, reflecting higher management and other fees. During the quarter, assets under management increased $72 billion, or 9%, to $868 billion, reflecting non-money market net inflows of $16 billion (4), primarily in fixed income assets, money market net inflows of $42 billion and market appreciation of $14 billion in fixed income and equity assets. Securities Services net revenues were $672 million, 35% higher than the fourth quarter of 2006, reflecting significantly higher customer balances in securities lending and margin lending.                               Expenses Operating expenses were $28.38 billion for 2007, 23% higher than 2006. Compensation and Benefits Compensation and benefits expenses were $20.19 billion for 2007, 23% higher than 2006, reflecting increased discretionary compensation and growth in employment levels. The ratio of compensation and benefits to net revenues for 2007 was 43.9% compared with 43.7% for 2006. Employment levels increased 15% compared with the end of 2006, including a 2% increase during the fourth quarter. Non-Compensation Expenses Full Year Non-compensation expenses were $8.19 billion for 2007, 23% higher than 2006, primarily attributable to higher levels of business activity and continued geographic expansion. One-half of this increase was attributable to brokerage, clearing, exchange and distribution fees, principally reflecting higher transaction volumes in Equities. Other expenses, professional fees, and communications and technology expenses also increased, primarily due to higher levels of business activity. Occupancy and depreciation and amortization expenses included exit costs of $128 million related to the firm’s office space. Fourth Quarter Non-compensation expenses were $2.41 billion, 26% higher than the fourth quarter of 2006 and 12% higher than the third quarter of 2007. The increase compared with the fourth quarter of 2006 was primarily attributable to higher brokerage, clearing, exchange and distribution fees, principally due to higher transaction volumes in Equities, and an increase in occupancy and depreciation and amortization expenses, including exit costs of $128 million related to the firm’s office space. Provision For Taxes The effective income tax rate was 34.1% for 2007, up from 33.2% for the first nine months of 2007 and down from 34.5% for 2006. The increase in the effective income tax rate for 2007 compared with the first nine months of 2007 was primarily due to changes in the geographic earnings mix and a decrease in tax credits.                                 Capital As of November 30, 2007, total capital was $206.97 billion, consisting of $42.80 billion in total shareholders’ equity (common shareholders’ equity of $39.70 billion and preferred stock of $3.10 billion) and $164.17 billion in unsecured long-term borrowings. Book value per common share was $90.43, an increase of 25% compared with the end of 2006 and an increase of 7% compared with the end of the third quarter of 2007. Tangible book value per common share was $78.88 (1), an increase of 28% compared with the end of 2006 and an increase of 8% compared with the end of the third quarter of 2007. Book value and tangible book value per common share are based on common shares outstanding, including restricted stock units granted to employees with no future service requirements, of 439.0 million at period end. The firm repurchased 41.2 million shares of its common stock during 2007 at an average cost per share of $217.29, for a total cost of $8.96 billion, including 11.6 million shares during the fourth quarter at an average cost per share of $230.65, for a total cost of $2.68 billion. On December 17, 2007, the Board of Directors of The Goldman Sachs Group, Inc. (the Board) authorized the repurchase of an additional 60.0 million shares of common stock pursuant to the firm’s existing share repurchase program. The remaining share authorization under the firm’s existing share repurchase program, including the newly authorized amount, is 71.4 million shares.                                Dividends The Board declared a dividend of $0.35 per common share to be paid on February 28, 2008 to common shareholders of record on January 29, 2008. The Board also declared dividends of $351.84, $387.50, $351.84 and $346.84 per share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, respectively (represented by depositary shares, each representing a 1/1,000th interest in a share of preferred stock), to be paid on February 11, 2008 to preferred shareholders of record on January 27, 2008.                             ______________ Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world. Cautionary Note Regarding Forward-Looking Statements This press release contains "forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only the firm’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the firm’s control. It is possible that the firm’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the firm’s future results and financial condition, see "Risk Factors" in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the fiscal year ended November 24, 2006 and "Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the firm’s Annual Report on Form 10-K for the fiscal year ended November 24, 2006. Statements about the firm’s investment banking transaction backlog also may constitute forward-looking statements. Such statements are subject to the risk that the terms of these transactions may be modified or that they may not be completed at all; therefore, the net revenues, if any, that the firm actually earns from these transactions may differ, possibly materially, from those currently expected. Important factors that could result in a modification of the terms of a transaction or a transaction not being completed include, in the case of underwriting transactions, a decline in general economic conditions, outbreak of hostilities, volatility in the securities markets generally or an adverse development with respect to the issuer of the securities and, in the case of financial advisory transactions, a decline in the securities markets, an inability to obtain adequate financing, an adverse development with respect to a party to the transaction or a failure to obtain a required regulatory approval. For a discussion of other important factors that could adversely affect the firm’s investment banking transactions, see "Risk Factors" in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the fiscal year ended November 24, 2006. Conference Call A conference call to discuss the firm’s results, outlook and related matters will be held at 11:00 am (ET). The call will be open to the public. Members of the public who would like to listen to the conference call should dial 1-888-281-7154 (U.S. domestic) or 1-706-679-5627 (international). The number should be dialed at least 10 minutes prior to the start of the conference call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the firm’s web site, www.gs.com/our_firm/investor_relations/. There is no charge to access the call. For those unable to listen to the live broadcast, a replay will be available on the firm’s web site or by dialing 1-800-642-1687 (U.S. domestic) or 1-706-645-9291 (international) passcode number 25388886, beginning approximately two hours after the event. Please direct any questions regarding obtaining access to the conference call to Goldman Sachs Investor Relations, via e-mail, at gs-investor-relations@gs.com. THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES SEGMENT NET REVENUES (UNAUDITED) $ in millions   Year Ended   % Change From Nov. 30,   Nov. 24, Nov. 24, 2007 2006 2006 Investment Banking Financial Advisory $ 4,222 $ 2,580   64   %   Equity underwriting 1,382 1,365 1 Debt underwriting   1,951     1,684   16   Total Underwriting 3,333 3,049 9       Total Investment Banking   7,555     5,629   34     Trading and Principal Investments FICC 16,165 14,262 13   Equities trading 6,725 4,965 35 Equities commissions   4,579     3,518   30   Total Equities 11,304 8,483 33   SMFG (129 ) 527 N.M. ICBC 495 937 (47 ) Other corporate and real estate gains and losses 2,914 949 207 Overrides   477     404   18   Total Principal Investments 3,757 2,817 33       Total Trading and Principal Investments   31,226     25,562   22     Asset Management and Securities Services Management and other fees 4,303 3,332 29 Incentive fees   187     962   (81 ) Total Asset Management 4,490 4,294 5   Securities Services 2,716 2,180 25       Total Asset Management and Securities Services   7,206     6,474   11         Total net revenues $ 45,987   $ 37,665   22   THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES SEGMENT NET REVENUES (UNAUDITED) $ in millions   Three Months Ended   % Change From   Nov. 30,   Aug. 31,   Nov. 24, Aug. 31, Nov. 24, 2007 2007 2006 2007 2006   Investment Banking Financial Advisory $ 1,240   $ 1,412 $ 627 (12 ) % 98 %   Equity underwriting 403 355 330 14 22 Debt underwriting   330     378     387   (13 ) (15 ) Total Underwriting 733 733 717 - 2           Total Investment Banking   1,973     2,145     1,344   (8 ) 47     Trading and Principal Investments FICC 3,304 4,889 3,104 (32 ) 6   Equities trading 1,348 1,799 1,235 (25 ) 9 Equities commissions   1,243     1,330     896   (7 ) 39   Total Equities 2,591 3,129 2,131 (17 ) 22   SMFG 35 (261 ) (78 ) N.M. N.M. ICBC 163 230 949 (29 ) (83 ) Other corporate and real estate gains and losses 734 148 323 N.M. 127 Overrides   104     94     205   11   (49 ) Total Principal Investments   1,036     211     1,399   N.M. (26 )   Total Trading and Principal Investments   6,931     8,229     6,634   (16 ) 4     Asset Management and Securities Services Management and other fees 1,134 1,152 910 (2 ) 25 Incentive fees   31     46     23   (33 ) 35   Total Asset Management 1,165 1,198 933 (3 ) 25   Securities Services   672     762     496   (12 ) 35     Total Asset Management and Securities Services   1,837     1,960     1,429   (6 ) 29             Total net revenues $ 10,741   $ 12,334   $ 9,407   (13 ) 14   THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) In millions, except per share amounts   Year Ended % Change From Nov. 30, Nov. 24, Nov. 24, 2007 2006 2006 Revenues Investment banking $ 7,555 $ 5,613 35 % Trading and principal investments 29,714 24,027 24 Asset management and securities services 4,731 4,527 5 Interest income   45,968   35,186 31   Total revenues 87,968 69,353 27   Interest expense   41,981   31,688 32     Revenues, net of interest expense   45,987   37,665 22     Operating expenses Compensation and benefits 20,190 16,457 23   Brokerage, clearing, exchange and distribution fees 2,758 1,985 39 Market development 601 492 22 Communications and technology 665 544 22 Depreciation and amortization 624 521 20 Amortization of identifiable intangible assets 195 173 13 Occupancy 975 850 15 Professional fees 714 545 31 Cost of power generation 335 406 (17 ) Other expenses   1,326   1,132 17   Total non-compensation expenses 8,193 6,648 23       Total operating expenses   28,383   23,105 23     Pre-tax earnings 17,604 14,560 21 Provision for taxes   6,005   5,023 20   Net earnings 11,599 9,537 22   Preferred stock dividends   192   139 38   Net earnings applicable to common shareholders $ 11,407 $ 9,398 21       Earnings per common share Basic $ 26.34 $ 20.93 26 % Diluted 24.73 19.69 26   Average common shares outstanding Basic 433.0 449.0 (4 ) Diluted 461.2 477.4 (3 )   Selected Data Ratio of compensation and benefits to net revenues 43.9 % 43.7 % THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) In millions, except per share amounts and employees   Three Months Ended % Change From Nov. 30, Aug. 31, Nov. 24, Aug. 31, Nov. 24, 2007 2007 2006 2007 2006 Revenues Investment banking $ 1,974 $ 2,145 $ 1,337 (8 ) % 48 % Trading and principal investments 6,823 7,576 6,051 (10 ) 13 Asset management and securities services 1,219 1,272 982 (4 ) 24 Interest income   11,518   12,810   9,756 (10 ) 18   Total revenues 21,534 23,803 18,126 (10 ) 19   Interest expense   10,793   11,469   8,719 (6 ) 24     Revenues, net of interest expense   10,741   12,334   9,407 (13 ) 14     Operating expenses Compensation and benefits 3,272 5,920 2,505 (45 ) 31   Brokerage, clearing, exchange and distribution fees 774 795 571 (3 ) 36 Market development 177 148 154 20 15 Communications and technology 184 169 148 9 24 Depreciation and amortization 207 145 143 43 45 Amortization of identifiable intangible assets 41 53 45 (23 ) (9 ) Occupancy 343 218 237 57 45 Professional fees 204 188 178 9 15 Cost of power generation 82 88 98 (7 ) (16 ) Other expenses   402   351   343 15   17   Total non-compensation expenses 2,414 2,155 1,917 12 26           Total operating expenses   5,686   8,075   4,422 (30 ) 29     Pre-tax earnings 5,055 4,259 4,985 19 1 Provision for taxes   1,840   1,405   1,833 31   -   Net earnings 3,215 2,854 3,152 13 2   Preferred stock dividends   49   48   48 2   2   Net earnings applicable to common shareholders $ 3,166 $ 2,806 $ 3,104 13   2       Earnings per common share Basic $ 7.49 $ 6.54 $ 7.06 15 % 6 % Diluted 7.01 6.13 6.59 14 6   Average common shares outstanding Basic 422.9 429.0 439.8 (1 ) (4 ) Diluted 451.7 457.4 470.7 (1 ) (4 )   Selected Data Employees at period   end (5) 30,522 29,905 26,467 2 15 Ratio of compensation and benefits to net revenues 30.5 % 48.0 % 26.6 % NON-COMPENSATION EXPENSES (UNAUDITED) $ in millions       Year Ended % Change From Nov. 30, Nov. 24, Nov. 24, 2007 2006 2006   Non-compensation expenses of consolidated investments (6) $ 446 $ 501 (11 ) %   Non-compensation expenses excluding consolidated investments Brokerage, clearing, exchange and distribution fees 2,758 1,985 39 Market development 593 461 29 Communications and technology 661 537 23 Depreciation and amortization 509 444 15 Amortization of identifiable intangible assets 189 169 12 Occupancy 892 738 21 Professional fees 711 534 33 Cost of power generation 335 406 (17 ) Other expenses   1,099   873 26   Subtotal 7,747 6,147 26       Total non-compensation expenses, as reported $ 8,193 $ 6,648 23       Three Months Ended   % Change From Nov. 30,   Aug. 31,   Nov. 24, Aug. 31, Nov. 24, 2007 2007 2006 2007 2006   Non-compensation expenses of consolidated investments (6) $ 157 $ 101 $ 130 55 % 21 %   Non-compensation expenses excluding consolidated investments Brokerage, clearing, exchange and distribution fees 774 795 571 (3 ) 36 Market development 175 146 148 20 18 Communications and technology 182 168 146 8 25 Depreciation and amortization 142 128 119 11 19 Amortization of identifiable intangible assets 39 52 43 (25 ) (9 ) Occupancy 311 200 210 56 48 Professional fees 203 188 176 8 15 Cost of power generation 82 88 98 (7 ) (16 ) Other expenses   349   289   276 21   26     Subtotal 2,257 2,054 1,787 10 26             Total non-compensation expenses, as reported $ 2,414 $ 2,155 $ 1,917 12   26     THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED)       Average Daily VaR (7) $ in millions   Three Months Ended Twelve Months Ended Nov. 30, Aug. 31, Nov. 24, Nov. 30, Nov. 24, 2007 2007 2006 2007 2006 Risk Categories Interest rates $ 106 $ 96 $ 51 $ 85 $ 49 Equity prices 107 97 75 100 72 Currency rates 30 23 14 23 21 Commodity prices 26 24 29 26 30 Diversification effect (8)   (118 )   (101 )   (63 )   (96 )   (71 ) Total $ 151   $ 139   $ 106   $ 138   $ 101         Assets Under Management (9) $ in billions   As of % Change From Nov. 30, Aug. 31, Nov. 30, Aug. 31, Nov. 30, 2007 2007 2006 2007 2006 Asset Class Alternative investments $ 151 $ 151 $ 145 - % 4 % Equity 255 251 215 2 19 Fixed income   256     230     198     11     29   Total non-money market assets 662 632 558 5 19   Money markets   206     164     118     26     75   Total assets under management $ 868   $ 796   $ 676     9     28     Three Months Ended   Year Ended Nov. 30, Aug. 31,   Nov. 30, Nov. 30, Nov. 30, 2007 2007 2006 2007 2006   Balance, beginning of period $ 796   $ 758 $ 629   $ 676   $ 532   Net inflows / (outflows) Alternative investments - 7 6 9 32 Equity 1 7 4 26 16 Fixed income   15     5     7     38     29   Total non-money market net inflows / (outflows) 16 (4) 19 17 73 (4) 77   Money markets   42     31     7     88     17   (10) Total net inflows / (outflows) 58 50 24 161 94 (11)   Net market appreciation / (depreciation) 14 (12 ) 23 31 50           Balance, end of period $ 868   $ 796   $ 676   $ 868   $ 676         Principal Investments (12) $ in millions   As of November 30, 2007 Corporate Real Estate Total   Private $ 7,297 $ 2,361 $ 9,658 Public   2,208   67   2,275 Subtotal 9,505 2,428 11,933 SMFG convertible preferred stock (13) 4,060 - 4,060 ICBC ordinary shares (14)   6,807   -   6,807 Total $ 20,372 $ 2,428 $ 22,800                              Footnotes (1)     Tangible common shareholders' equity equals total shareholders' equity less preferred stock, goodwill and identifiable intangible assets, excluding power contracts. Identifiable intangible assets associated with power contracts are not deducted from total shareholders' equity because, unlike other intangible assets, less than 50% of these assets are supported by common shareholders' equity. Management believes that return on average tangible common shareholders' equity (ROTE) is meaningful because it measures the performance of businesses consistently, whether they were acquired or developed internally. ROTE is computed by dividing net earnings (or annualized net earnings for annualized ROTE) applicable to common shareholders by average monthly tangible common shareholders' equity. Tangible book value per common share is computed by dividing tangible common shareholders' equity by the number of common shares outstanding, including restricted stock units granted to employees with no future service requirements.           The following table sets forth a reconciliation of total shareholders' equity to tangible common shareholders' equity:   Average for the As of     Three Months   Year Ended Ended November 30, November 30, November 30, 2007 2007 2007 (unaudited, $ in millions)   Total shareholders' equity $ 37,959 $ 39,687   $ 42,800 Preferred stock   (3,100 )   (3,100 )   (3,100 ) Common shareholders' equity 34,859 36,587 39,700 Goodwill and identifiable intangible assets, excluding power contracts   (4,971 )   (4,996 )   (5,072 ) Tangible common shareholders' equity $ 29,888   $ 31,591   $ 34,628   (2)     Thomson Financial - January 1, 2007 through November 30, 2007. (3)     The firm's investment banking transaction backlog represents   an estimate of the firm's future net revenues from investment banking transactions where management believes that future revenue realization is more likely than not. (4)     Includes $7 billion of net asset inflows in connection with the firm's acquisition of Macquarie - IMM Investment Management. (5)     Excludes 4,572, 4,904 and 3,868 employees as of November 2007, August 2007 and November 2006, respectively, of consolidated entities held for investment purposes. Compensation and benefits includes $43 million, $40 million and $64 million for the three months ended November 30, 2007, August 31, 2007 and November 24, 2006, respectively, attributable to these consolidated entities. (6)     Consolidated entities held for investment purposes are entities that are held strictly for capital appreciation, have a defined exit strategy and are engaged in activities that are not closely related to the firm's principal businesses. For example, these investments include consolidated entities that hold real estate assets, such as hotels, but exclude investments in entities that primarily hold financial assets. Management believes that it is meaningful to review non-compensation expenses excluding expenses related to these consolidated entities in order to evaluate trends in non-compensation expenses related to the firm's principal business activities. (7)     VaR is the potential loss in value of Goldman Sachs' trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. The modeling of the risk characteristics of the firm's trading positions involves a number of assumptions and approximations. While management believes that these assumptions and approximations are reasonable, there is no standard methodology for estimating VaR, and different assumptions and/or approximations could produce materially different VaR estimates. For a further discussion of the calculation of VaR, see Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in the firm's Annual Report on Form 10-K for the year ended November 24, 2006. (8)     Equals the difference between total VaR and the sum of the VaRs for the four risk categories. This effect arises because the four market risk categories are not perfectly correlated. (9)     Substantially all assets under management are valued as of calendar month end. Assets under management do not include the firm's investments in funds that it manages. (10)   Includes the transfer of $8 billion of money market assets under management to interest-bearing deposits at Goldman Sachs  Bank USA, a wholly owned subsidiary of The Goldman Sachs Group, Inc. These deposits are not included in assets under management. (11)   Includes $3 billion of net asset inflows in connection with the firm's acquisition of its variable annuity and life insurance business. (12)   Represents investments included within the Principal Investments component of our Trading and Principal Investments segment. (13)   Excludes an economic hedge on the shares of common stock underlying the investment. As of November 2007, the fair value of this hedge was $3.63 billion. Includes the effect of foreign exchange revaluation on the investment, for which Goldman Sachs also maintains an economic currency hedge. (14)   Includes interests of $4.30 billion as of November 2007 held by investment funds managed by Goldman Sachs. The fair value of the investment in the ordinary shares of ICBC, which trade on The Stock Exchange of Hong Kong, includes the effect of foreign exchange revaluation, for which Goldman Sachs maintains an economic currency hedge.