高盛 (GS) 2002 Q3 法說會逐字稿

Good morning.

I'm David.

I will be your conference facilitator today.

At this time, I would like to welcome everyone to the The Goldman Sachs Group third quarter earnings conference call.

All lines will be placed on mute to prevent any background noise, and after the speaker's remarks there will be a question and answer period.

If you would like to ask a question during this time, press star then 1 on your keypad.

Thank you.

Mr. Andrews, you may begin your conference.

Good morning.

This is John Andrews, Director of Investor Relations of The Goldman Sachs Group.

I would like to welcome you to our third quarter earnings conference call.

Before we begin, today's call may include forward-looking statements.

These statements represent the firm's belief regarding future events that by their nature are uncertain and outside of the control.

The actual results and financial condition may differ, possibly materially, from what is indicated in the forward-looking statements.

For discussion of some of the risks and factors that could affect the firm's future results, please see the description of certain factors that may affect our business in our current annual report on form 10-K, for the fiscal year ended November 2001, and item 5 in our quarterly report on form 10-Q for our second quarter 2002.

And the forward-looking disclaimers, particularly as it relates to our transaction backlog.

Our chief financial officer David Viniar will now review the results.

Thank you, John.

Thank you for calling today.

I'll start with a brief review of results then take your questions.

The operating environment remains weak during our third quarter and conditions actually worsened in a number of our most important businesses.

Economic uncertainty and the ongoing lack of investor and corporate confidence continued to plague the capital markets.

Nevertheless, our quarterly results were again relatively strong, despite the difficult environment.

Net earnings in the third quarter were $522 million.

Earnings per diluted share were $1, down 6% from the prior quarter, but up 15% from the third quarter of 2001.

Annualized return on tangible equities in the third quarter was 15.1% and 15.6% for the first nine months of fiscal 2002.

I'll review each of our businesses, starting with investment banking.

Net revenues in investment banking were $652 million, a 14% decrease from the second quarter.

The quarter was characterized by a continued decline in investment banking activity, including a 31% decline in global announced M and A volume, 30% decline in worldwide common stock offerings, a 23% decline in worldwide IPOs and 34% in worldwide debt issuance, all from the second quarter.

Advisory net revenues for the third quarter of $315 million were 26% below the second quarter.

Despite the environment, our M and A franchise remains strong as Goldman Sachs ranked first in M and A in the calendar year through August.

During the quarter, we advise on a number of significant closed transactions, including the 25 billion dollar merger of Conoco and Phillips and the 17 billion dollar messenger of Immunex.

Announced during our third quarter, including the $62 billion of Pharmacia and Pfizer, the 3.6 billion acquisition by AOL Time-Warner, AT&T's share of their venture, and the 2.6 billion dollar acquisition of Chef America by Nestle.

Third quarter underwriting net revenues were $337 million essentially unchanged from the second quarter, despite global declines in worldwide common stock and debt issuance.

Our equity franchise remains strong.

Goldman Sachs ranked first in worldwide public common stock offerings and second in worldwide IPOs for the calendar year through August.

We underwrote a number of significant transactions, including the $4.6 billion IPO for CIT 2.3 billion dollar secondary for AT&T, and the 2.5 billion dollar Bank of China IPO.

The same factors that led to the industry wide slowdown in M and A and debt underwriting in the third quarter also contributed to a significant decline in our investment banking backlog.

Although discussions with our investment bank clients remain very active, it is reasonable to expect that economic uncertainty and a lack of investor and corporate confidence will continue to dampen investment banking activity in the near term.

Let me now turn to trading and principal investing, which consists of fixed income currents and commodities or FICC, equities and principal investments.

Trading and principal investment produced net revenues of $1.5 billion in the third quarter. 4% higher than the prior quarter.

FICC continued to perform strongly with record net revenues of $1.3 billion, a 15% increase over the second quarter.

Despite a widening of corporate spreads and reduced primary activity during parts of the quarter, FICC's record results underscored the breadth and depth of business, most produced solid results, fixed income dirivitives, currencies and mortgages were particularly strong contributors in the quarter.

Equities faced a difficult operating environment, with quarterly net revenues of $281 million, 33% below the second quarter.

The significant downward movers in equity indices in July and lack of corporate issuance contributed to weaker results in our shares.

Principal investments produced negative net revenues of $100 million, in private investments in the technology and telecommunications sectors, which more than offset gains on dispositions and real estate.

The carrying value of our portfolio at the end of the third was $1 billion, while our real estate portfolio was $800 million.

Now we'll turn to Asset Management and securities service, which recorded 1.5 billion, down 9% from the second quarter.

Within the segment, Asset Management fell 10% from the second quarter to $400 million.

The drop in revenues reflected lower incentive income, combined with the reduction assets.

Total assets under management fell 4% from the prior quarter, to $336 billion, primarily because of asset depreciation.

Net outflows were slightly over $1 billion, largely from money market assets.

However, looking over a longer period, Asset Management Securities are up 3% from the third quarter of last year despite weak global equity markets This reflects our long-term success in gathering assets and growing this business, even in the midst of a difficult market.

Securities services net revenues of $266 million were essentially flat to the second quarter.

Commissions declined 12% from the second quarter to $838 million.

The decline was caused primarily by lower overrides for [INAUDIBLE] banking business as well as lower levels of customer activity, particularly in our global shares business.

Now we'll turn it expenses.

As in prior quarters this year, we accrued compensation ratio of 50% of net revenues.

Non-compensation expense of $974 million was 4% above the second quarter reflecting increases in occupancy and brokerage [INAUDIBLE].

The increased occupancy expense was primarily due to one-time costs related to the postponement of construction of a smaller facility, adjacent to the office building being built in Jersey city.

Head count at the end of the third quarter was 20,600, down 9% from the beginning of fiscal 2002, and 2% from the second quarter.

Given the likelihood of a continued weak operating environment in the fourth quarter, head count will likely be somewhat lower by year end.

Our tax rate for year-to-date fiscal 2002 was 36.5%.

This lower tax rate reflects our geographic earnings mix, combined with ongoing efforts to convert major operating subsidiaries around the world to corporate form, underway since our IPO.

During the quarter, the firm repurchased 5.5 million shares.

At the end of the third fisical quarter, we had approximately 9 million shares remaining under our current repurchase authorization.

In conclusion, we continue to see a challenging environment in the near term, as corporate activity remains low and investor confidence is poor and the equity markets remain weak.

That said, we remain positive about the enduring strength of the Goldman Sachs franchise, despite the weak environment of the last two years our business is diverse, as demonstrated by the strength and depth of FICC franchise and growth of Asset Management business.

That diversity has also produced relatively strong financial results for Goldman Sachs.

Also, our competitive position remains strong as we continue to have leading market shares in the highest margin businesses, like M and A and equities.

We believe this success reflects the consistent execution on strategy and unrelenting focus on clients.

We think Goldman Sachs will be well positioned to benefit when the capital markets recover.

Now I'd be happy to take your questions.

I would like to remind everyone, to ask a question, please press star, then number 1.

We'll pause to compile the Q & A roster.

Your first question comes from Guy Mosecowski of Salomon Smith Barney.

Good morning, David.

Good morning, Guy.

I guess the question that leaps to mind, having seen that results from several other firms at this point, is how would you attribute the rank of the fixed income business, given the very difficult conditions in the corporate credit market during the period?

And did you in fact -- experience any meaningful market issues in corporate credit, which were more than offset in other parts of the business?

Give us a little color on that, it would be very helpful.

Sure.

Couple things, Guy.

One of things we talked to in the past is that while people think of FICC as a business, FICC is not a business.

FICC is actually many, many businesses, where we are a leader in virtually all of them.

Consists of a currency business, commodity business, mortgage business, swaps, corporates, leverage financing, on and on.

So there are many businesses.

And obviously, it was a more difficult environment for some of the corporate businesses, as spreads widened, but there was still low rates, steep yield curve, lots of volatility, and lots of things that help many of the businesses within FICC, as far as the environment goes.

The other thing would you say is we aggressively mark our positions to market all the time.

So at the end of any quarter, our position at the end of day -- at the end of every quarter, our positions a fairly mark to market.

When you have movements, we're only affected by those movements.

Not in catch up.

And that is kind of the summary.

Okay.

I guess I would have the same question on the securities services side.

Obviously, that's not just prime ridge but given the comments we heard from Bear Stearns and Lehman Brothers on what the hedge fund clientele has been doing in terms of the decline and margin balances, to what would you attribute the relative stability of the revenue in that area versus last quarter?

You know, we are one of two real leaders in that business.

We have a very high share.

We continue to gain new clients in that business.

And that has helped us to keep the revenue stable in a difficult environment.

You actually would attribute it to market share pickup during the period?

I would call it more of a client pickup as opposed to market share pickup.

And the final question is, you had a big sequential decline on the commission revenues side and you pointed out that the primary reason for that would have been a decline in overrides.

Can you give us some sense for what was happening underlying equity commission business and whether you were seeing any pricing contraction there, given that it sounds like you did see a decline in the commission revenue, yet the volumes seemed to have been good.

We did not really see a decline in pricing.

But there's just although volumes were up in certain places, there's just a lower level of activity across the board.

Which led to somewhat lower commissions, really across the shares businesses, around the world.

I do have one more question, actually, regarding the investment banking backlog comment that you made.

When you refer to those backlogs, do you include in them only business that has been not yet been announced, for example, on the M and A side?

No.

It also would include announced transactions.

But it is our backlog and we've -- I've been asked this before, is a probability weighted assessment of revenues.

So when we say our -- we take into account deals that have been announced and not announced, but we assess the probability of actually collecting the fees.

Given the market environment.

Great.

Thank you very much, David.

You're welcome.

Your next question comes from to Henry McVeigh of Morgan Stanley.

Good morning.

Couple things.

Just one on the portfolios, the real estate portfolios 800 million, down from a billion last quarter, is that right.

Yes.

The other was 1.2, down to a billion.

Yep.

Okay.

And there was no new money added during the quarter?

There were investments made.

Right.

Yes.

But not -- yes, there were some investments and some dispositions and as you can see there were some writedowns.

Okay.

Second thing, just on the -- I guess even if you look at the equity business and you assume the changing for the pricing on the NASDAQ, it did look like it came off still more sequentially.

It was is a cash business, derivatives business across the board?

Look, the equities business was the whole environment for equities trading has been weak.

Certainly weak in this quarter.

You know, it's always dangerous to look quarter over quarter.

It was strong.

The third quarter was down from the second quarter.

But I would say the weakness is across the board.

Just a lack of activity.

What drives trading for us is activity levels, which are fueled by issuance, fueled by hedging, fueled by just general corporate activity, and there will be has been very little of that.

Right.

Is there any, I guess what weve seen across the board is increasing capital commitments, just in -- putting pressure, you don't think that's -- has anything to do with it?

No.

Okay.

I guess couple other things, when you said head count you said would be down somewhat.

Is that higher than the sequential increase of 2 to 3%?

I think I'll just leave it at somewhat.

Okay.

Couple other things.

Just on the Europe versus U.S., you can give us a feel for the relative strength and weakness of the different regions, Lehman indicated they had big quarter in Asia and Europe stronger on the fixed income side.

Unfortunately, with the exception of FICC, it would be the same relative weakness, both inside and outside the United States.

We continue to have in the range of plus or minus a few percent, 60% of our business, people, capital in the U.S.

And roughly 40% plus or minus a few outside the U.S..

And I would say that the business environment in Europe was as weak if not slightly weaker than in the U.S..

And in some pieces of Asia, like Korea, place like that, the business environment is quite strong but that's a small piece of our revenues.

Then just one more, on the non-comp, it looks like you had about a 30 million on the -- property.

30 million was the increase in occupancy of which the bulk was from the postponement.

Bulk.

Okay.

Do you think there's still more room in terms of bringing down the non-comp or are we starting to stabilize here?

You know, we're very focused on it.

As you can see, we've worked extremely hard to keep those costs down.

But I would not expect substantial declines in non-comp expenses.

Okay.

When you said currencies, mortgages and fixed income derivatives in terms of ranking the areas of outperformance, is there any -- would you put currencies number one, then mortgages?

That was not meant to rank them and I wouldn't.

Okay.

Thanks.

Your next question comes from Glen Shore of Deutsch Bank.

Thank you very much.

Just maybe going a little further in the equities business, you didn't mention specialists but given the volatility in the downward pushing in June and July, any comment you can give us on specialists?

No, we don't break out any individual business.

But I would say that the equities business was fairly weak across the board.

Okay.

How about -- as of the end of last quarter, I think there was 65 million, I want tab careful, shares available for sale throughout the employee base.

And as the company was brought into the S&P, I wondered if you have any comment on how much that accelerated , how you're managing that, how much is left in that bucket?

You know, we can get back to you.

I don't have the exact number.

But what I would tell you is other than on the day of the inclusion in the S&P, there was very little pressure by partners and employees to sell.

There were obviously some sales, but very little selling pressure, and I'm guessing part of that was price related.

Great.

So -- Should I take that as there's no not necessarily reason to expect any acceleration, meaning the next events on this issue is may of '03?

If you consider that an event.

I think people now have enough shares available to them that they will just sell them over time in the normal course.

I put that in quotes.

You couldn't see my fingers.

That's what I would assume.

And finally, on the topic, any update you can give us on interaction with the regulators, particularly with the state of Utah?

Let me just answer that question in general.

Rather than specifically.

It would be the same answer for everything.

They're obviously several investigations going on, it's very hard to speculate on what would happen.

We are cooperating fully with the investigators in every investigation.

Priority for all of us is to restore our confidence in the markets and in the system.

And we think finishing these investigations will be part of that process.

And all I can say is we remain confident in our business practices, and we think that they're all strong.

All righty.

Last and final one, is with oil prices on the rise, we haven't been speaking much about the commodities business lately.

But are we seeing signs of a pickup there at all?

Well, the commodities business, it's still a good business for Goldman Sachs.

There's obviously been somewhat less activity in the commodities business than there has been in the past and that's largely because there aren't that many counter-parties to trade with.

Lot of the energy companies have had quite a bit of difficulty, and so activity levels have been lower.

How things unfold in the Middle East could have an influence on the activity levels in the business.

All right.

Thank you, Dave.

No problem.

Your next question comes from Mark Constant of Lehman Brothers.

Good morning.

Just wanted to clarify the 30 million dollars from postponement and other occupancy equipment, that's all in this quarter, in other words, not into the 4th?

Yes.

Okay.

Did you comment about the professional services, anything unusual in that item at this level?

No.

Okay.

One thing to follow up, on Guy's commenting on the pipeline.

You put in that factor for likelihood, but are you also -- how do you treat if that net commentary, in timing?

Is that supposed to be with respect to the fourth quarter specifically or sort of go forward and total?

It is going forward.

But it's both probability and time weighted.

Okay.

The benefit that typically accrues to most or many trading businesses when volatility increases doesn't appear to have really happened in a lot of cases with lower corporate activity, positioning for seasonal patterns, et cetera.

Wondering if that might have been a different phenomenon this quarter where you did realize a benefit from volatility and greater than you might normally anticipate?

You see, in the FICC environment, there was a lot of activity.

While there wasn't a lot of -- there was much less debt issuance.

There was a lot of activity.

Because you had currencies moving around, interest rates staying low, lots of people wanting to hedge various exposures.

So it led to lots of activity in those markets.

As opposed to the equities markets, where although volatility implied volatility picked up, you just had very, very little trading activity.

Okay.

And in the secondary it was enough to more than compensate for the lower primary?

Yes.

Okay.

And then lastly, just thinking about the currency business, is that also one that is really -- think about as being pure volume volatility and risks management or is there a directional bias in that as with equity volatility?

All of our businesses are a mix of customer business and proprietary businesses, trading businesses.

So I can never say to anyone that we do not take proprietary risks in these businesses.

But most of our businesses have a very, very large component driven by helping our clients come up with structured solutions to their problems.

But there's nothing inherent in the product category that gives you a natural bias?

No.

Thank you.

Your next question comes from Riley Tyranny of Fox [Inaudible].

It's pretty obvious the results that you guys posted in FICC were vastly superior to the results from the other firms.

Would you say that proprietary trading was a greater contributor this quarter than it has been in the past?

And when we see the Q --we see the sense of the var being increased during the quarter, will we find that out.

I'll answer the second question first.

You'll see the var in the cue, and while you might see some blips when you look at the average var overall, for the firm, quarter over quarter, you will not see a material increase.

You'll see a small increase.

We don't break out the difference between proprietary trading and customer trading because it's very hard to conclude what is what.

There is a small percentage of our trading that is purely proprietary prayed, small percentage purely customer driven where we put two customers together.

But the great majority of what we do will be driven by trading with customers, where customers either ask us to do a transaction, well hedge something for them and then hold a position, we may lay it off in pieces to the market, so it's a mix of starting with a customer and ending up taking risks.

It's very hard to break out what is proprietary and what is customer.

Okay.

Let me ask this, David.

Are you today as you talk about the backlog and you hear the conversations internally, things that aren't in the backlog yet, are you less optimistic than you were three months ago about say the next one or two quarters prospects for the business?

Or generally, do you think things are pretty much unchanged?

I -- leaving aside the fact that we're three months farther, so I was more optimistic three months ago about where we would be today than I am today.

But if you look out, where do I think over the next six months, versus what I thought over the next six months, three months ago, I would say I'm equally pessimistic or equally cautious about it.

I think the environment right now is still quite difficult.

We continue to -- our economists continue to believe that sometimes towards the middle of next year it will pick up.

And things will start to improve.

But it certainly doesn't seem to be picking up now or certainly not between now and the end of the year.

Okay.

Thanks a lot.

Your next question comes from Judah Caroshaw of Merrill Lynch.

Hi, David.

Couple questions.

I wonder if you can talk about staffing models in investment banking business, given you're equally cautious, I guess I'm surprised we're not seeing more outward evidence of rationalization in the bank force.

And I'm curious whether you're doing things below the surface, in terms of combining specializations or other functional areas and whether you feel constrained by the small number of bankers you have versus bigger competitors.

Well, I guess what I would say is you -- we don't break out our head count by division.

And we are down 9%, total this year.

We -- it's likely we'll be down somewhat more before the end of the year.

In doing that, we are conscious both of making sure we have the strongest franchise but we also do understand the business environment that various of our businesses are operating in right now.

So we take all that into consideration.

And I wouldn't say we're constrained by anything, but I think we probably have been more aggressive than others in making sure our investment banking area is right sized.

We continue to focus on that.

That implies that if you have a 9% drop to date would you have something above that percentage wise?

We don't disclose those numbers.

Another thing I want to explore is your equity trading platform.

Two parts of the question, one is are there significant residual investments you need to make to build up the platform?

And secondly, can you talk about whether you've had -- how you measure the success of past investments of terms of share of market share trends and costs, improvements of the cost of the last couple years.

The first question is easy.

The answer is no.

There were no significant investments we think we need to build out the platform.

To take an investment like SLK to measure the success has been tough because obviously the markets turned down pretty significantly.

Shortly after we made the investment.

But within the context of that we're pleased with how it's doing, with the way the integration is going, with the way we've been able to get some of the Hull and some of the SLK technology brought into other parts of Goldman Sachs.

So procedurally, everything seems to be working well.

It would be helpful if the environment picked up a little bit.

And two final unrelated things, but can you give any light of terms of what your expectations are for performance fees in the Asset Management business and Lehman gave feel for option expense impact on the comp ratio. for next year, wondering if you could make a comment there as well.

We give no guidance on revenue in the 4th quarter of any kind.

And as far as option expense, our continuing guidance to you is that we would expect our revenue ratio next year to be 50% just like this year.

Okay.

Why would there be -- if there's an incremental expense, why wouldn't be there be a more noticeable impact?

We'll do it within our ratio.

Thank you, David.

You're welcome.

Your next question comes from Joan Solatare of Credit Suisse First Boston.

Good morning.

Keeping with comp for a minute, just given the additional reduction in head count, when are we going see say severance charge in the fourth quarter and how much will be done through encouraged attrition just very lower or zero bonuses?

Any severance we have has been and will likely be within our comp number.

So you will not see a special -- you have not seen a special number, I don't anticipate you will, but I never know what will happen.

And our -- you know, the last question is a hard one.

Our attrition is a mix of voluntary and involuntary turnover.

I'll leave it at that.

Okay.

And then going back to the var, can you be more specific by area?

Where has that picked up, and I guess characterizing that, how much is up because volatility is higher versus putting more assets to work in training?

It is a combination of those things, and you'll see the numbers in a couple weeks.

In the Q. But what I would say is you're not going to see on average a really material increase anywhere across the firm.

Okay.

And on diluted share count, down a couple percentage points, can you just talk about buyback plan fare and I was surprised the shrink average was that large, given all of the employees shares coming up.

Our buyback plan, Joan, continue to be to try to keep share count relatively stable.

As you know, the accounting for some of this gets a little funny sometimes because the share price can affect the accounting for shares outstanding.

So basically it just took out things that are now out of the money that were in the money?

Basically, yes.

Okay.

And then finally, just in terms of activity, and not specific backlog numbers, but I guess more field -- the fact that you're reducing at this point would suggest a bit more pessimism than the last three or six months.

No, I would say equal.

Equal.

Okay, thank you.

You're welcome.

Your next question comes from Michael Freudenstein of J.P. Morgan.

Hi, David.

Just two questions.

First is in terms of the backlog ,can you give us any sense of the mix with respect to advisory versus underwriting.

We don't disclose that, Michael.

okay.

I just wanted to go back to something alluded to earlier.

You've made a number of structural changes in the quarter, I guess NASDAQ you combined GS and SLK, currency and fixed income, you appear to have made some combinations there.

And capital markets I guess you were -- in some regions you merged your equity and debt capital markets, considering doing some more of that.

I'm just wondering, where we were are in that process both if in terms of is there more to be done there, and are the expense saves that could come out of that still to come?

You know, we are constantly reviewing our businesses, and reviewing them for two reasons.

One, are it help efficiency to drive costs down?

But also, will it help synergies to drive revenues up?

And either or both could be reasons we would sometimes combine businesses, if people sitting next to each other can be helpful, but also if we think theres efficiency in costs.

So we continue to review them, as you said we've talked about reviewing some of the capital markets businesses.

We're reviewing these and reviewing kind of all across the businesses we always do to see if there's things we can do more efficiently.

Thanks.

You're welcome.

Next question, Robert Silponty of Bank of America.

Hi, David.

You guided to next year's non- -- I'm sorry, comp to net revenue ratio 50% plus or minus one or two percent.

But does that hold for 4th quarter in particular?

I'm looking at last year's 4th quarter, it dipped below that.

How should we think about that in the fourth quarter?

It's our best estimate right now.

That it will be within the 48 to 52?

50% plus or minus a percent or two.

Something like two-thirds of our compensation is year end bonuses, we're going through process right now, obviously the final number will be what we actually pay.

But the best estimate we have today is 50%, and so that is why we're going there?

okay.

And on the private equity line, the hundred million dollar writedown, 125 million last quarter, 100 million this quarter, that's a big swing number in the revenue line given that I don't think there's much expense associated with that.

How should we be thinking with where that -- within where that writedown or no writedown next quarter goes, depending on -- what should we look at a proxy for how that might change from here?

You are aggressively marking these down every quarter.

we mark our positions to market when we think they're value is impaired on private investment, we mark it down so there's no catchup there.

As you had close to a 20% decline, in the equity markets, in the quarter.

And that led to -- and certainly even more so in the Telecom sector.

Private positions, and if you see a continued decline, then I would expect that those positions will become less valuable and the if the markets improve,we hope to see a pick up.

So -- Would that imply that maybe NASDAQ might be a better proxy to watch than some of other indices?

You know, they've all been pretty weak together recently.

And obviously our risk is a lot less than it was a year or so ago.

Not for the right reasons.

So I think you just need to look at all of the markets overall and how should we be thinking about the portfolio, in terms of global mix?

It is actually pretty diversified around the world.

I don't have the percentages right in front of me.

We can get back to you on that.

But certainly over the last couple of years, I think we've actually invested as much outside the United States both real estate and corporate as we have within the United States.

Get, thank you.

You're welcome.

Your next question comes from Michael Liper of Liper Advisory Services.

Good morning.

Good morning.

Focus a little bit on the Asset Management business, and the billion-six outflow.

Two perhaps related questions.

First, can you give us any color of how much of that was external accounts, meaning institutional accounts versus private client business?

And second, do you have any idea of whether any of that money stayed within Goldman Sachs's distinct asset management in the sense that they reinvested in individual securities or -- and or hedge funds that you have relationships with?

The answer to your second question is I don't know.

Overall, a billion-six in outflows on 350 billion dollars is a tiny outflow.

And it was virtually all in money market assets.

So we actually view that as pretty immaterial.

Okay.

In order to ask a question, please press star, then the number one on your telephone keypad.

Your next question comes from David Prone of Prudential Securities.

Hi.

Just a quick question.

On the Pharmacia assignment, assigned to the times when one transaction can be meaningful to the few cents.

Is it safe to assume that it is going to be generally back loaded on the closure date and if so, I've heard that was originally a November close, slipping into December potentially.

Do you have any information on that.

I don't know.

When the deal is scheduled to close.

We recognize the fees on all of our investment transactions when they are earned.

And it varies from transaction to transaction.

They will largely be earned when transactions are closed.

There are sometimes fees that are paid along the way and it just varies.

Okay.

Great.

Thank you.

No problem.

At this time, there are no further questions.

We'll go back to Mr. John Andrews for closing remarks.

We'd like to thank you for joining us today.

For those who would like to relisten to the call, it will be available within a few hours on replay both on our website and also by dialing 1-800-642-1687 or for international callers -- 1-706-645-9291, pass code for both numbers is 5653999.

Thank you for joining us today.

This concludes today's Goldman Sachs third quarter earnings conference call.

Thank you for participating.

You may now disconnected.