- Merchant banking revenues were flat, compared to a gain of $35 million of November 2006 quarter and a loss of $29 million in the August 2007 quarter.
- Global clearing services net revenues increased by 2% to $276 million when compared to $271 million in November 2006 quarter.
- Net interest revenues increased 1% to $205 million from $203 million in last year''s quarter, as average margin debt balance has increased from the levels reached from November 2006 quarter.
- Clearance commission and other revenue increased 3% to $70 billion from $68 billion in the year ago quarter due to increased customer activity.

- Sequentially, global clearance services revenue decreased 17% when compared to the record revenues of $332 million earned in the August 2007 quarter.
- Net interest revenue decreased 21% from a record $259 million in the third quarter, as average margin debt customer short balance decreased.
- Clearance commission and other revenues decreased 4% from $73 million in the August quarter due to reduce customer activity.

Average customer margin balances increased 14% to $82 billion from $72 billion in the November 2006 period and down 20% from $102 billion in the August 2007 period.

- Average customer short balances were $85 billion, down 6% from $90 billion in November 2006 period and down 17% from a record $102 billion in the August period.
- Average securities borrowed balances were $61 billion, up 6% from $58 billion in November 2006 period, and down 12% from $70 billion in the August quarter.
- The decline in average customer margin debt and short balances when compared to the August quarterly levels reflects client deleveraging due to the challenging market environment, as well as prime broker balance reallocations experienced during early August.
- Customer balances have increased after lows experienced in the third quarter, and new business prospects remain strong.

- Equity in client accounts increased 2% to $289 billion when compared to the August 2007 quarter.
- Customer margin balances were $86 billion, customer short balances were $88 billion and security borrowed balances were $63 billion.

Wealth Management net revenues increased 10% to $272 million when compared to $247 million in the November 2006 quarter.

- Private Client Services net revenue rose 20% to $161 million from a $134 million earned in the year ago quarter, primarily reflecting growth in fee-based revenues and commissions.
- Fee-based assets in PCS customer account is 9%, $11.1 billion at the end of the fourth quarter compared to $10.2 billion in the year ago period.
- Asset Management revenues were a $111 million, down from a $113 million earned in the November 2006 quarter.

The strong results were primarily due to growth in management fees on alternative assets and traditional fixed income assets. In addition, performance fees increased and growth of fees in proprietary hedge fund products.

Sequentially, Wealth Management revenues increased from the loss of $38 million when compared to the August 2007 quarter, as the business rebounded in the third quarter which included a $170 million loss in the asset management area.

- Sequentially, assets under management were down 23% from the levels of August 2007. The decline in assets under management primarily relates to the $8.8 billion transfer of assets related to the spin-off of Ocean C Asset Management. Under the terms of the agreement, PCM will maintain a continuing interest in the results of Ocean C and will maintain a sub-advisory arrangement of $3.5 billion of AUM.
- Alternative assets under management were $8.3 billion in November 30, down 7% from $8.9 billion at August 31, but up 6% from $7.8 billion in November 2006.

Total expenses were $992 million, down 35% from the year ago quarter and down 14% from August 2007 quarter.

- The decline in total expenses is primarily due to lower employee compensation and benefit expenses, which decreased both sequentially and year-over-year due to lower net revenues.
- Employee compensation and benefits was $326 million, a decrease of 69% from $1.05 billion in the fourth quarter of 2006. Sequentially, employee compensation and benefits decreased 51% from $664 million in the August 2007 quarter.
- Compensation and net revenues for the year ended November 2007 was 57.6% as compared to 47.1% fiscal 2006. The increase in compensation ratios, when compared to fiscal 2006, reflects the impact of the significant decline in net revenues experienced during 2007 associated with losses recognized in mortgage and asset-backed products.
- The compensation ratio increased as other areas of the company performed well, and compensation levels needed to be maintained in order to reflect market levels.

Worldwide headcount is 14,100 up from 13,600 in November 30, 2006, were down from the 15,500 level reached in the sequential quarter.

- Headcount was reduced by action and attrition of approximately 9% in 1400 employees reflecting the difficult global credit markets.

- Non-compensation expenses were $666 million, an increase of 42% when compared to $468 million in November 2006 quarter. The increase in non-compensation related cost when compared to November 2006 quarter is primarily related to increase severance expenses, legal settlements, and professional fees. These increases were partially offset by lower CAP plan related expenses.
- Adding to the increase of non-compensation expenses are higher transaction related costs associated with higher business volumes, as well as higher occupancy, communication, and technology cost associated with the increase in worldwide employee headcount.
- Sequentially, non-compensation expenses increased 35% when compared to $492 million in the August 2007 quarter, associated with severance cost, increased legal related expenses, and minority interest cost. CAP plan-related expenses were a credit of $59 million versus $46 million of expenses in November 2006 quarter attributable to the decreased level of earnings. Sequentially CAP plan related expenses were $4 million in the August 2007 quarter.

Tax rate was a benefit of 38%, reflecting the net loss before income taxes and relatively fixed level of tax-preference items.

- Year-to-date tax rate moved to a net tax benefit of 21%, as compared to a tax rate of 34.7% for the full fiscal year 2006, reflecting the mix of domestic and international profits.
- Book value was $84.9 per share with a $136.2 million shares outstanding. Book value declined from August 31, 2007, primarily reflecting the impact of the net loss in the fourth quarter in treasury stock purchases.
- The company repurchased $3.4 million shares of common shock at an aggregate cost of $373 million.
- At November 30, 2007, approximately 7% of the firm assets were considered level three assets.

Firm-wide VAR at the end of the quarter increased to $69 million when measured against the August 31, 2007 amount.

- While the company reduced positions and risks, the increase on VAR is primarily the result of the increase in market volatility and the impact of the Williams transaction which closed during the period.
- Total stockholders equity was $11.8 billion and total capital was $80.3 billion.
- The company moved to enhance liquidity position by reducing the risk on balance sheet, continuing to reduce commercial paper outstandings and increasing secured term funding and maintaining strong cash liquidity flow.

- Commercial paper outstanding currently stands at $3.9 billion compared to $4.6 billion and $20.7 billion at August 31 2007 and November 30, 2006 respectively.
- The firm''s parent company liquidity pool, which consists of high quality money market instrument, stands at $17.4 billion. In addition, readily available secured and unsecured committed bank lines are approximately $8 billion.