Goldman Sachs 2003 Annual Report Download - page 43

Management’s Discussion and Analysis
GOLDMAN SACHS 2003 ANNUAL REPORT 41
The following table sets forth the carrying value and range of remaining useful lives of our identifiable intangible assets
by major asset class:
IDENTIFIABLE INTANGIBLE ASSETS BY ASSET CLASS
AS OF NOVEMBER
2003 2002
RANGE OF
REMAINING
CARRYING USEFUL LIVES CARRYING
($ IN MILLIONS) VALUE (IN YEARS) VALUE
Customer lists $880
(1) 8 – 21 $ 765
NYSE specialist rights 636 24 – 26 666
Option and exchange-traded fund
(ETF) specialist rights 130 2 – 24 291
Other 174(2) 4 – 9 258
Total $1,820 $1,980
(1) Includes primarily our clearance and execution and Nasdaq customer lists acquired in our combination with SLK and financial counseling customer
lists acquired in our combination with Ayco.
(2) Includes primarily technology-related assets acquired in our combination with SLK.
A prolonged period of weakness in global equity mar-
kets, the trading of securities in multiple markets and on
multiple exchanges, and the ongoing NYSE and SEC
investigations into the stock specialist business could
adversely impact our businesses and impair the value of
our goodwill and/or identifiable intangible assets. In
addition, an announced restructuring by the NYSE or
any other exchange on which we hold specialist rights or
an adverse action or assessment by a regulator could
indicate a potential impairment of the associated identi-
fiable intangible assets.
USE OF ESTIMATES
The use of generally accepted accounting principles
requires management to make certain estimates. In addi-
tion to the estimates we use in connection with fair value
measurements and the accounting for goodwill and iden-
tifiable intangible assets, the use of estimates is also impor-
tant in determining provisions for potential losses that
may arise from litigation and regulatory proceedings.
We provide for potential losses that may arise out of litiga-
tion and regulatory proceedings to the extent that such
losses are probable and can be estimated, in accordance
with SFAS No. 5, “Accounting for Contingencies.” Our
total liability in respect of litigation and regulatory
proceedings, which is determined on a case-by-case basis,
represents our best estimate of probable losses after con-
sidering, among other factors, the progress of each case,
our experience and the experience of others in similar
cases, and the opinions and views of legal counsel.
However, significant judgment is required in making this
estimate and our final liability may turn out to be mate-
rially different. During 2003, we recorded provisions of
$159 million in respect of a number of litigation and reg-
ulatory proceedings. See “Legal Proceedings” in our
Annual Report on Form 10-K for our 2003 fiscal year
for information on our judicial, regulatory and arbitra-
tion proceedings.
RESULTS OF OPERATIONS
The composition of our net revenues has varied over time
as financial markets and the scope of our operations have
changed. The composition of net revenues can also vary
over the shorter term due to fluctuations in U.S. and
global economic and market conditions. For a further
discussion of the impact of economic and market condi-
tions on our results of operations, see “— Business
Environment” and “— Certain Factors That May Affect
Our Business.”