Goldman Sachs 2004 Annual Report Download - page 103

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GOLDMAN฀SAC H S ฀ 2 0 0 4 ฀ANNUAL฀ R E P O RT฀฀฀101
notes฀to฀consolidated฀financial฀statements
GOLDMAN฀SAC H S ฀ 2 0 0 4 ฀ANNUAL฀ R E P O RT฀฀฀101
Significant components of the firm’s deferred tax assets and liabilities are set forth below:
฀ ฀ AS฀OF฀NOVEMBER
(IN฀MILLIONS)฀ 2004฀ 2003
Deferred tax assets
Compensation and benefits $฀฀฀920 $1,301
Unrealized losses — 177
Other, net 227 156
1,147 1,634
Valuation allowance(1) (21) (18)
Total deferred tax assets 1,126 1,616
Deferred tax liabilities
Depreciation and amortization 383 196
Unrealized gains 180 —
Total deferred tax liabilities $฀฀฀563 $฀฀฀196
(1)฀Relates฀primarily฀to฀the฀ability฀to฀utilize฀certain฀state฀and฀local฀and฀foreign฀tax฀credits.฀
The weighted average fair value of options granted during fiscal 2004, fiscal 2003 and fiscal 2002 was $32.22 per option,
$31.31 per option and $27.38 per option, respectively. Fair value was estimated as of the grant date based on a binomial option-
pricing model using the following weighted average assumptions:
฀ ฀ YEAR฀ENDED฀NOVEMBER
฀ ฀ 2004฀ 2003฀2002฀
Risk-free interest rate 3.4%฀ 3.4%฀ 3.5%
Expected volatility 35.0฀ 35.0฀ 35.0
Dividend yield 1.0฀ 1.0฀ 0.6
Expected life 5฀years฀ 5฀years฀ 5฀years
NOTE฀13
Income Taxes
The components of the net tax expense reflected in the consolidated statements of earnings are set forth below:
฀ ฀ YEAR฀ENDED฀NOVEMBER
(IN฀MILLIONS)฀ 2004฀ 2003฀2002
Current taxes
U.S. federal $฀ ฀374 $฀ ฀680฀ $฀ ฀543
State and local 46 115฀ 35
Non-U.S. 663 552฀ 331
Total current tax expense 1,083 1,347฀ 909
Deferred taxes
U.S. federal 827 22฀ 7
State and local 98 27฀ 102
Non-U.S. 115 44฀ 121
Total deferred tax expense 1,040 93฀ 230
Net tax expense $2,123 $1,440฀ $1,139
Deferred income taxes reflect the net tax effects of temporary
differences between the financial reporting and tax bases of
assets and liabilities. These temporary differences result in
taxable or deductible amounts in future years and are meas-
ured using the tax rates and laws that will be in effect when
such differences are expected to reverse.
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