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GOLDMAN฀SAC H S ฀ 2004฀ A N N U A L ฀ R E P ORT ฀ ฀ ฀ 4 1
management’s฀discussion฀and฀analysis
management’s฀discussion฀and฀analysis
GOLDMAN฀SAC H S ฀ 2004฀ A N N U A L ฀ R E P ORT ฀ ฀ ฀ 4 1
fourth quarter of 2003, and recognized an impairment charge of
$133 million. The estimated fair value of the option specialist
rights was derived from estimated discounted cash flows. We
also surrendered certain option specialist rights in earlier quar-
ters of 2003, recognizing total charges of $20 million. There
were no intangible asset impairments in fiscal 2004.
A prolonged period of weakness in global equity markets and
the trading of securities in multiple markets and on multiple
exchanges could adversely impact our businesses and impair
the value of our goodwill and/or identifiable intangible assets.
In addition, an announced restructuring by the NYSE or any
other exchange on which we hold specialist rights or an adverse
action or assessment by a regulator could indicate a potential
impairment of the associated identifiable intangible assets.
Use of Estimates
The use of generally accepted accounting principles requires
management to make certain estimates. In addition to the esti-
mates we make in connection with fair value measurements and
the accounting for goodwill and identifiable intangible assets,
the use of estimates is also important in determining provisions
for potential losses that may arise from litigation and regulatory
proceedings and tax audits. We estimate and provide for poten-
tial losses that may arise out of litigation and regulatory pro-
ceedings and tax audits to the extent that such losses are
probable and can be estimated, in accordance with SFAS No. 5,
“Accounting for Contingencies.” Significant judgment is
required in making these estimates and our final liabilities may
ultimately be materially different.
The following table sets forth the carrying value and range of remaining useful lives of our identifiable intangible assets by major
asset class:
identifiable฀intangible฀assets฀by฀asset฀class
฀ ฀ AS฀OF฀NOVEMBER
฀ ฀ 2004฀ 2003
฀ ฀ ฀ RANGE฀OF฀REMAINING฀ ฀
฀ ฀ CARRYING฀ USEFUL฀LIVES฀ CARRYING฀
($฀IN฀MILLIONS)฀ VALUE฀ (IN฀YEARS)฀ VALUE
Customer lists(1) $฀฀฀828฀ 7฀฀–฀฀20 $฀฀฀880
New York Stock Exchange (NYSE) specialist rights 607฀ 23฀฀–฀฀26 636
Exchange-traded fund (ETF) and option specialist rights 121฀ 23 ฀ 130
Other(2) 133฀ 3฀฀–฀฀8 174
Total $1,689฀ ฀ $1,820
฀
(1)฀฀Primarily฀includes฀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)฀Primarily฀includes฀technology-related฀assets฀acquired฀in฀our฀combination฀with฀SLK.
BES฀•฀Phone฀(201)฀635-5240฀฀•฀FAX฀(201)฀635-5199
BPX/S10829฀•฀Flow฀16฀•฀Proof฀10฀•฀2/4/05฀•฀RUSH
Our total liability in respect of litigation and regulatory pro-
ceedings is determined on a case-by-case basis and represents an
estimate of probable losses after considering, among other fac-
tors, the progress of each case, our experience and the experi-
ence of others in similar cases, and the opinions and views of
legal counsel. Given the inherent difficulty of predicting the
outcome of our litigation matters, particularly in cases in which
claimants seek substantial or indeterminate damages, we cannot
estimate losses or ranges of losses for cases where there is only
a reasonable possibility that a loss may have been incurred. See
“Legal Proceedings” in Part I, Item 3 of the Annual Report on
Form 10-K for information on our judicial, regulatory and
arbitration 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 conditions on our results of operations,
see “— Business Environment” and “— Certain Factors That
May Affect Our Business” included above, and “— Business
— Certain Factors That May Affect Our Business” in Part I,
Item 1 of the Annual Report on Form 10-K.