Goldman Sachs 2004 Annual Report Download - page 84

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notes฀to฀consolidated฀financial฀statements
82฀฀฀G O L D M A N ฀ S A C H S ฀ 2 004฀ A N N U A L ฀ R E P O RT
the dilutive effect of the common stock deliverable pursuant to
stock options and restricted stock units for which future service
is required as a condition to the delivery of the underlying
common stock.
CASH฀AND฀ CASH฀ EQUIVALENTS
The firm defines cash equivalents as highly liquid overnight
deposits held in the ordinary course of business.
RECENT฀ACCOUNTING฀ DEVELOPMENTS
In December 2003, the FASB issued FIN No. 46-R. FIN No. 46-R
replaced FIN No. 46, which was issued in January 2003. As per-
mitted, the firm adopted either FIN No. 46 or FIN No. 46-R for
substantially all VIEs in which the firm held a variable interest as
of November 2003. As of May 2004, the firm adopted FIN
No. 46-R for all VIEs in which it held a variable interest. The
effect of the firm’s adoption of FIN No. 46 and FIN No. 46-R was
not material to the firm’s financial condition, results of operations
or cash flows.
In December 2003, the FASB issued SFAS No. 132 (revised
2003), “Employers’ Disclosures about Pensions and Other
Postretirement Benefits.” SFAS No. 132 (revised 2003) amends
the disclosure requirements for pension plans and other postre-
tirement benefits by requiring additional disclosures such as
descriptions of the types of plan assets, investment strategies,
measurement dates, plan obligations, cash flows and compo-
nents of net periodic pension costs recognized during interim
periods. The statement does not change the measurement or
recognition of plan assets and obligations. The firm adopted the
interim period disclosures beginning with the first quarter of
fiscal 2004. As required, the firm adopted the annual disclosure
provisions effective for the firm’s fiscal year ending
November 2004. See Note 11 for further information regarding
the firm’s employee benefit plans.
In May 2004, the FASB issued FASB Staff Position (FSP)
No. FAS 106-2, “Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003,” which supersedes FSP
No. FAS 106-1 of the same title issued in January 2004. The
Medicare Prescription Drug, Improvement and Modernization
Act of 2003 (the Medicare Act) introduces a federal subsidy to
sponsors of retiree health care benefit plans that provide a ben-
efit that is at least actuarially equivalent to Medicare Part D.
Management has concluded that, if provisions are finalized in
their current form, benefits provided under the firm’s plan meet
the “actuarially equivalent” standard set forth in the Medicare
Act. As permitted, the firm prospectively adopted FSP
No. FAS 106-2 in the fourth quarter of fiscal 2004, thereby
reducing the firm’s accumulated benefit obligation by $13 million.
The impact on net periodic postretirement benefit cost in future
periods is not expected to have a material effect on the firm’s
financial condition, results of operations or cash flows.
In December 2004, the FASB issued a revision to SFAS No. 123,
“Accounting for Stock-Based Compensation,” SFAS No. 123-R,
“Share-Based Payment.” SFAS No. 123-R focuses primarily on
transactions in which an entity exchanges its equity instruments
for employee services and generally establishes standards for the
accounting for transactions in which an entity obtains goods or
services in share-based payment transactions. SFAS No. 123-R
is effective for the firm’s fourth quarter of fiscal 2005.
Management is currently evaluating the effect of adoption of
SFAS No. 123-R, but does not expect adoption to have a mate-
rial effect on the firm’s financial condition, results of operations
or cash flows.
BES฀•฀Phone฀(201)฀635-5240฀฀•฀FAX฀(201)฀635-5199
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