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Management’s Discussion and Analysis
The following table sets forth the carrying value of our goodwill by operating segment:
Goodwill by Operating Segment
As of November
(in millions) 2007 2006
Investment Banking
Financial Advisory $ — $ —
Underwriting 125 125
Trading and Principal Investments
FICC 123 136
Equities
(1)
2,381 2,381
Principal Investments 11 4
Asset Management and Securities Services
Asset Management
(2)
564 421
Securities Services 117 117
Total $3,321 $3,184
(1) Primarily related to SLK.
(2) Primarily related to Ayco. The increase in goodwill from November 2006 relates to our acquisition of Macquarie — IMM Investment Management.
IDENTIFIABLE INTANGIBLE ASSETS. We amortize our identifiable intangible assets over their estimated useful lives in accordance
with SFAS No. 142, and test for potential impairment whenever events or changes in circumstances suggest that an asset’s or asset
group’s carrying value may not be fully recoverable in accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets.” An impairment loss, calculated as the difference between the estimated fair value and the carrying
value of an asset or asset group, is recognized if the sum of the estimated undiscounted cash flows relating to the asset or asset group
is less than the corresponding carrying value.
The following table sets forth the carrying value and range of remaining useful lives of our identifiable intangible assets by major
asset class:
Identifiable Intangible Assets by Asset Class
As of November
2007 2006
Range of Estimated
Remaining
Carrying Useful Lives Carrying
($ in millions) Value (in years) Value
Customer lists
(1)
$ 732 3 – 18 $ 737
New York Stock Exchange (NYSE) specialist rights 502 14 542
Insurance-related assets
(2)
372 7 362
Exchange-traded fund (ETF) specialist rights 100 20 105
Power contracts
(3)
20 1 – 18 667
Other
(4)
45 1 – 5 89
Total $1,771 $2,502
(1) Primarily includes our clearance and execution and NASDAQ customer lists related to SLK and financial counseling customer lists related to Ayco.
(2) Consists of the value of business acquired (VOBA) and deferred acquisition costs (DAC). VOBA represents the present value of estimated future gross profits of the
variable annuity and life insurance business. DAC results from commissions paid by Goldman Sachs to the primary insurer (ceding company) on life and annuity reinsurance
agreements as compensation to place the business with us and to cover the ceding company’s acquisition expenses. VOBA and DAC are amortized over the estimated
life of the underlying contracts based on estimated gross profits, and amortization is adjusted based on actual experience. The seven-year useful life represents the
weighted average remaining amortization period of the underlying contracts (certain of which extend for approximately 30 years).
(3) The reduction in power contracts from November 2006 is due to the sale of the majority of our ownership interests in 14 power generation facilities during 2007.
(4) Primarily includes marketing and technology-related assets.
49Goldman Sachs 2007 Annual Report