Goldman Sachs 2007 Annual Report Download - page 55

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Management’s Discussion and Analysis
The following table sets forth our operating expenses and number of employees:
Operating Expenses and Employees
Year Ended November
($ in millions) 2007 2006 2005
Compensation and benefits
(1)
$20,190 $16,457 $11,758
Brokerage, clearing, exchange and distribution fees 2,758 1,985 1,416
Market development 601 492 378
Communications and technology 665 544 490
Depreciation and amortization 624 521 501
Amortization of identifiable intangible assets 195 173 124
Occupancy 975 850 728
Professional fees 714 545 475
Cost of power generation 335 406 386
Other expenses 1,326 1,132 709
Total non-compensation expenses 8,193 6,648 5,207
Total operating expenses $28,383 $23,105 $16,965
Employees at year end
(2)
30,522 26,467 23,623
(1)
Compensation and benefits includes $168 million, $259 million and $137 million for the years ended November 2007, November 2006 and November 2005, respectively,
attributable to consolidated entities held for investment purposes. Consolidated entities held for investment purposes are entities that are held strictly for capital appreciation,
have a defined exit strategy and are engaged in activities that are not closely related to our principal businesses.
(2)
Excludes 4,572, 3,868 and 7,382 employees as of November 2007, November 2006 and November 2005, respectively, of consolidated entities held for investment
purposes (see footnote 1 above).
The following table sets forth non-compensation expenses of consolidated entities held for investment purposes and our remaining
non-compensation expenses by line item:
Non-Compensation Expenses
Year Ended November
(in millions) 2007 2006 2005
Non-compensation expenses of consolidated investments
(1) $ 446 $ 501 $ 265
Non-compensation expenses excluding consolidated investments
Brokerage, clearing, exchange and distribution fees 2,758 1,985 1,416
Market development 593 461 361
Communications and technology 661 537 487
Depreciation and amortization 509 444 467
Amortization of identifiable intangible assets 189 169 124
Occupancy 892 738 674
Professional fees 711 534 468
Cost of power generation 335 406 386
Other expenses 1,099 873 559
Subtotal 7,747 6,147 4,942
Total non-compensation expenses, as reported $8,193 $6,648 $5,207
(1) Consolidated entities held for investment purposes are entities that are held strictly for capital appreciation, have a defined exit strategy and are engaged in activities that
are not closely related to our principal businesses. For example, these investments include consolidated entities that hold real estate assets, such as hotels, but exclude
investments in entities that primarily hold financial assets. We believe that it is meaningful to review non-compensation expenses excluding expenses related to these
consolidated entities in order to evaluate trends in non-compensation expenses related to our principal business activities. Revenues related to such entities are included
in “Trading and principal investments” in the consolidated statements of earnings.
53Goldman Sachs 2007 Annual Report