Sallie Mae 2005 Annual Report Download - page 169

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)
F-47
11. Acquisitions (Continued)
been allocated to tangible and intangible assets based on a preliminary assessment of their fair values.
GRP employs approximately 60 individuals at its location in White Plains, New York.
The results of operations of GRP have been included in the Company’s consolidated financial
statements since the acquisition date and are reflected within the DMO segment’s financial results as
discussed further in Note 18, “Segment Reporting.’’ The acquisition and GRP’s pro forma results of
operations prior to the acquisition date were deemed immaterial to the Company’s consolidated financial
statements.
The Company allocated the purchase price to the fair values of the acquired tangible assets, liabilities
and identifiable intangible assets as of the acquisition date as determined by an independent appraiser.
The preliminary purchase price was initially allocated to purchased loan portfolios, real estate owned, and
other identifiable intangible assets. The preliminary purchase price allocation resulted in an excess
purchase price over the fair value of net assets acquired, or goodwill, of approximately $54 million. The
identifiable intangible assets include GRP’s trade name, an indefinite life intangible asset with a fair value
of approximately $4 million as of the acquisition date, and definite life intangible assets with aggregate fair
values of approximately $22 million as of the acquisition date.
Goodwill resulting from this transaction reflects the benefits the Company expects to derive from the
combined operations of GRP and the Company’s existing DMO business segment. Goodwill will be
reviewed for impairment in accordance with SFAS No. 142, as discussed further in Note 2, “Significant
Accounting Policies.’’
AFS Holdings, LLC
On December 22, 2005, the Company acquired an additional 12 percent interest in AFS for a
purchase price of approximately $59 million, increasing the Company’s total purchase price for its
76 percent controlling interest to approximately $226 million including cash consideration and certain
acquisition costs. AFS is a full-service, accounts receivable management company that purchases charged
off debt, conducts contingency collection work and performs third party receivables servicing across a
number of consumer asset classes. Under the terms of the September 2004 purchase agreement, the
Company has the option to purchase the remaining minority interest in AFS over the next two year period.
The results of operations of AFS have been included in the Company’s consolidated financial
statements since the acquisition of the Company’s initial 64 percent interest on September 16, 2004 and are
reflected within the Company’s DMO segment results as discussed further in Note 18, “Segment
Reporting.” The acquisition and AFS’s pro forma results of operations prior to the acquisition date were
deemed immaterial to the Company’s consolidated financial statements.
During 2005, the Company finalized its purchase price allocation associated with its acquisition of its
64 percent controlling interest in AFS during 2004. The initial purchase price of $167 million has been
allocated to the fair values of the acquired intangible assets, liabilities and identifiable intangible assets as
of the acquisition date as determined by an independent appraiser. The final purchase price allocation
resulted in an excess purchase price over the fair value of net assets acquired, or goodwill, of approximately
$155 million. The preliminary purchase price allocation associated with the December 2005 acquisition of
an additional 12 percent interest resulted in goodwill of approximately $46 million, increasing goodwill
associated with the acquisition of AFS to $155 million. The remaining fair value of AFS’s assets and
liabilities was primarily allocated to purchased loan portfolios and other identifiable intangible assets.