Sallie Mae 2005 Annual Report Download - page 170

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)
F-48
11. Acquisitions (Continued)
Goodwill resulting from these transactions reflects the benefits the Company expects to derive from
AFS’s experienced management team, existing servicing platform and several new asset classes in a new
line of business. It also reflects the benefits from the combined operations of AFS 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.”
Identifiable intangible assets at each respective acquisition date includes AFS’s trade name, an
indefinite life intangible asset with an aggregate fair value of approximately $13 million as of the
acquisition dates, and definite life intangible assets with aggregate fair values of approximately $19 million
as of the acquisition dates, $15 million of which is attributed to customer relationships.
Southwest Student Services Corporation
On October 15, 2004, the Company purchased all of the outstanding stock of Southwest Student
Services Corporation (“Southwest”) from the Helios Education Foundation for total consideration of
approximately $533 million including cash of $525 million and restricted stock of $8 million, the exercise of
which is contingent on the combined company’s achievement of specified loan origination volumes.
Southwest provides for the origination, funding, acquisition and servicing of education loans. Southwest
provides student loans and related services nationally with a primary focus on colleges and universities in
Arizona and Florida.
The results of operations of Southwest have been included in the Company’s consolidated financial
statements since the acquisition date and are reflected within the Company’s lending segment results as
discussed further in Note 18, “Segment Reporting.” The acquisition and Southwest’s pro forma results of
operations prior to the acquisition date were deemed immaterial to the Company’s consolidated financial
statements.
The Company finalized its purchase price allocation in 2005 allocating the purchase price 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 $185 million.
Goodwill will be reviewed for impairment in accordance with SFAS No. 142 as discussed further in Note 2,
“Significant Accounting Policies.”
Education Assistance Foundation and Student Loan Finance Association
On July 1, 2005, the Company closed the second step in a two step purchase of the secondary market
and related businesses of EAF and SLFA and its subsidiaries for a purchase price of approximately
$61 million, increasing its purchase price to approximately $496 million.
The first step of the transaction closed on December 13, 2004, which included SLFA’s $1.8 billion
student loan portfolio (and the related funding). In addition, the Company entered into a full service
guarantor servicing contract with EAF’s affiliate, Northwest Education Association (“NELA”), a
guarantee agency for FFELP student loans that serves the Pacific Northwest and acquired all of the
outstanding voting common stock for a 66 percent equity interest and an option to purchase the remaining
equity within six to eight months in Washington Transferee Corporation (“WTC”), an indirect subsidiary