Sallie Mae 2005 Annual Report Download - page 178

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)
F-56
14. Stockholders’ Equity (Continued)
Accumulated Other Comprehensive Income
Accumulated other comprehensive income includes the after-tax change in unrealized gains and losses
on investments, unrealized gains and losses on derivatives, and the minimum pension liability adjustment.
The following table presents the cumulative balances of the components of other comprehensive income
for the years ended December 31, 2005, 2004 and 2003.
December 31,
2005 2004 2003
Net unrealized gains (losses) on investments(1) .................... $382,316 $467,374 $510,223
Net unrealized gains (losses) on derivatives(2) ..................... (12,560) (25,658) (83,302)
Minimum pension liability adjustment(3) .......................... (1,846) (1,044) (1,300)
Total accumulated other comprehensive income .................. $367,910 $440,672 $425,621
(1) Net of tax expense of $203,495, $251,178 and $274,736 for the years ended December 31, 2005, 2004 and 2003.
(2) Net of tax benefit of $4,667, $12,220 and $44,855 for the years ended December 31, 2005, 2004 and 2003.
(3) Net of tax benefit of $994, $562 and $700 for the years ended December 31, 2005, 2004 and 2003.
15. Earnings per Common Share
Basic earnings per common share (“basic EPS”) is calculated using the weighted average number of
shares of common stock outstanding during each period. Diluted earnings per common share (“diluted
EPS”) reflect the potential dilutive effect of (i) additional common shares that are issuable upon exercise
of outstanding stock options, deferred compensation, restricted stock units, and the outstanding
commitment to issue shares under the Employee Stock Purchase Plan (“ESPP”), determined by the
treasury stock method, (ii) the assumed conversion of convertible debentures, determined by the “if-
converted” method, and (iii) equity forward contracts, determined by the reverse treasury stock method.
Diluted EPS for the year ended December 31, 2003 also includes the dilutive effect of stock warrants,
which were exercised in June 2003.
At December 31, 2005, the Company had $2 billion contingently convertible debentures (“Co-Cos”)
outstanding that are convertible, under certain conditions, into shares of SLM common stock at an initial
conversion price of $65.98. The investors generally can only convert the debentures if the Company’s
common stock has appreciated to 130 percent of the conversion price ($85.77) for a prescribed period, or
the Company calls the debentures. Per EITF No. 04-8, diluted EPS for all periods presented includes the
potential dilutive effect of the Company’s outstanding Co-Cos for the years ended December 31, 2005,
2004 and 2003.