Sallie Mae 2006 Annual Report Download - page 157

8. Long-Term Borrowings (Continued)
interest rate and foreign currency swaps are not reflected in the tables above. The Company swaps all foreign
currency denominated debt to U.S dollars except when funding foreign denominated assets.
Included in long-term debt is $2 billion aggregate principal amount of 32-year unsecured senior
convertible debentures 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
stock price has appreciated to 130 percent of the conversion price ($85.77) for a prescribed period, or the
Company calls the debentures. The convertible debentures bear interest at a floating rate equal to three-month
LIBOR minus .05 percent, until July 25, 2007, after which, the debentures can pay additional contingent
interest under certain circumstances. Beginning on July 25, 2007, the Company may call the debentures and
the investors may put the debentures, subject to certain conditions. Since the investors do not have the
unilateral right to put the bonds to the Company, they are classified as long-term in the Company’s balance
sheet.
At December 31, 2006, the Company had outstanding long-term borrowings with call features totaling
$11.4 billion, and had $5.8 billion of outstanding long-term borrowings that are putable by the investor to the
Company prior to the stated maturity date. Generally, these instruments are callable and putable at the par
amount. As of December 31, 2006, the stated maturities (for putable debt, the stated maturity date is the put
date) and maturities if accelerated to the call dates for long-term borrowings are shown in the following table:
Stated
Maturity
(1)
Maturity to
Call Date
(1)
December 31, 2006
Year of Maturity
2007 . . ............................................. $ 4,156,247 $ 8,045,376
2008 . . ............................................. 14,389,052 14,943,505
2009 . . ............................................. 15,294,665 15,832,060
2010 . . ............................................. 10,818,992 10,828,479
2011 . . ............................................. 11,040,837 11,189,886
2012 . . ............................................. 6,131,996 6,140,539
2013-2047 ........................................... 41,621,551 36,473,495
103,453,340 103,453,340
SFAS No. 133 (gains) losses on derivative hedging activities ...... 1,105,191 1,105,191
$104,558,531 $104,558,531
(1)
The Company views its on-balance sheet securitization trust debt as long-term based on the contractual maturity dates and
projects the expected principal paydowns based on the Company’s current estimates regarding loan prepayment speeds. The pro-
jected principal paydowns of $4.2 billion shown in year 2007 relate to the on-balance sheet securitization trust debt.
9. Student Loan Securitization
Securitization Activity
The Company securitizes its student loan assets and for transactions qualifying as sales retains a Residual
Interest and servicing rights (as the Company retains the servicing responsibilities), all of which are referred to
as the Company’s Retained Interest in off-balance sheet securitized loans. The Residual Interest is the right to
receive cash flows from the student loans and reserve accounts in excess of the amounts needed to pay
F-38
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)