Sallie Mae 2006 Annual Report Download - page 169

11. Acquisitions (Continued)
Identifiable intangible assets at the acquisition date include the Upromise trade name, an indefinite life
intangible asset, with an aggregate fair value of approximately $31 million as of the acquisition date. Definite
life intangible assets with aggregate fair values of approximately $122 million as of the acquisition date
consist primarily of participant, member and partner relationships, and member deposits. These definite life
intangible assets will be amortized over one to 15 years depending on the economic benefit derived from each
of the underlying assets.
The Company’s purchase price allocation as of December 31, 2006 is preliminary as the Company is
awaiting the final results of a valuation that is being performed by an independent appraiser. The Company
does not anticipate any significant differences between its preliminary purchase price allocation and the final
allocation which the Company expects to complete by the end of the third quarter 2007.
The results of operations of Upromise have been included in the Company’s consolidated financial
statements since the acquisition date and are reflected within the Company’s Corporate and Other business
segment results as discussed further in Note 18, “Segment Reporting.” The acquisition and Upromise’s pro
forma results of operations prior to the acquisition date were deemed immaterial to the Company’s
consolidated financial statements.
AFS Holdings, LLC
On December 29, 2006, the Company acquired an additional 12 percent interest in AFS for a purchase
price of approximately $51 million increasing the Company’s total purchase price for its 88 percent controlling
interest to approximately $277 million including cash consideration and certain acquisition costs. AFS is a
full-service, accounts receivable management company that purchases charged-off debt 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 12 percent minority interest in
AFS within the next year.
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 business 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.
The acquisition was accounted for under the purchase method of accounting as defined in SFAS No. 141.
During 2006, the Company finalized its purchase price allocation associated with its December 2005
acquisition of an additional 12 percent interest in AFS. The initial purchase price of $59 million has been
allocated to the fair values of the acquired tangible assets, liabilities assumed 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
$53 million. The preliminary purchase price allocation associated with the December 2006 acquisition of an
additional 12 percent interest resulted in goodwill, of approximately $45 million increasing goodwill associated
with the Company’s acquisition of AFS to $207 million. The remaining fair value of AFS’s assets and
liabilities at each respective acquisition date was primarily allocated to purchased loan portfolios and other
identifiable intangible assets.
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
F-50
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)