Sallie Mae 2007 Annual Report Download - page 142

2. Significant Accounting Policies (Continued)
Accounting for Uncertainty in Income Taxes
The Company adopted the provisions of the FASB’s FIN No. 48, “Accounting for Uncertainty in Income
Taxes,” on January 1, 2007.
FIN No. 48, amends SFAS No. 109, “Accounting for Income Taxes,” and includes the following
interpretations:
• Changes historical methods of recording the impact to the financial statements of uncertain tax
positions from a model based upon probable liabilities to be owed, to a model based upon the tax
benefit most likely to be sustained.
• Prescribes a threshold for the financial statement recognition of tax positions taken or expected to be
taken in a tax return, based upon whether it is more likely than not that a tax position will be sustained
upon examination.
• Provides rules on the measurement in the financial statements of tax positions that meet this recognition
threshold, requiring that the largest amount of benefit that is greater than 50 percent likely of being
realized upon ultimate settlement to be recorded.
• Requires new disclosures regarding uncertain tax positions.
Minority Interest in Subsidiaries
At December 31, 2007 and 2006, minority interest in subsidiaries represents interests held by minority
shareholders in AFS Holdings, LLC, of approximately 12 percent for both years.
Earnings (Loss) per Common Share
The Company computes earnings (loss) per common share (“EPS”) in accordance with SFAS No. 128,
“Earnings per Share.” See Note 13, “Earnings (Loss) per Common Share,” for further discussion.
Foreign Currency Transactions
The Company has financial services operations in foreign countries. The financial statements of these
foreign businesses have been translated into U.S. dollars in accordance with U.S. GAAP. The net investments
of the parent in the foreign subsidiary are translated at the current exchange rate at each period-end through
the “other comprehensive income” component of stockholders’ equity for net investments deemed to be long-
term in nature or through net income if the net investment is short-term in nature. Income statement items are
translated at the average exchange rate for the period through income. Transaction gains and losses resulting
from exchange rate changes on transactions denominated in currencies other than the entity’s functional
currency are included in other operating income.
Statement of Cash Flows
Included in the Company’s financial statements is the consolidated statement of cash flows. It is the
policy of the Company to include all derivative net settlements, irrespective of whether the derivative is a
qualifying hedge, in the same section of the Statement of Cash Flows that the derivative is economically
hedging.
As discussed in the Restricted Cash and Investments section of this note, the Company’s restricted cash
balances primarily relate to on-balance sheet securitizations. This balance is primarily the result of timing
F-21
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise stated)