Sallie Mae 2007 Annual Report Download - page 159

6. Goodwill and Acquired Intangible Assets (Continued)
loans on which the Company is entitled to earn a 9.5 percent yield. These impairment charges were recorded
to operating expense in the Lending operating segment.
A summary of changes in the Company’s goodwill by reportable segment is as follows:
(Dollars in millions)
December 31,
2006
Acquisitions/
Other
December 31,
2007
Lending ..................................... $406 $(18) $388
Asset Performance Group ........................ 349 28 377
Corporate and Other ............................ 215 (15) 200
Total ....................................... $970 $ (5) $965
(Dollars in millions)
December 31,
2005
Acquisitions/
Other
December 31,
2006
Lending ..................................... $410 $ (4) $406
Asset Performance Group ........................ 299 50 349
Corporate and Other ............................ 64 151 215
Total ....................................... $773 $197 $970
Under the terms of the September 2004 purchase agreement pursuant to which the Company acquired a
64 percent controlling interest in AFS Holdings, LLC (“AFS”), the Company exercised its options on
December 29, 2006 and December 22, 2005, to acquire additional 12 percent interests in AFS for
approximately $61 million and $59 million, respectively, including cash consideration and certain acquisition
costs, increasing the Company’s interest in AFS to 88 percent and 76 percent, as of December 31, 2006 and
2005, respectively. 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. In the third
quarter of 2007 and 2006, the Company finalized its purchase price allocations associated with the
December 29, 2006 and December 22, 2005 acquisitions of the additional 12 percent interests in AFS resulting
in excess purchase price over the fair value of net assets acquired, or goodwill, of $45 million and $53 million,
respectively, and increasing the aggregate goodwill associated with the Company’s acquisition of AFS to
$207 million and $162 million, respectively. Subsequent to December 31, 2007, the Company exercised its
option to acquire the remaining 12 percent minority interest in AFS on January 3, 2008 for a purchase price of
approximately $38 million increasing the Company’s total purchase price for its 100 percent interest to
approximately $324 million including cash consideration and certain acquisition costs.
On August 22, 2006, the Company acquired Upromise for approximately $308 million including cash
consideration and certain acquisition costs. Upromise markets and administers an affinity marketing program
and also provides administration services for college savings plans. In the third quarter of 2007, the Company
finalized its purchase price allocation for Upromise which resulted in an excess purchase price over the fair
value of net assets acquired, or goodwill, of approximately $137 million.
On August 31, 2005, the Company acquired 100 percent controlling interest in GRP/AG Holdings, LLC
and its subsidiaries (collectively, “GRP”) for a purchase price of approximately $138 million including cash
consideration and certain acquisition costs. GRP engages in the acquisition and resolution of distressed
residential mortgage loans and foreclosed residential properties. In the third quarter of 2006, the Company
finalized its purchase price allocation for GRP, which resulted in an excess purchase price over the fair value
of net assets acquired, or goodwill, of $53 million.
In 2007 and 2006, the Company also adjusted goodwill for certain earnout payments associated with prior
acquisitions.
F-38
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise stated)