Sallie Mae 2007 Annual Report Download - page 163

8. Long-Term Borrowings (Continued)
To match the interest rate and currency characteristics of its long-term borrowings with the interest rate
and currency characteristics of its assets, the Company enters into interest rate and foreign currency swaps
with independent parties. Under these agreements, the Company makes periodic payments, generally indexed
to the related asset rates, or rates which are highly correlated to the asset rates, in exchange for periodic
payments which generally match the Company’s interest and foreign currency obligations on fixed or variable
rate borrowings (see Note 10, “Derivative Financial Instruments”). Payments and receipts on the Company’s
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.
The Company had $1.0 billion of taxable and $1.7 billion of tax-exempt auction rate securities
outstanding at December 31, 2007. In February 2008, an imbalance of supply and demand in the auction rate
securities market as a whole led to failures of the auctions pursuant to which certain of the Company’s auction
rate securities’ interest rates are set. As a result, certain of the Company’s auction rate securities bear interest
at the maximum rate allowable under their terms. The maximum allowable interest rate on the Company’s
$1.0 billion taxable auction rate securities is generally LIBOR plus 1.50 percent. The maximum allowable
interest rate on many of the Company’s $1.7 billion of tax-exempt auction rate securities was recently
amended to LIBOR plus 2.00 percent through May 31, 2008. After May 31, 2008, the maximum allowable
rate on these securities will revert to a formula driven rate, which, if in effect as of February 28, 2008, would
have produced various maximum rates ranging up to 5.26 percent.
At December 31, 2007, the Company had outstanding long-term borrowings with call features totaling
$3.8 billion, and had $131 million 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, 2007, 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:
Unsecured
Borrowings
Secured
Borrowings Total
Unsecured
Borrowings
Secured
Borrowings Total
Stated Maturity
(1)
Maturity to Call Date
(1)
December 31, 2007
Year of Maturity
2008 . . . . . . . . . . . . . . . . $ — $ 6,840,770 $ 6,840,770 $ 774,038 $ 8,566,332 $ 9,340,370
2009 . . . . . . . . . . . . . . . . 7,952,375 6,007,623 13,959,998 8,503,235 6,003,573 14,506,808
2010 . . . . . . . . . . . . . . . . 7,087,011 6,043,316 13,130,327 7,200,277 5,943,449 13,143,726
2011 . . . . . . . . . . . . . . . . 7,188,472 5,681,403 12,869,875 7,342,286 5,681,403 13,023,689
2012 . . . . . . . . . . . . . . . . 2,341,200 5,249,587 7,590,787 2,386,648 5,249,587 7,636,235
2013 . . . . . . . . . . . . . . . . 2,993,819 4,953,136 7,946,955 2,967,162 4,953,136 7,920,298
2014-2047 . . . . . . . . . . . . 9,233,148 35,820,039 45,053,187 7,622,379 34,198,394 41,820,773
36,796,025 70,595,874 107,391,899 36,796,025 70,595,874 107,391,899
SFAS No. 133 (gains)
losses on derivative
hedging activities . . . . . 1,781,993 1,924,252 3,706,245 1,781,993 1,924,252 3,706,245
Total . . . . . . . . . . . . . . . . $38,578,018 $72,520,126 $111,098,144 $38,578,018 $72,520,126 $111,098,144
(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 projected principal
paydowns of $6.8 billion shown in year 2008 relate to the on-balance sheet securitization trust debt.
F-42
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise stated)