Sallie Mae 2007 Annual Report Download - page 27

ASSET PERFORMANCE GROUP BUSINESS SEGMENT
Our APG business segment may not be able to purchase defaulted consumer receivables at prices that man-
agement believes to be appropriate, and a decrease in our ability to purchase portfolios of receivables could
adversely affect our net income.
If our APG business segment is not able to purchase defaulted consumer receivables at planned levels and
at prices that management believes to be appropriate, we could experience short-term and long-term decreases
in income.
The availability of receivables portfolios at prices which generate an appropriate return on our investment
depends on a number of factors both within and outside of our control, including the following:
• the continuation of current growth trends in the levels of consumer obligations;
• sales of receivables portfolios by debt owners;
• competitive factors affecting potential purchasers and credit originators of receivables; and
• the ability to continue to service portfolios to yield an adequate return.
Because of the length of time involved in collecting defaulted consumer receivables on acquired portfolios
and the volatility in the timing of our collections, we may not be able to identify trends and make changes in
our purchasing strategies in a timely manner.
LIQUIDITY AND CAPITAL RESOURCES
Future sales or issuances of our common stock may dilute the ownership interest of existing shareholders
and depress the trading price of our common stock.
Future sales or issuances of our common stock may dilute the ownership interests of our existing
shareholders. In addition, future sales or issuances of substantial amounts of our common stock may be at
prices below current market prices and may adversely impact the market price of our common stock. Our
mandatory convertible preferred stock, Series C has dividend and liquidation preference over our common
stock.
The 7.25 percent mandatory convertible preferred stock, Series C may adversely affect the market price of
our common stock.
The market price of our common stock is likely to be influenced by the 7.25 percent mandatory
convertible preferred stock, Series C. For example, the market price of our common stock could become more
volatile and could be depressed by:
• investors’ anticipation of the potential resale in the market of a substantial number of additional shares
of our common stock received upon conversion of the 7.25 percent mandatory convertible preferred
stock, Series C;
• possible sales of our common stock by investors who view the 7.25 percent mandatory convertible
preferred stock, Series C as a more attractive means of equity participation in us than owning shares of
our common stock; and
• hedging or arbitrage trading activity that may develop involving the 7.25 percent mandatory convertible
preferred stock, series C and our common stock.
We do not currently pay regular dividends on our common stock.
We have not paid dividends on our common stock since the execution of the Merger Agreement with the
Buyer Group in April 2007. While the restriction on the payment of dividends under the Merger Agreement
has been terminated, we expect to continue not paying dividends in the near term in order to focus on balance
sheet improvement and expect to re-examine our dividend policy in the second half of 2008. Subject to
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