Sallie Mae 2007 Annual Report Download - page 53

The Lending operating segment includes all discussion of income and related expenses associated with
the net interest margin, the student loan spread and its components, the provisions for loan losses, and other
fees earned on our Managed portfolio of student loans. The APG operating segment reflects the fees earned
and expenses incurred in providing accounts receivable management and collection services. Our Corporate
and Other reportable segment includes our remaining fee businesses and other corporate expenses that do not
pertain directly to the primary segments identified above.
Lending APG
Corporate
and Other
Year Ended
December 31, 2007
Interest income:
FFELP Stafford and Other Student Loans.................... $ 2,848 $ — $ —
FFELP Consolidation Loans ............................. 5,522 — —
Private Education Loans ................................ 2,835 — —
Other loans .......................................... 106 — —
Cash and investments .................................. 868 — 21
Total interest income ..................................... 12,179 — 21
Total interest expense .................................... 9,597 27 21
Net interest income (loss) ................................. 2,582 (27) —
Less: provisions for loan losses ............................. 1,394 — 1
Net interest income (loss) after provisions for loan losses .......... 1,188 (27) (1)
Contingency fee revenue .................................. — 336 —
Guarantor serving fees ................................... — — 156
Collections revenue ...................................... — 269 —
Other income .......................................... 194 — 218
Total other income ...................................... 194 605 374
Operating expenses
(1)
.................................... 709 390 341
Income before income taxes and minority interest in net earnings of
subsidiaries .......................................... 673 188 32
Income tax expense
(2)
.................................... 249 70 12
Minority interest in net earnings of subsidiaries ................. — 2 —
“Core Earnings” net income ............................... $ 424 $116 $ 20
(1)
Operating expenses for the Lending, APG, and Corporate and Other reportable segments include $31 million, $11 million, and
$15 million, respectively, of stock option compensation expense, and $19 million, $2 million and $2 million, respectively, of
severance expense.
(2)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.
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