Sallie Mae 2009 Annual Report Download - page 252

GLOSSARY
Listed below are definitions of key terms that are used throughout this document. See also APPENDIX A,
“FEDERAL FAMILY EDUCATION LOAN PROGRAM,” for a further discussion of the FFELP.
Consolidation Loan Rebate Fee — All holders of FFELP Consolidation Loans are required to pay to the
U.S. Department of Education (“ED”) an annual 105 basis point Consolidation Loan Rebate Fee on all
outstanding principal and accrued interest balances of FFELP Consolidation Loans purchased or originated
after October 1, 1993, except for loans for which consolidation applications were received between October 1,
1998 and January 31, 1999, where the Consolidation Loan Rebate Fee is 62 basis points.
Constant Prepayment Rate (“CPR”) — A variable in life-of-loan estimates that measures the rate at
which loans in the portfolio prepay before their stated maturity. The CPR is directly correlated to the average
life of the portfolio. CPR equals the percentage of loans that prepay annually as a percentage of the beginning
of period balance.
“Core Earnings” — The Company prepares financial statements in accordance with generally accepted
accounting principles in the United States of America (“GAAP”). In addition to evaluating the Company’s
GAAP-based financial information, management evaluates the Company’s business segments on a basis that,
as allowed under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification
(“ASC”) 280, “Segment Reporting,” differs from GAAP. The Company refers to management’s basis of
evaluating its segment results as “Core Earnings” presentations for each business segment and refers to these
performance measures in its presentations with credit rating agencies and lenders. While “Core Earnings”
results are not a substitute for reported results under GAAP, the Company relies on “Core Earnings”
performance measures in operating each business segment because it believes these measures provide
additional information regarding the operational and performance indicators that are most closely assessed by
management.
“Core Earnings” performance measures are the primary financial performance measures used by
management to evaluate performance and to allocate resources. Accordingly, financial information is reported
to management on a “Core Earnings” basis by reportable segment, as these are the measures used regularly by
the Company’s chief operating decision makers. “Core Earnings” performance measures are used in develop-
ing the Company’s financial plans, tracking results, and establishing corporate performance targets and
incentive compensation. Management believes this information provides additional insight into the financial
performance of the Company’s core business activities. “Core Earnings” performance measures are not defined
terms within GAAP and may not be comparable to similarly titled measures reported by other companies.
“Core Earnings” net income reflects only current period adjustments to GAAP net income. Accordingly, the
Company’s ‘Core Earnings” presentation does not represent another comprehensive basis of accounting.
See Note 20, “Segment Reporting,” to the consolidated financial statements and “MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS —
BUSINESS SEGMENTS — Limitations of ‘Core Earnings’ — Pre-tax Differences between ‘Core Earnings’
and GAAP by Business Segment” for further discussion of the differences between “Core Earnings” and
GAAP, as well as reconciliations between “Core Earnings” and GAAP.
In prior filings with the SEC of SLM Corporation’s annual reports on Form 10-K and quarterly reports
on Form 10-Q, “Core Earnings” has been labeled as “ ‘Core’ net income” or “Managed net income” in certain
instances.
Direct Lending; Direct Loans — Educational loans provided by the DSLP (see definition, below) to
students and parent borrowers directly through ED (see definition below) rather than through a bank or other
lender.
DSLP — The William D. Ford Federal Direct Loan Program.
Economic Floor Income — Economic Floor Income equals Gross Floor Income earned on Managed
loans, minus the payments on Floor Income Contracts, plus the amortization of net premiums on both Fixed
Rate and Variable Rate Floor Income Contracts (see definitions for capitalized terms, below).
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