Sallie Mae 2013 Annual Report Download - page 161

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
Other acquired intangible assets include but are not limited to tradenames, customer and other relationships,
and non-compete agreements. Acquired intangible assets with finite lives are amortized over their estimated
useful lives in proportion to their estimated economic benefit. Finite-lived acquired intangible assets are
reviewed for impairment using an undiscounted cash flow analysis when an event occurs or circumstances
change indicating the carrying amount of a finite-lived asset or asset group may not be recoverable. If the
carrying amount of the asset or asset groups exceeds the undiscounted cash flows, the fair value of the asset or
asset group is determined using an acceptable valuation technique. An impairment loss would be recognized if
the carrying amount of the asset (or asset group) exceeds the fair value of the asset or asset group. The
impairment loss recognized would be the difference between the carrying amount and fair value. Indefinite-life
acquired intangible assets are not amortized. We test these indefinite life acquired intangible assets for
impairment annually as of October 1 or at interim periods if an event occurs or circumstances change that would
indicate the carrying value of these assets may be impaired. The annual or interim impairment test of indefinite-
lived acquired intangible assets is based primarily on a discounted cash flow analysis.
Restructuring and Other Reorganization Expenses
From time to time we implement plans to restructure our business. In conjunction with these restructuring
plans, involuntary benefit arrangements, disposal costs (including contract termination costs and other exit costs),
as well as certain other costs that are incremental and incurred as a direct result of our restructuring plans, are
classified as restructuring expenses in the accompanying consolidated statements of income.
We sponsor the SLM Corporation Employee Severance Plan (the “Severance Plan”) which provides
severance benefits in the event of termination of our full-time employees (with the exception of certain specified
levels of management) and part-time employees who work at least 24 hours per week. The Severance Plan
establishes specified benefits based on base salary, job level immediately preceding termination and years of
service upon termination of employment due to Involuntary Termination or a Job Abolishment, as defined in the
Severance Plan. The benefits payable under the Severance Plan relate to past service and they accumulate and
vest. Accordingly, we recognize severance costs to be paid pursuant to the Severance Plan when payment of such
benefits is probable and reasonably estimable. Such benefits, including severance pay calculated based on the
Severance Plan, medical and dental benefits, outplacement services and continuation pay, have been incurred
during 2013, 2012 and 2011, as a direct result of our restructuring initiatives. Accordingly, such costs are
classified as restructuring expenses in the accompanying consolidated statements of income.
Contract termination costs are expensed at the earlier of (1) the contract termination date or (2) the cease use
date under the contract. Other exit costs are expensed as incurred and classified as restructuring expenses if
(1) the cost is incremental to and incurred as a direct result of planned restructuring activities and (2) the cost is
not associated with or incurred to generate revenues subsequent to our consummation of the related restructuring
activities.
Other reorganization expenses include third-party costs and severance incurred in connection with our
previously announced plan to separate our existing organization into two distinct publicly-traded entities.
Accounting for Stock-Based Compensation
We recognize stock-based compensation cost in our consolidated statements of income using the fair value
based method. Under this method we determine the fair value of the stock-based compensation at the time of the
grant and recognize the resulting compensation expense over the vesting period of the stock-based grant.
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