Sallie Mae 2008 Annual Report Download - page 163

7. Borrowings (Continued)
Ending Balance
Weighted Average
Interest Rate Average Balance
Weighted Average
Interest Rate
December 31, 2007
Year Ended
December 31, 2007
Term bank deposits ........ $ 254,029 4.77% $ 166,013 4.94%
ABCP borrowings ......... 25,960,348 5.32 10,604,570 3.29
Short-term portion of long-
term borrowings ........ 8,451,163 4.86 4,975,380 4.86
Other interest bearing
liabilities .............. 1,281,867 3.06 638,927 4.85
Total short-term borrowings. . $35,947,407 5.13% $16,384,890 3.84%
Maximum outstanding at any
month end............. $36,980,307
As of December 31, 2008, the Company has $5.2 billion in revolving credit facilities which provide
liquidity support for general corporate purposes including backup for its commercial paper program. The
Company has never drawn on these facilities. The facilities include a $1.4 billion 5-year revolving credit
facility maturing in October 2009, a $1.9 billion 5-year revolving credit facility maturing in 2010, and a
$1.9 billion 5-year revolving credit facility maturing in October 2011. They do not include a $0.3 billion
commitment from a subsidiary of Lehman Brothers Holding, Inc. as discussed below. Interest on these
facilities is based on LIBOR plus a spread that is determined by the amount of the facility utilized and the
Company’s credit rating. The principal financial covenants in the unsecured revolving credit facilities require
the Company to maintain tangible net worth of at least $1.38 billion at all times. Consolidated tangible net
worth as calculated for purposes of this covenant was $3.2 billion as of December 31, 2008. The covenants
also require the Company to meet either a minimum interest coverage ratio or a minimum net adjusted
revenue test based on the four preceding quarters’ adjusted “Core Earnings” financial performance. The
Company was compliant with the minimum net adjusted revenue test as of the quarter ended December 31,
2008. Failure to meet these covenants would result in the facilities being withdrawn.
Lehman Brothers Bank, FSB, a subsidiary of Lehman Brothers Holdings Inc., is a party to the Company’s
unsecured revolving credit facilities under which they provide the Company with a $308 million commitment
excluded in the total above. Lehman Brothers Holdings Inc., declared bankruptcy on September 15, 2008. The
Company is operating under the assumption that the lending commitment of Lehman Brothers Bank, FSB,
will not be honored if drawn upon. While the Company continues to explore various options, it does not
anticipate replacing its commitment from Lehman Brothers Bank, FSB.
F-43
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)