EX-99.1 3 a2071235zex-99_1.txt EXHIBIT 99.1 Exhibit 99.1 SALLIEMAE N E W S R E L E A S E -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE MEDIA CONTACTS: INVESTOR CONTACT: Jim Boyle Jeff Heinz (703) 810-5605 (703) 810-7751 Martha Holler (703) 810-5178 USA EDUCATION, INC. (NYSE: SLM) REPORTS FOURTH-QUARTER `CORE CASH BASIS' EARNINGS PER DILUTED SHARE OF $1.03 COMPANY ACHIEVES MILESTONE OF $10 BILLION IN ANNUAL, PREFERRED-CHANNEL ORIGINATIONS RESTON, VA., JAN. 17, 2002 - USA Education, Inc., commonly known as Sallie Mae (NYSE: SLM), today announced that its fourth-quarter 2001 "core cash basis" earnings were $163 million, an 18-percent increase over the year-ago quarter of $138 million. "Core cash basis" earnings per share, which measure the recurring earnings of the company, were $1.03 per diluted share, a 29-percent increase over $.80 in the year-ago quarter. For the year ended Dec. 31, 2001, "core cash basis" earnings were a record $624 million or $3.75 per diluted share, a 27-percent increase over $492 million or $2.93 per diluted share in 2000. A principal driver of Sallie Mae's continued strong performance is its preferred-channel loan originations activity, which consists of the company's own loans as well as those from its affiliated and partner brands. The volume of these preferred-channel originations totaled $2.4 billion during the fourth quarter of 2001, a 21-percent increase from the $2.0 billion of originations made during the year-ago period. Loan originations are a key measure of the company's market share success, and serve as an indicator of future loan volume. During the 2001 calendar year, the company originated a record $10.1 billion through its preferred channel, compared to $7.3 billion in the year-ago period, a 38-percent increase. This increase in preferred-channel originations includes the growth attributed to the purchases of USA Group and Student Loan Funding Resources in July 2000. "Generating $10 billion in preferred-channel volume is a significant milestone for us," said Albert L. Lord, vice chairman and chief executive officer, Sallie Mae. "This steep ramp-up in volume demonstrates the success of our campus-based sales efforts. Our sales force, now numbering well over 200, has responded to our school customers' needs, as our origination results demonstrate." "Core cash basis" net interest income totaled $341 million for the quarter, a 25-percent increase from $273 million in the year-ago quarter. For the year ended Dec. 31, 2001, "core cash basis" net interest income totaled $1.3 billion, a 22-percent increase from the $1.0 billion generated in 2000. The growth in net interest income is attributed to a 17-percent, year-over-year increase in the average balance of managed student loans and a significant increase in the student loan spread. The "core cash basis" student loan spread equaled 1.81 percent for the year ended 2001 and 1.70 percent for the year ended 2000. (MORE) -------------------------------------------------------------------------------- SALLIE MAE - 11600 SALLIE MAE DRIVE - RESTON, VIRGINIA 20193 - WWW.SALLIEMAE.COM USA EDUCATION, INC. FOURTH-QUARTER EARNINGS PAGE 2 "Core cash basis" other income totaled $111 million for the quarter, compared to $131 million in the prior quarter and $119 million in the year-ago quarter. The 2001 fourth-quarter figure was down from both the prior and year-ago quarters, principally due to seasonal factors associated with the guarantor services operation, and income related to the USA Group and Student Loan Funding Resources transactions, respectively. "With our recently announced acquisitions of two of the most highly respected student loan default-collection agencies -- Pioneer Credit Recovery and General Revenue Corporation -- we are well-positioned to add significantly to this area of fee-based revenue in 2002," said Thomas J. Fitzpatrick, president and chief operating officer, Sallie Mae. "At the same time, we are making good on our promise to hold the line on operating expenses and, in fact, decreased our total `core cash basis' operating expenses for the fourth quarter to $170 million, compared to $173 million in the previous quarter." Under "core cash basis" results, securitizations are treated as financings, not sales. Accordingly, no gains on sales or subsequent servicing or securitization revenues are recognized. The following items are excluded from "core cash basis" results: the amortization and changes in market value of goodwill and intangible assets; non-recurring items such as floor income, gains and losses on the sales of investment securities and student loans; the one-time integration charge of the USA Group acquisition; and the effects of Statement of Financial Accounting Standards No.133 ("SFAS 133"). Sallie Mae reported fourth-quarter 2001 GAAP net income of $266 million or $1.69 per diluted share, compared to $99 million or $.56 per diluted share in the year-ago period. Under SFAS 133, the company was required to record a non-cash, mark-to-market, after-tax gain of $45 million or $.29 per diluted share, resulting principally from floor contracts the company sells to lock in its long-term spreads on student loans. Excluding the effects of SFAS 133, Sallie Mae reported GAAP net income of $221 million or $1.40 per diluted share for the fourth quarter of 2001. The company will host its regular earnings conference call at noon today. Sallie Mae executives will discuss various highlights of the quarter and answer questions related to the company's performance. Individuals interested in participating should call the following number today, Jan. 17, 2002, starting at 11:45 a.m. EST: (877) 777-1971 (USA and Canada) or (612) 333-4911 (International). The conference call will be replayed continuously beginning Thursday, Jan. 17, at 3:30 p.m. EST and concluding at 11:59 p.m. EST on Thursday, Jan. 24. Please dial (800) 475-6701 (USA and Canada) or dial (320) 365-3844 (International) and use access code 621986. In addition, there will be a live audio webcast of the conference call, which may be accessed at http://www.salliemae.com. A replay will be available 30-45 minutes after the live broadcast. Statements in this release referring to expectations as to future market share, the successful consummation of any business acquisitions and other future developments are forward-looking statements, which involve risks, uncertainties and other factors that may cause the actual results to differ materially from such forward-looking statements. Such factors include, among others, changes in the terms of student loans and the educational credit marketplace arising from the implementation of applicable laws and regulations, and from changes in such laws and regulations, changes in the demand for educational financing or in financing preferences of educational institutions, students and their families, and changes in the general interest rate environment. For more information, see the company's filings with the Securities and Exchange Commission. (MORE) USA EDUCATION, INC. FOURTH-QUARTER EARNINGS -------------------------------------------------------------------------------- SALLIE MAE - 11600 SALLIE MAE DRIVE - RESTON, VIRGINIA 20193 - WWW.SALLIEMAE.COM PAGE 3 SALLIE MAE, founded 28 years ago, provides funds for educational loans, primarily federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP). The company currently owns or manages nearly $72 billion in student loans for more than seven million borrowers, and provides parents, students and educators with comprehensive information on the financial aid process. Through its specialized subsidiaries and divisions, Sallie Mae also provides an array of consumer credit loans, including those for lifelong learning and K-12 education, and business and technical outsourcing services for colleges and universities. More information is available at http://www.salliemae.com. Sallie Mae is a registered service mark of the Student Loan Marketing Association. USA Education, Inc. and its subsidiaries, other than the Student Loan Marketing Association, are not sponsored by or agencies of the United States. ### -------------------------------------------------------------------------------- SALLIE MAE - 11600 SALLIE MAE DRIVE - RESTON, VIRGINIA 20193 - WWW.SALLIEMAE.COM USA EDUCATION, INC. SUPPLEMENTAL EARNINGS DISCLOSURE DECEMBER 31, 2001 (DOLLARS IN MILLIONS, EXCEPT EARNINGS PER SHARE)
============================================================================================================================= QUARTERS ENDED YEARS ENDED ----------------------------------------- DECEMBER 31, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, ----------------------------- 2001 2001 2000 2001 2000 ------------ ------------- ------------ ------------- ------------- Net income $ 266 $ (194) $ 99 $ 384 $ 465 "Core cash basis" net income * 163 163 138 624 492 Diluted earnings per share $ 1.69 $ (1.25) $ .56 $ 2.28 $ 2.76 "Core cash basis" diluted earnings per share 1.03 .99 .80 3.75 2.93 Net interest margin 2.18 % 1.65 % 1.35 % 1.82 % 1.52 % "Core cash basis" net interest margin 1.74 1.64 1.42 1.64 1.53 Return on assets 2.11 % (1.58)% .83% .78 % 1.06 % "Core cash basis" return on assets .82 .82 .71 .79 .71 Student loan spread 2.50 % 1.91 % 1.76 % 2.01 % 1.82 % "Core cash basis" student loan spread 1.89 1.79 1.64 1.81 1.70 Average on-balance sheet student loans $ 41,504 $ 40,180 $ 37,024 $ 40,025 $ 34,637 Average off-balance sheet student loans 30,484 31,370 30,438 30,594 25,711 ------------ ------------- ------------ ------------- ------------- Average managed student loans $ 71,988 $ 71,550 $ 67,462 $ 70,619 $ 60,348 ============ ============= ============ ============= ============= Ending on-balance sheet student loans $ 41,001 $ 40,644 $ 37,647 Ending off-balance sheet student loans 30,725 31,185 29,868 ------------ ------------- ------------ Ending managed student loans $ 71,726 $ 71,829 $ 67,515 ============ ============= ============ * "Core cash basis" net income includes securitizations as financings and excludes the amortization and changes in market value of goodwill and intangible assets, and non-recurring items such as floor income, certain integration charges and the liquidation of investment securities and student loans. Effective January 1, 2001, "core cash basis" net income also excludes the effects of SFAS 133. =============================================================================================================================
USA EDUCATION, INC. CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) QUARTERS ENDED ------------------------------------------ YEARS ENDED DECEMBER 31, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, -------------------------- 2001 2001 2000 2001 2000 ----------- ----------- ----------- ----------- ----------- Interest income: Student loans $ 548,554 $ 591,721 $ 782,144 $ 2,527,818 $ 2,854,231 Warehousing advances 7,469 10,625 15,360 43,401 56,410 Academic facilities financings 12,616 13,003 14,637 53,485 66,709 Investments 60,080 83,942 140,768 372,827 501,309 ----------- ----------- ----------- ----------- ----------- Total interest income 628,719 699,291 952,909 2,997,531 3,478,659 Interest expense 360,133 501,672 794,964 2,124,115 2,836,871 ----------- ----------- ----------- ----------- ----------- Net interest income 268,586 197,619 157,945 873,416 641,788 Less: provision for losses 23,822 15,299 9,354 65,991 32,119 ----------- ----------- ----------- ----------- ----------- Net interest income after provision for losses 244,764 182,320 148,591 807,425 609,669 ----------- ----------- ----------- ----------- ----------- Other income: Gains on student loan securitizations 20,278 27,143 836 75,199 91,846 Servicing and securitization revenue 201,637 118,940 84,952 634,320 295,646 Gains (losses) on sales of securities (74,580) (24,788) (25,316) (178,287) 18,622 Guarantor servicing fees 65,906 75,732 73,810 255,171 128,375 Derivative market value adjustment 98,425 (552,832) - (505,687) - Other 42,988 68,070 46,530 236,901 153,143 ----------- ----------- ----------- ----------- ----------- Total other income 354,654 (287,735) 180,812 517,617 687,632 Operating expenses 185,901 184,113 174,312 707,654 532,710 Integration charge - - - - 53,000 ----------- ----------- ----------- ----------- ----------- Income before income taxes and minority interest in net earnings of subsidiary 413,517 (289,528) 155,091 617,388 711,591 Income taxes 145,522 (98,656) 53,762 223,322 235,880 Minority interest in net earnings of subsidiary 2,050 2,673 2,673 10,070 10,694 ----------- ----------- ----------- ----------- ----------- NET INCOME 265,945 (193,545) 98,656 383,996 465,017 Preferred stock dividends 2,875 2,875 2,864 11,501 11,522 ----------- ----------- ----------- ----------- ----------- Net income attributable to common stock $ 263,070 $ (196,420) $ 95,792 $ 372,495 $ 453,495 =========== =========== =========== =========== =========== BASIC EARNINGS PER SHARE $ 1.69 $ (1.25) $ .58 $ 2.34 $ 2.84 =========== =========== =========== =========== =========== Average common shares outstanding 155,582 157,074 163,927 159,078 159,482 =========== =========== =========== =========== =========== DILUTED EARNINGS PER SHARE $ 1.69 $ (1.25) $ .56 $ 2.28 $ 2.76 =========== =========== =========== =========== =========== Average common and common equivalent shares outstanding 155,582 157,074 169,866 163,400 164,355 =========== =========== =========== =========== ===========
USA EDUCATION, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, ASSETS 2001 2001 2000 ----------- ----------- ----------- Student loans $41,000,870 $40,643,809 $37,647,297 Warehousing advances 1,035,906 979,642 987,352 Academic facilities financings 732,241 760,435 851,168 Cash and investments 5,787,153 7,233,358 5,940,490 Other assets 4,317,789 4,243,591 3,365,481 ----------- ----------- ----------- Total assets $52,873,959 $53,860,835 $48,791,788 =========== =========== =========== LIABILITIES Short-term borrowings $31,064,821 $31,749,596 $30,463,988 Long-term notes 17,285,350 17,654,066 14,910,939 Other liabilities 2,851,326 2,717,664 1,787,642 ----------- ----------- ----------- Total liabilities 51,201,497 52,121,326 47,162,569 ----------- ----------- ----------- COMMITMENTS* MINORITY INTEREST IN SUBSIDIARY - 213,883 213,883 STOCKHOLDERS' EQUITY Preferred stock, par value $.20 per share, 20,000 shares authorized: 3,300; 3,300; and 3,300 shares, respectively, issued at stated value of $50 per share 165,000 165,000 165,000 Common stock, par value $.20 per share, 375,000 shares authorized: 202,736; 202,165; and 190,852 shares, respectively, issued 40,547 40,433 38,170 Additional paid-in capital 805,804 769,360 225,211 Unrealized gains on investments, net of tax 670,199 706,028 311,301 Retained earnings 2,068,490 1,836,364 1,810,902 ----------- ----------- ----------- Stockholders' equity before treasury stock 3,750,040 3,517,185 2,550,584 Common stock held in treasury at cost: 47,241; 45,395; and 26,707 shares, respectively 2,077,578 1,991,559 1,135,248 ----------- ----------- ----------- Total stockholders' equity 1,672,462 1,525,626 1,415,336 ----------- ----------- ----------- Total liabilities and stockholders' equity $52,873,959 $53,860,835 $48,791,788 =========== =========== ===========
* Commitments to purchase loans, lines of credit, letters of credit, and academic facilities financing letters of credit were $21.6 billion, $2.6 billion, $3.2 billion, and $45.5 million, respectively, at December 31, 2001. USA EDUCATION, INC. PRO-FORMA "CORE CASH BASIS" CONSOLIDATED STATEMENTS OF INCOME The following pro-forma statements of income measure only the recurring earnings of the Company. Accordingly, securitization transactions are treated as financings, not sales, and thereby gains on such sales and subsequent servicing and securitization revenues are eliminated from net income. In addition, the effects of floor income, certain gains and losses on sales of investment securities and student loans, certain integration charges, the amortization and changes in market value of goodwill and intangible assets, and the non-cash, derivative market value adjustment in accordance with Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," are also excluded from net income. Management refers to these pro-forma results as "core cash basis" statements of income. Management monitors the periodic "core cash basis" earnings of the Company's managed student loan portfolio and believes that they assist in a better understanding of the Company's student loan business.
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) QUARTERS ENDED -------------------------------------------- YEARS ENDED DECEMBER 31, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, --------------------------- 2001 2001 2000 2001 2000 ------------- ------------- ------------- ------------ ----------- (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) Interest income: Student loans $ 857,383 $ 1,051,576 $ 1,440,935 $ 4,324,623 $ 5,014,858 Warehousing advances 7,469 10,625 15,360 43,401 56,410 Academic facilities financings 12,616 13,003 14,637 53,485 66,709 Investments 59,604 78,805 155,626 371,633 528,960 ----------- ----------- ----------- ----------- ----------- Total interest income 937,072 1,154,009 1,626,558 4,793,142 5,666,937 Interest expense 595,899 833,832 1,353,453 3,521,985 4,627,783 ----------- ----------- ----------- ----------- ----------- Net interest income 341,173 320,177 273,105 1,271,157 1,039,154 Less: provision for losses 30,320 20,991 13,730 89,145 52,951 ----------- ----------- ----------- ----------- ----------- Net interest income after provision for losses 310,853 299,186 259,375 1,182,012 986,203 ----------- ----------- ----------- ----------- ----------- Other income: Gains (losses) on sales of securities (1,560) 505 52 (1,574) 1,334 Guarantor servicing fees 65,906 75,732 73,810 255,171 128,375 Other 46,332 55,230 45,614 201,581 151,496 ----------- ----------- ----------- ----------- ----------- Total other income 110,678 131,467 119,476 455,178 281,205 Operating expenses 169,933 173,084 164,935 660,555 514,093 ----------- ----------- ----------- ----------- ----------- Income before income taxes and minority interest in net earnings of subsidiary 251,598 257,569 213,916 976,635 753,315 Income taxes 86,479 91,770 73,225 342,553 250,128 Minority interest in net earnings of subsidiary 2,050 2,673 2,674 10,070 10,694 ----------- ----------- ----------- ----------- ----------- NET INCOME 163,069 163,126 138,017 624,012 492,493 Preferred stock dividends 2,875 2,875 2,865 11,501 11,520 ----------- ----------- ----------- ----------- ----------- Net income attributable to common stock $ 160,194 $ 160,251 $ 135,152 $ 612,511 $ 480,973 =========== =========== =========== =========== =========== BASIC EARNINGS PER SHARE $ 1.03 $ 1.02 $ .82 $ 3.85 $ 3.02 =========== =========== =========== =========== =========== Average common shares outstanding 155,582 157,074 163,927 159,078 159,482 =========== =========== =========== =========== =========== DILUTED EARNINGS PER SHARE $ 1.03 $ .99 $ .80 $ 3.75 $ 2.93 =========== =========== =========== =========== =========== Average common and common equivalent shares outstanding 155,582 162,080 169,866 163,400 164,355 =========== =========== =========== =========== ===========