EX-99.1 2 a2169606zex-99_1.htm EXHIBIT 99.1
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Exhibit 99.1

SallieMae	N E W S R E L E A S E

FOR IMMEDIATE RELEASE	Media Contacts:	Investor Contacts:
	Tom Joyce 703/984-5610 Martha Holler 703/984-5178	Steve McGarry 703/984-6746 Joe Fisher 703/984-5755

SLM CORPORATION'S PORTFOLIO OF MANAGED LOANS
GROWS 14 PERCENT IN FIRST-QUARTER 2006
Internal Lending Brands Increase 51 Percent

RESTON, Va., April 20, 2006—SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported first-quarter 2006 earnings and performance results that include a 14-percent increase in the managed student loan portfolio to $126.9 billion from the year-ago quarter's $111.7 billion. Also during the quarter, the company originated $3.6 billion through its internal lending brands, a 51-percent increase over the year-ago period.

"We are pleased with our portfolio growth and the strong performance of our lending brands. Our pipeline of new school wins is impressive," said Tim Fitzpatrick, chief executive officer. "This quarter's results put us on the right path to deliver on our 2006 projections."

During the first-quarter 2006, the company originated $7.6 billion in preferred-channel loans, of which $2.2 billion were private education loans. Preferred-channel loan originations include loans originated by the company's internal lending brands and external lending partners.

Sallie Mae reports financial results on a GAAP basis and also presents certain non-GAAP or "core earnings" performance measures. The company's management, equity investors, credit rating agencies and debt capital providers use these "core earnings" measures to monitor the company's business performance.

Sallie Mae reported first-quarter 2006 GAAP net income of $152 million, or $.34 per diluted share, compared to $223 million, or $.49 per diluted share, in the year-ago period. Included in these GAAP results are pre-tax losses on derivative and hedging activities of $(87) million, compared to $(34) million in the year-ago quarter, and a decrease of $(44) million in servicing and securitization revenue.

"Core earnings" net income for the quarter was $287 million, or $.65 per diluted share, up from $256 million, or $.57 per diluted share in the year-ago quarter. During the first-quarter 2006, the company began expensing stock-based compensation. Recognizing stock-based compensation expense in both the current and year-ago periods, "core earnings" per diluted share were $.63 in the 2006 first quarter after eliminating the $.02 impact of a revision to borrower benefit estimates, up from $.55 in the same quarter in 2005, a 15-percent increase.


Sallie Mae	•	12061 Bluemont Way	•	Reston, Va 20190	•	www.SallieMae.com

"Core earnings" net interest income was $596 million for the quarter, a 21-percent increase over the year-ago quarter's $494 million. "Core earnings" other income, which consists primarily of fees earned from guarantor servicing and collection activity, was $245 million for the 2006 first quarter, up from $221 million in the year-ago quarter. "Core earnings" operating expenses were $309 million, compared to $249 million in the same quarter last year.

Both a description of the "core earnings" treatment and a full reconciliation to the GAAP income statement can be found at: http://www2.salliemae.com/investors/stockholderinfo/earningsinfo, click on the First Quarter 2006 Supplemental Earnings Disclosure.

Total equity for the company at March 31, 2006, was $3.8 billion, up from $3.1 billion a year ago. The company's tangible capital at March 31, 2006, was 1.86 percent of managed assets, compared to 1.63 percent at the same time last year.

The company will host its regular earnings conference call today at noon. Sallie Mae executives will be on hand to discuss various highlights of the quarter and to answer questions related to the company's performance. Individuals interested in participating should call the following number today, April 20, 2006, starting at 11:45 a.m. EDT: (877) 356-5689 (USA and Canada) or (706) 679-0623 (International). The conference call will be replayed continuously beginning Thursday, April 20, at 3:30 p.m. EDT and concluding at 11:59 p.m. EDT on Thursday, April 27. Please dial (800) 642-1687 (USA and Canada) or dial (706) 645-9291 (International) and use access code 6512067. In addition, there will be a live audio Web cast of the conference call, which may be accessed at www.salliemae.com. A replay will be available 30-45 minutes after the live broadcast.

***

This press release contains "forward-looking statements" including expectations as to future market share, the success of preferred channel originations and future results. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Because such statements inherently involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks 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.

SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, is the nation's leading provider of education funding, managing nearly $127 billion in student loans for 9 million borrowers. Sallie Mae was originally created in 1972 as a government-sponsored entity (GSE) and terminated its ties to the federal government in 2004. The company remains the country's largest originator of federally insured student loans. Through its specialized subsidiaries and divisions, Sallie Mae also provides debt management services as well as business and technical products to a range of business clients, including colleges, universities and loan guarantors. More information is available at www.SallieMae.com. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

###


Sallie Mae	•	12061 Bluemont Way	•	Reston, Va 20190	•	www.SallieMae.com

SLM CORPORATION

Supplemental Earnings Disclosure

March 31, 2006

(Dollars in millions, except earnings per share)

	Quarters ended
	March 31, 2006			December 31, 2005			March 31, 2005
	(unaudited)			(unaudited)			(unaudited)
SELECTED FINANCIAL INFORMATION AND RATIOS—(GAAP Basis)
Net income	$	152		$	431		$	223
Diluted earnings per common share⁽¹⁾	$	.34		$	.96		$	.49
Return on assets		.68	%		1.88	%		1.18	%
NON-GAAP INFORMATION⁽²⁾
"Core earnings" net income	$	287		$	284		$	256
"Core earnings" diluted earnings per common share⁽¹⁾	$	.65		$	.63		$	.57
"Core earnings" return on assets		.85	%		.84	%		.86	%
OTHER OPERATING STATISTICS
Average on-balance sheet student loans	$	82,850		$	82,914		$	67,661
Average off-balance sheet student loans		42,069			38,497			41,892

Average Managed student loans	$	124,919		$	121,411		$	109,553

Ending on-balance sheet student loans, net	$	81,645		$	82,604		$	69,906
Ending off-balance sheet student loans, net		45,225			39,925			41,793

Ending Managed student loans, net	$	126,870		$	122,529		$	111,699

Ending Managed FFELP Stafford and Other Student Loans, net	$	42,340		$	40,658		$	47,325
Ending Managed Consolidation Loans, net		66,662			65,434			51,856
Ending Managed Private Education Loans, net		17,868			16,437			12,518

Ending Managed student loans, net	$	126,870		$	122,529		$	111,699

⁽¹⁾: In December 2004, the Company adopted the Emerging Issues Task Force ("EITF") Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings per Share," as it relates to the Company's $2 billion in contingently convertible debt instruments ("Co-Cos") issued in May 2003. EITF No. 04-8 requires the shares underlying Co-Cos to be included in diluted earnings per common share computations regardless of whether the market price trigger or the conversion price has been met, using the "if-converted" method. The impact of Co-Cos due to the application of EITF No. 04-8 was to decrease diluted earnings per common share by the following amounts:

	Quarters ended
	March 31, 2006			December 31, 2005			March 31, 2005
	(unaudited)			(unaudited)			(unaudited)
Impact of Co-Cos on GAAP diluted earnings per common share	$	—	^(A)	$	(.03	)	$	(.02	)
Impact of Co-Cos on "core earnings" diluted earnings per common share	$	(.01	)	$	(.02	)	$	(.02	)
^(A) There is no impact on diluted earnings per common share because the effect of the assumed conversion is antidilutive.

⁽²⁾: See explanation of non-GAAP performance measures under "Reconciliation of 'Core Earnings' Net Income to GAAP Net Income."

SLM CORPORATION

Consolidated Balance Sheets

(In thousands, except per share amounts)

	March 31, 2006		December 31, 2005		March 31, 2005
	(unaudited)				(unaudited)
Assets
FFELP Stafford and Other Student Loans (net of allowance for losses of $5,547; $6,311; and $0, respectively)	$	18,882,890	$	19,988,116	$	18,933,160
Consolidation Loans (net of allowance for losses of $9,983; $8,639; and $6,849 respectively)		53,450,647		54,858,676		44,446,089
Private Education Loans (net of allowance for losses of $232,147; $204,112; and $190,880, respectively)		9,311,164		7,756,770		6,527,022
Other loans (net of allowance for losses of $15,081; $16,180; and $11,754, respectively)		1,114,200		1,137,987		1,094,712
Cash and investments		4,349,669		4,867,654		3,235,034
Restricted cash and investments		3,065,148		3,300,102		2,224,354
Retained Interest in off-balance sheet securitized loans		2,487,117		2,406,222		2,246,329
Goodwill and acquired intangible assets, net		1,091,301		1,105,104		1,014,986
Other assets		4,013,450		3,918,053		4,075,267

Total assets	$	97,765,586	$	99,338,684	$	83,796,953

Liabilities
Short-term borrowings	$	3,362,548	$	3,809,655	$	5,516,177
Long-term borrowings		87,083,110		88,119,090		72,241,082
Other liabilities		3,555,318		3,609,332		2,901,843

Total liabilities		94,000,976		95,538,077		80,659,102

Commitments and contingencies
Minority interest in subsidiaries		9,682		9,182		72,869
Stockholders' equity
Preferred stock, par value $.20 per share, 20,000 shares authorized; Series A: 3,300; 3,300; and 3,300 shares, respectively, issued at stated value of $50 per share; Series B: 4,000; 4,000; and 0 shares, respectively, issued at stated value of $100 per share		565,000		565,000		165,000
Common stock, par value $.20 per share, 1,125,000 shares authorized: 429,329; 426,484; and 484,917 shares, respectively, issued		85,866		85,297		96,984
Additional paid-in capital		2,364,252		2,233,647		1,969,881
Accumulated other comprehensive income, net of tax		328,496		367,910		374,574
Retained earnings		1,163,570		1,111,743		2,662,316

Stockholders' equity before treasury stock		4,507,184		4,363,597		5,268,755
Common stock held in treasury at cost: 16,599; 13,347; and 62,936 shares, respectively		752,256		572,172		2,203,773

Total stockholders' equity		3,754,928		3,791,425		3,064,982

Total liabilities and stockholders' equity	$	97,765,586	$	99,338,684	$	83,796,953

SLM CORPORATION

Consolidated Statements of Income

(In thousands, except per share amounts)

		Quarters ended
		March 31, 2006			December 31, 2005		March 31, 2005
		(unaudited)			(unaudited)		(unaudited)
Interest income:
	FFELP Stafford and Other Student Loans	$	298,500		$	315,164	$	190,733
	Consolidation Loans		821,335			760,338		508,421
	Private Education Loans		241,353			203,992		129,616
	Other loans		23,307			22,851		20,153
	Cash and investments		95,810			89,921		62,049

Total interest income			1,480,305			1,392,266		910,972
Interest expense			1,092,784			1,002,133		564,212

Net interest income			387,521			390,133		346,760
Less: provisions for losses			60,319			65,318		46,523

Net interest income after provisions for losses			327,202			324,815		300,237

Other income:
	Gains on student loan securitizations		30,023			240,651		49,894
	Servicing and securitization revenue		98,931			80,032		142,961
	Gains (losses) on derivative and hedging activities, net		(86,739	)		70,270		(34,251	)
	Guarantor servicing fees		26,907			21,555		32,540
	Debt management fees		91,612			98,839		85,752
	Collections revenue		56,681			48,304		34,883
	Other		68,428			60,093		62,319

Total other income			285,843			619,744		374,098
Operating expenses			323,309			296,663		262,291

Income before income taxes and minority interest in net earnings of subsidiaries			289,736			647,896		412,044
Income taxes			137,045			215,907		186,466

Income before minority interest in net earnings of subsidiaries			152,691			431,989		225,578
Minority interest in net earnings of subsidiaries			1,090			954		2,194

Net income			151,601			431,035		223,384
Preferred stock dividends			8,301			7,832		2,875

Net income attributable to common stock		$	143,300		$	423,203	$	220,509

Basic earnings per common share		$	.35		$	1.02	$	.52

Average common shares outstanding			412,675			415,907		420,924

Diluted earnings per common share		$	.34		$	.96	$	.49

Average common and common equivalent shares outstanding			422,974			457,406		463,014

Dividends per common share		$	.22		$	.22	$	.19

SLM CORPORATION

Segment and Non-GAAP "Core Earnings"

Consolidated Statements of Income

(In thousands)

		Quarter ended March 31, 2006
		Lending		DMO			Corporate and Other			Total "Core Earnings"		Adjustments			Total GAAP
		(unaudited)
Interest income:
	FFELP Stafford and Other Student Loans	$	649,751	$	—		$	—		$	649,751	$	(351,251	)	$	298,500
	Consolidation Loans		1,027,962		—			—			1,027,962		(206,627	)		821,335
	Private Education Loans		428,760		—			—			428,760		(187,407	)		241,353
	Other loans		23,307		—			—			23,307		—			23,307
	Cash and investments		130,461		—			1,323			131,784		(35,974	)		95,810

Total interest income			2,260,241		—			1,323			2,261,564		(781,259	)		1,480,305
Total interest expense			1,659,372		5,156			1,278			1,665,806		(573,022	)		1,092,784

Net interest income			600,869		(5,156	)		45			595,758		(208,237	)		387,521
Less: provisions for losses			74,820		—			19			74,839		(14,520	)		60,319

Net interest income after provisions for losses			526,049		(5,156	)		26			520,919		(193,717	)		327,202
Fee income			—		91,612			26,907			118,519		—			118,519
Collections revenue			—		56,540			—			56,540		141			56,681
Other income			40,572		—			30,009			70,581		40,062			110,643
Operating expenses⁽¹⁾			161,438		89,513			58,512			309,463		13,846			323,309
Income tax expense (benefit)⁽²⁾			149,917		19,789			(581	)		169,125		(32,080	)		137,045
Minority interest in net earnings of subsidiaries			—		1,090			—			1,090		—			1,090

Net income (loss)		$	255,266	$	32,604		$	(989	)	$	286,881	$	(135,280	)	$	151,601

⁽¹⁾: Operating expenses for the Lending, DMO, and Corporate and Other Business segments include $10 million, $3 million, and $5 million, respectively, of stock-based employee compensation expense due to the implementation of SFAS No. 123(R) in the first quarter of 2006.
⁽²⁾: Income taxes are based on a percentage of net income before tax for the individual reportable segment.

		Quarter ended December 31, 2005
		Lending⁽²⁾		DMO⁽²⁾			Corporate and Other⁽²⁾			Total "Core Earnings"		Adjustments			Total GAAP
		(unaudited)
Interest income:
	FFELP Stafford and Other Student Loans	$	619,987	$	—		$	—		$	619,987	$	(304,823	)	$	315,164
	Consolidation Loans		934,096		—			—			934,096		(173,758	)		760,338
	Private Education Loans		373,801		—			—			373,801		(169,809	)		203,992
	Other loans		22,851		—			—			22,851		—			22,851
Cash and investments			127,418		—			1,564			128,982		(39,061	)		89,921

Total interest income			2,078,153		—			1,564			2,079,717		(687,451	)		1,392,266
Total interest expense			1,506,852		5,531			1,455			1,513,838		(511,705	)		1,002,133

Net interest income			571,301		(5,531	)		109			565,879		(175,746	)		390,133
Less: provisions for losses			69,243		—			(7	)		69,236		(3,918	)		65,318

Net interest income after provisions for losses			502,058		(5,531	)		116			496,643		(171,828	)		324,815
Fee income			—		98,839			21,555			120,394		—			120,394
Collections revenue			—		48,112			—			48,112		192			48,304
Other income			37,696		—			28,355			66,051		384,995			451,046
Operating expenses			138,778		83,920			55,895			278,593		18,070			296,663
Income tax expense (benefit)⁽¹⁾			148,362		21,275			(2,172	)		167,465		48,442			215,907
Minority interest in net earnings of subsidiaries			—		954			—			954		—			954

Net income (loss)		$	252,614	$	35,271		$	(3,697	)	$	284,188	$	146,847		$	431,035

⁽¹⁾: Income taxes are based on a percentage of net income before tax for the individual reportable segment.
⁽²⁾: In the first quarter of 2006, the Company changed its method for allocating certain Corporate and Other expenses to the other business segments. All periods presented have been updated to reflect the new allocation methodology.

		Quarter ended March 31, 2005
		Lending⁽²⁾		DMO⁽²⁾			Corporate and Other⁽²⁾			Total "Core Earnings"		Adjustments			Total GAAP
		(unaudited)
Interest income:
	FFELP Stafford and Other Student Loans	$	509,940	$	—		$	—		$	509,940	$	(319,207	)	$	190,733
	Consolidation Loans		580,977		—			—			580,977		(72,556	)		508,421
	Private Education Loans		227,307		—			—			227,307		(97,691	)		129,616
	Other loans		20,153		—			—			20,153		—			20,153
	Cash and investments		78,188		—			945			79,133		(17,084	)		62,049

Total interest income			1,416,565		—			945			1,417,510		(506,538	)		910,972
Total interest expense			918,093		4,068			1,410			923,571		(359,359	)		564,212

Net interest income			498,472		(4,068	)		(465	)		493,939		(147,179	)		346,760
Less: provisions for losses			54,962		—			(40	)		54,922		(8,399	)		46,523

Net interest income after provisions for losses			443,510		(4,068	)		(425	)		439,017		(138,780	)		300,237
Fee income			—		85,752			32,540			118,292		—			118,292
Collections revenue			—		34,883			—			34,883		—			34,883
Other income			35,762		33			31,629			67,424		153,499			220,923
Operating expenses			134,185		63,916			51,196			249,297		12,994			262,291
Income tax expense⁽¹⁾			127,681		19,494			4,643			151,818		34,648			186,466
Minority interest in net earnings of subsidiaries			821		1,221			—			2,042		152			2,194

Net income		$	216,585	$	31,969		$	7,905		$	256,459	$	(33,075	)	$	223,384

⁽¹⁾: Income taxes are based on a percentage of net income before tax for the individual reportable segment.
⁽²⁾: In the first quarter of 2006, the Company changed its method for allocating certain Corporate and Other expenses to the other business segments. All periods presented have been updated to reflect the new allocation methodology.

SLM CORPORATION

Reconciliation of "Core Earnings" Net Income to GAAP Net Income

(In thousands, except per share amounts)

		Quarters ended
		March 31, 2006			December 31, 2005			March 31, 2005
		(unaudited)			(unaudited)			(unaudited)
"Core earnings" net income^(A)		$	286,881		$	284,188		$	256,459
"Core earnings" adjustments:
	Net impact of securitization accounting		(62,061	)		117,520			(32,372	)
	Net impact of derivative accounting		(38,817	)		149,755			89,612
	Net impact of Floor Income		(52,569	)		(56,108	)		(42,433	)
	Amortization of acquired intangibles		(13,913	)		(15,878	)		(13,082	)

Total "core earnings" adjustments before income taxes and minority interest in net earnings of subsidiaries			(167,360	)		195,289			1,725
Net tax effect^(B)			32,080			(48,442	)		(34,648	)

Total "core earnings" adjustments before minority interest in net earnings of subsidiaries			(135,280	)		146,847			(32,923	)
	Minority interest in net earnings of subsidiaries		—			—			(152	)

Total "core earnings" adjustments			(135,280	)		146,847			(33,075	)

GAAP net income		$	151,601		$	431,035		$	223,384

GAAP diluted earnings per common share		$	.34		$	.96		$	.49

^(A) "Core earnings" diluted earnings per common share		$	.65		$	.63		$	.57

^(B): Such tax effect is based upon the Company's "core earnings" effective tax rate for the year. The net tax effect results primarily from the exclusion of the permanent income tax impact of the equity forward contracts.

Non-GAAP "Core Earnings"

In accordance with the Rules and Regulations of the Securities and Exchange Commission ("SEC"), we prepare financial statements in accordance with GAAP. In addition to evaluating the Company's GAAP-based financial information, management evaluates the Company's business segments under certain non-GAAP performance measures that we refer to as "core earnings" for each business segment, and we refer to this information in our presentations with credit rating agencies and lenders. While "core earnings" are not a substitute for reported results under GAAP, we rely on "core earnings" to manage each operating segment because we believe these measures provide additional information regarding the operational and performance indicators that are most closely assessed by management.

defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. "Core earnings" reflect only current period adjustments to GAAP as described below. Accordingly, the Company's "core earnings" presentation does not represent another comprehensive basis of accounting. A more detailed discussion of the differences between GAAP and "core earnings" follows.

Limitations of "Core Earnings"

While GAAP provides a uniform, comprehensive basis of accounting, for the reasons described above, management believes that "core earnings" are an important additional tool for providing a more complete understanding of the Company's results of operations. Nevertheless, "core earnings" are subject to certain general and specific limitations that investors should carefully consider. For example, as stated above, unlike financial accounting, there is no comprehensive, authoritative guidance for management reporting. Our "core earnings" are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. Unlike GAAP, "core earnings" reflect only current period adjustments to GAAP. Accordingly, the Company's "core earnings" presentation does not represent a comprehensive basis of accounting. Investors, therefore, may not compare our Company's performance with that of other financial services companies based upon "core earnings." "Core earnings" results are only meant to supplement GAAP results by providing additional information regarding the operational and performance indicators that are most closely used by management, the Company's board of directors, rating agencies and lenders to assess performance.

Other limitations arise from the specific adjustments that management makes to GAAP results to derive "core earnings" results. For example, in reversing the unrealized gains and losses that result from SFAS No. 133 on derivatives that do not qualify for "hedge treatment," as well as on derivatives that do qualify but are in part ineffective because they are not perfect hedges, we focus on the long-term economic effectiveness of those instruments relative to the underlying hedged item and isolate the effects of interest rate volatility, changing credit spreads and changes in our stock price on the fair value of such instruments during the period. Under GAAP, the effects of these factors on the fair value of the derivative instruments (but not on the underlying hedged item) tend to show more volatility in the short term. While our presentation of our results on a Managed Basis provides important information regarding the performance of our Managed portfolio, a limitation of this presentation is that we are presenting the ongoing spread income on loans that have been sold to a trust managed by us. While we believe that our Managed Basis presentation presents the economic substance of our Managed loan portfolio, it understates earnings volatility from securitization gains. Our "core earnings" results exclude certain Floor Income, which is real cash income, from our reported results and therefore may understate earnings in certain periods. Management's financial planning and valuation of operating results, however, does not take into account Floor Income because of its inherent uncertainty, except when it is economically hedged through Floor Income Contracts.

Pre-Tax Differences between "Core Earnings" and GAAP

Our "core earnings" 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 our chief operating decision maker. Our "core earnings" are used in developing our financial plans and tracking results, and also in establishing corporate performance targets and determining incentive compensation. Management believes this information provides additional insight into the financial performance of the Company's core business activities. "Core earnings" reflect only current period adjustments to GAAP, as described in the more detailed discussion of the differences between GAAP and "core earnings" that follows, which includes further detail on each specific adjustments required to reconcile our "core earnings" segment presentation to our GAAP earnings.

1): Securitization Accounting: Under GAAP, certain securitization transactions in our Lending operating segment are accounted for as sales of assets. Under "core earnings" for the Lending operating segment, we present all securitization transactions on a Managed Basis as long-term non-recourse financings. The upfront "gains" on sale from securitization transactions as well as ongoing "servicing and securitization revenue" presented in accordance with GAAP are excluded from "core earnings" and are replaced by the interest income, provisions for loan losses, and interest expense as they are earned or incurred on the securitization loans. We also exclude transactions with our off-balance sheet trusts from "core earnings" as they are considered intercompany transactions on a Managed Basis.
2): Derivative Accounting: "Core earnings" exclude periodic unrealized gains and losses arising primarily in our Lending business segment, and to a lesser degree in our Corporate and Other business segment, that are caused primarily by the one-sided mark-to-market derivative valuations prescribed by SFAS No. 133 on derivatives that do not qualify for "hedge treatment" under GAAP. Under "core earnings," we recognize the economic effect of these hedges, which generally results in any cash paid or received being recognized ratably as an expense or revenue over the hedged item's life. "Core earnings" also exclude the gain or loss on equity forward contracts that under SFAS No. 133 are required to be accounted for as derivatives and marked-to-market through earnings.
3): Floor Income: The timing and amount (if any) of Floor Income earned in our Lending operating segment is uncertain and in excess of expected spreads. Therefore, we exclude such income from "core earnings" when it is not economically hedged. We employ derivatives, primarily Floor Income Contracts and futures, to economically hedge Floor Income. As discussed above in "Derivative Accounting," these derivatives do not qualify as effective accounting hedges, and therefore, under GAAP, they are marked-to-market through the "gains (losses) on derivative and hedging activities, net" line on the income statement with no offsetting gain or loss recorded for the economically hedged items. For "core earnings," we reverse the fair value adjustments on the Floor Income Contracts and futures economically hedging Floor Income and include the amortization of net premiums received (net of Eurodollar futures contracts' realized gains or losses) in income.
4): Other items: We exclude the amortization of acquired intangibles.

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SLM CORPORATION Supplemental Earnings Disclosure March 31, 2006 (Dollars in millions, except earnings per share)
SLM CORPORATION Consolidated Balance Sheets (In thousands, except per share amounts)
SLM CORPORATION Consolidated Statements of Income (In thousands, except per share amounts)
SLM CORPORATION Segment and Non-GAAP "Core Earnings" Consolidated Statements of Income (In thousands)
SLM CORPORATION Reconciliation of "Core Earnings" Net Income to GAAP Net Income (In thousands, except per share amounts)