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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
(Fee required)
For the Quarterly period ended or
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[x] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No fee required)
For the transition period from February 3, 1997 to March 31, 1997
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(Amended by Exch Act Rel No. 312905. eff 4/26/93.)
Commission file number 333-21217
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SLM HOLDING CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 52-2013874
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1050 Thomas Jefferson Street, NW Washington, DC 20007
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(Address of Principal Executive Offices) (Zip Code)
(202) 298-3152
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MAY 27, 1997
Common Stock, $. 20 par value 1,000 shares
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SLM HOLDING CORPORATION
FORM 10-Q
INDEX
March 31, 1997
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets - March 31, 1997 (unaudited)
and February 3, 1997 1
Notes to Balance Sheets 2
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 3
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 3
Item 2. Changes in Securities 3
Item 3. Defaults Upon Senior Securities 3
Item 4. Submission of Matters to a Vote of Security Holders 4
Item 5. Other Information 4
Item 6. Exhibits and Reports on Form 8-K 4
Signatures 5
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PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
SLM HOLDING CORPORATION
BALANCE SHEETS
MARCH 31, FEBRUARY 3,
1997 1997
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(Unaudited)
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000 $ 1,000
======= =======
LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ -
STOCKHOLDER'S EQUITY
Preferred stock, par value $.20 per share, 20,000,000 shares authorized, none issued and
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Common stock, par value $.20 per share, 250,000,000 shares authorized, 1,000 shares issued
and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 200
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 800
------- -------
Total stockholder's equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
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Total liabilities and stockholder's equity . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000 $ 1,000
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See accompanying notes to balance sheets.
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SLM HOLDING CORPORATION
NOTES TO BALANCE SHEETS
1. ORGANIZATION AND PRIVATIZATION
SLM Holding Corporation (the "Company") was incorporated on February
3, 1997 under Delaware law. The Company is a wholly-owned subsidiary of the
Student Loan Marketing Association ("Sallie Mae" or "GSE"), a corporation
chartered under federal law. The Company was incorporated to effect the
reorganization of the business of Sallie Mae and the eventual dissolution of
Sallie Mae. The Company has had no operations since its incorporation and will
commence operations effective upon the reorganization as described below.
Privatization
Sallie Mae is a stockholder-owned corporation which was created in
1972 as a federally chartered government-sponsored enterprise under the Higher
Education Act of 1965 (the "Act). The Act defines Sallie Mae's charter and
limits its corporate authority to education finance related activities, while
imposing certain obligations on Sallie Mae, including acting as a lender of
last resort to eligible borrowers under the Federal Family Education Loan
Program (the "FFELP").
On September 30, 1996, the Student Loan Marketing Association
Reorganization Act of 1996 (the "Privatization Act") was enacted. The
Privatization Act authorized the creation of a state-chartered holding company
(the "Holding Company") that can pursue new business opportunities beyond the
limited scope of the GSE's restricted federal charter. The Holding Company
would become the parent of the GSE pursuant to a reorganization ("the
Reorganization") which must be approved by a majority vote of the GSE's
shareholders, such vote to take place on or before March 31, 1998. The Company
has instituted a process to accomplish privatization as more fully described in
the combined Proxy Statement of Sallie Mae and Prospectus of the Company, dated
April 9, 1997 and filed as part of the Company's Registration Statement on Form
S-4 (File No. 333-21217) with the Securities and Exchange Commission, as
amended.
As described in the above-mentioned Proxy Statement/Prospectus, if the
Reorganization is approved by the shareholders, the GSE, which will become a
wholly-owned subsidiary of the Holding Company, will be gradually liquidated
and its federal charter rescinded on or before September 30, 2008. Pursuant to
the Reorganization, each outstanding share of Sallie Mae Common Stock will be
converted into one share of Holding Company Common Stock. In addition, Sallie
Mae will transfer certain assets, including stock in certain subsidiaries to
the Holding Company or one of its non-GSE subsidiaries. As required by the
Privatization Act, all GSE employees will be transferred to one of the Holding
Company's subsidiaries. During the wind-down period, it is expected that all
Sallie Mae operations will be managed pursuant to an arms-length service
agreement with a Sallie Mae affiliate. In addition, the Holding Company will
remain a passive entity which supports the operations of the GSE and its other
subsidiaries, and all business activities would be conducted through the GSE
and by such other subsidiaries.
The Privatization Act imposes certain restrictions on intercompany
relations between Sallie Mae and its affiliates during the wind-down period.
In particular, Sallie Mae must not extend credit to, nor guarantee any debt
obligations of the Holding Company, or the Holding Company's non-GSE
subsidiaries. Furthermore, the loan servicing arrangements must be on terms
no less favorable to Sallie Mae than Sallie Mae could obtain from an unrelated
third party. While Sallie Mae may not finance the activities of its non-GSE
affiliates, it may, subject to its minimum capital requirements, dividend
retained earnings and surplus capital to the Holding Company, which in turn may
use such amounts to support its non-GSE subsidiaries. The Sallie Mae charter
requires that Sallie Mae maintain a minimum capital ratio of at least 2.0
percent until 2000, and at least 2.25 percent thereafter. The Privatization
Act further directs that under no circumstances shall the assets of Sallie Mae
be available or used to pay claims or debts of or incurred by the Holding
Company.
During the wind-down period following the Reorganization and prior to
the GSE's dissolution, the GSE will be restricted in the new business
activities it may undertake. Sallie Mae may continue to purchase student loans
only through September 30, 2007.
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SLM HOLDING CORPORATION
NOTES TO BALANCE SHEETS -- (CONTINUED)
1. ORGANIZATION AND PRIVATIZATION -- (CONTINUED)
Warehousing advances, letters of credit and standby bond purchase
activity by the GSE will be limited to takedowns on contractual financing and
guarantee commitments in place as of the Reorganization's effective date. The
Holding Company generally may begin to purchase student loans only after the
GSE discontinues such activity. Sallie Mae's debt obligations that are
outstanding at the time of Reorganization will continue to be outstanding
obligations of the GSE immediately after the Reorganization. Sallie Mae will
be able to continue to issue debt in the government agency market to finance
student loans and other permissible asset acquisitions, although the maturity
date of such issuances generally may not extend beyond September 30, 2008,
Sallie Mae's final dissolution date. At March 31, 1997, Sallie Mae had $376
million in outstanding debt with maturities after September 30, 2008. Such
debt will be transferred into a defeasance trust on the final dissolution date.
The Privatization Act requires that within 60 days after the merger,
the Company must pay $5 million to the D.C. Financial Control Board for use of
the "Sallie Mae" name. In addition, the Holding Company must issue to the D.C.
Financial Control Board warrants to purchase 555,015 shares of Holding Company
Common Stock. These warrants are transferable and exercisable at any time
prior to September 30, 2008 at $72.43 per share. These provisions of the
Privatization Act were part of the terms negotiated with the Administration and
Congress as consideration for the GSE's privatization.
Beginning in fiscal 1997, and until the GSE is dissolved, Sallie Mae
also must reimburse the U.S. Treasury Department up to $800,000 annually
(subject to adjustment based on the Consumer Price Index) for its reasonable
costs and expenses of carrying out its supervisory duties under the
Privatization Act.
The transfer of subsidiaries and assets of the GSE to the Holding
Company and the related exchange of common stock between the GSE and the
Holding Company will be accounted for at historical cost similar to a pooling
of interests. Operations performed outside the GSE after the Reorganization
will be subject to state and local taxes.
If the Reorganization is not approved by shareholders certain charter
sunset provisions of the Privatization Act become applicable and will result in
the dissolution of the GSE by July 1, 2013.
2. BASIS OF PRESENTATION
The accompanying unaudited balance sheet of the Company has been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.
3. RISKS AND UNCERTAINTIES
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Not applicable. See Note 1 to Balance Sheets.
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Registrant knows of no material legal proceedings involving the
Registrant or its properties.
ITEM 2. CHANGES IN SECURITIES.
Nothing to report.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Nothing to report.
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PART II--OTHER INFORMATION -- (CONTINUED)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Nothing to report.
ITEM 5. OTHER INFORMATION.
Nothing to report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (SECTION 249.308 OF THIS CHAPTER).
The Company did not file any reports on Form 8-K since its
incorporation.
EXHIBIT NO.
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*2 -- Form of Agreement and Plan of Reorganization by and among the
Student Loan Marketing Association ("Sallie Mae"), SLM Holding
Corporation ("Registrant"), and Sallie Mae Merger Company
("MergerCo")
*3.1 -- Form of Amended and Restated Certificate of Incorporation of
Registrant
*3.2 -- By-Laws of Registrant
*21 -- Subsidiaries of the Registrant
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* Incorporated by Reference to the identically numbered Exhibits to the
Registrant's Registration Statement on Form S-4 (File No. 333-21217)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
SLM HOLDING CORPORATION
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(Registrant)
May 23, 1997 /s/ Timothy G. Greene
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Date Timothy G. Greene
Executive Vice President and General Counsel
May 27, 1997 /s/ Denise B. McGlone
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Date Denise B. McGlone
Executive Vice President and Chief Financial
Officer
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3-MOS
DEC-31-1997
FEB-03-1997
MAR-31-1997
1,000
0
0
0
0
0
0
0
0
1,000
0
0
0
0
0
0
200
800
1,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
