=============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 15, 2000 ------------- SLM HOLDING CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 52-2013874 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11600 SALLIE MAE DRIVE, RESTON, VIRGINIA 20193 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including are code: (703) 810-3000 ===============================================================================
ITEM 5. OTHER EVENTS On June 15, 2000, the Registrant entered into a definitive purchase agreement with USA Group, Inc. ("USA Group"), USA Group Loan Services, Inc. ("Loan Services"), and USA Group Guarantee Services, Inc. ("Guarantee Services") (USA Group, Loan Services and Guarantee Services, collectively, the "Sellers") to purchase the guarantee servicing, student loan servicing and secondary market operations of the Sellers other than those of the Sellers' affiliates -- USA Group Funds, Inc. and Secondary Market Services - Hawaii. The transaction is expected to close in the third quarter of 2000, subject to regulatory approvals. A copy of a Transaction Summary to be posted by the Registrant on its corporate website@www.salliemae.com, is attached hereto as Exhibit 99 and incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS (a) Exhibits. 99 Transaction Summary of the Registrant, dated June 22, 2000, summarizing the terms of the transaction under which the Registrant has agreed to acquire substantially all of the properties and assets of the USA Group, Inc. 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. Date: June 22, 2000 SLM HOLDING CORPORATION By: /s/ John F. Remondi --------------------------------- John F. Remondi Senior Vice President - Finance (Principal Financial and Accounting Officer and Duly Authorized Officer)
EXHIBIT INDEX Exhibit Number Description of Document 99 Transaction Summary of the Registrant, dated June 22, 2000, summarizing the terms of the transaction under which the Registrant has agreed to acquire substantially all of the properties and assets of the USA Group, Inc.
[LOGO] TRANSACTION SUMMARY SLM Holding Corporation and USA Group [GRAPHIC]
[LOGO] TERMS OF THE TRANSACTION - "BUYER" - SLM HOLDING - "SELLER" - USA GROUP FOUNDATION - $770 MILLION PURCHASE PRICE - $400 MILLION CASH - $370 MILLION RESTRICTED STOCK - HEADQUARTERS - RESTON, VIRGINIA - LARGEST OPERATION - INDIANAPOLIS, INDIANA - TOTAL EMPLOYEES: 6,500 - ANTICIPATED DATE OF CLOSING: SEPTEMBER 30, 2000 2
[LOGO] TRANSACTION SUMMARY This transaction is virtually a perfect match for Sallie Mae Strategically and Financially - Creates "full service" student loan organization - Completes loan origination and delivery process - Matches Direct Lending's loan delivery advantages - Adds $400 million fee income to Sallie Mae's $1 billion net interest margin (projected 2001) - Significant (20%) productivity potential - Accretive in 2001 - Goodwill - approximately $480 million - Equity capital to exceed $1.2 billion 3
[LOGO] FORWARD LOOKING STATEMENTS - - Statements in this document referring to this transaction, expectations as to future earnings and operations, and other future developments are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements 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, the ability to successfully integrate operations, the effect of competitors' and customers' responses, changes in terms of student loans and the educational credit marketplace arising from changes in interest rates and from the implementation of applicable laws and regulations, and from changes in such laws and regulations, and changes in the demand for educational financing or in financing preferences of educational institutions, students, and their families. 4
[LOGO] Overview of USA Group USA GROUP, INC - Private, non-profit incorporated in 1990 to provide direction and administrative support to its affiliated companies (predecessor was United Student Aid Funds incorporated in 1960) - Comprised of several entities that participate in higher education credit - USA FUNDS - FFELP guarantor - USA GROUP GUARANTEE SERVICES, INC. - provides administrative support to guarantors - USA GROUP LOAN SERVICES, INC. - FFELP third party loan servicing company - USA GROUP SECONDARY MARKET SERVICES, INC - secondary market company - EDUCATION ONE GROUP - Bank One marketing affiliation - NOEL-LEVITZ, INC. - higher education enrollment management consulting 5
[LOGO] USA GROUP GUARANTEE SERVICES, INC. - PROVIDES A FULL RANGE OF ADMINISTRATIVE SERVICES FOR A GUARANTOR TO CARRY OUT ITS FUNCTIONS - Loan origination and maintenance - Default prevention and collection - 12 GUARANTOR CUSTOMERS INCLUDING USA FUNDS - PROCESSED $10.2 BILLION OF GUARANTEES FOR THE FYE SEPTEMBER 30, 1999 ($8 BILLION FOR USA FUNDS) - FEES BASED ON LEVEL OF SERVICE PROVIDED TO GUARANTORS 6
[LOGO] USA GROUP LOAN SERVICES, INC. - MANAGES LOAN SERVICING FOR LENDER AND SECONDARY MARKET CLIENTS - $15.5 BILLION SERVICING PORTFOLIO, AS OF SEPTEMBER 30, 1999 (APPROXIMATELY $5.0 BILLION FOR USA GROUP) - 130 CLIENTS - 1.8 MILLION ACCOUNTS - FEE REVENUE IS BASED ON EITHER THE NUMBER OF ACCOUNTS OR THE DOLLAR VOLUME OF LOANS OUTSTANDING 7
[LOGO] USA GROUP SECONDARY MARKET SERVICES, INC. - Secondary market - $6 billion portfolio - 600 lender relationships - Key customer: Bank One - Projected annual acquisitions of $1 - $1.5 billion - Spread based revenue 8
[LOGO] USA GROUP PRINCIPAL OPERATING ENTITIES UNIT FUNCTION ACQUIRED SLM EQUIVALENT PRINCIPAL REVENUE BY SLM OPERATING UNIT SOURCES - ----------------------------------------------------------------------------------------------------------- Guarantor, DOE - Department of Education and Borrowers USA FUNDS Reinsured No None - ----------------------------------------------------------------------------------------------------------- Administrative services - Fees from lenders USA GROUP supporting USA Funds, None / Sallie Mae & guarantors GUARANTEE other guarantors, schools, Yes Servicing Corp. - Collection of SERVICES, INC. borrowers, lenders & defaulted loans secondary markets - $10.2 billion of guarantees - ----------------------------------------------------------------------------------------------------------- USA GROUP - Loan servicing fees LOAN SERVICES Student loan servicing, Yes Sallie Mae Servicing from lenders & INC. collections Corp. secondary markets - $15.5 billion servicing portfolio - ----------------------------------------------------------------------------------------------------------- - Interest income on loans owned or USA GROUP Student Loan managed SECONDARY Purchase loans in the Yes Marketing Assoc./ - $6 billion portfolio MARKET secondary market Nellie Mae / SLFR - Projected SERVICES, INC. acquisitions of $1- 1.5 billion 9
[LOGO] USA Group* Pro Forma Operating Margin Operations Acquired ($ IN MILLIONS) Pro forma REVENUES 1999 2000** -------- ---- ------ Default Activity Fees $136 $148 Loan Origination Fees 130 142 Other Loan Servicing Fees 77 73 Net Interest Income 48 71 ---- ---- TOTAL REVENUES 390 433 TOTAL EXPENSES 313 339 PRETAX INCOME $ 77 $ 95 OPERATING MARGIN 20% 22% *EXCLUDES GUARANTEE AGENCY USA FUNDS ** PROJECTED FOR 2000 FISCAL YEAR 10
[LOGO] APPENDIX 11
[LOGO] STUDENT LOAN LIFE CYCLE ORIGINATION DISBURSEMENT IN SCHOOL REPAYMENT DELINQUENCY DEFAULT ENTITIES - University - University - Guarantor - Servicer - Servicer - Servicer - Lender - Lender - DOE - Lender/ - Guarantor - Guarantor INVOLVED - Guarantor - Servicer - Secondary - DOE - DOE - DOE - Market - Collection - DOE Agencies FEES/ - Origination Fee - Disbursement - Account - Servicing Fee - Default - Collection Fee (DOE to Fee (Lender to Maintenance (Lender to Aversion Fee (Retention of INCOME Guarantor) Disbursement Fee (DOE to Servicer) (Federal defaulted loan - Guaranty Fee Agency) Guarantor) Interest Reserve Fund collections) (Student to - Conversion Fee - Interest Income Income to to Guarantor) Guarantor) (Lender to to Lender Lender - Servicing Fee (Lender to Servicer) USA - USA Funds - Guarantee - Guarantee - Loan Services - Guarantee - Guarantee (Guarantor) Services Services - SMS (if holder Services Services (Default GROUP - Guarantee (Origination & (Maintenance) of loan) (Default Collections) ENTITY Services Maintenance) Prevention) - Guarantee (ACTIVITY) (Origination & - Loan Services Services Maintenance) (Conversion) (Portfolio Management) DOE = Department of Education 12
[LOGO] STUDENT LOAN LIFE CYCLE DIAGRAM OF REVENUE SOURCES [GRAPHIC] 13
[LOGO] COMPARISON - SALLIE MAE/USA GROUP Note: Figures represent FY99 unless otherwise noted. Sallie Mae fiscal year ends 12/31; USA Group fiscal year ends 9/30. SALLIE MAE USA GROUP EMPLOYEES 3,500 3,000 LOAN $54.7 billion $6.0 billion PORTFOLIO OPERATING $926 million(1) $370.9 million (2) REVENUE LOAN $13.7 billion $3.1 billion (3) ACQUISITIONS GUARANTEE N/A $10.2 billion PROCESSING SERVICING $49.3 billion $15.5 billion PORTFOLIO BORROWER 5.3 million 1.5 million BASE (1)core cash basis net interest income (2)As reclassified for comparable presentation to Sallie Mae (3)Includes $1.5 billion spot purchase 14
[LOGO] MORE INFORMATION - PLEASE CONTACT: - Jeff Heinz - Sallie Mae Investor Relations - 703.810.7743 15