Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended: December 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-13251
SALLIE MAE 401(k) SAVINGS PLAN
(formerly Sallie Mae Employees’ Thrift & Savings Plan)
(Full title of the Plan)
SLM CORP.
(Name of the issuer of the securities held pursuant to the Plan)
11600 Sallie Mae Drive
Reston, Virginia 20193
(address of principal executive office of the issuer)
Table of Contents
SALLIE MAE 401(k) SAVINGS PLAN
| 3 | ||
| Financial Statements |
||
| 4 | ||
| 5 | ||
| 6 | ||
| 10 | ||
| 11 | ||
| 13 | ||
| A-1 |
2
Table of Contents
To the Participants and Plan Administrator of the
Sallie Mae 401(k) Savings Plan:
In our opinion, the accompanying statements of net
assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Sallie Mae 401(k) Savings Plan (the “Plan”) as
of December 31, 2001 and 2000 and the changes in net assets available for benefits for the year ended 2001 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility
of the Plan’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States
of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The
supplemental schedule titled Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of
Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected
to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
PricewaterhouseCoopersLLP
McLean, Virginia
September 16, 2002
3
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SALLIE MAE
401(k) SAVINGS PLAN
As of December 31, 2001 and 2000
| 2001 |
2000 | |||||
| Assets: |
||||||
| Investments, at fair value (Note 3) |
$ |
197,310,346 |
$ |
204,769,308 | ||
| Loans to plan participants |
|
4,784,784 |
|
5,008,752 | ||
| |
|
|
| |||
| Total assets |
|
202,095,130 |
|
209,778,060 | ||
| Liabilities: |
||||||
| Accounts payable |
|
— |
|
44,750 | ||
| |
|
|
| |||
| Total liabilities |
|
— |
|
44,750 | ||
| |
|
|
| |||
| Net assets available for benefits |
$ |
202,095,130 |
$ |
209,733,310 | ||
| |
|
|
| |||
The accompanying notes are an integral part of these financial statements.
4
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SALLIE MAE
401(k) SAVINGS PLAN
For the year ended December 31, 2001
| Additions to (deductions from) net assets attributed to: |
||||
| Investment income (loss): |
||||
| Net depreciation in fair value of investments (Note 3) |
$ |
(13,420,420 |
) | |
| Dividends |
|
3,228,718 |
| |
| Interest |
|
902,941 |
| |
| |
|
| ||
| Investment loss |
|
(9,288,761 |
) | |
| |
|
| ||
| Contributions: |
||||
| Employer, net of forfeitures |
|
14,625,941 |
| |
| Participant |
|
12,489,578 |
| |
| Rollover |
|
587,423 |
| |
| |
|
| ||
| |
27,702,942 |
| ||
| |
|
| ||
| Total additions, net |
|
18,414,181 |
| |
| |
|
| ||
| Deductions from net assets attributed to: |
||||
| Benefits paid to participants |
|
25,751,914 |
| |
| Transfer (Note 1) |
|
300,447 |
| |
| |
|
| ||
| Total deductions |
|
26,052,361 |
| |
| |
|
| ||
| Net decrease |
|
(7,638,180 |
) | |
| Net assets available for benefits: |
||||
| Beginning of year |
|
209,733,310 |
| |
| |
|
| ||
| End of year |
$ |
202,095,130 |
| |
| |
|
|
The accompanying notes are an
integral part of these financial statements.
5
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SALLIE MAE
401(k)
SAVINGS PLAN
1. Plan Description
General
The Sallie Mae 401(k) Savings Plan (the “Plan”) is a defined contribution plan established in 1974 for the benefit of eligible employees electing to participate
in the Plan (the “Participants”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. The following description of the Plan provides only general information. Participants
should refer to the Plan document for a more complete description of the Plan’s provision.
The Plan covers
substantially all employees of SLM Corporation, formerly USA Education, Inc., and its subsidiaries (the “Employer” and “Plan Administrator”). Eligible employees may enter the Plan after one month of service.
Effective August l, 2000, the Plan acquired a substantial portion of the assets of the USA Group, Inc. 401(k) Savings Plan in
connection with SLM Corporation’s acquisition of part of USA Group, Inc. Plan assets of $66,847,947 were transferred in connection with the purchase. During 2001, $300,447 was subsequently transferred out of the Plan in connection with this
purchase.
Contributions and vesting
Participants are eligible to contribute from 1 to 10 percent of their compensation, in increments of whole percentages, to the Plan under salary reduction agreements up to
the Internal Revenue Service maximum $10,500 in 2001. Participants may also contribute amounts rolled over from qualified employer plans in which they had previously participated.
After one year of service, the Employer contributes an amount equal to 100 percent of Participant contributions up to 6 percent of the participant’s eligible
compensation. Employer contributions not yet vested at termination of employment are forfeited by Participants and reduce the Employer’s future contribution. During 2001 Employer contributions were reduced by $430,271 from forfeited nonvested
accounts. Unused forfeitures at December 31, 2001 totaled $24,437. Such amount will be used to offset future employer contributions.
Effective September 1, 2000, participants become 100 percent vested after one year of service. Prior to that date, participants generally vested in Employer contributions and earnings thereon in accordance with the following
schedule:
| Vesting Percentage |
|||
| Two but less than three years of service |
25 |
% | |
| Three but less than for four years of service |
50 |
% | |
| Four but less than five years of service |
75 |
% | |
| Five or more years of service |
100 |
% |
Participants vest fully upon death, total disability, attainment of
age 65 or upon termination of the Plan by the Employer. Participant contributions and earnings thereon are fully vested at all times.
6
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SALLIE MAE
401(k)
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
Other contributions
During 2001, the Employer provided a contribution to eligible employees who did not participate in any of the Employer’s various
incentive plans. The award is a discretionary contribution determined by the Employer each year. In 2001 the award was based on 6 percent of base salary earned in 2000 and vested immediately. The amount contributed to the Plan, net of forfeitures,
was $5,249,608.
Participant loans
Participants may borrow up to 50 percent of their vested benefit to a maximum of $50,000. Participants may have no more than two loans outstanding at any time. The term of
a loan shall equal three or five years, at the election of the participant, except in the case of a loan that is used in regards to the participant’s principal residence, which must be repaid over twenty years. Loans are secured by the
participant’s account balance, bear interest rates equal to the prime rate established monthly by the Federal Reserve, and are repaid biweekly through automatic payroll deductions. In addition, participants may repay all or a portion (in $500
increments) of such loans at any time.
Investment elections
Fidelity Management Trust Company (Fidelity) is the Plan trustee and recordkeeper. Contributions are invested, based on Participants’
instructions, in any of the various investment options selected by the Sallie Mae 401(k) Savings Plan and Investment Committees. At December 31, 2001 the Plan offers various mutual funds, an employer stock fund, a money market fund, a guaranteed
investment contract and a self-directed brokerage option. Under the self-directed brokerage option participants may direct investments in any security or other investments offered by Fidelity, regardless of whether they are included as investment
options offered by the Plan. In order to participate in the self-directed brokerage option, participants must have a minimum Plan balance of $10,000 and at least $500 must remain in the other available funds.
Participant accounts
Each Participant’s account is credited with the Participant contribution, the Employer’s contribution and Plan earnings (losses). Allocations are based on participant earnings or account
balances.
Payment of benefits
Participants may withdraw funds from their account upon retirement, disability, separation from employment, attainment of age 59-1/2, and certain other times as specified
in the Plan Document. Distributions shall be made in a lump sum, reduced by the outstanding balance of any loan not repaid by the Participant.
Administrative expenses
Participants pay fees for
loans and withdrawals, and terminated Participants pay annual maintenance fees. The Participant costs are charged directly to the Participant’s account and are reflected in the statement of changes in net assets available for benefits as a
component of investment expenses. The Employer bears the remaining cost of Plan administration, except for commissions associated with common stock purchases and sales.
Plan administration
Members of the Sallie Mae 401(k) Savings Plan and Investment Committees and Trustees of the Plan are appointed by the Board of Directors of the Employer. Three officers of the Employer presently serve as Sallie Mae 401(k) Savings
Plan and Investment Committee members. The Plan pays no compensation for their services.
7
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SALLIE MAE
401(k)
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies
Basis of accounting
The Plan maintains its accounting records on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
Investment valuation and income recognition
Money market funds are carried at cost, which approximates fair value. Common stock, securities and brokerage account investments traded on national securities exchanges
are carried at market value based on the closing price on the last business day of the year. The fair value of mutual funds are determined based on the net asset value for shares held by the Plan. Guaranteed investment contracts are valued at
contract value. Loans to Participants are carried at cost, which approximates fair value.
The Plan presents on
the statement of changes in net assets available for benefits the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those
investments. Dividend income is recorded on the ex-dividend date. Interest earned on investments is recorded on the accrual basis. Purchases and sales of securities are recorded on the trade date.
Contributions
Contributions made by employees electing to participate in the Plan under salary reduction agreements and Employer contributions are recorded when payable into the Plan.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and changes therein, and disclosure of contingent assets and liabilities. Such estimates include those regarding fair value. Actual results could differ from those estimates.
Risks and uncertainties
The Plan provides for various investment options. Such investments are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is reasonably
possible that changes in the fair values of the investment securities and risks in the near term could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.
Benefit payments
Benefits are recorded when paid.
Reclassifications
Certain reclassifications were made in the prior year to conform
to the current year presentation.
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SALLIE MAE
401(k)
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
3. Investments
The individual investments that represent 5 percent or more of the fair value of net assets available for benefits are as follows:
| December 31, | ||||||
| 2001 |
2000 | |||||
| Employer Stock Fund: |
||||||
| USA Education Stock Fund, 1,828,060 and 1,891,607 units, respectively |
$ |
37,932,239 |
$ |
31,778,994 | ||
| Mutual Funds: |
||||||
| Fidelity Contra Fund, 497,718 and 527,481 shares, respectively |
|
21,287,376 |
|
25,936,252 | ||
| Fidelity Spartan U.S. Equity Index fund, 494,882 and 505,637 shares, respectively |
|
20,112,005 |
|
23,668,885 | ||
| Fidelity Balanced Fund, 1,009,731 and 948,975 shares, respectively |
|
15,044,997 |
|
14,414,928 | ||
| Janus Worldwide Fund, 302,512 and 326,288 shares, respectively |
|
13,262,108 |
|
18,552,756 | ||
| Fidelity Magellan Fund, 124,291 and 121,387 shares, respectively |
|
12,953,618 |
|
14,481,444 | ||
| Money Market Fund: |
||||||
| Fidelity Retirement Government Money Market |
|
18,366,864 |
|
17,564,565 | ||
During 2001, the Plan’s investments (including investments
bought, sold, or held during the year) depreciated in value by $13,420,420 as follows:
| Net (depreciation)/ appreciation |
||||
| Mutual funds |
$ |
(18,928,455 |
) | |
| USA Education Stock Fund |
|
7,038,996 |
| |
| Common stock |
|
(1,530,961 |
) | |
| |
|
| ||
| Total investments |
$ |
(13,420,420 |
) | |
| |
|
| ||
The Plan has fully entered into a benefit-responsive investment
contract (“GIC”) with Principal Mutual Life Insurance Company (“Principal”). Principal maintains the contributions in a general account. The account is credited with earnings on the underlying investments and charged for
participant withdrawals and administrative expenses. The contract is included in the financial statements at contract value as reported to the Plan by Principal. Contract value represents contributions made under the contract, plus earnings, less
participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.
There are no reserves against contract value for credit risk of the contract issuer or otherwise. The average yield and crediting interest rates were 6.02 percent for 2001
and 2000. The crediting interest rate is a fixed rate which is guaranteed through the life of the GIC. Such interest rates are reviewed on a quarterly basis for resetting.
4. Plan Termination
Although it
has not expressed any intent to do so, the Employer has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, Participants would become
100 percent vested in their employer contributions.
9
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SALLIE MAE
401(k)
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
5. Related-Party Transactions
Certain Plan investments are shares of mutual funds or amounts of an employer stock fund managed by Fidelity. Fidelity is the trustee as
defined by the Plan and therefore these transactions qualify as party-in-interest. Fees paid by SLM Corporation for administrative services were nominal for the year ended December 31, 2001.
Additionally, the Plan has investments in the USA Education Stock Fund which is comprised principally of USA Education, Inc. stock. At December 31, 2001 and 2000 the Plan
held 1,828,060 and 1,891,607 units, respectively, valued at $37,932,239 and $31,778,994, respectively. During 2001, 930,971 units in the amount of $24,012,949 were purchased and 994,518 units in the amount of $17,859,704 were sold of the USA
Education Stock Fund. Such transactions qualify as party-in-interest transactions, as SLM Corporation is the Plan’s sponsor.
6.
Income Tax Status
The Internal Revenue Service has determined and informed the Plan
by letter dated March 18, 1999, that the Plan is designed in accordance with applicable sections of the Internal Revenue Code (the “IRC”). Although the Plan has been amended since the date of the letter, the Plan Administrator believes the
amendments do not alter the tax status of the Plan and the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC.
7. Subsequent Events
Effective
April 1, 2002, the Nellie Mae Corporation 401(k) Savings Plan, Nellie Mae Corporation Pension Plan, Student Loan Funding Resources, Inc. 401(k) and Profit Sharing Retirement Plan, and the Student Loan Funding Resources, Inc. Money Purchase Pension
Plan were merged with and into the Plan. The total assets transferred into the Plan as a result of these mergers were $8,454,641.
8.
Reconciliation of Form 5500 to financial statements
There were no reconciling items
related to the Form 5500 filed for the year ended December 31, 2001.
The following reconciling item relates to
the Form 5500 filed for the year ended December 31, 2000:
The balance sheet as of December 31, 2000 includes a
payable to the prior plan sponsor for forfeitures. Such amount was not reflected in the Form 5500 as of December 31, 2000. A reconciliation is as follows:
| Reconciliation of Form 5500 to financial statements: |
||||
| Net assets available for benefits per Form 5500 |
$ |
209,778,060 |
| |
| Less: Forfeitures payable |
|
(44,750 |
) | |
| |
|
| ||
| Net assets available for benefits per financial statements |
$ |
209,733,310 |
| |
| |
|
|
| Identity of issuer, borrower, lessor, or similar party |
Description of investment, including maturity date, rate of interest, collateral, par or maturity value |
Cost** |
Current value | ||||
| Mutual funds: |
|||||||
| *Fidelity Management Trust Company |
Fidelity Contra Fund |
$ |
21,287,376 | ||||
| *Fidelity Management Trust Company |
Fidelity Spartan U.S. Equity Index Fund |
|
20,112,005 | ||||
| *Fidelity Management Trust Company |
Fidelity Balanced Fund |
|
15,044,997 | ||||
| Janus Capital Corporation |
Janus Worldwide Fund |
|
13,262,108 | ||||
| *Fidelity Management Trust Company |
Fidelity Magellan Fund |
|
12,953,618 | ||||
| *Fidelity Management Trust Company |
Fidelity Growth and Income Fund |
|
8,826,912 | ||||
| *Fidelity Management Trust Company |
Fidelity OTC Portfolio |
|
7,243,300 | ||||
| *Fidelity Management Trust Company |
Fidelity Asset Manager Fund |
|
4,306,907 | ||||
| Pacific Investment Management Company |
PIMCO Total Return Fund |
|
3,598,870 | ||||
| *Fidelity Management Trust Company |
Fidelity Blue Chip Fund |
|
3,218,581 | ||||
| Morgan Stanley Institutional Fund Trust |
MSIFT Value Adviser |
|
2,765,760 | ||||
| *Fidelity Management Trust Company |
Fidelity Growth Company Fund |
|
2,251,296 | ||||
Table of Contents
SALLIE MAE
401(k)
SAVINGS PLAN
December 31, 2001
| Identity of issuer, borrower, lessor, or similar party |
Description of investment including maturity date, rate of interest, collateral, par or maturity value |
Cost** |
Current value | ||||
| *Fidelity Management Trust Company |
Fidelity US Bond Index Fund |
|
2,042,535 | ||||
| *Fidelity Management Trust Company |
Fidelity Freedom 2030 Fund |
|
1,508,043 | ||||
| *Fidelity Management Trust Company |
Fidelity Freedom 2020 Fund |
|
1,254,873 | ||||
| *Fidelity Management Trust Company |
Fidelity Intermediate Bond Fund |
|
1,186,960 | ||||
| *Fidelity Management Trust Company |
Fidelity Low Price Stock Fund |
|
672,612 | ||||
| *Fidelity Management Trust Company |
Fidelity Freedom 2010 Fund |
|
655,591 | ||||
| *Fidelity Management Trust Company |
Fidelity Equity Income Fund |
|
584,128 | ||||
| *Fidelity Management Trust Company |
Fidelity Asset Manager Growth Fund |
|
540,457 | ||||
| Morgan Stanley Institutional Fund Trust |
MSIFT Midcap Growth Advisor |
|
515,913 | ||||
| *Fidelity Management Trust Company |
Fidelity Overseas Fund |
|
466,536 | ||||
| Neuberger & Berman |
NB Genesis Trust |
|
409,476 | ||||
| *Fidelity Management Trust Company |
Fidelity Disciplined Equity Fund |
|
388,112 | ||||
| *Fidelity Management Trust Company |
Fidelity Puritan Fund |
|
383,757 | ||||
| Baron Capital Group |
Baron Growth |
|
362,150 | ||||
| *Fidelity Management Trust Company |
Fidelity Diversified International Fund |
|
347,114 | ||||
| Credit Suisse Asset Management |
CS Global Fixed Income Com |
|
295,123 | ||||
| Franklin Advisors |
Franklin Small Cap Growth Fund |
|
270,352 | ||||
| *Fidelity Management Trust Company |
Fidelity Europe Fund |
|
248,135 | ||||
| *Fidelity Management Trust Company |
Fidelity Investment Grade Bond Fund |
|
183,147 | ||||
| *Fidelity Management Trust Company |
Fidelity Ginnie Mae Fund |
|
164,757 | ||||
| *Fidelity Management Trust Company |
Fidelity Freedom 2000 Fund |
|
143,363 | ||||
| Templeton Global Advisors |
Templeton World A |
|
112,496 | ||||
| *Fidelity Management Trust Company |
Fidelity Freedom 2040 Fund |
|
98,728 | ||||
| *Fidelity Management Trust Company |
Fidelity Real Estate Fund |
|
72,149 | ||||
| *Fidelity Management Trust Company |
Fidelity Asset Manager Income Fund |
|
35,879 | ||||
| Templeton Global Advisors |
Templeton Foreign A |
|
29,786 | ||||
| *Fidelity Management Trust Company |
Fidelity Freedom Income Fund |
|
20,928 | ||||
| Neuberger & Berman |
NB Partners Trust |
|
4,823 | ||||
| *Fidelity Management Trust Company |
Fidelity Capital & Income Fund |
|
4,816 | ||||
| USA Education stock fund: |
|||||||
| *SLM Corporation |
USA Education Stock Fund |
|
37,932,239 | ||||
| Money market funds: |
|||||||
| *Fidelity Management Trust Company |
Fidelity Retirement Government Money Market |
|
18,366,864 | ||||
| Guaranteed investment contracts: |
|||||||
| Principal Mutual Life Insurance Company |
Fixed Income 6.02% |
|
8,144,554 | ||||
| Self-directed brokerage accounts: |
|||||||
| *Fidelity Management Trust Company |
BrokerageLink |
|
4,992,220 | ||||
| Participant loans: |
|||||||
| *Plan participants |
Loans allowable under the plan instrument, collateralized by participant account balances, due in varying installments through 2009, with interest rates
ranging from 8% to 11.5%. |
|
4,784,784 | ||||
| |
| ||||||
| $ |
202,095,130 | ||||||
| |
| ||||||
11
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SALLIE MAE
401(k)
SAVINGS PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2001
| Identity of issuer, borrower, lessor, or similar party |
Description of investment including maturity date, rate of interest, collateral, par or maturity value |
Cost** |
Current value | |||
| *Party-in-interest |
||||||
| **Cost information is not required as |
||||||
| investments are participant-directed |
12
Table of Contents
The Plan. Pursuant to the requirements of the Securities and Exchange
Act of 1934 the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
SALLIE MAE 401(k) SAVINGS PLAN
(Full title of the Plan)
| Date: November 12, 2002 |
By: |
/s/ Barbara
Deemer | ||
| Barbara Deemer | ||||
| Controller, Plan Administrator |
13
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the
incorporation by reference in the Registration Statement on Form S-8 (No. 333-33577) of SLM Corporation of our report dated September 16, 2002 relating to the financial statements of the Sallie Mae 401(k) Savings Plan, formerly the Sallie Mae
Employees’ Thrift & Savings Plan, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
McLean, Virginia
October 11, 2002
A-1