Third-quarter operating expenses were $244 million in 2012, down from $285 million in the year-ago quarter.
Funding and Liquidity
During third-quarter 2012, the company issued $2.6 billion in FFELP asset-backed securities (ABS), $640 million in private education loan ABS, and $800 million of unsecured bonds.
In third-quarter 2012, Sallie Mae paid a common stock dividend of $0.125 per share and repurchased 7.6 million shares of common stock for $121 million. Year-to-date Sept. 30, 2012, Sallie Mae has repurchased 48.2 million common shares for $730 million. At Sept. 30, 2012, $170 million was available for additional common share repurchases.
The company expects 2012 results to be as follows:
- Full-year 2012 private education loan originations of at least $3.2 billion.
- Fully diluted 2012 core earnings per share of $2.15.
Sallie Mae reports financial results on a GAAP basis and also provides certain core earnings performance measures. The difference between the company’s core earnings and GAAP results for the periods presented were the unrealized, mark-to-market gains/losses on derivative contracts and the goodwill and acquired intangible asset amortization and impairment. These items are recognized in GAAP but not in core earnings results. The company provides core earnings measures because this is what management uses when making management decisions regarding the company’s performance and the allocation of corporate resources. In addition, the company’s equity investors, credit rating agencies and debt capital providers use these core earnings measures to monitor the company’s business performance. See “Core Earnings — Definition and Limitations” for a further discussion and a complete reconciliation between GAAP net income and core earnings. Given the significant variability of valuations of derivative instruments on expected GAAP net income, the company does not provide a GAAP equivalent for its core earnings per share guidance.
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