USA Education, Inc. (NYSE: SLM) First-Quarter 'Core Cash Basis' Earnings Per Diluted Share Up 28 Percent

Reports 'Core Cash Basis' Earnings Per Diluted Share of $.84



Apr 19, 2001, 01:00 ET from USA Education, Inc.

    RESTON, Va., April 19 /PRNewswire/ -- USA Education, Inc., commonly known
 as Sallie Mae, today reported that its first-quarter 2001 "core cash basis"
 earnings were $145 million, a 33-percent increase over the year-ago quarter of
 $109 million.  "Core cash basis" earnings per diluted share were $.84, a 28-
 percent increase over $.66 per diluted share in the same quarter last year.
     "We produced strong results by capitalizing on the marketplace momentum
 built last year," said Albert L. Lord, vice chairman and chief executive
 officer.  "Also, the USA Group integration is near completion, so we look to
 achieve our stated operating savings over the balance of this year."
     "Core cash basis" net interest income totaled $296 million for the
 quarter, a 21-percent increase from the year-ago quarter.  The growth in net
 interest income is due to a 27-percent increase in the average balance of
 managed student loans, which now totals $68.7 billion.
     "Core cash basis" other operating income for the 2001 first quarter
 totaled $112 million -- $74 million of which can be attributed to the
 operations of the former USA Group, acquired in July of 2000.  This compares
 to $28 million of such income for the year-ago quarter and $119 million for
 the prior quarter.  The decrease from the prior quarter is due to seasonal
 factors and the timing of collection processing.
     The company acquired $3.6 billion of student loans during the 2001 first
 quarter compared to $2.9 billion in the first quarter of 2000, a 28-percent
 increase.  Sallie Mae's "control channel" disbursement volume, or loans
 disbursed on its origination platform, totaled $3.1 billion in the current
 quarter, a 44-percent increase from $2.1 billion in the year-ago quarter.
     "Core cash basis" results measure the recurring earnings of the company.
 Accordingly, securitization transactions are treated as financings, not sales,
 and as a result, gains on such sales are eliminated.  In addition, the
 amortization of goodwill and non-recurring items such as floor income, gains
 or losses on the sale of investment securities and student loans, and the one-
 time integration charge of the USA Group acquisition are not included.
 Similarly, in order to preserve consistency in "core cash basis" reporting,
 the non-cash, mark-to-market effects of Statement of Financial Accounting
 Standards No. 133, "Accounting for Derivative Instruments and Hedging
 Activities" ("SFAS 133"), which became effective as of Jan. 1, 2001, also are
 excluded.
     Excluding the effect of newly implemented SFAS 133, Sallie Mae reported
 first-quarter 2001 net income of $127 million, or $.73 per diluted share,
 compared to $154 million, or $.93 per diluted share, in the year-ago period.
 Under SFAS 133, the company was required to record a non-cash, mark-to-market,
 first-quarter, after-tax charge of $97 million, or $.57 per diluted share.  As
 a result, the GAAP net income figure for the first quarter of 2001 totaled
 $30 million, or $.16 per diluted share.  As noted above, the company
 implemented SFAS 133 as of Jan. 1, 2001.
     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 first-quarter
 performance.  Individuals interested in participating should call the
 following number today, April 19, 2001, at noon EDT: 800-230-1074 (USA and
 Canada) or 612-288-0329 (International) starting at 11:45 a.m. EDT.  The
 conference call will be replayed continuously beginning Thursday, April 19, at
 4 p.m. EDT and concluding at 11:59 p.m. EDT on Friday, April 27.  Please dial
 800-475-6701 (USA and Canada) or dial 320-365-3844 (International) and use
 access code 580908.  In addition, there will be a live audio webcast of the
 conference call, which may be accessed at http://www.salliemae.com .  A replay
 will be available 30-45 minutes after the live broadcast.
 
     Statements in this release referring to expectations as to future market
 share, the successful consummation of any business acquisitions and other
 future developments are forward-looking statements, which 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, 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.
 
     Sallie Mae, founded 28 years ago, provides funds for educational loans,
 primarily federally guaranteed student loans originated under the Federal
 Family Education Loan Program (FFELP).  The company currently owns or manages
 more than $68 billion in student loans for more than seven million borrowers,
 and provides parents, students and educators with comprehensive information on
 the financial aid process.  Through its specialized subsidiaries and
 divisions, Sallie Mae also provides an array of consumer credit loans,
 including those for lifelong learning and K-12 education, and business and
 technical outsourcing services for colleges and universities. More information
 is available at http://www.salliemae.com .  Sallie Mae is a registered service
 mark of the Student Loan Marketing Association.  USA Education, Inc. and its
 subsidiaries, other than the Student Loan Marketing Association, are not
 sponsored by or agencies of the United States.
 
 
                              USA EDUCATION, INC.
                        Supplemental Earnings Disclosure
                                 March 31, 2001
                (Dollars in millions, except earnings per share)
 
                                               Quarters ended
                                    -------------------------------------
                                     March 31,   December 31,   March 31,
                                       2001         2000          2000
                                    ----------   ------------   ---------
     Net income                     $     30     $     99       $    154
     "Core cash basis" net
       income *                          145          138            109
 
     Diluted earnings per share     $    .16     $    .56       $    .93
     "Core cash basis" diluted
       earnings per share                .84          .80            .66
 
     Net interest margin                1.48%        1.35%          1.60%
     "Core cash basis" net
       interest margin                  1.52         1.42           1.60
 
     Return on assets                    .25%         .83%          1.43%
     "Core cash basis" return
       on assets                         .75          .71            .69
 
     Student loan spread                1.66%        1.76%          1.84%
     "Core cash basis" student
       loan spread                      1.73         1.64           1.77
 
     Average on-balance sheet
      student loans                 $ 38,709     $ 37,024       $ 33,766
     Average off-balance sheet
      student loans                   30,028       30,438         20,328
                                    --------     --------        -------
     Average managed student
      loans                         $ 68,737     $ 67,462       $ 54,094
                                    ========     ========       ========
     Ending on-balance sheet
      student loans                 $ 38,525     $ 37,647       $ 31,928
     Ending off-balance sheet
      student loans                   30,527       29,868         22,808
                                    --------     --------       --------
     Ending managed student
      loans                         $ 69,052     $ 67,515       $ 54,736
                                    ========     ========       ========
 
     * "Core cash basis" net income includes securitizations as financings
       and excludes goodwill amortization and non-recurring items such as
       floor income, the integration charge and the liquidation of
       investment securities and student loans.  Effective January 1, 2001,
       "core cash basis" net income also excludes the effects of SFAS 133.
 
 
                              USA EDUCATION, INC.
                       Consolidated Statements of Income
 
                    (In thousands, except per share amounts)
 
                                               Quarters ended
                                    -------------------------------------
                                     March 31,   December 31,   March 31,
                                       2001         2000          2000
                                    ----------   ------------   ---------
     Interest income:
      Student loans                 $713,033     $782,144       $667,657
      Warehousing advances            14,585       15,360         16,699
      Academic facilities
       financings                     14,202       14,637         17,169
      Investments                    132,853      140,768        118,191
                                    --------     --------       --------
     Total interest income           874,673      952,909        819,716
     Interest expense                694,865      794,964        657,847
                                    --------     --------       --------
     Net interest income             179,808      157,945        161,869
     Less: provision for losses       13,599        9,354          9,438
                                    --------     --------       --------
     Net interest income after
      provision for losses           166,209      148,591        152,431
                                    --------     --------       --------
 
     Other income:
       Gains on student loan
        securitizations                9,478          836         42,330
       Servicing and
        securitization revenue       120,011       84,952         62,119
       Gains/(losses) on sales
        of securities                (23,590)     (25,316)        43,002
       Guarantor servicing fees       55,183       73,251              -
       Other                        (106,604)      47,089         28,140
                                    --------      -------        -------
       Total other income             54,478      180,812        175,591
 
     Operating expenses              167,373      174,312         96,238
                                    --------     --------        -------
     Income before income
      taxes and minority
      interest in net earnings
      of subsidiary                   53,314      155,091        231,784
     Income taxes                     20,839       53,762         75,461
     Minority interest in net
      earnings of subsidiary           2,674        2,673          2,674
                                    --------     --------       --------
     NET INCOME                     $ 29,801     $ 98,656       $153,649
     Preferred stock dividends         2,875        2,864          2,907
                                    --------     --------       --------
     Net income attributable
      to common stock               $ 26,926     $ 95,792       $150,742
                                    ========     ========       ========
     Basic earnings per share       $    .17     $    .58       $    .96
                                    ========     ========       ========
     Average common shares
      outstanding                    163,051      163,927        157,197
                                    ========     ========       ========
     Diluted earnings per share     $    .16     $    .56       $    .93
                                    ========     ========        =======
     Average common and common
      equivalent shares
      outstanding                    169,939      169,866        162,256
                                    ========     ========       ========
 
 
                              USA EDUCATION, INC.
                          Consolidated Balance Sheets
 
                    (In thousands, except per share amounts)
 
                                   March 31,   December 31,    March 31,
     Assets                          2001         2000           2000
                                 ------------  -----------   -----------
     Student loans               $38,524,502   $37,647,297   $31,927,725
     Warehousing advances          1,013,768       987,352       872,836
     Academic facilities
      financings                     837,150       851,168     1,022,316
     Cash and investments          6,773,665     5,940,490     4,083,426
     Other assets,
      principally accrued
      interest receivable          3,719,544     3,365,481     2,328,595
                                 -----------   -----------    ----------
     Total assets                $50,868,629   $48,791,788   $40,234,898
                                 ===========   ===========   ===========
     Liabilities
 
     Short-term borrowings       $37,473,211   $30,463,988   $33,039,012
     Long-term notes               9,849,246    14,910,939     5,049,865
     Other liabilities             1,912,111     1,787,642     1,019,612
                                 -----------   -----------   -----------
     Total liabilities            49,234,568    47,162,569    39,108,489
                                 -----------   -----------   -----------
     Commitments *
 
     Minority interest in
      subsidiary                     213,883       213,883       213,883
 
     Stockholders' equity
 
     Preferred stock, par
      value $.20 per share,
      20,000 shares authorized:
      3,300; 3,300; and 3,300
      shares, respectively,
      issued at stated value
      of $50 per share               165,000       165,000       165,000
     Common stock, par
      value $.20 per share,
      250,000 shares
      authorized:  195,699;
      190,852; and 186,237
      shares, respectively,
      issued                          39,140        38,170        37,247
     Additional paid-in
      capital                        424,543       225,211        60,740
     Unrealized gains on
      investments, net
      of tax                         440,228       311,301       295,371
     Retained earnings             1,809,316     1,810,902     1,587,637
                                  ----------     ---------    ----------
     Stockholders' equity
      before treasury stock        2,878,227     2,550,584     2,145,995
     Common stock held in
      treasury at cost:
      32,730; 26,707; and
      29,633 shares,
      respectively                 1,458,049     1,135,248     1,233,469
                                 -----------     ---------   -----------
     Total stockholders'
      equity                       1,420,178     1,415,336       912,526
                                 -----------     ---------    ----------
     Total liabilities and
      stockholders' equity       $50,868,629   $48,791,788   $40,234,898
                                 ===========   ===========   ===========
 
     * Commitments to purchase loans, lines of credit, letters of credit,
       and academic facilities financing commitments and letters of
       credit were $24.1 billion, $2.7 billion, $3.2 billion, and $54.5
       million, respectively, at March 31, 2001.
 
 

SOURCE USA Education, Inc.
    RESTON, Va., April 19 /PRNewswire/ -- USA Education, Inc., commonly known
 as Sallie Mae, today reported that its first-quarter 2001 "core cash basis"
 earnings were $145 million, a 33-percent increase over the year-ago quarter of
 $109 million.  "Core cash basis" earnings per diluted share were $.84, a 28-
 percent increase over $.66 per diluted share in the same quarter last year.
     "We produced strong results by capitalizing on the marketplace momentum
 built last year," said Albert L. Lord, vice chairman and chief executive
 officer.  "Also, the USA Group integration is near completion, so we look to
 achieve our stated operating savings over the balance of this year."
     "Core cash basis" net interest income totaled $296 million for the
 quarter, a 21-percent increase from the year-ago quarter.  The growth in net
 interest income is due to a 27-percent increase in the average balance of
 managed student loans, which now totals $68.7 billion.
     "Core cash basis" other operating income for the 2001 first quarter
 totaled $112 million -- $74 million of which can be attributed to the
 operations of the former USA Group, acquired in July of 2000.  This compares
 to $28 million of such income for the year-ago quarter and $119 million for
 the prior quarter.  The decrease from the prior quarter is due to seasonal
 factors and the timing of collection processing.
     The company acquired $3.6 billion of student loans during the 2001 first
 quarter compared to $2.9 billion in the first quarter of 2000, a 28-percent
 increase.  Sallie Mae's "control channel" disbursement volume, or loans
 disbursed on its origination platform, totaled $3.1 billion in the current
 quarter, a 44-percent increase from $2.1 billion in the year-ago quarter.
     "Core cash basis" results measure the recurring earnings of the company.
 Accordingly, securitization transactions are treated as financings, not sales,
 and as a result, gains on such sales are eliminated.  In addition, the
 amortization of goodwill and non-recurring items such as floor income, gains
 or losses on the sale of investment securities and student loans, and the one-
 time integration charge of the USA Group acquisition are not included.
 Similarly, in order to preserve consistency in "core cash basis" reporting,
 the non-cash, mark-to-market effects of Statement of Financial Accounting
 Standards No. 133, "Accounting for Derivative Instruments and Hedging
 Activities" ("SFAS 133"), which became effective as of Jan. 1, 2001, also are
 excluded.
     Excluding the effect of newly implemented SFAS 133, Sallie Mae reported
 first-quarter 2001 net income of $127 million, or $.73 per diluted share,
 compared to $154 million, or $.93 per diluted share, in the year-ago period.
 Under SFAS 133, the company was required to record a non-cash, mark-to-market,
 first-quarter, after-tax charge of $97 million, or $.57 per diluted share.  As
 a result, the GAAP net income figure for the first quarter of 2001 totaled
 $30 million, or $.16 per diluted share.  As noted above, the company
 implemented SFAS 133 as of Jan. 1, 2001.
     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 first-quarter
 performance.  Individuals interested in participating should call the
 following number today, April 19, 2001, at noon EDT: 800-230-1074 (USA and
 Canada) or 612-288-0329 (International) starting at 11:45 a.m. EDT.  The
 conference call will be replayed continuously beginning Thursday, April 19, at
 4 p.m. EDT and concluding at 11:59 p.m. EDT on Friday, April 27.  Please dial
 800-475-6701 (USA and Canada) or dial 320-365-3844 (International) and use
 access code 580908.  In addition, there will be a live audio webcast of the
 conference call, which may be accessed at http://www.salliemae.com .  A replay
 will be available 30-45 minutes after the live broadcast.
 
     Statements in this release referring to expectations as to future market
 share, the successful consummation of any business acquisitions and other
 future developments are forward-looking statements, which 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, 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.
 
     Sallie Mae, founded 28 years ago, provides funds for educational loans,
 primarily federally guaranteed student loans originated under the Federal
 Family Education Loan Program (FFELP).  The company currently owns or manages
 more than $68 billion in student loans for more than seven million borrowers,
 and provides parents, students and educators with comprehensive information on
 the financial aid process.  Through its specialized subsidiaries and
 divisions, Sallie Mae also provides an array of consumer credit loans,
 including those for lifelong learning and K-12 education, and business and
 technical outsourcing services for colleges and universities. More information
 is available at http://www.salliemae.com .  Sallie Mae is a registered service
 mark of the Student Loan Marketing Association.  USA Education, Inc. and its
 subsidiaries, other than the Student Loan Marketing Association, are not
 sponsored by or agencies of the United States.
 
 
                              USA EDUCATION, INC.
                        Supplemental Earnings Disclosure
                                 March 31, 2001
                (Dollars in millions, except earnings per share)
 
                                               Quarters ended
                                    -------------------------------------
                                     March 31,   December 31,   March 31,
                                       2001         2000          2000
                                    ----------   ------------   ---------
     Net income                     $     30     $     99       $    154
     "Core cash basis" net
       income *                          145          138            109
 
     Diluted earnings per share     $    .16     $    .56       $    .93
     "Core cash basis" diluted
       earnings per share                .84          .80            .66
 
     Net interest margin                1.48%        1.35%          1.60%
     "Core cash basis" net
       interest margin                  1.52         1.42           1.60
 
     Return on assets                    .25%         .83%          1.43%
     "Core cash basis" return
       on assets                         .75          .71            .69
 
     Student loan spread                1.66%        1.76%          1.84%
     "Core cash basis" student
       loan spread                      1.73         1.64           1.77
 
     Average on-balance sheet
      student loans                 $ 38,709     $ 37,024       $ 33,766
     Average off-balance sheet
      student loans                   30,028       30,438         20,328
                                    --------     --------        -------
     Average managed student
      loans                         $ 68,737     $ 67,462       $ 54,094
                                    ========     ========       ========
     Ending on-balance sheet
      student loans                 $ 38,525     $ 37,647       $ 31,928
     Ending off-balance sheet
      student loans                   30,527       29,868         22,808
                                    --------     --------       --------
     Ending managed student
      loans                         $ 69,052     $ 67,515       $ 54,736
                                    ========     ========       ========
 
     * "Core cash basis" net income includes securitizations as financings
       and excludes goodwill amortization and non-recurring items such as
       floor income, the integration charge and the liquidation of
       investment securities and student loans.  Effective January 1, 2001,
       "core cash basis" net income also excludes the effects of SFAS 133.
 
 
                              USA EDUCATION, INC.
                       Consolidated Statements of Income
 
                    (In thousands, except per share amounts)
 
                                               Quarters ended
                                    -------------------------------------
                                     March 31,   December 31,   March 31,
                                       2001         2000          2000
                                    ----------   ------------   ---------
     Interest income:
      Student loans                 $713,033     $782,144       $667,657
      Warehousing advances            14,585       15,360         16,699
      Academic facilities
       financings                     14,202       14,637         17,169
      Investments                    132,853      140,768        118,191
                                    --------     --------       --------
     Total interest income           874,673      952,909        819,716
     Interest expense                694,865      794,964        657,847
                                    --------     --------       --------
     Net interest income             179,808      157,945        161,869
     Less: provision for losses       13,599        9,354          9,438
                                    --------     --------       --------
     Net interest income after
      provision for losses           166,209      148,591        152,431
                                    --------     --------       --------
 
     Other income:
       Gains on student loan
        securitizations                9,478          836         42,330
       Servicing and
        securitization revenue       120,011       84,952         62,119
       Gains/(losses) on sales
        of securities                (23,590)     (25,316)        43,002
       Guarantor servicing fees       55,183       73,251              -
       Other                        (106,604)      47,089         28,140
                                    --------      -------        -------
       Total other income             54,478      180,812        175,591
 
     Operating expenses              167,373      174,312         96,238
                                    --------     --------        -------
     Income before income
      taxes and minority
      interest in net earnings
      of subsidiary                   53,314      155,091        231,784
     Income taxes                     20,839       53,762         75,461
     Minority interest in net
      earnings of subsidiary           2,674        2,673          2,674
                                    --------     --------       --------
     NET INCOME                     $ 29,801     $ 98,656       $153,649
     Preferred stock dividends         2,875        2,864          2,907
                                    --------     --------       --------
     Net income attributable
      to common stock               $ 26,926     $ 95,792       $150,742
                                    ========     ========       ========
     Basic earnings per share       $    .17     $    .58       $    .96
                                    ========     ========       ========
     Average common shares
      outstanding                    163,051      163,927        157,197
                                    ========     ========       ========
     Diluted earnings per share     $    .16     $    .56       $    .93
                                    ========     ========        =======
     Average common and common
      equivalent shares
      outstanding                    169,939      169,866        162,256
                                    ========     ========       ========
 
 
                              USA EDUCATION, INC.
                          Consolidated Balance Sheets
 
                    (In thousands, except per share amounts)
 
                                   March 31,   December 31,    March 31,
     Assets                          2001         2000           2000
                                 ------------  -----------   -----------
     Student loans               $38,524,502   $37,647,297   $31,927,725
     Warehousing advances          1,013,768       987,352       872,836
     Academic facilities
      financings                     837,150       851,168     1,022,316
     Cash and investments          6,773,665     5,940,490     4,083,426
     Other assets,
      principally accrued
      interest receivable          3,719,544     3,365,481     2,328,595
                                 -----------   -----------    ----------
     Total assets                $50,868,629   $48,791,788   $40,234,898
                                 ===========   ===========   ===========
     Liabilities
 
     Short-term borrowings       $37,473,211   $30,463,988   $33,039,012
     Long-term notes               9,849,246    14,910,939     5,049,865
     Other liabilities             1,912,111     1,787,642     1,019,612
                                 -----------   -----------   -----------
     Total liabilities            49,234,568    47,162,569    39,108,489
                                 -----------   -----------   -----------
     Commitments *
 
     Minority interest in
      subsidiary                     213,883       213,883       213,883
 
     Stockholders' equity
 
     Preferred stock, par
      value $.20 per share,
      20,000 shares authorized:
      3,300; 3,300; and 3,300
      shares, respectively,
      issued at stated value
      of $50 per share               165,000       165,000       165,000
     Common stock, par
      value $.20 per share,
      250,000 shares
      authorized:  195,699;
      190,852; and 186,237
      shares, respectively,
      issued                          39,140        38,170        37,247
     Additional paid-in
      capital                        424,543       225,211        60,740
     Unrealized gains on
      investments, net
      of tax                         440,228       311,301       295,371
     Retained earnings             1,809,316     1,810,902     1,587,637
                                  ----------     ---------    ----------
     Stockholders' equity
      before treasury stock        2,878,227     2,550,584     2,145,995
     Common stock held in
      treasury at cost:
      32,730; 26,707; and
      29,633 shares,
      respectively                 1,458,049     1,135,248     1,233,469
                                 -----------     ---------   -----------
     Total stockholders'
      equity                       1,420,178     1,415,336       912,526
                                 -----------     ---------    ----------
     Total liabilities and
      stockholders' equity       $50,868,629   $48,791,788   $40,234,898
                                 ===========   ===========   ===========
 
     * Commitments to purchase loans, lines of credit, letters of credit,
       and academic facilities financing commitments and letters of
       credit were $24.1 billion, $2.7 billion, $3.2 billion, and $54.5
       million, respectively, at March 31, 2001.
 
 SOURCE  USA Education, Inc.