(Mark One)
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2013
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
.
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NEBRASKA
(State or other jurisdiction of incorporation or organization)
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84-0748903
(I.R.S. Employer Identification No.)
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121 SOUTH 13TH STREET
LINCOLN, NEBRASKA
(Address of principal executive offices)
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68508
(Zip Code)
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•
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student loan portfolio risks such as interest rate basis and repricing risk resulting from the fact that the interest rate characteristics of the student loan assets do not match the interest rate characteristics of the funding for those assets, the risk of loss of floor income on certain student loans originated under the Federal Family Education Loan Program (the "FFEL Program" or "FFELP"), risks related to the use of derivatives to manage exposure to interest rate fluctuations, and risks from changes in levels of student loan prepayment or default rates;
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financing and liquidity risks, including risks of changes in the general interest rate environment and in the securitization and other financing markets for student loans, which may increase the costs or limit the availability of financings necessary to purchase, refinance, or continue to hold student loans;
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risks from changes in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets, such as the expected decline over time in FFELP loan interest income and fee-based revenues due to the discontinuation of new FFELP loan originations in 2010 and potential government initiatives to consolidate existing FFELP loans to the Federal Direct Loan Program, risks related to the expected reduction in government payments to guaranty agencies to rehabilitate defaulted FFELP loans and services in support of those activities, risks related to the availability of government funds and actual extension of the Company's loan servicing contract with the U.S. Department of Education (the "Department"), which accounted for 23 percent of the Company's fee-based revenue in 2013, for an additional five years, and the Company's ability to maintain or increase volumes under that contract, and the Company's ability to comply with agreements with third-party customers for the servicing of FFELP and Federal Direct Loan Program loans;
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risks related to a breach of or failure in the Company's operational or information systems or infrastructure, or those of third-party vendors;
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uncertainties inherent in forecasting future cash flows from student loan assets and related asset-backed securitizations; and
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risks and uncertainties associated with litigation matters and with maintaining compliance with the extensive regulatory requirements applicable to the Company's business, and uncertainties inherent in the estimates and assumptions about future events that management is required to make in the preparation of the Company's consolidated financial statements.
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•
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Terry J. Heimes, formerly the Company's Chief Financial Officer ("CFO"), was appointed Chief Operating Officer of the Company;
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•
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Timothy A. Tewes, formerly an Executive Director of the Company and CEO of Nelnet Business Solutions, Inc., a subsidiary of the Company, was appointed President of the Company; and
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•
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James D. Kruger, formerly an Executive Director and Controller of the Company, was appointed Chief Financial Officer of the Company.
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Students and families
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•
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Colleges and universities, specifically financial aid, business, and admissions offices
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Private, faith-based, and other K-12 schools
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Lenders, servicers, and state agencies in education finance
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•
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Government entities
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•
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Referred to as Nelnet Diversified Solutions (“NDS”)
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Focuses on student loan servicing, student loan servicing-related technology solutions, and outsourcing services for guaranty agencies and other entities
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Includes the brands Nelnet Loan Servicing, Firstmark Services, Nelnet Guarantor Solutions, 5280 Solutions, Responsible Repay, CampusGuard, and Proxi
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•
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Commonly known as Nelnet Business Solutions (“NBS”)
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•
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Focuses on tuition payment plans and online payment and refund processing
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Includes the brand FACTS Management
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Commonly called Nelnet Enrollment Solutions (“NES”)
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Focuses on education planning and enrollment-related services, including inquiry generation and management
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Includes the brands CUnet, Peterson's, EssayEdge, and Sparkroom
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Includes the acquisition and management of the Company's student loan assets
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Servicing federally-owned student loans for the Department
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Servicing FFELP loans
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•
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Originating and servicing non-federally insured student loans
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Servicing and outsourcing services for FFELP guaranty agencies, including FFELP guaranty collection services
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Providing student loan servicing software and other information technology products and services
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•
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Three metrics measure the satisfaction among separate customer groups, including borrowers, financial aid personnel at postsecondary schools participating in federal student loan programs, and Federal Student Aid and other federal agency personnel or contractors who work with the servicers.
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Two performance metrics measure the success of default prevention efforts as reflected by the percentage of borrowers and percentage of dollars in each servicer's portfolio that go into default.
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Contract year
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Year 2
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Year 3
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Year 4
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Year 5
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Nelnet's overall ranking (out of the four TIVAS)
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4
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4
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1
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1
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Allocation percent
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16%
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16%
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30%
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30%
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Allocation period
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August 15, 2010 - August 14, 2011
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August 15, 2011 - August 14, 2012
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August 15, 2012 - August 14, 2013
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August 15, 2013 - August 14, 2014
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•
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Administration of the Total and Permanent Disability (TPD) Discharge program
. The Company processes applications for the TPD Discharge program and is responsible for discharge, monitoring, and servicing of TPD loans. Individuals who are totally and permanently disabled may qualify for a discharge of their federal student loans, and the Company processes applications under the program and receives a fee from the Department on a per application basis, as well as a monthly servicing fee. The Company is the exclusive provider of this service to the Department.
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Origination of consolidation loans.
Beginning in 2014, the Department implemented a new process to outsource the origination of consolidation loans whereby each of the four TIVAS receives Direct Loan consolidation origination volume based on borrower choice. The Department will pay the Company a fee for each completed consolidation loan application it processes. The Company will service the Direct Loan consolidation volume it originates.
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Inquiry Generation - Services include delivering qualified inquiries or clicks to third-party customers, primarily higher education institutions.
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Inquiry Management (Agency) - Services include managing the marketing activities for third-party customers, primarily higher education institutions, in order to provide qualified inquiries or clicks.
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Inquiry Management (Software) - Products and services include the licensing of software to third-party customers, primarily higher education institutions. This software is also used internally by the Company. The inquiry management software has been adapted so that it can be offered as a hosted software solution usable by third parties to manage and obtain qualified inquiries or clicks.
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Digital Marketing - Services include interactive services to connect students to colleges and universities sold primarily based on subscriptions, and also include editing services for admission essays.
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Content Solutions - Products and services include test preparation study guides, school directories and databases, career exploration guides, on-line courses, scholarship search and selection data, career planning, and on-line information about colleges and universities.
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Location
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Primary function or segment
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Approximate square feet
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Lease expiration date
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Lincoln, NE
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Corporate Headquarters, Asset Generation and Management, Student Loan and Guaranty Servicing, Tuition Payment Processing and Campus Commerce, Enrollment Services
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187,000
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–
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Aurora, CO
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Student Loan and Guaranty Servicing
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96,000
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February 2015
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Lincoln, NE
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Student Loan and Guaranty Servicing and Asset Generation and Management
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70,000
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June 2014 and December 2015
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Highlands Ranch, CO
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Student Loan and Guaranty Servicing
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67,000
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March 2017
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Lincoln, NE
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Student Loan and Guaranty Servicing and Asset Generation and Management
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49,000
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March 2024
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Omaha, NE
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Student Loan and Guaranty Servicing, Tuition Payment Processing and Campus Commerce
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32,000
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December 2018
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Paramus, NJ
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Enrollment Services
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18,000
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March 2015
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2013
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2012
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||||||||||||||||||||||||||||
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1st Quarter
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2nd Quarter
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3rd Quarter
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4th Quarter
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1st Quarter
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2nd Quarter
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3rd Quarter
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4th Quarter
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High
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$
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35.55
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$
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39.98
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$
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41.74
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$
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45.49
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$
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27.20
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$
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26.64
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$
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24.99
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$
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29.98
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Low
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28.85
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31.56
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36.06
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38.00
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23.72
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21.49
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22.16
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23.17
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2013
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2012
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||||||||||||||||||||||||||
Record date
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3/1/13
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5/31/13
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8/30/13
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12/2/13
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3/1/12
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6/1/12
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9/1/12
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11/19/12
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Payment date
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3/15/13
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6/14/13
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9/13/13
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12/16/13
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3/15/12
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6/15/12
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9/15/12
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11/27/12
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|||||||
Dividend amount per share
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$
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0.10
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$
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0.10
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$
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0.10
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$
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0.10
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$
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0.10
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$
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0.10
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$
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0.10
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$ 1.10*
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Company/Index
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12/31/2008
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12/31/2009
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12/31/2010
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12/31/2011
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12/31/2012
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12/31/2013
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||||||
Nelnet, Inc.
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$
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100.00
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$
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120.74
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$
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171.62
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$
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180.44
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$
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231.96
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$
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331.57
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S&P 500
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100.00
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126.46
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145.51
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148.59
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172.37
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228.19
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||||||
S&P Financials
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100.00
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117.22
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131.44
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109.01
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140.42
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190.46
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Period
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Total number of shares purchased (a)
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Average price paid per share
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Total number of shares purchased as part of publicly announced plans or programs (b)
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Maximum number of shares that may yet be purchased under the plans or programs (b)
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|||||
October 1 - October 31, 2013
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808
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$
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40.62
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—
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3,875,367
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November 1 - November 30, 2013
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395
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44.37
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—
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|
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3,875,367
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|
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December 1 - December 31, 2013
|
|
1,680
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|
|
42.13
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—
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|
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3,875,367
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Total
|
|
2,883
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|
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$
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42.01
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—
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(a)
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The total number of shares includes shares owned and tendered by employees to satisfy tax withholding obligations upon the vesting of restricted shares and, unless otherwise indicated, were purchased at the closing price of the Company’s shares on the date of vesting.
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(b)
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On May 9, 2012, the Company announced that its Board of Directors had authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 24, 2015.
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Year ended December 31,
|
||||||||||||||
|
2013
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2012
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2011
|
|
2010
|
|
2009
|
||||||
|
(Dollars in thousands, except share data)
|
||||||||||||||
Operating Data:
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income
|
$
|
413,875
|
|
|
345,287
|
|
|
364,565
|
|
|
371,071
|
|
|
235,345
|
|
Loan and guaranty servicing revenue
|
243,428
|
|
|
209,748
|
|
|
175,657
|
|
|
158,584
|
|
|
129,911
|
|
|
Tuition payment processing and campus commerce revenue
|
80,682
|
|
|
74,410
|
|
|
67,797
|
|
|
59,824
|
|
|
53,894
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|
|
Enrollment services revenue
|
98,078
|
|
|
117,925
|
|
|
130,470
|
|
|
139,897
|
|
|
119,397
|
|
|
Other income
|
46,298
|
|
|
39,476
|
|
|
29,513
|
|
|
31,310
|
|
|
26,469
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|
|
Gain on sale of loans and debt repurchases
|
11,699
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|
|
4,139
|
|
|
8,340
|
|
|
78,631
|
|
|
76,831
|
|
|
Net income attributable to Nelnet, Inc.
|
302,672
|
|
|
177,997
|
|
|
204,335
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|
|
189,034
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|
|
139,125
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|
|
Earnings per common share attributable to Nelnet, Inc. shareholders - basic and diluted:
|
6.50
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|
|
3.76
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|
|
4.24
|
|
|
3.82
|
|
|
2.79
|
|
|
Dividends per common share
|
0.40
|
|
|
1.40
|
|
|
0.37
|
|
|
0.70
|
|
|
0.07
|
|
|
|
|
|
|
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|
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Other Data:
|
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|
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|
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|
||||||
Fixed rate floor income, net of derivative settlements
|
$
|
148,431
|
|
|
145,345
|
|
|
144,454
|
|
|
132,243
|
|
|
145,098
|
|
Core student loan spread
|
1.54
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%
|
|
1.44
|
%
|
|
1.52
|
%
|
|
1.48
|
%
|
|
1.18
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%
|
|
Origination and acquisition of student loans (par value)
|
$
|
4,058,997
|
|
|
3,885,138
|
|
|
2,841,334
|
|
|
4,202,164
|
|
|
2,779,873
|
|
Student loans serviced (at end of period)
|
138,208,897
|
|
|
97,492,053
|
|
|
76,119,717
|
|
|
61,477,651
|
|
|
37,549,563
|
|
|
|
|
|
|
|
|
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|
||||||
|
As of December 31,
|
||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||
Balance Sheet Data:
|
(Dollars in thousands, except share data)
|
||||||||||||||
Cash and cash equivalents
|
$
|
63,267
|
|
|
66,031
|
|
|
42,570
|
|
|
283,801
|
|
|
338,181
|
|
Student loans receivables, net
|
25,907,589
|
|
|
24,830,621
|
|
|
24,297,876
|
|
|
24,033,001
|
|
|
23,926,957
|
|
|
Goodwill and intangible assets
|
123,250
|
|
|
126,511
|
|
|
145,492
|
|
|
155,830
|
|
|
197,255
|
|
|
Total assets
|
27,770,849
|
|
|
26,607,895
|
|
|
25,852,217
|
|
|
25,893,892
|
|
|
25,876,427
|
|
|
Bonds and notes payable
|
25,955,289
|
|
|
25,098,835
|
|
|
24,434,540
|
|
|
24,672,472
|
|
|
24,805,289
|
|
|
Nelnet, Inc. shareholders' equity
|
1,443,662
|
|
|
1,165,208
|
|
|
1,066,205
|
|
|
906,633
|
|
|
784,563
|
|
|
Tangible Nelnet, Inc. shareholders' equity (a)
|
1,320,412
|
|
|
1,038,697
|
|
|
920,713
|
|
|
750,803
|
|
|
587,308
|
|
|
Book value per common share
|
31.13
|
|
|
25.00
|
|
|
22.62
|
|
|
18.75
|
|
|
15.73
|
|
|
Tangible book value per common share (a)
|
28.47
|
|
|
22.28
|
|
|
19.53
|
|
|
15.53
|
|
|
11.77
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Ratios:
|
|
|
|
|
|
|
|
|
|
||||||
Shareholders' equity to total assets
|
5.20
|
%
|
|
4.38
|
%
|
|
4.12
|
%
|
|
3.50
|
%
|
|
3.03
|
%
|
(a)
|
Tangible Nelnet, Inc. shareholders' equity, a non-GAAP measure, equals "Nelnet, Inc. shareholders' equity" less "goodwill" and "intangible assets, net." Management believes presenting tangible equity and tangible book value per common share are useful measures of evaluating the strength of the Company's capital position. These measures may be calculated differently by other companies.
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
GAAP net income attributable to Nelnet, Inc.
|
$
|
302,672
|
|
|
177,997
|
|
|
204,335
|
|
Derivative market value and foreign currency adjustments, net of tax
|
(30,128
|
)
|
|
29,384
|
|
|
11,041
|
|
|
Net income, excluding derivative market value and foreign currency adjustments (a)
|
$
|
272,544
|
|
|
207,381
|
|
|
215,376
|
|
|
|
|
|
|
|
||||
Earnings per share:
|
|
|
|
|
|
||||
GAAP net income attributable to Nelnet, Inc.
|
$
|
6.50
|
|
|
3.76
|
|
|
4.24
|
|
Derivative market value and foreign currency adjustments, net of tax
|
(0.65
|
)
|
|
0.62
|
|
|
0.23
|
|
|
Net income, excluding derivative market value and foreign currency adjustments (a)
|
$
|
5.85
|
|
|
4.38
|
|
|
4.47
|
|
(a)
|
The Company provides non-GAAP information that reflects specific items management believes to be important in the evaluation of its financial position and performance. "Derivative market value and foreign currency adjustments" include (i) the unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP; and (ii) the foreign currency transaction gains or losses caused by the re-measurement of the Company's Euro-denominated bonds to U.S. dollars. The Company believes these point-in-time estimates of asset and liability values related to these financial instruments that are subject to interest and currency rate fluctuations affect the period-to-period comparability of the results of operations. Accordingly, the Company provides operating results excluding these items for comparability purposes.
|
•
|
Student Loan and Guaranty Servicing ("LGS") - referred to as Nelnet Diversified Solutions ("NDS")
|
•
|
Tuition Payment Processing and Campus Commerce ("TPP&CC") - referred to as Nelnet Business Solutions ("NBS")
|
•
|
Enrollment Services - commonly called Nelnet Enrollment Solutions ("NES")
|
(a)
|
Revenue includes intersegment revenue of $56.7 million, $65.4 million, and $69.0 million for the years ended
December 31, 2013
,
2012
, and
2011
, respectively, earned by LGS as a result of servicing loans for AGM.
|
(b)
|
Revenue includes "net interest income after provision for loan losses" and "total other income" from the Company's segment statements of income, excluding the impact from changes in fair values of derivatives and foreign currency transaction adjustments, which was income of
$35.3 million
, an expense of
$51.8 million
, and income of $
7.6 million
for the years ended
December 31, 2013
,
2012
, and
2011
, respectively. Net income excludes changes in fair values of derivatives and foreign currency transaction adjustments, net of tax, which was income of
$21.9 million
, an expense of
$32.1 million
, and income of
$4.7 million
for the years ended
December 31, 2013
,
2012
, and
2011
, respectively.
|
(c)
|
Computed as income before income taxes divided by total revenue.
|
•
|
As of December 31, 2013, the Company was servicing $138.2 billion in FFELP, private, and government owned student loans, as compared with $97.5 billion and $76.1 billion of loans as of December 31, 2012 and 2011, respectively. The year over year increase was due to an increase in government servicing volume.
|
•
|
Revenue increased for the
year
ended
December 31, 2013
compared to 2012 and for the year ended December 31, 2012 compared to 2011 due to growth in servicing volume under the Company's contract with the Department and an increase in collection revenue from getting defaulted FFELP loan assets current on behalf of guaranty agencies. These increases were partially offset by decreases in traditional FFELP and guaranty servicing revenue.
|
•
|
Before tax operating margin increased for the year ended
December 31, 2013
compared to 2012, as a result of the investments made and certain costs incurred by the Company in 2012 to improve performance metrics under the Department servicing contract and to implement and comply with the Department's special direct consolidation loan initiative. In addition, intangible assets for this segment were fully amortized in 2012.
|
•
|
Revenue increased in the
year
s ended
December 31, 2013
and December 31, 2012, compared to the same periods in
2012
and 2011, respectively, due to an increase in the number of managed tuition payment plans as a result of providing more plans at existing schools and obtaining new school customers.
|
•
|
Before tax operating margin increased for the year ended
December 31, 2013
compared to
2012
. The increase was the result of efficiencies gained in the operations of the business and a decrease in amortization expense related to intangible assets. In addition, certain investments were made by the Company during
2012
in new products and services to meet customer needs and expand product and service offerings.
|
•
|
Enrollment services revenue has decreased year over year due to a decrease in inquiry generation and management revenue as a result of the regulatory uncertainty regarding recruiting and marketing to potential students in the for-profit college industry, which has caused schools to decrease spending on marketing efforts. Additionally, clients are shifting marketing budgets to more efficient or lower cost channels, which has caused a reduction in volume.
|
•
|
The Company continues to focus on improving the profitability of this segment by reducing operating expenses in reaction to the ongoing decline in revenue and gross margin.
|
•
|
The Company acquired $4.1 billion of FFELP student loans during
2013
, compared to $3.9 billion in
2012
and $2.8 billion in 2011. The average loan portfolio balance for the years ended
December 31, 2013
,
2012
, and
2011
was $25.0 billion, $23.7 billion, and $24.0 billion, respectively.
|
•
|
Core student loan spread increased to 1.54% for the year ended
December 31, 2013
, compared to 1.44% for the year ended December 31, 2012. This increase was due to the improved corresponding relationship between the interest rate indices governing what the Company earns on its loans and what the Company pays to fund such loans.
|
•
|
Due to historically low interest rates, the Company continues to earn significant fixed rate floor income. During the years ended
December 31, 2013
, 2012, and
2011
, the Company earned $148.4 million, $145.3 million, and $144.5 million, respectively, of fixed rate floor income (net of $31.0 million, $19.3 million, and $20.2 million of derivative settlements, respectively, used to hedge such loans).
|
•
|
Whitetail Rock Capital Management, LLC ("WRCM"), the Company's SEC-registered investment advisory subsidiary, recognized revenue of $17.4 million, $9.3 million, and $5.1 million for the years ended
December 31, 2013
, 2012, and
2011
, respectively. These amounts include performance fees earned from the sale of managed securities.
|
•
|
As of
December 31, 2013
, the Company had cash and investments of $255.3 million.
|
•
|
For the year ended
December 31, 2013
, the Company generated
$387.2 million
in net cash provided by operating activities.
|
•
|
Forecasted undiscounted future cash flows from the Company's FFELP student loan portfolio financed in asset-backed securitization transactions are estimated to be approximately
$2.17 billion
as of
December 31, 2013
.
|
•
|
As of December 31, 2013
,
$45.0 million
was outstanding on the Company's unsecured line of credit and
$230.0 million
was available for future use. The unsecured line of credit has a maturity date of March 28, 2018.
|
•
|
During the year ended
December 31, 2013
, the Company repurchased 393,259 shares of Class A common stock for $13.1 million ($33.40 per share).
|
•
|
During the year ended
December 31, 2013
, the Company repurchased $90.5 million (par value) of its own asset-backed and unsecured debt securities for a gain totaling $11.7 million.
|
•
|
During the year ended
December 31, 2013
, the Company paid cash dividends of $18.6 million.
|
•
|
The Company intends to use its liquidity position to capitalize on market opportunities, including FFELP student loan acquisitions; strategic acquisitions and investments in its core business areas of loan financing, loan servicing, payment processing, and enrollment services; and capital management initiatives, including stock repurchases, debt repurchases, and dividend distributions.
|
|
Year ended December 31,
|
|
|
||||||||
|
2013
|
|
2012
|
|
2011
|
|
Additional information
|
||||
Variable student loan interest margin, net of settlements on derivatives
|
$
|
235,480
|
|
|
192,021
|
|
|
219,363
|
|
|
Represents the yield the Company receives on its student loan portfolio less the cost of funding these loans. Variable student loan spread is also impacted by the amortization/accretion of loan premiums and discounts, the 1.05% per year consolidation loan rebate fee paid to the Department, and yield adjustments from borrower benefit programs. See AGM operating segment - results of operations.
|
Fixed rate floor income, net of settlements on derivatives
|
148,431
|
|
|
145,345
|
|
|
144,454
|
|
|
The Company has a portfolio of student loans that are earning interest at a fixed borrower rate which exceeds the statutorily defined variable lender rates, generating fixed rate floor income. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk" for additional information.
|
|
Investment interest
|
6,668
|
|
|
4,616
|
|
|
3,168
|
|
|
Increase is due to an increase in average investment balance.
|
|
Non-portfolio related derivative settlements
|
(1,671
|
)
|
|
(2,232
|
)
|
|
(611
|
)
|
|
|
|
Corporate debt interest expense
|
(4,669
|
)
|
|
(8,485
|
)
|
|
(9,649
|
)
|
|
Includes interest expense on the Junior Subordinated Hybrid Securities and unsecured and secured lines of credit.
|
|
Net interest income (net of settlements on derivatives)
|
$
|
384,239
|
|
|
331,265
|
|
|
356,725
|
|
|
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Borrower late fee income
|
$
|
12,686
|
|
|
13,876
|
|
|
12,647
|
|
Investment advisory fees
|
17,422
|
|
|
9,347
|
|
|
5,062
|
|
|
Realized and unrealized gains/(losses) on investments, net
|
6,094
|
|
|
6,914
|
|
|
3,183
|
|
|
Other
|
10,096
|
|
|
9,339
|
|
|
8,621
|
|
|
Other income
|
$
|
46,298
|
|
|
39,476
|
|
|
29,513
|
|
Company owned
|
|
$23,727
|
|
$22,650
|
|
$22,277
|
|
$21,926
|
|
$21,504
|
|
$21,237
|
|
$20,820
|
|
$20,629
|
|
$20,715
|
|
$21,397
|
||||||||||
% of total
|
|
38.6%
|
|
29.8%
|
|
27.1%
|
|
25.6%
|
|
23.2%
|
|
21.8%
|
|
18.5%
|
|
17.7%
|
|
15.3%
|
|
15.5%
|
||||||||||
Number of servicing borrowers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Government servicing
|
|
2,804,502
|
|
|
3,036,534
|
|
|
3,096,026
|
|
|
3,137,583
|
|
|
3,588,412
|
|
|
3,892,929
|
|
|
4,261,637
|
|
|
4,396,341
|
|
|
5,145,901
|
|
|
5,305,498
|
|
FFELP servicing
|
|
1,912,748
|
|
|
1,799,484
|
|
|
1,779,245
|
|
|
1,724,087
|
|
|
1,659,020
|
|
|
1,626,146
|
|
|
1,586,312
|
|
|
1,529,203
|
|
|
1,507,452
|
|
|
1,462,122
|
|
Private servicing
|
|
155,947
|
|
|
164,554
|
|
|
163,135
|
|
|
161,763
|
|
|
175,070
|
|
|
173,948
|
|
|
170,224
|
|
|
173,588
|
|
|
178,935
|
|
|
195,580
|
|
Total:
|
|
4,873,197
|
|
|
5,000,572
|
|
|
5,038,406
|
|
|
5,023,433
|
|
|
5,422,502
|
|
|
5,693,023
|
|
|
6,018,173
|
|
|
6,099,132
|
|
|
6,832,288
|
|
|
6,963,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of remote hosted borrowers
|
|
545,456
|
|
|
9,566,296
|
|
|
8,645,463
|
|
|
7,909,300
|
|
|
7,505,693
|
|
|
6,912,204
|
|
|
5,001,695
|
|
|
3,218,896
|
|
|
1,986,866
|
|
|
1,915,203
|
|
|
Year ended December 31,
|
|
|
||||||||
|
2013
|
|
2012
|
|
2011
|
|
Additional information
|
||||
Net interest income
|
$
|
40
|
|
|
53
|
|
|
58
|
|
|
|
Loan and guaranty servicing revenue
|
243,428
|
|
|
209,748
|
|
|
175,657
|
|
|
See table below for additional analysis.
|
|
Intersegment servicing revenue
|
56,744
|
|
|
65,376
|
|
|
69,037
|
|
|
Represents revenue earned by the LGS operating segment as a result of servicing loans for the AGM operating segment. Year over year decrease is due to portfolio run-off.
|
|
Total other income
|
300,172
|
|
|
275,124
|
|
|
244,694
|
|
|
|
|
Salaries and benefits
|
119,092
|
|
|
115,126
|
|
|
102,878
|
|
|
Increase due to additional personnel to support the increase in volume under the government servicing contract.
|
|
Depreciation and amortization
|
11,419
|
|
|
18,415
|
|
|
15,313
|
|
|
Intangible assets were fully amortized during 2012. Amortization expense for 2012 and 2011 was $8.7 million and $8.5 million, respectively.
|
|
Other expenses
|
79,116
|
|
|
70,505
|
|
|
60,442
|
|
|
Increase due to additional servicing volume and collection costs incurred related to rehabilitating defaulted FFELP loans on behalf of guaranty agencies. Collection costs were $32.0 million, $28.0 million, and $23.8 million in 2013, 2012, and 2011, respectively.
|
|
Intersegment expenses, net
|
4,359
|
|
|
5,280
|
|
|
4,776
|
|
|
|
|
Total operating expenses
|
213,986
|
|
|
209,326
|
|
|
183,409
|
|
|
|
|
Income before income taxes and corporate overhead allocation
|
86,226
|
|
|
65,851
|
|
|
61,343
|
|
|
|
|
Corporate overhead allocation
|
(6,150
|
)
|
|
(5,904
|
)
|
|
(4,138
|
)
|
|
|
|
Income before income taxes
|
80,076
|
|
|
59,947
|
|
|
57,205
|
|
|
|
|
Income tax expense
|
(30,430
|
)
|
|
(22,780
|
)
|
|
(21,736
|
)
|
|
|
|
Net income
|
$
|
49,646
|
|
|
37,167
|
|
|
35,469
|
|
|
|
Before tax operating margin
|
26.7
|
%
|
|
21.8
|
%
|
|
23.4
|
%
|
|
|
|
Year ended December 31,
|
|
|
||||||||
|
2013
|
|
2012
|
|
2011
|
|
Additional information
|
||||
Government servicing
|
$
|
97,351
|
|
|
69,493
|
|
|
50,978
|
|
|
Increase due to an increase in the number of borrowers serviced under the government servicing contract.
|
FFELP servicing
|
20,420
|
|
|
24,255
|
|
|
26,653
|
|
|
Decrease will continue as third-party customers' FFELP portfolios run off.
|
|
Private servicing
|
9,485
|
|
|
9,201
|
|
|
9,911
|
|
|
|
|
FFELP guaranty servicing
|
12,251
|
|
|
13,183
|
|
|
16,249
|
|
|
Decrease will continue as FFELP portfolios run off and guaranty volume decreases.
|
|
FFELP guaranty collection
|
73,628
|
|
|
58,926
|
|
|
47,801
|
|
|
The Company earns revenue from rehabilitating defaulted FFELP loans on behalf of guaranty agencies. This revenue has increased as a result of an increase in defaulted loan volume. However, over time, this FFELP-related revenue source will decrease as FFELP portfolios continue to run off. Also, recent federal budget provisions to become effective July 1, 2014 will reduce payments by the Department to guaranty agencies for assisting student loan borrowers with the rehabilitation of defaulted loans under FFELP. Rehabilitation collection revenue was $54.2 million, $43.8 million, and $34.2 million in 2013, 2012, and 2011, respectively. The Company anticipates this revenue will be negatively impacted as a result of these federal budget provisions.
|
|
Software services
|
28,609
|
|
|
33,512
|
|
|
23,443
|
|
|
In October 2011, the Company began providing hosted student loan servicing to a significant customer, which resulted in an increase in software services revenue. The contract with this customer expired in December 2013. The number of remote hosted borrowers and related revenue decreased from this customer throughout 2013 as this customer's loan volume was transferred to other servicers. The Company received a portion of these transfers, which increased the number of full-service borrowers under the Department's servicing contract. Revenue earned from this customer in 2013, 2012, and 2011 was $6.2 million, $14.7 million and $6.2 million, respectively. Excluding revenue from this customer, software services revenue increased year over year due to an increase in the number of borrowers from other remote hosted customers.
|
|
Other
|
1,684
|
|
|
1,178
|
|
|
622
|
|
|
|
|
Loan and guaranty servicing revenue
|
$
|
243,428
|
|
|
209,748
|
|
|
175,657
|
|
|
|
|
Year ended December 31,
|
|
|
||||||||
|
2013
|
|
2012
|
|
2011
|
|
Additional information
|
||||
Net interest income
|
$
|
—
|
|
|
8
|
|
|
21
|
|
|
|
Tuition payment processing and campus commerce revenue
|
80,682
|
|
|
74,410
|
|
|
67,797
|
|
|
Increase due to an increase in the number of managed tuition payment plans as a result of providing more plans at existing schools and obtaining new school customers.
|
|
Salaries and benefits
|
37,575
|
|
|
34,314
|
|
|
30,070
|
|
|
Increase due to additional personnel to support the increase in payment plans and customers.
|
|
Depreciation and amortization
|
4,518
|
|
|
7,240
|
|
|
6,179
|
|
|
Certain intangible assets were fully amortized at the end of 2012. Amortization of intangible assets was $3.3 million, $6.3 million, and $5.0 million in 2013, 2012, and 2011, respectively.
|
|
Other expenses
|
9,147
|
|
|
10,439
|
|
|
10,192
|
|
|
Implementation of electronic communications and processes has resulted in reductions in paper forms, postage, and freight which have decreased expenses in 2013 compared to 2012. In addition, certain investments were made by the Company during 2012 in new products and services to meet customer needs and expand product and service offerings.
|
|
Intersegment expenses, net
|
5,989
|
|
|
5,383
|
|
|
4,714
|
|
|
|
|
Total operating expenses
|
57,229
|
|
|
57,376
|
|
|
51,155
|
|
|
|
|
Income before income taxes and corporate overhead allocation
|
23,453
|
|
|
17,042
|
|
|
16,663
|
|
|
|
|
Corporate overhead allocation
|
(1,957
|
)
|
|
(1,968
|
)
|
|
(1,379
|
)
|
|
|
|
Income before income taxes
|
21,496
|
|
|
15,074
|
|
|
15,284
|
|
|
|
|
Income tax expense
|
(8,168
|
)
|
|
(5,728
|
)
|
|
(5,807
|
)
|
|
|
|
Net income
|
$
|
13,328
|
|
|
9,346
|
|
|
9,477
|
|
|
|
Before tax operating margin
|
26.6
|
%
|
|
20.3
|
%
|
|
22.5
|
%
|
|
|
|
Year ended December 31,
|
|
|
||||||||
|
2013
|
|
2012
|
|
2011
|
|
Additional information
|
||||
Enrollment services revenue
|
$
|
98,078
|
|
|
117,925
|
|
130,470
|
|
See table below for additional analysis.
|
||
Salaries and benefits
|
19,296
|
|
|
22,816
|
|
|
25,155
|
|
Decrease due to cost saving measures initiated by the Company in reaction to the ongoing decline in revenue.
|
||
Cost to provide enrollment services
|
64,961
|
|
|
78,375
|
|
|
86,548
|
|
See table below for additional analysis.
|
||
Depreciation and amortization
|
232
|
|
|
6,491
|
|
|
6,854
|
|
Intangible assets were fully amortized in 2012. Amortization expense related to intangible assets and student list costs for 2012 and 2011 was $5.9 million and $6.4 million, respectively.
|
||
Other expenses
|
6,084
|
|
|
10,416
|
|
|
9,425
|
|
Decrease is due to cost saving measures initiated by the Company in reaction to the ongoing decline in revenue. Additionally, included in 2012 expense is an impairment charge of $2.9 million related to student list costs.
|
||
Intersegment expenses, net
|
4,588
|
|
|
3,768
|
|
|
3,521
|
|
|
|
|
Total operating expenses
|
95,161
|
|
|
121,866
|
|
|
131,503
|
|
|
|
|
Income (loss) before income taxes and corporate overhead allocation
|
2,917
|
|
|
(3,941
|
)
|
|
(1,033
|
)
|
|
|
|
Corporate overhead allocation
|
(1,943
|
)
|
|
(1,968
|
)
|
|
(1,379
|
)
|
|
|
|
Income (loss) before income taxes
|
974
|
|
|
(5,909
|
)
|
|
(2,412
|
)
|
|
|
|
Income tax (expense) benefit
|
(369
|
)
|
|
2,244
|
|
|
917
|
|
|
||
Net income (loss)
|
$
|
605
|
|
|
(3,665
|
)
|
|
(1,495
|
)
|
|
|
Before tax operating margin
|
1.0
|
%
|
|
(5.0
|
)%
|
|
(1.8
|
)%
|
|
|
|
Inquiry generation (a)
|
|
Inquiry management (agency) (a)
|
|
Inquiry management (software)
|
|
Digital marketing
|
|
Content solutions (b)
|
|
Total
|
|||||||
|
Year ended December 31, 2013
|
|||||||||||||||||
Enrollment services revenue
|
$
|
14,285
|
|
|
59,852
|
|
|
3,985
|
|
|
4,399
|
|
|
15,557
|
|
|
98,078
|
|
Cost to provide enrollment services
|
9,108
|
|
|
52,919
|
|
|
—
|
|
|
318
|
|
|
2,616
|
|
|
64,961
|
|
|
Gross profit
|
$
|
5,177
|
|
|
6,933
|
|
|
3,985
|
|
|
4,081
|
|
|
12,941
|
|
|
33,117
|
|
Gross profit %
|
36.2%
|
|
11.6%
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Year ended December 31, 2012
|
|||||||||||||||||
Enrollment services revenue
|
$
|
17,650
|
|
|
72,930
|
|
|
3,620
|
|
|
4,850
|
|
|
18,875
|
|
|
117,925
|
|
Cost to provide enrollment services
|
10,717
|
|
|
64,705
|
|
|
—
|
|
|
268
|
|
|
2,685
|
|
|
78,375
|
|
|
Gross profit
|
$
|
6,933
|
|
|
8,225
|
|
|
3,620
|
|
|
4,582
|
|
|
16,190
|
|
|
39,550
|
|
Gross profit %
|
39.3%
|
|
11.3%
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Year ended December 31, 2011
|
|||||||||||||||||
Enrollment services revenue
|
$
|
24,556
|
|
|
78,804
|
|
|
2,690
|
|
|
4,455
|
|
|
19,965
|
|
|
130,470
|
|
Cost to provide enrollment services
|
14,552
|
|
|
69,533
|
|
|
—
|
|
|
317
|
|
|
2,146
|
|
|
86,548
|
|
|
Gross profit
|
$
|
10,004
|
|
|
9,271
|
|
|
2,690
|
|
|
4,138
|
|
|
17,819
|
|
|
43,922
|
|
Gross profit %
|
40.7%
|
|
11.8%
|
|
|
|
|
|
|
|
|
(a)
|
Inquiry generation revenue
decreased
$3.4 million
(
19.1%
) and
$6.9 million
(
28.1%
) and inquiry management (agency) revenue
decreased
$13.1 million
(
17.9%
) and
$5.9 million
(
7.5%
) for the years ended
December 31, 2013
and
2012
, respectively, compared to
2012
and
2011
, respectively. Revenues from these services have been affected by the ongoing regulatory uncertainty regarding recruiting and marketing to potential students in the for-profit college industry, which has caused schools to decrease spending on marketing efforts. Additionally, clients are shifting marketing budgets to more efficient or lower cost channels, which has caused a reduction in volume. The decrease in inquiry generation gross profit margin is due to increased costs for higher quality sources and a shift in revenue from higher profit margin clients to clients with lower profit margins.
|
(b)
|
Content solutions revenue
decreased
$3.3 million
(
17.6%
) and
$1.1 million
(
5.5%
) for the years ended
December 31, 2013
, and 2012, respectively, compared to
2012
and
2011
, respectively, due to the divesture of the Company's list marketing business during 2013 and as the result of a decrease in list marketing services during 2012.
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Beginning balance
|
$
|
24,995,880
|
|
|
24,359,625
|
|
|
23,784,069
|
|
Loan acquisitions
|
4,058,997
|
|
|
3,885,138
|
|
|
2,841,334
|
|
|
Repayments, claims, capitalized interest, participations, and other
|
(2,375,806
|
)
|
|
(1,807,144
|
)
|
|
(1,650,489
|
)
|
|
Consolidation loans lost to external parties
|
(514,108
|
)
|
|
(1,331,163
|
)
|
|
(585,230
|
)
|
|
Loans sold
|
(43,657
|
)
|
|
(110,576
|
)
|
|
(30,059
|
)
|
|
Ending balance
|
$
|
26,121,306
|
|
|
24,995,880
|
|
|
24,359,625
|
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Variable student loan yield, gross
|
2.58
|
%
|
|
2.63
|
%
|
|
2.58
|
%
|
|
Consolidation rebate fees
|
(0.77
|
)
|
|
(0.75
|
)
|
|
(0.72
|
)
|
|
Discount accretion, net of premium and deferred origination costs amortization
|
0.03
|
|
|
—
|
|
|
(0.09
|
)
|
|
Variable student loan yield, net
|
1.84
|
|
|
1.88
|
|
|
1.77
|
|
|
Student loan cost of funds - interest expense
|
(0.91
|
)
|
|
(1.09
|
)
|
|
(0.90
|
)
|
|
Student loan cost of funds - derivative settlements
|
0.01
|
|
|
0.03
|
|
|
0.05
|
|
|
Variable student loan spread
|
0.94
|
|
|
0.82
|
|
|
0.92
|
|
|
Fixed rate floor income, net of settlements on derivatives
|
0.60
|
|
|
0.62
|
|
|
0.60
|
|
|
Core student loan spread
|
1.54
|
%
|
|
1.44
|
%
|
|
1.52
|
%
|
|
|
|
|
|
|
|
||||
Average balance of student loans
|
$
|
24,960,521
|
|
|
23,694,388
|
|
|
24,045,003
|
|
Average balance of debt outstanding
|
24,954,546
|
|
|
23,932,304
|
|
|
24,237,459
|
|
(a)
|
Prior to April 1, 2012, the interest earned on the majority of the Company's FFELP student loan assets
was indexed to the three-month commercial paper rate. As allowed by legislation, effective April 1, 2012, the Company elected to change the index on which the Special Allowance Payments are calculated for FFELP loans from the commercial paper rate to the one-month LIBOR rate. The Company funds the majority of its assets with three-month LIBOR indexed floating rate securities. The relationship between the indices in which the Company earns interest on its loans and funds such loans has a significant impact on student loan spread. This table (the right axis) shows the difference between the Company's liability base rate and the one-month LIBOR (Q2 2012 - Q4 2013) or commercial paper rate indices (Q1 2011 - Q1 2012) by quarter.
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Fixed rate floor income, gross
|
$
|
179,453
|
|
|
164,615
|
|
|
164,700
|
|
Derivative settlements (a)
|
(31,022
|
)
|
|
(19,270
|
)
|
|
(20,246
|
)
|
|
Fixed rate floor income, net
|
$
|
148,431
|
|
|
145,345
|
|
|
144,454
|
|
Fixed rate floor income contribution to spread, net
|
0.60
|
%
|
|
0.62
|
%
|
|
0.60
|
%
|
(a)
|
Includes settlement payments on derivatives used to hedge student loans earning fixed rate floor income.
|
|
Year ended December 31,
|
|
|
||||||||
|
2013
|
|
2012
|
|
2011
|
|
Additional information
|
||||
Net interest income after provision for loan losses
|
$
|
390,571
|
|
|
324,906
|
|
|
347,811
|
|
|
See table below for additional analysis.
|
Other income
|
15,223
|
|
|
18,219
|
|
|
15,416
|
|
|
The primary component of other income is borrower late fees, which were $12.7 million, $13.9 million, and $12.6 million in 2013, 2012, and 2011, respectively. The primary item of other income that causes fluctuations year over year is the net realized and unrealized gains/losses from investments, which were gains of $0.2 million and $1.7 million in 2013 and 2012, respectively, and a loss of $0.1 million in 2011.
|
|
Gain on sale of loans and debt repurchases
|
11,004
|
|
|
3,814
|
|
|
1,433
|
|
|
Gains are primarily from the Company repurchasing its own asset-backed debt securities.
|
|
Derivative market value and foreign currency adjustments, net
|
35,256
|
|
|
(51,809
|
)
|
|
7,571
|
|
|
Includes (i) the unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP; and (ii) the foreign currency transaction gains or losses caused by the re-measurement of the Company's Euro-denominated bonds to U.S. dollars.
|
|
Derivative settlements, net
|
(27,966
|
)
|
|
(11,792
|
)
|
|
(7,228
|
)
|
|
The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative settlements for each applicable period should be evaluated with the Company’s net interest income as reflected in the table below.
|
|
Total other income
|
33,517
|
|
|
(41,568
|
)
|
|
17,192
|
|
|
|
|
Salaries and benefits
|
2,292
|
|
|
2,252
|
|
|
2,791
|
|
|
|
|
Other expenses
|
30,945
|
|
|
16,435
|
|
|
13,381
|
|
|
Increase due to higher third party servicing fees related to a significant amount of recent loan purchases being serviced at third parties.
|
|
Intersegment expenses, net
|
57,572
|
|
|
66,215
|
|
|
70,018
|
|
|
Amount includes fees paid to the LGS operating segment for the servicing of the Company's student loan portfolio. Such amounts have decreased as the AGM portfolio serviced by LGS has run off.
|
|
Total operating expenses
|
90,809
|
|
|
84,902
|
|
|
86,190
|
|
|
|
|
Income before income taxes and corporate overhead allocation
|
333,279
|
|
|
198,436
|
|
|
278,813
|
|
|
|
|
Corporate overhead allocation
|
(3,896
|
)
|
|
(5,306
|
)
|
|
(6,896
|
)
|
|
|
|
Income before income taxes
|
329,383
|
|
|
193,130
|
|
|
271,917
|
|
|
|
|
Income tax expense
|
(125,165
|
)
|
|
(73,387
|
)
|
|
(103,327
|
)
|
|
|
|
Net income
|
$
|
204,218
|
|
|
119,743
|
|
|
168,590
|
|
|
|
|
|
|
|
|
|
|
|
||||
Additional information:
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
204,218
|
|
|
119,743
|
|
|
168,590
|
|
|
The Company provides non-GAAP information that reflects specific items management believes to be important in the evaluation of its operating results. The Company believes the point-in-time estimates of asset and liability values related to its derivatives and Euro-denominated bonds that are subject to interest and currency rate fluctuations affect the period-to-period comparability of the results of operations. These items are excluded here for comparability purposes.
|
Derivative market value and foreign currency adjustments, net
|
(35,256
|
)
|
|
51,809
|
|
|
(7,571
|
)
|
|
||
Tax effect
|
13,397
|
|
|
(19,687
|
)
|
|
2,877
|
|
|
||
Net income, excluding derivative market value and foreign currency adjustments
|
$
|
182,359
|
|
|
151,865
|
|
|
163,896
|
|
|
|
Year ended December 31,
|
|
|
||||||||
|
2013
|
|
2012
|
|
2011
|
|
Additional Information
|
||||
Variable interest income, net of settlements on derivatives
|
$
|
645,739
|
|
|
630,267
|
|
|
633,486
|
|
|
Increase in 2013 compared to 2012 is due to an increase in the average student loan portfolio, partially offset by a decrease in the gross yield earned on student loans, net of settlements on derivatives. Decrease in 2012 compared to 2011 is due to a decrease in the average student loan portfolio, partially offset by an increase in the yield earned on student loans, net of settlements on derivatives.
|
Consolidation rebate fees
|
(192,061
|
)
|
|
(178,211
|
)
|
|
(174,387
|
)
|
|
Increase due to an increase in the average consolidation loan balance.
|
|
Discount accretion, net of premium and deferred origination costs amortization
|
8,067
|
|
|
47
|
|
|
(21,095
|
)
|
|
Increase due to the Company's purchases of loans at a net discount over the prior few years.
|
|
Interest on bonds and notes payable
|
(226,265
|
)
|
|
(260,082
|
)
|
|
(218,641
|
)
|
|
Decrease in 2013 compared to 2012 is due to a decrease in cost of funds, partially offset by an increase in average debt outstanding. Increase in 2012 compared to 2011 is due to an increase in cost of funds, partially offset by a decrease in average debt outstanding.
|
|
Variable student loan interest margin, net of settlements on derivatives
|
235,480
|
|
|
192,021
|
|
|
219,363
|
|
|
|
|
Fixed rate floor income, net of settlements on derivatives
|
148,431
|
|
|
145,345
|
|
|
144,454
|
|
|
The high levels of fixed rate floor income earned are due to historically low interest rates.
|
|
Investment interest
|
461
|
|
|
955
|
|
|
1,051
|
|
|
|
|
Intercompany interest
|
(3,267
|
)
|
|
(3,707
|
)
|
|
(3,035
|
)
|
|
|
|
Provision for loan losses - federally insured
|
(20,000
|
)
|
|
(22,000
|
)
|
|
(20,000
|
)
|
|
|
|
Provision for loan losses - non-federally insured
|
1,500
|
|
|
500
|
|
|
(1,250
|
)
|
|
|
|
Net interest income after provision for loan losses (net of settlements on derivatives)
|
$
|
362,605
|
|
|
313,114
|
|
|
340,583
|
|
|
|
|
As of December 31, 2013
|
||||
|
Carrying
amount
|
|
Final maturity
|
||
Asset Generation and Management:
|
|
|
|
||
Bonds and notes issued in asset-backed securitizations
|
$
|
24,614,143
|
|
|
5/25/18 - 8/26/52
|
FFELP warehouse facilities
|
1,396,344
|
|
|
1/17/16 - 6/12/16
|
|
Other borrowings
|
61,401
|
|
|
4/11/14 - 11/11/15
|
|
|
$
|
26,071,888
|
|
|
|
|
Year ended December 31, 2013
|
|
Year ended December 31, 2012
|
|
Year ended December 31, 2011
|
||||||||||||||||||||||
|
Par value
|
|
Purchase price
|
|
Gain
|
|
Par value
|
|
Purchase price
|
|
Gain
|
|
Par value
|
|
Purchase price
|
|
Gain
|
||||||||||
Unsecured debt - Hybrid Securities
|
$
|
2,775
|
|
|
2,080
|
|
|
695
|
|
|
1,465
|
|
|
1,140
|
|
|
325
|
|
|
62,558
|
|
|
55,651
|
|
|
6,907
|
|
Asset-backed securities
|
87,696
|
|
|
76,725
|
|
|
10,971
|
|
|
134,667
|
|
|
130,969
|
|
|
3,698
|
|
|
12,254
|
|
|
12,199
|
|
|
55
|
|
|
|
$
|
90,471
|
|
|
78,805
|
|
|
11,666
|
|
|
136,132
|
|
|
132,109
|
|
|
4,023
|
|
|
74,812
|
|
|
67,850
|
|
|
6,962
|
|
|
Total shares repurchased
|
|
Purchase price (in thousands)
|
|
Average price of shares repurchased (per share)
|
|||||
|
|
|
||||||||
Year ended December 31, 2013
|
393,259
|
|
|
$
|
13,136
|
|
|
$
|
33.40
|
|
Year ended December 31, 2012
|
806,023
|
|
|
22,814
|
|
|
28.30
|
|
||
Year ended December 31, 2011
|
1,436,423
|
|
|
27,134
|
|
|
18.89
|
|
|
As of December 31, 2013
|
||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 to 3 years
|
|
3 to 5 years
|
|
More than 5 years
|
||||||
Bonds and notes payable (a)
|
$
|
26,213,345
|
|
|
56,900
|
|
|
1,400,845
|
|
|
447,245
|
|
|
24,308,355
|
|
Operating lease obligations
|
16,554
|
|
|
5,889
|
|
|
5,958
|
|
|
2,451
|
|
|
2,256
|
|
|
Total
|
$
|
26,229,899
|
|
|
62,789
|
|
|
1,406,803
|
|
|
449,696
|
|
|
24,310,611
|
|
(a)
|
Amounts exclude interest as substantially all bonds and notes payable carry variable rates of interest.
|
|
As of December 31, 2013
|
|
As of December 31, 2012
|
||||||||||
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
||||||
Fixed-rate loan assets
|
$
|
11,090,583
|
|
|
42.5
|
%
|
|
$
|
11,271,233
|
|
|
45.1
|
%
|
Variable-rate loan assets
|
15,030,723
|
|
|
57.5
|
|
|
13,724,647
|
|
|
54.9
|
|
||
Total
|
$
|
26,121,306
|
|
|
100.0
|
%
|
|
$
|
24,995,880
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
Fixed-rate debt instruments
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Variable-rate debt instruments
|
26,213,345
|
|
|
100.0
|
|
|
25,270,865
|
|
|
100.0
|
|
||
Total
|
$
|
26,213,345
|
|
|
100.0
|
%
|
|
$
|
25,270,865
|
|
|
100.0
|
%
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Fixed rate floor income, gross
|
$
|
179,453
|
|
|
164,615
|
|
|
164,700
|
|
Derivative settlements (a)
|
(31,022
|
)
|
|
(19,270
|
)
|
|
(20,246
|
)
|
|
Fixed rate floor income, net
|
$
|
148,431
|
|
|
145,345
|
|
|
144,454
|
|
(a)
|
Includes settlement payments on derivatives used to hedge student loans earning fixed rate floor income.
|
Fixed interest range
|
|
Borrower/lender weighted average yield
|
|
Estimated variable conversion rate (a)
|
|
Loan balance
|
||
|
|
|
||||||
< 3.0%
|
|
2.87%
|
|
0.23%
|
|
$
|
1,753,639
|
|
3.0 - 3.49%
|
|
3.20%
|
|
0.56%
|
|
2,101,999
|
|
|
3.5 - 3.99%
|
|
3.65%
|
|
1.01%
|
|
1,919,895
|
|
|
4.0 - 4.49%
|
|
4.20%
|
|
1.56%
|
|
1,448,691
|
|
|
4.5 - 4.99%
|
|
4.72%
|
|
2.08%
|
|
845,296
|
|
|
5.0 - 5.49%
|
|
5.24%
|
|
2.60%
|
|
578,336
|
|
|
5.5 - 5.99%
|
|
5.67%
|
|
3.03%
|
|
350,308
|
|
|
6.0 - 6.49%
|
|
6.18%
|
|
3.54%
|
|
405,238
|
|
|
6.5 - 6.99%
|
|
6.70%
|
|
4.06%
|
|
367,927
|
|
|
7.0 - 7.49%
|
|
7.16%
|
|
4.52%
|
|
151,774
|
|
|
7.5 - 7.99%
|
|
7.71%
|
|
5.07%
|
|
259,141
|
|
|
8.0 - 8.99%
|
|
8.17%
|
|
5.53%
|
|
612,919
|
|
|
> 9.0%
|
|
9.04%
|
|
6.40%
|
|
295,420
|
|
|
|
|
|
|
|
|
$
|
11,090,583
|
|
(a)
|
The estimated variable conversion rate is the estimated short-term interest rate at which loans would convert to a variable rate. As of
December 31, 2013
, the weighted average estimated variable conversion rate was
1.83%
. As of
December 31, 2013
, the short-term interest rate was
17
basis points.
|
(a)
|
For all interest rate derivatives, the Company receives discrete three-month LIBOR.
|
Index
|
|
Frequency of variable resets
|
|
Assets
|
|
Debt outstanding that funded student loan assets
|
|||
1 month LIBOR (a)
|
|
Daily
|
|
$
|
25,037,097
|
|
|
—
|
|
3 month Treasury bill
|
|
Daily
|
|
1,013,106
|
|
|
—
|
|
|
3 month LIBOR (a) (b)
|
|
Quarterly
|
|
—
|
|
|
16,253,353
|
|
|
1 month LIBOR
|
|
Monthly
|
|
—
|
|
|
7,804,457
|
|
|
Auction-rate or remarketing (c)
|
|
Varies
|
|
—
|
|
|
1,134,250
|
|
|
Asset-backed commercial paper (d)
|
|
Varies
|
|
—
|
|
|
818,427
|
|
|
Other (e)
|
|
|
|
21,685
|
|
|
61,401
|
|
|
|
|
|
|
$
|
26,071,888
|
|
|
26,071,888
|
|
(a)
|
The Company has certain basis swaps outstanding in which the Company receives three-month LIBOR and pays one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps"). The Company entered into these derivative instruments to better match the interest rate characteristics on its student loan assets and the debt funding such assets. The following table summarizes these derivatives as of
December 31, 2013
:
|
|
Maturity
|
|
Notional amount
|
|
|||
|
2021
|
|
|
$
|
250,000
|
|
|
|
2022
|
|
|
1,900,000
|
|
|
|
|
2023
|
|
|
3,650,000
|
|
|
|
|
2024
|
|
|
250,000
|
|
|
|
|
2026
|
|
|
800,000
|
|
|
|
|
2028
|
|
|
100,000
|
|
|
|
|
2036
|
|
|
700,000
|
|
|
|
|
2039
|
(1)
|
|
150,000
|
|
|
|
|
2040
|
(2)
|
|
200,000
|
|
|
|
|
|
|
|
$
|
8,000,000
|
|
(3)
|
(3)
|
The weighted average rate paid by the Company on the 1:3 Basis Swaps as of
December 31, 2013
was
one-month LIBOR
plus
3.5
basis points.
|
(b)
|
The Company has Euro-denominated notes that reprice on the EURIBOR index. The Company has entered into a cross-currency interest rate swap that converts the EURIBOR index to three-month LIBOR. As a result, these notes are reflected in the three-month LIBOR category in the above table. See “Foreign Currency Exchange Risk” below.
|
(c)
|
The interest rates on certain of the Company's asset-backed securities are set and periodically reset via a "dutch auction" (“Auction Rate Securities”) or through remarketing utilizing remarketing agents (“Variable Rate Demand Notes”). As of
December 31, 2013
, the Company is currently sponsor for
$915.1 million
of Auction Rate Securities and
$219.2 million
of Variable Rate Demand Notes.
|
(d)
|
The interest rates on certain of the Company's warehouse facilities are indexed to asset-backed commercial paper rates.
|
(e)
|
Assets include restricted cash and investments and other assets. Debt outstanding includes other debt obligations secured by student loan assets and related collateral.
|
|
Interest rates
|
|
Asset and funding index mismatches
|
||||||||||||||||||||||||
|
Change from increase of 100 basis points
|
|
Change from increase of 300 basis points
|
|
Increase of 10 basis points
|
|
Increase of 30 basis points
|
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
|
Dollar
|
|
Percent
|
|
Dollar
|
|
Percent
|
|
Dollar
|
|
Percent
|
|
Dollar
|
|
Percent
|
||||||||||||
|
Year ended December 31, 2013
|
||||||||||||||||||||||||||
Effect on earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Decrease in pre-tax net income before impact of derivative settlements
|
$
|
(70,599
|
)
|
|
(15.1
|
)%
|
|
$
|
(124,864
|
)
|
|
(26.8
|
)%
|
|
$
|
(16,831
|
)
|
|
(3.6
|
)%
|
|
$
|
(50,493
|
)
|
|
(10.8
|
)%
|
Impact of derivative settlements
|
60,123
|
|
|
12.9
|
|
|
180,370
|
|
|
38.7
|
|
|
6,855
|
|
|
1.5
|
|
|
20,565
|
|
|
4.4
|
|
||||
Increase (decrease) in net income before taxes
|
$
|
(10,476
|
)
|
|
(2.2
|
)%
|
|
$
|
55,506
|
|
|
11.9
|
%
|
|
$
|
(9,976
|
)
|
|
(2.1
|
)%
|
|
$
|
(29,928
|
)
|
|
(6.4
|
)%
|
Increase (decrease) in basic and diluted earnings per share
|
$
|
(0.14
|
)
|
|
|
|
$
|
0.74
|
|
|
|
|
$
|
(0.13
|
)
|
|
|
|
$
|
(0.40
|
)
|
|
|
||||
|
Year ended December 31, 2012
|
||||||||||||||||||||||||||
Effect on earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Decrease in pre-tax net income before impact of derivative settlements
|
$
|
(66,283
|
)
|
|
(24.1
|
)%
|
|
$
|
(117,342
|
)
|
|
(42.7
|
)%
|
|
$
|
(23,935
|
)
|
|
(8.7
|
)%
|
|
$
|
(71,805
|
)
|
|
(26.2
|
)%
|
Impact of derivative settlements
|
47,263
|
|
|
17.2
|
|
|
141,789
|
|
|
51.6
|
|
|
1,717
|
|
|
0.6
|
|
|
5,152
|
|
|
1.9
|
|
||||
Increase (decrease) in net income before taxes
|
$
|
(19,020
|
)
|
|
(6.9
|
)%
|
|
$
|
24,447
|
|
|
8.9
|
%
|
|
$
|
(22,218
|
)
|
|
(8.1
|
)%
|
|
$
|
(66,653
|
)
|
|
(24.3
|
)%
|
Increase (decrease) in basic and diluted earnings per share
|
$
|
(0.25
|
)
|
|
|
|
$
|
0.32
|
|
|
|
|
$
|
(0.29
|
)
|
|
|
|
$
|
(0.87
|
)
|
|
|
||||
|
Year ended December 31, 2011
|
||||||||||||||||||||||||||
Effect on earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Decrease in pre-tax net income before impact of derivative settlements
|
$
|
(69,225
|
)
|
|
(21.5
|
)%
|
|
$
|
(124,602
|
)
|
|
(38.7
|
)%
|
|
$
|
(24,237
|
)
|
|
(7.5
|
)%
|
|
$
|
(72,712
|
)
|
|
(22.6
|
)%
|
Impact of derivative settlements
|
50,569
|
|
|
15.7
|
|
|
151,705
|
|
|
47.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Increase (decrease) in net income before taxes
|
$
|
(18,656
|
)
|
|
(5.8
|
)%
|
|
$
|
27,103
|
|
|
8.4
|
%
|
|
$
|
(24,237
|
)
|
|
(7.5
|
)%
|
|
$
|
(72,712
|
)
|
|
(22.6
|
)%
|
Increase (decrease) in basic and diluted earnings per share
|
$
|
(0.24
|
)
|
|
|
|
$
|
0.35
|
|
|
|
|
$
|
(0.31
|
)
|
|
|
|
$
|
(0.94
|
)
|
|
|
|
|
As of December 31, 2013
|
||||||||
Plan category
|
|
Number of shares to be issued upon exercise of outstanding options, warrants, and rights (a)
|
|
Weighted-average exercise price of outstanding options, warrants, and rights (b)
|
|
Number of shares remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|
||||
Equity compensation plans approved by shareholders
|
|
—
|
|
|
—
|
|
|
3,007,307
|
|
(1)
|
Equity compensation plans not approved by shareholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
—
|
|
|
—
|
|
|
3,007,307
|
|
|
(1)
|
Includes
2,314,802
,
116,291
, and
576,214
shares of Class A Common Stock remaining available for future issuance under the Nelnet, Inc. Restricted Stock Plan, Nelnet, Inc. Directors Stock Compensation Plan, and Nelnet, Inc. Employee Share Purchase Plan, respectively.
|
(a)
|
1. Consolidated Financial Statements
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
F-2
|
Consolidated Balance Sheets as of December 31, 2013 and 2012
|
|
F-3
|
Consolidated Statements of Income for the years ended December 31, 2013, 2012, and 2011
|
|
F-4
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012, and 2011
|
|
F-5
|
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2013, 2012, and 2011
|
|
F-6
|
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012, and 2011
|
|
F-7
|
Notes to Consolidated Financial Statements
|
|
F-8
|
(b)
|
Exhibits
|
Exhibit Index
|
|
Exhibit No.
|
Description
|
3.1
|
Second Amended and Restated Articles of Incorporation of Nelnet, Inc., and Articles of Amendment thereto, filed as Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 and incorporated by reference herein.
|
|
|
3.2
|
Articles of Amendment to Second Amended and Restated Articles of Incorporation of Nelnet, Inc., filed as Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated by reference herein.
|
|
|
3.3
|
Sixth Amended and Restated Bylaws of Nelnet, Inc., as amended as of March 18, 2011, filed as Exhibit 3.1 to the registrant's Current Report on Form 8-K filed on March 24, 2011 and incorporated by reference herein.
|
|
|
3.4
|
Seventh Amended and Restated Bylaws of Nelnet, Inc., as amended as of February 6, 2014, filed as Exhibit 3.1 to the registrant's Current Report on Form 8-K filed on February 11, 2014 and incorporated by reference herein.
|
|
|
4.1
|
Form of Class A Common Stock Certificate of Nelnet, Inc., filed on November 24, 2003 as Exhibit 4.1 to the registrant’s Registration Statement on Form S-1 (Registration No. 333-108070) and incorporated by reference herein.
|
|
|
4.2
|
Certain instruments, including indentures of trust, defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries, none of which instruments authorizes a total amount of indebtedness thereunder in excess of 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis, are omitted from this Exhibit Index pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. Many of such instruments have been previously filed with the Securities and Exchange Commission, and the registrant hereby agrees to furnish a copy of any such instrument to the Commission upon request.
|
|
|
Exhibit Index
|
|
4.3
|
Registration Rights Agreement, dated as of December 16, 2003, by and among Nelnet, Inc. and the shareholders of Nelnet, Inc. signatory thereto, filed on November 24, 2003 as Exhibit 4.11 to the registrant’s Registration Statement on Form S-1 (Registration No. 333-108070) and incorporated by reference herein.
|
|
|
10.1*
|
Composite Form of Amended and Restated Participation Agreement, dated as of June 1, 2001, between NELnet, Inc. (subsequently renamed National Education Loan Network, Inc.) and Union Bank and Trust Company, as amended by the First Amendment thereto dated as of December 19, 2001 through the Cancellation of the Fifteenth Amendment thereto dated as of March 16, 2011 (such Participation Agreement and each amendment through the Cancellation of the Fifteenth Amendment thereto have been previously filed as set forth in the Exhibit Index for the registrant’s Annual Report on Form 10-K for the year ended December 31, 2012, and are incorporated by reference herein).
|
|
|
10.2
|
Sixteenth Amendment of Amended and Restated Participation Agreement, dated as of March 23, 2012, by and between Union Bank and Trust Company and National Education Loan Network, Inc., filed as Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 and incorporated by reference herein.
|
|
|
10.3
|
Guaranteed Purchase Agreement, dated as of March 19, 2001, by and between NELnet, Inc. (subsequently renamed National Education Loan Network, Inc.) and Union Bank and Trust Company, filed on September 25, 2003 as Exhibit 10.36 to the registrant’s Registration Statement on Form S-1 (Registration No. 333-108070) and incorporated by reference herein.
|
|
|
10.4
|
First Amendment of Guaranteed Purchase Agreement, dated as of February 1, 2002, by and between NELnet, Inc. (subsequently renamed National Education Loan Network, Inc.) and Union Bank and Trust Company, filed on September 25, 2003 as Exhibit 10.37 to the registrant’s Registration Statement on Form S-1 (Registration No. 333-108070) and incorporated by reference herein.
|
|
|
10.5
|
Second Amendment of Guaranteed Purchase Agreement, dated as of December 1, 2002, by and between Nelnet, Inc. (f/k/a/ NELnet, Inc.) (subsequently renamed National Education Loan Network, Inc.) and Union Bank and Trust Company, filed on September 25, 2003 as Exhibit 10.38 to the registrant’s Registration Statement on Form S-1 (Registration No. 333-108070) and incorporated by reference herein.
|
|
|
10.6
|
Guaranteed Purchase Agreement, dated as of September 1, 2010, by and between Nelnet, Inc. and Union Bank and Trust Company, filed as Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 and incorporated by reference herein.
|
|
|
10.7
|
First Amendment of Guaranteed Purchase Agreement, dated as of March 22, 2011, by and between Nelnet, Inc. and Union Bank and Trust Company, filed as Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 and incorporated by reference herein.
|
|
|
10.8
|
Amendment to Application and Agreement for Standby Letter of Credit, Loan Purchase Agreements, and Standby Student Loan Purchase Agreements, dated effective October 21, 2003, by and among National Education Loan Network, Inc., Nelnet, Inc., Nelnet Education Loan Funding, Inc., Union Bank and Trust Company, and Bank of America, N.A., filed on October 27, 2003 as Exhibit 10.94 to the registrant’s Registration Statement on Form S-1 (Registration No. 333-108070) and incorporated by reference herein.
|
|
|
10.9
|
February 2004 Amendment to Application and Agreement for Standby Letter of Credit, Loan Purchase Agreements and Standby Student Loan Purchase Agreements, dated as of February 20, 2004, among National Education Loan Network, Inc., Nelnet, Inc., Nelnet Education Loan Funding, Inc., Union Bank and Trust Company, and Bank of America, N.A., filed as Exhibit 10.62 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2003 and incorporated by reference herein.
|
|
|
10.10
|
November 2003 Amendment to Application and Agreement for Standby Letter of Credit, Loan Purchase Agreements, and Standby Student Loan Purchase Agreements, dated effective as of November 20, 2003, by and among National Education Loan Network, Inc., Nelnet, Inc., Nelnet Education Loan Funding, Inc., Union Bank and Trust Company, and Bank of America, N.A., filed as Exhibit 10.63 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2003 and incorporated by reference herein.
|
|
|
10.11
|
December 2003 Amendment to Application and Agreement for Standby Letter of Credit, Loan Purchase Agreements, and Standby Student Loan Purchase Agreements, dated effective as of December 19, 2003, by and among National Education Loan Network, Inc, Nelnet, Inc., Nelnet Education Loan Funding, Inc., Union Bank and Trust Company, and Bank of America, N.A., filed as Exhibit 10.64 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2003 and incorporated by reference herein.
|
|
|
10.12
|
April 2004 Amendment to Application and Agreement for Standby Letter of Credit, Loan Purchase Agreements, and Standby Student Loan Purchase Agreements, dated effective April 15, 2004, among Bank of America, N.A., Nelnet Education Loan Funding, Inc., National Education Loan Network, Inc, Nelnet, Inc., and Union Bank and Trust Company, filed as Exhibit 10.67 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and incorporated by reference herein.
|
|
|
Exhibit Index
|
|
10.13
|
Amendment of Agreements dated as of February 4, 2005, by and between National Education Loan Network, Inc. and Union Bank and Trust Company, filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on February 10, 2005 and incorporated by reference herein.
|
|
|
10.14+
|
Nelnet, Inc. Employee Share Purchase Plan, as amended through March 17, 2011, filed as Exhibit 10.4 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 and incorporated by reference herein.
|
|
|
10.15
|
Office Building Lease dated June 21, 1996 between Miller & Paine and Union Bank and Trust Company, filed as Exhibit 10.3 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated by reference herein.
|
|
|
10.16
|
Amendment to Office Building Lease dated June 11, 1997 between Miller & Paine and Union Bank and Trust Company, filed as Exhibit 10.4 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated by reference herein.
|
|
|
10.17
|
Lease Amendment Number Two dated February 8, 2001 between Miller & Paine and Union Bank and Trust Company, filed as Exhibit 10.5 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated by reference herein.
|
|
|
10.18
|
Lease Amendment Number Three dated May 23, 2005 between Miller & Paine, LLC and Union Bank and Trust Company, filed as Exhibit 10.6 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated by reference herein.
|
|
|
10.19
|
Lease Agreement dated May 20, 2005 between Miller & Paine, LLC and Union Bank and Trust Company, filed as Exhibit 10.7 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated by reference herein.
|
|
|
10.20
|
Office Sublease dated April 30, 2001 between Union Bank and Trust Company and Nelnet, Inc., filed as Exhibit 10.8 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated by reference herein.
|
|
|
10.21+
|
Nelnet, Inc. Restricted Stock Plan, as amended through May 20, 2009, filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on May 27, 2009 and incorporated herein by reference.
|
|
|
10.22+
|
Nelnet, Inc. Directors Stock Compensation Plan, as amended through April 18, 2008, filed on June 27, 2008 as Exhibit 99.1 to the registrant’s Registration Statement on Form S-8 (Registration No. 333-151911) and incorporated herein by reference.
|
|
|
10.23
|
Loan Purchase Agreement, dated as of November 25, 2008, by and between Nelnet Education Loan Funding, Inc., f/k/a NEBHELP, INC., acting, where applicable, by and through Wells Fargo Bank, National Association, not individually but as Eligible Lender Trustee for the Seller under the Warehouse Agreement or Eligible Lender Trust Agreement, and Union Bank and Trust Company, acting in its individual capacity and as trustee, filed as Exhibit 10.71 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference.
|
|
|
10.24
|
Loan Servicing Agreement, dated as of November 25, 2008, by and between Nelnet, Inc. and Union Bank and Trust Company, filed as Exhibit 10.72 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference.
|
|
|
10.25
|
Assurance Commitment Agreement, dated as of November 25, 2008, by and among Jay L. Dunlap, Angie Muhleisen, Michael S. Dunlap, Nelnet, Inc., Union Bank and Trust Company, and Farmers & Merchants Investment Inc., filed as Exhibit 10.73 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference.
|
|
|
10.26
|
Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC, filed as Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by reference.
|
|
|
10.27
|
Guaranteed Purchase Agreement, dated as of September 1, 2010, by and between Nelnet, Inc. and Union Bank and Trust Company, filed as Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 and incorporated herein by reference.
|
|
|
10.28
|
Management Agreement, dated effective as of May 1, 2011, by Whitetail Rock Capital Management, LLC and Union Bank and Trust Company, filed as Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference.
|
|
|
10.29
|
Management Agreement, dated effective as of January 20, 2012, by and between Union Bank and Trust Company and Whitetail Rock Capital Management, LLC, filed as Exhibit 10.58 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference.
|
Dated:
|
February 27, 2014
|
|
|
|
|
NELNET, INC
|
|
|
|
|
|
|
|
By:
|
/s/ JEFFREY R. NOORDHOEK
|
|
|
Name: Jeffrey R. Noordhoek
|
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
(Principle Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ JEFFREY R. NOORDHOEK
|
|
Chief Executive Officer (Principle Executive Officer)
|
|
February 27, 2014
|
Jeffrey R. Noordhoek
|
|
|
|
|
|
|
|
|
|
/s/ JAMES D. KRUGER
|
|
Chief Financial Officer (Principle Financial Officer and Principal Accounting Officer)
|
|
February 27, 2014
|
James D. Kruger
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL S. DUNLAP
|
|
Executive Chairman
|
|
February 27, 2014
|
Michael S. Dunlap
|
|
|
|
|
|
|
|
|
|
/s/ STEPHEN F. BUTTERFIELD
|
|
Vice Chairman
|
|
February 27, 2014
|
Stephen F. Butterfield
|
|
|
|
|
|
|
|
|
|
/s/ JAMES P. ABEL
|
|
Director
|
|
February 27, 2014
|
James P. Abel
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM R. CINTANI
|
|
Director
|
|
February 27, 2014
|
William R. Cintani
|
|
|
|
|
|
|
|
|
|
/s/ KATHLEEN A. FARRELL
|
|
Director
|
|
February 27, 2014
|
Kathleen A. Farrell
|
|
|
|
|
|
|
|
|
|
/s/ THOMAS E. HENNING
|
|
Director
|
|
February 27, 2014
|
Thomas E. Henning
|
|
|
|
|
|
|
|
|
|
/s/ KIMBERLY K. RATH
|
|
Director
|
|
February 27, 2014
|
Kimberly K. Rath
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL D. REARDON
|
|
Director
|
|
February 27, 2014
|
Michael D. Reardon
|
|
|
|
|
Page
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
NELNET, INC. AND SUBSIDIARIES
|
||||||
Consolidated Balance Sheets
|
||||||
December 31, 2013 and 2012
|
||||||
|
2013
|
|
2012
|
|||
|
(Dollars in thousands, except share data)
|
|||||
Assets:
|
|
|
|
|||
Student loans receivable (net of allowance for loan losses of $55,122 and $51,902, respectively)
|
$
|
25,907,589
|
|
|
24,830,621
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
Cash and cash equivalents - not held at a related party
|
8,537
|
|
|
7,567
|
|
|
Cash and cash equivalents - held at a related party
|
54,730
|
|
|
58,464
|
|
|
Total cash and cash equivalents
|
63,267
|
|
|
66,031
|
|
|
Investments
|
192,040
|
|
|
83,312
|
|
|
Restricted cash and investments
|
735,123
|
|
|
815,462
|
|
|
Restricted cash - due to customers
|
167,576
|
|
|
96,516
|
|
|
Accrued interest receivable
|
314,553
|
|
|
307,518
|
|
|
Accounts receivable (net of allowance for doubtful accounts of $6,045 and $1,529, respectively)
|
56,072
|
|
|
63,638
|
|
|
Goodwill
|
117,118
|
|
|
117,118
|
|
|
Intangible assets, net
|
6,132
|
|
|
9,393
|
|
|
Property and equipment, net
|
33,829
|
|
|
31,869
|
|
|
Other assets
|
115,043
|
|
|
88,976
|
|
|
Fair value of derivative instruments
|
62,507
|
|
|
97,441
|
|
|
Total assets
|
$
|
27,770,849
|
|
|
26,607,895
|
|
Liabilities:
|
|
|
|
|
|
|
Bonds and notes payable
|
$
|
25,955,289
|
|
|
25,098,835
|
|
Accrued interest payable
|
21,725
|
|
|
14,770
|
|
|
Other liabilities
|
164,300
|
|
|
161,671
|
|
|
Due to customers
|
167,576
|
|
|
96,516
|
|
|
Fair value of derivative instruments
|
17,969
|
|
|
70,890
|
|
|
Total liabilities
|
26,326,859
|
|
|
25,442,682
|
|
|
Commitments and contingencies
|
|
|
|
|||
Equity:
|
|
|
|
|||
Nelnet, Inc. shareholders' equity:
|
|
|
|
|
|
|
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding
|
—
|
|
|
—
|
|
|
Common stock:
|
|
|
|
|||
Class A, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 34,881,338 shares and 35,116,913 shares, respectively
|
349
|
|
|
351
|
|
|
Class B, convertible, $0.01 par value. Authorized 60,000,000 shares; issued and outstanding 11,495,377 shares
|
115
|
|
|
115
|
|
|
Additional paid-in capital
|
24,887
|
|
|
32,540
|
|
|
Retained earnings
|
1,413,492
|
|
|
1,129,389
|
|
|
Accumulated other comprehensive earnings
|
4,819
|
|
|
2,813
|
|
|
Total Nelnet, Inc. shareholders' equity
|
1,443,662
|
|
|
1,165,208
|
|
|
Noncontrolling interest
|
328
|
|
|
5
|
|
|
Total equity
|
1,443,990
|
|
|
1,165,213
|
|
|
|
|
|
|
|||
Total liabilities and equity
|
$
|
27,770,849
|
|
|
26,607,895
|
|
|
|
|
|
|||
Supplemental information - assets and liabilities of consolidated variable interest entities:
|
|
|
|
|||
Student loans receivable
|
$
|
26,020,629
|
|
|
24,920,130
|
|
Restricted cash and investments
|
732,771
|
|
|
753,511
|
|
|
Fair value of derivative instruments
|
36,834
|
|
|
82,841
|
|
|
Other assets
|
313,748
|
|
|
306,454
|
|
|
Bonds and notes payable
|
(26,244,222
|
)
|
|
(25,209,341
|
)
|
|
Other liabilities
|
(303,142
|
)
|
|
(348,364
|
)
|
|
Net assets of consolidated variable interest entities
|
$
|
556,618
|
|
|
505,231
|
|
|
|
|
|
NELNET, INC. AND SUBSIDIARIES
|
|||||||||
Consolidated Statements of Income
|
|||||||||
Years ended December 31, 2013, 2012, and 2011
|
|||||||||
|
|
|
|
|
|
||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in thousands, except share data)
|
||||||||
Interest income:
|
|
|
|
|
|
||||
Loan interest
|
$
|
638,142
|
|
|
609,237
|
|
|
589,686
|
|
Investment interest
|
6,668
|
|
|
4,616
|
|
|
3,168
|
|
|
Total interest income
|
644,810
|
|
|
613,853
|
|
|
592,854
|
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
|
Interest on bonds and notes payable
|
230,935
|
|
|
268,566
|
|
|
228,289
|
|
|
Net interest income
|
413,875
|
|
|
345,287
|
|
|
364,565
|
|
|
Less provision for loan losses
|
18,500
|
|
|
21,500
|
|
|
21,250
|
|
|
Net interest income after provision for loan losses
|
395,375
|
|
|
323,787
|
|
|
343,315
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Loan and guaranty servicing revenue
|
243,428
|
|
|
209,748
|
|
|
175,657
|
|
|
Tuition payment processing and campus commerce revenue
|
80,682
|
|
|
74,410
|
|
|
67,797
|
|
|
Enrollment services revenue
|
98,078
|
|
|
117,925
|
|
|
130,470
|
|
|
Other income
|
46,298
|
|
|
39,476
|
|
|
29,513
|
|
|
Gain on sale of loans and debt repurchases
|
11,699
|
|
|
4,139
|
|
|
8,340
|
|
|
Derivative market value and foreign currency adjustments and derivative settlements, net
|
18,957
|
|
|
(61,416
|
)
|
|
(25,647
|
)
|
|
Total other income
|
499,142
|
|
|
384,282
|
|
|
386,130
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
196,169
|
|
|
192,826
|
|
|
177,951
|
|
|
Cost to provide enrollment services
|
64,961
|
|
|
78,375
|
|
|
86,548
|
|
|
Depreciation and amortization
|
18,311
|
|
|
33,625
|
|
|
29,744
|
|
|
Other
|
149,542
|
|
|
128,738
|
|
|
113,415
|
|
|
Total operating expenses
|
428,983
|
|
|
433,564
|
|
|
407,658
|
|
|
Income before income taxes
|
465,534
|
|
|
274,505
|
|
|
321,787
|
|
|
Income tax expense
|
161,193
|
|
|
96,077
|
|
|
117,452
|
|
|
Net income
|
304,341
|
|
|
178,428
|
|
|
204,335
|
|
|
Net income attributable to noncontrolling interest
|
1,669
|
|
|
431
|
|
|
—
|
|
|
Net income attributable to Nelnet, Inc.
|
$
|
302,672
|
|
|
177,997
|
|
|
204,335
|
|
Earnings per common share:
|
|
|
|
|
|
||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted
|
$
|
6.50
|
|
|
3.76
|
|
|
4.24
|
|
Weighted average common shares outstanding - basic and diluted
|
46,570,314
|
|
|
47,369,331
|
|
|
48,157,403
|
|
NELNET, INC. AND SUBSIDIARIES
|
|||||||||
Consolidated Statements of Comprehensive Income
|
|||||||||
Years ended December 31, 2013, 2012, and 2011
|
|||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in thousands)
|
||||||||
Net income
|
$
|
304,341
|
|
|
178,428
|
|
|
204,335
|
|
Other comprehensive income:
|
|
|
|
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
||||
Unrealized holding gains arising during period, net
|
9,134
|
|
|
10,230
|
|
|
—
|
|
|
Less reclassification adjustment for gains recognized in net income, net of losses
|
(5,938
|
)
|
|
(5,798
|
)
|
|
—
|
|
|
Income tax effect
|
(1,190
|
)
|
|
(1,619
|
)
|
|
—
|
|
|
Total other comprehensive income
|
2,006
|
|
|
2,813
|
|
|
—
|
|
|
Comprehensive income
|
306,347
|
|
|
181,241
|
|
|
204,335
|
|
|
Comprehensive income attributable to noncontrolling interest
|
1,669
|
|
|
431
|
|
|
—
|
|
|
Comprehensive income attributable to Nelnet, Inc.
|
$
|
304,678
|
|
|
180,810
|
|
|
204,335
|
|
NELNET, INC. AND SUBSIDIARIES
|
||||||||||||||||||||||||||||||||||||
Consolidated Statements of Shareholders' Equity
|
||||||||||||||||||||||||||||||||||||
Years ended December 31, 2013, 2012, and 2011
|
||||||||||||||||||||||||||||||||||||
|
Nelnet, Inc. Shareholders
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
Preferred stock shares
|
|
Common stock shares
|
|
Preferred stock
|
|
Class A common stock
|
|
Class B common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive earnings
|
|
Employee notes receivable
|
|
Noncontrolling interest
|
|
Total equity
|
|||||||||||||||
|
|
Class A
|
|
Class B
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
(Dollars in thousands, except share data)
|
|||||||||||||||||||||||||||||||||||
Balance as of December 31, 2010
|
—
|
|
|
36,846,353
|
|
|
11,495,377
|
|
|
$
|
—
|
|
|
368
|
|
|
115
|
|
|
76,263
|
|
|
831,057
|
|
|
—
|
|
|
(1,170
|
)
|
|
—
|
|
|
906,633
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
204,335
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
204,335
|
|
|
Cash dividend on Class A and Class B common stock - $0.37 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,763
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,763
|
)
|
|
Contingency payment related to business combination
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,893
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,893
|
)
|
|
Issuance of common stock, net of forfeitures
|
—
|
|
|
233,172
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
4,694
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,696
|
|
|
Compensation expense for stock based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,301
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,301
|
|
|
Repurchase of common stock
|
—
|
|
|
(1,436,423
|
)
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(27,120
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,134
|
)
|
|
Reduction of employee stock notes receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
|
Balance as of December 31, 2011
|
—
|
|
|
35,643,102
|
|
|
11,495,377
|
|
|
—
|
|
|
356
|
|
|
115
|
|
|
49,245
|
|
|
1,017,629
|
|
|
—
|
|
|
(1,140
|
)
|
|
—
|
|
|
1,066,205
|
|
|
Issuance of noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
177,997
|
|
|
—
|
|
|
—
|
|
|
431
|
|
|
178,428
|
|
|
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,813
|
|
|
—
|
|
|
—
|
|
|
2,813
|
|
|
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(431
|
)
|
|
(431
|
)
|
|
Cash dividends on Class A and Class B common stock - $1.40 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66,237
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66,237
|
)
|
|
Issuance of common stock, net of forfeitures
|
—
|
|
|
279,834
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3,913
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,916
|
|
|
Compensation expense for stock based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,188
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,188
|
|
|
Repurchase of common stock
|
—
|
|
|
(806,023
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(22,806
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,814
|
)
|
|
Reduction of employee stock notes receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,140
|
|
|
—
|
|
|
1,140
|
|
|
Balance as of December 31, 2012
|
—
|
|
|
35,116,913
|
|
|
11,495,377
|
|
|
—
|
|
|
351
|
|
|
115
|
|
|
32,540
|
|
|
1,129,389
|
|
|
2,813
|
|
|
—
|
|
|
5
|
|
|
1,165,213
|
|
|
Issuance of noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
302,672
|
|
|
—
|
|
|
—
|
|
|
1,669
|
|
|
304,341
|
|
|
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,006
|
|
|
—
|
|
|
—
|
|
|
2,006
|
|
|
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,351
|
)
|
|
(1,351
|
)
|
|
Cash dividends on Class A and Class B common stock - $0.40 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,569
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,569
|
)
|
|
Issuance of common stock, net of forfeitures
|
—
|
|
|
157,684
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2,377
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,379
|
|
|
Compensation expense for stock based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,102
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,102
|
|
|
Repurchase of common stock
|
—
|
|
|
(393,259
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(13,132
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,136
|
)
|
|
Balance as of December 31, 2013
|
—
|
|
|
34,881,338
|
|
|
11,495,377
|
|
|
$
|
—
|
|
|
349
|
|
|
115
|
|
|
24,887
|
|
|
1,413,492
|
|
|
4,819
|
|
|
—
|
|
|
328
|
|
|
1,443,990
|
|
NELNET, INC. AND SUBSIDIARIES
|
||||||||||
Consolidated Statements of Cash Flows
|
||||||||||
Years ended December 31, 2013, 2012, and 2011
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||
|
|
(Dollars in thousands)
|
||||||||
Net income attributable to Nelnet, Inc.
|
|
$
|
302,672
|
|
|
177,997
|
|
|
204,335
|
|
Net income attributable to noncontrolling interest
|
|
1,669
|
|
|
431
|
|
|
—
|
|
|
Net income
|
|
304,341
|
|
|
178,428
|
|
|
204,335
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities, net of asset acquisitions:
|
|
|
|
|
|
|
|
|
||
Depreciation and amortization, including debt discounts and student loan premiums and deferred origination costs
|
|
79,484
|
|
|
116,781
|
|
|
103,472
|
|
|
Student loan discount accretion
|
|
(36,258
|
)
|
|
(44,380
|
)
|
|
(30,915
|
)
|
|
Provision for loan losses
|
|
18,500
|
|
|
21,500
|
|
|
21,250
|
|
|
Derivative market value adjustment
|
|
(83,878
|
)
|
|
27,833
|
|
|
50,513
|
|
|
Foreign currency transaction adjustment
|
|
35,285
|
|
|
19,561
|
|
|
(32,706
|
)
|
|
Proceeds from the termination/amendment of derivative instruments, net of payments
|
|
65,890
|
|
|
(6,005
|
)
|
|
3,365
|
|
|
Gain on sale of loans
|
|
(33
|
)
|
|
(116
|
)
|
|
(1,378
|
)
|
|
Gain from debt repurchases
|
|
(11,666
|
)
|
|
(4,023
|
)
|
|
(6,962
|
)
|
|
Gain from sales of available-for-sale securities, net
|
|
(5,938
|
)
|
|
(5,798
|
)
|
|
—
|
|
|
Deferred income tax expense (benefit)
|
|
2,539
|
|
|
(23,829
|
)
|
|
(7,726
|
)
|
|
Non-cash compensation expense
|
|
3,329
|
|
|
3,020
|
|
|
2,029
|
|
|
Other
|
|
112
|
|
|
1,945
|
|
|
(2,394
|
)
|
|
Decrease in accrued interest receivable
|
|
8,341
|
|
|
883
|
|
|
29,220
|
|
|
Decrease (increase) in accounts receivable
|
|
7,566
|
|
|
16
|
|
|
(11,040
|
)
|
|
(Increase) decrease in other assets
|
|
(4,783
|
)
|
|
2,322
|
|
|
(3,176
|
)
|
|
Decrease in accrued interest payable
|
|
(433
|
)
|
|
(4,864
|
)
|
|
(538
|
)
|
|
Increase (decrease) in other liabilities
|
|
4,782
|
|
|
16,044
|
|
|
(6,487
|
)
|
|
Net cash provided by operating activities
|
|
387,180
|
|
|
299,318
|
|
|
310,862
|
|
|
Cash flows from investing activities, net of asset acquisitions:
|
|
|
|
|
|
|
|
|
||
Purchases of student loans and student loan residual interests
|
|
(1,925,703
|
)
|
|
(3,776,690
|
)
|
|
(976,837
|
)
|
|
Purchases of student loans from a related party
|
|
(466,973
|
)
|
|
(321
|
)
|
|
(112
|
)
|
|
Net proceeds from student loan repayments, claims, capitalized interest, participations, and other
|
|
2,852,177
|
|
|
3,112,744
|
|
|
2,235,719
|
|
|
Proceeds from sale of student loans
|
|
43,292
|
|
|
107,093
|
|
|
121,344
|
|
|
Purchases of available-for-sale securities
|
|
(219,894
|
)
|
|
(190,250
|
)
|
|
—
|
|
|
Proceeds from sales of available-for-sale securities
|
|
103,250
|
|
|
165,854
|
|
|
—
|
|
|
Purchases of other investments, net
|
|
(20,302
|
)
|
|
—
|
|
|
—
|
|
|
Purchases of property and equipment, net
|
|
(17,010
|
)
|
|
(9,944
|
)
|
|
(14,167
|
)
|
|
Decrease (increase) in restricted cash and investments, net
|
|
147,743
|
|
|
(201,140
|
)
|
|
87,905
|
|
|
Asset acquisitions, including contingency payments
|
|
—
|
|
|
—
|
|
|
(14,029
|
)
|
|
Net cash provided by (used in) investing activities
|
|
496,580
|
|
|
(792,654
|
)
|
|
1,439,823
|
|
|
Cash flows from financing activities, net of borrowings assumed:
|
|
|
|
|
|
|
|
|
||
Payments on bonds and notes payable
|
|
(5,153,057
|
)
|
|
(4,444,099
|
)
|
|
(3,045,663
|
)
|
|
Proceeds from issuance of bonds and notes payable
|
|
4,312,720
|
|
|
5,066,950
|
|
|
1,100,384
|
|
|
Payments of debt issuance costs
|
|
(13,697
|
)
|
|
(18,197
|
)
|
|
(2,282
|
)
|
|
Dividends paid
|
|
(18,569
|
)
|
|
(66,237
|
)
|
|
(17,763
|
)
|
|
Repurchases of common stock
|
|
(13,136
|
)
|
|
(22,814
|
)
|
|
(27,134
|
)
|
|
Proceeds from issuance of common stock
|
|
561
|
|
|
480
|
|
|
512
|
|
|
Payments received on employee stock notes receivable
|
|
—
|
|
|
1,140
|
|
|
30
|
|
|
Issuance of noncontrolling interest
|
|
5
|
|
|
5
|
|
|
—
|
|
|
Distribution to noncontrolling interest
|
|
(1,351
|
)
|
|
(431
|
)
|
|
—
|
|
|
Net cash (used in) provided by financing activities
|
|
(886,524
|
)
|
|
516,797
|
|
|
(1,991,916
|
)
|
|
Net (decrease) increase in cash and cash equivalents
|
|
(2,764
|
)
|
|
23,461
|
|
|
(241,231
|
)
|
|
Cash and cash equivalents, beginning of year
|
|
66,031
|
|
|
42,570
|
|
|
283,801
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
63,267
|
|
|
66,031
|
|
|
42,570
|
|
|
|
|
|
|
|
|
||||
Cash disbursements made for:
|
|
|
|
|
|
|
|
|
||
Interest
|
|
$
|
190,998
|
|
|
234,606
|
|
|
206,117
|
|
Income taxes, net of refunds
|
|
$
|
154,840
|
|
|
114,758
|
|
|
133,180
|
|
Noncash activity:
|
|
|
|
|
|
|
||||
Investing activity - student loans and other assets acquired
|
|
$
|
1,715,260
|
|
|
—
|
|
|
1,760,583
|
|
Financing activity - borrowings and other liabilities assumed in acquisition of student loans
|
|
$
|
1,676,761
|
|
|
—
|
|
|
1,692,241
|
|
|
|
|
|
|
|
|
1.
|
Description of Business
|
•
|
Servicing federally-owned student loans for the Department
|
•
|
Servicing FFELP loans
|
•
|
Originating and servicing non-federally insured student loans
|
•
|
Servicing and outsourcing services for FFELP guaranty agencies, including FFELP guaranty collection services
|
•
|
Providing student loan servicing software and other information technology products and services
|
•
|
Inquiry Generation - Services include delivering qualified inquiries or clicks to third-party customers, primarily higher education institutions.
|
•
|
Inquiry Management (Agency) - Services include managing the marketing activities for third-party customers, primarily higher education institutions, in order to provide qualified inquiries or clicks.
|
•
|
Inquiry Management (Software) - Products and services include the licensing of software to third-party customers, primarily higher education institutions. This software is also used internally by the Company. The inquiry management software has been adapted so that it can be offered as a hosted software solution usable by third parties to manage and obtain qualified inquiries or clicks.
|
•
|
Digital Marketing - Services include interactive services to connect students to colleges and universities and are sold primarily based on subscriptions, and also include editing services for admission essays.
|
•
|
Content Solutions - Products and services include test preparation study guides, school directories and databases, career exploration guides, on-line courses, scholarship search and selection data, career planning, and on-line information about colleges and universities.
|
2.
|
Summary of Significant Accounting Policies and Practices
|
•
|
Level 1: Quoted prices for
identical
instruments in active markets. The types of financial instruments included in Level 1 are highly liquid instruments with quoted prices.
|
•
|
Level 2: Quoted prices for
similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose primary value drivers are observable.
|
•
|
Level 3: Instruments whose primary value drivers are
unobservable
. Inputs are developed based on the best information available; however, significant judgment is required by management in developing the inputs.
|
•
|
Loan and guaranty servicing fees
– Loan servicing fees are determined according to individual agreements with customers and are calculated based on the dollar value of loans, number of loans, or number of borrowers serviced for each customer. Guaranty servicing fees are generally calculated based on the number of loans serviced, volume of loans serviced, or amounts collected. Revenue is recognized over the period in which services are provided to customers, and when ultimate collection is assured.
|
•
|
Guaranty collections revenue
– Guaranty collections revenue is earned when collected. Collection costs paid to third parties associated with this revenue is expensed upon successful collection.
|
•
|
Software services revenue
– Software services revenue is determined from individual agreements with customers and includes license and maintenance fees associated with student loan software products. Computer and software consulting and remote hosting revenues are recognized over the period in which services are provided to customers.
|
•
|
Inquiry Generation and Management (Agency)
- This revenue is derived primarily from fees which are earned through the delivery of qualified inquiries or clicks. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. Delivery is deemed to have occurred at the time a qualified inquiry or click is delivered to the customer, provided that no significant obligations remain. From time to time, the Company may agree to credit certain inquiries or clicks if they fail to meet the contractual or other guidelines of a particular client. The Company has established a sales reserve based on historical experience. To date, such credits have been immaterial and within management’s expectations.
|
•
|
Inquiry Management (Software)
- This revenue is determined from individual agreements with customers and includes license and maintenance fees associated with inquiry management software products. Remote hosting revenues are recognized over the period in which services are provided to customers.
|
•
|
Digital Marketing
- Revenue from sales of subscriptions for interactive services to connect students to colleges and universities is recognized ratably over the term of the contract as earned. Subscription revenue received or receivable in advance of the delivery of services is included in deferred revenue. Revenue for editing services for admission essays is recognized over the period in which services are provided to customers.
|
•
|
Content Solutions
- Several content solutions services are sold based on subscriptions. Revenue from sales of subscription services is recognized ratably over the term of the contract as earned. Subscription revenue received or receivable in advance of the delivery of services is included in deferred revenue. Revenue from the sale of print products is generally earned and recognized, net of estimated returns, upon shipment or delivery. All other revenue is recognized over the period in which services are provided to customers.
|
|
As of December 31,
|
|||||
|
2013
|
|
2012
|
|||
Federally insured loans
|
|
|
|
|||
Stafford and other
|
$
|
6,686,626
|
|
|
7,261,114
|
|
Consolidation
|
19,363,577
|
|
|
17,708,732
|
|
|
Total
|
26,050,203
|
|
|
24,969,846
|
|
|
Non-federally insured loans
|
71,103
|
|
|
26,034
|
|
|
|
26,121,306
|
|
|
24,995,880
|
|
|
Loan discount, net of unamortized loan premiums and deferred origination costs (a)
|
(158,595
|
)
|
|
(113,357
|
)
|
|
Allowance for loan losses – federally insured loans
|
(43,440
|
)
|
|
(40,120
|
)
|
|
Allowance for loan losses – non-federally insured loans
|
(11,682
|
)
|
|
(11,782
|
)
|
|
|
$
|
25,907,589
|
|
|
24,830,621
|
|
|
|
|
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Balance at beginning of period
|
$
|
51,902
|
|
|
48,482
|
|
|
43,626
|
|
Provision for loan losses:
|
|
|
|
|
|
||||
Federally insured loans
|
20,000
|
|
|
22,000
|
|
|
20,000
|
|
|
Non-federally insured loans
|
(1,500
|
)
|
|
(500
|
)
|
|
1,250
|
|
|
Total provision for loan losses
|
18,500
|
|
|
21,500
|
|
|
21,250
|
|
|
Charge-offs:
|
|
|
|
|
|
|
|
||
Federally insured loans
|
(15,588
|
)
|
|
(21,217
|
)
|
|
(17,166
|
)
|
|
Non-federally insured loans
|
(3,683
|
)
|
|
(3,508
|
)
|
|
(4,147
|
)
|
|
Total charge-offs
|
(19,271
|
)
|
|
(24,725
|
)
|
|
(21,313
|
)
|
|
Recoveries - non-federally insured loans
|
1,577
|
|
|
1,419
|
|
|
1,310
|
|
|
Purchase (sale) of federally insured loans, net
|
(1,093
|
)
|
|
2,133
|
|
|
1,463
|
|
|
Transfer from repurchase obligation related to non-federally insured loans repurchased, net
|
3,507
|
|
|
3,093
|
|
|
2,146
|
|
|
Balance at end of period
|
$
|
55,122
|
|
|
51,902
|
|
|
48,482
|
|
|
|
|
|
|
|
||||
Allocation of the allowance for loan losses:
|
|
|
|
|
|
|
|
||
Federally insured loans
|
$
|
43,440
|
|
|
40,120
|
|
|
37,205
|
|
Non-federally insured loans
|
11,682
|
|
|
11,782
|
|
|
11,277
|
|
|
Total allowance for loan losses
|
$
|
55,122
|
|
|
51,902
|
|
|
48,482
|
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Beginning balance
|
$
|
16,130
|
|
|
19,223
|
|
|
12,600
|
|
Repurchase obligation transferred to the allowance for loan losses related to loans repurchased, net
|
(3,507
|
)
|
|
(3,093
|
)
|
|
(2,146
|
)
|
|
Repurchase obligation associated with loans sold
|
3,520
|
|
|
—
|
|
|
6,269
|
|
|
Current period expense
|
—
|
|
|
—
|
|
|
2,500
|
|
|
Ending balance
|
$
|
16,143
|
|
|
16,130
|
|
|
19,223
|
|
|
As of December 31,
|
|||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|||||||||||||||
Federally insured loans, excluding rehabilitation loans:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans in-school/grace/deferment (a)
|
$
|
2,618,390
|
|
|
|
|
$
|
2,949,320
|
|
|
|
|
$
|
3,623,284
|
|
|
|
|||
Loans in forbearance (b)
|
2,954,495
|
|
|
|
|
2,992,023
|
|
|
|
|
3,267,771
|
|
|
|
||||||
Loans in repayment status:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans current
|
15,251,869
|
|
|
86.1
|
%
|
|
14,583,044
|
|
|
87.6
|
%
|
|
14,422,192
|
|
|
84.6
|
%
|
|||
Loans delinquent 31-60 days (c)
|
768,600
|
|
|
4.3
|
|
|
652,351
|
|
|
3.9
|
|
|
821,166
|
|
|
4.8
|
|
|||
Loans delinquent 61-90 days (c)
|
426,089
|
|
|
2.5
|
|
|
330,885
|
|
|
2.0
|
|
|
388,542
|
|
|
2.3
|
|
|||
Loans delinquent 91-120 days (c)
|
281,991
|
|
|
1.6
|
|
|
247,381
|
|
|
1.5
|
|
|
289,173
|
|
|
1.7
|
|
|||
Loans delinquent 121-270 days (c)
|
712,204
|
|
|
4.0
|
|
|
603,942
|
|
|
3.6
|
|
|
811,914
|
|
|
4.8
|
|
|||
Loans delinquent 271 days or greater (c)(d)
|
269,066
|
|
|
1.5
|
|
|
220,798
|
|
|
1.4
|
|
|
307,861
|
|
|
1.8
|
|
|||
Total loans in repayment
|
17,709,819
|
|
|
100.0
|
%
|
|
16,638,401
|
|
|
100.0
|
%
|
|
17,040,848
|
|
|
100.0
|
%
|
|||
Total federally insured loans, excluding rehabilitation loans
|
$
|
23,282,704
|
|
|
|
|
|
$
|
22,579,744
|
|
|
|
|
|
$
|
23,931,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Rehabilitation loans:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans in-school/grace/deferment (a)
|
$
|
254,115
|
|
|
|
|
$
|
150,317
|
|
|
|
|
$
|
41,615
|
|
|
|
|||
Loans in forbearance (b)
|
415,530
|
|
|
|
|
330,278
|
|
|
|
|
62,681
|
|
|
|
||||||
Loans in repayment status:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans current
|
1,086,053
|
|
|
51.8
|
%
|
|
670,205
|
|
|
35.1
|
%
|
|
178,180
|
|
|
60.0
|
%
|
|||
Loans delinquent 31-60 days (c)
|
198,718
|
|
|
9.5
|
|
|
113,795
|
|
|
6.0
|
|
|
23,038
|
|
|
7.7
|
|
|||
Loans delinquent 61-90 days (c)
|
124,244
|
|
|
5.9
|
|
|
79,691
|
|
|
4.2
|
|
|
18,552
|
|
|
6.3
|
|
|||
Loans delinquent 91-120 days (c)
|
108,800
|
|
|
5.2
|
|
|
186,278
|
|
|
9.8
|
|
|
18,607
|
|
|
6.3
|
|
|||
Loans delinquent 121-270 days (c)
|
405,732
|
|
|
19.3
|
|
|
633,001
|
|
|
33.1
|
|
|
43,743
|
|
|
14.8
|
|
|||
Loans delinquent 271 days or greater (c)(d)
|
174,307
|
|
|
8.3
|
|
|
226,537
|
|
|
11.8
|
|
|
14,390
|
|
|
4.9
|
|
|||
Total loans in repayment
|
2,097,854
|
|
|
100.0
|
%
|
|
1,909,507
|
|
|
100.0
|
%
|
|
296,510
|
|
|
100.0
|
%
|
|||
Total rehabilitation loans
|
2,767,499
|
|
|
|
|
|
2,390,102
|
|
|
|
|
|
400,806
|
|
|
|
||||
Total federally insured loans
|
$
|
26,050,203
|
|
|
|
|
$
|
24,969,846
|
|
|
|
|
$
|
24,332,709
|
|
|
|
(a)
|
Loans for borrowers who still may be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans,
e.g.
, residency periods for medical students or a grace period for bar exam preparation for law students.
|
(b)
|
Loans for borrowers who have temporarily ceased making full payments due to hardship or other factors, according to a schedule approved by the servicer consistent with the established loan program servicing procedures and policies.
|
(c)
|
The period of delinquency is based on the number of days scheduled payments are contractually past due and relate to repayment loans, that is, receivables not charged off, and not in school, grace, deferment, or forbearance.
|
(d)
|
A portion of loans included in loans delinquent 271 days or greater includes loans in claim status, which are loans that have gone into default and have been submitted to the guaranty agency.
|
|
As of December 31, 2013
|
||||||
|
Carrying
amount
|
|
Interest rate
range
|
|
Final maturity
|
||
Variable-rate bonds and notes issued in asset-backed securitizations:
|
|
|
|
|
|
||
Bonds and notes based on indices
|
$
|
23,479,893
|
|
|
0.25% - 6.90%
|
|
5/25/18 - 8/26/52
|
Bonds and notes based on auction or remarketing
|
1,134,250
|
|
|
0.07% - 2.17%
|
|
5/1/28 - 11/26/46
|
|
Total variable-rate bonds and notes
|
24,614,143
|
|
|
|
|
|
|
FFELP warehouse facilities
|
1,396,344
|
|
|
0.17% - 0.25%
|
|
1/17/16 - 6/12/16
|
|
Unsecured line of credit
|
45,000
|
|
|
1.67%
|
|
3/28/18
|
|
Unsecured debt - Junior Subordinated Hybrid Securities
|
96,457
|
|
|
3.62%
|
|
9/15/61
|
|
Other borrowings
|
61,401
|
|
|
1.67% - 5.10%
|
|
4/11/14 - 11/11/15
|
|
|
26,213,345
|
|
|
|
|
|
|
Discount on bonds and notes payable
|
(258,056
|
)
|
|
|
|
|
|
Total
|
$
|
25,955,289
|
|
|
|
|
|
|
As of December 31, 2012
|
||||||
|
Carrying
amount
|
|
Interest rate
range
|
|
Final maturity
|
||
Variable-rate bonds and notes issued in asset-backed securitizations:
|
|
|
|
|
|
||
Bonds and notes based on indices
|
$
|
21,185,140
|
|
|
0.32% - 6.90%
|
|
11/25/15 - 8/26/52
|
Bonds and notes based on auction or remarketing
|
969,925
|
|
|
0.15% - 2.14%
|
|
5/1/28 - 5/25/42
|
|
Total variable-rate bonds and notes
|
22,155,065
|
|
|
|
|
|
|
FFELP warehouse facilities
|
1,554,151
|
|
|
0.21% - 0.29%
|
|
1/31/15 - 6/30/15
|
|
Department of Education Conduit
|
1,344,513
|
|
|
0.82%
|
|
1/19/14
|
|
Unsecured line of credit
|
55,000
|
|
|
1.71%
|
|
2/17/16
|
|
Unsecured debt - Junior Subordinated Hybrid Securities
|
99,232
|
|
|
3.68%
|
|
9/15/61
|
|
Other borrowings
|
62,904
|
|
|
1.50% - 5.10%
|
|
11/14/13 - 11/11/15
|
|
|
25,270,865
|
|
|
|
|
|
|
Discount on bonds and notes payable
|
(172,030
|
)
|
|
|
|
|
|
Total
|
$
|
25,098,835
|
|
|
|
|
|
|
|
NHELP-III
|
|
NHELP-II
|
|
NFSLW-I
|
|
Total
|
|||||
Maximum financing amount
|
|
$
|
750,000
|
|
|
500,000
|
|
|
500,000
|
|
|
1,750,000
|
|
Amount outstanding
|
|
577,918
|
|
|
339,359
|
|
|
479,067
|
|
|
1,396,344
|
|
|
Amount available
|
|
172,082
|
|
|
160,641
|
|
|
20,933
|
|
|
353,656
|
|
|
Expiration of liquidity provisions
|
|
January 16, 2014
|
|
(a)
|
February 28, 2014
|
|
(b)
|
June 12, 2014
|
|
|
|
||
Final maturity date
|
|
January 17, 2016
|
|
|
February 28, 2016
|
|
(b)
|
June 12, 2016
|
|
|
|
||
Maximum advance rates
|
|
92.2 - 95.0%
|
|
|
84.5 - 94.5%
|
|
|
92.0 - 98.0%
|
|
|
|
||
Minimum advance rates
|
|
92.2 - 95.0%
|
|
|
84.5 - 94.5%
|
|
|
84.0 - 90.0%
|
|
|
|
||
Advanced as equity support
|
|
$
|
34,762
|
|
|
31,676
|
|
|
22,073
|
|
|
88,511
|
|
|
|
Securitizations issued during the year ended December 31, 2013
|
||||||||||||||||||||
|
|
2013-1
|
|
2013-2 (a)
|
|
2013-3
|
|
2013-4
|
|
2013-5 (a)
|
|
|
|
Total
|
||||||||
Date securities issued
|
|
1/31/13
|
|
|
2/28/13
|
|
|
4/30/13
|
|
|
6/21/13
|
|
|
9/30/13
|
|
|
|
|
|
|||
Total original principal amount
|
|
$
|
437,500
|
|
|
1,122,000
|
|
|
765,000
|
|
|
453,000
|
|
|
399,000
|
|
|
|
|
$
|
3,176,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Class A senior notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total original principal amount
|
|
$
|
428,000
|
|
|
1,122,000
|
|
|
745,000
|
|
|
440,000
|
|
|
399,000
|
|
|
|
|
3,134,000
|
|
|
Bond discount
|
|
—
|
|
|
(3,325
|
)
|
|
—
|
|
|
(1,690
|
)
|
|
(4,881
|
)
|
|
|
|
(9,896
|
)
|
||
Issue price
|
|
$
|
428,000
|
|
|
1,118,675
|
|
|
745,000
|
|
|
438,310
|
|
|
394,119
|
|
|
|
|
3,124,104
|
|
|
Cost of funds (1-month LIBOR plus:)
|
|
0.60
|
%
|
|
0.50
|
%
|
|
0.50
|
%
|
|
0.50
|
%
|
|
0.63
|
%
|
|
|
|
|
|||
Final maturity date
|
|
6/25/41
|
|
|
7/25/40
|
|
|
2/25/37
|
|
|
12/26/42
|
|
|
1/25/37
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Class B subordinated notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total original principal amount
|
|
$
|
9,500
|
|
|
|
|
20,000
|
|
|
13,000
|
|
|
|
|
|
|
42,500
|
|
|||
Bond discount
|
|
(1,525
|
)
|
|
|
|
(1,762
|
)
|
|
(1,804
|
)
|
|
|
|
|
|
(5,091
|
)
|
||||
Issue price
|
|
$
|
7,975
|
|
|
|
|
18,238
|
|
|
11,196
|
|
|
|
|
|
|
37,409
|
|
|||
Cost of funds (1-month LIBOR plus:)
|
|
1.50
|
%
|
|
|
|
1.50
|
%
|
|
1.50
|
%
|
|
|
|
|
|
|
|||||
Final maturity date
|
|
3/25/48
|
|
|
|
|
7/25/47
|
|
|
1/25/47
|
|
|
|
|
|
|
|
|
|
Securitizations issued during the year ended December 31, 2012
|
|
|
||||||||||||||||||||
|
|
2012-1 (a)
|
|
2012-2 (a)
|
|
2012-3 (a)
|
|
2012-4
|
|
2012-5
|
|
2012-6
|
|
Total
|
||||||||||
Date securities issued
|
|
5/9/12
|
|
|
6/11/12
|
|
|
7/31/12
|
|
|
10/11/12
|
|
|
11/8/12
|
|
|
12/12/12
|
|
|
|
|
|||
Total original principal amount
|
|
$
|
336,300
|
|
|
323,000
|
|
|
414,300
|
|
|
937,500
|
|
|
1,174,000
|
|
|
1,012,000
|
|
|
$
|
4,197,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Class A senior notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total original principal amount
|
|
$
|
336,300
|
|
|
323,000
|
|
|
414,300
|
|
|
920,000
|
|
|
1,144,000
|
|
|
987,000
|
|
|
4,124,600
|
|
||
Bond discount
|
|
—
|
|
|
(3,609
|
)
|
|
(1,275
|
)
|
|
—
|
|
|
(7,642
|
)
|
|
(3,399
|
)
|
|
(15,925
|
)
|
|||
Issue price
|
|
$
|
336,300
|
|
|
319,391
|
|
|
413,025
|
|
|
920,000
|
|
|
1,136,358
|
|
|
983,601
|
|
|
4,108,675
|
|
||
Cost of funds (1-month LIBOR plus:)
|
|
0.80
|
%
|
|
0.80
|
%
|
|
0.70
|
%
|
|
0.70
|
%
|
|
0.60
|
%
|
|
0.60
|
%
|
|
|
|
|||
Final maturity date
|
|
12/27/39
|
|
|
12/26/33
|
|
|
3/26/40
|
|
|
9/27/38
|
|
|
10/27/36
|
|
|
3/27/45
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Class B subordinated notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total original principal amount
|
|
|
|
|
|
|
|
$
|
17,500
|
|
|
30,000
|
|
|
25,000
|
|
|
72,500
|
|
|||||
Bond discount
|
|
|
|
|
|
|
|
(4,900
|
)
|
|
(10,011
|
)
|
|
(6,937
|
)
|
|
(21,848
|
)
|
||||||
Issue price
|
|
|
|
|
|
|
|
$
|
12,600
|
|
|
19,989
|
|
|
18,063
|
|
|
50,652
|
|
|||||
Cost of funds (1-month LIBOR plus:)
|
|
|
|
|
|
|
|
1.00
|
%
|
|
1.00
|
%
|
|
1.50
|
%
|
|
|
|
||||||
Final maturity date
|
|
|
|
|
|
|
|
7/26/49
|
|
|
12/28/43
|
|
|
8/26/52
|
|
|
|
|
(a)
|
Total original principal amount excludes the Class B subordinated tranches for the 2012-1, 2012-2, 2012-3, 2013-2, and 2013-5 transactions totaling
$7.6 million
,
$10.0 million
,
$10.0 million
,
$34.0 million
, and
$9.0 million
, respectively, that were retained at issuance.
As of December 31, 2013
, the Company has a total of
$85.5 million
(par value) of its own Class B subordinated notes remaining from prior completed asset-backed securitizations that are not included in the Company's consolidated balance sheet. If the Company sells these notes to third parties, the Company would obtain cash
|
•
|
A minimum consolidated net worth
|
•
|
A minimum adjusted EBITDA to corporate debt interest (over the last four rolling quarters)
|
•
|
A limitation on recourse indebtedness
|
•
|
A limitation on the percentage of non-federally insured loans in the Company’s portfolio
|
2014
|
|
$
|
56,900
|
|
2015
|
|
4,501
|
|
|
2016
|
|
1,396,344
|
|
|
2017
|
|
—
|
|
|
2018
|
|
447,245
|
|
|
2019 and thereafter
|
|
24,308,355
|
|
|
|
|
$
|
26,213,345
|
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Gain on sale of loans
|
$
|
33
|
|
|
116
|
|
|
1,378
|
|
Gain from debt repurchases (a)
|
11,666
|
|
|
4,023
|
|
|
6,962
|
|
|
|
$
|
11,699
|
|
|
4,139
|
|
|
8,340
|
|
(a)
|
The activity included in "Gain from debt repurchases" is detailed below:
|
|
Year ended December 31, 2013
|
|
Year ended December 31, 2012
|
|
Year ended December 31, 2011
|
||||||||||||||||||||||
|
Par value
|
|
Purchase
price
|
|
Gain
|
|
Par value
|
|
Purchase
price
|
|
Gain
|
|
Par value
|
|
Purchase
price
|
|
Gain
|
||||||||||
Hybrid Securities
|
$
|
2,775
|
|
|
2,080
|
|
|
695
|
|
|
1,465
|
|
|
1,140
|
|
|
325
|
|
|
62,558
|
|
|
55,651
|
|
|
6,907
|
|
Asset-backed securities
|
87,696
|
|
|
76,725
|
|
|
10,971
|
|
|
134,667
|
|
|
130,969
|
|
|
3,698
|
|
|
12,254
|
|
|
12,199
|
|
|
55
|
|
|
|
$
|
90,471
|
|
|
78,805
|
|
|
11,666
|
|
|
136,132
|
|
|
132,109
|
|
|
4,023
|
|
|
74,812
|
|
|
67,850
|
|
|
6,962
|
|
(c)
|
The weighted average rate paid by the Company on the 1:3 Basis Swaps as of
December 31, 2013 and 2012
, was
one-month LIBOR
plus
3.5
basis points and one-month LIBOR plus
3.3
basis points, respectively.
|
|
|
|
As of December 31, 2013
|
|
As of December 31, 2012
|
||||||||||
|
Maturity
|
|
Notional amount
|
|
Weighted average fixed rate paid by the Company (a)
|
|
Notional amount
|
|
Weighted average fixed rate paid by the Company (a)
|
||||||
|
|
|
|
|
|||||||||||
|
2013
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
3,150,000
|
|
|
0.71
|
%
|
|
2014
|
|
1,750,000
|
|
|
0.71
|
|
|
1,750,000
|
|
|
0.71
|
|
||
|
2015
|
|
1,100,000
|
|
|
0.89
|
|
|
1,100,000
|
|
|
0.89
|
|
||
|
2016
|
|
750,000
|
|
|
0.85
|
|
|
750,000
|
|
|
0.85
|
|
||
|
2017
|
|
1,250,000
|
|
|
0.86
|
|
|
750,000
|
|
|
0.99
|
|
||
|
|
|
$
|
4,850,000
|
|
|
0.81
|
%
|
|
$
|
7,500,000
|
|
|
0.78
|
%
|
(a)
|
For all interest rate derivatives, the Company receives discrete three-month LIBOR.
|
(a)
|
For all interest rate derivatives, the Company receives discrete three-month LIBOR.
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Re-measurement of Euro Notes
|
$
|
(35,285
|
)
|
|
(19,561
|
)
|
|
32,706
|
|
Change in fair value of cross currency interest rate swaps
|
26,354
|
|
|
2,210
|
|
|
(14,287
|
)
|
|
Total impact to consolidated statements of income - income (expense) (a)
|
$
|
(8,931
|
)
|
|
(17,351
|
)
|
|
18,419
|
|
(a)
|
The financial statement impact of the above items is included in "Derivative market value and foreign currency adjustments and derivative settlements, net" in the Company's consolidated statements of income.
|
|
Fair value of asset derivatives
|
|
Fair value of liability derivatives
|
|||||||||
|
As of
|
|
As of
|
|
As of
|
|
As of
|
|||||
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2013
|
|
December 31, 2012
|
|||||
1:3 basis swaps
|
$
|
18,490
|
|
|
12,239
|
|
|
—
|
|
|
1,215
|
|
Interest rate swaps - floor income hedges
|
7,183
|
|
|
—
|
|
|
15,849
|
|
|
45,913
|
|
|
Interest rate swaps - hybrid debt hedges
|
—
|
|
|
—
|
|
|
2,119
|
|
|
23,762
|
|
|
Cross-currency interest rate swaps
|
36,834
|
|
|
82,841
|
|
|
—
|
|
|
—
|
|
|
Other
|
—
|
|
|
2,361
|
|
|
—
|
|
|
—
|
|
|
Total
|
$
|
62,507
|
|
|
97,441
|
|
|
17,968
|
|
|
70,890
|
|
|
|
|
|
Gross amounts not offset in the consolidated balance sheets
|
|
|
|||||||
Derivative assets
|
|
Gross amounts of recognized assets presented in the consolidated balance sheets
|
|
Derivatives subject to enforceable master netting arrangement
|
|
Cash collateral received (a)
|
|
Net asset (liability)
|
|||||
Balance as of December 31, 2013
|
|
$
|
62,507
|
|
|
(15,437
|
)
|
|
(15,959
|
)
|
|
31,111
|
|
Balance as of December 31, 2012
|
|
97,441
|
|
|
(13,234
|
)
|
|
(19,993
|
)
|
|
64,214
|
|
|
|
|
|
Gross amounts not offset in the consolidated balance sheets
|
|
|
|||||||
Derivative liabilities
|
|
Gross amounts of recognized liabilities presented in the consolidated balance sheets
|
|
Derivatives subject to enforceable master netting arrangement
|
|
Cash collateral pledged (b)
|
|
Net asset (liability)
|
|||||
Balance as of December 31, 2013
|
|
$
|
(17,969
|
)
|
|
15,437
|
|
|
3,630
|
|
|
1,098
|
|
Balance as of December 31, 2012
|
|
(70,890
|
)
|
|
13,234
|
|
|
63,128
|
|
|
5,472
|
|
(a)
|
As of
December 31, 2013
and
December 31, 2012
, the trustee for certain of the Company's asset-backed securitization transactions held
$16.0 million
and
$20.0 million
, respectively, of collateral from the counterparty on the cross-currency interest rate swaps.
|
(b)
|
As of
December 31, 2013
and
December 31, 2012
, the Company had
$3.6 million
and
$63.1 million
, respectively, posted as collateral to derivative counterparties, which is included in “restricted cash and investments” in the Company's consolidated balance sheet.
|
|
|
Year ended December 31,
|
||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||
Settlements:
|
|
|
|
|
|
|
|
|
||
1:3 basis swaps
|
|
$
|
3,301
|
|
|
4,495
|
|
|
1,446
|
|
Interest rate swaps - floor income hedges
|
|
(31,022
|
)
|
|
(19,270
|
)
|
|
(20,246
|
)
|
|
Interest rate swaps - hybrid debt hedges
|
|
(1,670
|
)
|
|
(2,231
|
)
|
|
(744
|
)
|
|
Cross-currency interest rate swaps
|
|
(245
|
)
|
|
3,228
|
|
|
11,877
|
|
|
Other
|
|
—
|
|
|
(244
|
)
|
|
(173
|
)
|
|
Total settlements - (expense) income
|
|
(29,636
|
)
|
|
(14,022
|
)
|
|
(7,840
|
)
|
|
Change in fair value:
|
|
|
|
|
|
|
|
|
|
|
1:3 basis swaps
|
|
7,467
|
|
|
676
|
|
|
1,114
|
|
|
Interest rate swaps - floor income hedges
|
|
36,719
|
|
|
(35,215
|
)
|
|
(12,169
|
)
|
|
Interest rate swaps - hybrid debt hedges
|
|
12,997
|
|
|
1,717
|
|
|
(25,475
|
)
|
|
Cross-currency interest rate swaps
|
|
26,354
|
|
|
2,210
|
|
|
(14,287
|
)
|
|
Other
|
|
341
|
|
|
2,779
|
|
|
304
|
|
|
Total change in fair value - income (expense)
|
|
83,878
|
|
|
(27,833
|
)
|
|
(50,513
|
)
|
|
Re-measurement of Euro Notes (foreign currency transaction adjustment) - income (expense)
|
|
(35,285
|
)
|
|
(19,561
|
)
|
|
32,706
|
|
|
Derivative market value and foreign currency adjustments and derivative settlements, net - income (expense)
|
|
$
|
18,957
|
|
|
(61,416
|
)
|
|
(25,647
|
)
|
|
As of December 31, 2013
|
|
As of December 31, 2012
|
||||||||||||||||||||||
|
Amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses (a)
|
|
Fair value
|
|
Amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Available-for-sale investments :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Student loan asset-backed and other debt securities (b)
|
$
|
171,931
|
|
|
7,111
|
|
|
(1,241
|
)
|
|
177,801
|
|
|
64,970
|
|
|
3,187
|
|
|
(179
|
)
|
|
67,978
|
|
|
Equity securities
|
1,502
|
|
|
1,783
|
|
|
(3
|
)
|
|
3,282
|
|
|
3,449
|
|
|
1,604
|
|
|
(180
|
)
|
|
4,873
|
|
||
Total available-for-sale investments
|
$
|
173,433
|
|
|
8,894
|
|
|
(1,244
|
)
|
|
181,083
|
|
|
68,419
|
|
|
4,791
|
|
|
(359
|
)
|
|
72,851
|
|
|
Trading investments :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Student loan asset-backed and other debt securities
|
|
|
|
|
|
|
10,957
|
|
|
|
|
|
|
|
|
10,461
|
|
||||||||
Total available-for-sale and trading investments
|
|
|
|
|
|
|
$
|
192,040
|
|
|
|
|
|
|
|
|
83,312
|
|
|||||||
Restricted Investments (c):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Guaranteed investment contracts - held-to-maturity
|
|
|
|
|
|
|
$
|
7,285
|
|
|
|
|
|
|
|
|
8,830
|
|
(a)
|
As of
December 31, 2013
, the Company considered the decline in market value of its available-for-sale investments to be temporary in nature and did not consider any of its investments other-than-temporarily impaired.
|
(b)
|
As of
December 31, 2013
, the stated maturities of the Company's student loan asset-backed securities and other debt securities classified as available-for-sale are shown in the following table:
|
Year of Maturity:
|
Amortized cost
|
|
Fair value
|
|||
Within 1 year
|
$
|
—
|
|
|
—
|
|
1-5 years
|
418
|
|
|
418
|
|
|
6-10 years
|
57
|
|
|
57
|
|
|
After 10 years
|
171,456
|
|
|
177,326
|
|
|
Total
|
$
|
171,931
|
|
|
177,801
|
|
(c)
|
Restricted investments are included in "restricted cash and investments" in the Company's consolidated balance sheets. The Company's restricted investments include cash balances that the Company's indentured securitization trusts deposit
|
|
|
Year ended December 31,
|
||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
||||
Gross realized gains
|
|
$
|
6,270
|
|
|
6,120
|
|
|
—
|
|
Gross realized losses
|
|
(332
|
)
|
|
(322
|
)
|
|
—
|
|
|
Trading securities:
|
|
|
|
|
|
|
||||
Unrealized gains (losses), net
|
|
221
|
|
|
254
|
|
|
430
|
|
|
Realized gains (losses), net
|
|
5
|
|
|
1,459
|
|
|
2,753
|
|
|
|
|
$
|
6,164
|
|
|
7,511
|
|
|
3,183
|
|
|
Student Loan and Guaranty Servicing
|
|
Tuition Payment Processing and Campus Commerce
|
|
Enrollment Services
|
|
Asset Generation and Management (a)
|
|
Total
|
||||||
Balance as of December 31, 2011, 2012, and 2013
|
$
|
8,596
|
|
|
58,086
|
|
|
8,553
|
|
|
41,883
|
|
|
117,118
|
|
(a)
|
As a result of the Reconciliation Act of 2010, the Company no longer originates new FFELP loans and net interest income of the Company's existing FFELP loan portfolio will decline over time as the Company's portfolio pays down. As a result, as this revenue stream winds down, goodwill impairment will be triggered for the Asset Generation and Management reporting unit due to the passage of time and depletion of projected cash flows stemming from its FFELP student loan portfolio. Other than the Asset Generation and Management reporting unit, management believes the elimination of new FFELP loan originations will not have an adverse impact on the fair value of the Company's other reporting units.
|
|
|
|
As of December 31,
|
|||||
|
Useful life
|
|
2013
|
|
2012
|
|||
Computer equipment and software
|
1-5 years
|
|
$
|
77,733
|
|
|
72,595
|
|
Office furniture and equipment
|
3-7 years
|
|
9,843
|
|
|
9,583
|
|
|
Leasehold improvements
|
1-15 years
|
|
3,618
|
|
|
6,502
|
|
|
Transportation equipment
|
10 years
|
|
7,398
|
|
|
3,610
|
|
|
Building and building improvements
|
5-39 years
|
|
10,366
|
|
|
9,711
|
|
|
Land
|
—
|
|
700
|
|
|
700
|
|
|
|
|
|
109,658
|
|
|
102,701
|
|
|
Accumulated depreciation
|
|
|
75,829
|
|
|
70,832
|
|
|
|
|
|
$
|
33,829
|
|
|
31,869
|
|
|
|
Total shares repurchased
|
|
Purchase price (in thousands)
|
|
Average price of shares repurchased (per share)
|
|||||
Year ended December 31, 2013
|
|
393,259
|
|
|
$
|
13,136
|
|
|
$
|
33.40
|
|
Year ended December 31, 2012
|
|
806,023
|
|
|
22,814
|
|
|
28.30
|
|
||
Year ended December 31, 2011
|
|
1,436,423
|
|
|
27,134
|
|
|
18.89
|
|
|
Year ended December 31,
|
||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||||||||||||||||||
|
Common shareholders
|
|
Unvested restricted stock shareholders
|
|
Total
|
|
Common shareholders
|
|
Unvested restricted stock shareholders
|
|
Total
|
|
Common shareholders
|
|
Unvested restricted stock shareholders
|
|
Total
|
||||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income attributable to Nelnet, Inc.
|
$
|
300,043
|
|
|
2,629
|
|
|
302,672
|
|
|
176,647
|
|
|
1,350
|
|
|
177,997
|
|
|
203,077
|
|
|
1,258
|
|
|
204,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average common shares outstanding - basic and diluted
|
46,165,785
|
|
|
404,529
|
|
|
46,570,314
|
|
|
47,010,034
|
|
|
359,297
|
|
|
47,369,331
|
|
|
47,860,824
|
|
|
296,579
|
|
|
48,157,403
|
|
|
Earnings per share - basic and diluted
|
$
|
6.50
|
|
|
6.50
|
|
|
6.50
|
|
|
3.76
|
|
|
3.76
|
|
|
3.76
|
|
|
4.24
|
|
|
4.24
|
|
|
4.24
|
|
|
Year ended December 31,
|
|||||
|
2013
|
|
2012
|
|||
Gross balance - beginning of year
|
$
|
29,568
|
|
|
21,794
|
|
Additions based on tax positions of prior years
|
996
|
|
|
9,493
|
|
|
Additions based on tax positions related to the current year
|
3,812
|
|
|
4,367
|
|
|
Settlements with taxing authorities
|
(7,470
|
)
|
|
—
|
|
|
Reductions for tax positions of prior years
|
(6,470
|
)
|
|
(5,738
|
)
|
|
Reductions based on tax positions related to the current year
|
(272
|
)
|
|
—
|
|
|
Reductions due to lapse of applicable statute of limitations
|
(1,023
|
)
|
|
(348
|
)
|
|
Gross balance - end of year
|
$
|
19,141
|
|
|
29,568
|
|
|
Year ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Current:
|
|
|
|
|
|
||||
Federal
|
$
|
153,756
|
|
|
118,490
|
|
|
123,737
|
|
State
|
4,776
|
|
|
1,383
|
|
|
1,354
|
|
|
Foreign
|
122
|
|
|
33
|
|
|
87
|
|
|
Total current provision
|
158,654
|
|
|
119,906
|
|
|
125,178
|
|
|
|
|
|
|
|
|
||||
Deferred:
|
|
|
|
|
|
||||
Federal
|
1,676
|
|
|
(23,460
|
)
|
|
(6,606
|
)
|
|
State
|
868
|
|
|
(358
|
)
|
|
(1,116
|
)
|
|
Foreign
|
(5
|
)
|
|
(11
|
)
|
|
(4
|
)
|
|
Total deferred provision (benefit)
|
2,539
|
|
|
(23,829
|
)
|
|
(7,726
|
)
|
|
Provision for income tax expense
|
$
|
161,193
|
|
|
96,077
|
|
|
117,452
|
|
|
Year ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Tax expense at federal rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase (decrease) resulting from:
|
|
|
|
|
|
|||
State tax, net of federal income tax benefit
|
0.8
|
|
|
0.5
|
|
|
0.9
|
|
Provision of uncertain federal and state tax matters
|
(0.6)
|
|
|
0.2
|
|
|
1.1
|
|
Tax credits
|
(0.4)
|
|
|
(0.6)
|
|
|
(0.4)
|
|
Valuation allowance
|
—
|
|
|
—
|
|
|
(0.3)
|
|
Other
|
—
|
|
|
(0.1)
|
|
|
0.2
|
|
Effective tax rate
|
34.8
|
%
|
|
35.0
|
%
|
|
36.5
|
%
|
|
As of As of December 31,
|
|||||
|
2013
|
|
2012
|
|||
Deferred tax assets:
|
|
|
|
|||
Student loans
|
$
|
25,967
|
|
|
26,612
|
|
Intangible assets
|
23,675
|
|
|
29,812
|
|
|
Securitizations
|
10,407
|
|
|
—
|
|
|
Accrued expenses
|
4,162
|
|
|
3,739
|
|
|
Stock compensation
|
1,608
|
|
|
1,317
|
|
|
Deferred revenue
|
777
|
|
|
987
|
|
|
Basis in certain derivative contracts
|
—
|
|
|
14,178
|
|
|
Other
|
28
|
|
|
982
|
|
|
Total gross deferred tax assets
|
66,624
|
|
|
77,627
|
|
|
Less valuation allowance
|
(239
|
)
|
|
(137
|
)
|
|
Net deferred tax assets
|
66,385
|
|
|
77,490
|
|
|
Deferred tax liabilities:
|
|
|
|
|||
Debt repurchases
|
32,286
|
|
|
32,866
|
|
|
Loan origination services
|
23,750
|
|
|
27,554
|
|
|
Depreciation
|
4,673
|
|
|
4,770
|
|
|
Unrealized gain on debt and equity securities
|
2,830
|
|
|
1,619
|
|
|
Basis in certain derivative contracts
|
2,137
|
|
|
—
|
|
|
Total gross deferred tax liabilities
|
65,676
|
|
|
66,809
|
|
|
Net deferred tax asset (liability)
|
$
|
709
|
|
|
10,681
|
|
•
|
The operating results of WRCM, the Company's SEC-registered investment advisory subsidiary
|
•
|
Income earned on certain investment activities
|
•
|
Interest expense incurred on unsecured debt transactions
|
•
|
Other product and service offerings that are not considered operating segments
|
|
Year ended December 31, 2013
|
|||||||||||||||||||||||
|
Fee-Based
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Student Loan and Guaranty Servicing
|
|
Tuition Payment Processing and Campus Commerce
|
|
Enrollment
Services |
|
Total Fee-
Based |
|
Asset
Generation and Management |
|
Corporate
Activity and Overhead |
|
Eliminations
|
|
Total
|
|||||||||
Total interest income
|
$
|
40
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
638,604
|
|
|
9,433
|
|
|
(3,267
|
)
|
|
644,810
|
|
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
229,533
|
|
|
4,669
|
|
|
(3,267
|
)
|
|
230,935
|
|
|
Net interest income (loss)
|
40
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
409,071
|
|
|
4,764
|
|
|
—
|
|
|
413,875
|
|
|
Less provision for loan losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,500
|
|
|
—
|
|
|
—
|
|
|
18,500
|
|
|
Net interest income (loss) after provision for loan losses
|
40
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
390,571
|
|
|
4,764
|
|
|
—
|
|
|
395,375
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan and guaranty servicing revenue
|
243,428
|
|
|
—
|
|
|
—
|
|
|
243,428
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
243,428
|
|
|
Intersegment servicing revenue
|
56,744
|
|
|
—
|
|
|
—
|
|
|
56,744
|
|
|
—
|
|
|
—
|
|
|
(56,744
|
)
|
|
—
|
|
|
Tuition payment processing and campus commerce revenue
|
—
|
|
|
80,682
|
|
|
—
|
|
|
80,682
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,682
|
|
|
Enrollment services revenue
|
—
|
|
|
—
|
|
|
98,078
|
|
|
98,078
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98,078
|
|
|
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,223
|
|
|
32,218
|
|
|
(1,143
|
)
|
|
46,298
|
|
|
Gain on sale of loans and debt repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,004
|
|
|
695
|
|
|
—
|
|
|
11,699
|
|
|
Derivative market value and foreign currency adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,256
|
|
|
13,337
|
|
|
—
|
|
|
48,593
|
|
|
Derivative settlements, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,966
|
)
|
|
(1,670
|
)
|
|
—
|
|
|
(29,636
|
)
|
|
Total other income (expense)
|
300,172
|
|
|
80,682
|
|
|
98,078
|
|
|
478,932
|
|
|
33,517
|
|
|
44,580
|
|
|
(57,887
|
)
|
|
499,142
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
119,092
|
|
|
37,575
|
|
|
19,296
|
|
|
175,963
|
|
|
2,292
|
|
|
17,914
|
|
|
—
|
|
|
196,169
|
|
|
Cost to provide enrollment services
|
—
|
|
|
—
|
|
|
64,961
|
|
|
64,961
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64,961
|
|
|
Depreciation and amortization
|
11,419
|
|
|
4,518
|
|
|
232
|
|
|
16,169
|
|
|
—
|
|
|
2,142
|
|
|
—
|
|
|
18,311
|
|
|
Other
|
79,116
|
|
|
9,147
|
|
|
6,084
|
|
|
94,347
|
|
|
30,945
|
|
|
25,393
|
|
|
(1,143
|
)
|
|
149,542
|
|
|
Intersegment expenses, net
|
4,359
|
|
|
5,989
|
|
|
4,588
|
|
|
14,936
|
|
|
57,572
|
|
|
(15,764
|
)
|
|
(56,744
|
)
|
|
—
|
|
|
Total operating expenses
|
213,986
|
|
|
57,229
|
|
|
95,161
|
|
|
366,376
|
|
|
90,809
|
|
|
29,685
|
|
|
(57,887
|
)
|
|
428,983
|
|
|
Income (loss) before income taxes and corporate overhead allocation
|
86,226
|
|
|
23,453
|
|
|
2,917
|
|
|
112,596
|
|
|
333,279
|
|
|
19,659
|
|
|
—
|
|
|
465,534
|
|
|
Corporate overhead allocation
|
(6,150
|
)
|
|
(1,957
|
)
|
|
(1,943
|
)
|
|
(10,050
|
)
|
|
(3,896
|
)
|
|
13,946
|
|
|
—
|
|
|
—
|
|
|
Income (loss) before income taxes
|
80,076
|
|
|
21,496
|
|
|
974
|
|
|
102,546
|
|
|
329,383
|
|
|
33,605
|
|
|
—
|
|
|
465,534
|
|
|
Income tax (expense) benefit
|
(30,430
|
)
|
|
(8,168
|
)
|
|
(369
|
)
|
|
(38,967
|
)
|
|
(125,165
|
)
|
|
2,939
|
|
|
—
|
|
|
(161,193
|
)
|
|
Net income (loss)
|
49,646
|
|
|
13,328
|
|
|
605
|
|
|
63,579
|
|
|
204,218
|
|
|
36,544
|
|
|
—
|
|
|
304,341
|
|
|
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,669
|
|
|
—
|
|
|
1,669
|
|
|
Net income attributable to Nelnet, Inc.
|
$
|
49,646
|
|
|
13,328
|
|
|
605
|
|
|
63,579
|
|
|
204,218
|
|
|
34,875
|
|
|
—
|
|
|
302,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total assets
|
$
|
84,986
|
|
|
219,064
|
|
|
34,791
|
|
|
338,841
|
|
|
27,387,461
|
|
|
391,168
|
|
|
(346,621
|
)
|
|
27,770,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012
|
|||||||||||||||||||||||
|
Fee-Based
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Student Loan and Guaranty Servicing
|
|
Tuition Payment Processing and Campus Commerce
|
|
Enrollment
Services |
|
Total Fee-
Based |
|
Asset
Generation and Management |
|
Corporate
Activity and Overhead |
|
Eliminations
|
|
Total
|
|||||||||
Total interest income
|
$
|
53
|
|
|
8
|
|
|
—
|
|
|
61
|
|
|
610,194
|
|
|
7,305
|
|
|
(3,707
|
)
|
|
613,853
|
|
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
263,788
|
|
|
8,485
|
|
|
(3,707
|
)
|
|
268,566
|
|
|
Net interest income (loss)
|
53
|
|
|
8
|
|
|
—
|
|
|
61
|
|
|
346,406
|
|
|
(1,180
|
)
|
|
—
|
|
|
345,287
|
|
|
Less provision for loan losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,500
|
|
|
—
|
|
|
—
|
|
|
21,500
|
|
|
Net interest income (loss) after provision for loan losses
|
53
|
|
|
8
|
|
|
—
|
|
|
61
|
|
|
324,906
|
|
|
(1,180
|
)
|
|
—
|
|
|
323,787
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan and guaranty servicing revenue
|
209,748
|
|
|
—
|
|
|
—
|
|
|
209,748
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
209,748
|
|
|
Intersegment servicing revenue
|
65,376
|
|
|
—
|
|
|
—
|
|
|
65,376
|
|
|
—
|
|
|
—
|
|
|
(65,376
|
)
|
|
—
|
|
|
Tuition payment processing and campus commerce revenue
|
—
|
|
|
74,410
|
|
|
—
|
|
|
74,410
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74,410
|
|
|
Enrollment services revenue
|
—
|
|
|
—
|
|
|
117,925
|
|
|
117,925
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
117,925
|
|
|
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,219
|
|
|
21,257
|
|
|
—
|
|
|
39,476
|
|
|
Gain on sale of loans and debt repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,814
|
|
|
325
|
|
|
—
|
|
|
4,139
|
|
|
Derivative market value and foreign currency adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,809
|
)
|
|
4,415
|
|
|
—
|
|
|
(47,394
|
)
|
|
Derivative settlements, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,792
|
)
|
|
(2,230
|
)
|
|
—
|
|
|
(14,022
|
)
|
|
Total other income (expense)
|
275,124
|
|
|
74,410
|
|
|
117,925
|
|
|
467,459
|
|
|
(41,568
|
)
|
|
23,767
|
|
|
(65,376
|
)
|
|
384,282
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
115,126
|
|
|
34,314
|
|
|
22,816
|
|
|
172,256
|
|
|
2,252
|
|
|
18,318
|
|
|
—
|
|
|
192,826
|
|
|
Cost to provide enrollment services
|
—
|
|
|
—
|
|
|
78,375
|
|
|
78,375
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78,375
|
|
|
Depreciation and amortization
|
18,415
|
|
|
7,240
|
|
|
6,491
|
|
|
32,146
|
|
|
—
|
|
|
1,479
|
|
|
—
|
|
|
33,625
|
|
|
Other
|
70,505
|
|
|
10,439
|
|
|
10,416
|
|
|
91,360
|
|
|
16,435
|
|
|
20,943
|
|
|
—
|
|
|
128,738
|
|
|
Intersegment expenses, net
|
5,280
|
|
|
5,383
|
|
|
3,768
|
|
|
14,431
|
|
|
66,215
|
|
|
(15,270
|
)
|
|
(65,376
|
)
|
|
—
|
|
|
Total operating expenses
|
209,326
|
|
|
57,376
|
|
|
121,866
|
|
|
388,568
|
|
|
84,902
|
|
|
25,470
|
|
|
(65,376
|
)
|
|
433,564
|
|
|
Income (loss) before income taxes and corporate overhead allocation
|
65,851
|
|
|
17,042
|
|
|
(3,941
|
)
|
|
78,952
|
|
|
198,436
|
|
|
(2,883
|
)
|
|
—
|
|
|
274,505
|
|
|
Corporate overhead allocation
|
(5,904
|
)
|
|
(1,968
|
)
|
|
(1,968
|
)
|
|
(9,840
|
)
|
|
(5,306
|
)
|
|
15,146
|
|
|
—
|
|
|
—
|
|
|
Income (loss) before income taxes
|
59,947
|
|
|
15,074
|
|
|
(5,909
|
)
|
|
69,112
|
|
|
193,130
|
|
|
12,263
|
|
|
—
|
|
|
274,505
|
|
|
Income tax (expense) benefit
|
(22,780
|
)
|
|
(5,728
|
)
|
|
2,244
|
|
|
(26,264
|
)
|
|
(73,387
|
)
|
|
3,574
|
|
|
—
|
|
|
(96,077
|
)
|
|
Net income (loss)
|
37,167
|
|
|
9,346
|
|
|
(3,665
|
)
|
|
42,848
|
|
|
119,743
|
|
|
15,837
|
|
|
—
|
|
|
178,428
|
|
|
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
431
|
|
|
—
|
|
|
431
|
|
|
Net income (loss) attributable to Nelnet, Inc.
|
$
|
37,167
|
|
|
9,346
|
|
|
(3,665
|
)
|
|
42,848
|
|
|
119,743
|
|
|
15,406
|
|
|
—
|
|
|
177,997
|
|
Total assets
|
$
|
90,959
|
|
|
150,600
|
|
|
53,902
|
|
|
295,461
|
|
|
26,463,551
|
|
|
207,003
|
|
|
(358,120
|
)
|
|
26,607,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2011
|
|||||||||||||||||||||||
|
Fee-Based
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Student Loan and Guaranty Servicing
|
|
Tuition Payment Processing and Campus Commerce
|
|
Enrollment
Services |
|
Total Fee-
Based |
|
Asset
Generation and Management |
|
Corporate
Activity and Overhead |
|
Eliminations
|
|
Total
|
|||||||||
Total interest income
|
$
|
58
|
|
|
21
|
|
|
—
|
|
|
79
|
|
|
590,736
|
|
|
5,074
|
|
|
(3,035
|
)
|
|
592,854
|
|
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
221,675
|
|
|
9,649
|
|
|
(3,035
|
)
|
|
228,289
|
|
|
Net interest income (loss)
|
58
|
|
|
21
|
|
|
—
|
|
|
79
|
|
|
369,061
|
|
|
(4,575
|
)
|
|
—
|
|
|
364,565
|
|
|
Less provision for loan losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,250
|
|
|
—
|
|
|
—
|
|
|
21,250
|
|
|
Net interest income (loss) after provision for loan losses
|
58
|
|
|
21
|
|
|
—
|
|
|
79
|
|
|
347,811
|
|
|
(4,575
|
)
|
|
—
|
|
|
343,315
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan and guaranty servicing revenue
|
175,657
|
|
|
—
|
|
|
—
|
|
|
175,657
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
175,657
|
|
|
Intersegment servicing revenue
|
69,037
|
|
|
—
|
|
|
—
|
|
|
69,037
|
|
|
—
|
|
|
—
|
|
|
(69,037
|
)
|
|
—
|
|
|
Tuition payment processing and campus commerce revenue
|
—
|
|
|
67,797
|
|
|
—
|
|
|
67,797
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67,797
|
|
|
Enrollment services revenue
|
—
|
|
|
—
|
|
|
130,470
|
|
|
130,470
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
130,470
|
|
|
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,416
|
|
|
14,097
|
|
|
—
|
|
|
29,513
|
|
|
Gain on sale of loans and debt repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,433
|
|
|
6,907
|
|
|
—
|
|
|
8,340
|
|
|
Derivative market value and foreign currency adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,571
|
|
|
(25,378
|
)
|
|
—
|
|
|
(17,807
|
)
|
|
Derivative settlements, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,228
|
)
|
|
(612
|
)
|
|
—
|
|
|
(7,840
|
)
|
|
Total other income (expense)
|
244,694
|
|
|
67,797
|
|
|
130,470
|
|
|
442,961
|
|
|
17,192
|
|
|
(4,986
|
)
|
|
(69,037
|
)
|
|
386,130
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
102,878
|
|
|
30,070
|
|
|
25,155
|
|
|
158,103
|
|
|
2,791
|
|
|
17,057
|
|
|
—
|
|
|
177,951
|
|
|
Cost to provide enrollment services
|
—
|
|
|
—
|
|
|
86,548
|
|
|
86,548
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86,548
|
|
|
Depreciation and amortization
|
15,313
|
|
|
6,179
|
|
|
6,854
|
|
|
28,346
|
|
|
—
|
|
|
1,398
|
|
|
—
|
|
|
29,744
|
|
|
Other
|
60,442
|
|
|
10,192
|
|
|
9,425
|
|
|
80,059
|
|
|
13,381
|
|
|
19,975
|
|
|
—
|
|
|
113,415
|
|
|
Intersegment expenses, net
|
4,776
|
|
|
4,714
|
|
|
3,521
|
|
|
13,011
|
|
|
70,018
|
|
|
(13,992
|
)
|
|
(69,037
|
)
|
|
—
|
|
|
Total operating expenses
|
183,409
|
|
|
51,155
|
|
|
131,503
|
|
|
366,067
|
|
|
86,190
|
|
|
24,438
|
|
|
(69,037
|
)
|
|
407,658
|
|
|
Income (loss) before income taxes and corporate overhead allocation
|
61,343
|
|
|
16,663
|
|
|
(1,033
|
)
|
|
76,973
|
|
|
278,813
|
|
|
(33,999
|
)
|
|
—
|
|
|
321,787
|
|
|
Corporate overhead allocation
|
(4,138
|
)
|
|
(1,379
|
)
|
|
(1,379
|
)
|
|
(6,896
|
)
|
|
(6,896
|
)
|
|
13,792
|
|
|
—
|
|
|
—
|
|
|
Income (loss) before income taxes
|
57,205
|
|
|
15,284
|
|
|
(2,412
|
)
|
|
70,077
|
|
|
271,917
|
|
|
(20,207
|
)
|
|
—
|
|
|
321,787
|
|
|
Income tax (expense) benefit
|
(21,736
|
)
|
|
(5,807
|
)
|
|
917
|
|
|
(26,626
|
)
|
|
(103,327
|
)
|
|
12,501
|
|
|
—
|
|
|
(117,452
|
)
|
|
Net income (loss)
|
35,469
|
|
|
9,477
|
|
|
(1,495
|
)
|
|
43,451
|
|
|
168,590
|
|
|
(7,706
|
)
|
|
—
|
|
|
204,335
|
|
|
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net income (loss) attributable to Nelnet, Inc.
|
$
|
35,469
|
|
|
9,477
|
|
|
(1,495
|
)
|
|
43,451
|
|
|
168,590
|
|
|
(7,706
|
)
|
|
—
|
|
|
204,335
|
|
Total assets
|
$
|
123,307
|
|
|
157,444
|
|
|
45,738
|
|
|
326,489
|
|
|
25,821,806
|
|
|
24,735
|
|
|
(320,813
|
)
|
|
25,852,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Bais Yaakov of Spring Valley v. Peterson's Nelnet, LLC
|
•
|
Than Zaw v. Nelnet, Inc.
|
•
|
Grant Keating v. Peterson's Nelnet, LLC et al
|
2014
|
$
|
5,889
|
|
2015
|
3,446
|
|
|
2016
|
2,512
|
|
|
2017
|
1,380
|
|
|
2018
|
1,071
|
|
|
2019 and thereafter
|
2,256
|
|
|
|
$
|
16,554
|
|
|
Year ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Non-vested shares at beginning of year
|
378,671
|
|
|
285,718
|
|
|
311,119
|
|
Granted
|
131,933
|
|
|
168,833
|
|
|
82,845
|
|
Vested
|
(62,491
|
)
|
|
(41,089
|
)
|
|
(54,184
|
)
|
Canceled
|
(41,062
|
)
|
|
(34,791
|
)
|
|
(54,062
|
)
|
Non-vested shares at end of year
|
407,051
|
|
|
378,671
|
|
|
285,718
|
|
2014
|
$
|
2,305
|
|
2015
|
1,449
|
|
|
2016
|
904
|
|
|
2017
|
492
|
|
|
2018
|
271
|
|
|
2019 and thereafter
|
406
|
|
|
|
$
|
5,827
|
|
|
Shares issued - not deferred
|
|
Shares- deferred
|
|
Total
|
|||
Year ended December 31, 2013
|
10,156
|
|
|
5,279
|
|
|
15,435
|
|
Year ended December 31, 2012
|
16,561
|
|
|
16,700
|
|
|
33,261
|
|
Year ended December 31, 2011
|
13,059
|
|
|
20,843
|
|
|
33,902
|
|
19.
|
Related Parties
|
|
As of December 31, 2013
|
|
As of December 31, 2012
|
|||||||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
|||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Investments: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Student loan asset-backed securities
|
$
|
—
|
|
|
188,279
|
|
|
188,279
|
|
|
—
|
|
|
77,652
|
|
|
77,652
|
|
Equity securities
|
3,282
|
|
|
—
|
|
|
3,282
|
|
|
4,873
|
|
|
—
|
|
|
4,873
|
|
|
Debt securities
|
479
|
|
|
—
|
|
|
479
|
|
|
787
|
|
|
—
|
|
|
787
|
|
|
Total investments
|
3,761
|
|
|
188,279
|
|
|
192,040
|
|
|
5,660
|
|
|
77,652
|
|
|
83,312
|
|
|
Fair value of derivative instruments (b)
|
—
|
|
|
62,507
|
|
|
62,507
|
|
|
—
|
|
|
97,441
|
|
|
97,441
|
|
|
Total assets
|
$
|
3,761
|
|
|
250,786
|
|
|
254,547
|
|
|
5,660
|
|
|
175,093
|
|
|
180,753
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Fair value of derivative instruments (b):
|
$
|
—
|
|
|
17,969
|
|
|
17,969
|
|
|
—
|
|
|
70,890
|
|
|
70,890
|
|
Total liabilities
|
$
|
—
|
|
|
17,969
|
|
|
17,969
|
|
|
—
|
|
|
70,890
|
|
|
70,890
|
|
(a)
|
Investments represent investments recorded at fair value on a recurring basis. Level 1 investments are measured based upon quoted prices and include investments traded on an active exchange, such as the New York Stock Exchange, and corporate bonds, mortgage-backed securities, U.S. government bonds, and U.S. Treasury securities that trade in active markets. Level 2 investments include student loan asset-backed securities. The fair value for the student loan asset-backed securities is determined using indicative quotes from broker dealers or an income approach valuation technique (present value using the discount rate adjustment technique) that considers, among other things, rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk.
|
(b)
|
All derivatives are accounted for at fair value on a recurring basis. The fair value of derivative financial instruments is determined using a market approach in which derivative pricing models use the stated terms of the contracts and observable yield curves, forward foreign currency exchange rates, and volatilities from active markets.
|
|
As of December 31, 2013
|
||||||||||||||
|
Fair value
|
|
Carrying value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||
Student loans receivable
|
$
|
26,641,383
|
|
|
25,907,589
|
|
|
—
|
|
|
—
|
|
|
26,641,383
|
|
Cash and cash equivalents
|
63,267
|
|
|
63,267
|
|
|
63,267
|
|
|
—
|
|
|
—
|
|
|
Investments
|
192,040
|
|
|
192,040
|
|
|
3,761
|
|
|
188,279
|
|
|
—
|
|
|
Restricted cash
|
727,838
|
|
|
727,838
|
|
|
727,838
|
|
|
—
|
|
|
—
|
|
|
Restricted cash – due to customers
|
167,576
|
|
|
167,576
|
|
|
167,576
|
|
|
—
|
|
|
—
|
|
|
Restricted investments
|
7,285
|
|
|
7,285
|
|
|
7,285
|
|
|
—
|
|
|
—
|
|
|
Accrued interest receivable
|
314,553
|
|
|
314,553
|
|
|
—
|
|
|
314,553
|
|
|
—
|
|
|
Derivative instruments
|
62,507
|
|
|
62,507
|
|
|
—
|
|
|
62,507
|
|
|
—
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bonds and notes payable
|
25,577,250
|
|
|
25,955,289
|
|
|
—
|
|
|
25,577,250
|
|
|
—
|
|
|
Accrued interest payable
|
21,725
|
|
|
21,725
|
|
|
—
|
|
|
21,725
|
|
|
—
|
|
|
Due to customers
|
167,576
|
|
|
167,576
|
|
|
167,576
|
|
|
—
|
|
|
—
|
|
|
Derivative instruments
|
17,969
|
|
|
17,969
|
|
|
—
|
|
|
17,969
|
|
|
—
|
|
|
As of December 31, 2012
|
||||||||||||||
|
Fair value
|
|
Carrying value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||
Student loans receivable
|
$
|
25,418,623
|
|
|
24,830,621
|
|
|
—
|
|
|
—
|
|
|
25,418,623
|
|
Cash and cash equivalents
|
66,031
|
|
|
66,031
|
|
|
66,031
|
|
|
—
|
|
|
—
|
|
|
Investments
|
83,312
|
|
|
83,312
|
|
|
5,660
|
|
|
77,652
|
|
|
—
|
|
|
Restricted cash
|
806,632
|
|
|
806,632
|
|
|
806,632
|
|
|
—
|
|
|
—
|
|
|
Restricted cash – due to customers
|
96,516
|
|
|
96,516
|
|
|
96,516
|
|
|
—
|
|
|
—
|
|
|
Restricted investments
|
8,830
|
|
|
8,830
|
|
|
8,830
|
|
|
—
|
|
|
—
|
|
|
Accrued interest receivable
|
307,518
|
|
|
307,518
|
|
|
—
|
|
|
307,518
|
|
|
—
|
|
|
Derivative instruments
|
97,441
|
|
|
97,441
|
|
|
—
|
|
|
97,441
|
|
|
—
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bonds and notes payable
|
24,486,008
|
|
|
25,098,835
|
|
|
—
|
|
|
24,486,008
|
|
|
—
|
|
|
Accrued interest payable
|
14,770
|
|
|
14,770
|
|
|
—
|
|
|
14,770
|
|
|
—
|
|
|
Due to customers
|
96,516
|
|
|
96,516
|
|
|
96,516
|
|
|
—
|
|
|
—
|
|
|
Derivative instruments
|
70,890
|
|
|
70,890
|
|
|
—
|
|
|
70,890
|
|
|
—
|
|
|
2013
|
|||||||||||
|
First quarter
|
|
Second quarter
|
|
Third quarter
|
|
Fourth quarter
|
|||||
Net interest income
|
$
|
98,798
|
|
|
101,419
|
|
|
104,922
|
|
|
108,736
|
|
Less provision for loan losses
|
5,000
|
|
|
5,000
|
|
|
5,000
|
|
|
3,500
|
|
|
Net interest income after provision for loan losses
|
93,798
|
|
|
96,419
|
|
|
99,922
|
|
|
105,236
|
|
|
Loan and guaranty servicing revenue
|
55,601
|
|
|
60,078
|
|
|
64,582
|
|
|
63,167
|
|
|
Tuition payment processing and campus commerce revenue
|
23,411
|
|
|
18,356
|
|
|
19,927
|
|
|
18,988
|
|
|
Enrollment services revenue
|
28,957
|
|
|
24,823
|
|
|
22,563
|
|
|
21,735
|
|
|
Other income
|
9,416
|
|
|
12,288
|
|
|
8,613
|
|
|
15,981
|
|
|
Gain on sale of loans and debt repurchases
|
1,407
|
|
|
7,355
|
|
|
2,138
|
|
|
799
|
|
|
Derivative market value and foreign currency adjustments and derivative settlements, net
|
1,072
|
|
|
40,188
|
|
|
(16,648
|
)
|
|
(5,655
|
)
|
|
Salaries and benefits
|
(47,905
|
)
|
|
(47,432
|
)
|
|
(48,712
|
)
|
|
(52,120
|
)
|
|
Cost to provide enrollment services
|
(19,642
|
)
|
|
(16,787
|
)
|
|
(14,668
|
)
|
|
(13,864
|
)
|
|
Depreciation and amortization
|
(4,377
|
)
|
|
(4,320
|
)
|
|
(4,340
|
)
|
|
(5,274
|
)
|
|
Operating expenses - other
|
(34,941
|
)
|
|
(34,365
|
)
|
|
(39,887
|
)
|
|
(40,349
|
)
|
|
Income tax expense
|
(38,447
|
)
|
|
(54,746
|
)
|
|
(30,444
|
)
|
|
(37,556
|
)
|
|
Net income
|
68,350
|
|
|
101,857
|
|
|
63,046
|
|
|
71,088
|
|
|
Net income attributable to noncontrolling interest
|
271
|
|
|
614
|
|
|
216
|
|
|
568
|
|
|
Net income attributable to Nelnet, Inc.
|
$
|
68,079
|
|
|
101,243
|
|
|
62,830
|
|
|
70,520
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted
|
$
|
1.46
|
|
|
2.17
|
|
|
1.35
|
|
|
1.52
|
|
|
2012
|
||||||||||||||
|
First quarter
|
|
Second quarter
|
|
Third quarter
|
|
Fourth quarter
|
||||||||
Net interest income
|
$
|
84,856
|
|
|
84,567
|
|
|
85,266
|
|
|
90,598
|
|
|||
Less provision for loan losses
|
6,000
|
|
|
7,000
|
|
|
5,000
|
|
|
3,500
|
|
||||
Net interest income after provision for loan losses
|
78,856
|
|
|
77,567
|
|
|
80,266
|
|
|
87,098
|
|
||||
Loan and guaranty servicing revenue
|
49,488
|
|
|
52,391
|
|
|
53,285
|
|
|
54,584
|
|
||||
Tuition payment processing and campus commerce revenue
|
21,913
|
|
|
16,834
|
|
|
17,928
|
|
|
17,735
|
|
||||
Enrollment services revenue
|
31,664
|
|
|
29,710
|
|
|
30,661
|
|
|
25,890
|
|
||||
Other income
|
10,954
|
|
|
8,800
|
|
|
12,699
|
|
|
7,023
|
|
||||
Gain on sale of loans and debt repurchases
|
—
|
|
|
935
|
|
|
195
|
|
|
3,009
|
|
||||
Derivative market value and foreign currency adjustments and derivative settlements, net
|
(15,180
|
)
|
|
(21,618
|
)
|
|
(31,275
|
)
|
|
6,657
|
|
||||
Salaries and benefits
|
(49,095
|
)
|
|
(48,703
|
)
|
|
(46,395
|
)
|
|
(48,633
|
)
|
||||
Cost to provide enrollment services
|
(21,678
|
)
|
|
(20,374
|
)
|
|
(20,151
|
)
|
|
(16,172
|
)
|
||||
Depreciation and amortization
|
(8,136
|
)
|
|
(8,226
|
)
|
|
(8,402
|
)
|
|
(8,861
|
)
|
||||
Operating expenses - other
|
(32,263
|
)
|
|
(30,908
|
)
|
|
(29,989
|
)
|
|
(35,578
|
)
|
||||
Income tax expense
|
(23,230
|
)
|
|
(14,878
|
)
|
|
(21,870
|
)
|
|
(36,099
|
)
|
||||
Net income
|
43,293
|
|
|
41,530
|
|
|
36,952
|
|
|
56,653
|
|
||||
Net income attributable to noncontrolling interest
|
152
|
|
|
136
|
|
|
124
|
|
|
19
|
|
||||
Net income attributable to Nelnet, Inc.
|
$
|
43,141
|
|
|
$
|
41,394
|
|
|
$
|
36,828
|
|
|
$
|
56,634
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted
|
$
|
0.91
|
|
|
0.87
|
|
|
0.78
|
|
|
1.20
|
|
Statements of Income
|
||||||||||
(Parent Company Only)
|
||||||||||
Years ended December 31, 2013, 2012, and 2011
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||
Investment interest
|
|
$
|
7,911
|
|
|
5,186
|
|
|
4,132
|
|
Interest on bonds and notes payable
|
|
4,433
|
|
|
3,607
|
|
|
1,162
|
|
|
Net interest income
|
|
3,478
|
|
|
1,579
|
|
|
2,970
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|||
Other income
|
|
7,112
|
|
|
8,010
|
|
|
4,304
|
|
|
Gain from debt repurchases
|
|
11,905
|
|
|
4,487
|
|
|
7,255
|
|
|
Equity in subsidiaries income
|
|
275,989
|
|
|
224,011
|
|
|
256,299
|
|
|
Derivative market value adjustments and derivative settlements, net
|
|
28,134
|
|
|
(47,262
|
)
|
|
(55,911
|
)
|
|
Total other income
|
|
323,140
|
|
|
189,246
|
|
|
211,947
|
|
|
Operating expenses
|
|
5,626
|
|
|
1,867
|
|
|
6,634
|
|
|
Income before income taxes
|
|
320,992
|
|
|
188,958
|
|
|
208,283
|
|
|
Income tax expense
|
|
(16,651
|
)
|
|
(10,530
|
)
|
|
(3,948
|
)
|
|
Net income
|
|
304,341
|
|
|
178,428
|
|
|
204,335
|
|
|
Net income attributable to noncontrolling interest
|
|
1,669
|
|
|
431
|
|
|
—
|
|
|
Net income attributable to Nelnet, Inc.
|
|
$
|
302,672
|
|
|
177,997
|
|
|
204,335
|
|
Statements of Cash Flows
|
|||||||||
(Parent Company Only)
|
|||||||||
Years ended December 31, 2013, 2012, and 2011
|
|||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Net income attributable to Nelnet, Inc.
|
$
|
302,672
|
|
|
177,997
|
|
|
204,335
|
|
Net income attributable to noncontrolling interest
|
1,669
|
|
|
431
|
|
|
—
|
|
|
Net income
|
304,341
|
|
|
178,428
|
|
|
204,335
|
|
|
Adjustments to reconcile income to net cash provided by operating activities:
|
|
|
|
|
|
||||
Derivative market value adjustment
|
(57,525
|
)
|
|
30,041
|
|
|
36,226
|
|
|
(Payments) proceeds to terminate and/or amend derivative instruments, net
|
(6,469
|
)
|
|
(6,005
|
)
|
|
3,365
|
|
|
Gain from debt repurchases
|
(11,905
|
)
|
|
(4,487
|
)
|
|
(7,255
|
)
|
|
Equity in earnings of subsidiaries
|
(275,989
|
)
|
|
(224,011
|
)
|
|
(256,299
|
)
|
|
Gain from sale of available-for-sale securities, net
|
(5,938
|
)
|
|
(5,798
|
)
|
|
—
|
|
|
Other
|
4,119
|
|
|
3,218
|
|
|
8,219
|
|
|
Decrease in other assets
|
209,896
|
|
|
169,256
|
|
|
341,412
|
|
|
Increase (decrease) in other liabilities
|
16,205
|
|
|
(38,971
|
)
|
|
14,126
|
|
|
Net cash provided by operating activities
|
176,735
|
|
|
101,671
|
|
|
344,129
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
||||
Decrease (increase) in restricted cash
|
59,495
|
|
|
(29,082
|
)
|
|
(3,083
|
)
|
|
Contingency payment related to business combination
|
—
|
|
|
—
|
|
|
(5,893
|
)
|
|
Purchases of available-for-sale securities
|
(217,415
|
)
|
|
(186,727
|
)
|
|
—
|
|
|
Proceeds from sales of available-for-sale securities
|
116,337
|
|
|
162,533
|
|
|
—
|
|
|
Purchase of subsidiary debt, net
|
(66,272
|
)
|
|
(6,584
|
)
|
|
108,334
|
|
|
Purchases of other investments, net
|
(11,758
|
)
|
|
—
|
|
|
—
|
|
|
Net cash (used in) provided by investing activities
|
(119,613
|
)
|
|
(59,860
|
)
|
|
99,358
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
||||
Payments on notes payable
|
(147,080
|
)
|
|
(109,748
|
)
|
|
(440,913
|
)
|
|
Payments on notes payable due to a related party
|
—
|
|
|
—
|
|
|
(107,050
|
)
|
|
Proceeds from issuance of notes payable
|
135,000
|
|
|
153,380
|
|
|
—
|
|
|
Payments of debt issuance costs
|
(644
|
)
|
|
(1,111
|
)
|
|
—
|
|
|
Dividends paid
|
(18,569
|
)
|
|
(66,237
|
)
|
|
(17,763
|
)
|
|
Repurchases of common stock
|
(13,136
|
)
|
|
(22,763
|
)
|
|
(27,134
|
)
|
|
Proceeds from issuance of common stock
|
561
|
|
|
480
|
|
|
512
|
|
|
Payments received on employee stock notes receivable
|
—
|
|
|
1,140
|
|
|
30
|
|
|
Issuance of noncontrolling interest
|
5
|
|
|
5
|
|
|
—
|
|
|
Distribution made to noncontrolling interest
|
(1,351
|
)
|
|
(431
|
)
|
|
—
|
|
|
Net cash used in financing activities
|
(45,214
|
)
|
|
(45,285
|
)
|
|
(592,318
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
11,908
|
|
|
(3,474
|
)
|
|
(148,831
|
)
|
|
Cash and cash equivalents, beginning of year
|
12,124
|
|
|
15,598
|
|
|
164,429
|
|
|
Cash and cash equivalents, end of year
|
$
|
24,032
|
|
|
12,124
|
|
|
15,598
|
|
|
|
|
|
|
|
•
|
had been accepted for enrollment or was enrolled in good standing at an eligible institution of higher education;
|
•
|
was carrying or planning to carry at least one-half the normal full-time workload, as determined by the institution, for the course of study the student was pursuing;
|
•
|
was not in default on any federal education loans;
|
•
|
had not committed a crime involving fraud in obtaining funds under the Higher Education Act which funds had not been fully repaid; and
|
•
|
met other applicable eligibility requirements.
|
•
|
Subsidized Stafford Loans
|
•
|
Unsubsidized Stafford Loans
|
•
|
PLUS Loans
|
•
|
Consolidation Loans
|
•
|
Original fixed interest rate of 8% for the first 48 months of repayment. Beginning on the first day of the 49
th
month of repayment, the interest rate increased to a fixed rate of 10% thereafter. Loans in this category were subject to excess interest rebates and have been converted to a variable interest rate based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.25%. The variable interest rate is adjusted annually on July 1. The maximum interest rate for loans in this category is 10%.
|
•
|
When the borrower is in school, in grace, or in an authorized period of deferment, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 2.5%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 8.25%.
|
•
|
When the borrower is in repayment or in a period of forbearance, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.1%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 8.25%.
|
•
|
When the borrower is in school, in grace, or in an authorized period of deferment, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 1.7%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 8.25%.
|
•
|
When the borrower is in repayment or in a period of forbearance, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 2.3%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 8.25%.
|
•
|
July 1, 2008 and before July 1, 2009, the applicable interest rate is fixed at 6.00%,
|
•
|
July 1, 2009 and before July 1, 2010, the applicable interest rate is fixed at 5.60%.
|
•
|
Beginning July 1, 2001, the applicable interest rate is variable and is based on the weekly average one-year constant maturity Treasury yield for the last calendar week ending on or before June 26 preceding July 1 of each year, plus 3.1%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 11%. Prior to July 1, 2001, SLS Loans in this category had interest rates which were based on the 52-week Treasury bill auctioned at the final auction held prior to the preceding June 1, plus 3.1%. The annual (July 1) variable interest rate adjustment was applicable prior to July 1, 2001, as was the maximum interest rate of 11%.
|
•
|
have outstanding indebtedness on student loans made under the Federal Family Education Loan Program and/or certain other federal student loan programs; and
|
•
|
be in repayment status or in a grace period on loans to be consolidated.
|
•
|
9%, or
|
•
|
The weighted average of the interest rates on the loans consolidated, rounded to the nearest whole percent.
|
•
|
For the portion of the Consolidation Loan which is comprised of FFELP, Direct, FISL, Perkins, HPSL, or NSL loans, the variable interest rate is based on the bond equivalent rate of the 91-day Treasury bills auctioned at the final auction before the preceding June 1, plus 3.1%. The variable interest rate for this portion of the Consolidation Loan is adjusted annually on July 1. The maximum interest rate for this portion of the Consolidation Loan is 8.25%.
|
•
|
For the portion of the Consolidation Loan which is attributable to HEAL Loans (if applicable), the variable interest rate is based on the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter ending
|
•
|
For the portion of the Consolidation Loan which is comprised of FFELP, Direct, FISL, Perkins, HPSL, or NSL loans, the applicable interest rate is fixed and is based on the weighted average of the interest rates on the non-HEAL loans being consolidated, rounded up to the nearest one-eighth of one percent. The maximum interest rate for this portion of the Consolidation Loan is 8.25%.
|
•
|
For the portion of the Consolidation Loan which is attributable to HEAL Loans (if applicable), the applicable interest rate is variable and is based on the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter ending June 30, plus 3.0%. The variable interest rate for this portion of the Consolidation Loan is adjusted annually on July 1. There is no maximum interest rate for the portion of the Consolidation Loan that is represented by HEAL Loans.
|
•
|
during a period not exceeding three years while the borrower is a member of the Armed Forces, an officer in the Commissioned Corps of the Public Health Service or, with respect to a borrower who first obtained a student loan disbursed on or after July 1, 1987, or a student loan for a period of enrollment beginning on or after July 1, 1987, an active duty member of the National Oceanic and Atmospheric Administration Corps;
|
•
|
during a period not exceeding three years while the borrower is a volunteer under the Peace Corps Act;
|
•
|
during a period not exceeding three years while the borrower is a full-time paid volunteer under the Domestic Volunteer Act of 1973;
|
•
|
during a period not exceeding three years while the borrower is a full-time volunteer in service which the Secretary of Education has determined is comparable to service in the Peace Corp or under the Domestic Volunteer Act of 1970 with an organization which is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code;
|
•
|
during a period not exceeding two years while the borrower is serving an internship necessary to receive professional recognition required to begin professional practice or service, or a qualified internship or residency program;
|
•
|
during a period not exceeding three years while the borrower is temporarily totally disabled, as established by sworn affidavit of a qualified physician, or while the borrower is unable to secure employment because of caring for a dependant who is so disabled;
|
•
|
during a period not exceeding two years while the borrower is seeking and unable to find full-time employment;
|
•
|
during any period that the borrower is pursuing a full-time course of study at an eligible institution (or, with respect to a borrower who first obtained a student loan disbursed on or after July 1, 1987, or a student loan for a period of enrollment beginning on or after July 1, 1987, is pursuing at least a half-time course of study);
|
•
|
during any period that the borrower is pursuing a course of study in a graduate fellowship program;
|
•
|
during any period the borrower is receiving rehabilitation training services for qualified individuals, as defined by the Secretary of Education;
|
•
|
during a period not exceeding six months per request while the borrower is on parental leave; and
|
•
|
only with respect to a borrower who first obtained a student loan disbursed on or after July 1, 1987, or a student loan for a period of enrollment beginning on or after July 1, 1987, during a period not exceeding three years while the borrower is a full-time teacher in a public or nonprofit private elementary or secondary school in a “teacher shortage area” (as prescribed by the Secretary of Education), and during a period not exceeding one year for mothers, with preschool age children, who are entering or re-entering the work force and who are paid at a rate of no more than $1 per hour more than the federal minimum wage.
|
•
|
during any period that the borrower is pursuing at least a half-time course of study at an eligible institution;
|
•
|
during any period that the borrower is pursuing a course of study in a graduate fellowship program;
|
•
|
during any period the borrower is receiving rehabilitation training services for qualified individuals, as defined by the Secretary of Education;
|
•
|
during a period not exceeding three years while the borrower is seeking and unable to find full-time employment; and
|
•
|
during a period not exceeding three years for any reason which has caused or will cause the borrower economic hardship. Economic hardship includes working full time and earning an amount that does not exceed the greater of the federal minimum wage or 150% of the poverty line applicable to a borrower's family size and state of residence. Additional categories of economic hardship are based on the receipt of payments from a state or federal public assistance program, service in the Peace Corps, or until July 1, 2009, the relationship between a borrower's educational debt burden and his or her income.
|
•
|
is a National Guard member, Armed Forces reserves member, or retired member of the Armed Forces;
|
•
|
is called or ordered to active duty; and
|
•
|
is enrolled at the time of, or was enrolled within six months prior to, the activation in a program at an eligible institution.
|
•
|
A parent PLUS borrower, upon request, may defer the repayment of the loan during any period during which the student for whom the loan was borrowed is enrolled at least half time. Also upon request, the borrower can defer the loan for the six-month period immediately following the date on which the student for whom the loan was borrowed ceases to be enrolled at least half time, or if the parent borrower is also a student, the date after he or she ceases to be enrolled at least half time.
|
•
|
A graduate or professional student PLUS borrower may defer the loan for the six-month period immediately following the date on which he or she ceases to be enrolled at least half time. This option does not require a request and may be granted each time the borrower ceases to be enrolled at least half time.
|
•
|
1.5% with respect to loans for which the first disbursement was made on or after July 1, 2007, and before July 1, 2008;
|
•
|
1.0% with respect to loans for which the first disbursement was made on or after July 1, 2008, and before July 1, 2009; and
|
•
|
0.5% with respect to loans for which the first disbursement was made on or after July 1, 2009, and before July 1, 2010.
|
Date of Loans
|
Annualized SAP Rate
|
On or after October 1, 1981
|
T-Bill Rate less Applicable Interest Rate + 3.5%
|
On or after November 16, 1986
|
T-Bill Rate less Applicable Interest Rate + 3.25%
|
On or after October 1, 1992
|
T-Bill Rate less Applicable Interest Rate + 3.1%
|
On or after July 1, 1995
|
T-Bill Rate less Applicable Interest Rate + 3.1%
(1)
|
On or after July 1, 1998
|
T-Bill Rate less Applicable Interest Rate + 2.8%
(2)
|
On or after January 1, 2000
|
3 Month Commercial Paper Rate less Applicable Interest Rate + 2.34%
(3)(6)
|
On or after October 1, 2007 and held by a Department of Education certified not-for-profit holder or Eligible Lender Trustee holding on behalf of a Department of Education certified not-for-profit entity
|
3 Month Commercial Paper Rate less Applicable Interest Rate + 1.94%
(4)(6)
|
All other loans on or after October 1, 2007
|
3 Month Commercial Paper Rate less Applicable Interest Rate + 1.79%
(5)(6)
|
•
|
the applicable interest rate minus the special allowance support level for the loan, multiplied by
|
•
|
the average daily principal balance of the loan during the quarter, divided by
|
•
|
four.
|
•
|
originated or acquired with funds obtained from the refunding of tax-exempt obligations issued prior to October 1, 1993, or
|
•
|
originated or acquired with funds obtained from collections on other loans made or purchased with funds obtained from tax-exempt obligations initially issued prior to October 1, 1993.
|
|
Name
|
Organized in
|
Relationship to Nelnet Inc.
|
Percentage Ownership
|
1
|
National Education Loan Network, Inc.
|
Nevada
|
Direct Subsidiary
|
100%
|
2
|
Nelnet Capital LLC
|
Nebraska
|
Direct Subsidiary
|
100%
|
3
|
Nelnet Guarantor Solutions, LLC (formerly Nelnet Guarantee Services LLC; formerly GuaranTec LLP)
|
Florida
|
Indirect Subsidiary
|
100%
|
4
|
National Higher Education Loan Program, Inc.
|
Nebraska
|
Indirect Subsidiary
|
100%
|
5
|
5280 Solutions LLC (f/k/a Nelnet Technology Services LLC) (d/b/a Idaho Financial Associates, Charter Account Systems and 5280 Solutions)
|
Colorado
|
Indirect Subsidiary
|
100%
|
6
|
FirstMark Services, LLC
|
Colorado
|
Indirect Subsidiary
|
100%
|
7
|
Health Education Solutions, Inc. (f/k/a ClassCredit, Inc.)
|
Florida
|
Indirect Subsidiary
|
100%
|
8
|
EFS Finance Co., LLC
|
Nebraska
|
Indirect Subsidiary
|
100%
|
9
|
Nelnet Management Corporation-1 (formerly Nelnet Student Loan Warehouse Corporation – 1)
|
Nevada
|
Indirect Subsidiary
|
100%
|
10
|
Nelnet Student Loan Funding Management Corporation
|
Nevada
|
Indirect Subsidiary
|
100%
|
11
|
Nelnet Student Loan Funding, LLC
|
Delaware
|
Indirect Subsidiary
|
100%
|
12
|
NHELP-I, LLC
|
Delaware
|
Indirect Subsidiary
|
100%
|
13
|
Nelnet Education Loan Funding, Inc. (f/k/a NEBHELP, INC.)
|
Nebraska
|
Indirect Subsidiary
|
100%
|
14
|
Nelnet Canada, Inc.
|
Canada
|
Indirect Subsidiary
|
100%
|
15
|
Nelnet Business Solutions, Inc. (f/k/a FACTS Management Co.) (dba FACTS Management and infiNET Integrated Solutions)
|
Nebraska
|
Indirect Subsidiary
|
100%
|
16
|
Nelnet Asset Management, Inc. (f/k/a LoanSTAR Funding Group, Inc.)
|
Texas
|
Indirect Subsidiary
|
100%
|
17
|
Nelnet Academic Services, LLC (f/k/a Nelnet Mentor, LLC)
|
Nebraska
|
Direct Subsidiary
|
100%
|
18
|
Loanstar Assets GP, LLC
|
Delaware
|
Indirect Subsidiary
|
100%
|
19
|
Loanstar Assets LP, LLC
|
Delaware
|
Indirect Subsidiary
|
100%
|
20
|
Loanstar Assets Partners, LP
|
Delaware
|
Indirect Subsidiary
|
100%
|
21
|
CUnet Agency Management, LLC
|
Delaware
|
Indirect Subsidiary
|
100%
|
22
|
Peterson’s Nelnet, LLC (formerly NELN Acquisition, LLC)
|
Nebraska
|
Indirect Subsidiary
|
100%
|
23
|
M & P Building, LLC
|
Nebraska
|
Direct/Indirect
|
100%
|
24
|
First National Life Insurance Company of the USA
|
Nebraska
|
Indirect Subsidiary
|
100%
|
25
|
Unilink Data Systems Pty Ltd
|
Australia
|
Indirect Subsidiary
|
100%
|
26
|
Nelnet Servicing, LLC
|
Nebraska
|
Indirect Subsidiary
|
100%
|
27
|
Nelnet Diversified Solutions, LLC (formerly NLS Holding Company, LLC)
|
Nebraska
|
Direct Subsidiary
|
100%
|
28
|
Nelnet Enrollment Solutions, LLC
|
Nebraska
|
Indirect Subsidiary
|
100%
|
29
|
Nelnet FFELP Student Loan Warehouse-I, LLC
|
Delaware
|
Indirect Subsidiary
|
100%
|
30
|
Merchant Preservation Services, LLC
|
Nebraska
|
Indirect Subsidiary
|
100%
|
32
|
Next Gen Web Solutions, LLC
|
Nebraska
|
Indirect Subsidiary
|
50%
|
33
|
Whitetail Rock Capital Management, LLC
|
Nebraska
|
Direct Subsidiary
|
90%
|
34
|
Municipal Tax Investment, LLC
|
Nebraska
|
Direct Subsidiary
|
100%
|
35
|
Globalnet, LLC
|
Nebraska
|
Direct Subsidiary
|
50%
|
36
|
Nelnet B2B Services, LLC
|
Nebraska
|
Direct/Indirect
|
100%
|
37
|
NHELP-III, LLC
|
Delaware
|
Indirect Subsidiary
|
100%
|
38
|
GCO SLIMS Trust-I
|
Delaware
|
Indirect Subsidiary
|
100%
|
39
|
GCO Education Loan Funding Trust-I
|
Delaware
|
Indirect Subsidiary
|
100%
|
40
|
CUnet Inquiry Generation, LLC
|
Nebraska
|
Indirect Subsidiary
|
100%
|
41
|
CUnet Software, LLC
|
Nebraska
|
Indirect Subsidiary
|
100%
|
42
|
NHELP-II, LLC
|
Delaware
|
Indirect Subsidiary
|
100%
|
43
|
Whitetail Rock Fund Management, LLC
|
Nebraska
|
Indirect Subsidiary
|
100%
|
44
|
Nelnet Student Loan Funding II, LLC
|
Delaware
|
Indirect Subsidiary
|
100%
|
45
|
Nelnet Student Loan Funding II, Management Corporation
|
Nebraska
|
Indirect Subsidiary
|
100%
|
46
|
Municipal Tax Property, LLC
|
Nebraska
|
Direct Subsidiary
|
100%
|
47
|
Nelnet UNL Alliance, LLC
|
Nebraska
|
Direct Subsidiary
|
100%
|
48
|
Nelnet Captive Insurance Company, Inc.
|
Delaware
|
Direct Subsidiary
|
100%
|
49
|
GCO Education Loan Funding Master Trust - II
|
Delaware
|
Indirect Subsidiary
|
100%
|
50
|
Nelnet Finance Corp.
|
Nebraska
|
Indirect Subsidiary
|
100%
|
|
|
|
|
|
1.
|
I have reviewed this
annual
report on Form
10-K
of Nelnet, Inc. and subsidiaries (the “Company”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 27, 2014
|
/s/ JEFFREY R. NOORDHOEK
|
|
|
Jeffrey R. Noordhoek Chief Executive Officer
Principal Executive Officer |
1.
|
I have reviewed this
annual
report on Form
10-K
of Nelnet, Inc. and subsidiaries (the “Company”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 27, 2014
|
/s/ JAMES D. KRUGER
|
|
|
James D. Kruger
Chief Financial Officer
Principal Financial Officer and Principal Accounting Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 27, 2014
|
By:
/s/ JEFFREY R. NOORDHOEK
|
|
|
Name: Jeffrey R. Noordhoek
Title: Chief Executive Officer
Principal Executive Officer
|
|
|
|
|
|
By:
/s/ JAMES D. KRUGER
|
|
|
Name: James D. Kruger
Title: Chief Financial Officer
Principal Financial Officer and Principal Accounting Officer
|