þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
NEBRASKA
(State or other jurisdiction of incorporation or organization) 121 SOUTH 13TH STREET, SUITE 201 LINCOLN, NEBRASKA (Address of principal executive offices) |
84-0748903
(I.R.S. Employer Identification No.) 68508 (Zip Code) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
PART I | ||||||||
|
||||||||
2 | ||||||||
|
||||||||
15 | ||||||||
|
||||||||
28 | ||||||||
|
||||||||
28 | ||||||||
|
||||||||
29 | ||||||||
|
||||||||
30 | ||||||||
|
||||||||
PART II | ||||||||
|
||||||||
30 | ||||||||
|
||||||||
32 | ||||||||
|
||||||||
35 | ||||||||
|
||||||||
79 | ||||||||
|
||||||||
85 | ||||||||
|
||||||||
85 | ||||||||
|
||||||||
85 | ||||||||
|
||||||||
86 | ||||||||
|
||||||||
PART III | ||||||||
|
||||||||
87 | ||||||||
|
||||||||
87 | ||||||||
|
||||||||
87 | ||||||||
|
||||||||
87 | ||||||||
|
||||||||
87 | ||||||||
|
||||||||
PART IV | ||||||||
|
||||||||
88 | ||||||||
|
||||||||
95 | ||||||||
|
||||||||
Exhibit 10.32 | ||||||||
Exhibit 10.33 | ||||||||
Exhibit 10.69 | ||||||||
Exhibit 10.70 | ||||||||
Exhibit 10.71 | ||||||||
Exhibit 10.72 | ||||||||
Exhibit 10.73 | ||||||||
Exhibit 12.1 | ||||||||
Exhibit 21.1 | ||||||||
Exhibit 23.1 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32 |
|
Students and families
|
|
Colleges and universities
|
|
Private, parochial, and other K-12 institutions
|
|
Lenders, holders, and agencies in education finance
|
2
3
|
Student Loan and Guaranty Servicing
|
||
|
Tuition Payment Processing and Campus Commerce
|
||
|
Enrollment Services
|
||
|
Software and Technical Services
|
||
|
Asset Generation and Management
|
4
2008 | ||||||||||||||||||||||||
As reported | ||||||||||||||||||||||||
External | Intersegment | by segment | ||||||||||||||||||||||
Dollars | Percent | Dollars | Percent | Dollars | Percent | |||||||||||||||||||
|
||||||||||||||||||||||||
Student Loan and Guaranty Servicing
|
$ | 105,664 | 19.3 | % | $ | 75,361 | 51.6 | % | $ | 181,025 | 26.2 | % | ||||||||||||
Tuition Payment Processing and Campus Commerce
|
50,124 | 9.2 | 302 | 0.2 | 50,426 | 7.3 | ||||||||||||||||||
Enrollment Services
|
112,459 | 20.6 | 2 | 0.0 | 112,461 | 16.3 | ||||||||||||||||||
Software and Technical Services
|
19,731 | 3.6 | 6,831 | 4.7 | 26,562 | 3.8 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Total revenue from fee-based businesses
|
287,978 | 52.7 | 82,496 | 56.5 | 370,474 | 53.6 | ||||||||||||||||||
|
||||||||||||||||||||||||
Asset Generation and Management
|
295,820 | 54.2 | (2,190 | ) | (1.5 | ) | 293,630 | 42.4 | ||||||||||||||||
|
||||||||||||||||||||||||
Corporate Activity and Overhead
|
(37,617 | ) | (6.9 | ) | 65,575 | 45.0 | 27,958 | 4.0 | ||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Total revenue
|
$ | 546,181 | 100.0 | % | $ | 145,881 | 100.0 | % | $ | 692,062 | 100.0 | % | ||||||||||||
|
2007 | ||||||||||||||||||||||||
As reported | ||||||||||||||||||||||||
External | Intersegment | by segment | ||||||||||||||||||||||
Dollars | Percent | Dollars | Percent | Dollars | Percent | |||||||||||||||||||
Student Loan and Guaranty Servicing
|
$ | 133,234 | 23.2 | % | $ | 74,687 | 73.9 | % | $ | 207,921 | 30.7 | % | ||||||||||||
Tuition Payment Processing and Campus Commerce
|
46,484 | 8.1 | 688 | 0.7 | 47,172 | 7.0 | ||||||||||||||||||
Enrollment Services
|
104,245 | 18.1 | 891 | 0.9 | 105,136 | 15.5 | ||||||||||||||||||
Software and Technical Services
|
22,093 | 3.8 | 15,683 | 15.5 | 37,776 | 5.6 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Total revenue from fee-based businesses
|
306,056 | 53.2 | 91,949 | 91.0 | 398,005 | 58.8 | ||||||||||||||||||
|
||||||||||||||||||||||||
Asset Generation and Management
|
292,058 | 50.8 | (3,737 | ) | (3.7 | ) | 288,321 | 42.7 | ||||||||||||||||
|
||||||||||||||||||||||||
Corporate Activity and Overhead
|
(23,197 | ) | (4.0 | ) | 12,777 | 12.7 | (10,420 | ) | (1.5 | ) | ||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Total revenue
|
$ | 574,917 | 100.0 | % | $ | 100,989 | 100.0 | % | $ | 675,906 | 100.0 | % | ||||||||||||
|
2006 | ||||||||||||||||||||||||
As reported | ||||||||||||||||||||||||
External | Intersegment | by segment | ||||||||||||||||||||||
Dollars | Percent | Dollars | Percent | Dollars | Percent | |||||||||||||||||||
Student Loan and Guaranty Servicing
|
$ | 130,555 | 22.9 | % | $ | 63,545 | 76.0 | % | $ | 194,100 | 29.7 | % | ||||||||||||
Tuition Payment Processing and Campus Commerce
|
39,111 | 6.8 | 503 | 0.6 | 39,614 | 6.0 | ||||||||||||||||||
Enrollment Services
|
56,049 | 9.8 | 1,000 | 1.2 | 57,049 | 8.7 | ||||||||||||||||||
Software and Technical Services
|
15,595 | 2.7 | 17,877 | 21.4 | 33,472 | 5.1 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Total revenue from fee-based businesses
|
241,310 | 42.2 | 82,925 | 99.2 | 324,235 | 49.5 | ||||||||||||||||||
|
||||||||||||||||||||||||
Asset Generation and Management
|
352,238 | 61.6 | (2,858 | ) | (3.4 | ) | 349,380 | 53.3 | ||||||||||||||||
|
||||||||||||||||||||||||
Corporate Activity and Overhead
|
(21,856 | ) | (3.8 | ) | 3,520 | 4.2 | (18,336 | ) | (2.8 | ) | ||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Total revenue
|
$ | 571,692 | 100.0 | % | $ | 83,587 | 100.0 | % | $ | 655,279 | 100.0 | % | ||||||||||||
|
5
1. |
Origination and servicing of FFEL Program loans (47.1%)
|
||
2. |
Origination and servicing of non-federally insured student loans (7.6%)
|
||
3. |
Servicing and support outsourcing for guaranty agencies (45.3%)
|
As of December 31, 2008 | As of December 31, 2007 | |||||||||||||||
Dollar | Percent | Dollar | Percent | |||||||||||||
|
||||||||||||||||
Company
|
$ | 24,596 | (a) | 68.5 | % | $ | 25,640 | 75.8 | % | |||||||
Third Party
|
11,293 | (b) | 31.5 | 8,177 | 24.2 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 35,889 | 100.0 | % | $ | 33,817 | 100.0 | % | ||||||||
|
(a) |
Approximately $644
million of these loans are eligible to be sold
to the Department of Education pursuant to its
Purchase Commitment Program. The Department
obtains all rights to service loans that it
purchases as part of this program.
|
|
(b) |
Approximately $928
million of these loans may be eligible to be
sold to the Department of Education pursuant to
its Purchase Commitment Program. The Department
obtains all rights to service loans that it
purchases as part of this program.
|
6
Top FFELP Loan Servicers (a) | ||||||
Rank | Name | $ billions | ||||
1 |
Sallie Mae
|
$ | 127.4 | |||
2 |
PHEAA
|
34.4 | ||||
3 |
Nelnet
|
32.2 | ||||
4 |
Great Lakes
|
32.1 | ||||
5 |
ACS
|
31.0 | ||||
6 |
Wells Fargo
|
11.7 | ||||
7 |
JPMorgan Chase
|
11.4 | ||||
8 |
Express Loan Servicing
|
8.7 | ||||
9 |
Edfinancial
|
7.7 | ||||
10 |
KHEAA (Kentucky)
|
5.5 |
(a) |
The above table does
not include information from Citibank, The
Student Loan Corporation, and CLC Servicing
Corporation as these entities did not disclose
volumes.
|
7
8
Content Management | ||||
|
Test preparation study guides and online courses | |||
|
||||
|
Admissions consulting | |||
|
||||
|
Licensing of scholarship data | |||
|
||||
|
Essay and resume editing services | |||
|
||||
|
Call center services |
Lead Generation | ||
|
Vendor lead management services | |
|
||
|
Pay per click marketing management | |
|
||
|
Email marketing | |
|
||
|
Admissions lead generation | |
|
||
|
List marketing services |
9
|
HELMS/HELM-Net, STAR, and SLSS, systems which are used in the full servicing of FFELP,
private, consolidation, and Canadian loans
|
|
Mariner, which is used for consolidation loan origination
|
|
InfoCentre, which is a data warehouse and analysis tool for educational loans
|
|
Uconnect, a tool to facilitate information sharing between different applications
|
10
11
12
13
14
|
Asset Generation and Management
|
|
Student Loan and Guaranty Servicing
|
|
School code of conduct requirements applicable to FFELP and private education
loan lending
|
||
|
Disclosure and reporting requirements for lenders and schools participating in
preferred lender arrangements
|
||
|
Permissible and prohibited inducement activities on the part of FFELP lenders,
private education lenders, and FFELP guaranty agencies
|
||
|
Additional loan origination and repayment disclosures that FFELP and private
education lenders must provide to borrowers
|
||
|
Additional FFELP loan servicing requirements
|
15
|
Breaches of the Companys internal control systems, such as a failure to adjust
manual or automated servicing functions following a change in regulatory
requirements
|
|
Privacy issues
|
|
Technological defects, such as a malfunction in or destruction of the Companys
computer systems
|
|
Fraud by the Companys employees or other persons in activities such as borrower
payment processing
|
16
17
18
19
|
Tuition Payment Processing and Campus Commerce
|
|
Enrollment Services
|
|
Software and Technical Services
|
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
F-20
F-21
F-22
F-23
F-24
F-25
F-26
F-27
F-28
F-29
F-30
F-31
F-32
F-33
F-34
F-35
F-36
F-37
F-38
F-39
F-40
F-41
F-42
F-43
F-44
F-45
F-46
F-47
F-48
F-49
F-50
F-51
F-52
F-53
F-54
F-55
A-1
A-2
A-3
A-4
A-5
A-6
A-7
A-8
A-9
A-10
A-11
A-12
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Lease
Approximate
expiration
Location
Primary Function or Segment
square feet
date
Lincoln, NE
154,000
Aurora, CO
124,000
February 2015
Jacksonville, FL
109,000
January 2014
Lawrenceville, NJ
62,000
April 2011
Table of Contents
Table of Contents
2008
2007
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
$
13.66
$
14.11
$
16.06
$
14.80
$
27.92
$
28.00
$
24.35
$
19.61
9.00
10.35
9.37
9.21
23.38
22.99
17.11
11.99
Table of Contents
AMONG NELNET, INC., THE DOW JONES US TOTAL MARKET INDEX,
AND THE DOW JONES US FINANCIAL SERVICES INDEX
Company/Index
12/31/2003
12/31/2004
12/31/2005
12/31/2006
12/31/2007
12/31/2008
$
100.00
$
120.22
$
181.61
$
122.14
$
57.58
$
65.33
100.00
112.01
119.10
137.64
145.91
91.69
100.00
114.26
123.84
158.21
132.73
55.16
Total number of
Maximum number
shares purchased
of shares that may
Total number
Average
as part of publicly
yet be purchased
of shares
price paid
announced plans
under the plans
Period
purchased (1)
per share
or programs (2) (3)
or programs (4)
1,606
$
13.10
1,606
7,107,906
260,468
36.93
1,708
7,384,499
56,508
12.84
1,645
7,156,712
318,582
$
32.54
4,959
(1)
Table of Contents
(2)
(3)
(4)
(B / C)
(A + D)
Maximum number of
Approximate dollar
Closing price on
Approximate
Approximate
shares that
value of shares that
the last trading day
number of shares that
number of shares that
may yet be
may yet be
of the Companys
may yet be
may yet be
purchased under the
purchased under
Class A Common
purchased under
purchased under
2006 Plan
the 2006 ESLP
Stock
the 2006 ESLP
the 2006 Plan and
As of
(A)
(B)
(C)
(D)
2006 ESLP
4,616,450
$
36,450,000
$
14.63
2,491,456
7,107,906
4,614,742
36,450,000
13.16
2,769,757
7,384,499
4,613,097
36,450,000
14.33
2,543,615
7,156,712
Table of Contents
Table of Contents
Year ended December 31,
2008
2007
2006
2005
2004
(dollars in thousands, except share data)
$
187,892
244,614
308,459
328,999
398,160
25,000
28,178
15,308
7,030
(529
)
162,892
216,436
293,151
321,969
398,689
307,392
327,238
247,033
145,500
119,653
(51,414
)
3,597
16,133
301
240
10,827
26,806
(31,075
)
96,227
(11,918
)
55,657
18,677
23,432
(17,008
)
(34,140
)
(183,393
)
(236,631
)
(214,676
)
(142,132
)
(130,840
)
(26,230
)
(30,426
)
(25,062
)
(8,151
)
(8,707
)
(18,834
)
(49,504
)
(21,488
)
(212,157
)
(219,048
)
(185,053
)
(117,448
)
(98,580
)
44,740
57,145
102,395
279,258
234,397
17,896
21,716
36,237
100,581
85,227
26,844
35,429
65,916
178,074
149,170
1,818
(2,575
)
2,239
3,048
9
28,662
32,854
68,155
181,122
149,179
$
0.54
0.71
1.23
3.31
2.78
0.04
(0.05
)
0.04
0.06
0.58
0.66
1.27
3.37
2.78
49,099,967
49,618,107
53,593,056
53,761,727
53,648,605
49,114,208
49,628,802
53,593,056
53,761,727
53,648,605
$
0.07
0.28
$
2,809,083
5,152,110
6,696,118
8,471,121
4,070,529
26,044,507
25,143,059
21,696,466
15,716,388
11,809,663
35,888,693
33,817,458
30,593,592
26,988,839
21,076,045
0.93
%
1.13
%
1.42
%
1.51
%
1.66
%
0.125
%
0.046
%
0.018
%
0.007
%
0.102
%
(at end of period)
2.31
%
2.09
%
2.51
%
2.85
%
3.01
%
As of December 31,
2008
2007
2006
2005
2004
(dollars in thousands)
$
189,847
111,746
102,343
96,678
41,181
25,413,008
26,736,122
23,789,552
20,260,807
13,461,814
252,232
277,525
353,008
243,630
16,792
27,854,897
29,162,783
26,796,873
22,798,693
15,169,511
26,787,959
28,115,829
25,562,119
21,673,620
14,300,606
643,226
608,879
671,850
649,492
456,175
(a)
(b)
Table of Contents
Year ended December 31,
2008
2007
$ Change
% Change
$
50,124
46,484
3,640
103,014
81,649
21,365
153,138
128,133
$
25,005
19.5
%
9,445
22,596
105,664
133,234
19,731
22,093
$
287,978
306,056
Table of Contents
Table of Contents
Table of Contents
Year ended
December 31,
December 31,
2008
2007
$ Change
$
1,176,383
1,667,057
(490,674
)
37,998
80,219
(42,221
)
1,214,381
1,747,276
(532,895
)
1,026,489
1,502,662
(476,173
)
187,892
244,614
(56,722
)
25,000
28,178
(3,178
)
$
162,892
216,436
(53,544
)
Table of Contents
Year ended
December 31,
December 31,
2008
2007
$ Change
$
104,176
128,069
(23,893
)
178,699
160,888
17,811
19,757
22,669
(2,912
)
4,760
15,612
(10,852
)
(51,414
)
3,597
(55,011
)
10,827
26,806
(15,979
)
55,657
18,677
36,980
$
322,462
376,318
(53,856
)
Table of Contents
Year ended December 31,
2008
2007
$ Change
$
177,724
230,316
(52,592
)
223,464
245,558
(22,094
)
401,188
475,874
$
(74,686
)
7,067
10,231
18,834
49,504
13,525
$
440,614
535,609
Table of Contents
Year ended
December 31,
December 31,
2007
2006
$ Change
$
1,667,057
1,455,715
211,342
80,219
93,918
(13,699
)
1,747,276
1,549,633
197,643
1,502,662
1,241,174
261,488
244,614
308,459
(63,845
)
28,178
15,308
12,870
$
216,436
293,151
(76,715
)
Year ended
December 31,
December 31,
2007
2006
$ Change
$
128,069
121,593
6,476
160,888
102,318
58,570
22,669
15,890
6,779
15,612
7,232
8,380
3,597
16,133
(12,536
)
26,806
(31,075
)
57,881
18,677
23,432
(4,755
)
$
376,318
255,523
120,795
Table of Contents
Year ended December 31,
2007
2006
$ Change
$
230,316
228,238
2,078
245,558
242,591
2,967
475,874
470,829
$
5,045
(46,038
)
10,231
49,504
21,488
$
535,609
446,279
Table of Contents
As of December 31,
Change
2008
2007
Dollars
Percent
$
25,413,008
26,736,122
(1,323,114
)
(4.9)
%
1,348,104
1,120,838
227,266
20.3
175,178
164,695
10,483
6.4
77,054
112,830
(35,776
)
(31.7
)
175,174
222,471
(47,297
)
(21.3
)
666,379
805,827
(139,448
)
(17.3
)
$
27,854,897
29,162,783
(1,307,886
)
(4.5
)%
$
26,787,959
28,115,829
(1,327,870
)
(4.7
)%
1,815
5,885
(4,070
)
(69.2
)
421,897
432,190
(10,293
)
(2.4
)
27,211,671
28,553,904
(1,342,233
)
(4.7
)
643,226
608,879
34,347
5.6
$
27,854,897
29,162,783
(1,307,886
)
(4.5
)%
Table of Contents
Table of Contents
Table of Contents
Year ended December 31, 2007
Fee-Based
Student
Tuition
Base net
Loan
Payment
Software
Asset
Corporate
income
and
Processing
and
Total
Generation
Activity
Eliminations
Adjustments
GAAP
Guaranty
and Campus
Enrollment
Technical
Fee-
and
and
and
to GAAP
Results of
Servicing
Commerce
Services
Services
Based
Management
Overhead
Reclassifications
Results
Operations
$
5,459
3,809
347
18
9,633
1,730,882
7,485
(3,737
)
3,013
1,747,276
7
7
14
1,465,883
40,502
(3,737
)
1,502,662
5,459
3,802
340
18
9,619
264,999
(33,017
)
3,013
244,614
28,178
28,178
5,459
3,802
340
18
9,619
236,821
(33,017
)
3,013
216,436
127,775
127,775
294
128,069
42,682
103,311
145,993
13,387
1,508
160,888
594
22,075
22,669
22,669
84
84
4,433
11,095
15,612
3,597
3,597
74,687
688
891
15,683
91,949
9,040
(100,989
)
26,806
26,806
6,628
12,049
18,677
202,462
43,454
104,796
37,758
388,470
28,339
33,692
(100,989
)
26,806
376,318
85,462
20,426
33,480
23,959
163,327
23,101
49,839
(1,747
)
2,111
236,631
1,840
929
58
2,827
2,406
4,998
(10,231
)
11,401
11,401
28,291
9,812
49,504
36,618
8,901
60,445
2,995
108,959
29,205
77,915
2,969
30,426
249,474
10,552
364
335
775
12,026
74,714
5,240
(91,980
)
134,472
29,691
106,590
27,787
298,540
157,717
147,804
(100,989
)
32,537
535,609
73,449
17,565
(1,454
)
9,989
99,549
107,443
(147,129
)
(2,718
)
57,145
27,910
6,675
(553
)
3,796
37,828
40,828
(57,285
)
345
21,716
45,539
10,890
(901
)
6,193
61,721
66,615
(89,844
)
(3,063
)
35,429
(2,575
)
(2,575
)
$
45,539
10,890
(901
)
6,193
61,721
66,615
(89,844
)
(5,638
)
32,854
(a)
Table of Contents
Year ended December 31, 2006
Fee-Based
Student
Tuition
Base net
Loan
Payment
Software
Asset
Corporate
income
and
Processing
and
Total
Generation
Activity
Eliminations
Adjustments
GAAP
Guaranty
and Campus
Enrollment
Technical
Fee-
and
and
and
to GAAP
Results of
Servicing
Commerce
Services
Services
Based
Management
Overhead
Reclassifications
Results
Operations
$
8,957
4,029
531
105
13,622
1,534,423
4,446
(2,858
)
1,549,633
8
8
1,215,529
28,495
(2,858
)
1,241,174
8,957
4,021
531
105
13,614
318,894
(24,049
)
308,459
15,308
15,308
8,957
4,021
531
105
13,614
303,586
(24,049
)
293,151
121,593
121,593
121,593
35,090
55,361
90,451
11,867
102,318
5
157
15,490
15,652
238
15,890
97
97
3,833
3,302
7,232
16,133
16,133
63,545
503
1,000
17,877
82,925
662
(83,587
)
(31,075
)
(31,075
)
18,381
5,051
23,432
185,240
35,593
56,518
33,367
310,718
50,452
9,015
(83,587
)
(31,075
)
255,523
83,988
17,607
15,510
22,063
139,168
53,036
32,979
(12,254
)
1,747
214,676
21,687
(199
)
21,488
32,419
8,371
30,854
3,238
74,882
51,085
59,086
25,062
210,115
12,577
1,025
17
13,619
52,857
4,857
(71,333
)
128,984
27,003
46,381
25,301
227,669
178,665
96,723
(83,587
)
26,809
446,279
65,213
12,611
10,668
8,171
96,663
175,373
(111,757
)
(57,884
)
102,395
24,780
4,791
4,054
3,105
36,730
66,642
(46,902
)
(20,233
)
36,237
40,433
7,820
6,614
5,066
59,933
108,731
(64,855
)
(37,651
)
66,158
(242
)
(242
)
(242
)
40,433
7,578
6,614
5,066
59,691
108,731
(64,855
)
(37,651
)
65,916
2,239
2,239
$
40,433
7,578
6,614
5,066
59,691
108,731
(64,855
)
(35,412
)
68,155
(a)
Table of Contents
Student
Tuition
Loan
Payment
Software
Asset
Corporate
and
Processing
and
Generation
Activity
Guaranty
and Campus
Enrollment
Technical
and
and
Servicing
Commerce
Services
Services
Management
Overhead
Total
Year ended December 31, 2008
$
(13,844
)
3,483
(10,361
)
4,751
7,826
12,451
1,057
145
26,230
2,999
2,999
(32,360
)
(32,360
)
(1,818
)
(1,818
)
(1,590
)
(2,615
)
(4,185
)
(354
)
16,770
(2,234
)
5,792
$
1,343
5,211
8,266
703
(29,289
)
4,248
(9,518
)
Year ended December 31, 2007
$
(24,224
)
(2,582
)
(26,806
)
5,094
5,815
12,692
1,191
5,634
30,426
2,111
2,111
(3,013
)
(3,013
)
2,575
2,575
(1,936
)
(2,209
)
(4,823
)
(452
)
8,209
1,556
345
$
5,733
3,606
7,869
739
(13,394
)
1,085
5,638
Year ended December 31, 2006
$
5,483
25,592
31,075
5,641
5,968
4,573
1,263
7,617
25,062
1,747
1,747
(2,239
)
(2,239
)
(2,143
)
(2,268
)
(1,738
)
(480
)
(4,978
)
(8,626
)
(20,233
)
$
1,259
3,700
2,835
783
8,122
18,713
35,412
(a)
Table of Contents
Table of Contents
As of
As of
As of
December 31,
December 31,
December 31,
2008
2007
2006
Dollar
Percent
Dollar
Percent
Dollar
Percent
(dollars in millions)
$
24,596
(a)
68.5
%
$
25,640
75.8
%
$
21,869
71.5
%
11,293
(b)
31.5
8,177
24.2
8,725
28.5
$
35,889
100.0
%
$
33,817
100.0
%
$
30,594
100.0
%
(a)
(b)
Table of Contents
Year ended
December 31,
December 31,
2008
2007
$ Change
$
1,377
5,459
(4,082
)
104,287
127,775
(23,488
)
51
51
75,361
74,687
674
179,699
202,462
(22,763
)
51,320
85,462
(34,142
)
747
1,840
(1,093
)
5,074
5,074
33,922
36,618
(2,696
)
25,111
10,552
14,559
22,626
22,626
138,800
134,472
4,328
42,276
73,449
(31,173
)
14,321
27,910
(13,589
)
$
27,955
45,539
(17,584
)
23.3
%
35.3
%
39.1
%
36.2
%
Year ended
December 31,
December 31,
2008
2007
$ Change
% Change
$
49,099
55,376
(6,277)
(11.3
)%
7,980
10,297
(2,317)
(22.5
)
47,208
62,102
(14,894)
(24.0
)
$
104,287
127,775
(23,488)
(18.4
)%
Table of Contents
Year ended
December 31,
December 31,
2007
2006
$ Change
$
5,459
8,957
(3,498
)
127,775
121,593
6,182
5
(5
)
97
(97
)
74,687
63,545
11,142
202,462
185,240
17,222
85,462
83,988
1,474
1,840
1,840
36,618
32,419
4,199
10,552
12,577
(2,025
)
134,472
128,984
5,488
73,449
65,213
8,236
27,910
24,780
3,130
$
45,539
40,433
5,106
35.3
%
33.6
%
36.2
%
33.6
%
Table of Contents
Year ended
December 31,
December 31,
2007
2006
$ Change
% Change
$
55,376
66,374
(10,998
)
(16.6
)%
10,297
9,672
625
6.5
62,102
45,547
16,555
36.3
$
127,775
121,593
6,182
5.1
%
Table of Contents
Year ended
December 31,
December 31,
2008
2007
$ Change
$
1,689
3,802
(2,113
)
48,435
42,682
5,753
(280
)
84
(364
)
302
688
(386
)
48,457
43,454
5,003
23,290
20,426
2,864
9,879
8,901
978
478
364
114
919
919
34,566
29,691
4,875
15,580
17,565
(1,985
)
5,175
6,675
(1,500
)
$
10,405
10,890
(485
)
31.1
%
37.2
%
32.9
%
37.2
%
Table of Contents
Year ended
December 31,
December 31,
2007
2006
$ Change
$
3,802
4,021
(219
)
42,682
35,090
7,592
84
84
688
503
185
43,454
35,593
7,861
20,426
17,607
2,819
8,901
8,371
530
364
1,025
(661
)
29,691
27,003
2,688
17,565
12,611
4,954
6,675
4,791
1,884
10,890
7,820
3,070
(242
)
242
$
10,890
7,578
3,312
37.2
%
31.8
%
Table of Contents
Year ended
December 31,
December 31,
2008
2007
$ Change
$
17
340
(323
)
112,405
103,311
9,094
37
594
(557
)
2
891
(889
)
112,444
104,796
7,648
24,379
33,480
(9,101
)
282
929
(647
)
11,401
(11,401
)
76,189
60,445
15,744
3,240
335
2,905
3,401
3,401
107,491
106,590
901
4,970
(1,454
)
6,424
1,730
(553
)
2,283
$
3,240
(901
)
4,141
4.4
%
(1.4
%)
7.7
%
10.3
%
Table of Contents
Year ended
December 31,
December 31,
2007
2006
$ Change
$
340
531
(191
)
103,311
55,361
47,950
594
157
437
891
1,000
(109
)
104,796
56,518
48,278
33,480
15,510
17,970
929
929
11,401
11,401
60,445
30,854
29,591
335
17
318
106,590
46,381
60,209
(1,454
)
10,668
(12,122
)
(553
)
4,054
(4,607
)
$
(901
)
6,614
(7,515
)
(1.4
%)
18.7
%
10.3
%
18.7
%
Table of Contents
Year ended
December 31,
December 31,
2008
2007
$ Change
$
24
18
6
19,707
22,075
(2,368
)
6,831
15,683
(8,852
)
26,538
37,758
(11,220
)
18,081
23,959
(5,878
)
487
58
429
2,489
2,995
(506
)
37
775
(738
)
2,286
2,286
23,380
27,787
(4,407
)
3,182
9,989
(6,807
)
1,021
3,796
(2,775
)
$
2,161
6,193
(4,032
)
12.0
%
26.4
%
22.4
%
26.6
%
Table of Contents
Year ended
December 31,
December 31,
2007
2006
$ Change
$
18
105
(87
)
22,075
15,490
6,585
15,683
17,877
(2,194
)
37,758
33,367
4,391
23,959
22,063
1,896
58
58
2,995
3,238
(243
)
775
775
27,787
25,301
2,486
9,989
8,171
1,818
3,796
3,105
691
$
6,193
5,066
1,127
26.4
%
24.4
%
26.6
%
24.4
%
Table of Contents
As of December 31, 2008
As of December 31, 2007
As of December 31, 2006
Dollars
Percent
Dollars
Percent
Dollars
Percent
$
6,641,817
26.1
%
$
6,624,009
24.8
%
$
5,724,586
24.1
%
960,751
3.8
101,901
0.4
412,142
1.6
414,708
1.5
365,112
1.5
115,528
0.5
15,233
0.1
16,614,950
65.3
18,646,993
69.8
17,127,623
72.0
42,753
0.2
251,554
0.9
273,108
1.1
274,815
1.0
197,147
0.8
25,061,049
98.6
26,329,213
98.5
23,414,468
98.4
402,881
1.6
452,501
1.7
401,087
1.7
(25,577
)
(0.1
)
(24,534
)
(0.1
)
(7,601
)
(0.0
)
(25,345
)
(0.1
)
(21,058
)
(0.1
)
(18,402
)
(0.1
)
$
25,413,008
100.0
%
$
26,736,122
100.0
%
$
23,789,552
100.0
%
(a)
(b)
Table of Contents
Year ended December 31,
2008
2007
2006
$
26,329,213
23,414,468
19,912,955
69,078
3,096,754
5,299,820
(28,474
)
(1,602,835
)
(2,643,880
)
40,604
1,493,919
2,655,940
1,258,961
1,086,398
1,035,695
936,044
662,629
720,641
517,551
1,105,145
1,600,990
55,922
804,019
682,852
2,809,082
5,152,110
6,696,118
(1,877,885
)
(1,321,055
)
(1,332,086
)
(369,145
)
(800,978
)
(1,114,040
)
(1,830,216
)
(115,332
)
(748,479
)
$
25,061,049
26,329,213
23,414,468
Table of Contents
Year ended December 31,
2008
2007
2006
$
45,592
26,003
13,390
17,000
23,158
9,268
8,000
5,020
6,040
25,000
28,178
15,308
(15,207
)
(6,225
)
(1,765
)
(3,713
)
(1,193
)
(930
)
(18,920
)
(7,418
)
(2,695
)
(750
)
(1,171
)
$
50,922
45,592
26,003
$
25,577
24,534
7,601
25,345
21,058
18,402
$
50,922
45,592
26,003
0.073
%
0.030
%
0.012
%
0.125
%
0.046
%
0.018
%
0.196
%
0.181
%
0.120
%
0.203
%
0.173
%
0.111
%
9.280
%
7.663
%
9.334
%
$
26,044,507
25,143,059
21,696,466
25,061,049
26,329,213
23,414,468
273,108
274,815
197,147
Table of Contents
As of December 31, 2008
As of December 31, 2007
Federally Insured Loans:
Dollars
Percent
Dollars
Percent
$
7,374,602
$
7,115,505
2,484,478
3,015,456
13,169,101
88.3
%
13,937,702
87.5
%
536,112
3.6
682,956
4.3
240,549
1.6
353,303
2.2
983,099
6.5
949,476
6.0
14,928,861
100.0
%
15,923,437
100.0
%
$
24,787,941
$
26,054,398
$
84,237
$
111,946
9,540
12,895
169,865
94.7
%
142,851
95.3
%
3,315
1.8
3,450
2.3
1,743
1.0
1,247
0.8
4,408
2.5
2,426
1.6
179,331
100.0
%
149,974
100.0
%
$
273,108
$
274,815
(1)
(2)
(3)
(4)
Year ended December 31,
2008
2007
2006
5.58
%
7.76
%
7.85
%
(0.73
)
(0.77
)
(0.72
)
(0.35
)
(0.36
)
(0.39
)
4.50
6.63
6.74
(3.45
)
(5.49
)
(5.12
)
1.05
1.14
1.62
(0.12
)
(0.01
)
(0.20
)
0.93
%
1.13
%
1.42
%
$
26,044,507
$
25,143,059
21,696,466
26,869,364
26,599,361
23,379,258
(a)
Table of Contents
Table of Contents
Year ended
December 31,
December 31,
2008
2007
$ Change
$
152,773
236,821
(84,048
)
16
294
(278
)
17,859
13,387
4,472
(448
)
4,433
(4,881
)
(53,035
)
3,597
(56,632
)
466
466
65,622
6,628
58,994
30,480
28,339
2,141
8,316
23,101
(14,785
)
1,845
2,406
(561
)
9,351
28,291
(18,940
)
35,679
29,205
6,474
74,609
74,714
(105
)
2,496
2,496
132,296
157,717
(25,421
)
50,957
107,443
(56,486
)
18,356
40,828
(22,472
)
$
32,601
66,615
(34,014
)
27.8
%
40.5
%
55.5
%
54.8
%
Table of Contents
Year ended December 31,
Change
2008
2007
Dollars
Percent
$
1,415,281
1,948,751
(533,470
)
(27.4
)%
(190,604
)
(193,687
)
3,083
1.6
(90,619
)
(91,020
)
401
0.4
1,134,058
1,664,044
(529,986
)
(31.8
)
30,271
66,838
(36,567
)
(54.7
)
1,164,329
1,730,882
(566,553
)
(32.7
)
986,556
1,465,883
(479,327
)
(32.7
)
25,000
28,178
(3,178
)
(11.3
)
$
152,773
236,821
(84,048
)
(35.5
)%
Table of Contents
Year ended
December 31,
December 31,
2007
2006
$ Change
$
236,821
303,586
(66,765
)
294
294
13,387
11,867
1,520
238
(238
)
4,433
3,833
600
3,597
16,133
(12,536
)
6,628
18,381
(11,753
)
28,339
50,452
(22,113
)
23,101
53,036
(29,935
)
2,406
2,406
28,291
21,687
6,604
29,205
51,085
(21,880
)
74,714
52,857
21,857
157,717
178,665
(20,948
)
107,443
175,373
(67,930
)
40,828
66,642
(25,814
)
$
66,615
108,731
(42,116
)
40.5
%
49.5
%
54.8
%
55.7
%
Year ended December 31,
Change
2007
2006
Dollars
Percent
$
1,948,751
1,699,859
248,892
14.6
%
(193,687
)
(156,751
)
(36,936
)
(23.6
)
(91,020
)
(87,393
)
(3,627
)
(4.2
)
1,664,044
1,455,715
208,329
14.3
66,838
78,708
(11,870
)
(15.1
)
1,730,882
1,534,423
196,459
12.8
1,465,883
1,215,529
250,354
20.6
28,178
15,308
12,870
84.1
$
236,821
303,586
(66,765
)
(22.0
)%
Table of Contents
Table of Contents
Carrying
Interest rate
amount
range
Final maturity
$
20,509,073
0.75% 5.02%
09/25/13 06/25/41
2,713,285
0.00% 6.00%
11/01/09 07/01/43
23,222,358
1,445,327
1.32% 2.94%
05/09/10
95,020
2.49%
03/14/09
202,096
5.30% 6.68%
11/01/09 05/01/29
475,000
5.13% and 7.40%
06/01/10 and 09/15/61
691,500
0.98% 2.41%
05/08/12
622,170
3.37%
09/30/09
34,488
1.25% 5.47%
05/22/09 11/01/15
$
26,787,959
(a)
(b)
(c)
Table of Contents
Table of Contents
Table of Contents
(i)
(ii)
(iii)
(iv)
Table of Contents
Less than
More than
Total
1 year
1 to 3 years
3 to 5 years
5 years
$
26,787,959
792,970
1,841,576
814,633
23,338,780
39,372
9,425
15,689
11,547
2,711
47,055
20,000
27,055
$
26,874,386
822,395
1,884,320
826,180
23,341,491
Table of Contents
$
215,000
197,000
51,000
$
463,000
(a)
(b)
(c)
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
As of December 31, 2008
As of December 31, 2007
Dollars
Percent
Dollars
Percent
$
2,532,609
10.1
%
$
1,136,544
4.3
%
22,528,440
89.9
25,192,669
95.7
$
25,061,049
100.0
%
$
26,329,213
100.0
%
$
677,096
2.5
%
$
689,476
2.5
%
26,110,863
97.5
27,426,353
97.5
$
26,787,959
100.0
%
$
28,115,829
100.0
%
Table of Contents
Borrower/
Estimated
Balance of
Fixed
lender
variable
assets earning fixed-rate
interest
weighted
conversion
floor income as of
rate range
average yield
rate (a)
December 31, 2008 (b)
3.64
%
1.00
%
$
1,183
4.25
%
1.61
%
2,097
4.73
%
2.09
%
2,507
5.34
%
2.70
%
387,063
5.67
%
3.03
%
344,236
6.19
%
3.55
%
406,420
6.70
%
4.06
%
362,556
7.17
%
4.53
%
124,283
7.70
%
5.06
%
206,865
8.16
%
5.52
%
428,425
9.04
%
6.40
%
266,974
$
2,532,609
(a)
(b)
Table of Contents
Debt
outstanding
that funded
Frequency of
student loan
Index (e)
Variable Resets
Assets
assets (a)
Daily
$
23,627,814
622,170
Varies
1,160,127
Quarterly
20,509,073
Varies
2,713,285
Varies
1,445,327
202,096
704,010
$
25,491,951
25,491,951
(a)
Notional Amount
Average/Discrete
3/1 Basis
Maturity
Basis Swaps
Swaps
$
4,500,000
2,700,000
2,400,000
1,300,000
1,250,000
100,000
$
9,600,000
2,650,000
(b)
(c)
(d)
Table of Contents
(e)
Table of Contents
Year ended December 31,
2008
2007
2006
$
(15,037
)
4,753
12,993
46,751
8,535
12,050
7,044
19,794
23,942
(6,661
)
(14,406
)
(1,993
)
$
55,656
18,677
23,432
(a)
(b)
Table of Contents
Year ended December 31, 2008
Interest Rates
Asset and funding index
Change from decrease of 100
Change from increase of 100
mismatches
basis points
basis points
Increase of 10 basis points
Dollar
Percent
Dollar
Percent
Dollar
Percent
$
26,744
59.8
%
$
(24,224
)
(54.1
)%
$
(26,863
)
(60.0
)%
(19,830
)
(44.3
)
19,830
44.3
$
6,914
15.5
%
$
(4,394
)
(9.8
)%
$
(26,863
)
(60.0
)%
$
0.08
$
(0.05
)
$
(0.33
)
Year ended December 31, 2007
Interest Rates
Asset and funding index
Change from decrease of 100
Change from increase of 100
mismatches
basis points
basis points
Increase of 10 basis points
Dollar
Percent
Dollar
Percent
Dollar
Percent
$
2,020
3.5
%
$
6,828
11.9
%
$
(26,599
)
(46.5)
%
$
2,020
3.5
%
$
6,828
11.9
%
$
(26,599
)
(46.5
)%
$
0.03
$
0.09
$
(0.33
)
Year ended December 31, 2006
Interest Rates
Asset and funding index
Change from decrease of 100
Change from increase of 100
mismatches
basis points
basis points
Increase of 10 basis points
Dollar
Percent
Dollar
Percent
Dollar
Percent
$
9,695
9.1
%
$
25,841
24.1
%
$
(23,379
)
(22.8)
%
(12,875
)
(12.1
)
12,875
12.1
$
(3,180
)
(3.0
)%
$
38,716
36.2
%
$
(23,379
)
(22.8)
%
$
(0.04
)
$
0.46
$
(0.28
)
Table of Contents
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Table of Contents
Nelnet, Inc.:
March 2, 2009
Table of Contents
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
Number of shares remaining
Number of shares to be
Weighted-average exercise
available for future issuance
issued upon exercise of
price of outstanding
under equity compensation
outstanding options,
options,
plans (excluding securities
warrants, and rights
warrants, and rights
reflected in column (a))
Plan category
(a)
(b)
(c)
0
$
0
3,337,714
0
$
0
0
0
$
0
3,337,714
(1)
(1)
Table of Contents
Page
F-2
F-3
F-4
F-5
F-6
F-7
Table of Contents
Exhibit No.
Description
2.1
2.2
3.1
3.2
3.3
4.1
4.2
4.3
10.1
10.2
10.3
10.4
10.5
Table of Contents
Exhibit No.
Description
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
Table of Contents
Exhibit No.
Description
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
*
10.33
*
Table of Contents
Exhibit No.
Description
10.34
10.35
+
10.36
+
10.37
+
10.38
+
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
+
10.47
10.48
10.49
10.50
+
10.51
+
Table of Contents
Exhibit No.
Description
10.52
+
10.53
10.54
+
10.55
10.56
+
10.57
+
10.58
+
10.59
+
10.60
+
10.61
+
10.62
10.63
10.64
10.65
10.66
10.67
Table of Contents
Exhibit No.
Description
10.68
+
10.69
*
10.70
+*
10.71
*
10.72
*
10.73
*
12.1
*
21.1
*
23.1
*
31.1
*
31.2
*
32*
*
*
**
+
Table of Contents
NELNET, INC.
By:
/s/ MICHAEL S. DUNLAP
Name:
Michael S. Dunlap
Title:
Chairman and Chief Executive Officer
(Principal Executive Officer)
Signature
Title
Date
Chairman and
Chief Executive Officer
(Principal Executive Officer)
March 2, 2009
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
March 2, 2009
Vice Chairman
March 2, 2009
Director
March 2, 2009
Director
March 2, 2009
Director
March 2, 2009
Director
March 2, 2009
Director
March 2, 2009
Director
March 2, 2009
Director
March 2, 2009
Table of Contents
Page
F-2
F-3
F-4
F-5
F-6
F-7
Table of Contents
Nelnet, Inc.:
March 2, 2009
Table of Contents
2008
2007
(Dollars in thousands, except share data)
$
25,413,008
26,736,122
13,129
38,305
176,718
73,441
189,847
111,746
997,272
927,247
160,985
81,845
471,878
593,322
42,088
49,084
175,178
164,695
77,054
112,830
38,747
55,797
113,666
107,624
175,174
222,471
$
27,854,897
29,162,783
$
26,787,959
28,115,829
81,576
129,446
179,336
220,899
160,985
81,845
1,815
5,885
27,211,671
28,553,904
378
380
115
115
103,762
96,185
540,521
515,317
(1,550
)
(3,118
)
643,226
608,879
$
27,854,897
29,162,783
Table of Contents
2008
2007
2006
(Dollars in thousands, except share data)
$
1,176,383
1,667,057
1,455,715
37,998
80,219
93,918
1,214,381
1,747,276
1,549,633
1,026,489
1,502,662
1,241,174
187,892
244,614
308,459
25,000
28,178
15,308
162,892
216,436
293,151
104,176
128,069
121,593
178,699
160,888
102,318
19,757
22,669
15,890
4,760
15,612
7,232
(51,414
)
3,597
16,133
66,484
45,483
(7,643
)
322,462
376,318
255,523
183,393
236,631
214,676
68,596
59,378
39,198
43,669
47,451
39,436
35,553
40,102
25,993
19,215
25,395
20,827
18,834
49,504
21,488
12,384
17,371
21,505
10,408
11,450
11,802
48,562
48,327
51,354
257,221
298,978
231,603
440,614
535,609
446,279
44,740
57,145
102,395
17,896
21,716
36,237
26,844
35,429
66,158
(242
)
26,844
35,429
65,916
1,818
(2,575
)
2,239
$
28,662
32,854
68,155
$
0.54
0.71
1.23
0.04
(0.05
)
0.04
$
0.58
0.66
1.27
Table of Contents
Accumulated
Preferred
Class A
Class B
Additional
Employee
other
Total
stock
Common stock shares
Preferred
common
common
paid-in
Retained
notes
comprehensive
shareholders
shares
Class A
Class B
stock
stock
stock
capital
earnings
receivable
income
equity
(Dollars in thousands, except share data)
40,040,841
13,962,954
$
400
140
220,346
428,186
420
649,492
68,155
68,155
(98
)
(98
)
68,057
(191
)
(191
)
477,386
4
17,517
17,521
2,185
2,185
(1,940,200
)
(19
)
(62,370
)
(62,389
)
457,142
(457,142
)
5
(5
)
(2,825
)
(2,825
)
39,035,169
13,505,812
390
135
177,678
496,341
(2,825
)
131
671,850
32,854
32,854
(322
)
(322
)
191
191
32,723
(13,817
)
(13,817
)
(61
)
(61
)
2,519
2,519
781,561
8
5,698
(725
)
4,981
4,810
4,810
(3,372,122
)
(33
)
(82,018
)
(82,051
)
2,010,435
(2,010,435
)
20
(20
)
(474,426
)
(5
)
(12,502
)
(12,507
)
432
432
37,980,617
11,495,377
380
115
96,185
515,317
(3,118
)
608,879
28,662
28,662
(3,458
)
(3,458
)
201,654
2
3,826
3,828
5,283
5,283
(388,204
)
(4
)
(1,532
)
(1,536
)
1,568
1,568
37,794,067
11,495,377
$
378
115
103,762
540,521
(1,550
)
643,226
Table of Contents
2008
2007
2006
(Dollars in thousands)
$
28,662
32,854
68,155
1,818
(2,575
)
2,239
26,844
35,429
65,916
141,605
261,385
167,185
38,576
(139,146
)
(43,908
)
(52,886
)
108,712
70,374
3,483
3,628
4,640
20,368
50,843
8,580
(16,367
)
(8,100
)
18,834
49,504
21,488
8,291
(3,942
)
51,414
(3,087
)
(15,886
)
7,320
6,686
2,495
(9,468
)
(24,979
)
(7,012
)
25,000
28,178
15,308
1,788
(2,643
)
(56
)
121,444
(89,924
)
(108,735
)
6,996
(6,659
)
(12,276
)
1,608
(5,324
)
8,779
(47,870
)
9,235
25,930
(17,581
)
(1,310
)
5,678
321,103
276,777
208,500
(3,717
)
6,742
321,103
273,060
215,242
(2,685,876
)
(5,042,378
)
(6,276,416
)
(212,888
)
(260,985
)
(588,564
)
2,247,031
2,122,033
2,446,126
1,807,813
118,649
782,124
(5,141
)
(20,061
)
(41,815
)
(70,025
)
590,604
(128,802
)
(2,988
)
747
149
14,497
(18,000
)
(1,773
)
(100,531
)
10,000
1,059,926
(2,468,667
)
(3,907,729
)
(294
)
(10,130
)
1,059,926
(2,468,961
)
(3,917,859
)
(6,879,826
)
(5,750,423
)
(5,040,778
)
5,640,865
8,121,833
8,721,060
(35,772
)
(50,796
)
108,089
(14,886
)
(15,160
)
(19,907
)
(3,458
)
(13,817
)
(9,600
)
(15,875
)
710
1,467
1,645
(1,536
)
(76,648
)
(62,389
)
575
432
(2,825
)
(1,302,928
)
2,201,013
3,704,895
(1,302,928
)
2,201,013
3,704,895
548
158
78,101
5,660
2,436
111,746
106,086
103,650
$
189,847
111,746
106,086
$
1,056,640
1,369,287
1,160,482
$
24,058
36,999
51,834
$
14,110
5,134
$
725
Table of Contents
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
2008
2007
2006
$
9,278
4,474
(3,562
)
(2,235
)
1,966
(8,316
)
(148
)
25
$
1,818
(2,575
)
2,239
2007
2006
$
124
232
31,511
68,966
(22,357
)
(55,122
)
(9,602
)
9,278
4,474
3,562
2,235
$
5,716
2,239
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Employee
Write-down
termination
Lease
of property
benefits
terminations
and equipment
Total
$
6,315
(a)
3,916
(b)
10,060
(c)
20,291
(10,060
)
(10,060
)
(134)
(a)
(16)
(b)
(150
)
(4,988
)
(218
)
(5,206
)
1,193
3,682
4,875
(191)
(a)
(191
)
(1,002
)
(791
)
(1,793
)
$
2,891
2,891
(a)
(b)
(c)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Employee
termination
Lease
Write-down
benefits
terminations
of assets
Total
$
5,865
(a)
1,398
(b)
18,834
(c)
26,097
(18,834
)
(18,834
)
(5,865
)
(809
)
(6,674
)
$
589
589
(a)
(b)
(c)
Restructuring
costs
Write-down of
Restructuring
recognized
assets to net
Cash
accrual as of
Operating segment
in 2008
realizable value
payments
December 31, 2008
$
5,906
(5,074
)
(786
)
46
297
(310
)
(13
)
510
(511
)
(1
)
11,235
(9,351
)
(1,878
)
6
8,149
(4,409
)
(3,189
)
551
$
26,097
(18,834
)
(6,674
)
589
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
$
3,266
16,343
558
4,172
134
576
12,474
(16,343
)
(2,334
)
(5,047
)
$
13,799
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
$
157
1,212
13,111
545
4,891
34,150
(2,991
)
$
51,075
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
$
5,154
14,962
360
520
23,910
(4,818
)
$
40,088
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
$
7,055
18,920
2,349
2,375
19,954
(14,173
)
$
36,480
Weighted
average
remaining
useful life as of
December 31,
As of December 31,
2008
2008
2007
(months)
106
$
50,623
60,061
43
11,581
1,609
19
8,735
15,425
23
4,033
6,287
9
1,561
4,189
2
342
2,391
86
179
203
8,473
80 months
77,054
98,638
14,192
$
77,054
112,830
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
$
22,318
15,985
10,031
9,029
6,168
13,523
$
77,054
Tuition
Student Loan
Payment
Software
Asset
and
Processing
and
Generation
Guaranty
and Campus
Enrollment
Technical
and
Servicing
Commerce
Services
Services
Management
Total
$
57,858
82,416
8,596
42,550
191,420
228
(15,552
)
(15,324
)
(11,401
)
(11,401
)
$
58,086
55,463
8,596
42,550
164,695
11,150
11,150
(667
)
(667
)
$
58,086
66,613
8,596
41,883
175,178
(a)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Operating
Impairment
Asset
segment
charge
Asset Generation and Management
$
13,581
Asset Generation and Management
11,555
Asset Generation and Management
2,907
Enrollment Services
11,401
$
39,444
Operating
Impairment
Asset
segment
charge
Student Loan and Guaranty Servicing
$
4,689
Asset Generation and Management
336
Asset Generation and Management
8,336
Asset Generation and Management
12
Asset Generation and Management
667
Student Loan and Guaranty Servicing
385
Corporate activities
4,409
$
18,834
As of December 31,
2008
2007
$
24,787,941
26,054,398
273,108
274,815
25,061,049
26,329,213
402,881
452,501
(25,577
)
(24,534
)
(25,345
)
(21,058
)
$
25,413,008
26,736,122
0.10
%
0.09
%
9.28
%
7.66
%
0.20
%
0.17
%
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
2008
2007
2006
$
45,592
26,003
13,390
25,000
28,178
15,308
(18,920
)
(7,418
)
(2,695
)
(750
)
(1,171
)
$
50,922
45,592
26,003
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
As of December 31, 2007
Carrying
Interest rate
amount
range
Final maturity
$
17,508,810
4.73% 5.78%
09/25/12 06/25/41
2,905,295
2.96% 7.25%
11/01/09 07/01/43
20,414,105
6,629,109
5.22% 5.98%
05/09/10
226,250
5.58%
03/14/09
214,476
5.20% 6.68%
11/01/09 05/01/29
475,000
5.13% and 7.40%
06/01/10 and 09/15/61
80,000
5.40% 5.53%
05/08/12
76,889
4.65% 5.20%
09/28/08 11/01/15
$
28,115,829
(a)
(b)
(c)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
(i)
(ii)
(iii)
(iv)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
$
792,970
1,742,676
98,900
703,348
111,285
23,338,780
$
26,787,959
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Weighted
Weighted
average fixed
average fixed
Notional
rate paid by
Notional
rate received by
Maturity
amount
the Company
amount
the Company
$
512,500
3.42
%
$
512,500
5.25
%
462,500
3.76
462,500
5.34
312,500
4.01
312,500
5.37
1,137,500
4.25
1,137,500
4.75
275,000
4.31
275,000
4.76
525,000
4.36
525,000
4.80
$
3,225,000
4.05
%
$
3,225,000
4.98
%
Weighted
average fixed
Notional
rate paid by
Maturity
Amount
the Company (b)
$
2,000,000
4.18
%
500,000
4.08
700,000
3.44
500,000
3.57
250,000
3.86
$
3,950,000
3.94
%
(a)
(b)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
As of December 31, 2008
Notional Amount
Average/Discrete
Maturity
Basis Swaps
3/1 Basis Swaps
$
4,500,000
2,700,000
2,400,000
1,300,000
1,250,000
100,000
$
9,600,000
2,650,000
As of December 31, 2007
Notional Amount
Average/Discrete
Maturity
Basis waps
3/1 Basis Swaps
$
4,000,000
6,000,000
6,500,000
4,050,000
3,900,000
1,000,000
500,000
$
24,450,000
1,500,000
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
As of December 31,
2008
2007
$
(2,695
)
6,039
27,525
167,320
191,756
$
173,359
216,586
2008
2007
2006
$
(15,037
)
16,803
40,476
46,751
8,534
(645
)
23,942
(6,660
)
(14,406
)
(1,993
)
$
55,656
18,677
23,432
(a)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
2008
2007
2006
49,455,978
49,800,434
53,593,056
356,011
182,327
49,099,967
49,618,107
53,593,056
14,241
10,695
49,114,208
49,628,802
53,593,056
As of December 31,
2008
2007
$
31,111
85,821
238,561
117,752
340,196
333,047
$
609,868
536,620
Useful
As of December 31,
life
2008
2007
3-5 years
$
83,200
87,182
3-7 years
13,206
14,491
1-10 years
11,949
12,147
3-10 years
3,771
3,845
39 years
9,234
9,139
121,360
126,804
82,613
71,007
$
38,747
55,797
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
2008
2007
$
8,359
10,838
938
299
999
723
(62
)
(858
)
(48
)
(1,101
)
(3,453
)
$
8,275
8,359
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
2005 and 2006
2004 through 2006
2004 through 2006
2008
2007
2006
$
25,073
45,016
40,881
2,270
1,674
340
21
5
27,364
46,695
41,221
(7,256
)
(24,105
)
(4,708
)
(2,217
)
(874
)
(276
)
5
(9,468
)
(24,979
)
(4,984
)
$
17,896
21,716
36,237
2008
2007
2006
35.0
%
35.0
%
35.0
%
0.9
2.2
1.2
(0.9
)
(0.4
)
(2.8
)
(1.9
)
(3.6
)
(0.5
)
4.2
3.4
2.1
2.7
1.4
0.4
40.0
%
38.0
%
35.4
%
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
As of December 31,
2008
2007
$
20,229
17,839
5,283
5,455
969
1,726
536
990
875
701
1,339
803
1,165
773
141
30,537
28,287
(1,988
)
(773
)
28,549
27,514
55,793
61,348
17,152
13,788
3,185
9,447
477
946
162
76,607
85,691
$
(48,058
)
(58,177
)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
As of December 31,
2008
2007
Fair value
Carrying value
Fair value
Carrying value
$
25,743,732
25,413,008
27,061,783
26,736,122
189,847
189,847
111,746
111,746
997,272
997,272
927,247
927,247
160,985
160,985
81,845
81,845
471,878
471,878
593,322
593,322
175,174
175,174
222,471
222,471
26,512,082
26,787,959
28,106,745
28,115,829
81,576
81,576
129,446
129,446
160,985
160,985
81,845
81,845
1,815
1,815
5,885
5,885
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
As of December 31, 2008
Level 1
Level 2
Level 3
Total
$
4,941
3,876
8,817
175,174
175,174
$
4,941
179,050
183,991
$
1,815
1,815
$
1,815
1,815
(a)
(b)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
$
9,425
8,806
6,883
6,116
5,431
2,711
$
39,372
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Year ended December 31, 2008
Fee-Based
Student
Tuition
Base net
Loan
Payment
Software
Asset
Corporate
income
and
Processing
and
Total
Generation
Activity
Eliminations
Adjustments
GAAP
Guaranty
and Campus
Enrollment
Technical
Fee-
and
and
and
to GAAP
Results of
Servicing
Commerce
Services
Services
Based
Management
Overhead
Reclassifications
Results
Operations
$
1,377
1,689
17
24
3,107
1,164,329
6,810
(2,190
)
42,325
1,214,381
986,556
42,123
(2,190
)
1,026,489
1,377
1,689
17
24
3,107
177,773
(35,313
)
42,325
187,892
25,000
25,000
1,377
1,689
17
24
3,107
152,773
(35,313
)
42,325
162,892
104,287
104,287
16
(127
)
104,176
48,435
112,405
160,840
17,859
178,699
37
19,707
19,744
13
19,757
51
(280
)
(229
)
(448
)
5,437
4,760
(53,035
)
1,621
(51,414
)
75,361
302
2
6,831
82,496
63,385
(145,881
)
466
10,361
10,827
65,622
(9,965
)
55,657
179,699
48,457
112,444
26,538
367,138
30,480
70,329
(145,881
)
396
322,462
51,320
23,290
24,379
18,081
117,070
8,316
54,910
98
2,999
183,393
747
282
487
1,516
1,845
3,706
(7,067
)
5,074
5,074
9,351
4,409
18,834
33,922
9,879
76,189
2,489
122,479
35,679
53,975
24
26,230
238,387
25,111
478
3,240
37
28,866
74,609
3,733
(107,208
)
22,626
919
3,401
2,286
29,232
2,496
(31,728
)
138,800
34,566
107,491
23,380
304,237
132,296
120,733
(145,881
)
29,229
440,614
42,276
15,580
4,970
3,182
66,008
50,957
(85,717
)
13,492
44,740
14,321
5,175
1,730
1,021
22,247
18,356
(28,499
)
5,792
17,896
27,955
10,405
3,240
2,161
43,761
32,601
(57,218
)
7,700
26,844
1,818
1,818
$
27,955
10,405
3,240
2,161
43,761
32,601
(57,218
)
9,518
28,662
$
245,202
128,657
120,961
14,428
509,248
27,724,122
106,965
(485,438
)
27,854,897
(a)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Year ended December 31, 2007
Fee-Based
Student
Tuition
Base net
Loan
Payment
Software
Asset
Corporate
income
and
Processing
and
Total
Generation
Activity
Eliminations
Adjustments
GAAP
Guaranty
and Campus
Enrollment
Technical
Fee-
and
and
and
to GAAP
Results of
Servicing
Commerce
Services
Services
Based
Management
Overhead
Reclassifications
Results
Operations
$
5,459
3,809
347
18
9,633
1,730,882
7,485
(3,737
)
3,013
1,747,276
7
7
14
1,465,883
40,502
(3,737
)
1,502,662
5,459
3,802
340
18
9,619
264,999
(33,017
)
3,013
244,614
28,178
28,178
5,459
3,802
340
18
9,619
236,821
(33,017
)
3,013
216,436
127,775
127,775
294
128,069
42,682
103,311
145,993
13,387
1,508
160,888
594
22,075
22,669
22,669
84
84
8,030
11,095
19,209
74,687
688
891
15,683
91,949
9,040
(100,989
)
26,806
26,806
6,628
12,049
18,677
202,462
43,454
104,796
37,758
388,470
28,339
33,692
(100,989
)
26,806
376,318
85,462
20,426
33,480
23,959
163,327
23,101
49,839
(1,747
)
2,111
236,631
1,840
929
58
2,827
2,406
4,998
(10,231
)
11,401
11,401
28,291
9,812
49,504
36,618
8,901
60,445
2,995
108,959
29,205
77,915
2,969
30,426
249,474
10,552
364
335
775
12,026
74,714
5,240
(91,980
)
134,472
29,691
106,590
27,787
298,540
157,717
147,804
(100,989
)
32,537
535,609
73,449
17,565
(1,454
)
9,989
99,549
107,443
(147,129
)
(2,718
)
57,145
27,910
6,675
(553
)
3,796
37,828
40,828
(57,285
)
345
21,716
45,539
10,890
(901
)
6,193
61,721
66,615
(89,844
)
(3,063
)
35,429
45,539
10,890
(901
)
6,193
61,721
66,615
(89,844
)
(3,063
)
35,429
(2,575
)
(2,575
)
$
45,539
10,890
(901
)
6,193
61,721
66,615
(89,844
)
(5,638
)
32,854
$
206,008
119,084
121,202
21,186
467,480
28,696,640
48,147
(49,484
)
29,162,783
(a)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Year ended December 31, 2006
Fee-Based
Student
Tuition
Base net
Loan
Payment
Software
Asset
Corporate
income
and
Processing
and
Total
Generation
Activity
Eliminations
Adjustments
GAAP
Guaranty
and Campus
Enrollment
Technical
Fee-
and
and
and
to GAAP
Results of
Servicing
Commerce
Services
Services
Based
Management
Overhead
Reclassifications
Results
Operations
$
8,957
4,029
531
105
13,622
1,534,423
4,446
(2,858
)
1,549,633
8
8
1,215,529
28,495
(2,858
)
1,241,174
8,957
4,021
531
105
13,614
318,894
(24,049
)
308,459
15,308
15,308
8,957
4,021
531
105
13,614
303,586
(24,049
)
293,151
121,593
121,593
121,593
35,090
55,361
90,451
11,867
102,318
5
157
15,490
15,652
238
15,890
97
97
19,966
3,302
23,365
63,545
503
1,000
17,877
82,925
662
(83,587
)
(31,075
)
(31,075
)
18,381
5,051
23,432
185,240
35,593
56,518
33,367
310,718
50,452
9,015
(83,587
)
(31,075
)
255,523
83,988
17,607
15,510
22,063
139,168
53,036
32,979
(12,254
)
1,747
214,676
21,687
(199
)
21,488
32,419
8,371
30,854
3,238
74,882
51,085
59,086
25,062
210,115
12,577
1,025
17
13,619
52,857
4,857
(71,333
)
128,984
27,003
46,381
25,301
227,669
178,665
96,723
(83,587
)
26,809
446,279
65,213
12,611
10,668
8,171
96,663
175,373
(111,757
)
(57,884
)
102,395
24,780
4,791
4,054
3,105
36,730
66,642
(46,902
)
(20,233
)
36,237
40,433
7,820
6,614
5,066
59,933
108,731
(64,855
)
(37,651
)
66,158
(242
)
(242
)
(242
)
40,433
7,578
6,614
5,066
59,691
108,731
(64,855
)
(37,651
)
65,916
2,239
2,239
$
40,433
7,578
6,614
5,066
59,691
108,731
(64,855
)
(35,412
)
68,155
$
398,939
177,105
152,962
29,359
658,365
26,174,592
37,268
(200,661
)
27,309
26,796,873
(a)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
Student
Tuition
Loan
Payment
Software
Asset
Corporate
and
Processing
and
Generation
Activity
Guaranty
and Campus
Enrollment
Technical
and
and
Servicing
Commerce
Services
Services
Management
Overhead
Total
Year ended December 31, 2008
$
(13,844
)
3,483
(10,361
)
4,751
7,826
12,451
1,057
145
26,230
2,999
2,999
(32,360
)
(32,360
)
(1,818
)
(1,818
)
(1,590
)
(2,615
)
(4,185
)
(354
)
16,770
(2,234
)
5,792
$
1,343
5,211
8,266
703
(29,289
)
4,248
(9,518
)
Year ended December 31, 2007
$
(24,224
)
(2,582
)
(26,806
)
5,094
5,815
12,692
1,191
5,634
30,426
2,111
2,111
(3,013
)
(3,013
)
2,575
2,575
(1,936
)
(2,209
)
(4,823
)
(452
)
8,209
1,556
345
$
5,733
3,606
7,869
739
(13,394
)
1,085
5,638
Year ended December 31, 2006
$
5,483
25,592
31,075
5,641
5,968
4,573
1,263
7,617
25,062
1,747
1,747
(2,239
)
(2,239
)
(2,143
)
(2,268
)
(1,738
)
(480
)
(4,978
)
(8,626
)
(20,233
)
$
1,259
3,700
2,835
783
8,122
18,713
35,412
(1)
(2)
(3)
(4)
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
(5)
(6)
2008
First
Second
Third
Fourth
quarter
quarter
quarter
quarter
$
16,525
73,338
59,570
38,459
5,000
6,000
7,000
7,000
11,525
67,338
52,570
31,459
80,188
72,263
81,979
72,962
(47,474
)
48
(3,988
)
(16,598
)
20,192
6,874
56,016
(110,003
)
(97,922
)
(103,669
)
(110,186
)
(18,834
)
31,371
(19,195
)
(13,969
)
(16,103
)
(69,825
)
42,724
23,785
30,160
981
837
$
(69,825
)
43,705
23,785
30,997
$
(1.42
)
0.87
0.48
0.62
0.02
0.01
$
(1.42
)
0.89
0.48
0.63
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
2007
First
Second
Third
Fourth
quarter
quarter
quarter
quarter
$
67,984
67,976
64,399
44,255
2,753
2,535
18,340
4,550
65,231
65,441
46,059
39,705
81,335
77,647
83,519
84,737
1,787
1,010
492
308
(7,890
)
10,743
16,113
26,517
(121,229
)
(120,646
)
(123,941
)
(120,289
)
(49,504
)
(7,264
)
(13,306
)
10,664
(11,810
)
11,970
20,889
(16,598
)
19,168
2,810
(6,135
)
909
(159
)
$
14,780
14,754
(15,689
)
19,009
$
0.23
0.42
(0.34
)
0.39
0.06
(0.12
)
0.02
$
0.29
0.30
(0.32
)
0.39
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
(Parent Company Only)
As of December 31,
2008
2007
$
130,394
50,677
17,607
132,336
57,529
657,020
652,047
28,168
34,434
13,447
22,453
980,070
464,040
$
1,959,042
1,281,180
$
1,166,500
569,550
5,232
5,153
11,748
40,069
132,336
57,529
1,315,816
672,301
493
495
103,762
96,185
540,521
515,317
(1,550
)
(3,118
)
643,226
608,879
$
1,959,042
1,281,180
(Parent Company Only)
Year ended December 31,
2008
2007
2006
$
133,942
220,985
206,528
104,803
143,329
186,399
29,139
77,656
20,129
(8,030
)
(31,429
)
(16,001
)
14,406
35,581
11,497
5,445
(14,243
)
57,598
14,116
32,136
7,307
26,844
35,429
65,916
1,818
(2,575
)
2,239
$
28,662
32,854
68,155
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share amounts, unless otherwise noted)
(Parent Company Only)
Year ended December 31,
2008
2007
2006
$
28,662
32,854
68,155
1,818
(2,575
)
2,239
26,844
35,429
65,916
5,477
7,606
8,258
13,868
(13,818
)
21,761
20,368
50,843
8,580
(16,367
)
(8,100
)
2,448
8,643
(5,445
)
14,243
(57,598
)
(3,942
)
7,320
6,686
2,495
4,133
(320
)
4,149
9,006
3,613
(1,751
)
(542,104
)
69,271
(309,207
)
79
(1,893
)
5,266
(8,992
)
(5,099
)
17,399
(483,365
)
163,162
(234,732
)
(17,607
)
2,510
(9
)
747
149
12,515
309,413
(240,732
)
(18,000
)
(4,950
)
(13,130
)
10,000
(20,582
)
315,201
(253,713
)
(14,550
)
(597,297
)
611,500
230,383
564,464
23
(114
)
(3,156
)
(3,458
)
(13,817
)
(9,600
)
(15,875
)
710
1,467
1,645
(1,536
)
(76,648
)
(62,389
)
575
432
(2,825
)
583,664
(471,469
)
497,739
79,717
6,894
9,294
50,677
43,783
34,489
$
130,394
50,677
43,783
Table of Contents
The Federal Family Education Loan Program
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Date of Loans
Annualized SAP Rate
T-Bill Rate less Applicable Interest Rate + 3.5%
T-Bill Rate less Applicable Interest Rate + 3.25%
T-Bill Rate less Applicable Interest Rate + 3.1%
T-Bill Rate less Applicable Interest Rate + 3.1%
(1)
T-Bill Rate less Applicable Interest Rate + 2.8%
(2)
3 Month Commercial Paper Rate less Applicable Interest Rate +
2.34%
(3)
3 Month Commercial Paper Rate less
Applicable Interest Rate + 1.94%
(4)
3 Month Commercial Paper Rate less Applicable Interest Rate +
1.79%
(5)
(1)
(2)
(3)
(4)
(5)
Date of Loans
Annualized SAP Rate
T-Bill Rate less Applicable Interest Rate + 3.1%
3 Month Commercial Paper Rate less Applicable
Interest Rate + 2.64%
3 Month Commercial Paper Rate less Applicable
Interest Rate + 1.94%
3 Month Commercial Paper Rate less Applicable
Interest Rate + 1.79%
3 Month Commercial Paper Rate less Applicable
Interest Rate + 2.24%
3 Month Commercial Paper Rate less Applicable
Interest Rate + 2.09%
Table of Contents
2
Table of Contents
Exhibit
No.
Description
*
**
+
1
2
3
4
Duncan Aviation, Inc. | National Education Loan Network, Inc. | |||||
|
||||||
By:
|
/s/ Jeff Lake | By: | /s/ William J. Munn | |||
|
||||||
Title:
|
Title: | |||||
|
||||||
|
||||||
Union Financial Services, Inc. | ||||||
|
||||||
By:
|
/s/ Michael S. Dunlap | |||||
|
||||||
Title:
|
||||||
5
Nelnet
|
74.753 | % | ||
UFS
|
25.247 | % |
1
2
3
4
National Education Loan Network, Inc. | Union Financial Services, Inc. | |||||
|
||||||
|
||||||
By:
|
/s/ William J. Munn | By: | /s/ Michael S. Dunlap | |||
|
||||||
Its:
|
Its: | |||||
5
Union Bank and Trust Company | National Education Loan Network, Inc. | |||||||||
|
||||||||||
By:
|
/s/ Thomas Sullivan | By: | /s/ Darrin Jameson | |||||||
|
||||||||||
|
Title: VP | Title: Director |
1. |
Compensation and Benefits.
You will receive the following compensation and
benefits, which exceed amounts Nelnet would otherwise be required to pay you under our
normal policies and procedures or any other law, rule or agreement:
|
a. |
In lieu of notice, in lieu of any other monies you may be entitled to,
and the provisions of this Agreement, the amount of four hundred fifty thousand
dollars ($450,000), less applicable taxes and other deductions (Payment) on or
before August 15, 2008 via direct deposit to your bank account. The Payment includes
any amount you may have been entitled to pursuant to the companys incentive program
for 2008. The Payment does not include (i) your regular payroll through the
Termination Date; and (ii) all accrued but unused Earned Time Off (ETO) as of the
Termination Date, both of which were paid to you on or about the Termination Date.
|
b. |
You and your dependents will be eligible for health insurance coverage
(including dental and vision coverage if applicable) pursuant to the Comprehensive
Omnibus Budget Reconciliation Act (COBRA), based on the coverage you had in place
upon the Termination Date and at your own expense.
|
c. |
Effective July 15, 2008, your participation in the Nelnet 401(k) plan and
the Employee Stock Purchase Plan as well as your accrual of ETO, and your disability
insurance and life insurance benefits have ceased in accordance with the provisions
of those plans. Disability and life insurance benefits are convertible to a
personal plan at your option. All restricted shares of Nelnet Class A Common Stock
in your name which had not vested as of July 15, 2008 will be cancelled.
|
d. |
You will receive Nelnets standard outplacement and career assistance
services package via Lee Hecht Harrison, at Nelnets expense.
|
e. |
You have received, without charge, a laptop computer with operating
software and applications substantially similar to the one you were provided while
employed with Nelnet.
|
f. |
You will receive reimbursement for pre-approved business expenses
(written approval of Nelnets President or Chief Financial Officer is required)
which are incurred on behalf of Nelnet
through July 15, 2008, upon submission of the same and subject to Nelnets standard
policies for payment of such expenses.
|
2. |
Waiver of Claims.
In consideration of the amounts to be paid to you, you waive and
release Nelnet, Inc. and its employees, agents, officers, directors, and shareholders,
partners and affiliated companies; of and from any claims, demands, actions, charges, and
causes of action, known and unknown, of any kind whatsoever, including, but not limited to,
all matters relating to or arising out of your employment with and separation from Nelnet and
your compensation. This applies to claims under Title VII of the Civil Rights Act of 1964, as
amended; the Employee Retirement Income Security Act of 1974, as amended; the Rehabilitation
Act of 1973, as amended; the Age Discrimination in Employment Act of 1967, as amended;
Section 1981 of the Civil Rights Act of 1866; Executive Orders 11246 and 11478; the National
Labor Relations Act, as amended; the Fair Labor Standards Act of 1938, as amended; the Family
and Medical Leave Act of 1993; the Equal Pay Act of 1963, as amended, the Older Workers
Benefit Protection Act; the Americans with Disabilities Act; the Civil Rights Act of 1991;
and any other law or ordinance, or any other basis of action, up to and including the date
you execute this agreement. You further waive any rights and release Nelnet from any
obligation to pay for any leave benefits of any kind upon ending of employment, whether
accrued or not, including ETO and amounts pursuant to any incentive program.
|
3. |
Other Items
|
a. |
Confidentiality and Trade Secrets. This letter is confidential and may not be
disclosed to any other person except as required by law or to your spouse, accountants
or attorneys for legitimate purposes. You possess many trade secrets of Nelnet, such as
customer lists, marketing strategies and financial information, all of which you must
keep confidential at all times unless disclosure is authorized in writing by Nelnet.
|
b. |
Agreement Not to Compete. For a period of twelve (12) months following the
Termination Date, you agree not to engage, either directly or indirectly, in owning,
managing, operating, joining, controlling, being employed by or participating in any
manner in the ownership, management, operation or control of, or to be connected in any
manner with any person, firm, corporation, company (other than Nelnet), partnership,
joint venture or the like which in any way, either directly or indirectly, is engaged in
any activity which is directly or indirectly competitive with Nelnet, without the prior
express written consent and permission of Nelnet, provided, however, the foregoing does
not prevent your ownership of shareholdings of 1% or less of publicly traded companies.
Notwithstanding the foregoing
, the provisions of this paragraph shall only apply
to the products and services offered by or in development at Nelnet (including 5280
Solutions, LLC), and the activities in which Nelnet (including 5280 Solutions, LLC) was
engaged as of the Termination Date and with which you were involved during your
employment, all as set forth on Exhibit A hereto. This Agreement shall supersede and
terminate any existing employment agreement, oral or written, between you and Nelnet.
The period of your agreement not to compete shall be extended to include any period of
time in which you are or were engaged in activities constituting a breach of this
paragraph and any period of time required to litigate with respect to such activities,
provided such litigation results in a finding that you were engaged in activities
constituting a breach hereof. You and Nelnet agree that a breach hereof will cause
irreparable injury to Nelnet, and that monetary damage would not provide an adequate
remedy for such breach and that therefore Nelnet
may elect to have this paragraph specifically enforced by any court having equity
jurisdiction, without the requirement of posting bond or other security.
|
c. |
Nonsolicitation. You will not at any time for a period of twelve (12) months from
and after the Termination Date, directly or indirectly solicit any employee of Nelnet to
leave the employ of their employer.
|
d. |
Employment Inquiries. In keeping with our standard policies, Nelnet will answer
external employment-related inquiries by indicating only the position(s) held by you,
your dates of employment, your responsibilities, and a confirmation of your last salary.
Please direct all such inquiries to Nelnets People Services department.
|
e. |
Statements. You agree not to make written or oral statements or take any action
directly or indirectly, which you know or reasonably should know to be disparaging or
negative concerning Nelnet, and you agree not to suggest to anyone that any such
statements be made or to urge or influence any person to make any such statement. You
will refrain from expressing any disparaging or negative opinions concerning your
separation from Nelnet, any of Nelnets officers, directors, or employees, or any other
matters relative to Nelnets reputation as an employer.
|
f. |
Indemnification. As a former corporate officer of Nelnet, Nelnet will continue to
provide you with indemnification relating to events which occurred while you were a
corporate officer, to the fullest extent permitted under applicable law and Nelnets
by-laws (including but not limited to any director and officer liability insurance to
the extent provided under Nelnets policy).
|
g. |
REVIEW AND REVOCATION PERIODS. YOU HAVE TWENTY ONE (21) DAYS FROM JULY 15, 2008
TO REVIEW AND CONSIDER THIS AGREEMENT BEFORE SIGNING IT. YOU ARE ADVISED TO CONSULT WITH
AN ATTORNEY BEFORE SIGNING THIS AGREEMENT. ALSO, YOU MAY REVOKE THIS AGREEMENT WITHIN
SEVEN (7) DAYS OF SIGNING IT, BY DELIVERING A WRITTEN NOTICE OF REVOCATION TO:
EVAN
ROTH, 3015 S. PARKER RD. SUITE 400, AURORA, CO 80014.
THE AGREEMENT WILL NOT BECOME
EFFECTIVE OR ENFORCEABLE AND THE PAYMENTS AND BENEFITS WILL NOT BE MADE OR BECOME
EFFECTIVE UNTIL THE END OF THIS REVOCATION PERIOD. IF YOU REVOKE THIS AGREEMENT, IT WILL
NOT BE EFFECTIVE OR ENFORCED, AND YOU WILL NOT RECEIVE ANY PAYMENTS HEREUNDER.
|
h. |
The terms of this Agreement have been changed from that initially provided to you
on July 15, 2008. The changes were made as a result of negotiations between you and
Nelnet. It is agreed that the changes, whether material or immaterial, do not restart
the running of the 21 day period to review and consider the Agreement and that the
running of the 21 day period shall be deemed to have started on July 15, 2008.
|
i. |
In the event you sign this Agreement prior to the 21 day time period, you hereby
state and affirm that: (1) your decision to accept such shortening of time is knowing
and voluntary; (2) your decision to accept such shortening of time was not induced by
Nelnet through fraud or misrepresentation, and (3) your decision to accept such
shortening of time was not induced by Nelnet through a threat to withdraw or alter the
offer prior to the expiration of the 21 day time
period, or by providing different terms to employees who sign the release prior to the
expiration of such time period.
|
j. |
This agreement shall be interpreted, construed and enforced in accordance with
the laws of the State of Nebraska.
|
/s/ Raymond J. Ciarvella | ||||
Raymond J. Ciarvella | ||||
|
1. |
Education loan origination, disbursement, processing and servicing services
|
||
2. |
Computer software systems, programs and applications for origination, disbursement,
processing and servicing of education loans in the United States and Canada
|
||
3. |
GoHazel
|
||
4. |
GenerationVoice
|
||
5. |
Dynamic Forms
|
||
6. |
Enterprise content management solutions (Dynamic Payables, Dynamic Filer, UConnect and
related offerings)
|
||
7. |
TRACS time tracking
|
||
8. |
Certified Mail
|
||
9. |
Contract Compass
|
||
10. |
Transcript Broker
|
||
11. |
Webmentum
|
||
12. |
Student Manager
|
1
2
3
4
5
6
(i) |
any representation or warranty made or furnished by the
Seller in or pursuant to this Loan Purchase Agreement (including
Section 3(a) hereof) shall prove to have been materially incorrect;
|
(ii) |
the Secretary of Education or a Guarantee Agency, as
the case may be, refuses to honor all or part of a claim filed with
respect to a FFELP Loan (including any claim for Interest Subsidy
Payments, Special Allowance Payments, reinsurance or Guarantee
payments) on account of any circumstance or event that occurred prior
to the sale of such FFELP Loan to the Purchaser;
|
(iii) |
on account of any circumstance or event that occurred
prior to the sale of a FFELP Loan to the Purchaser, a defense is
asserted by a Borrower (or endorser, if any) of the FFELP Loan with
respect to Borrowers
obligation to pay all or any part of the FFELP Loan, and the
Purchaser, in good faith, believes that the facts reported, if true,
raise a reasonable doubt as to the legal enforceability of such
FFELP Loan;
|
7
(iv) |
a Guarantor refuses to honor all or part of a claim
filed with respect to a Guaranteed Loan on account of any circumstance
or event that occurred prior to the sale of such Student Loan to the
Purchaser;
|
(v) |
a FFELP Loan is required to be repurchased pursuant to
subsection 5(b) hereof; or
|
(vi) |
the instrument which Seller purports to be a FFELP Loan
is not, in fact, a FFELP Loan;
|
8
9
10
11
12
Union Bank and Trust Company, | Nelnet Education Loan Funding, Inc., f/k/a | |||||||||||
Individually and as Trustee | NEBHELP, INC. | |||||||||||
|
||||||||||||
By: | /s/ Kenneth L. Backemeyer | By: | /s/ Terry J. Heimes | |||||||||
|
Title: | Senior Vice President | Title: | Chief Financial Officer |
13
2
3
(a) |
The Application for such Loan
|
||
(b) |
The original Note (or certified copy thereof)
|
||
(c) |
Evidence of Guarantee of the Loan by a Guarantor
|
||
(d) |
Evidence of full disbursement
|
4
(e) |
Evidence of due diligence servicing in accordance with the requirements of the
Act and applicable Regulations
|
||
(f) |
If applicable, adequate evidence of the validity of the conveyance of such Loan
to the Lender; and
|
||
(g) |
Repayment history, including, but not limited to, payment transaction history
and documentation of deferments and forbearances.
|
5
6
7
8
Account Balance* | Process Requirements | |||
|
||||
$0 - $100.00 |
Write-off thirty (30) days after the last payment was made, and, if
applicable, forward Notes to borrower.
|
|||
|
||||
$100.01 + |
Recover such amount by filing a supplemental claim, if applicable, or service as
normal.
|
* |
Account balance includes both principal and interest.
|
9
10
11
12
13
14
15
16
17
18
Nelnet, Inc. | Union Bank and Trust Company, | |||||||||||||
Individually and as Trustee | ||||||||||||||
|
||||||||||||||
By: | /s/ Terry J. Heimes | By: | /s/ Kenneth L. Backemeyer | |||||||||||
|
Name: | Terry J. Heimes | Name: | Kenneth L. Backemeyer | ||||||||||
|
Title: | Chief Financial Officer | Title: | Senior Vice President |
19
1. |
Purchase of Low Quality Assets.
Nelnet, Holding Company, and members of the
Dunlap Family commit to make either (i) quarterly cash payments to Union Bank equal to the
book value at the end of each calendar quarter, plus write-downs during that quarter by
Union Bank, of any transferred assets that became and remained low-quality assets (as
defined in Regulation W) during that quarter; or (ii) quarterly purchases from Union Bank
of any transferred assets that became and remained low-quality assets during that quarter
at a price equal to the book value at the end of that quarter plus write-downs during that
quarter by Bank of any such assets. Nelnet, Holding Company, or members of the Dunlap
Family will make the cash payment or will purchase the assets within 30 days after the end
of each calendar quarter. Union Bank will hold an amount of risk-based capital equal to
the book value of any transferred assets that become low-quality assets so long as Union
Bank (or any operating subsidiary) retains ownership or control of such low-quality assets.
For example, under this dollar-for-dollar capital requirement, the risk-based capital
charge for each transferred asset that becomes a low-quality asset would be 100 percent
(equivalent to a 1250 percent risk weight), rather than the 8 percent requirement that
would apply to a similar defaulted loan asset that is not a part of the transferred asset
pool.
|
1
2. |
Holdback
. Nelnet, Holding Company, and members of the Dunlap Family commit to
establish and maintain throughout the term of the exemption an escrow account (the
Holdback) at Union Bank in an amount equal to that portion of the aggregate outstanding
principal amount of the assets transferred pursuant to the Loan Purchase Agreement that is
not guaranteed under the FFEL Program in accordance with the Higher Education Act of 1965,
as amended. Union Bank will be entitled to draw money from the escrow account to the
extent that the bank incurs losses as a result of a breach by Nelnet, Holding Company, or a
member of the Dunlap Family in complying with any of the commitments made herein or in
connection with Union Banks request for the Exemption. Funds in the Holdback shall be
invested as mutually agreed by Union Bank and Nelnet, and income from the Holdback shall be
distributed to Nelnet on a monthly basis or as otherwise mutually agreed. Funds (other
than income as described in the preceding sentence) in the Holdback shall be distributed to
Nelnet on a quarterly basis as the Portfolio is paid down or paid off, provided, however,
that the Holdback shall be maintained at a level at all times at least equal to that
portion of the outstanding principal balance of assets in the Portfolio that is not
guaranteed (the 2-3% risk share).
|
3. |
Reimbursement Upon Sale of Portfolio
. Nelnet, Holding Company, and members of
the Dunlap Family commit to reimburse Union Bank promptly for any losses incurred by Union
Bank on the sale of any transferred assets comprising the Portfolio, provided that such
sale is a bona fide, arms length transaction.
|
4. |
Waiver of Servicing Fees
. Nelnet commits to waive servicing fees charged to
Union Bank in connection with the Portfolio to the extent that Union Banks spread on the
Portfolio falls below 50 basis points (0.50%) per annum, until all of the servicing fees
have been waived. If a complete waiver of servicing fees by Nelnet leaves Union Bank with
a negative spread on the Portfolio, Nelnet, Holding Company, and members of the Dunlap
Family commit to make monthly cash contributions to Union Bank to enable it to earn a
positive spread on the Portfolio. Union Bank shall compute the spread on a monthly basis
and, if it determines that such spread has fallen below 50 basis points per annum, Union
Bank shall accordingly reduce the servicing fees on a
pro tanto
basis. The spread shall be
computed as the difference between (i)the weighted average yield on the Portfolio, less
(ii) the weighted average cost of liabilities Union Bank utilizes to fund the Portfolio,
all on an annualized basis. Nelnet shall have the right to reasonably review the books and
records of Union Bank with respect to the spread and supporting calculation work sheets.
|
5. |
Capital Maintenance by Holding Company
. Holding Company commits to maintain
regulatory capital ratios equal to or greater than the pro forma regulatory capital ratios
set forth Exhibit A, attached hereto. Specifically, Holding Company commits to maintain a
tier 1 leverage ratio of at least 8.23 percent; a tier 1 risk-based ratio of at least
10.81 percent; and a total risk-based ratio of at least 11.22 percent.
|
6. |
Capital Maintenance by Union Bank
. Union Bank commits to maintain a tier 1
leverage ratio of at least 5 percent, a tier 1 risk-based ratio of at least 6 percent, and
a total risk-based ratio of at least 11 percent.
|
2
7. |
Representations and Warranties.
Each of Nelnet, Union Bank and the Holding
Company represents and warrants as follows:
|
8. |
Assignment
. No party to this Agreement may assign all or any portion of this
Agreement without the prior written consent of all other parties hereto.
|
9. |
Amendment
. This Agreement may be amended only in writing and if signed by all
parties hereto.
|
10. |
Severability
. If any provision of this Agreement shall be held, deemed to be
or shall, in fact, be inoperative or unenforceable as applied in any particular situation,
such circumstances shall not have the effect of rendering any other provisions herein
contained invalid, inoperative or unenforceable.
|
3
UNION BANK AND TRUST COMPANY | NELNET, INC. | |||||||||||||
|
||||||||||||||
By: | /s/ Angie Muhleisen | By: | /s/ Terry J. Heimes | |||||||||||
|
Title: | President and Chief Executive Officer | Title: | Chief Financial Officer |
FARMERS & MERCHANTS INVESTMENT INC. | ||||||
|
||||||
By: | /s/ Jay L. Dunlap | |||||
|
Title: | Chairman of the Board | ||||
|
||||||
/s/ Jay L. Dunlap | ||||||
Jay L. Dunlap, Individually | ||||||
|
||||||
/s/ Angie Muhleisen | ||||||
Angie Muhleisen, Individually | ||||||
|
||||||
/s/ Michael S. Dunlap | ||||||
Michael S. Dunlap, Individually |
4
Year Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
|
||||||||||||||||||||
Income from continuing operations
before taxes and minority interest
|
$ | 44,740 | 57,145 | 102,395 | 279,258 | 234,397 | ||||||||||||||
Income from equity investments
|
(29 | ) | (1,144 | ) | (536 | ) | (1,637 | ) | (1,220 | ) | ||||||||||
Distributions from equity investments
|
| 747 | 149 | 625 | 970 | |||||||||||||||
Interest on uncertain tax positions
included in pre-tax income
|
72 | 86 | | | | |||||||||||||||
|
||||||||||||||||||||
Income before fixed charges
|
44,783 | 56,834 | 102,008 | 278,246 | 234,147 | |||||||||||||||
Plus: fixed charges
|
1,027,875 | 1,504,268 | 1,242,802 | 621,309 | 255,660 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Earnings (as defined)
|
$ | 1,072,658 | 1,561,102 | 1,344,810 | 899,555 | 489,807 | ||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Interest and amortization expense
|
$ | 1,026,489 | 1,502,662 | 1,241,174 | 620,111 | 254,610 | ||||||||||||||
Rent expense (interest portion)
|
1,458 | 1,692 | 1,628 | 1,198 | 1,050 | |||||||||||||||
Interest included in interest expense not
related to third party indebtedness
|
(72 | ) | (86 | ) | | | | |||||||||||||
|
||||||||||||||||||||
Total fixed charges
|
$ | 1,027,875 | 1,504,268 | 1,242,802 | 621,309 | 255,660 | ||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Earnings divided by fixed charges
|
1.04 | 1.04 | 1.08 | 1.45 | 1.92 | |||||||||||||||
|
Relationship to | Percentage | |||||||
Name | Nelnet, Inc. | Ownership | ||||||
1.
|
National Education Loan Network, Inc. (organized in Nevada) (dba American Card Services) | Direct Subsidiary | 100 | % | ||||
2.
|
Nelnet Capital LLC (organized in Nebraska) | Direct Subsidiary | 100 | % | ||||
3.
|
Nelnet Guarantor Solutions, LLC (organized in Florida) (formerly Nelnet Guarantee Services LLC; formerly GuaranTec LLP) | Indirect Subsidiary | 100 | % | ||||
4.
|
National Higher Education Loan Program, Inc. (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
5.
|
5280 Solutions LLC (f/k/a Nelnet Technology Services LLC) (organized in Colorado) (d/b/a Idaho Financial Associates, Charter Account Systems and 5280 Solutions) | Indirect Subsidiary | 100 | % | ||||
6.
|
FirstMark Services, LLC (organized in Colorado) | Indirect Subsidiary | 100 | % | ||||
7.
|
Health Education Solutions, Inc. (organized in Florida) (f/k/a ClassCredit, Inc.) | Indirect Subsidiary | 80 | % | ||||
8.
|
InTuition, Inc. (organized in Florida) | Indirect Subsidiary | 100 | % | ||||
9.
|
EFS Finance Co. (organized in Indiana) | Indirect Subsidiary | 100 | % | ||||
10.
|
Nelnet Management Corporation-1 (organized in Nevada) (formerly Nelnet Student Loan Warehouse Corporation 1) | Indirect Subsidiary | 100 | % | ||||
11.
|
Nelnet Student Loan Funding Management Corporation (organized in Nevada) | Indirect Subsidiary | 100 | % | ||||
12.
|
Nelnet Student Loan Funding, LLC (organized in Delaware) | Indirect Subsidiary | 100 | % | ||||
13.
|
NELNET Student Loan Corporation-1 (organized in Nevada) | Indirect Subsidiary | 100 | % | ||||
14.
|
NELNET Student Loan Corporation-2 (organized in Nevada) | Indirect Subsidiary | 100 | % | ||||
15.
|
NHELP-I, Inc. (organized in Nevada) | Indirect Subsidiary | 100 | % | ||||
16.
|
NHELP-II Inc. (organized in Nevada) | Indirect Subsidiary | 100 | % | ||||
17.
|
NHELP-II, LLC (organized in Nevada) | Indirect Subsidiary | 100 | % | ||||
18.
|
NHELP-III, Inc. (organized in Nevada) | Indirect Subsidiary | 100 | % | ||||
19.
|
EMT Corp. (organized in Indiana) | Indirect Subsidiary | 100 | % | ||||
20.
|
Nelnet Loan Corp.(organized in Nevada) | Indirect Subsidiary | 100 | % | ||||
21.
|
Nelnet Education Loan Funding, Inc. (f/k/a NEBHELP, INC.) (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
22.
|
MELMAC, Inc. (organized in Nevada) | Indirect Subsidiary | 100 | % | ||||
23.
|
MELMAC, LLC (organized in Delaware) | Indirect Subsidiary | 100 | % | ||||
24.
|
National Education Loan of New England, Inc. (organized in Rhode Island) | Indirect Subsidiary | 100 | % | ||||
25.
|
Student Loan Acquisition Authority of Arizona, LLC (organized in Delaware) | Indirect Subsidiary | 100 | % | ||||
26.
|
SLAAA Acquisition Corp. (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
27.
|
Shockley Financial Corp. (organized in Colorado) | Indirect Subsidiary | 100 | % | ||||
28.
|
Nelnet Canada, Inc. (organized in Canada) | Indirect Subsidiary | 100 | % | ||||
29.
|
Nelnet Business Solutions, Inc. (f/k/a FACTS Management Co.) (organized in Nebraska) (dba FACTS Management and infiNET Integrated Solutions) | Indirect Subsidiary | 100 | % | ||||
30.
|
Student Marketing Group, Inc. (organized in New York) | Direct Subsidiary | 100 | % | ||||
31.
|
National Honor Roll, L.L.C. (organized in New York) | Indirect Subsidiary | 100 | % |
1
Relationship to | Percentage | |||||||
Name | Nelnet, Inc. | Ownership | ||||||
32.
|
Nelnet Asset Management, Inc. (organized in Texas) (f/k/a LoanSTAR Funding Group, Inc.) | Indirect Subsidiary | 100 | % | ||||
33.
|
Nelnet Academic Funding Solutions, LLC (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
34.
|
College Bound Loans, Inc. (organized in Rhode Island) (f/k/a/ BST Holdings, Inc.) | Indirect Subsidiary | 100 | % | ||||
35.
|
Nelnet Academic Services, LLC (organized in Nebraska) (f/k/a Nelnet Mentor, LLC) | Indirect Subsidiary | 100 | % | ||||
36.
|
Chela Education Funding, Inc. (organized in Nebraska) (f/k/a Student Partner Services, Inc.) | Indirect Subsidiary | 100 | % | ||||
37.
|
Loanstar Assets GP, LLC (organized in Delaware) | Indirect Subsidiary | 100 | % | ||||
38.
|
Loanstar Assets LP, LLC (organized in Delaware) | Indirect Subsidiary | 100 | % | ||||
39.
|
Loanstar Assets Partners, LP (organized in Delaware) | Indirect Subsidiary | 100 | % | ||||
40.
|
Nelnet Academic Private Loan Warehouse I, LLC (organized in Delaware) | Indirect Subsidiary | 100 | % | ||||
41.
|
CUnet, LLC (organized in Delaware) | Indirect Subsidiary | 100 | % | ||||
42.
|
Petersons Nelnet, LLC (formerly NELN Acquisition, LLC) (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
43.
|
M & P Building, LLC (organized in Nebraska) | Direct/Indirect | 100 | % | ||||
44.
|
Nelnet Student Asset Funding Extendable CP, LLC (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
45.
|
Lincoln Square Funding LLC (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
46.
|
First National Life Insurance Company of the USA (a Nebraska domiciled life insurance company) | Indirect Subsidiary | 100 | % | ||||
47.
|
Education Solutions, Inc. (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
48.
|
Next Gen Web Solutions, LLC (organized in Nebraska) | Indirect Subsidiary | 50 | % | ||||
49.
|
GoHazel, LLC (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
50.
|
Unilink USA, LLC (organized in Nebraska) | Indirect Subsidiary | 50 | % | ||||
51.
|
Unilink Data Systems Pty Ltd (organized in Australia) | Indirect Subsidiary | 50 | % | ||||
52.
|
Nelnet Servicing, LLC (organized in Nebraska) | Indirect Subsidiary | 100 | % | ||||
53.
|
NLS Holding Company, LLC (organized in Nebraska) | Direct Subsidiary | 100 | % | ||||
54.
|
Nelnet Enrollment Solutions, LLC (organized in Nebraska) | Indirect Subsidiary | 100 | % |
Note: |
This list does not include
special purpose Nelnet Student Loan Trusts utilized to hold
beneficial interests in eligible student loans in asset backed
securitization financings.
|
2
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 registrants 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 registrants 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 on such evaluation; and
|
||
(d) |
Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most
recent fiscal quarter (the registrants fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and
|
5. |
The registrants other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control
over financial reporting.
|
Date: March 2, 2009
|
/s/ Michael S. Dunlap
|
|||
|
Chairman and Chief Executive Officer | |||
|
Principal Executive Officer |
1. |
I have reviewed the 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 registrants 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 registrants 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 on such evaluation; and
|
||
(d) |
Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most
recent fiscal quarter (the registrants fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and
|
5. |
The registrants other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control
over financial reporting.
|
Date: March 2, 2009
|
/s/ Terry J. Heimes
|
|||
|
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: March 2, 2009 | By: | /s/ Michael S. Dunlap | ||
Name: | Michael S. Dunlap | |||
Title: | Chairman and Chief Executive Officer | |||
By: | /s/ Terry J. Heimes | |||
Name: | Terry J. Heimes | |||
Title: | Chief Financial Officer |