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1. | Description of Business |
• | Servicing federally-owned student loans for the Department |
• | Servicing FFELP loans |
• | Originating and servicing non-federally insured student loans |
• | Servicing and outsourcing services for FFELP guaranty agencies, including FFELP guaranty collection services |
• | Providing student loan servicing software and other information technology products and services |
• | Inquiry Generation - Services include delivering qualified inquiries or clicks to third-party customers, primarily higher education institutions. |
• | Inquiry Management (Agency) - Services include managing the marketing activities for third-party customers, primarily higher education institutions, in order to provide qualified inquiries or clicks. |
• | Inquiry Management (Software) - Products and services include the licensing of software to third-party customers, primarily higher education institutions. This software is also used internally by the Company. The inquiry management software has been adapted so that it can be offered as a hosted software solution usable by third parties to manage and obtain qualified inquiries or clicks. |
• | Digital Marketing - Services include interactive services to connect students to colleges and universities and are sold primarily based on subscriptions, and also include editing services for admission essays. |
• | Content Solutions - Products and services include test preparation study guides, school directories and databases, career exploration guides, on-line courses, scholarship search and selection data, career planning, and on-line information about colleges and universities. |
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2. | Summary of Significant Accounting Policies and Practices |
• | Level 1: Quoted prices for identical instruments in active markets. The types of financial instruments included in Level 1 are highly liquid instruments with quoted prices. |
• | Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose primary value drivers are observable. |
• | Level 3: Instruments whose primary value drivers are unobservable. Inputs are developed based on the best information available; however, significant judgment is required by management in developing the inputs. |
• | Loan and guaranty servicing fees – Loan servicing fees are determined according to individual agreements with customers and are calculated based on the dollar value of loans, number of loans, or number of borrowers serviced for each customer. Guaranty servicing fees are generally calculated based on the number of loans serviced, volume of loans serviced, or amounts collected. Revenue is recognized over the period in which services are provided to customers, and when ultimate collection is assured. |
• | Guaranty collections revenue – Guaranty collections revenue is earned when collected. Collection costs paid to third parties associated with this revenue is expensed upon successful collection. |
• | Software services revenue – Software services revenue is determined from individual agreements with customers and includes license and maintenance fees associated with student loan software products. Computer and software consulting and remote hosting revenues are recognized over the period in which services are provided to customers. |
• | Inquiry Generation and Management (Agency) - This revenue is derived primarily from fees which are earned through the delivery of qualified inquiries or clicks. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. Delivery is deemed to have occurred at the time a qualified inquiry or click is delivered to the customer, provided that no significant obligations remain. From time to time, the Company may agree to credit certain inquiries or clicks if they fail to meet the contractual or other guidelines of a particular client. The Company has established a sales reserve based on historical experience. To date, such credits have been immaterial and within management’s expectations. |
• | Inquiry Management (Software) - This revenue is determined from individual agreements with customers and includes license and maintenance fees associated with inquiry management software products. Remote hosting revenues are recognized over the period in which services are provided to customers. |
• | Digital Marketing - Revenue from sales of subscriptions for interactive services to connect students to colleges and universities is recognized ratably over the term of the contract as earned. Subscription revenue received or receivable in advance of the delivery of services is included in deferred revenue. Revenue for editing services for admission essays is recognized over the period in which services are provided to customers. |
• | Content Solutions - Several content solutions services are sold based on subscriptions. Revenue from sales of subscription services is recognized ratably over the term of the contract as earned. Subscription revenue received or receivable in advance of the delivery of services is included in deferred revenue. Revenue from the sale of print products is generally earned and recognized, net of estimated returns, upon shipment or delivery. All other revenue is recognized over the period in which services are provided to customers. |
|
As of December 31, | ||||||
2013 | 2012 | |||||
Federally insured loans | ||||||
Stafford and other | $ | 6,686,626 | 7,261,114 | |||
Consolidation | 19,363,577 | 17,708,732 | ||||
Total | 26,050,203 | 24,969,846 | ||||
Non-federally insured loans | 71,103 | 26,034 | ||||
26,121,306 | 24,995,880 | |||||
Loan discount, net of unamortized loan premiums and deferred origination costs (a) | (158,595 | ) | (113,357 | ) | ||
Allowance for loan losses – federally insured loans | (43,440 | ) | (40,120 | ) | ||
Allowance for loan losses – non-federally insured loans | (11,682 | ) | (11,782 | ) | ||
$ | 25,907,589 | 24,830,621 | ||||
Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Balance at beginning of period | $ | 51,902 | 48,482 | 43,626 | |||||
Provision for loan losses: | |||||||||
Federally insured loans | 20,000 | 22,000 | 20,000 | ||||||
Non-federally insured loans | (1,500 | ) | (500 | ) | 1,250 | ||||
Total provision for loan losses | 18,500 | 21,500 | 21,250 | ||||||
Charge-offs: | |||||||||
Federally insured loans | (15,588 | ) | (21,217 | ) | (17,166 | ) | |||
Non-federally insured loans | (3,683 | ) | (3,508 | ) | (4,147 | ) | |||
Total charge-offs | (19,271 | ) | (24,725 | ) | (21,313 | ) | |||
Recoveries - non-federally insured loans | 1,577 | 1,419 | 1,310 | ||||||
Purchase (sale) of federally insured loans, net | (1,093 | ) | 2,133 | 1,463 | |||||
Transfer from repurchase obligation related to non-federally insured loans repurchased, net | 3,507 | 3,093 | 2,146 | ||||||
Balance at end of period | $ | 55,122 | 51,902 | 48,482 | |||||
Allocation of the allowance for loan losses: | |||||||||
Federally insured loans | $ | 43,440 | 40,120 | 37,205 | |||||
Non-federally insured loans | 11,682 | 11,782 | 11,277 | ||||||
Total allowance for loan losses | $ | 55,122 | 51,902 | 48,482 |
Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Beginning balance | $ | 16,130 | 19,223 | 12,600 | |||||
Repurchase obligation transferred to the allowance for loan losses related to loans repurchased, net | (3,507 | ) | (3,093 | ) | (2,146 | ) | |||
Repurchase obligation associated with loans sold | 3,520 | — | 6,269 | ||||||
Current period expense | — | — | 2,500 | ||||||
Ending balance | $ | 16,143 | 16,130 | 19,223 |
As of December 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Federally insured loans, excluding rehabilitation loans: | ||||||||||||||||||||
Loans in-school/grace/deferment (a) | $ | 2,618,390 | $ | 2,949,320 | $ | 3,623,284 | ||||||||||||||
Loans in forbearance (b) | 2,954,495 | 2,992,023 | 3,267,771 | |||||||||||||||||
Loans in repayment status: | ||||||||||||||||||||
Loans current | 15,251,869 | 86.1 | % | 14,583,044 | 87.6 | % | 14,422,192 | 84.6 | % | |||||||||||
Loans delinquent 31-60 days (c) | 768,600 | 4.3 | 652,351 | 3.9 | 821,166 | 4.8 | ||||||||||||||
Loans delinquent 61-90 days (c) | 426,089 | 2.5 | 330,885 | 2.0 | 388,542 | 2.3 | ||||||||||||||
Loans delinquent 91-120 days (c) | 281,991 | 1.6 | 247,381 | 1.5 | 289,173 | 1.7 | ||||||||||||||
Loans delinquent 121-270 days (c) | 712,204 | 4.0 | 603,942 | 3.6 | 811,914 | 4.8 | ||||||||||||||
Loans delinquent 271 days or greater (c)(d) | 269,066 | 1.5 | 220,798 | 1.4 | 307,861 | 1.8 | ||||||||||||||
Total loans in repayment | 17,709,819 | 100.0 | % | 16,638,401 | 100.0 | % | 17,040,848 | 100.0 | % | |||||||||||
Total federally insured loans, excluding rehabilitation loans | $ | 23,282,704 | $ | 22,579,744 | $ | 23,931,903 | ||||||||||||||
Rehabilitation loans: | ||||||||||||||||||||
Loans in-school/grace/deferment (a) | $ | 254,115 | $ | 150,317 | $ | 41,615 | ||||||||||||||
Loans in forbearance (b) | 415,530 | 330,278 | 62,681 | |||||||||||||||||
Loans in repayment status: | ||||||||||||||||||||
Loans current | 1,086,053 | 51.8 | % | 670,205 | 35.1 | % | 178,180 | 60.0 | % | |||||||||||
Loans delinquent 31-60 days (c) | 198,718 | 9.5 | 113,795 | 6.0 | 23,038 | 7.7 | ||||||||||||||
Loans delinquent 61-90 days (c) | 124,244 | 5.9 | 79,691 | 4.2 | 18,552 | 6.3 | ||||||||||||||
Loans delinquent 91-120 days (c) | 108,800 | 5.2 | 186,278 | 9.8 | 18,607 | 6.3 | ||||||||||||||
Loans delinquent 121-270 days (c) | 405,732 | 19.3 | 633,001 | 33.1 | 43,743 | 14.8 | ||||||||||||||
Loans delinquent 271 days or greater (c)(d) | 174,307 | 8.3 | 226,537 | 11.8 | 14,390 | 4.9 | ||||||||||||||
Total loans in repayment | 2,097,854 | 100.0 | % | 1,909,507 | 100.0 | % | 296,510 | 100.0 | % | |||||||||||
Total rehabilitation loans | 2,767,499 | 2,390,102 | 400,806 | |||||||||||||||||
Total federally insured loans | $ | 26,050,203 | $ | 24,969,846 | $ | 24,332,709 |
(a) | Loans for borrowers who still may be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation for law students. |
(b) | Loans for borrowers who have temporarily ceased making full payments due to hardship or other factors, according to a schedule approved by the servicer consistent with the established loan program servicing procedures and policies. |
(c) | The period of delinquency is based on the number of days scheduled payments are contractually past due and relate to repayment loans, that is, receivables not charged off, and not in school, grace, deferment, or forbearance. |
(d) | A portion of loans included in loans delinquent 271 days or greater includes loans in claim status, which are loans that have gone into default and have been submitted to the guaranty agency. |
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As of December 31, 2013 | |||||||
Carrying amount | Interest rate range | Final maturity | |||||
Variable-rate bonds and notes issued in asset-backed securitizations: | |||||||
Bonds and notes based on indices | $ | 23,479,893 | 0.25% - 6.90% | 5/25/18 - 8/26/52 | |||
Bonds and notes based on auction or remarketing | 1,134,250 | 0.07% - 2.17% | 5/1/28 - 11/26/46 | ||||
Total variable-rate bonds and notes | 24,614,143 | ||||||
FFELP warehouse facilities | 1,396,344 | 0.17% - 0.25% | 1/17/16 - 6/12/16 | ||||
Unsecured line of credit | 45,000 | 1.67% | 3/28/18 | ||||
Unsecured debt - Junior Subordinated Hybrid Securities | 96,457 | 3.62% | 9/15/61 | ||||
Other borrowings | 61,401 | 1.67% - 5.10% | 4/11/14 - 11/11/15 | ||||
26,213,345 | |||||||
Discount on bonds and notes payable | (258,056 | ) | |||||
Total | $ | 25,955,289 |
As of December 31, 2012 | |||||||
Carrying amount | Interest rate range | Final maturity | |||||
Variable-rate bonds and notes issued in asset-backed securitizations: | |||||||
Bonds and notes based on indices | $ | 21,185,140 | 0.32% - 6.90% | 11/25/15 - 8/26/52 | |||
Bonds and notes based on auction or remarketing | 969,925 | 0.15% - 2.14% | 5/1/28 - 5/25/42 | ||||
Total variable-rate bonds and notes | 22,155,065 | ||||||
FFELP warehouse facilities | 1,554,151 | 0.21% - 0.29% | 1/31/15 - 6/30/15 | ||||
Department of Education Conduit | 1,344,513 | 0.82% | 1/19/14 | ||||
Unsecured line of credit | 55,000 | 1.71% | 2/17/16 | ||||
Unsecured debt - Junior Subordinated Hybrid Securities | 99,232 | 3.68% | 9/15/61 | ||||
Other borrowings | 62,904 | 1.50% - 5.10% | 11/14/13 - 11/11/15 | ||||
25,270,865 | |||||||
Discount on bonds and notes payable | (172,030 | ) | |||||
Total | $ | 25,098,835 |
NHELP-III | NHELP-II | NFSLW-I | Total | ||||||||||
Maximum financing amount | $ | 750,000 | 500,000 | 500,000 | 1,750,000 | ||||||||
Amount outstanding | 577,918 | 339,359 | 479,067 | 1,396,344 | |||||||||
Amount available | 172,082 | 160,641 | 20,933 | 353,656 | |||||||||
Expiration of liquidity provisions | January 16, 2014 | (a) | February 28, 2014 | (b) | June 12, 2014 | ||||||||
Final maturity date | January 17, 2016 | February 28, 2016 | (b) | June 12, 2016 | |||||||||
Maximum advance rates | 92.2 - 95.0% | 84.5 - 94.5% | 92.0 - 98.0% | ||||||||||
Minimum advance rates | 92.2 - 95.0% | 84.5 - 94.5% | 84.0 - 90.0% | ||||||||||
Advanced as equity support | $ | 34,762 | 31,676 | 22,073 | 88,511 |
Securitizations issued during the year ended December 31, 2013 | ||||||||||||||||||||||
2013-1 | 2013-2 (a) | 2013-3 | 2013-4 | 2013-5 (a) | Total | |||||||||||||||||
Date securities issued | 1/31/13 | 2/28/13 | 4/30/13 | 6/21/13 | 9/30/13 | |||||||||||||||||
Total original principal amount | $ | 437,500 | 1,122,000 | 765,000 | 453,000 | 399,000 | $ | 3,176,500 | ||||||||||||||
Class A senior notes: | ||||||||||||||||||||||
Total original principal amount | $ | 428,000 | 1,122,000 | 745,000 | 440,000 | 399,000 | 3,134,000 | |||||||||||||||
Bond discount | — | (3,325 | ) | — | (1,690 | ) | (4,881 | ) | (9,896 | ) | ||||||||||||
Issue price | $ | 428,000 | 1,118,675 | 745,000 | 438,310 | 394,119 | 3,124,104 | |||||||||||||||
Cost of funds (1-month LIBOR plus:) | 0.60 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.63 | % | ||||||||||||
Final maturity date | 6/25/41 | 7/25/40 | 2/25/37 | 12/26/42 | 1/25/37 | |||||||||||||||||
Class B subordinated notes: | ||||||||||||||||||||||
Total original principal amount | $ | 9,500 | 20,000 | 13,000 | 42,500 | |||||||||||||||||
Bond discount | (1,525 | ) | (1,762 | ) | (1,804 | ) | (5,091 | ) | ||||||||||||||
Issue price | $ | 7,975 | 18,238 | 11,196 | 37,409 | |||||||||||||||||
Cost of funds (1-month LIBOR plus:) | 1.50 | % | 1.50 | % | 1.50 | % | ||||||||||||||||
Final maturity date | 3/25/48 | 7/25/47 | 1/25/47 |
Securitizations issued during the year ended December 31, 2012 | ||||||||||||||||||||||||
2012-1 (a) | 2012-2 (a) | 2012-3 (a) | 2012-4 | 2012-5 | 2012-6 | Total | ||||||||||||||||||
Date securities issued | 5/9/12 | 6/11/12 | 7/31/12 | 10/11/12 | 11/8/12 | 12/12/12 | ||||||||||||||||||
Total original principal amount | $ | 336,300 | 323,000 | 414,300 | 937,500 | 1,174,000 | 1,012,000 | $ | 4,197,100 | |||||||||||||||
Class A senior notes: | ||||||||||||||||||||||||
Total original principal amount | $ | 336,300 | 323,000 | 414,300 | 920,000 | 1,144,000 | 987,000 | 4,124,600 | ||||||||||||||||
Bond discount | — | (3,609 | ) | (1,275 | ) | — | (7,642 | ) | (3,399 | ) | (15,925 | ) | ||||||||||||
Issue price | $ | 336,300 | 319,391 | 413,025 | 920,000 | 1,136,358 | 983,601 | 4,108,675 | ||||||||||||||||
Cost of funds (1-month LIBOR plus:) | 0.80 | % | 0.80 | % | 0.70 | % | 0.70 | % | 0.60 | % | 0.60 | % | ||||||||||||
Final maturity date | 12/27/39 | 12/26/33 | 3/26/40 | 9/27/38 | 10/27/36 | 3/27/45 | ||||||||||||||||||
Class B subordinated notes: | ||||||||||||||||||||||||
Total original principal amount | $ | 17,500 | 30,000 | 25,000 | 72,500 | |||||||||||||||||||
Bond discount | (4,900 | ) | (10,011 | ) | (6,937 | ) | (21,848 | ) | ||||||||||||||||
Issue price | $ | 12,600 | 19,989 | 18,063 | 50,652 | |||||||||||||||||||
Cost of funds (1-month LIBOR plus:) | 1.00 | % | 1.00 | % | 1.50 | % | ||||||||||||||||||
Final maturity date | 7/26/49 | 12/28/43 | 8/26/52 |
(a) | Total original principal amount excludes the Class B subordinated tranches for the 2012-1, 2012-2, 2012-3, 2013-2, and 2013-5 transactions totaling $7.6 million, $10.0 million, $10.0 million, $34.0 million, and $9.0 million, respectively, that were retained at issuance. As of December 31, 2013, the Company has a total of $85.5 million (par value) of its own Class B subordinated notes remaining from prior completed asset-backed securitizations that are not included in the Company's consolidated balance sheet. If the Company sells these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. Upon sale, these notes would be shown as “bonds and notes payable” in the Company's consolidated balance sheet. The Company believes the market value of such notes is currently less than par value. Any excess of the par value over the market value on the date of sale would be recognized by the Company as interest expense over the life of the bonds. |
• | A minimum consolidated net worth |
• | A minimum adjusted EBITDA to corporate debt interest (over the last four rolling quarters) |
• | A limitation on recourse indebtedness |
• | A limitation on the percentage of non-federally insured loans in the Company’s portfolio |
2014 | $ | 56,900 | ||
2015 | 4,501 | |||
2016 | 1,396,344 | |||
2017 | — | |||
2018 | 447,245 | |||
2019 and thereafter | 24,308,355 | |||
$ | 26,213,345 |
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Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Gain on sale of loans | $ | 33 | 116 | 1,378 | |||||
Gain from debt repurchases (a) | 11,666 | 4,023 | 6,962 | ||||||
$ | 11,699 | 4,139 | 8,340 |
(a) | The activity included in "Gain from debt repurchases" is detailed below: |
Year ended December 31, 2013 | Year ended December 31, 2012 | Year ended December 31, 2011 | |||||||||||||||||||||||||
Par value | Purchase price | Gain | Par value | Purchase price | Gain | Par value | Purchase price | Gain | |||||||||||||||||||
Hybrid Securities | $ | 2,775 | 2,080 | 695 | 1,465 | 1,140 | 325 | 62,558 | 55,651 | 6,907 | |||||||||||||||||
Asset-backed securities | 87,696 | 76,725 | 10,971 | 134,667 | 130,969 | 3,698 | 12,254 | 12,199 | 55 | ||||||||||||||||||
$ | 90,471 | 78,805 | 11,666 | 136,132 | 132,109 | 4,023 | 74,812 | 67,850 | 6,962 |
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As of December 31, | ||||||||||
2013 | 2012 | |||||||||
Maturity | Notional amount | Notional amount | ||||||||
2021 | $ | 250,000 | 250,000 | |||||||
2022 | 1,900,000 | 1,900,000 | ||||||||
2023 | 3,650,000 | 3,150,000 | ||||||||
2024 | 250,000 | 250,000 | ||||||||
2026 | 800,000 | 800,000 | ||||||||
2028 | 100,000 | 100,000 | ||||||||
2036 | 700,000 | 700,000 | ||||||||
2039 | (a) | 150,000 | 150,000 | |||||||
2040 | (b) | 200,000 | 200,000 | |||||||
$ | 8,000,000 | (c) | 7,500,000 | (c) |
(c) | The weighted average rate paid by the Company on the 1:3 Basis Swaps as of December 31, 2013 and 2012, was one-month LIBOR plus 3.5 basis points and one-month LIBOR plus 3.3 basis points, respectively. |
As of December 31, 2013 | As of December 31, 2012 | ||||||||||||||
Maturity | Notional amount | Weighted average fixed rate paid by the Company (a) | Notional amount | Weighted average fixed rate paid by the Company (a) | |||||||||||
2013 | $ | — | — | % | $ | 3,150,000 | 0.71 | % | |||||||
2014 | 1,750,000 | 0.71 | 1,750,000 | 0.71 | |||||||||||
2015 | 1,100,000 | 0.89 | 1,100,000 | 0.89 | |||||||||||
2016 | 750,000 | 0.85 | 750,000 | 0.85 | |||||||||||
2017 | 1,250,000 | 0.86 | 750,000 | 0.99 | |||||||||||
$ | 4,850,000 | 0.81 | % | $ | 7,500,000 | 0.78 | % |
(a) | For all interest rate derivatives, the Company receives discrete three-month LIBOR. |
As of December 31, 2013 | As of December 31, 2012 | ||||||||||||
Maturity | Notional amount | Weighted average fixed rate paid by the Company (a) | Notional amount | Weighted average fixed rate paid by the Company (a) | |||||||||
2036 | $ | 25,000 | 4.28% | $ | 75,000 | 4.28 | % |
(a) | For all interest rate derivatives, the Company receives discrete three-month LIBOR. |
Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Re-measurement of Euro Notes | $ | (35,285 | ) | (19,561 | ) | 32,706 | |||
Change in fair value of cross currency interest rate swaps | 26,354 | 2,210 | (14,287 | ) | |||||
Total impact to consolidated statements of income - income (expense) (a) | $ | (8,931 | ) | (17,351 | ) | 18,419 |
(a) | The financial statement impact of the above items is included in "Derivative market value and foreign currency adjustments and derivative settlements, net" in the Company's consolidated statements of income. |
Fair value of asset derivatives | Fair value of liability derivatives | |||||||||||
As of | As of | As of | As of | |||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||
1:3 basis swaps | $ | 18,490 | 12,239 | — | 1,215 | |||||||
Interest rate swaps - floor income hedges | 7,183 | — | 15,849 | 45,913 | ||||||||
Interest rate swaps - hybrid debt hedges | — | — | 2,119 | 23,762 | ||||||||
Cross-currency interest rate swaps | 36,834 | 82,841 | — | — | ||||||||
Other | — | 2,361 | — | — | ||||||||
Total | $ | 62,507 | 97,441 | 17,968 | 70,890 |
Gross amounts not offset in the consolidated balance sheets | |||||||||||||
Derivative assets | Gross amounts of recognized assets presented in the consolidated balance sheets | Derivatives subject to enforceable master netting arrangement | Cash collateral received (a) | Net asset (liability) | |||||||||
Balance as of December 31, 2013 | $ | 62,507 | (15,437 | ) | (15,959 | ) | 31,111 | ||||||
Balance as of December 31, 2012 | 97,441 | (13,234 | ) | (19,993 | ) | 64,214 |
Gross amounts not offset in the consolidated balance sheets | |||||||||||||
Derivative liabilities | Gross amounts of recognized liabilities presented in the consolidated balance sheets | Derivatives subject to enforceable master netting arrangement | Cash collateral pledged (b) | Net asset (liability) | |||||||||
Balance as of December 31, 2013 | $ | (17,969 | ) | 15,437 | 3,630 | 1,098 | |||||||
Balance as of December 31, 2012 | (70,890 | ) | 13,234 | 63,128 | 5,472 |
(a) | As of December 31, 2013 and December 31, 2012, the trustee for certain of the Company's asset-backed securitization transactions held $16.0 million and $20.0 million, respectively, of collateral from the counterparty on the cross-currency interest rate swaps. |
(b) | As of December 31, 2013 and December 31, 2012, the Company had $3.6 million and $63.1 million, respectively, posted as collateral to derivative counterparties, which is included in “restricted cash and investments” in the Company's consolidated balance sheet. |
Year ended December 31, | ||||||||||
2013 | 2012 | 2011 | ||||||||
Settlements: | ||||||||||
1:3 basis swaps | $ | 3,301 | 4,495 | 1,446 | ||||||
Interest rate swaps - floor income hedges | (31,022 | ) | (19,270 | ) | (20,246 | ) | ||||
Interest rate swaps - hybrid debt hedges | (1,670 | ) | (2,231 | ) | (744 | ) | ||||
Cross-currency interest rate swaps | (245 | ) | 3,228 | 11,877 | ||||||
Other | — | (244 | ) | (173 | ) | |||||
Total settlements - (expense) income | (29,636 | ) | (14,022 | ) | (7,840 | ) | ||||
Change in fair value: | ||||||||||
1:3 basis swaps | 7,467 | 676 | 1,114 | |||||||
Interest rate swaps - floor income hedges | 36,719 | (35,215 | ) | (12,169 | ) | |||||
Interest rate swaps - hybrid debt hedges | 12,997 | 1,717 | (25,475 | ) | ||||||
Cross-currency interest rate swaps | 26,354 | 2,210 | (14,287 | ) | ||||||
Other | 341 | 2,779 | 304 | |||||||
Total change in fair value - income (expense) | 83,878 | (27,833 | ) | (50,513 | ) | |||||
Re-measurement of Euro Notes (foreign currency transaction adjustment) - income (expense) | (35,285 | ) | (19,561 | ) | 32,706 | |||||
Derivative market value and foreign currency adjustments and derivative settlements, net - income (expense) | $ | 18,957 | (61,416 | ) | (25,647 | ) |
|
As of December 31, 2013 | As of December 31, 2012 | ||||||||||||||||||||||||
Amortized cost | Gross unrealized gains | Gross unrealized losses (a) | Fair value | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||||||||
Investments: | |||||||||||||||||||||||||
Available-for-sale investments : | |||||||||||||||||||||||||
Student loan asset-backed and other debt securities (b) | $ | 171,931 | 7,111 | (1,241 | ) | 177,801 | 64,970 | 3,187 | (179 | ) | 67,978 | ||||||||||||||
Equity securities | 1,502 | 1,783 | (3 | ) | 3,282 | 3,449 | 1,604 | (180 | ) | 4,873 | |||||||||||||||
Total available-for-sale investments | $ | 173,433 | 8,894 | (1,244 | ) | 181,083 | 68,419 | 4,791 | (359 | ) | 72,851 | ||||||||||||||
Trading investments : | |||||||||||||||||||||||||
Student loan asset-backed and other debt securities | 10,957 | 10,461 | |||||||||||||||||||||||
Total available-for-sale and trading investments | $ | 192,040 | 83,312 | ||||||||||||||||||||||
Restricted Investments (c): | |||||||||||||||||||||||||
Guaranteed investment contracts - held-to-maturity | $ | 7,285 | 8,830 |
(a) | As of December 31, 2013, the Company considered the decline in market value of its available-for-sale investments to be temporary in nature and did not consider any of its investments other-than-temporarily impaired. |
(b) | As of December 31, 2013, the stated maturities of the Company's student loan asset-backed securities and other debt securities classified as available-for-sale are shown in the following table: |
Year of Maturity: | Amortized cost | Fair value | ||||
Within 1 year | $ | — | — | |||
1-5 years | 418 | 418 | ||||
6-10 years | 57 | 57 | ||||
After 10 years | 171,456 | 177,326 | ||||
Total | $ | 171,931 | 177,801 |
(c) | Restricted investments are included in "restricted cash and investments" in the Company's consolidated balance sheets. The Company's restricted investments include cash balances that the Company's indentured securitization trusts deposit in guaranteed investment contracts that are held for the related note holders. These investments are classified as held-to-maturity and the Company accounts for them at amortized cost, which approximates fair value. |
Year of Maturity: | |||
Within 1 year | $ | — | |
1-5 years | 5,084 | ||
6-10 years | — | ||
After 10 years | 2,201 | ||
Total | $ | 7,285 |
Year ended December 31, | ||||||||||
2013 | 2012 | 2011 | ||||||||
Available-for-sale securities: | ||||||||||
Gross realized gains | $ | 6,270 | 6,120 | — | ||||||
Gross realized losses | (332 | ) | (322 | ) | — | |||||
Trading securities: | ||||||||||
Unrealized gains (losses), net | 221 | 254 | 430 | |||||||
Realized gains (losses), net | 5 | 1,459 | 2,753 | |||||||
$ | 6,164 | 7,511 | 3,183 |
Year ended December 31, | ||||||||||
Affected line item in the consolidated statements of income - income (expense): | 2013 | 2012 | 2011 | |||||||
Other income | $ | 5,938 | 5,798 | — | ||||||
Income tax expense | (2,197 | ) | (2,145 | ) | — | |||||
Net income | $ | 3,741 | 3,653 | — |
|
Student Loan and Guaranty Servicing | Tuition Payment Processing and Campus Commerce | Enrollment Services | Asset Generation and Management (a) | Total | |||||||||||
Balance as of December 31, 2011, 2012, and 2013 | $ | 8,596 | 58,086 | 8,553 | 41,883 | 117,118 |
(a) | As a result of the Reconciliation Act of 2010, the Company no longer originates new FFELP loans and net interest income of the Company's existing FFELP loan portfolio will decline over time as the Company's portfolio pays down. As a result, as this revenue stream winds down, goodwill impairment will be triggered for the Asset Generation and Management reporting unit due to the passage of time and depletion of projected cash flows stemming from its FFELP student loan portfolio. Other than the Asset Generation and Management reporting unit, management believes the elimination of new FFELP loan originations will not have an adverse impact on the fair value of the Company's other reporting units. |
|
As of December 31, | ||||||||
Useful life | 2013 | 2012 | ||||||
Computer equipment and software | 1-5 years | $ | 77,733 | 72,595 | ||||
Office furniture and equipment | 3-7 years | 9,843 | 9,583 | |||||
Leasehold improvements | 1-15 years | 3,618 | 6,502 | |||||
Transportation equipment | 10 years | 7,398 | 3,610 | |||||
Building and building improvements | 5-39 years | 10,366 | 9,711 | |||||
Land | — | 700 | 700 | |||||
109,658 | 102,701 | |||||||
Accumulated depreciation | 75,829 | 70,832 | ||||||
$ | 33,829 | 31,869 |
|
Year ended December 31, | ||||||
2013 | 2012 | |||||
Gross balance - beginning of year | $ | 29,568 | 21,794 | |||
Additions based on tax positions of prior years | 996 | 9,493 | ||||
Additions based on tax positions related to the current year | 3,812 | 4,367 | ||||
Settlements with taxing authorities | (7,470 | ) | — | |||
Reductions for tax positions of prior years | (6,470 | ) | (5,738 | ) | ||
Reductions based on tax positions related to the current year | (272 | ) | — | |||
Reductions due to lapse of applicable statute of limitations | (1,023 | ) | (348 | ) | ||
Gross balance - end of year | $ | 19,141 | 29,568 |
Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Current: | |||||||||
Federal | $ | 153,756 | 118,490 | 123,737 | |||||
State | 4,776 | 1,383 | 1,354 | ||||||
Foreign | 122 | 33 | 87 | ||||||
Total current provision | 158,654 | 119,906 | 125,178 | ||||||
Deferred: | |||||||||
Federal | 1,676 | (23,460 | ) | (6,606 | ) | ||||
State | 868 | (358 | ) | (1,116 | ) | ||||
Foreign | (5 | ) | (11 | ) | (4 | ) | |||
Total deferred provision (benefit) | 2,539 | (23,829 | ) | (7,726 | ) | ||||
Provision for income tax expense | $ | 161,193 | 96,077 | 117,452 |
Year ended December 31, | ||||||||
2013 | 2012 | 2011 | ||||||
Tax expense at federal rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Increase (decrease) resulting from: | ||||||||
State tax, net of federal income tax benefit | 0.8 | 0.5 | 0.9 | |||||
Provision of uncertain federal and state tax matters | (0.6) | 0.2 | 1.1 | |||||
Tax credits | (0.4) | (0.6) | (0.4) | |||||
Valuation allowance | — | — | (0.3) | |||||
Other | — | (0.1) | 0.2 | |||||
Effective tax rate | 34.8 | % | 35.0 | % | 36.5 | % |
As of As of December 31, | ||||||
2013 | 2012 | |||||
Deferred tax assets: | ||||||
Student loans | $ | 25,967 | 26,612 | |||
Intangible assets | 23,675 | 29,812 | ||||
Securitizations | 10,407 | — | ||||
Accrued expenses | 4,162 | 3,739 | ||||
Stock compensation | 1,608 | 1,317 | ||||
Deferred revenue | 777 | 987 | ||||
Basis in certain derivative contracts | — | 14,178 | ||||
Other | 28 | 982 | ||||
Total gross deferred tax assets | 66,624 | 77,627 | ||||
Less valuation allowance | (239 | ) | (137 | ) | ||
Net deferred tax assets | 66,385 | 77,490 | ||||
Deferred tax liabilities: | ||||||
Debt repurchases | 32,286 | 32,866 | ||||
Loan origination services | 23,750 | 27,554 | ||||
Depreciation | 4,673 | 4,770 | ||||
Unrealized gain on debt and equity securities | 2,830 | 1,619 | ||||
Basis in certain derivative contracts | 2,137 | — | ||||
Total gross deferred tax liabilities | 65,676 | 66,809 | ||||
Net deferred tax asset (liability) | $ | 709 | 10,681 |
|
• | The operating results of WRCM, the Company's SEC-registered investment advisory subsidiary |
• | Income earned on certain investment activities |
• | Interest expense incurred on unsecured debt transactions |
• | Other product and service offerings that are not considered operating segments |
Year ended December 31, 2013 | ||||||||||||||||||||||||
Fee-Based | ||||||||||||||||||||||||
Student Loan and Guaranty Servicing | Tuition Payment Processing and Campus Commerce | Enrollment Services | Total Fee- Based | Asset Generation and Management | Corporate Activity and Overhead | Eliminations | Total | |||||||||||||||||
Total interest income | $ | 40 | — | — | 40 | 638,604 | 9,433 | (3,267 | ) | 644,810 | ||||||||||||||
Interest expense | — | — | — | — | 229,533 | 4,669 | (3,267 | ) | 230,935 | |||||||||||||||
Net interest income (loss) | 40 | — | — | 40 | 409,071 | 4,764 | — | 413,875 | ||||||||||||||||
Less provision for loan losses | — | — | — | — | 18,500 | — | — | 18,500 | ||||||||||||||||
Net interest income (loss) after provision for loan losses | 40 | — | — | 40 | 390,571 | 4,764 | — | 395,375 | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Loan and guaranty servicing revenue | 243,428 | — | — | 243,428 | — | — | — | 243,428 | ||||||||||||||||
Intersegment servicing revenue | 56,744 | — | — | 56,744 | — | — | (56,744 | ) | — | |||||||||||||||
Tuition payment processing and campus commerce revenue | — | 80,682 | — | 80,682 | — | — | — | 80,682 | ||||||||||||||||
Enrollment services revenue | — | — | 98,078 | 98,078 | — | — | — | 98,078 | ||||||||||||||||
Other income | — | — | — | — | 15,223 | 32,218 | (1,143 | ) | 46,298 | |||||||||||||||
Gain on sale of loans and debt repurchases | — | — | — | — | 11,004 | 695 | — | 11,699 | ||||||||||||||||
Derivative market value and foreign currency adjustments, net | — | — | — | — | 35,256 | 13,337 | — | 48,593 | ||||||||||||||||
Derivative settlements, net | — | — | — | — | (27,966 | ) | (1,670 | ) | — | (29,636 | ) | |||||||||||||
Total other income (expense) | 300,172 | 80,682 | 98,078 | 478,932 | 33,517 | 44,580 | (57,887 | ) | 499,142 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Salaries and benefits | 119,092 | 37,575 | 19,296 | 175,963 | 2,292 | 17,914 | — | 196,169 | ||||||||||||||||
Cost to provide enrollment services | — | — | 64,961 | 64,961 | — | — | — | 64,961 | ||||||||||||||||
Depreciation and amortization | 11,419 | 4,518 | 232 | 16,169 | — | 2,142 | — | 18,311 | ||||||||||||||||
Other | 79,116 | 9,147 | 6,084 | 94,347 | 30,945 | 25,393 | (1,143 | ) | 149,542 | |||||||||||||||
Intersegment expenses, net | 4,359 | 5,989 | 4,588 | 14,936 | 57,572 | (15,764 | ) | (56,744 | ) | — | ||||||||||||||
Total operating expenses | 213,986 | 57,229 | 95,161 | 366,376 | 90,809 | 29,685 | (57,887 | ) | 428,983 | |||||||||||||||
Income (loss) before income taxes and corporate overhead allocation | 86,226 | 23,453 | 2,917 | 112,596 | 333,279 | 19,659 | — | 465,534 | ||||||||||||||||
Corporate overhead allocation | (6,150 | ) | (1,957 | ) | (1,943 | ) | (10,050 | ) | (3,896 | ) | 13,946 | — | — | |||||||||||
Income (loss) before income taxes | 80,076 | 21,496 | 974 | 102,546 | 329,383 | 33,605 | — | 465,534 | ||||||||||||||||
Income tax (expense) benefit | (30,430 | ) | (8,168 | ) | (369 | ) | (38,967 | ) | (125,165 | ) | 2,939 | — | (161,193 | ) | ||||||||||
Net income (loss) | 49,646 | 13,328 | 605 | 63,579 | 204,218 | 36,544 | — | 304,341 | ||||||||||||||||
Net income attributable to noncontrolling interest | — | — | — | — | — | 1,669 | — | 1,669 | ||||||||||||||||
Net income attributable to Nelnet, Inc. | $ | 49,646 | 13,328 | 605 | 63,579 | 204,218 | 34,875 | — | 302,672 | |||||||||||||||
Total assets | $ | 84,986 | 219,064 | 34,791 | 338,841 | 27,387,461 | 391,168 | (346,621 | ) | 27,770,849 | ||||||||||||||
Year ended December 31, 2012 | ||||||||||||||||||||||||
Fee-Based | ||||||||||||||||||||||||
Student Loan and Guaranty Servicing | Tuition Payment Processing and Campus Commerce | Enrollment Services | Total Fee- Based | Asset Generation and Management | Corporate Activity and Overhead | Eliminations | Total | |||||||||||||||||
Total interest income | $ | 53 | 8 | — | 61 | 610,194 | 7,305 | (3,707 | ) | 613,853 | ||||||||||||||
Interest expense | — | — | — | — | 263,788 | 8,485 | (3,707 | ) | 268,566 | |||||||||||||||
Net interest income (loss) | 53 | 8 | — | 61 | 346,406 | (1,180 | ) | — | 345,287 | |||||||||||||||
Less provision for loan losses | — | — | — | — | 21,500 | — | — | 21,500 | ||||||||||||||||
Net interest income (loss) after provision for loan losses | 53 | 8 | — | 61 | 324,906 | (1,180 | ) | — | 323,787 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Loan and guaranty servicing revenue | 209,748 | — | — | 209,748 | — | — | — | 209,748 | ||||||||||||||||
Intersegment servicing revenue | 65,376 | — | — | 65,376 | — | — | (65,376 | ) | — | |||||||||||||||
Tuition payment processing and campus commerce revenue | — | 74,410 | — | 74,410 | — | — | — | 74,410 | ||||||||||||||||
Enrollment services revenue | — | — | 117,925 | 117,925 | — | — | — | 117,925 | ||||||||||||||||
Other income | — | — | — | — | 18,219 | 21,257 | — | 39,476 | ||||||||||||||||
Gain on sale of loans and debt repurchases | — | — | — | — | 3,814 | 325 | — | 4,139 | ||||||||||||||||
Derivative market value and foreign currency adjustments, net | — | — | — | — | (51,809 | ) | 4,415 | — | (47,394 | ) | ||||||||||||||
Derivative settlements, net | — | — | — | — | (11,792 | ) | (2,230 | ) | — | (14,022 | ) | |||||||||||||
Total other income (expense) | 275,124 | 74,410 | 117,925 | 467,459 | (41,568 | ) | 23,767 | (65,376 | ) | 384,282 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Salaries and benefits | 115,126 | 34,314 | 22,816 | 172,256 | 2,252 | 18,318 | — | 192,826 | ||||||||||||||||
Cost to provide enrollment services | — | — | 78,375 | 78,375 | — | — | — | 78,375 | ||||||||||||||||
Depreciation and amortization | 18,415 | 7,240 | 6,491 | 32,146 | — | 1,479 | — | 33,625 | ||||||||||||||||
Other | 70,505 | 10,439 | 10,416 | 91,360 | 16,435 | 20,943 | — | 128,738 | ||||||||||||||||
Intersegment expenses, net | 5,280 | 5,383 | 3,768 | 14,431 | 66,215 | (15,270 | ) | (65,376 | ) | — | ||||||||||||||
Total operating expenses | 209,326 | 57,376 | 121,866 | 388,568 | 84,902 | 25,470 | (65,376 | ) | 433,564 | |||||||||||||||
Income (loss) before income taxes and corporate overhead allocation | 65,851 | 17,042 | (3,941 | ) | 78,952 | 198,436 | (2,883 | ) | — | 274,505 | ||||||||||||||
Corporate overhead allocation | (5,904 | ) | (1,968 | ) | (1,968 | ) | (9,840 | ) | (5,306 | ) | 15,146 | — | — | |||||||||||
Income (loss) before income taxes | 59,947 | 15,074 | (5,909 | ) | 69,112 | 193,130 | 12,263 | — | 274,505 | |||||||||||||||
Income tax (expense) benefit | (22,780 | ) | (5,728 | ) | 2,244 | (26,264 | ) | (73,387 | ) | 3,574 | — | (96,077 | ) | |||||||||||
Net income (loss) | 37,167 | 9,346 | (3,665 | ) | 42,848 | 119,743 | 15,837 | — | 178,428 | |||||||||||||||
Net income attributable to noncontrolling interest | — | — | — | — | — | 431 | — | 431 | ||||||||||||||||
Net income (loss) attributable to Nelnet, Inc. | $ | 37,167 | 9,346 | (3,665 | ) | 42,848 | 119,743 | 15,406 | — | 177,997 | ||||||||||||||
Total assets | $ | 90,959 | 150,600 | 53,902 | 295,461 | 26,463,551 | 207,003 | (358,120 | ) | 26,607,895 | ||||||||||||||
Year ended December 31, 2011 | ||||||||||||||||||||||||
Fee-Based | ||||||||||||||||||||||||
Student Loan and Guaranty Servicing | Tuition Payment Processing and Campus Commerce | Enrollment Services | Total Fee- Based | Asset Generation and Management | Corporate Activity and Overhead | Eliminations | Total | |||||||||||||||||
Total interest income | $ | 58 | 21 | — | 79 | 590,736 | 5,074 | (3,035 | ) | 592,854 | ||||||||||||||
Interest expense | — | — | — | — | 221,675 | 9,649 | (3,035 | ) | 228,289 | |||||||||||||||
Net interest income (loss) | 58 | 21 | — | 79 | 369,061 | (4,575 | ) | — | 364,565 | |||||||||||||||
Less provision for loan losses | — | — | — | — | 21,250 | — | — | 21,250 | ||||||||||||||||
Net interest income (loss) after provision for loan losses | 58 | 21 | — | 79 | 347,811 | (4,575 | ) | — | 343,315 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Loan and guaranty servicing revenue | 175,657 | — | — | 175,657 | — | — | — | 175,657 | ||||||||||||||||
Intersegment servicing revenue | 69,037 | — | — | 69,037 | — | — | (69,037 | ) | — | |||||||||||||||
Tuition payment processing and campus commerce revenue | — | 67,797 | — | 67,797 | — | — | — | 67,797 | ||||||||||||||||
Enrollment services revenue | — | — | 130,470 | 130,470 | — | — | — | 130,470 | ||||||||||||||||
Other income | — | — | — | — | 15,416 | 14,097 | — | 29,513 | ||||||||||||||||
Gain on sale of loans and debt repurchases | — | — | — | — | 1,433 | 6,907 | — | 8,340 | ||||||||||||||||
Derivative market value and foreign currency adjustments, net | — | — | — | — | 7,571 | (25,378 | ) | — | (17,807 | ) | ||||||||||||||
Derivative settlements, net | — | — | — | — | (7,228 | ) | (612 | ) | — | (7,840 | ) | |||||||||||||
Total other income (expense) | 244,694 | 67,797 | 130,470 | 442,961 | 17,192 | (4,986 | ) | (69,037 | ) | 386,130 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Salaries and benefits | 102,878 | 30,070 | 25,155 | 158,103 | 2,791 | 17,057 | — | 177,951 | ||||||||||||||||
Cost to provide enrollment services | — | — | 86,548 | 86,548 | — | — | — | 86,548 | ||||||||||||||||
Depreciation and amortization | 15,313 | 6,179 | 6,854 | 28,346 | — | 1,398 | — | 29,744 | ||||||||||||||||
Other | 60,442 | 10,192 | 9,425 | 80,059 | 13,381 | 19,975 | — | 113,415 | ||||||||||||||||
Intersegment expenses, net | 4,776 | 4,714 | 3,521 | 13,011 | 70,018 | (13,992 | ) | (69,037 | ) | — | ||||||||||||||
Total operating expenses | 183,409 | 51,155 | 131,503 | 366,067 | 86,190 | 24,438 | (69,037 | ) | 407,658 | |||||||||||||||
Income (loss) before income taxes and corporate overhead allocation | 61,343 | 16,663 | (1,033 | ) | 76,973 | 278,813 | (33,999 | ) | — | 321,787 | ||||||||||||||
Corporate overhead allocation | (4,138 | ) | (1,379 | ) | (1,379 | ) | (6,896 | ) | (6,896 | ) | 13,792 | — | — | |||||||||||
Income (loss) before income taxes | 57,205 | 15,284 | (2,412 | ) | 70,077 | 271,917 | (20,207 | ) | — | 321,787 | ||||||||||||||
Income tax (expense) benefit | (21,736 | ) | (5,807 | ) | 917 | (26,626 | ) | (103,327 | ) | 12,501 | — | (117,452 | ) | |||||||||||
Net income (loss) | 35,469 | 9,477 | (1,495 | ) | 43,451 | 168,590 | (7,706 | ) | — | 204,335 | ||||||||||||||
Net income attributable to noncontrolling interest | — | — | — | — | — | — | — | — | ||||||||||||||||
Net income (loss) attributable to Nelnet, Inc. | $ | 35,469 | 9,477 | (1,495 | ) | 43,451 | 168,590 | (7,706 | ) | — | 204,335 | |||||||||||||
Total assets | $ | 123,307 | 157,444 | 45,738 | 326,489 | 25,821,806 | 24,735 | (320,813 | ) | 25,852,217 | ||||||||||||||
|
|
• | Bais Yaakov of Spring Valley v. Peterson's Nelnet, LLC |
• | Than Zaw v. Nelnet, Inc. |
• | Grant Keating v. Peterson's Nelnet, LLC et al |
|
2014 | $ | 5,889 | |
2015 | 3,446 | ||
2016 | 2,512 | ||
2017 | 1,380 | ||
2018 | 1,071 | ||
2019 and thereafter | 2,256 | ||
$ | 16,554 |
|
|
Year ended December 31, | ||||||||
2013 | 2012 | 2011 | ||||||
Non-vested shares at beginning of year | 378,671 | 285,718 | 311,119 | |||||
Granted | 131,933 | 168,833 | 82,845 | |||||
Vested | (62,491 | ) | (41,089 | ) | (54,184 | ) | ||
Canceled | (41,062 | ) | (34,791 | ) | (54,062 | ) | ||
Non-vested shares at end of year | 407,051 | 378,671 | 285,718 |
2014 | $ | 2,305 | |
2015 | 1,449 | ||
2016 | 904 | ||
2017 | 492 | ||
2018 | 271 | ||
2019 and thereafter | 406 | ||
$ | 5,827 |
Shares issued - not deferred | Shares- deferred | Total | ||||||
Year ended December 31, 2013 | 10,156 | 5,279 | 15,435 | |||||
Year ended December 31, 2012 | 16,561 | 16,700 | 33,261 | |||||
Year ended December 31, 2011 | 13,059 | 20,843 | 33,902 |
Shares issued - not deferred | Shares- deferred | Total | ||||||
Year ended December 31, 2013 | 10,156 | 5,279 | 15,435 | |||||
Year ended December 31, 2012 | 16,561 | 16,700 | 33,261 | |||||
Year ended December 31, 2011 | 13,059 | 20,843 | 33,902 |
|
|
As of December 31, 2013 | As of December 31, 2012 | |||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||
Assets: | ||||||||||||||||||
Investments: (a) | ||||||||||||||||||
Student loan asset-backed securities | $ | — | 188,279 | 188,279 | — | 77,652 | 77,652 | |||||||||||
Equity securities | 3,282 | — | 3,282 | 4,873 | — | 4,873 | ||||||||||||
Debt securities | 479 | — | 479 | 787 | — | 787 | ||||||||||||
Total investments | 3,761 | 188,279 | 192,040 | 5,660 | 77,652 | 83,312 | ||||||||||||
Fair value of derivative instruments (b) | — | 62,507 | 62,507 | — | 97,441 | 97,441 | ||||||||||||
Total assets | $ | 3,761 | 250,786 | 254,547 | 5,660 | 175,093 | 180,753 | |||||||||||
Liabilities: | ||||||||||||||||||
Fair value of derivative instruments (b): | $ | — | 17,969 | 17,969 | — | 70,890 | 70,890 | |||||||||||
Total liabilities | $ | — | 17,969 | 17,969 | — | 70,890 | 70,890 |
(a) | Investments represent investments recorded at fair value on a recurring basis. Level 1 investments are measured based upon quoted prices and include investments traded on an active exchange, such as the New York Stock Exchange, and corporate bonds, mortgage-backed securities, U.S. government bonds, and U.S. Treasury securities that trade in active markets. Level 2 investments include student loan asset-backed securities. The fair value for the student loan asset-backed securities is determined using indicative quotes from broker dealers or an income approach valuation technique (present value using the discount rate adjustment technique) that considers, among other things, rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk. |
(b) | All derivatives are accounted for at fair value on a recurring basis. The fair value of derivative financial instruments is determined using a market approach in which derivative pricing models use the stated terms of the contracts and observable yield curves, forward foreign currency exchange rates, and volatilities from active markets. |
As of December 31, 2013 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student loans receivable | $ | 26,641,383 | 25,907,589 | — | — | 26,641,383 | |||||||||
Cash and cash equivalents | 63,267 | 63,267 | 63,267 | — | — | ||||||||||
Investments | 192,040 | 192,040 | 3,761 | 188,279 | — | ||||||||||
Restricted cash | 727,838 | 727,838 | 727,838 | — | — | ||||||||||
Restricted cash – due to customers | 167,576 | 167,576 | 167,576 | — | — | ||||||||||
Restricted investments | 7,285 | 7,285 | 7,285 | — | — | ||||||||||
Accrued interest receivable | 314,553 | 314,553 | — | 314,553 | — | ||||||||||
Derivative instruments | 62,507 | 62,507 | — | 62,507 | — | ||||||||||
Financial liabilities: | |||||||||||||||
Bonds and notes payable | 25,577,250 | 25,955,289 | — | 25,577,250 | — | ||||||||||
Accrued interest payable | 21,725 | 21,725 | — | 21,725 | — | ||||||||||
Due to customers | 167,576 | 167,576 | 167,576 | — | — | ||||||||||
Derivative instruments | 17,969 | 17,969 | — | 17,969 | — |
As of December 31, 2012 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student loans receivable | $ | 25,418,623 | 24,830,621 | — | — | 25,418,623 | |||||||||
Cash and cash equivalents | 66,031 | 66,031 | 66,031 | — | — | ||||||||||
Investments | 83,312 | 83,312 | 5,660 | 77,652 | — | ||||||||||
Restricted cash | 806,632 | 806,632 | 806,632 | — | — | ||||||||||
Restricted cash – due to customers | 96,516 | 96,516 | 96,516 | — | — | ||||||||||
Restricted investments | 8,830 | 8,830 | 8,830 | — | — | ||||||||||
Accrued interest receivable | 307,518 | 307,518 | — | 307,518 | — | ||||||||||
Derivative instruments | 97,441 | 97,441 | — | 97,441 | — | ||||||||||
Financial liabilities: | |||||||||||||||
Bonds and notes payable | 24,486,008 | 25,098,835 | — | 24,486,008 | — | ||||||||||
Accrued interest payable | 14,770 | 14,770 | — | 14,770 | — | ||||||||||
Due to customers | 96,516 | 96,516 | 96,516 | — | — | ||||||||||
Derivative instruments | 70,890 | 70,890 | — | 70,890 | — |
|
2013 | ||||||||||||
First quarter | Second quarter | Third quarter | Fourth quarter | |||||||||
Net interest income | $ | 98,798 | 101,419 | 104,922 | 108,736 | |||||||
Less provision for loan losses | 5,000 | 5,000 | 5,000 | 3,500 | ||||||||
Net interest income after provision for loan losses | 93,798 | 96,419 | 99,922 | 105,236 | ||||||||
Loan and guaranty servicing revenue | 55,601 | 60,078 | 64,582 | 63,167 | ||||||||
Tuition payment processing and campus commerce revenue | 23,411 | 18,356 | 19,927 | 18,988 | ||||||||
Enrollment services revenue | 28,957 | 24,823 | 22,563 | 21,735 | ||||||||
Other income | 9,416 | 12,288 | 8,613 | 15,981 | ||||||||
Gain on sale of loans and debt repurchases | 1,407 | 7,355 | 2,138 | 799 | ||||||||
Derivative market value and foreign currency adjustments and derivative settlements, net | 1,072 | 40,188 | (16,648 | ) | (5,655 | ) | ||||||
Salaries and benefits | (47,905 | ) | (47,432 | ) | (48,712 | ) | (52,120 | ) | ||||
Cost to provide enrollment services | (19,642 | ) | (16,787 | ) | (14,668 | ) | (13,864 | ) | ||||
Depreciation and amortization | (4,377 | ) | (4,320 | ) | (4,340 | ) | (5,274 | ) | ||||
Operating expenses - other | (34,941 | ) | (34,365 | ) | (39,887 | ) | (40,349 | ) | ||||
Income tax expense | (38,447 | ) | (54,746 | ) | (30,444 | ) | (37,556 | ) | ||||
Net income | 68,350 | 101,857 | 63,046 | 71,088 | ||||||||
Net income attributable to noncontrolling interest | 271 | 614 | 216 | 568 | ||||||||
Net income attributable to Nelnet, Inc. | $ | 68,079 | 101,243 | 62,830 | 70,520 | |||||||
Earnings per common share: | ||||||||||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ | 1.46 | 2.17 | 1.35 | 1.52 |
2012 | |||||||||||||||
First quarter | Second quarter | Third quarter | Fourth quarter | ||||||||||||
Net interest income | $ | 84,856 | 84,567 | 85,266 | 90,598 | ||||||||||
Less provision for loan losses | 6,000 | 7,000 | 5,000 | 3,500 | |||||||||||
Net interest income after provision for loan losses | 78,856 | 77,567 | 80,266 | 87,098 | |||||||||||
Loan and guaranty servicing revenue | 49,488 | 52,391 | 53,285 | 54,584 | |||||||||||
Tuition payment processing and campus commerce revenue | 21,913 | 16,834 | 17,928 | 17,735 | |||||||||||
Enrollment services revenue | 31,664 | 29,710 | 30,661 | 25,890 | |||||||||||
Other income | 10,954 | 8,800 | 12,699 | 7,023 | |||||||||||
Gain on sale of loans and debt repurchases | — | 935 | 195 | 3,009 | |||||||||||
Derivative market value and foreign currency adjustments and derivative settlements, net | (15,180 | ) | (21,618 | ) | (31,275 | ) | 6,657 | ||||||||
Salaries and benefits | (49,095 | ) | (48,703 | ) | (46,395 | ) | (48,633 | ) | |||||||
Cost to provide enrollment services | (21,678 | ) | (20,374 | ) | (20,151 | ) | (16,172 | ) | |||||||
Depreciation and amortization | (8,136 | ) | (8,226 | ) | (8,402 | ) | (8,861 | ) | |||||||
Operating expenses - other | (32,263 | ) | (30,908 | ) | (29,989 | ) | (35,578 | ) | |||||||
Income tax expense | (23,230 | ) | (14,878 | ) | (21,870 | ) | (36,099 | ) | |||||||
Net income | 43,293 | 41,530 | 36,952 | 56,653 | |||||||||||
Net income attributable to noncontrolling interest | 152 | 136 | 124 | 19 | |||||||||||
Net income attributable to Nelnet, Inc. | $ | 43,141 | $ | 41,394 | $ | 36,828 | $ | 56,634 | |||||||
Earnings per common share: | |||||||||||||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ | 0.91 | 0.87 | 0.78 | 1.20 |
|
Balance Sheets | ||||||
(Parent Company Only) | ||||||
As of December 31, 2013 and 2012 | ||||||
2013 | 2012 | |||||
Assets: | ||||||
Cash and cash equivalents | $ | 24,032 | 12,124 | |||
Investments | 175,887 | 67,564 | ||||
Investment in subsidiary debt | 233,095 | 155,613 | ||||
Restricted cash | 3,763 | 63,258 | ||||
Investment in subsidiaries | 957,676 | 915,148 | ||||
Other assets | 272,910 | 237,379 | ||||
Fair value of derivative instruments | 25,673 | 14,600 | ||||
Total assets | $ | 1,693,036 | 1,465,686 | |||
Liabilities: | ||||||
Notes payable | $ | 191,457 | 204,232 | |||
Other liabilities | 39,620 | 25,351 | ||||
Fair value of derivative instruments | 17,969 | 70,890 | ||||
Total liabilities | 249,046 | 300,473 | ||||
Equity: | ||||||
Nelnet, Inc. shareholders' equity: | ||||||
Common stock | 464 | 466 | ||||
Additional paid-in capital | 24,887 | 32,540 | ||||
Retained earnings | 1,413,492 | 1,129,389 | ||||
Accumulated other comprehensive earnings | 4,819 | 2,813 | ||||
Total Nelnet, Inc. shareholders' equity | 1,443,662 | 1,165,208 | ||||
Noncontrolling interest | 328 | 5 | ||||
Total equity | 1,443,990 | 1,165,213 | ||||
Total liabilities and shareholders' equity | $ | 1,693,036 | 1,465,686 |
Statements of Income | ||||||||||
(Parent Company Only) | ||||||||||
Years ended December 31, 2013, 2012, and 2011 | ||||||||||
2013 | 2012 | 2011 | ||||||||
Investment interest | $ | 7,911 | 5,186 | 4,132 | ||||||
Interest on bonds and notes payable | 4,433 | 3,607 | 1,162 | |||||||
Net interest income | 3,478 | 1,579 | 2,970 | |||||||
Other income (expense): | ||||||||||
Other income | 7,112 | 8,010 | 4,304 | |||||||
Gain from debt repurchases | 11,905 | 4,487 | 7,255 | |||||||
Equity in subsidiaries income | 275,989 | 224,011 | 256,299 | |||||||
Derivative market value adjustments and derivative settlements, net | 28,134 | (47,262 | ) | (55,911 | ) | |||||
Total other income | 323,140 | 189,246 | 211,947 | |||||||
Operating expenses | 5,626 | 1,867 | 6,634 | |||||||
Income before income taxes | 320,992 | 188,958 | 208,283 | |||||||
Income tax expense | (16,651 | ) | (10,530 | ) | (3,948 | ) | ||||
Net income | 304,341 | 178,428 | 204,335 | |||||||
Net income attributable to noncontrolling interest | 1,669 | 431 | — | |||||||
Net income attributable to Nelnet, Inc. | $ | 302,672 | 177,997 | 204,335 |
Statements of Cash Flows | |||||||||
(Parent Company Only) | |||||||||
Years ended December 31, 2013, 2012, and 2011 | |||||||||
2013 | 2012 | 2011 | |||||||
Net income attributable to Nelnet, Inc. | $ | 302,672 | 177,997 | 204,335 | |||||
Net income attributable to noncontrolling interest | 1,669 | 431 | — | ||||||
Net income | 304,341 | 178,428 | 204,335 | ||||||
Adjustments to reconcile income to net cash provided by operating activities: | |||||||||
Derivative market value adjustment | (57,525 | ) | 30,041 | 36,226 | |||||
(Payments) proceeds to terminate and/or amend derivative instruments, net | (6,469 | ) | (6,005 | ) | 3,365 | ||||
Gain from debt repurchases | (11,905 | ) | (4,487 | ) | (7,255 | ) | |||
Equity in earnings of subsidiaries | (275,989 | ) | (224,011 | ) | (256,299 | ) | |||
Gain from sale of available-for-sale securities, net | (5,938 | ) | (5,798 | ) | — | ||||
Other | 4,119 | 3,218 | 8,219 | ||||||
Decrease in other assets | 209,896 | 169,256 | 341,412 | ||||||
Increase (decrease) in other liabilities | 16,205 | (38,971 | ) | 14,126 | |||||
Net cash provided by operating activities | 176,735 | 101,671 | 344,129 | ||||||
Cash flows from investing activities: | |||||||||
Decrease (increase) in restricted cash | 59,495 | (29,082 | ) | (3,083 | ) | ||||
Contingency payment related to business combination | — | — | (5,893 | ) | |||||
Purchases of available-for-sale securities | (217,415 | ) | (186,727 | ) | — | ||||
Proceeds from sales of available-for-sale securities | 116,337 | 162,533 | — | ||||||
Purchase of subsidiary debt, net | (66,272 | ) | (6,584 | ) | 108,334 | ||||
Purchases of other investments, net | (11,758 | ) | — | — | |||||
Net cash (used in) provided by investing activities | (119,613 | ) | (59,860 | ) | 99,358 | ||||
Cash flows from financing activities: | |||||||||
Payments on notes payable | (147,080 | ) | (109,748 | ) | (440,913 | ) | |||
Payments on notes payable due to a related party | — | — | (107,050 | ) | |||||
Proceeds from issuance of notes payable | 135,000 | 153,380 | — | ||||||
Payments of debt issuance costs | (644 | ) | (1,111 | ) | — | ||||
Dividends paid | (18,569 | ) | (66,237 | ) | (17,763 | ) | |||
Repurchases of common stock | (13,136 | ) | (22,763 | ) | (27,134 | ) | |||
Proceeds from issuance of common stock | 561 | 480 | 512 | ||||||
Payments received on employee stock notes receivable | — | 1,140 | 30 | ||||||
Issuance of noncontrolling interest | 5 | 5 | — | ||||||
Distribution made to noncontrolling interest | (1,351 | ) | (431 | ) | — | ||||
Net cash used in financing activities | (45,214 | ) | (45,285 | ) | (592,318 | ) | |||
Net increase (decrease) in cash and cash equivalents | 11,908 | (3,474 | ) | (148,831 | ) | ||||
Cash and cash equivalents, beginning of year | 12,124 | 15,598 | 164,429 | ||||||
Cash and cash equivalents, end of year | $ | 24,032 | 12,124 | 15,598 | |||||
|
• | Level 1: Quoted prices for identical instruments in active markets. The types of financial instruments included in Level 1 are highly liquid instruments with quoted prices. |
• | Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose primary value drivers are observable. |
• | Level 3: Instruments whose primary value drivers are unobservable. Inputs are developed based on the best information available; however, significant judgment is required by management in developing the inputs. |
• | Loan and guaranty servicing fees – Loan servicing fees are determined according to individual agreements with customers and are calculated based on the dollar value of loans, number of loans, or number of borrowers serviced for each customer. Guaranty servicing fees are generally calculated based on the number of loans serviced, volume of loans serviced, or amounts collected. Revenue is recognized over the period in which services are provided to customers, and when ultimate collection is assured. |
• | Guaranty collections revenue – Guaranty collections revenue is earned when collected. Collection costs paid to third parties associated with this revenue is expensed upon successful collection. |
• | Software services revenue – Software services revenue is determined from individual agreements with customers and includes license and maintenance fees associated with student loan software products. Computer and software consulting and remote hosting revenues are recognized over the period in which services are provided to customers. |
• | Inquiry Generation and Management (Agency) - This revenue is derived primarily from fees which are earned through the delivery of qualified inquiries or clicks. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. Delivery is deemed to have occurred at the time a qualified inquiry or click is delivered to the customer, provided that no significant obligations remain. From time to time, the Company may agree to credit certain inquiries or clicks if they fail to meet the contractual or other guidelines of a particular client. The Company has established a sales reserve based on historical experience. To date, such credits have been immaterial and within management’s expectations. |
• | Inquiry Management (Software) - This revenue is determined from individual agreements with customers and includes license and maintenance fees associated with inquiry management software products. Remote hosting revenues are recognized over the period in which services are provided to customers. |
• | Digital Marketing - Revenue from sales of subscriptions for interactive services to connect students to colleges and universities is recognized ratably over the term of the contract as earned. Subscription revenue received or receivable in advance of the delivery of services is included in deferred revenue. Revenue for editing services for admission essays is recognized over the period in which services are provided to customers. |
• | Content Solutions - Several content solutions services are sold based on subscriptions. Revenue from sales of subscription services is recognized ratably over the term of the contract as earned. Subscription revenue received or receivable in advance of the delivery of services is included in deferred revenue. Revenue from the sale of print products is generally earned and recognized, net of estimated returns, upon shipment or delivery. All other revenue is recognized over the period in which services are provided to customers. |
|
As of December 31, | ||||||
2013 | 2012 | |||||
Federally insured loans | ||||||
Stafford and other | $ | 6,686,626 | 7,261,114 | |||
Consolidation | 19,363,577 | 17,708,732 | ||||
Total | 26,050,203 | 24,969,846 | ||||
Non-federally insured loans | 71,103 | 26,034 | ||||
26,121,306 | 24,995,880 | |||||
Loan discount, net of unamortized loan premiums and deferred origination costs (a) | (158,595 | ) | (113,357 | ) | ||
Allowance for loan losses – federally insured loans | (43,440 | ) | (40,120 | ) | ||
Allowance for loan losses – non-federally insured loans | (11,682 | ) | (11,782 | ) | ||
$ | 25,907,589 | 24,830,621 | ||||
Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Balance at beginning of period | $ | 51,902 | 48,482 | 43,626 | |||||
Provision for loan losses: | |||||||||
Federally insured loans | 20,000 | 22,000 | 20,000 | ||||||
Non-federally insured loans | (1,500 | ) | (500 | ) | 1,250 | ||||
Total provision for loan losses | 18,500 | 21,500 | 21,250 | ||||||
Charge-offs: | |||||||||
Federally insured loans | (15,588 | ) | (21,217 | ) | (17,166 | ) | |||
Non-federally insured loans | (3,683 | ) | (3,508 | ) | (4,147 | ) | |||
Total charge-offs | (19,271 | ) | (24,725 | ) | (21,313 | ) | |||
Recoveries - non-federally insured loans | 1,577 | 1,419 | 1,310 | ||||||
Purchase (sale) of federally insured loans, net | (1,093 | ) | 2,133 | 1,463 | |||||
Transfer from repurchase obligation related to non-federally insured loans repurchased, net | 3,507 | 3,093 | 2,146 | ||||||
Balance at end of period | $ | 55,122 | 51,902 | 48,482 | |||||
Allocation of the allowance for loan losses: | |||||||||
Federally insured loans | $ | 43,440 | 40,120 | 37,205 | |||||
Non-federally insured loans | 11,682 | 11,782 | 11,277 | ||||||
Total allowance for loan losses | $ | 55,122 | 51,902 | 48,482 |
Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Beginning balance | $ | 16,130 | 19,223 | 12,600 | |||||
Repurchase obligation transferred to the allowance for loan losses related to loans repurchased, net | (3,507 | ) | (3,093 | ) | (2,146 | ) | |||
Repurchase obligation associated with loans sold | 3,520 | — | 6,269 | ||||||
Current period expense | — | — | 2,500 | ||||||
Ending balance | $ | 16,143 | 16,130 | 19,223 |
As of December 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Federally insured loans, excluding rehabilitation loans: | ||||||||||||||||||||
Loans in-school/grace/deferment (a) | $ | 2,618,390 | $ | 2,949,320 | $ | 3,623,284 | ||||||||||||||
Loans in forbearance (b) | 2,954,495 | 2,992,023 | 3,267,771 | |||||||||||||||||
Loans in repayment status: | ||||||||||||||||||||
Loans current | 15,251,869 | 86.1 | % | 14,583,044 | 87.6 | % | 14,422,192 | 84.6 | % | |||||||||||
Loans delinquent 31-60 days (c) | 768,600 | 4.3 | 652,351 | 3.9 | 821,166 | 4.8 | ||||||||||||||
Loans delinquent 61-90 days (c) | 426,089 | 2.5 | 330,885 | 2.0 | 388,542 | 2.3 | ||||||||||||||
Loans delinquent 91-120 days (c) | 281,991 | 1.6 | 247,381 | 1.5 | 289,173 | 1.7 | ||||||||||||||
Loans delinquent 121-270 days (c) | 712,204 | 4.0 | 603,942 | 3.6 | 811,914 | 4.8 | ||||||||||||||
Loans delinquent 271 days or greater (c)(d) | 269,066 | 1.5 | 220,798 | 1.4 | 307,861 | 1.8 | ||||||||||||||
Total loans in repayment | 17,709,819 | 100.0 | % | 16,638,401 | 100.0 | % | 17,040,848 | 100.0 | % | |||||||||||
Total federally insured loans, excluding rehabilitation loans | $ | 23,282,704 | $ | 22,579,744 | $ | 23,931,903 | ||||||||||||||
Rehabilitation loans: | ||||||||||||||||||||
Loans in-school/grace/deferment (a) | $ | 254,115 | $ | 150,317 | $ | 41,615 | ||||||||||||||
Loans in forbearance (b) | 415,530 | 330,278 | 62,681 | |||||||||||||||||
Loans in repayment status: | ||||||||||||||||||||
Loans current | 1,086,053 | 51.8 | % | 670,205 | 35.1 | % | 178,180 | 60.0 | % | |||||||||||
Loans delinquent 31-60 days (c) | 198,718 | 9.5 | 113,795 | 6.0 | 23,038 | 7.7 | ||||||||||||||
Loans delinquent 61-90 days (c) | 124,244 | 5.9 | 79,691 | 4.2 | 18,552 | 6.3 | ||||||||||||||
Loans delinquent 91-120 days (c) | 108,800 | 5.2 | 186,278 | 9.8 | 18,607 | 6.3 | ||||||||||||||
Loans delinquent 121-270 days (c) | 405,732 | 19.3 | 633,001 | 33.1 | 43,743 | 14.8 | ||||||||||||||
Loans delinquent 271 days or greater (c)(d) | 174,307 | 8.3 | 226,537 | 11.8 | 14,390 | 4.9 | ||||||||||||||
Total loans in repayment | 2,097,854 | 100.0 | % | 1,909,507 | 100.0 | % | 296,510 | 100.0 | % | |||||||||||
Total rehabilitation loans | 2,767,499 | 2,390,102 | 400,806 | |||||||||||||||||
Total federally insured loans | $ | 26,050,203 | $ | 24,969,846 | $ | 24,332,709 |
(a) | Loans for borrowers who still may be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation for law students. |
(b) | Loans for borrowers who have temporarily ceased making full payments due to hardship or other factors, according to a schedule approved by the servicer consistent with the established loan program servicing procedures and policies. |
(c) | The period of delinquency is based on the number of days scheduled payments are contractually past due and relate to repayment loans, that is, receivables not charged off, and not in school, grace, deferment, or forbearance. |
(d) | A portion of loans included in loans delinquent 271 days or greater includes loans in claim status, which are loans that have gone into default and have been submitted to the guaranty agency. |
|
As of December 31, 2013 | |||||||
Carrying amount | Interest rate range | Final maturity | |||||
Variable-rate bonds and notes issued in asset-backed securitizations: | |||||||
Bonds and notes based on indices | $ | 23,479,893 | 0.25% - 6.90% | 5/25/18 - 8/26/52 | |||
Bonds and notes based on auction or remarketing | 1,134,250 | 0.07% - 2.17% | 5/1/28 - 11/26/46 | ||||
Total variable-rate bonds and notes | 24,614,143 | ||||||
FFELP warehouse facilities | 1,396,344 | 0.17% - 0.25% | 1/17/16 - 6/12/16 | ||||
Unsecured line of credit | 45,000 | 1.67% | 3/28/18 | ||||
Unsecured debt - Junior Subordinated Hybrid Securities | 96,457 | 3.62% | 9/15/61 | ||||
Other borrowings | 61,401 | 1.67% - 5.10% | 4/11/14 - 11/11/15 | ||||
26,213,345 | |||||||
Discount on bonds and notes payable | (258,056 | ) | |||||
Total | $ | 25,955,289 |
As of December 31, 2012 | |||||||
Carrying amount | Interest rate range | Final maturity | |||||
Variable-rate bonds and notes issued in asset-backed securitizations: | |||||||
Bonds and notes based on indices | $ | 21,185,140 | 0.32% - 6.90% | 11/25/15 - 8/26/52 | |||
Bonds and notes based on auction or remarketing | 969,925 | 0.15% - 2.14% | 5/1/28 - 5/25/42 | ||||
Total variable-rate bonds and notes | 22,155,065 | ||||||
FFELP warehouse facilities | 1,554,151 | 0.21% - 0.29% | 1/31/15 - 6/30/15 | ||||
Department of Education Conduit | 1,344,513 | 0.82% | 1/19/14 | ||||
Unsecured line of credit | 55,000 | 1.71% | 2/17/16 | ||||
Unsecured debt - Junior Subordinated Hybrid Securities | 99,232 | 3.68% | 9/15/61 | ||||
Other borrowings | 62,904 | 1.50% - 5.10% | 11/14/13 - 11/11/15 | ||||
25,270,865 | |||||||
Discount on bonds and notes payable | (172,030 | ) | |||||
Total | $ | 25,098,835 |
NHELP-III | NHELP-II | NFSLW-I | Total | ||||||||||
Maximum financing amount | $ | 750,000 | 500,000 | 500,000 | 1,750,000 | ||||||||
Amount outstanding | 577,918 | 339,359 | 479,067 | 1,396,344 | |||||||||
Amount available | 172,082 | 160,641 | 20,933 | 353,656 | |||||||||
Expiration of liquidity provisions | January 16, 2014 | (a) | February 28, 2014 | (b) | June 12, 2014 | ||||||||
Final maturity date | January 17, 2016 | February 28, 2016 | (b) | June 12, 2016 | |||||||||
Maximum advance rates | 92.2 - 95.0% | 84.5 - 94.5% | 92.0 - 98.0% | ||||||||||
Minimum advance rates | 92.2 - 95.0% | 84.5 - 94.5% | 84.0 - 90.0% | ||||||||||
Advanced as equity support | $ | 34,762 | 31,676 | 22,073 | 88,511 |
Securitizations issued during the year ended December 31, 2013 | ||||||||||||||||||||||
2013-1 | 2013-2 (a) | 2013-3 | 2013-4 | 2013-5 (a) | Total | |||||||||||||||||
Date securities issued | 1/31/13 | 2/28/13 | 4/30/13 | 6/21/13 | 9/30/13 | |||||||||||||||||
Total original principal amount | $ | 437,500 | 1,122,000 | 765,000 | 453,000 | 399,000 | $ | 3,176,500 | ||||||||||||||
Class A senior notes: | ||||||||||||||||||||||
Total original principal amount | $ | 428,000 | 1,122,000 | 745,000 | 440,000 | 399,000 | 3,134,000 | |||||||||||||||
Bond discount | — | (3,325 | ) | — | (1,690 | ) | (4,881 | ) | (9,896 | ) | ||||||||||||
Issue price | $ | 428,000 | 1,118,675 | 745,000 | 438,310 | 394,119 | 3,124,104 | |||||||||||||||
Cost of funds (1-month LIBOR plus:) | 0.60 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.63 | % | ||||||||||||
Final maturity date | 6/25/41 | 7/25/40 | 2/25/37 | 12/26/42 | 1/25/37 | |||||||||||||||||
Class B subordinated notes: | ||||||||||||||||||||||
Total original principal amount | $ | 9,500 | 20,000 | 13,000 | 42,500 | |||||||||||||||||
Bond discount | (1,525 | ) | (1,762 | ) | (1,804 | ) | (5,091 | ) | ||||||||||||||
Issue price | $ | 7,975 | 18,238 | 11,196 | 37,409 | |||||||||||||||||
Cost of funds (1-month LIBOR plus:) | 1.50 | % | 1.50 | % | 1.50 | % | ||||||||||||||||
Final maturity date | 3/25/48 | 7/25/47 | 1/25/47 |
Securitizations issued during the year ended December 31, 2012 | ||||||||||||||||||||||||
2012-1 (a) | 2012-2 (a) | 2012-3 (a) | 2012-4 | 2012-5 | 2012-6 | Total | ||||||||||||||||||
Date securities issued | 5/9/12 | 6/11/12 | 7/31/12 | 10/11/12 | 11/8/12 | 12/12/12 | ||||||||||||||||||
Total original principal amount | $ | 336,300 | 323,000 | 414,300 | 937,500 | 1,174,000 | 1,012,000 | $ | 4,197,100 | |||||||||||||||
Class A senior notes: | ||||||||||||||||||||||||
Total original principal amount | $ | 336,300 | 323,000 | 414,300 | 920,000 | 1,144,000 | 987,000 | 4,124,600 | ||||||||||||||||
Bond discount | — | (3,609 | ) | (1,275 | ) | — | (7,642 | ) | (3,399 | ) | (15,925 | ) | ||||||||||||
Issue price | $ | 336,300 | 319,391 | 413,025 | 920,000 | 1,136,358 | 983,601 | 4,108,675 | ||||||||||||||||
Cost of funds (1-month LIBOR plus:) | 0.80 | % | 0.80 | % | 0.70 | % | 0.70 | % | 0.60 | % | 0.60 | % | ||||||||||||
Final maturity date | 12/27/39 | 12/26/33 | 3/26/40 | 9/27/38 | 10/27/36 | 3/27/45 | ||||||||||||||||||
Class B subordinated notes: | ||||||||||||||||||||||||
Total original principal amount | $ | 17,500 | 30,000 | 25,000 | 72,500 | |||||||||||||||||||
Bond discount | (4,900 | ) | (10,011 | ) | (6,937 | ) | (21,848 | ) | ||||||||||||||||
Issue price | $ | 12,600 | 19,989 | 18,063 | 50,652 | |||||||||||||||||||
Cost of funds (1-month LIBOR plus:) | 1.00 | % | 1.00 | % | 1.50 | % | ||||||||||||||||||
Final maturity date | 7/26/49 | 12/28/43 | 8/26/52 |
(a) | Total original principal amount excludes the Class B subordinated tranches for the 2012-1, 2012-2, 2012-3, 2013-2, and 2013-5 transactions totaling $7.6 million, $10.0 million, $10.0 million, $34.0 million, and $9.0 million, respectively, that were retained at issuance. As of December 31, 2013, the Company has a total of $85.5 million (par value) of its own Class B subordinated notes remaining from prior completed asset-backed securitizations that are not included in the Company's consolidated balance sheet. If the Company sells these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. Upon sale, these notes would be shown as “bonds and notes payable” in the Company's consolidated balance sheet. The Company believes the market value of such notes is currently less than par value. Any excess of the par value over the market value on the date of sale would be recognized by the Company as interest expense over the life of the bonds. |
2014 | $ | 56,900 | ||
2015 | 4,501 | |||
2016 | 1,396,344 | |||
2017 | — | |||
2018 | 447,245 | |||
2019 and thereafter | 24,308,355 | |||
$ | 26,213,345 |
|
Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Gain on sale of loans | $ | 33 | 116 | 1,378 | |||||
Gain from debt repurchases (a) | 11,666 | 4,023 | 6,962 | ||||||
$ | 11,699 | 4,139 | 8,340 |
(a) | The activity included in "Gain from debt repurchases" is detailed below: |
Year ended December 31, 2013 | Year ended December 31, 2012 | Year ended December 31, 2011 | |||||||||||||||||||||||||
Par value | Purchase price | Gain | Par value | Purchase price | Gain | Par value | Purchase price | Gain | |||||||||||||||||||
Hybrid Securities | $ | 2,775 | 2,080 | 695 | 1,465 | 1,140 | 325 | 62,558 | 55,651 | 6,907 | |||||||||||||||||
Asset-backed securities | 87,696 | 76,725 | 10,971 | 134,667 | 130,969 | 3,698 | 12,254 | 12,199 | 55 | ||||||||||||||||||
$ | 90,471 | 78,805 | 11,666 | 136,132 | 132,109 | 4,023 | 74,812 | 67,850 | 6,962 |
|
As of December 31, | ||||||||||
2013 | 2012 | |||||||||
Maturity | Notional amount | Notional amount | ||||||||
2021 | $ | 250,000 | 250,000 | |||||||
2022 | 1,900,000 | 1,900,000 | ||||||||
2023 | 3,650,000 | 3,150,000 | ||||||||
2024 | 250,000 | 250,000 | ||||||||
2026 | 800,000 | 800,000 | ||||||||
2028 | 100,000 | 100,000 | ||||||||
2036 | 700,000 | 700,000 | ||||||||
2039 | (a) | 150,000 | 150,000 | |||||||
2040 | (b) | 200,000 | 200,000 | |||||||
$ | 8,000,000 | (c) | 7,500,000 | (c) |
(c) | The weighted average rate paid by the Company on the 1:3 Basis Swaps as of December 31, 2013 and 2012, was one-month LIBOR plus 3.5 basis points and one-month LIBOR plus 3.3 basis points, respectively. |
As of December 31, 2013 | As of December 31, 2012 | ||||||||||||||
Maturity | Notional amount | Weighted average fixed rate paid by the Company (a) | Notional amount | Weighted average fixed rate paid by the Company (a) | |||||||||||
2013 | $ | — | — | % | $ | 3,150,000 | 0.71 | % | |||||||
2014 | 1,750,000 | 0.71 | 1,750,000 | 0.71 | |||||||||||
2015 | 1,100,000 | 0.89 | 1,100,000 | 0.89 | |||||||||||
2016 | 750,000 | 0.85 | 750,000 | 0.85 | |||||||||||
2017 | 1,250,000 | 0.86 | 750,000 | 0.99 | |||||||||||
$ | 4,850,000 | 0.81 | % | $ | 7,500,000 | 0.78 | % |
(a) | For all interest rate derivatives, the Company receives discrete three-month LIBOR. |
As of December 31, 2013 | As of December 31, 2012 | ||||||||||||
Maturity | Notional amount | Weighted average fixed rate paid by the Company (a) | Notional amount | Weighted average fixed rate paid by the Company (a) | |||||||||
2036 | $ | 25,000 | 4.28% | $ | 75,000 | 4.28 | % |
(a) | For all interest rate derivatives, the Company receives discrete three-month LIBOR. |
Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Re-measurement of Euro Notes | $ | (35,285 | ) | (19,561 | ) | 32,706 | |||
Change in fair value of cross currency interest rate swaps | 26,354 | 2,210 | (14,287 | ) | |||||
Total impact to consolidated statements of income - income (expense) (a) | $ | (8,931 | ) | (17,351 | ) | 18,419 |
(a) | The financial statement impact of the above items is included in "Derivative market value and foreign currency adjustments and derivative settlements, net" in the Company's consolidated statements of income. |
Fair value of asset derivatives | Fair value of liability derivatives | |||||||||||
As of | As of | As of | As of | |||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||
1:3 basis swaps | $ | 18,490 | 12,239 | — | 1,215 | |||||||
Interest rate swaps - floor income hedges | 7,183 | — | 15,849 | 45,913 | ||||||||
Interest rate swaps - hybrid debt hedges | — | — | 2,119 | 23,762 | ||||||||
Cross-currency interest rate swaps | 36,834 | 82,841 | — | — | ||||||||
Other | — | 2,361 | — | — | ||||||||
Total | $ | 62,507 | 97,441 | 17,968 | 70,890 |
Gross amounts not offset in the consolidated balance sheets | |||||||||||||
Derivative assets | Gross amounts of recognized assets presented in the consolidated balance sheets | Derivatives subject to enforceable master netting arrangement | Cash collateral received (a) | Net asset (liability) | |||||||||
Balance as of December 31, 2013 | $ | 62,507 | (15,437 | ) | (15,959 | ) | 31,111 | ||||||
Balance as of December 31, 2012 | 97,441 | (13,234 | ) | (19,993 | ) | 64,214 |
Gross amounts not offset in the consolidated balance sheets | |||||||||||||
Derivative liabilities | Gross amounts of recognized liabilities presented in the consolidated balance sheets | Derivatives subject to enforceable master netting arrangement | Cash collateral pledged (b) | Net asset (liability) | |||||||||
Balance as of December 31, 2013 | $ | (17,969 | ) | 15,437 | 3,630 | 1,098 | |||||||
Balance as of December 31, 2012 | (70,890 | ) | 13,234 | 63,128 | 5,472 |
(a) | As of December 31, 2013 and December 31, 2012, the trustee for certain of the Company's asset-backed securitization transactions held $16.0 million and $20.0 million, respectively, of collateral from the counterparty on the cross-currency interest rate swaps. |
(b) | As of December 31, 2013 and December 31, 2012, the Company had $3.6 million and $63.1 million, respectively, posted as collateral to derivative counterparties, which is included in “restricted cash and investments” in the Company's consolidated balance sheet. |
Year ended December 31, | ||||||||||
2013 | 2012 | 2011 | ||||||||
Settlements: | ||||||||||
1:3 basis swaps | $ | 3,301 | 4,495 | 1,446 | ||||||
Interest rate swaps - floor income hedges | (31,022 | ) | (19,270 | ) | (20,246 | ) | ||||
Interest rate swaps - hybrid debt hedges | (1,670 | ) | (2,231 | ) | (744 | ) | ||||
Cross-currency interest rate swaps | (245 | ) | 3,228 | 11,877 | ||||||
Other | — | (244 | ) | (173 | ) | |||||
Total settlements - (expense) income | (29,636 | ) | (14,022 | ) | (7,840 | ) | ||||
Change in fair value: | ||||||||||
1:3 basis swaps | 7,467 | 676 | 1,114 | |||||||
Interest rate swaps - floor income hedges | 36,719 | (35,215 | ) | (12,169 | ) | |||||
Interest rate swaps - hybrid debt hedges | 12,997 | 1,717 | (25,475 | ) | ||||||
Cross-currency interest rate swaps | 26,354 | 2,210 | (14,287 | ) | ||||||
Other | 341 | 2,779 | 304 | |||||||
Total change in fair value - income (expense) | 83,878 | (27,833 | ) | (50,513 | ) | |||||
Re-measurement of Euro Notes (foreign currency transaction adjustment) - income (expense) | (35,285 | ) | (19,561 | ) | 32,706 | |||||
Derivative market value and foreign currency adjustments and derivative settlements, net - income (expense) | $ | 18,957 | (61,416 | ) | (25,647 | ) |
|
As of December 31, 2013 | As of December 31, 2012 | ||||||||||||||||||||||||
Amortized cost | Gross unrealized gains | Gross unrealized losses (a) | Fair value | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||||||||
Investments: | |||||||||||||||||||||||||
Available-for-sale investments : | |||||||||||||||||||||||||
Student loan asset-backed and other debt securities (b) | $ | 171,931 | 7,111 | (1,241 | ) | 177,801 | 64,970 | 3,187 | (179 | ) | 67,978 | ||||||||||||||
Equity securities | 1,502 | 1,783 | (3 | ) | 3,282 | 3,449 | 1,604 | (180 | ) | 4,873 | |||||||||||||||
Total available-for-sale investments | $ | 173,433 | 8,894 | (1,244 | ) | 181,083 | 68,419 | 4,791 | (359 | ) | 72,851 | ||||||||||||||
Trading investments : | |||||||||||||||||||||||||
Student loan asset-backed and other debt securities | 10,957 | 10,461 | |||||||||||||||||||||||
Total available-for-sale and trading investments | $ | 192,040 | 83,312 | ||||||||||||||||||||||
Restricted Investments (c): | |||||||||||||||||||||||||
Guaranteed investment contracts - held-to-maturity | $ | 7,285 | 8,830 |
(a) | As of December 31, 2013, the Company considered the decline in market value of its available-for-sale investments to be temporary in nature and did not consider any of its investments other-than-temporarily impaired. |
(b) | As of December 31, 2013, the stated maturities of the Company's student loan asset-backed securities and other debt securities classified as available-for-sale are shown in the following table: |
Year of Maturity: | Amortized cost | Fair value | ||||
Within 1 year | $ | — | — | |||
1-5 years | 418 | 418 | ||||
6-10 years | 57 | 57 | ||||
After 10 years | 171,456 | 177,326 | ||||
Total | $ | 171,931 | 177,801 |
(c) | Restricted investments are included in "restricted cash and investments" in the Company's consolidated balance sheets. The Company's restricted investments include cash balances that the Company's indentured securitization trusts deposit in guaranteed investment contracts that are held for the related note holders. These investments are classified as held-to-maturity and the Company accounts for them at amortized cost, which approximates fair value. |
Year of Maturity: | |||
Within 1 year | $ | — | |
1-5 years | 5,084 | ||
6-10 years | — | ||
After 10 years | 2,201 | ||
Total | $ | 7,285 |
Year of Maturity: | Amortized cost | Fair value | ||||
Within 1 year | $ | — | — | |||
1-5 years | 418 | 418 | ||||
6-10 years | 57 | 57 | ||||
After 10 years | 171,456 | 177,326 | ||||
Total | $ | 171,931 | 177,801 |
Year of Maturity: | |||
Within 1 year | $ | — | |
1-5 years | 5,084 | ||
6-10 years | — | ||
After 10 years | 2,201 | ||
Total | $ | 7,285 |
Year ended December 31, | ||||||||||
2013 | 2012 | 2011 | ||||||||
Available-for-sale securities: | ||||||||||
Gross realized gains | $ | 6,270 | 6,120 | — | ||||||
Gross realized losses | (332 | ) | (322 | ) | — | |||||
Trading securities: | ||||||||||
Unrealized gains (losses), net | 221 | 254 | 430 | |||||||
Realized gains (losses), net | 5 | 1,459 | 2,753 | |||||||
$ | 6,164 | 7,511 | 3,183 |
Year ended December 31, | ||||||||||
Affected line item in the consolidated statements of income - income (expense): | 2013 | 2012 | 2011 | |||||||
Other income | $ | 5,938 | 5,798 | — | ||||||
Income tax expense | (2,197 | ) | (2,145 | ) | — | |||||
Net income | $ | 3,741 | 3,653 | — |
|
Student Loan and Guaranty Servicing | Tuition Payment Processing and Campus Commerce | Enrollment Services | Asset Generation and Management (a) | Total | |||||||||||
Balance as of December 31, 2011, 2012, and 2013 | $ | 8,596 | 58,086 | 8,553 | 41,883 | 117,118 |
(a) | As a result of the Reconciliation Act of 2010, the Company no longer originates new FFELP loans and net interest income of the Company's existing FFELP loan portfolio will decline over time as the Company's portfolio pays down. As a result, as this revenue stream winds down, goodwill impairment will be triggered for the Asset Generation and Management reporting unit due to the passage of time and depletion of projected cash flows stemming from its FFELP student loan portfolio. Other than the Asset Generation and Management reporting unit, management believes the elimination of new FFELP loan originations will not have an adverse impact on the fair value of the Company's other reporting units. |
|
As of December 31, | ||||||||
Useful life | 2013 | 2012 | ||||||
Computer equipment and software | 1-5 years | $ | 77,733 | 72,595 | ||||
Office furniture and equipment | 3-7 years | 9,843 | 9,583 | |||||
Leasehold improvements | 1-15 years | 3,618 | 6,502 | |||||
Transportation equipment | 10 years | 7,398 | 3,610 | |||||
Building and building improvements | 5-39 years | 10,366 | 9,711 | |||||
Land | — | 700 | 700 | |||||
109,658 | 102,701 | |||||||
Accumulated depreciation | 75,829 | 70,832 | ||||||
$ | 33,829 | 31,869 |
|
Year ended December 31, | ||||||
2013 | 2012 | |||||
Gross balance - beginning of year | $ | 29,568 | 21,794 | |||
Additions based on tax positions of prior years | 996 | 9,493 | ||||
Additions based on tax positions related to the current year | 3,812 | 4,367 | ||||
Settlements with taxing authorities | (7,470 | ) | — | |||
Reductions for tax positions of prior years | (6,470 | ) | (5,738 | ) | ||
Reductions based on tax positions related to the current year | (272 | ) | — | |||
Reductions due to lapse of applicable statute of limitations | (1,023 | ) | (348 | ) | ||
Gross balance - end of year | $ | 19,141 | 29,568 |
Year ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Current: | |||||||||
Federal | $ | 153,756 | 118,490 | 123,737 | |||||
State | 4,776 | 1,383 | 1,354 | ||||||
Foreign | 122 | 33 | 87 | ||||||
Total current provision | 158,654 | 119,906 | 125,178 | ||||||
Deferred: | |||||||||
Federal | 1,676 | (23,460 | ) | (6,606 | ) | ||||
State | 868 | (358 | ) | (1,116 | ) | ||||
Foreign | (5 | ) | (11 | ) | (4 | ) | |||
Total deferred provision (benefit) | 2,539 | (23,829 | ) | (7,726 | ) | ||||
Provision for income tax expense | $ | 161,193 | 96,077 | 117,452 |
Year ended December 31, | ||||||||
2013 | 2012 | 2011 | ||||||
Tax expense at federal rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Increase (decrease) resulting from: | ||||||||
State tax, net of federal income tax benefit | 0.8 | 0.5 | 0.9 | |||||
Provision of uncertain federal and state tax matters | (0.6) | 0.2 | 1.1 | |||||
Tax credits | (0.4) | (0.6) | (0.4) | |||||
Valuation allowance | — | — | (0.3) | |||||
Other | — | (0.1) | 0.2 | |||||
Effective tax rate | 34.8 | % | 35.0 | % | 36.5 | % |
As of As of December 31, | ||||||
2013 | 2012 | |||||
Deferred tax assets: | ||||||
Student loans | $ | 25,967 | 26,612 | |||
Intangible assets | 23,675 | 29,812 | ||||
Securitizations | 10,407 | — | ||||
Accrued expenses | 4,162 | 3,739 | ||||
Stock compensation | 1,608 | 1,317 | ||||
Deferred revenue | 777 | 987 | ||||
Basis in certain derivative contracts | — | 14,178 | ||||
Other | 28 | 982 | ||||
Total gross deferred tax assets | 66,624 | 77,627 | ||||
Less valuation allowance | (239 | ) | (137 | ) | ||
Net deferred tax assets | 66,385 | 77,490 | ||||
Deferred tax liabilities: | ||||||
Debt repurchases | 32,286 | 32,866 | ||||
Loan origination services | 23,750 | 27,554 | ||||
Depreciation | 4,673 | 4,770 | ||||
Unrealized gain on debt and equity securities | 2,830 | 1,619 | ||||
Basis in certain derivative contracts | 2,137 | — | ||||
Total gross deferred tax liabilities | 65,676 | 66,809 | ||||
Net deferred tax asset (liability) | $ | 709 | 10,681 |
|
Year ended December 31, 2013 | ||||||||||||||||||||||||
Fee-Based | ||||||||||||||||||||||||
Student Loan and Guaranty Servicing | Tuition Payment Processing and Campus Commerce | Enrollment Services | Total Fee- Based | Asset Generation and Management | Corporate Activity and Overhead | Eliminations | Total | |||||||||||||||||
Total interest income | $ | 40 | — | — | 40 | 638,604 | 9,433 | (3,267 | ) | 644,810 | ||||||||||||||
Interest expense | — | — | — | — | 229,533 | 4,669 | (3,267 | ) | 230,935 | |||||||||||||||
Net interest income (loss) | 40 | — | — | 40 | 409,071 | 4,764 | — | 413,875 | ||||||||||||||||
Less provision for loan losses | — | — | — | — | 18,500 | — | — | 18,500 | ||||||||||||||||
Net interest income (loss) after provision for loan losses | 40 | — | — | 40 | 390,571 | 4,764 | — | 395,375 | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Loan and guaranty servicing revenue | 243,428 | — | — | 243,428 | — | — | — | 243,428 | ||||||||||||||||
Intersegment servicing revenue | 56,744 | — | — | 56,744 | — | — | (56,744 | ) | — | |||||||||||||||
Tuition payment processing and campus commerce revenue | — | 80,682 | — | 80,682 | — | — | — | 80,682 | ||||||||||||||||
Enrollment services revenue | — | — | 98,078 | 98,078 | — | — | — | 98,078 | ||||||||||||||||
Other income | — | — | — | — | 15,223 | 32,218 | (1,143 | ) | 46,298 | |||||||||||||||
Gain on sale of loans and debt repurchases | — | — | — | — | 11,004 | 695 | — | 11,699 | ||||||||||||||||
Derivative market value and foreign currency adjustments, net | — | — | — | — | 35,256 | 13,337 | — | 48,593 | ||||||||||||||||
Derivative settlements, net | — | — | — | — | (27,966 | ) | (1,670 | ) | — | (29,636 | ) | |||||||||||||
Total other income (expense) | 300,172 | 80,682 | 98,078 | 478,932 | 33,517 | 44,580 | (57,887 | ) | 499,142 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Salaries and benefits | 119,092 | 37,575 | 19,296 | 175,963 | 2,292 | 17,914 | — | 196,169 | ||||||||||||||||
Cost to provide enrollment services | — | — | 64,961 | 64,961 | — | — | — | 64,961 | ||||||||||||||||
Depreciation and amortization | 11,419 | 4,518 | 232 | 16,169 | — | 2,142 | — | 18,311 | ||||||||||||||||
Other | 79,116 | 9,147 | 6,084 | 94,347 | 30,945 | 25,393 | (1,143 | ) | 149,542 | |||||||||||||||
Intersegment expenses, net | 4,359 | 5,989 | 4,588 | 14,936 | 57,572 | (15,764 | ) | (56,744 | ) | — | ||||||||||||||
Total operating expenses | 213,986 | 57,229 | 95,161 | 366,376 | 90,809 | 29,685 | (57,887 | ) | 428,983 | |||||||||||||||
Income (loss) before income taxes and corporate overhead allocation | 86,226 | 23,453 | 2,917 | 112,596 | 333,279 | 19,659 | — | 465,534 | ||||||||||||||||
Corporate overhead allocation | (6,150 | ) | (1,957 | ) | (1,943 | ) | (10,050 | ) | (3,896 | ) | 13,946 | — | — | |||||||||||
Income (loss) before income taxes | 80,076 | 21,496 | 974 | 102,546 | 329,383 | 33,605 | — | 465,534 | ||||||||||||||||
Income tax (expense) benefit | (30,430 | ) | (8,168 | ) | (369 | ) | (38,967 | ) | (125,165 | ) | 2,939 | — | (161,193 | ) | ||||||||||
Net income (loss) | 49,646 | 13,328 | 605 | 63,579 | 204,218 | 36,544 | — | 304,341 | ||||||||||||||||
Net income attributable to noncontrolling interest | — | — | — | — | — | 1,669 | — | 1,669 | ||||||||||||||||
Net income attributable to Nelnet, Inc. | $ | 49,646 | 13,328 | 605 | 63,579 | 204,218 | 34,875 | — | 302,672 | |||||||||||||||
Total assets | $ | 84,986 | 219,064 | 34,791 | 338,841 | 27,387,461 | 391,168 | (346,621 | ) | 27,770,849 | ||||||||||||||
Year ended December 31, 2012 | ||||||||||||||||||||||||
Fee-Based | ||||||||||||||||||||||||
Student Loan and Guaranty Servicing | Tuition Payment Processing and Campus Commerce | Enrollment Services | Total Fee- Based | Asset Generation and Management | Corporate Activity and Overhead | Eliminations | Total | |||||||||||||||||
Total interest income | $ | 53 | 8 | — | 61 | 610,194 | 7,305 | (3,707 | ) | 613,853 | ||||||||||||||
Interest expense | — | — | — | — | 263,788 | 8,485 | (3,707 | ) | 268,566 | |||||||||||||||
Net interest income (loss) | 53 | 8 | — | 61 | 346,406 | (1,180 | ) | — | 345,287 | |||||||||||||||
Less provision for loan losses | — | — | — | — | 21,500 | — | — | 21,500 | ||||||||||||||||
Net interest income (loss) after provision for loan losses | 53 | 8 | — | 61 | 324,906 | (1,180 | ) | — | 323,787 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Loan and guaranty servicing revenue | 209,748 | — | — | 209,748 | — | — | — | 209,748 | ||||||||||||||||
Intersegment servicing revenue | 65,376 | — | — | 65,376 | — | — | (65,376 | ) | — | |||||||||||||||
Tuition payment processing and campus commerce revenue | — | 74,410 | — | 74,410 | — | — | — | 74,410 | ||||||||||||||||
Enrollment services revenue | — | — | 117,925 | 117,925 | — | — | — | 117,925 | ||||||||||||||||
Other income | — | — | — | — | 18,219 | 21,257 | — | 39,476 | ||||||||||||||||
Gain on sale of loans and debt repurchases | — | — | — | — | 3,814 | 325 | — | 4,139 | ||||||||||||||||
Derivative market value and foreign currency adjustments, net | — | — | — | — | (51,809 | ) | 4,415 | — | (47,394 | ) | ||||||||||||||
Derivative settlements, net | — | — | — | — | (11,792 | ) | (2,230 | ) | — | (14,022 | ) | |||||||||||||
Total other income (expense) | 275,124 | 74,410 | 117,925 | 467,459 | (41,568 | ) | 23,767 | (65,376 | ) | 384,282 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Salaries and benefits | 115,126 | 34,314 | 22,816 | 172,256 | 2,252 | 18,318 | — | 192,826 | ||||||||||||||||
Cost to provide enrollment services | — | — | 78,375 | 78,375 | — | — | — | 78,375 | ||||||||||||||||
Depreciation and amortization | 18,415 | 7,240 | 6,491 | 32,146 | — | 1,479 | — | 33,625 | ||||||||||||||||
Other | 70,505 | 10,439 | 10,416 | 91,360 | 16,435 | 20,943 | — | 128,738 | ||||||||||||||||
Intersegment expenses, net | 5,280 | 5,383 | 3,768 | 14,431 | 66,215 | (15,270 | ) | (65,376 | ) | — | ||||||||||||||
Total operating expenses | 209,326 | 57,376 | 121,866 | 388,568 | 84,902 | 25,470 | (65,376 | ) | 433,564 | |||||||||||||||
Income (loss) before income taxes and corporate overhead allocation | 65,851 | 17,042 | (3,941 | ) | 78,952 | 198,436 | (2,883 | ) | — | 274,505 | ||||||||||||||
Corporate overhead allocation | (5,904 | ) | (1,968 | ) | (1,968 | ) | (9,840 | ) | (5,306 | ) | 15,146 | — | — | |||||||||||
Income (loss) before income taxes | 59,947 | 15,074 | (5,909 | ) | 69,112 | 193,130 | 12,263 | — | 274,505 | |||||||||||||||
Income tax (expense) benefit | (22,780 | ) | (5,728 | ) | 2,244 | (26,264 | ) | (73,387 | ) | 3,574 | — | (96,077 | ) | |||||||||||
Net income (loss) | 37,167 | 9,346 | (3,665 | ) | 42,848 | 119,743 | 15,837 | — | 178,428 | |||||||||||||||
Net income attributable to noncontrolling interest | — | — | — | — | — | 431 | — | 431 | ||||||||||||||||
Net income (loss) attributable to Nelnet, Inc. | $ | 37,167 | 9,346 | (3,665 | ) | 42,848 | 119,743 | 15,406 | — | 177,997 | ||||||||||||||
Total assets | $ | 90,959 | 150,600 | 53,902 | 295,461 | 26,463,551 | 207,003 | (358,120 | ) | 26,607,895 | ||||||||||||||
Year ended December 31, 2011 | ||||||||||||||||||||||||
Fee-Based | ||||||||||||||||||||||||
Student Loan and Guaranty Servicing | Tuition Payment Processing and Campus Commerce | Enrollment Services | Total Fee- Based | Asset Generation and Management | Corporate Activity and Overhead | Eliminations | Total | |||||||||||||||||
Total interest income | $ | 58 | 21 | — | 79 | 590,736 | 5,074 | (3,035 | ) | 592,854 | ||||||||||||||
Interest expense | — | — | — | — | 221,675 | 9,649 | (3,035 | ) | 228,289 | |||||||||||||||
Net interest income (loss) | 58 | 21 | — | 79 | 369,061 | (4,575 | ) | — | 364,565 | |||||||||||||||
Less provision for loan losses | — | — | — | — | 21,250 | — | — | 21,250 | ||||||||||||||||
Net interest income (loss) after provision for loan losses | 58 | 21 | — | 79 | 347,811 | (4,575 | ) | — | 343,315 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Loan and guaranty servicing revenue | 175,657 | — | — | 175,657 | — | — | — | 175,657 | ||||||||||||||||
Intersegment servicing revenue | 69,037 | — | — | 69,037 | — | — | (69,037 | ) | — | |||||||||||||||
Tuition payment processing and campus commerce revenue | — | 67,797 | — | 67,797 | — | — | — | 67,797 | ||||||||||||||||
Enrollment services revenue | — | — | 130,470 | 130,470 | — | — | — | 130,470 | ||||||||||||||||
Other income | — | — | — | — | 15,416 | 14,097 | — | 29,513 | ||||||||||||||||
Gain on sale of loans and debt repurchases | — | — | — | — | 1,433 | 6,907 | — | 8,340 | ||||||||||||||||
Derivative market value and foreign currency adjustments, net | — | — | — | — | 7,571 | (25,378 | ) | — | (17,807 | ) | ||||||||||||||
Derivative settlements, net | — | — | — | — | (7,228 | ) | (612 | ) | — | (7,840 | ) | |||||||||||||
Total other income (expense) | 244,694 | 67,797 | 130,470 | 442,961 | 17,192 | (4,986 | ) | (69,037 | ) | 386,130 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Salaries and benefits | 102,878 | 30,070 | 25,155 | 158,103 | 2,791 | 17,057 | — | 177,951 | ||||||||||||||||
Cost to provide enrollment services | — | — | 86,548 | 86,548 | — | — | — | 86,548 | ||||||||||||||||
Depreciation and amortization | 15,313 | 6,179 | 6,854 | 28,346 | — | 1,398 | — | 29,744 | ||||||||||||||||
Other | 60,442 | 10,192 | 9,425 | 80,059 | 13,381 | 19,975 | — | 113,415 | ||||||||||||||||
Intersegment expenses, net | 4,776 | 4,714 | 3,521 | 13,011 | 70,018 | (13,992 | ) | (69,037 | ) | — | ||||||||||||||
Total operating expenses | 183,409 | 51,155 | 131,503 | 366,067 | 86,190 | 24,438 | (69,037 | ) | 407,658 | |||||||||||||||
Income (loss) before income taxes and corporate overhead allocation | 61,343 | 16,663 | (1,033 | ) | 76,973 | 278,813 | (33,999 | ) | — | 321,787 | ||||||||||||||
Corporate overhead allocation | (4,138 | ) | (1,379 | ) | (1,379 | ) | (6,896 | ) | (6,896 | ) | 13,792 | — | — | |||||||||||
Income (loss) before income taxes | 57,205 | 15,284 | (2,412 | ) | 70,077 | 271,917 | (20,207 | ) | — | 321,787 | ||||||||||||||
Income tax (expense) benefit | (21,736 | ) | (5,807 | ) | 917 | (26,626 | ) | (103,327 | ) | 12,501 | — | (117,452 | ) | |||||||||||
Net income (loss) | 35,469 | 9,477 | (1,495 | ) | 43,451 | 168,590 | (7,706 | ) | — | 204,335 | ||||||||||||||
Net income attributable to noncontrolling interest | — | — | — | — | — | — | — | — | ||||||||||||||||
Net income (loss) attributable to Nelnet, Inc. | $ | 35,469 | 9,477 | (1,495 | ) | 43,451 | 168,590 | (7,706 | ) | — | 204,335 | |||||||||||||
Total assets | $ | 123,307 | 157,444 | 45,738 | 326,489 | 25,821,806 | 24,735 | (320,813 | ) | 25,852,217 | ||||||||||||||
|
2014 | $ | 5,889 | |
2015 | 3,446 | ||
2016 | 2,512 | ||
2017 | 1,380 | ||
2018 | 1,071 | ||
2019 and thereafter | 2,256 | ||
$ | 16,554 |
|
Year ended December 31, | ||||||||
2013 | 2012 | 2011 | ||||||
Non-vested shares at beginning of year | 378,671 | 285,718 | 311,119 | |||||
Granted | 131,933 | 168,833 | 82,845 | |||||
Vested | (62,491 | ) | (41,089 | ) | (54,184 | ) | ||
Canceled | (41,062 | ) | (34,791 | ) | (54,062 | ) | ||
Non-vested shares at end of year | 407,051 | 378,671 | 285,718 |
2014 | $ | 2,305 | |
2015 | 1,449 | ||
2016 | 904 | ||
2017 | 492 | ||
2018 | 271 | ||
2019 and thereafter | 406 | ||
$ | 5,827 |
Shares issued - not deferred | Shares- deferred | Total | ||||||
Year ended December 31, 2013 | 10,156 | 5,279 | 15,435 | |||||
Year ended December 31, 2012 | 16,561 | 16,700 | 33,261 | |||||
Year ended December 31, 2011 | 13,059 | 20,843 | 33,902 |
|
As of December 31, 2013 | As of December 31, 2012 | |||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||
Assets: | ||||||||||||||||||
Investments: (a) | ||||||||||||||||||
Student loan asset-backed securities | $ | — | 188,279 | 188,279 | — | 77,652 | 77,652 | |||||||||||
Equity securities | 3,282 | — | 3,282 | 4,873 | — | 4,873 | ||||||||||||
Debt securities | 479 | — | 479 | 787 | — | 787 | ||||||||||||
Total investments | 3,761 | 188,279 | 192,040 | 5,660 | 77,652 | 83,312 | ||||||||||||
Fair value of derivative instruments (b) | — | 62,507 | 62,507 | — | 97,441 | 97,441 | ||||||||||||
Total assets | $ | 3,761 | 250,786 | 254,547 | 5,660 | 175,093 | 180,753 | |||||||||||
Liabilities: | ||||||||||||||||||
Fair value of derivative instruments (b): | $ | — | 17,969 | 17,969 | — | 70,890 | 70,890 | |||||||||||
Total liabilities | $ | — | 17,969 | 17,969 | — | 70,890 | 70,890 |
(a) | Investments represent investments recorded at fair value on a recurring basis. Level 1 investments are measured based upon quoted prices and include investments traded on an active exchange, such as the New York Stock Exchange, and corporate bonds, mortgage-backed securities, U.S. government bonds, and U.S. Treasury securities that trade in active markets. Level 2 investments include student loan asset-backed securities. The fair value for the student loan asset-backed securities is determined using indicative quotes from broker dealers or an income approach valuation technique (present value using the discount rate adjustment technique) that considers, among other things, rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk. |
(b) | All derivatives are accounted for at fair value on a recurring basis. The fair value of derivative financial instruments is determined using a market approach in which derivative pricing models use the stated terms of the contracts and observable yield curves, forward foreign currency exchange rates, and volatilities from active markets. |
As of December 31, 2013 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student loans receivable | $ | 26,641,383 | 25,907,589 | — | — | 26,641,383 | |||||||||
Cash and cash equivalents | 63,267 | 63,267 | 63,267 | — | — | ||||||||||
Investments | 192,040 | 192,040 | 3,761 | 188,279 | — | ||||||||||
Restricted cash | 727,838 | 727,838 | 727,838 | — | — | ||||||||||
Restricted cash – due to customers | 167,576 | 167,576 | 167,576 | — | — | ||||||||||
Restricted investments | 7,285 | 7,285 | 7,285 | — | — | ||||||||||
Accrued interest receivable | 314,553 | 314,553 | — | 314,553 | — | ||||||||||
Derivative instruments | 62,507 | 62,507 | — | 62,507 | — | ||||||||||
Financial liabilities: | |||||||||||||||
Bonds and notes payable | 25,577,250 | 25,955,289 | — | 25,577,250 | — | ||||||||||
Accrued interest payable | 21,725 | 21,725 | — | 21,725 | — | ||||||||||
Due to customers | 167,576 | 167,576 | 167,576 | — | — | ||||||||||
Derivative instruments | 17,969 | 17,969 | — | 17,969 | — |
As of December 31, 2012 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student loans receivable | $ | 25,418,623 | 24,830,621 | — | — | 25,418,623 | |||||||||
Cash and cash equivalents | 66,031 | 66,031 | 66,031 | — | — | ||||||||||
Investments | 83,312 | 83,312 | 5,660 | 77,652 | — | ||||||||||
Restricted cash | 806,632 | 806,632 | 806,632 | — | — | ||||||||||
Restricted cash – due to customers | 96,516 | 96,516 | 96,516 | — | — | ||||||||||
Restricted investments | 8,830 | 8,830 | 8,830 | — | — | ||||||||||
Accrued interest receivable | 307,518 | 307,518 | — | 307,518 | — | ||||||||||
Derivative instruments | 97,441 | 97,441 | — | 97,441 | — | ||||||||||
Financial liabilities: | |||||||||||||||
Bonds and notes payable | 24,486,008 | 25,098,835 | — | 24,486,008 | — | ||||||||||
Accrued interest payable | 14,770 | 14,770 | — | 14,770 | — | ||||||||||
Due to customers | 96,516 | 96,516 | 96,516 | — | — | ||||||||||
Derivative instruments | 70,890 | 70,890 | — | 70,890 | — |
|
2013 | ||||||||||||
First quarter | Second quarter | Third quarter | Fourth quarter | |||||||||
Net interest income | $ | 98,798 | 101,419 | 104,922 | 108,736 | |||||||
Less provision for loan losses | 5,000 | 5,000 | 5,000 | 3,500 | ||||||||
Net interest income after provision for loan losses | 93,798 | 96,419 | 99,922 | 105,236 | ||||||||
Loan and guaranty servicing revenue | 55,601 | 60,078 | 64,582 | 63,167 | ||||||||
Tuition payment processing and campus commerce revenue | 23,411 | 18,356 | 19,927 | 18,988 | ||||||||
Enrollment services revenue | 28,957 | 24,823 | 22,563 | 21,735 | ||||||||
Other income | 9,416 | 12,288 | 8,613 | 15,981 | ||||||||
Gain on sale of loans and debt repurchases | 1,407 | 7,355 | 2,138 | 799 | ||||||||
Derivative market value and foreign currency adjustments and derivative settlements, net | 1,072 | 40,188 | (16,648 | ) | (5,655 | ) | ||||||
Salaries and benefits | (47,905 | ) | (47,432 | ) | (48,712 | ) | (52,120 | ) | ||||
Cost to provide enrollment services | (19,642 | ) | (16,787 | ) | (14,668 | ) | (13,864 | ) | ||||
Depreciation and amortization | (4,377 | ) | (4,320 | ) | (4,340 | ) | (5,274 | ) | ||||
Operating expenses - other | (34,941 | ) | (34,365 | ) | (39,887 | ) | (40,349 | ) | ||||
Income tax expense | (38,447 | ) | (54,746 | ) | (30,444 | ) | (37,556 | ) | ||||
Net income | 68,350 | 101,857 | 63,046 | 71,088 | ||||||||
Net income attributable to noncontrolling interest | 271 | 614 | 216 | 568 | ||||||||
Net income attributable to Nelnet, Inc. | $ | 68,079 | 101,243 | 62,830 | 70,520 | |||||||
Earnings per common share: | ||||||||||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ | 1.46 | 2.17 | 1.35 | 1.52 |
2012 | |||||||||||||||
First quarter | Second quarter | Third quarter | Fourth quarter | ||||||||||||
Net interest income | $ | 84,856 | 84,567 | 85,266 | 90,598 | ||||||||||
Less provision for loan losses | 6,000 | 7,000 | 5,000 | 3,500 | |||||||||||
Net interest income after provision for loan losses | 78,856 | 77,567 | 80,266 | 87,098 | |||||||||||
Loan and guaranty servicing revenue | 49,488 | 52,391 | 53,285 | 54,584 | |||||||||||
Tuition payment processing and campus commerce revenue | 21,913 | 16,834 | 17,928 | 17,735 | |||||||||||
Enrollment services revenue | 31,664 | 29,710 | 30,661 | 25,890 | |||||||||||
Other income | 10,954 | 8,800 | 12,699 | 7,023 | |||||||||||
Gain on sale of loans and debt repurchases | — | 935 | 195 | 3,009 | |||||||||||
Derivative market value and foreign currency adjustments and derivative settlements, net | (15,180 | ) | (21,618 | ) | (31,275 | ) | 6,657 | ||||||||
Salaries and benefits | (49,095 | ) | (48,703 | ) | (46,395 | ) | (48,633 | ) | |||||||
Cost to provide enrollment services | (21,678 | ) | (20,374 | ) | (20,151 | ) | (16,172 | ) | |||||||
Depreciation and amortization | (8,136 | ) | (8,226 | ) | (8,402 | ) | (8,861 | ) | |||||||
Operating expenses - other | (32,263 | ) | (30,908 | ) | (29,989 | ) | (35,578 | ) | |||||||
Income tax expense | (23,230 | ) | (14,878 | ) | (21,870 | ) | (36,099 | ) | |||||||
Net income | 43,293 | 41,530 | 36,952 | 56,653 | |||||||||||
Net income attributable to noncontrolling interest | 152 | 136 | 124 | 19 | |||||||||||
Net income attributable to Nelnet, Inc. | $ | 43,141 | $ | 41,394 | $ | 36,828 | $ | 56,634 | |||||||
Earnings per common share: | |||||||||||||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ | 0.91 | 0.87 | 0.78 | 1.20 |
|
Balance Sheets | ||||||
(Parent Company Only) | ||||||
As of December 31, 2013 and 2012 | ||||||
2013 | 2012 | |||||
Assets: | ||||||
Cash and cash equivalents | $ | 24,032 | 12,124 | |||
Investments | 175,887 | 67,564 | ||||
Investment in subsidiary debt | 233,095 | 155,613 | ||||
Restricted cash | 3,763 | 63,258 | ||||
Investment in subsidiaries | 957,676 | 915,148 | ||||
Other assets | 272,910 | 237,379 | ||||
Fair value of derivative instruments | 25,673 | 14,600 | ||||
Total assets | $ | 1,693,036 | 1,465,686 | |||
Liabilities: | ||||||
Notes payable | $ | 191,457 | 204,232 | |||
Other liabilities | 39,620 | 25,351 | ||||
Fair value of derivative instruments | 17,969 | 70,890 | ||||
Total liabilities | 249,046 | 300,473 | ||||
Equity: | ||||||
Nelnet, Inc. shareholders' equity: | ||||||
Common stock | 464 | 466 | ||||
Additional paid-in capital | 24,887 | 32,540 | ||||
Retained earnings | 1,413,492 | 1,129,389 | ||||
Accumulated other comprehensive earnings | 4,819 | 2,813 | ||||
Total Nelnet, Inc. shareholders' equity | 1,443,662 | 1,165,208 | ||||
Noncontrolling interest | 328 | 5 | ||||
Total equity | 1,443,990 | 1,165,213 | ||||
Total liabilities and shareholders' equity | $ | 1,693,036 | 1,465,686 |
Statements of Income | ||||||||||
(Parent Company Only) | ||||||||||
Years ended December 31, 2013, 2012, and 2011 | ||||||||||
2013 | 2012 | 2011 | ||||||||
Investment interest | $ | 7,911 | 5,186 | 4,132 | ||||||
Interest on bonds and notes payable | 4,433 | 3,607 | 1,162 | |||||||
Net interest income | 3,478 | 1,579 | 2,970 | |||||||
Other income (expense): | ||||||||||
Other income | 7,112 | 8,010 | 4,304 | |||||||
Gain from debt repurchases | 11,905 | 4,487 | 7,255 | |||||||
Equity in subsidiaries income | 275,989 | 224,011 | 256,299 | |||||||
Derivative market value adjustments and derivative settlements, net | 28,134 | (47,262 | ) | (55,911 | ) | |||||
Total other income | 323,140 | 189,246 | 211,947 | |||||||
Operating expenses | 5,626 | 1,867 | 6,634 | |||||||
Income before income taxes | 320,992 | 188,958 | 208,283 | |||||||
Income tax expense | (16,651 | ) | (10,530 | ) | (3,948 | ) | ||||
Net income | 304,341 | 178,428 | 204,335 | |||||||
Net income attributable to noncontrolling interest | 1,669 | 431 | — | |||||||
Net income attributable to Nelnet, Inc. | $ | 302,672 | 177,997 | 204,335 |
Statements of Cash Flows | |||||||||
(Parent Company Only) | |||||||||
Years ended December 31, 2013, 2012, and 2011 | |||||||||
2013 | 2012 | 2011 | |||||||
Net income attributable to Nelnet, Inc. | $ | 302,672 | 177,997 | 204,335 | |||||
Net income attributable to noncontrolling interest | 1,669 | 431 | — | ||||||
Net income | 304,341 | 178,428 | 204,335 | ||||||
Adjustments to reconcile income to net cash provided by operating activities: | |||||||||
Derivative market value adjustment | (57,525 | ) | 30,041 | 36,226 | |||||
(Payments) proceeds to terminate and/or amend derivative instruments, net | (6,469 | ) | (6,005 | ) | 3,365 | ||||
Gain from debt repurchases | (11,905 | ) | (4,487 | ) | (7,255 | ) | |||
Equity in earnings of subsidiaries | (275,989 | ) | (224,011 | ) | (256,299 | ) | |||
Gain from sale of available-for-sale securities, net | (5,938 | ) | (5,798 | ) | — | ||||
Other | 4,119 | 3,218 | 8,219 | ||||||
Decrease in other assets | 209,896 | 169,256 | 341,412 | ||||||
Increase (decrease) in other liabilities | 16,205 | (38,971 | ) | 14,126 | |||||
Net cash provided by operating activities | 176,735 | 101,671 | 344,129 | ||||||
Cash flows from investing activities: | |||||||||
Decrease (increase) in restricted cash | 59,495 | (29,082 | ) | (3,083 | ) | ||||
Contingency payment related to business combination | — | — | (5,893 | ) | |||||
Purchases of available-for-sale securities | (217,415 | ) | (186,727 | ) | — | ||||
Proceeds from sales of available-for-sale securities | 116,337 | 162,533 | — | ||||||
Purchase of subsidiary debt, net | (66,272 | ) | (6,584 | ) | 108,334 | ||||
Purchases of other investments, net | (11,758 | ) | — | — | |||||
Net cash (used in) provided by investing activities | (119,613 | ) | (59,860 | ) | 99,358 | ||||
Cash flows from financing activities: | |||||||||
Payments on notes payable | (147,080 | ) | (109,748 | ) | (440,913 | ) | |||
Payments on notes payable due to a related party | — | — | (107,050 | ) | |||||
Proceeds from issuance of notes payable | 135,000 | 153,380 | — | ||||||
Payments of debt issuance costs | (644 | ) | (1,111 | ) | — | ||||
Dividends paid | (18,569 | ) | (66,237 | ) | (17,763 | ) | |||
Repurchases of common stock | (13,136 | ) | (22,763 | ) | (27,134 | ) | |||
Proceeds from issuance of common stock | 561 | 480 | 512 | ||||||
Payments received on employee stock notes receivable | — | 1,140 | 30 | ||||||
Issuance of noncontrolling interest | 5 | 5 | — | ||||||
Distribution made to noncontrolling interest | (1,351 | ) | (431 | ) | — | ||||
Net cash used in financing activities | (45,214 | ) | (45,285 | ) | (592,318 | ) | |||
Net increase (decrease) in cash and cash equivalents | 11,908 | (3,474 | ) | (148,831 | ) | ||||
Cash and cash equivalents, beginning of year | 12,124 | 15,598 | 164,429 | ||||||
Cash and cash equivalents, end of year | $ | 24,032 | 12,124 | 15,598 | |||||
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