(Source: PRNewswire-FirstCall)
LINCOLN, Neb., May 11 /PRNewswire-FirstCall/ -- Nelnet, Inc. today reported GAAP net income for the first quarter of 2009 of $25.5 million, or $0.52 per share, compared with a GAAP net loss of $69.8 million, or $1.42 per share, for the first quarter of 2008. Base net income for the first quarter of 2009 was $31.5 million, or $0.64 per share, compared with $15.3 million, or $0.31 per share, in the first quarter of 2008. Base net income in 2008 excluded discontinued operations and restructuring, impairment, and certain liquidity related charges.
Other income for the first quarter of 2009 includes a pre-tax gain of $8.1 million from the company's purchase at a discount of $34.9 million in principal of its 5.125 percent Senior Notes due 2010. In addition, other income includes a pre-tax gain of $3.5 million related to contingency payments received by the company during the first quarter of 2009 from the divestiture of Premiere Credit of North America in 2007.
"We are off to a good start in 2009 with our results for the first quarter," said Mike Dunlap, Chairman and Chief Executive Officer of Nelnet. "We continue to concentrate on transforming Nelnet into a company focused on education-related processing services for a fee by growing and diversifying our businesses. In addition, we have made progress toward our 2009 objectives of improving our liquidity and reducing our debt in this uncertain economy."
Fee-based Businesses
Total revenue from fee-based businesses for the first quarter of 2009 was $77.1 million, up from $75.3 million in the same period a year ago. In recent years, in order to reduce legislative risk, the company has expanded its products and services generated from businesses that are not dependent on the federal student loan program, including the company's enrollment services, tuition payment plan, and campus commerce businesses. In the first quarter of 2009, revenue from these businesses increased $3.3 million, or 8 percent, compared with the same period in 2008.
Margin Analysis
For the first quarter of 2009, Nelnet reported net interest income of $28.5 million, compared with $16.5 million for the first quarter of 2008.
The company reported core student loan spread of 0.94 percent for the first quarter of 2009 compared with 0.91 percent in the same period of 2008 and 0.90 percent for the fourth quarter of 2008. For the first quarter of 2009, core student loan spread includes net derivative settlements of $24.4 million, compared with $9.7 million in the fourth quarter of 2008.
Operating Expenses
Operating expenses were $92.6 million in the first quarter of 2009, down from $128.8 million for the same period a year ago and $110.2 million in the fourth quarter of 2008.
Student Loan Assets
At March 31, 2009, net student loan assets were $25.6 billion. Approximately 90 percent of these student loans are financed to term at rates that the company believes will generate cash flow of $1.4 billion. In addition, Nelnet has liquidity for new loan originations through the Department of Education's loan participation and purchase programs, which will allow Nelnet to make loans to all eligible students through the 2009-2010 academic year.
Nelnet continues to improve its liquidity position by reducing the amount of student loans in its federal student loan warehouse facility from $1.6 billion at December 31, 2008, to its current balance of $1.2 billion.
Non-GAAP Performance Measures
A description of base net income and a reconciliation of GAAP net income to base net income can be found in supplemental financial information to this earnings release online at http://www.nelnetinvestors.com/results.cfm.
Nelnet will host a conference call to discuss this earnings release at 3:00 p.m. (Eastern) Wednesday, May 13, 2009. To access the call live, participants in the United States and Canada should dial 877.723.9511, and international callers should dial 719.325.4812 at least 15 minutes prior to the call.
