Here are some interesting tidbits in their 10-Q filed earlier this week:
- Department of Education's preliminary program review report found Nelnet in non-compliance with HEA's prohibited inducement provisions (hmm..not the kind of news that you want to receive if you are one of six finalists for a large servicing contract with the Dept. of Ed.):
On May 1, 2009, the Company received the
Department’s preliminary program review report, which covered the Department’s review of the period
from October 1, 2002 to September 30, 2007. The preliminary program review report contains certain
initial findings of noncompliance with the Higher Education Act’s prohibited inducement provisions
and requires that the Company provide within 30 days an explanation for the basis of the
arrangements noted in the preliminary program review report. After the Company provides an
explanation of the arrangements noted in the Department’s initial findings and the Department
reviews such explanation and any documentation, the Department is expected to issue a final program
review determination letter and advise the Company whether it intends to take any additional
action. To the extent any findings are contained in the final letter, the additional action may
include the assessment of fines or penalties, or the limitation,
suspension, and termination of the
Company’s participation in FFELP.
- Company implementing a new restructuring plan which will impact 300 people:
On May 5, 2009, the Company adopted a plan to further streamline its operations by continuing to
reduce its geographic footprint and consolidate servicing operations and related support services.Management has developed a restructuring plan that will result in lower costs and provide enhanced
synergies through cross training, career development, and simplified communications. The Company
will simplify its operating structure to leverage its larger facilities and technology by closing
certain offices and downsizing its presence in certain geographic locations. Approximately 300
associates will be impacted by this restructuring plan. However, the majority of these functions
will be relocated to the Company’s Lincoln headquarters and
Denver offices. Implementation of the plan will begin immediately
and is expected to be substantially complete during the second quarter of 2010.
The Company estimates that the total before-tax charge to earnings associated with this
restructuring plan will consist of $4 million to $6
million in severance costs, up to $4 million in contract termination costs, and up to $6 million in
non-cash charges related to the impairment of and/or the acceleration of depreciation on property
and equipment.
I hope to listen to their conference call tomorrow (it was held today) to get additional details about these issues.
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