Nelnet (NNI) 8-K Nelnet Reports First Quarter 2009 Results

Exhibit 99.1

Media contact: Ben Kiser, 402.458.3024
Investor contact: Phil Morgan, 402.458.3038

Nelnet Reports First Quarter 2009 Results

LINCOLN, Neb., May 11, 2009 — Nelnet, Inc. (NYSE: NNI) 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 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. A live audio webcast of the call will also be available at www.nelnetinvestors.com under the Events & Webcasts menu. A replay of the conference call will be available through March 23, 2009. To access the replay via telephone within the United States and Canada, callers should dial 888.203.1112. International callers should dial 719.457.0820. All callers accessing the replay will need to use the confirmation code 4079097. A replay of the audio webcast will also be available at www.nelnetinvestors.com.

This press release contains forward-looking statements and information that are based on management’s current expectations as of the date of this document. Statements that are not historical facts, including statements about the company’s expectations and statements that assume or are dependent upon future events, are forward-looking statements. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that may cause the actual results to be materially different from those reflected in such forward-looking statements. These factors include, among others, changes in the terms of student loans and the educational credit marketplace arising from the implementation of, or changes in, applicable laws and regulations including changes resulting from new laws such as any new laws enacted to implement the Administration’s 2010 budget proposals as they relate to the Federal Family Education Loan Program (FFEL Program or FFELP), which may reduce the volume, average term, special allowance payments, and yields on student loans under the FFEL Program of the U.S. Department of Education (the Department) or result in loans being originated or refinanced under non-FFEL programs or may affect the terms upon which banks and others agree to sell FFELP loans to the company. The company could also be affected by changes in the demand for educational financing or in financing preferences of lenders, educational institutions, students, and their families; the Company’s ability to maintain its credit facilities or obtain new facilities; the ability of lenders under the Company’s credit facilities to fulfill their lending commitments under these facilities; changes to the terms and conditions of the liquidity programs offered by the Department; changes in the general interest rate environment and in the securitization markets for education loans, which may increase the costs or limit the availability of financings necessary to initiate, purchase, or carry education loans; losses from loan defaults; changes in prepayment rates, guaranty rates, loan floor rates, and credit spreads; the uncertain nature of estimated expenses that may be incurred and cost savings that may result from restructuring plans; incorrect estimates or assumptions by management in connection with the preparation of the consolidated financial statements; and changes in general economic conditions. Additionally, financial projections may not prove to be accurate and may vary materially. The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this press release.

For more information see the company’s filings with the Securities and Exchange Commission. The company is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this press release or unforeseen events. Although the company may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so except as required by securities laws.

Condensed Consolidated Statements of Operations

	Three months ended
	March 31,				December 31,			March 31,
	2009				2008			2008
	(unaudited)				(unaudited)			(unaudited)
	(dollars in thousands, except share data)
Interest income:
Loan interest	$	189,570				286,279			355,390
Amortization of loan premiums and deferred origination costs		(18,651	)			(21,036	)		(25,404	)
Investment interest		4,091				8,084			11,680
Total interest income		175,010				273,327			341,666
Interest expense:
Interest on bonds and notes payable		146,502				234,868			325,141
Net interest income		28,508				38,459			16,525
Less provision for loan losses		7,500				7,000			5,000
Net interest income after provision for loan losses		21,008				31,459			11,525
Other income:
Loan and guaranty servicing revenue		26,471				21,632			24,661
Tuition payment processing and campus commerce revenue		15,538				12,175			13,847
Enrollment services revenue		28,771				29,257			27,222
Software services revenue		5,705		��		4,786			8,204
Other income		16,862				5,112			6,254
Loss on sale of loans		(206	)			(3,988	)		(47,474	)
Derivative market value, foreign currency, and put option adjustments		(4,880	)			46,348			(57,361	)
Derivative settlements, net		24,358				9,668			40,763
Total other income		112,619				124,990			16,116
Operating expenses:
Salaries and benefits		38,226				41,262			53,843
Cost to provide enrollment services		17,793				16,903			15,403
Other expenses		30,398				45,510			34,197
Amortization of intangible assets		6,154				6,511			6,560
Impairment expense		—				—			18,834
Total operating expenses		92,571				110,186			128,837
Income (loss) before income taxes		41,056				46,263			(101,196	)
Income tax (expense) benefit		(15,601	)			(16,103	)		31,371
Income (loss) from continuing operations		25,455				30,160			(69,825	)
Income from discontinued operations, net of tax		—				837			—
Net income (loss)	$	25,455				30,997			(69,825	)
Earnings (loss) per share, basic and diluted:
Income (loss) from continuing operations	$	0.52				0.61			(1.42	)
Income from discontinued operations, net of tax		—				0.02			—
Net income (loss)	$	0.52				0.63			(1.42	)
Weighted average shares outstanding		49,142,324				49,075,755			49,051,745

Condensed Consolidated Balance Sheets and Financial Data

	As of		As of		As of
	March 31,		December 31,		March 31,
	2009		2008		2008
	(unaudited)				(unaudited)
	(dollars in thousands)
Assets:
Student loans receivable, net	$	25,624,337		25,413,008		26,321,345
Student loans receivable — held for sale		—		—		423,651
Unrestricted cash and liquid investments		243,705		189,847		124,171
Restricted cash, cash equivalents, and investments		1,274,122		1,158,257		1,844,593
Goodwill		175,178		175,178		175,178
Intangible assets, net		70,900		77,054		92,897
Other assets		704,895		841,553		1,037,981
Total assets	$	28,093,137		27,854,897		30,019,816
Liabilities:
Bonds and notes payable	$	27,130,406		26,787,959		29,129,133
Other liabilities		291,129		423,712		352,576
Total liabilities		27,421,535		27,211,671		29,481,709
Shareholders’ equity		671,602		643,226		538,107
Total liabilities and shareholders’ equity	$	28,093,137		27,854,897		30,019,816