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

Exhibit 99.1

Media contact: Ben Kiser, 402.458.3024

Investor contact: Phil Morgan, 402.458.3038

Nelnet Reports Fourth Quarter 2009 Results

· Base net income of $3.94 per share for 2009 and $1.64 per share for the fourth quarter

· Fee-based revenue increased 13 percent

· Significant increase in volume of loans serviced for the Department of Education

· Strong balance sheet and cash position

LINCOLN, Neb., March 3, 2010 – Nelnet (NYSE: NNI) today reported base net income of $81.3 million, or $1.64 per share, for the fourth quarter of 2009, compared with $15.8 million, or $0.32 per share, for the same quarter a year ago. For the year ended December 31, 2009, the company reported base net income of $194.9 million, or $3.94 per share, compared with $81.1 million, or $1.65 per share, for 2008. Base net income excludes discontinued operations, restructuring charges, impairment expenses, and certain liquidity-related charges.

Base net income in the fourth quarter of 2009 includes pre-tax gains of $26.9 million, or $0.35 per share after tax, on the sale of $1.7 billion of federal student loans to the Department of Education (Department) and $22.7 million, or $0.30 per share after tax, from the company’s repurchase of $302.1 million of asset-backed debt. Excluded from base net income in the fourth quarter of 2009 is a $32.7 million non-cash impairment charge related to goodwill and intangible assets of the company’s direct marketing and list management business.

“After a challenging 2008, we ended 2009 significantly stronger and with renewed optimism for the future,” said Mike Dunlap, Nelnet Chairman and Chief Executive Officer. “Our focus on our customers, associates, and continuing to diversify our company served us well. We are excited by our increasing fee-based revenue, significant increase in volume we service for the Department, and our strong balance sheet position. Together, these results have positioned us well for 2010.”

Diversifying and increasing fee-based revenue

Total revenue from fee-based businesses for the fourth quarter of 2009 increased 13 percent to $77.3 million, or 62 percent of total revenue, and is compared with $68.4 million for the same period a year ago.

In the fourth quarter of 2009, Nelnet’s fee-based revenue from the company’s tuition payment plan, campus commerce, and lead generation businesses increased $5.0 million, or 16 percent, to $36.0 million, compared with the same period in 2008.

In September 2009, Nelnet began servicing student loans for the Department under a contract that will increase the company’s fee-based revenue as the servicing volume increases. As of December 31, 2009, the company was servicing approximately $3.4 billion of loans on behalf of the Department, of which approximately $1.5 billion was incremental volume previously serviced by other companies. As of March 1, 2010, servicing volume for the Department has grown to $6.3 billion, up from $177 million at September 30, 2009.

Maximizing the value of existing portfolio

At December 31, 2009, net student loan assets were $23.9 billion.  Substantially all of Nelnet's federal student loans are financed for the life of the loan at rates the company currently believes will generate significant future cash flow. In addition to loans held to term, Nelnet has liquidity for new loan originations through the Department's Loan Participation and Loan Purchase Programs, which will allow Nelnet to make loans to eligible students through the 2009-2010 academic year.

Narrower spreads and historically low interest rates are continuing to provide an opportunity for the company to generate substantial near-term value and cash flow from its student loan portfolio. For the fourth quarter of 2009, Nelnet reported net interest income of $80.5 million, compared with $38.5 million for the same period a year ago.

The company reported core student loan spread of 1.44 percent for the fourth quarter of 2009 compared with 0.90 percent for the same period of 2008 and 1.27 percent for the third quarter of 2009. Core student loan spread is benefiting from two factors: 1) lower interest rates increased fixed rate floor income to $38.9 million in the fourth quarter of 2009, compared with $12.3 million for the same period a year ago and $38.8 million in the third quarter of 2009, and 2) the disparity between three-month financial commercial paper rate (CP) and three-month LIBOR has tightened significantly.

Managing operating expenses

Management continues to effectively manage operating expenses. As a result, operating expenses, excluding restructuring and impairment charges, decreased $9.6 million, or 12 percent, for the three months ended December 31, 2009, compared with the same period in 2008.  Total operating expenses, excluding the impairment charge, for the fourth quarter of 2009 were $90.3 million.

GAAP net income

Nelnet reported GAAP net income for the fourth quarter of 2009 of $59.1 million, or $1.18 per dilutive share, compared with $31.0 million, or $0.63 per dilutive share, for the fourth quarter of 2008. For the year ended December 31, 2009, the company reported GAAP net income of $139.1 million, or $2.78 per dilutive share, compared with $28.7 million, or $0.58 per dilutive share, for 2008.

While base net income is not a substitute for reported results under GAAP, base net income is the primary financial performance measure used by management to develop financial plans, allocate resources, track results, evaluate performance, establish corporate performance targets, and determine incentive compensation. The company utilizes base net income in operating its business because base net income permits management to make meaningful period-to-period comparisons by eliminating the temporary volatility in the company’s performance that arises from certain items that are primarily affected by factors beyond the control of management.

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 11:00 a.m. (Eastern) Thursday, March 4, 2010. To access the call live, participants in the United States and Canada should dial 888.427.9415, and international callers should dial 719.785.1751 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 14, 2010. 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 4363322. A replay of the audio webcast will also be available at www.nelnetinvestors.com.

This press release contains forward-looking statements based on management’s current expectations as of the date of this release. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Because such statements inherently involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks include, among others, changes in the terms of student loans and the educational credit marketplace arising from the implementation of applicable laws and regulations, and from changes in such laws and regulations, adverse results in legal disputes, changes in the demand for educational financing or in financing preferences of educational institutions, students, and their families, increased financing costs and changes in the general interest rate environment. For more information, see the company's filings with the Securities and Exchange Commission, including the forward-looking statements contained in the company’s supplemental financial information for the fourth quarter 2009. All information in this release is as of March 3, 2010. The company does not undertake any obligation to update or revise these forward-looking statements to conform the statement to actual results or changes in the company’s expectations.

Condensed Consolidated Statements of Income

	Three months ended									Year ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2009			2009			2008			2009			2008
	(unaudited)			(unaudited)			(unaudited)
Interest income:
Loan interest	$	153,891			162,786			286,279			683,449			1,267,003
Amortization of loan premiums and deferred
origination costs		(18,558	)		(19,531	)		(21,036	)		(73,529	)		(90,620	)
Investment interest		1,477			1,943			8,084			10,287			37,998
Total interest income		136,810			145,198			273,327			620,207			1,214,381
Interest expense:
Interest on bonds and notes payable		56,262			76,016			234,868			384,862			1,026,489
Net interest income		80,548			69,182			38,459			235,345			187,892
Less provision for loan losses		6,000			7,500			7,000			29,000			25,000
Net interest income after provision
for loan losses		74,548			61,682			31,459			206,345			162,892
Other income (expense):
Loan and guaranty servicing revenue		27,467			26,006			21,769			108,747			99,942
Tuition payment processing and campus commerce revenue		13,521			12,987			12,175			53,894			48,155
Enrollment services revenue		31,209			30,670			29,257			119,397			112,405
Software services revenue		4,740			4,600			4,773			21,164			24,115
Other income		28,669			11,094			4,988			68,152			22,775
Gain (loss) on sale of loans, net		26,762			8,788			(3,988	)		35,148			(51,414	)
Derivative market value, foreign currency,
and put option adjustments		5,265			2,826			46,348			(30,802	)		10,827
Derivative settlements, net		479			4,914			9,668			39,286			55,657
Total other income		138,112			101,885			124,990			414,986			322,462
Operating expenses:
Salaries and benefits		39,316			37,810			41,262			155,532			183,393
Other expenses		27,284			29,217			45,510			120,198			147,192
Cost to provide enrollment services		18,718			20,323			16,903			74,926			64,965
Impairment expense		32,728			—			—			32,728			18,834
Amortization of intangible assets		4,998			5,312			6,511			22,249			26,230
Total operating expenses		123,044			92,662			110,186			405,633			440,614
Income before income taxes		89,616			70,905			46,263			215,698			44,740
Income tax expense		(30,553	)		(24,501	)		(16,103	)		(76,573	)		(17,896	)
Income from continuing operations		59,063			46,404			30,160			139,125			26,844
Income from discontinued operations, net of tax		—			—			837			—			1,818
Net income	$	59,063			46,404			30,997			139,125			28,662
Earnings per common share:
Basic:
Continuing operations	$	1.18			0.93			0.61			2.79			0.54
Discontinued operations		—			—			0.02			—			0.04
Net earnings	$	1.18			0.93			0.63			2.79			0.58
Diluted:
Continuing operations	$	1.18			0.93			0.61			2.78			0.54
Discontinued operations		—			—			0.02			—			0.04
Net earnings	$	1.18			0.93			0.63			2.78			0.58
Weighted average shares outstanding - basic		49,639,329			49,611,423			49,075,755			49,484,816			49,099,967
Weighted average shares outstanding - diluted		49,838,374			49,808,856			49,289,186			49,685,143			49,324,278

Condensed Consolidated Balance Sheets

	As of		As of		As of
	December 31,		September 30,		December 31,
	2009		2009		2008
			(unaudited)
Assets:
Student loans receivable, net	$	23,926,957		23,764,263		25,413,008
Student loans receivable - held for sale		—		1,627,794		—
Cash and cash equivalents		338,181		334,293		189,847
Restricted cash and investments		717,233		849,419		1,158,257
Goodwill		143,717		175,178		175,178
Intangible assets, net		53,538		59,803		77,054
Other assets		696,801		781,112		841,553
Total assets	$	25,876,427		27,591,862		27,854,897
Liabilities:
Bonds and notes payable	$	24,805,289		26,586,093		26,787,959
Other liabilities		286,575		277,695		423,712
Total liabilities		25,091,864		26,863,788		27,211,671
Shareholders' equity		784,563		728,074		643,226
Total liabilities and shareholders' equity	$	25,876,427		27,591,862		27,854,897