Free Answering Brief in Opposition - District Court of Delaware - Delaware

Case 1:04-cv-01551-JJF Document 378-20 Filed 10/05/2007 Page1 of 3
/ EXHIBIT 18

Case 1 :04-cv-01551-JJF Document 378-20 Filed 10/05/2007 Page 2 of 3__ __ ' _ _ ;
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_ February 23, 2000 *3
’ ` Mr. Kevin Boyer . . =
- · WiImix1gtonTmst Company · . _ _ Q
- ' 795 E. Lancaster Ave, Ste. 6 i. .
_ Villanova, PA 19085 ·
_ ·- gg: I 998 Financial Qtateggem and Subseguggt Exon; _ _ ._; -
- . v Dear Kevin, ‘ L g
' . I have enclosed e copy of Student Finance Corporationfs (“SFC") 1998 audited financial Z ,
- . statement. I discuss certain aspects ofit hereunder.
U . l ‘ - Qet Income {Loss) I `
P . SFC’s 19.98 uct loss was ($829,547). However, SFC’s operating income was $1,023,634.
The net loss was attributable to a rzororecuuirag write-0E of $1,858,181 in balances due ` E
` from a mow detimct back. ,
_ _Moreover, SFC had $1,868,000·of1mea11zed discount io 1998, fiom locus that SFC -
_ originated, but did not securitize. If SFC had been able to recogsize the discount as _ E
income, SFC’s operating income would have been $2,891,634 and its HB1; income would ;
_ ' have been $1,038,453. ` ‘ . _ `
if- ` eg Worth ` i i I I
I · v · .. . h SFC’_s 1998 not worth was ($3,448,184). This deEcit was partly attributable to · n
. _ shareholder distributions of $2,537,500 in 2998 and $1,1.73,975 in 1997. SFC is an S Q
· - · _ . corporation. It makes shareholder distributions for tax purposes isostoact of recognizing .3 5
- provisions for income taxes. SFC made distributions in 1998 and 1997 based upon ' j _· .
. _ . . preltcduasy Hnaneiai statements before tI1e~1998 audit was completed. _ Eg 5
· Ft I
‘ _ ` ‘ In February 2000, SFC sold 12% ofits common stock to various individuals and trusts io · _
. retum for an equity investment of $6,000,000. The sale was fully iiimied as of February . ?
. ' 11, 2000. _ . - ‘
· _ · SFC sold common stock to demonstrate that {thas the capability to raise equity Eoaooiog I · i
j oo short notice ood to signal SFC’s commitment to its long term business plat:. SFC did . · § 5
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Case 1 :04-cv-01551-JJF Document 378-20 Filed 10/05/2007 Page 3 of 3 _ _ _
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: 4 " February 23, 2000 . ' ‘ _
7 not need equity for cash How, not did it need equity te sznisiy its extemni auciitors. SFC _ _
-- - intends tc repurchase the stock in2000. ‘ ’
_ Ecmennn nf §eg:1mt §e;·gjeing Cumgang ‘_
EE'eetive March 1, 2000, SFC will spiu··0&` its lean servicing epmeiiens into e new _ - I
, ` ‘ business entity, Student Loan Servicing LLC (“SLS"). SLS will have initiai capitalization
'uf $1,000,000. SLS will ccmixact with SFC and its related entities to service student loans ' ‘
_ x_ mziginaied by SFC. SLS WI be an independently owned eempauy, bnukmptey remote-
· ` ROM SFC. ‘ ` :
. l SFC! thinks that this xestzmctming will make Lum. servicing more eEeetive and faciiitate J; E
future access to capital debt markets. · y
Piease contact me with any questions you may have; Thank you. ` "
‘ l · Sincerely, LL ·
· I ` ° Q E I i
· Andrew N. Yee = j ;
V ` ANY/ms I ‘ l _ ;
CC: Mr. ]0hl1L00ib0HfIOW _` _ · _ · _ U
U - ` _ · . ‘ _ 2 pn ezveee _ ` _ ’