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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
__X__ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1999 or
_____ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to ________
Commission file number: 333-85963
Exact name of Registrant as specified in its charter: Education Loans
Incorporated
State or other jurisdiction of incorporation or organization: Delaware
I. R. S. Employer Identification No.: 91-1819974
Address of principal executive offices: 105 First Avenue Southwest,
Aberdeen, SD 57401
Registrant's telephone number, including area code: (605) 622-4400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports). and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
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PART I
Item 1. BUSINESS.
Education Loans Incorporated (the "Company") is a bankruptcy remote,
limited purpose Delaware corporation and a wholly owned subsidiary of
Student Loan Finance Corporation, a South Dakota corporation. The sole
purpose of the company is restricted to financing, originating, owning,
selling and managing Student Loans, as described in the Company's
Prospectus dated November 30, 1999, for its Student Loan Asset-Backed
Notes, Series 1999-1, and the related Registration Statement on Form
S-3 (File No. 333-85963).
Item 2. PROPERTIES.
Not Applicable.
Item 3. LEGAL PROCEEDINGS.
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
As of December 31, 1999, the Trust had 6 holders of record of the
Student Loan Asset-Backed Notes, Series 1999-1, computed in accordance
with Rule 12g5-1 under the Securities Exchange Act of 1934, as amended.
Item 6. SELECTED FINANCIAL DATA.
Not Applicable.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Not Applicable.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Not Applicable.
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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS IN
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not Applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Not Applicable.
Item 11. EXECUTIVE COMPENSATION.
Not Applicable.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
Not Applicable.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not Applicable.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.
(a) The Report of Independent Auditors, delivered pursuant to
Section 21 of the Servicing Agreement dated as of December 1,
1999, is filed herewith.
(b) None.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
EDUCATION LOANS INCORPORATED
By /s/ A. Norgrin Sanderson
------------------------------------
President
Date: March 29, 2000
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EXHIBIT INDEX
Item
- ----
99.1 The Report of Independent Auditors, delivered pursuant to Section 21 of
the Servicing Agreement dated as of December 1, 1999.
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EXHIBIT 99.1
[LETTERHEAD]
Independent Accountant's Report on
Applying Agreed-Upon Procedures
To the Board of Directors
Education Loans Incorporated
Aberdeen, South Dakota
We have performed the procedures enumerated below, which were agreed to by the
Board of Directors and management of Education Loans Incorporated, solely to
assist the users in evaluating management's assertion regarding the accuracy of
the December 1999 Servicing Report and the loan information which collateralizes
the Student Loan Asset-Based Notes, Series 1999-1, as of December 31, 1999 and
for the period December 7, 1999 through December 31, 1999 (period during which
Note Series 1999-1 has been outstanding). This agreed-upon procedures engagement
was performed in accordance with standards established by the American Institute
of Certified Public Accountants. The sufficiency of these procedures is solely
the responsibility of the specified users of this letter. Consequently, we make
no representation regarding the sufficiency of the procedures described below
either for the purpose for which this letter has been requested or for any other
purpose.
Our procedures and findings are as follows:
1. We have read the following, set forth in the December 1999 Servicing
Report on the indicated pages, and have performed the additional
procedures stated below with respect to such information which were
applied as indicated with respect to the references explained below:
<TABLE>
<CAPTION>
Procedures
performed
(see explanation
Item Page Description in item 2)
- ---- ---- --------------------------------------------------------------- -----------
<S> <C> <C> <C>
I-C 1 "PRINCIPAL OUTSTANDING - DECEMBER, 1999."
The dollar amount of principal borrowed during the month and
the balance outstanding at the end of the month. a
I-D 1 "INTEREST RATE AS OF END OF MONTH." The percentage
at which each bond issue is accruing interest. b
I-D 1 "ACCRUED INTEREST OUTSTANDING - DECEMBER,
1999." The dollar amount of interest accrued during the month
and outstanding as of the end of the month. c
</TABLE>
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Education Loans Incorporated
Page 2
<TABLE>
<CAPTION>
Procedures
performed
(see explanation
Item Page Description in item 2)
- ---- ---- --------------------------------------------------------------- -----------
<S> <C> <C> <C>
II-A 2 "RESERVE FUND - DECEMBER, 1999." The dollar amount
as of the end of December and the change during the month. d
II-B 2 "CAPITALIZED INTEREST ACCOUNT - DECEMBER, 1999."
The dollar amount as of the end of December and the change
during the month. d
II-C 2 "ACQUISITION ACCOUNT - DECEMBER, 1999." The dollar
amount as of the end of December and the change during the
month. d
II-D 2 "ALTERNATIVE LOAN GUARANTEE ACCOUNT -
DECEMBER, 1999." - The dollar amount as of the end of
December and the change during the month. d
III-A 2 "STUDENT LOAN PRINCIPAL OUTSTANDING -
DECEMBER, 1999." - The dollar mount as of the end of
December and the change during the month. e
III-B 3 "COMPOSITION OF STUDENT LOAN PORTFOLIO AS OF DECEMBER
31, 1999." - The aggregate outstanding principal balance,
number of borrowers, average outstanding principal
balance per borrower, number of loans (promissory notes),
average outstanding principal balance per loan, and
weighted average interest rate. f
III-C 3 "DISTRIBUTION OF STUDENT LOAN PORTFOLIO BY
LOAN TYPE AS OF DECEMBER 31, 1999." - The
outstanding principal balance detailed by loan type and the
relative percentage to the total. g
III-D 3 "DISTRIBUTION OF STUDENT LOAN PORTFOLIO BY
INTEREST RATE AS OF DECEMBER 31, 1999." - The
outstanding principal balance detailed by interest rate and
the relative percentage to the total. h
III-E 3 "DISTRIBUTION OF STUDENT LOAN PORTFOLIO BY
BORROWER PAYMENT STATUS AS OF DECEMBER 31,
1999." - The outstanding principal balance detailed by
borrower payment status and the relative percentage to the
total. g
</TABLE>
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Education Loans Incorporated
Page 3
<TABLE>
<CAPTION>
Procedures
performed
(see explanation
Item Page Description in item 2)
- ---- ---- --------------------------------------------------------------- -----------
<S> <C> <C> <C>
III-F 4 "DISTRIBUTION OF STUDENT LOAN PORTFOLIO BY
DELINQUENCY STATUS AS OF DECEMBER 31, 1999." -
The outstanding principal balance detailed by delinquency
status and the relative percentage to the total. g
III-G 4 "DISTRIBUTION OF STUDENT LOAN PORTFOLIO BY
GUARANTEE STATUS AS OF DECEMBER 31, 1999." -
The outstanding principal balance detailed by guarantee
status and the relative percentage to the total. g
III-H 4 "DISTRIBUTION OF STUDENT LOAN PORTFOLIO BY
GUARANTEE AGENCY AS OF DECEMBER 31, 1999." -
The outstanding principal balance detailed by guarantee
agency and the relative percentage to the total. g
III-I 4 "FEES AND EXPENSES ACCRUED FOR/THROUGH
DECEMBER, 1999." - The dollar amount of fees incurred
during the period December 7, 1999 through December 31,
1999. i
III-J 4 RATIO OF ASSETS TO LIABILITIES AS OF DECEMBER 31,
1999." - The dollar amounts representing total indenture
assets and liabilities and the ratio thereto. j
</TABLE>
2. We have performed the following procedures, which were applied, as
indicated, to the items enumerated above:
Item
In 1. Procedures and Findings
a. We obtained a copy of the Prospectus Supplement for the Series
1999-1 Notes and agreed the principal amount of notes issued
to the amount indicated as borrowed during the month as
reported on the December 1999 Servicing Report without
exception. We agreed the balance outstanding at the end of the
month to the Corporation's general ledger without exception.
b. We obtained copies of the auction rate notifications received
by the Corporation which state the interest rates applicable
for the period December 7, 1999 through December 31, 1999 on
the Series 1999-1 Notes and agreed the rates to those used in
the calculation of accrued interest without exception.
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Education Loans Incorporated
Page 4
Item
In 1. Procedures and Findings
c. We obtained the accrued interest payable worksheet prepared by
the Corporation and agreed the outstanding principal balance
to the amounts tested in 2.a. above and agreed the interest
rates to 2.b. above. The accrued interest amount as of and for
the period ended December 31, 1999 was recalculated and agreed
to the Corporation's general ledger without exception.
d. We obtained the December 1999 U.S. Bank National Association
trustee statements for the Reserve Fund, Capitalized Interest
Account, Acquisition Account, and the Alternative Loan
Guarantee Account and agreed the activity for the period
December 7, 1999 through December 31, 1999 to the
Corporation's general ledger without exception.
e. We agreed the change in the student loan principal balance for
the period of December 7, 1999 through December 31, 1999 to
the December certification from the Corporation to U.S. Bank
National Association Trust Department without exception.
f. We obtained the loan portfolio information from each loan
servicer (Student Loan Finance Corporation, AFSA Data
Corporation, and Great Lakes Higher Education Servicing
Corporation) and verified the mathematical accuracy of the
number of borrowers and number of loans (promissory notes).
The average outstanding principal balances was recalculated
based on the aggregate outstanding principal balance at
December 31, 1999 tested in 2.e. above. We agreed the
weighted-average interest rate to the worksheet tested in 2.h.
below. No exceptions were noted.
g. We obtained a copy of the worksheet prepared by the
Corporation accumulating loan portfolio information by loan
type, borrower payment status, delinquency status, guarantee
status, and guarantee agency from reports that have been
obtained from each loan servicer (Student Loan Finance
Corporation, AFSA Data Corporation, and Great Lakes Higher
Education Servicing Corporation). We compared the outstanding
principal balances for each servicer to the worksheet,
verified the mathematical accuracy of the total, and
recalculated the respective percentages without exception.
h. We obtained the worksheet prepared by the Corporation
accumulating loan portfolio information by servicer (Student
Loan Finance Corporation, AFSA Data Corporation, and Great
Lakes Higher Education Servicing Corporation) and interest
rate. We verified the mathematical accuracy of the columns and
the outstanding principal balance by interest rate and
recalculated the respective percentages and found the amounts
and percentages to be in agreement with one exception that
$237,222.09 of principal at 7.50% was incorrectly included in
the 7.00% to 7.49% category rather than the 7.50% to 7.99%
category.
i. We obtained the general ledger detail of fees and expenses
incurred during the period December 7, 1999 through December
31, 1999 and agreed the amounts to the December Servicing
Report without exception.
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Education Loans Incorporated
Page 5
j. We obtained the December 31, 1999 trial balance of the
Corporation, verified the mathematical accuracy of the
Indenture Asset and Liability calculations, and agreed the
amounts to the December Servicing Report without exception.
The ratio of assets to liabilities was recalculated without
exception.
We were not engaged to, and did not perform an audit, the objective of which
would be the expression of an opinion on the specified elements, accounts or
items relating to the December 1999 Servicing Report. Accordingly, we do not
express such an opinion. Had we performed additional procedures, other matters
might have come to our attention that would have been reported to you.
This report is intended solely for the use of the Board of Directors, the
management of Education Loans Incorporated, the Corporation's trustee and the
Securities and Exchange Commission and is not intended to be and should not be
used by those who have not agreed to the procedures and taken responsibility for
the sufficiency of the procedures for their purposes. However, this report is a
matter of public record and its distribution is not limited.
/s/ Eide Bailly LLP
Aberdeen, South Dakota
March 3, 2000
