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| ESI > SEC Filings for ESI > Form 8-K on 4-Jan-2013 | All Recent SEC Filings |
4-Jan-2013
Results of Operations and Financial Condition, Other Events
In connection with the settlement described under Item 8.01 "Other Events" below, ITT Educational Services, Inc. (the "Company") expects to record an after-tax charge to net income of approximately $13.2 million in the fourth quarter of 2012. The Company also expects that this after-tax charge to net income will reduce its earnings per share by approximately $0.56 in the fourth quarter of 2012.
On December 28, 2012, the Company entered into a Settlement Agreement and Release (the "Settlement Agreement") with Sallie Mae, Inc. ("SMI") to settle the previously disclosed litigation matter between the Company and SMI relating to the Risk Sharing Loan Program Agreement, dated as of July 17, 2007, between the Company and SMI (the "RSA"). For additional information regarding the litigation subject to the Settlement Agreement, see Note 11 to the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, "Financial Information" and
Under the terms of the Settlement Agreement, the Company has agreed to pay a one-time payment of $46,000,000 to SMI on or before January 29, 2013 (the "Payment"). The Company and SMI each also agreed to release the other (and their respective affiliates) from any and all current and future claims arising out of, or directly or indirectly related to, the RSA, other than claims related to certain provisions of the RSA governing cooperation, confidentiality, the treatment of intellectual property and certain indemnification claims related to the FTC Holder Rule. SMI specifically agreed to release the Company from any and all of its guarantee obligations arising under the RSA before or after the date of the Settlement Agreement, and the Company agreed to release all right, title and interest in and to the loans made pursuant to the RSA, including any right to receive any payments related to any of those loans.
The Settlement Agreement provides that the Company and SMI will submit an order dismissing the litigation with prejudice within five business days after the Payment is received by SMI. The Settlement Agreement contains no admission of liability by either party.
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