partial guarantors. In addition, we obtained access to corporate aircraft at favorable rates in consideration of our guaranty.
We had guaranteed up to approximately $11.5 million of the line of credit and our Chairman guaranteed up to approximately
$17.5 million of the line of credit.
In July 2002, our Chairman assumed in full our guaranty obligations to Citicorp and our guaranty to Citicorp was released in
full. Our minority preferred stock interest and warrants (with a recorded value of $100,000 at June 30, 2002) in DDH were
cancelled. We have no further ownership interest in DDH. Our officers, other than the Chairman, are no longer directors of
DDH. In the first quarter of fiscal year 2003, we purchased $1.0 million in prepaid charter flights at favorable rates from
DDH. As of June 30, 2003, we have $0.8 million remaining in prepaid flights with DDH. During fiscal year 2003, we paid
DDH approximately $0.5 million for maintenance services, chartered aircraft and equipment.
In August 2001, we purchased a Challenger 600 aircraft from DDH for a purchase price of $8.5 million, which included
interior and exterior refurbishment of the aircraft. As of June 30, 2002, the purchase price for the aircraft was paid in full,
and refurbishment was near completion. The aircraft was delivered to us in the first quarter of fiscal year 2003.
Disclosures about Contractual Obligations and Commercial Commitments as of June 30, 2003 (in thousands):
Payments Due by Period
Less than
Contractual Obligations
Total
1 Year
1 3 Years
4 5 Years
After 5 Years
Long term debt
$ 494,690
$
$ 494,690
$
$
Capital lease obligations
5,414
1,764
2,468
1,182
Operating leases
350,145
103,357
128,674
64,932
53,182
Total Contractual Cash
Obligations
$ 850,249
$ 105,121
$ 625,832
$ 66,114
$ 53,182
Amount of Commitment Expiration per Period
Total
Other Commercial
Amounts
Less than
Commitments
Committed
1 Year
1 3 Years
4 5 Years
After 5 Years
Standby letters of credit
$ 176,428
$ 176,428
$
$
$
Surety Bonds
302,682
277,009
25,661
12
Total Commercial
Commitments
$ 479,110
$ 453,437
$ 25,661
$ 12
$
We are obligated to make certain contingent payments to former shareholders of acquired entities upon satisfaction of certain
contractual criteria. As of June 30, 2003, the maximum aggregate amount of the outstanding contingent obligations is
approximately $30.9 million. Upon satisfaction of the specified contractual criteria, any such payment would result in a
corresponding increase in goodwill.
Our Education Services business, which is included in our commercial segment, performs third party student loan servicing
in the Federal Family Education Loan program ("FFEL") on behalf of various financial institutions. At June 30, 2003, we
serviced a FFEL portfolio of 1.3 million loans with an outstanding principal balance of more than $14.2 billion. Some
servicing agreements contain provisions that, under certain circumstances, require us to purchase the loans from the investor
if the loan guaranty has been permanently terminated as a result of a loan default caused by our servicing error. If defaults
caused by us are cured during an initial period, any obligation we may have to purchase these loans expires. Loans that we
purchase may be subsequently cured; the guaranty reinstated and we repackage the loans for sale to third parties.
We evaluate the collectibility of any purchased loans and establish a reserve for potential losses, or default liability reserve,
through a charge to the provision for loss on defaulted loans purchased. The reserve is evaluated periodically and adjusted
based upon management s analysis of the historical performance of the purchased loans. This reserve was approximately $4.2
million at June 30, 2003.
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