Discover 2009 Annual Report Download - page 159
Download and view the complete annual report
Please find page 159 of the 2009 Discover annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149 -
150 -
151 -
152 -
153 -
154 -
155 -
156 -
157 -
158 -
159 -
160 -
161 -
162 -
163 -
164 -
165 -
166 -
167 -
168 -
169 -
170
-
171
-
172
-
173
-
174
-
175
-
176
-
177
-
178
 |
 |
28. Subsequent Events
As required by ASC Topic 855, Subsequent Events, the Company has evaluated subsequent events through
January 27, 2010, which is the date of the filing of its consolidated financial statements with the SEC.
At the time of the Company’s 2007 spin-off from Morgan Stanley, the Company entered into an agreement with
Morgan Stanley regarding the manner in which the antitrust case against Visa and MasterCard was to be pursued and
settled and how proceeds of the litigation would be shared (“Special Dividend Agreement”). In October 2008, the
Company settled the antitrust lawsuit and became involved in a dispute over Morgan Stanley’s right to a portion of the
proceeds. On January 4, 2010, the New York state court judge presiding over the lawsuit issued an order granting
Morgan Stanley’s motion for partial summary judgment seeking payment of Morgan Stanley’s share of the proceeds. The
Company intends to appeal the order and to continue to pursue its separate claims for damages. For additional
background regarding the lawsuit, see Note 23: Litigation.
Upon receipt of the settlement proceeds from MasterCard in the fourth quarter of fiscal 2008 and from Visa throughout
2009, the Company recorded the special dividend liability based on the terms of the agreement and its estimate of the
liability at that time. The Company has funded an escrow account, with the disputed portion of the proceeds received
from MasterCard in the fourth quarter of fiscal 2008 and from Visa in each of the quarters in fiscal 2009. Because of
Morgan Stanley’s actions, the Company did not remit payment to Morgan Stanley, and both the proceeds in the escrow
account and the special dividend liability are reflected on the consolidated statement of financial condition as of
November 30, 2009.
As a result of the court’s order granting Morgan Stanley’s motion for partial summary judgment, the Company has
reassessed the amount of its potential liability related to the case. As of November 30, 2009, the recorded liability was
increased to $837.7 million. Of this amount, $808.8 million is recorded in the Special Dividend – Morgan Stanley
liability, and $28.9 million of interest related to delayed payment is reflected in other expenses in the consolidated
statement of income for the year ended November 30, 2009 and accrued expenses and other liabilities in the
consolidated statement of financial condition as of November 30, 2009.
The Company did not have any other subsequent events that would require recognition or disclosure in the financial
statements and footnotes as of and for the year ended November 30, 2009.
-147-