Discover 2011 Annual Report Download - page 116

Download and view the complete annual report

Please find page 116 of the 2011 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.

Page out of 178

  • 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

104
The following table provides information about investment securities with aggregate gross unrealized losses and the
length of time that individual investment securities have been in a continuous unrealized loss position as of November 30, 2011
and 2010 (dollars in thousands):
At November 30, 2011
Available-for-Sale Investment Securities
U.S. Treasury securities
U.S. government agency securities
Credit card asset-backed securities of
other issuers
Corporate debt securities
Held-to-Maturity Investment Securities
State and political subdivisions of states
To-be-announced investment securities
At November 30, 2010
Available-for-Sale Investment Securities
U.S. Treasury securities
U.S. government agency securities
Credit card asset-backed securities of
other issuers
Corporate debt securities
Held-to-Maturity Investment Securities
State and political subdivisions of states
Number of
Securities
in a Loss
Position
—
2
—
3
6
2
17
18
23
5
4
Less than 12 months
Fair
Value
$—
$ 242,898
$—
$ 100,041
$ 2,689
$ 50,050
$ 1,262,670
$ 1,181,148
$ 238,646
$ 230,441
$ 7,731
Unrealized
Losses
$—
$ 1,208
$—
$20
$46
204
$ 1,585
$ 1,298
$54
$ 102
$ 239
More than 12 months
Fair
Value
$—
$—
$—
$—
$ 27,768
—
$—
$—
$—
$—
$ 27,603
Unrealized
Losses
$—
$—
$—
$—
$ 2,777
—
$—
$—
$—
$—
$ 3,532
During the years ended November 30, 2011, 2010 and 2009, the Company received $1.3 billion, $744.6 million, and
$431.3 million respectively, of proceeds related to maturities, redemptions, liquidation or sales of investment securities. For
the years ended November 30, 2011, 2010 and 2009, approximately $843.1 million, $650.1 million and $423.0 million of these
proceeds related to maturities of credit card asset-backed securities of other issuers.
During the year ended November 30, 2011, the Company received $161 thousand of proceeds and recorded $146
thousand of gross realized gains from the sale of equity securities. There were no sales of available for sale securities in 2010.
During the year ended November 30, 2009, the Company received $72.9 million of proceeds and recorded $5.4 million of gross
realized gains and no gross realized losses from the sale of credit card asset-backed securities of other issuers.
The Company records gains and losses on investment securities in other income when investments are sold or liquidated,
when the Company believes an investment is other than temporarily impaired prior to the disposal of the investment, or in
certain other circumstances. During the year ended November 30, 2011, the Company recorded $1.8 million of other than
temporary impairment ("OTTI") on held to maturity securities, which was recorded entirely in earnings. During the year ended
November 30, 2010, the Company recorded losses of $0.4 million on other debt securities and a $19.6 million pretax gain
related to the liquidation of collateral supporting the asset-backed commercial paper notes of Golden Key U.S. LLC (“Golden
Key”), which had invested in mortgage-backed securities. During the year ended November 30, 2009, the Company recorded
$9.2 million of OTTI, which was recorded entirely in earnings, the majority of which was related to Golden Key.
The Company records unrealized gains and losses on its available-for-sale investment securities in other comprehensive
income. For the year ended November 30, 2011, the Company recorded net unrealized gains of $75.3 million ($47.0 million
after tax). For the years ended November 30, 2010 and 2009, the Company recorded net unrealized losses of $6.7 million and
$14.1 million ($4.2 million and $8.5 million after tax), respectively, in other comprehensive income. For the year ended
November 30, 2010, the Company reversed an unrealized gain of $7.5 million ($4.7 million after tax) from other
comprehensive income upon liquidation of the collateral supporting the Golden Key investment. Additionally, the Company
eliminated a net unrealized loss of $125.0 million ($78.6 million after tax) upon consolidation of its securitization trusts in
connection with the adoption of Statements No. 166 and 167 on December 1, 2009.
Table of Contents