Discover 2011 Annual Report Download - page 69
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57
Results of Operations
The discussion below provides a summary of our results of operations for the year ended November 30, 2011, compared
to our results of operations for the year ended November 30, 2010, and for the year ended November 30, 2009 on a non-GAAP
as-adjusted basis. The discussion also provides information about our loan receivables as of November 30, 2011, compared to
November 30, 2010, and November 30, 2009 on a non-GAAP as-adjusted basis. In certain tables, quantitative information
about our loan receivables as of November 30, 2008 and 2007 are also shown on a non-GAAP as-adjusted basis. For a
reconciliation of GAAP to non-GAAP as-adjusted financial data, see “ - Reconciliations of GAAP to Non-GAAP As-Adjusted
Data.” All information and comparisons are based solely on continuing operations.
Segments
We manage our business activities in two segments: Direct Banking and Payment Services. In compiling the segment
results that follow, our Direct Banking segment bears all overhead costs that are not specifically associated with a particular
segment and all costs associated with Discover Network marketing, servicing and infrastructure, with the exception of an
allocation of direct and incremental costs driven by our Payment Services segment.
Direct Banking. Our Direct Banking segment includes Discover card-branded credit cards issued to individuals and
small businesses and other consumer banking products and services, including personal loans, student loans, prepaid cards and
other consumer lending and deposit products offered through our Discover Bank subsidiary. The majority of our Direct
Banking revenues relate to interest income earned on each of our loan products. Additionally, our credit card products generate
substantially all of our revenues related to discount and interchange, fee products and loan fee income.
Payment Services. Our Payment Services segment includes PULSE, an automated teller machine, debit and electronic
funds transfer network; Diners Club, a global payments network; and our third-party issuing business, which includes credit,
debit and prepaid cards issued on the Discover Network by third parties. The majority of our Payment Services revenues relate
to transaction processing revenue from PULSE and royalty and licensee revenue (included in other income) from Diners Club.
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