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Other income decreased in 2010 as compared to 2009. In 2010 revenue from the referral of declined applications to
third-party issuers was lower as compared to the prior years due to a lower level of acquisition activity. In addition, other
income included the $23 million loss as further described above.
Other Expense
The following table represents the components of other expense for the periods presented (dollars in thousands):
Employee compensation and benefits
Marketing and business development
Information processing and communications
Professional fees
Premises and equipment
Other expense
Total other expense
For the Years Ended November 30,
2011
$ 914,344
537,486
263,741
415,275
71,128
339,193
$ 2,541,167
2010
$ 802,649
463,086
258,111
342,648
70,274
245,897
$ 2,182,665
2009
(Non-GAAP
As-Adjusted1)
$ 827,683
406,020
289,209
321,329
73,014
304,841
$ 2,222,096
2011 vs. 2010
increase
(decrease)
$
$ 111,695
74,400
5,630
72,627
854
93,296
$ 358,502
%
14%
16%
2%
21%
1%
38%
16%
2010 vs. 2009
increase
(decrease)
$
$ (25,034)
57,066
(31,098)
21,319
(2,740)
(58,944)
$ (39,431)
%
(3)%
14 %
(11)%
7%
(4)%
(19)%
(2)%
(1) See “ - Reconciliations of GAAP to Non-GAAP As-Adjusted Data.”
Total other expense increased $358 million in 2011 as compared to 2010. This increase was primarily driven by the
acquisition of SLC, growth and infrastructure investments made to expand the loan portfolio, network acceptance and deposits,
and the associated impacts on headcount and compensation. Increased marketing and business development costs were
primarily driven by higher investments in new credit card account acquisitions and new originations in student and personal
loans enabled by the strong credit performance experienced in 2011. Professional fees increased due to higher costs related to
key technology and growth initiatives, along with costs related to the SLC acquisition and higher costs related to recovering
charged-off accounts. Other expense increased compared to prior year due to higher fraud related costs and an increase in legal
reserves related to pending litigation. In addition, 2010 other expense included a $29 million non-recurring benefit related to
the reversal of expense that had been recorded related to the payment to Morgan Stanley under an amendment to the special
dividend agreement. There was not a similar benefit in 2011.
Total other expense decreased $39 million in 2010 as compared to 2009 on a non-GAAP as-adjusted basis. Employee
compensation and benefits expense decreased as we reduced our cost base under uncertain economic conditions in 2009 and
into 2010. Information processing and communications expense was lower in 2010 than in 2009 due to our efforts to reduce
costs associated with ongoing contracts. Other expense was lower in 2010 due to (i) a $29 million nonrecurring benefit
discussed above; (ii) a $20 million restructuring charge recorded during the second quarter 2009 as a result of the reduction in
headcount and (iii) a $14 million decline in costs relating to fraud. These declines in expenses were partially offset by an
increase in marketing expenses, due to increased advertising and promotional marketing expenses and higher investments in
account acquisition, and an increase in professional fees, due to higher collection fees and advisory expenses related to the
acquisition of SLC.
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