Discover 2010 Annual Report Download - page 117

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,
2010 and 2009 (dollars in thousands):
Less than 12 months More than 12 months
Number of
Securities in a
Loss Position
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
At November 30, 2010
Available-for-Sale Investment Securities
U.S. Treasury securities ................................................................................. 17 $1,262,670 $ 1,585 $ 0 $ 0
U.S. government agency securities.................................................................. 18 $1,181,148 $ 1,298 $ 0 $ 0
Credit card asset-backed securities of other issuers ............................................ 23 $ 238,646 $ 54 $ 0 $ 0
Corporate debt securities............................................................................... 5 $ 230,441 $ 102 $ 0 $ 0
Held-to-Maturity Investment Securities
State and political subdivisions of states........................................................... 4 $ 7,731 $ 239 $ 27,603 $ 3,532
At November 30, 2009
Available-for-Sale Investment Securities
Certificated retained interests in DCENT........................................................... 10 $1,149,143 $115,857 $889,848 $10,152
Credit card asset-backed securities of other issuers ............................................ 9 $ 127,509 $ 34 $ 0 $ 0
Held-to-Maturity Investment Securities
State and political subdivisions of states........................................................... 5 $ 0 $ 0 $ 51,778 $ 6,162
Certificated retained interests in DCENT and DCMT ........................................... 3 $1,865,484 $430,655 $ 0 $ 0
During the years ended 2010, 2009 and 2008, the Company received $744.6 million, $431.3 million and $37.2
million, respectively, of proceeds related to maturities, redemptions, liquidation or sales of investment securities.
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. There were no sales of available-for-sale investment securities during the years ended 2010 or 2008.
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, 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. The investment was originally purchased in 2007 for $120.1 million, subsequently written down to
$51.3 million and, in August 2010, liquidated for $70.9 million.
During the years ended November 30, 2009 and November 30, 2008, the Company recorded $9.2 million and
$50.3 million of other than temporary impairment (“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 years ended November 30, 2010, 2009 and 2008, the Company recorded net unrealized losses of $6.7
million, $14.1 million and $79.3 million ($4.2 million, $8.5 million and $50.2 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.
At November 30, 2010, the Company had $3.5 million of gross unrealized losses in a continuous loss position for
more than 12 months on its held-to-maturity investment securities in states and political subdivisions of states, compared
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