Discover 2010 Annual Report Download - page 129

At November 30, 2010, certificates of deposit maturing over the next five years and thereafter were as follows (dollars
in thousands):
Year Amount
2011 ............................................................................................................................................................................................... $10,102,869
2012 ............................................................................................................................................................................................... $ 6,391,277
2013 ............................................................................................................................................................................................... $ 4,655,648
2014 ............................................................................................................................................................................................... $ 1,983,618
2015 ............................................................................................................................................................................................... $ 1,803,559
Thereafter ......................................................................................................................................................................................... $ 634,084
11. Long-Term Borrowings
Long-term borrowings consist of borrowings and capital leases having original maturities of one year or more. The
following table provides a summary of the Company’s long-term borrowings and weighted average interest rates on
balances outstanding at period end (dollars in thousands):
November 30, 2010 November 30, 2009
Outstanding
Interest
Rate Outstanding
Interest
Rate
Interest Rate
Terms Maturity
Discover Card Master Trust I and Discover Card
Execution Note Trust
Fixed rate asset-backed securities(1) .................... $ 2,598,343 5.47% $ 0 0.00% 5.10% to
5.65% fixed
Various April 2011 –
September 2017
Floating rate asset-backed securities(1)................. 10,621,057 0.75% 0 0.00% 1-month LIBOR(2) +
3 to 130 basis points
Various December
2010
– September 2015
Floating rate asset-backed securities(1)................. 1,250,000 0.63% 0 0.00% 3-month LIBOR(2) +
34 basis points
December 2012
Floating rate asset-backed securities and other
borrowings(1) ...............................................
450,000 0.98% 0
0.00%
Commercial Paper
rate + 70-74 basis points
Various January 2011
– April 2013
Total Long-Term Borrowings – owed to
securitization investors .................................. 14,919,400 0
Discover Financial Services (Parent Company)
Floating rate senior notes.................................. 0 0.00% 400,000 0.83% 3-month LIBOR(2)
+ 53 basis points
June 2010
Fixed rate senior notes due 2017
Book value .................................................. 399,467 6.45% 399,385 6.45% 6.45% fixed June 2017
Fair value adjustment(3) ................................. (7,888) 0
Total ....................................................... 391,579 399,385
Fixed rate senior notes due 2019....................... 400,000 10.25% 400,000 10.25% 10.25% fixed July 2019
Discover Bank
Subordinated bank notes due 2019 ................... 698,382 8.70% 698,202 8.70% 8.70% fixed November 2019
Subordinated bank notes due 2020 ................... 496,753 7.00% 0 0.00% 7.00% fixed April 2020
Floating rate secured borrowing(4) ...................... 93,980 0.79% 528,246 0.74% Commercial Paper
rate + 50 basis points
December 2010(4)
Floating rate secured borrowing(4) ...................... 212,336 0.70% 0 0.00% 1-month LIBOR(2)
+ 45 basis points
December 2010(4)
Floating rate secured borrowing(5) ...................... 492,910 0.66% 0 0.00% Commercial Paper
rate + 50 basis points
August 2013(5)
Capital lease obligations...................................... 388 6.26% 2,268 6.26% 6.26% fixed Various
Total Other Long-Term Borrowings ....................... 2,786,328 2,428,101
Total long-term borrowings......................... $17,705,728 $2,428,101
(1) Upon adoption of Statements No. 166 and 167 on December 1, 2009, the Company consolidated $22.3 billion of securitized loan receivables and the related debt issued from the trusts to third-
party investors. See Note 2: Change in Accounting Principle for more information. Asset-backed securities are collateralized by loan receivables as described in Note 7: Credit Card Securitization
Activities.
(2) London Interbank Offered Rate (“LIBOR”).
(3) The Company uses interest rate swaps to hedge this long-term borrowing against changes in fair value attributable to changes in LIBOR. See Note 23: Derivatives and Hedging Activities.
(4) This loan facility was entered into to fund cash collateral accounts, which provide credit enhancement to certain DCMT certificates. Repayment is dependent upon the available balances of the cash
collateral accounts at the various maturities of underlying securitization transactions, with final maturity in December 2010. The facility has two funding agents, one of which re-priced from
commercial paper conduit costs to LIBOR-based pricing effective in July 2010.
(5) Under a program established by the U.S. Department of Education, this loan facility was entered into to fund certain federal student loans, which were held for sale at November 30, 2010.
Principal and interest payments on the underlying student loans will reduce the balance of the secured borrowing over time, with final maturity in August 2013. However, upon sale of the loans, this
loan facility will be repaid.
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