Discover 2010 Annual Report Download - page 130

Maturities. Long-term borrowings had the following maturities at November 30, 2010 (dollars in thousands):
Discover Financial
Services
(Consolidated)
Discover Financial
Services
(Parent Company Only)
Due in 2011 ...................................................................................................................................... $ 5,132,623 $ 0
Due in 2012 ...................................................................................................................................... 3,325,989 0
Due in 2013 ...................................................................................................................................... 4,671,605 0
Due in 2014 ...................................................................................................................................... 989,294 0
Due in 2015 ...................................................................................................................................... 599,819 0
Thereafter.......................................................................................................................................... 2,986,398 791,579
Total.............................................................................................................................................. $17,705,728 $791,579
The Company has an unsecured credit agreement that is effective through May 2012. The agreement provides for a
revolving credit commitment of up to $2.4 billion (of which the Company may borrow up to 30% and Discover Bank may
borrow up to 100% of the total commitment). As of November 30, 2010, the Company had no outstanding balances due
under the facility. The credit agreement provides for a commitment fee on the unused portion of the facility, which can
range from 0.07% to 0.175% depending on the index debt ratings. Loans outstanding under the credit facility bear
interest at a margin above the Federal Funds rate, LIBOR, the Euro Interbank Offered Rate or the Euro Reference rate. The
terms of the credit agreement include various affirmative and negative covenants, including financial covenants related to
the maintenance of certain capitalization and tangible net worth levels, and certain double leverage, delinquency and
Tier 1 capital to managed loans ratios. The credit agreement also includes customary events of default with corresponding
grace periods, including, without limitation, payment defaults, cross-defaults to other agreements evidencing indebtedness
for borrowed money and bankruptcy-related defaults. The commitment may be terminated upon an event of default.
The Company also has access to committed undrawn capacity through private securitizations to support the funding of
its credit card loan receivables. As of November 30, 2010, the total commitment of secured credit facilities through
private providers was $3.8 billion, of which $0.5 billion had been used and was included in long-term borrowings –
owed to securitization investors at November 30, 2010. Access to the unused portions of the secured credit facilities
expires in 2012 and 2013. Borrowings outstanding under each facility bear interest at a margin above LIBOR or the
asset-backed commercial paper costs of each individual conduit provider. The terms of each agreement provide for a
commitment fee to be paid on the unused capacity, and include various affirmative and negative covenants, including
performance metrics and legal requirements similar to those required to issue any term securitization transaction.
12. Stock-Based Compensation Plans
The Company has two stock-based compensation plans: the Discover Financial Services Omnibus Incentive Plan and
the Discover Financial Services Directors’ Compensation Plan.
Omnibus Incentive Plan. The Discover Financial Services Omnibus Incentive Plan (“Omnibus Plan”), which is
stockholder-approved, provides for the award of stock options, stock appreciation rights, restricted stock, restricted stock
units (“RSUs”) and other stock-based and/or cash awards (collectively, “Awards”). The total number of shares that may
be granted is 45 million shares, subject to adjustments for certain transactions as described in the Omnibus Plan
document. Shares granted under the Omnibus Plan may be authorized but unissued shares or treasury shares that the
Company acquires in the open market, in private transactions or otherwise.
Option awards are granted with an exercise price equal to the fair market value of one share of the Company’s
common stock at the date of grant; these types of awards expire ten years from the grant date and may be subject to
restrictions on transfer, vesting requirements, which are set at the discretion of the Compensation Committee of the
Company’s Board of Directors, or cancellation under specified circumstances. Stock awards also may be subject to similar
restrictions determined at the time of grant under this plan. Certain option and stock awards provide for accelerated
vesting if there is a change in control or upon certain terminations (as defined in the Omnibus Plan).
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