Discover 2010 Annual Report Download - page 160

Discover Financial Services
(Parent Company Only)
Condensed Statements of Cash Flows
For the Years Ended November 30,
2010 2009 2008
(dollars in thousands)
Cash flows from operating activities
Net income ........................................................................................................................................... $ 764,788 $ 1,276,185 $ 927,750
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Non-cash charges included in net income:
Equity in undistributed net income of subsidiaries ................................................................................. (635,842) (609,780) (531,720)
Stock-based compensation expense.................................................................................................... 37,081 44,249 92,558
Deferred income taxes...................................................................................................................... 12,032 (31,699) 1,390
Depreciation and amortization .......................................................................................................... 82 85 88
Pension curtailment.......................................................................................................................... 0 0 (38,891)
Changes in assets and liabilities:
(Increase) decrease in other assets...................................................................................................... (6,644) 1,864 (854,687)
(Decrease) increase in other liabilities and accrued expenses.................................................................. (7,575) 65,287 110,105
Net cash provided by (used for) operating activities........................................................................... 163,922 746,191 (293,407)
Cash flows from investing activities
Net proceeds from (payments for):
(Increase) decrease in investment in subsidiaries ...................................................................................... (275,000) (1,233,958) 0
(Increase) decrease in loans to subsidiaries ............................................................................................. 1,080,576 (463,591) 465,776
Maturities of investment securities .......................................................................................................... 0 4,032 0
Decrease (Increase) in restricted cash – special dividend escrow................................................................. 643,311 (643,311) 0
Net cash provided by (used for) investing activities ............................................................................ 1,448,887 (2,336,828) 465,776
Cash flows from financing activities
Proceeds from issuance of long-term borrowings and bank notes ...................................................................... 0 400,000 0
Maturity of long-term borrowings................................................................................................................. (400,000) 0 0
Proceeds from issuance of preferred stock and warrants .................................................................................. 0 1,224,558 0
Redemption of preferred stock ..................................................................................................................... (1,224,558) 0 0
Repurchase of stock warrant ....................................................................................................................... (172,000) 0 0
Proceeds from issuance of common stock ...................................................................................................... 1,323 533,822 0
Purchases of treasury stock ......................................................................................................................... (8,241) (11,385) (6,838)
Net (decrease) increase in deposits .............................................................................................................. 859 (6,319) 7,353
Dividend paid to Morgan Stanley ................................................................................................................ (775,000) 0 0
Dividends paid on common and preferred stock ............................................................................................. (70,431) (101,034) (116,956)
Net cash provided by (used for) financing activities ........................................................................... (2,648,048) 2,039,642 (116,441)
Increase (decrease) in cash and cash equivalents............................................................................................ (1,035,239) 449,005 55,928
Cash and cash equivalents, at beginning of year............................................................................................ 1,035,606 586,601 530,673
Cash and cash equivalents, at end of year .................................................................................................... $ 367 $ 1,035,606 $ 586,601
Supplemental Disclosures:
Cash paid during the year for:
Interest expense.................................................................................................................................. $ 70,207 $ 36,056 $ 45,668
Income taxes, net of income tax refunds ................................................................................................. $ (64,044) $ 438,098 $ 111,041
Non-cash transactions
Special dividend – Morgan Stanley ....................................................................................................... $ 33,757 $ (335,757) $(473,000)
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