Discover 2010 Annual Report Download - page 162

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28. Quarterly Results (unaudited) (dollars in thousands, except per share data):
November 30,
2010
August 31,
2010
May 31,
2010
February 28,
2010
November 30,
2009
August 31,
2009
May 31,
2009
February 28,
2009
Interest income................. $1,499,347 $1,535,939 $1,551,782 $1,559,150 $ 638,086 $ 833,217 $ 857,984 $ 815,793
Interest expense ............... 375,506 389,137 404,621 413,724 314,158 304,401 320,005 312,720
Net interest income ....... 1,123,841 1,146,802 1,147,161 1,145,426 323,928 528,816 537,979 503,073
Provision for loan losses .... 382,670 712,565 724,264 1,387,206 399,732 380,999 643,861 937,813
Gain (loss) on investment
securities ..................... 0 18,951 0 180 5,413 (7,422) (1,012) (805)
Other income(1) ................ 472,135 545,193 512,844 545,696 1,248,146 1,323,382 1,082,132 1,190,761
Other expense................. 628,075 566,238 513,548 474,804 607,499 523,838 560,628 559,123
Income (loss) before
income tax expense ... 585,231 432,143 422,193 (170,708) 570,256 939,939 414,610 196,093
Income tax expense .......... 235,589 171,526 164,126 (67,170) 217,719 362,485 188,810 75,699
Net income (loss) .......... $ 349,642 $ 260,617 $ 258,067 $ (103,538) $ 352,537 $ 577,454 $ 225,800 $ 120,394
Net income (loss)
allocated to common
stockholders(1) ........... $ 346,517 $ 258,194 $ 184,590 $ (122,233) $ 330,505 $ 552,928 $ 206,366 $ 118,380
Basic earnings (loss) per
share(1)........................ $ 0.64 $ 0.47 $ 0.34 $ (0.22) $ 0.61 $ 1.08 $ 0.43 $ 0.25
Diluted earnings (loss) per
share(1)........................ $ 0.64 $ 0.47 $ 0.33 $ (0.22) $ 0.60 $ 1.07 $ 0.43 $ 0.25
(1) The year ended November 30, 2009 includes $1.9 billion of income related to the Visa and MasterCard antitrust litigation settlement, which is included in the Direct Banking segment. See Note 21:
Litigation.
(2) Because the inputs to net income allocated to common stockholders and earnings per share are calculated using weighted averages for the quarter, the sum of all four quarters may differ from the
year to date amounts in the consolidated statements of income.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), which are
designed to ensure that information required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate
to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered
by this report.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for
the Company. Our internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements in accordance with generally accepted
accounting principles. There are inherent limitations to the effectiveness of any system of internal control over financial
reporting. These limitations include the possibility of human error, the circumvention or overriding of the system and
reasonable resource constraints. Because of its inherent limitations, our internal control over financial reporting may not
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