Discover 2010 Annual Report Download - page 56

The selected financial data shown below for the year ended November 30, 2010 reflects a change in accounting
principle as a result of the consolidation of the securitization trusts, which is more fully described in Note 2: Change in
Accounting Principle to our consolidated financial statements. Selected financial data shown below for historical periods
prior to December 1, 2009 have not been retrospectively adjusted to reflect the change in accounting principle and
therefore continue to reflect the accounting standards that were applicable during those historical periods.
Discover Financial Services
Selected Financial Data
For the Years Ended November 30,
2010(1) 2009 2008 2007 2006
(dollars in thousands, except per share amounts)
Statement of Income Data:
Interest income...................................................................................... $ 6,146,218 $ 3,145,080 $ 2,692,563 $ 2,584,402 $ 2,209,192
Interest expense .................................................................................... 1,582,988 1,251,284 1,288,004 1,223,270 836,280
Net interest income ............................................................................ 4,563,230 1,893,796 1,404,559 1,361,132 1,372,912
Other income(2) ..................................................................................... 2,094,999 4,840,595 4,264,458 3,376,682 3,368,664
Revenue net of interest expense ............................................................ 6,658,229 6,734,391 5,669,017 4,737,814 4,741,576
Provision for loan losses ......................................................................... 3,206,705 2,362,405 1,595,615 733,887 606,765
Other expense ...................................................................................... 2,182,665 2,251,088 2,415,797 2,478,214 2,467,058
Income before income tax expense ....................................................... 1,268,859 2,120,898 1,657,605 1,525,713 1,667,753
Income tax expense ............................................................................... 504,071 844,713 594,692 561,514 535,563
Income from continuing operations ....................................................... 764,788 1,276,185 1,062,913 964,199 1,132,190
Loss from discontinued operations, net of tax(3)........................................... — — (135,163) (375,569) (55,574)
Net income(2)..................................................................................... $ 764,788 $ 1,276,185 $ 927,750 $ 588,630 $ 1,076,616
Net income allocated to common stockholders........................................ $ 667,938 $ 1,206,965 $ 910,510 $ 572,480 $ 1,076,616
Statement of Financial Condition Data (as of):
Loan receivables ................................................................................... $48,836,413 $23,625,084 $25,216,611 $20,831,117 $20,790,244
Total assets .......................................................................................... $60,784,968 $46,020,987 $39,892,382 $37,376,105 $29,064,898
Total stockholders’ equity........................................................................ $ 6,456,846 $ 8,435,547 $ 5,915,823 $ 5,599,422 $ 5,774,772
Allowance for loan losses ....................................................................... $ 3,304,118 $ 1,757,899 $ 1,374,585 $ 759,925 $ 703,917
Long-term borrowings............................................................................ $17,705,728 $ 2,428,101 $ 1,735,383 $ 2,134,093 $ 819,496
Per Share of Common Stock:
Basic EPS from continuing operations ....................................................... $ 1.23 $ 2.39 $ 2.18 $ 1.99 $ 2.37
Diluted EPS from continuing operations..................................................... $ 1.22 $ 2.38 $ 2.18 $ 1.98 $ 2.37
Weighted average shares outstanding (000’s)(4) ......................................... 544,058 504,540 479,335 477,328 477,236
Weighted average shares outstanding (fully diluted) (000’s)(4) ...................... 548,760 507,907 479,357 477,988 477,236
Cash dividends declared ........................................................................ $ 0.08 $ 0.12 $ 0.24 $ 0.06 —
Dividend payout ratio ............................................................................ 6.52% 5.02% 11.01% 3.02% —
Ratios:
Return on average equity........................................................................ 12% 17% 16% 10% 20%
Return on average assets........................................................................ 1% 3% 3% 2% 4%
Average stockholders’ equity to average total assets ................................... 11% 18% 15% 15% 17%
(1) Amounts as of and for the year ended November 30, 2010 include securitized loans as a result of the consolidation of the securitization trusts related to a change in accounting principle on
December 1, 2009. Amounts prior to December 1, 2009 do not include securitized loans.
(2) The years ended November 30, 2009 and 2008 include $1.9 billion pretax ($1.2 billion after tax) and $0.9 billion pretax ($0.5 billion after tax), respectively, of income related to the Visa and
MasterCard antitrust litigation settlement, which is included in our Direct Banking segment. See Note 21: Litigation to the consolidated financial statements.
(3) 2007 includes a $391 million pretax ($279 million after tax) non-cash impairment charge to write-down the intangible assets and goodwill of the Goldfish business, which was sold on March 31,
2008.
(4) On June 30, 2007, Morgan Stanley distributed to Morgan Stanley stockholders one share of our common stock for every two shares of Morgan Stanley common stock held on June 18, 2007. As a
result, on July 2, 2007, we had 477,235,927 shares of common stock outstanding and this share amount is being utilized for the calculation of basic earnings per share (“EPS”) for all periods
presented prior to the date of the spin-off. For all periods prior to the spin-off date, the same number of shares is being used for diluted EPS as for basic EPS as none of our common stock was
traded prior to July 2, 2007 and none of our equity awards were outstanding for the prior periods.
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