Discover 2015 Annual Report Download - page 132

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The fair value of the Discover Home Loans reporting unit was estimated using a discounted cash flow method that
incorporated the financial forecasts incorporating assumptions about the amount and timing of future cash flows,
discount rates and other factors that are inherently uncertain and judgmental in nature.
Intangible Assets
The Company's amortizable intangible assets consisting of customer relationships and trade names resulted from
various acquisitions and are primarily included in the Payment Services segment.
Non-amortizable intangible assets consist of trade name intangibles recognized in the acquisition of SLC, along
with international transaction processing rights and trade name intangibles which are primarily included in the Payment
Services segment. The Company conducted its annual impairment test of intangible assets as of October 1, 2015 and
October 1, 2014 and no impairment charges were identified.
The following table summarizes the Company's intangible assets (dollars in millions):
December 31,
2015 2014
Weighted-
Average
Amortization
Period
Gross
Carrying
Amount Accumulated Amortization Net Book Value
Gross
Carrying
Amount Accumulated Amortization Net Book Value
Amortizable intangible assets
Customer relationships .................. 16 years $ 69 $ 61 $ 8 $ 72 $ 60 $ 12
Trade name and other................... 25 years 8 3 5 8 3 5
Proprietary software...................... N/A — — — 6 2 4
Non-compete agreements.............. N/A — — — 2 2 —
Total amortizable intangible
assets ..................................... 77 64 13 88 67 21
Non-amortizable intangible assets
Trade names ................................ N/A 132 — 132 132 — 132
International transaction processing
rights ......................................... N/A 23 — 23 23 — 23
Total non-amortizable intangible
assets ..................................... 155 — 155 155 — 155
Total intangible assets............ $ 232 $ 64 $ 168 $ 243 $ 67 $ 176
Amortization expense related to the Company's intangible assets was $4 million, $10 million and $12 million for
the years ended December 31, 2015, 2014 and 2013, respectively.
The following table presents expected intangible asset amortization expense for the next five years based on
intangible assets at the end of the current period (dollars in millions):
Year Amount
2016 .................................................................................................................................................................................... $ 3
2017 .................................................................................................................................................................................... $ 2
2018 .................................................................................................................................................................................... $ 2
2019 .................................................................................................................................................................................... $ 2
2020 .................................................................................................................................................................................... $ 1
9. Deposits
The Company offers its deposit products to customers through two channels: (i) through direct marketing, internet
origination and affinity relationships (“direct-to-consumer deposits”); and (ii) indirectly through contractual
arrangements with securities brokerage firms (“brokered deposits”). Direct-to-consumer deposits include certificates of