Discover 2015 Annual Report Download - page 142

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The investments that are categorized as Level 2 assets primarily consist of fixed income securities and common
collective trusts. The common collective trust investment vehicles are valued using the Net Asset Value (“NAV”) provided
by the administrator of the fund. The NAV is quoted on a private market that is not active; however, the unit price is
based on underlying investments that are traded on an active market. The fair value of the stable value product is
calculated as the present value of future cash flows.
There were no transfers between Levels 1 and 2 within the fair value hierarchy for the years ended December 31,
2015 and 2014.
Cash Flows
The Company does not expect to make any contributions to the Discover Pension Plan for 2016.
Expected benefit payments associated with the Discover Pension Plan for the next five years and in aggregate for
the years thereafter are as follows (dollars in millions):
December 31,
2015
2016 .................................................................................................................................................................................... $ 15
2017 .................................................................................................................................................................................... $ 15
2018 .................................................................................................................................................................................... $ 16
2019 .................................................................................................................................................................................... $ 17
2020 .................................................................................................................................................................................... $ 18
Following five years thereafter ................................................................................................................................................. $ 110
Discover 401(k) Plan
Under the Discover 401(k) Plan, eligible U.S. employees receive 401(k) matching contributions. Eligible
employees also receive fixed employer contributions. Certain eligible employees also received employer transition credit
contributions from January 1, 2009 through December 31, 2013. The pretax expense associated with the Company
contributions for the years ended December 31, 2015, 2014 and 2013 was $56 million, $52 million and $50 million,
respectively.
13. Common and Preferred Stock
Preferred Stock
The Company has 575,000 shares of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B (the
"preferred stock"), outstanding with a par value of $0.01 per share that were issued on October 16, 2012. Each share
of preferred stock has a liquidation preference of $1,000 and is represented by 40 depositary shares. Net proceeds
received from the preferred stock issuance totaled approximately $560 million. The preferred stock is redeemable at the
Company's option, subject to regulatory approval, either (1) in whole or in part on any dividend payment date on or
after December 1, 2017 or (2) in whole but not in part, at any time within 90 days following a regulatory capital event
(as defined in the certificate of designations for the preferred stock), in each case at a redemption price equal to $1,000
per share of preferred stock plus declared and unpaid dividends. Any dividends declared on the preferred stock will be
payable quarterly in arrears at a rate of 6.50% per annum.
Stock Repurchase Program
On April 16, 2015, the Company's board of directors approved a share repurchase program authorizing the
repurchase of up to $2.2 billion of its outstanding shares of common stock. The program expires on July 31, 2016 and
may be terminated at any time. During the year ended December 31, 2015, the Company repurchased 29,050,394
shares for $1.7 billion.