Discover 2015 Annual Report Download - page 172

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27. Quarterly Results
The following table provides unaudited quarterly results (dollars in millions, except per share data):
December 31,
2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014
Interest income...................... $ 2,061 $ 2,008 $ 1,947 $ 1,929 $ 1,974 $ 1,926 $ 1,863 $1,833
Interest expense .................... 329 323 311 300 302 288 274 270
Net interest income............ 1,732 1,685 1,636 1,629 1,672 1,638 1,589 1,563
Provision for loan losses ........ 484 332 306 390 457 354 360 272
Other income(1) ..................... 473 503 539 542 365 552 583 515
Other expense ...................... 933 882 927 873 932 827 797 784
Income before income tax
expense.......................... 788 974 942 908 648 1,009 1,015 1,022
Income tax expense............... 288 362 343 322 244 365 371 391
Net income....................... $ 500 $ 612 $ 599 $ 586 $ 404 $ 644 $ 644 $ 631
Net income allocated to
common stockholders(2) .... $ 488 $ 599 $ 586 $ 573 $ 392 $ 630 $ 630 $ 618
Basic earnings per common
share(2) ............................... $ 1.15 $ 1.38 $ 1.33 $ 1.28 $ 0.87 $ 1.37 $ 1.35 $ 1.31
Diluted earnings per common
share(2) ............................... $ 1.14 $ 1.38 $ 1.33 $ 1.28 $ 0.87 $ 1.37 $ 1.35 $ 1.31
(1) During the three months ended December 31, 2014, the Company made certain changes to its customer rewards program eliminating forfeitures. These changes
resulted in a one-time expense of $178 million due to the reversal of the estimate for customer rewards forfeiture, a contra-account to accrued expenses and other
liabilities.
(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 (as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) 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 prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become