UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 8-K

 
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): December 18, 2008

  DISCOVER FINANCIAL SERVICES
(Exact name of registrant as specified in its charter)

 
Commission File Number: 001-33378

Delaware	 	36-2517428	
(State or other jurisdiction
of incorporation)	 	(IRS Employer
Identification No.)	

2500 Lake Cook Road, Riverwoods, Illinois 60015
(Address of principal executive offices, including zip code)
 
(224) 405-0900
(Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 
Item 2.02.      Results of Operations and Financial Condition.
 
On December 18, 2008, Discover Financial Services (the “Company”) released financial information with respect to the quarter and year ended November 30, 2008. A copy of the press release containing this information is attached hereto as Exhibit 99.1 and incorporated herein by reference. In addition, a copy of the Company's Financial Data Supplement for the quarter and year ended November 30, 2008 is attached hereto as Exhibit 99.2 and incorporated herein by reference.
 
The information contained in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly stated by specific reference in such filing.

 
Item 9.01.            Financial Statements and Exhibits.
  
(d) Exhibits

Exhibit No.	 	Description	
 	 	 	
99.1	 	Press Release of the Company dated December 18, 2008 containing financial information for the quarter and year ended November 30, 2008	
 	 	 	
99.2	 	Financial Data Supplement of the Company for the quarter and year ended November 30, 2008	

 

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	 	DISCOVER FINANCIAL SERVICES	
 	 	 	
Dated: December 18, 2008	 	By:	 	/s/ Christopher Greene	
 	 	 	 	Name:  Christopher Greene	
 	 	 	 	Title:  Assistant Secretary	

 

 
 
EXHIBIT INDEX
 
Exhibit No.	 	Description	
 	 	 	
99.1	 	Press Release of the Company dated December 18, 2008 containing financial information for the quarter and year ended November 30, 2008	
 	 	 	
99.2	 	Financial Data Supplement of the Company for the quarter and year ended November 30, 2008	

Exhibit 99.1

DISCOVER FINANCIAL SERVICES REPORTS FOURTH QUARTER RESULTS:
NET INCOME OF $432 MILLION AND EARNINGS PER SHARE OF $0.89

 
Riverwoods, IL, Dec. 18, 2008 - Discover Financial Services (NYSE: DFS) today reported results for the quarter and year ended November 30, 2008 as follows:

 	 	Continuing 
Operations	 	Discontinued
Operations	 	Net Income	
 	 	Earnings	Diluted EPS	 	Earnings	 	Earnings	Diluted EPS	
 	 	(millions)	 	 	(millions)	 	(millions)	 	
 	4Q08	$444	$0.92	 	($12)	 	$432	$0.89	
 	4Q07	$210	$0.44	 	($266)	 	($56)	($0.12)	
 	 	 	 	 	 	 	 	 	
 	2008	$1,063	$2.20	 	($135)	 	$928	$1.92	
 	2007	$964	$2.01	 	($375)	 	$589	$1.23	

Full year income from continuing operations was $1.1 billion, up 10% from last year.  Fourth quarter income from continuing operations was $444 million, up from $210 million in the fourth quarter of 2007.  Income from continuing operations includes antitrust litigation settlement proceeds of approximately $535 million (after-tax) in the fourth quarter of 2008.  Discontinued operations relates to the sale of the Goldfish business.

Fourth Quarter Highlights

·       	The company grew managed loans 6% from last year to $51 billion; Discover Card sales declined 2% to $22 billion.	
·       	The fourth-quarter managed net charge-off rate was 5.48% and the managed over 30 days delinquency rate was 4.56%.	
·       	The company added reserves in excess of charge-offs of $415 million.	
·       	Owned loans grew $3.5 billion from the third quarter, including $2.6 billion due to maturing securitizations retained on the balance sheet.	
·       	Total deposits grew 15% to $29 billion, including $6 billion of direct-to-consumer deposit balances.	
·       	Third-Party Payments segment volume grew 39% to $34 billion, including $7 billion of Diners Club International volume.	
 
“Our results and financial position reflect our conservative orientation toward growth, credit risk and capital management as we position Discover to weather the economic downturn,” said David Nelms, chief executive officer of Discover Financial Services.  “As part of our capital management, we are seeking to participate in the Treasury’s Capital Purchase Program which will further support our consumer lending operations.”

1

 
Settlement of Antitrust Litigation

On October 27, 2008 Discover reached a $2.75 billion settlement of its antitrust lawsuit with Visa and MasterCard.  Discover received an $863 million payment in November 2008, and expects to receive the remaining proceeds in equal $472 million installments over the four quarters of 2009.  The proceeds will be reflected as revenue in Discover’s U.S. Card segment in the period earned.

At the time of the spin-off of the company, Morgan Stanley and Discover entered into an agreement governing the manner in which the antitrust case was to be pursued and settled and how proceeds of the litigation were to be shared.  The company has notified Morgan Stanley that it breached the agreement and the amount of the dividend to Morgan Stanley, if any, is a matter of dispute.
 
Liquidity and Capital

The company continues to maintain liquidity and capital positions that it believes are appropriate for the current environment.  Cash liquidity was $9.4 billion and tangible equity was $5.5 billion, or 11.0% of net managed receivables, at November 30, 2008. The company applied to the U.S. Treasury to participate in the Capital Purchase Program and to the Federal Reserve to become a bank holding company.

Segment Results (Managed Basis):

U.S. Card

Managed loans grew to $51 billion, up 6% from last year and 1% from last quarter as decreased consumer spending and balance transfer activity were offset by lower cardmember payments and growth in installment loans.  Sales volume decreased 2% versus fourth quarter of 2007, and increased 2% on a full year basis.

Credit performance of the Card portfolio was consistent with Discover’s expectation as charge-offs rose, reflecting the deteriorating economic environment.  The managed over 30 days delinquency rate of 4.56% was up 71 basis points from the third quarter of 2008, and 98 basis points from last year.  The managed net charge-off rate increased to 5.48% for the fourth quarter of 2008, up 28 and 163 basis points, respectively, from last quarter and last year.  The full year net charge-off rate was 5.01% up 118 basis points from last year.  Based on current trends within the portfolio and in the economic environment, the company believes that the managed net charge-off rate in the first quarter of 2009 will exceed 6%.

2

 
Fourth Quarter
Pretax income was $646 million in the fourth quarter of 2008, including other income of $863 million related to proceeds from the antitrust settlement.  Pretax income was $321 million for the fourth quarter of 2007.

Managed net interest income increased $162 million, or 18%, an improvement of 79 basis points over fourth quarter of 2007.  Higher net interest income benefited from lower cost of funds, growth in loan balances and accretion of balance transfer fees previously included in loan fee revenue, partially offset by higher interest charge-offs.

Provision for loan losses increased $521 million, or 89%, due to higher net charge-offs and an increase in loan loss reserves in excess of charge-offs in the quarter.  The reserve increase in excess of charge-offs of $415 million resulted from a higher reserve rate as well as higher on-balance sheet loans due to maturing securitizations.

Other income increased $630 million, reflecting the antitrust settlement partially offset by a reduction in the fair value of the interest-only strip receivable.  The decline in the fair value of the interest-only strip receivable was due to no securitization gains in the fourth quarter as the company did not enter into new securitization transactions, along with higher anticipated charge-offs in the current environment.

Expenses decreased $54 million, or 9%, primarily attributable to lower compensation and marketing expense partially offset by increased professional fees.  Compensation expense included a $39 million one-time benefit due to curtailment of the company’s pension plan.  Marketing declined due to lower account acquisition and balance transfer volume as well as lower advertising costs.

Full Year
Pretax income was $1.6 billion in 2008, including other income of $863 million related to the antitrust settlement.  Pretax income was $1.5 billion for 2007.

Managed net interest income increased $551 million, or 15%, an improvement of 79 basis points over 2007, reflecting an increase in interest income and a decrease in interest expense.  Interest income benefited from growth in loan balances and the transfer of balance transfer fees to interest income, partially offset by higher interest charge-offs and lower investment income.  Interest expense decreased reflecting a lower cost of funds, partially offset by higher borrowings to fund higher loan balances.

Provision for loan losses increased $1.2 billion, or 66%, due to higher net charge-offs and an increase in loan loss reserves in excess of charge-offs during the year.  The reserve increase in excess of charge-offs of $615 million resulted from a higher reserve rate as well as higher on-balance sheet loans due to maturing securitizations.

3

Other income increased $673 million reflecting the antitrust settlement and higher discount and interchange revenue, partially offset by a write-down of the interest-only strip receivable and the transfer of balance transfer fees to interest income.  Discount and interchange revenue benefited from growth in sales volume.

Expenses decreased $79 million, or 3%, primarily attributable to the pension curtailment benefit; lower account acquisition and promotional marketing activity; and a decrease in costs related to litigation.

Third-Party Payments

Fourth Quarter
The Third-Party Payments segment transaction volume was $34 billion, up 39% from last year, reflecting the addition of Diners Club International volume of $7 billion, as well as increased volumes on the PULSE and Discover networks.

Pretax income of $21 million was up $13 million from the fourth quarter of 2007.  Diners Club International contributed $4 million to the segment’s pretax income.  Revenue increased $24 million due to increased volumes and fee revenues, as well as a $15 million contribution from Diners Club International.  Expenses increased $11 million due to the inclusion of Diners Club International.

Full Year
The Third-Party Payments segment transaction volume was a record $125 billion, up 36% from last year, reflecting the addition of Diners Club International volume of $13 billion, as well as increased volumes on the PULSE and Discover networks.

Pretax income of $81 million was up $44 million from 2007 including $11 million related to Diners Club International, which was acquired in June 2008.  Revenue increased $61 million due to increased volumes and fee revenues as well as a $28 million contribution from Diners Club International.  Expenses increased $17 million due to the inclusion of Diners Club International.

Discontinued Operations

Discontinued operations represent the company’s Goldfish business in the United Kingdom, which was sold to Barclays Bank PLC on March 31, 2008. In the fourth quarter of 2008, the company recognized a loss from discontinued operations, net of tax, of $12 million versus a loss of $266 million in the fourth quarter of 2007.  The fourth quarter of 2007 included an impairment charge to write down goodwill and intangibles to fair value of $279 million, after-tax.

4

Dividend Declaration/Stock Repurchase Program

The company’s board declared a cash dividend of $.06 per share, payable on Jan. 22, 2009, to stockholders of record at the close of business on Jan. 2, 2009.  No stock repurchases were conducted under the stock repurchase program during the fourth quarter.

Conference Call and Webcast Information

The company will host a conference call to discuss its fourth quarter results on Thursday, Dec. 18, 2008, at 10 a.m. Central time.  Interested parties can listen to the conference call via a live audio webcast at http://investorrelations.discoverfinancial.com.

About Discover Financial Services

Discover Financial Services (NYSE: DFS) is a leading credit card issuer and electronic payment services company with one of the most recognized brands in U.S. financial services. The company operates the Discover Card, America's cash rewards pioneer. Since its inception in 1986, the company has become one of the largest card issuers in the United States. Its payments businesses consist of the Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in 185 countries and territories. For more information, visit www.discoverfinancial.com .
 
Contacts:
 
Investors:
Craig Streem, 224-405-3575
craigstreem@discover.com
 
Media:
Leslie Sutton, 224-405-3965
lesliesutton@discover.com

A financial summary follows. Financial, statistical, and business related information, as well as information regarding business and segment trends, is included in the Financial Supplement. Both the earnings release and the Financial Supplement are available online in the Investor Relations section at www.discoverfinancial.com.
 
Financial information presented on a managed basis assumes that loans that have been securitized were not sold and presents financial information regarding these loans in a manner similar to the presentation of financial information regarding loans that have not been sold. Management believes it is useful for investors to consider the credit performance of the entire managed loan portfolio to understand the quality of loan originations and the related credit risks inherent in the owned portfolio and retained interests in securitization.  For more information, and a detailed reconciliation, please refer to the schedule titled “Reconciliation of GAAP to Managed Data” attached to this press release.

5

 
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Discover Financial Services' management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. These forward-looking statements speak only as of the date of this press release, and there is no undertaking to update or revise them as more information becomes available.  The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: the actions and initiatives of current and potential competitors; our ability to manage credit risks and securitize our receivables at acceptable rates and under sale accounting treatment; changes in economic variables, such as the number and size of personal bankruptcy filings, the rate of unemployment and the levels of consumer confidence and consumer debt; the level and volatility of equity prices, commodity prices and interest rates, currency values, investments, other market fluctuations and other market indices; the availability and cost of funding and capital; access to U.S. debt and deposit markets; losses in our investment portfolio; the ability to increase or sustain Discover Card usage or attract new cardmembers and introduce new products or services; our ability to attract new merchants and maintain relationships with current merchants; our ability to successfully integrate the Diners Club International network and maintain relationships with network participants; material security breaches of key systems; unforeseen and catastrophic events; our reputation; the potential effects of technological changes; the effect of political, economic and market conditions and geopolitical events; unanticipated developments relating to lawsuits, investigations or similar matters; the impact of current, pending and future legislation, regulation and regulatory and legal actions, including the Federal Reserve Board’s proposed amendments limiting certain credit card practices; our ability to attract and retain employees; the ability to protect our intellectual property; the impact of any potential future acquisitions; investor sentiment; and the restrictions on our operations resulting from indebtedness incurred related to our spin-off in 2007.

Additional factors that could cause Discover Financial Services' results to differ materially from those described in the forward-looking statements can be found under “Part I. Item 1A. Risk Factors” in the Company's Annual Report on Form 10-K for the year ended November 30, 2007 and “Part II. Other Information – Item 1A. Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2008, filed with the SEC and available at the SEC's internet site (http://www.sec.gov).

 
6  

 
Discover Financial Services	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	 	 	 	 	 	 	 	
(unaudited, dollars in thousands, except per	 	 	 	 	 	 	 	
share statistics)	 	Quarter Ended	 	
 	 	Nov 30, 2008	 	 	Aug 31, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	736,006	 	 	$	681,692	 	 	$	659,676	 	
Interest Expense	 	 	329,672	 	 	 	305,643	 	 	 	350,917	 	
Net Interest Income	 	 	406,334	 	 	 	376,049	 	 	 	308,759	 	
Other Income   1	 	 	1,568,901	 	 	 	875,121	 	 	 	952,500	 	
Revenue Net of Interest Expense	 	 	1,975,235	 	 	 	1,251,170	 	 	 	1,261,259	 	
Provision for Loan Losses	 	 	714,176	 	 	 	364,838	 	 	 	296,186	 	
Employee Compensation and Benefits	 	 	187,306	 	 	 	222,426	 	 	 	208,910	 	
Marketing and Business Development	 	 	119,382	 	 	 	137,928	 	 	 	155,976	 	
Information Processing & Communications	 	 	81,543	 	 	 	76,675	 	 	 	85,034	 	
Professional Fees	 	 	111,645	 	 	 	82,775	 	 	 	94,380	 	
Premises and Equipment	 	 	20,676	 	 	 	20,274	 	 	 	19,348	 	
Other Expense	 	 	73,530	 	 	 	72,469	 	 	 	73,083	 	
Total Other Expense	 	 	594,082	 	 	 	612,547	 	 	 	636,731	 	
Income (Loss) Before Income Taxes   1	 	 	666,977	 	 	 	273,785	 	 	 	328,342	 	
Tax Expense	 	 	223,336	 	 	 	94,885	 	 	 	118,368	 	
Income From Continuing Operations   1	 	 	443,641	 	 	 	178,900	 	 	 	209,974	 	
Discontinued Operations, Net of Tax   2	 	 	(11,306	)	 	 	1,153	 	 	 	(266,458	)	
Net Income (Loss)   1, 2	 	$	432,335	 	 	$	180,053	 	 	$	(56,484	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective Tax Rate From Continuing Operations	 	 	33.5	%	 	 	34.7	%	 	 	36.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics   3	 	 	 	 	 	 	 	 	 	 	 	 	
Total Assets	 	$	39,892,382	 	 	$	37,283,548	 	 	$	33,449,702	 	
Total Equity	 	$	5,924,044	 	 	$	6,000,393	 	 	$	5,599,422	 	
Total Tangible Equity	 	$	5,465,304	 	 	$	5,539,274	 	 	$	5,284,232	 	
Tangible Equity/Total Owned Assets	 	 	13.7	%	 	 	14.9	%	 	 	15.8	%	
ROE   1, 2	 	 	29	%	 	 	12	%	 	 	(4	%)	
ROE from Continuing Operations   1	 	 	30	%	 	 	12	%	 	 	15	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Allowance for Loan Loss (period end)	 	$	1,374,585	 	 	$	959,769	 	 	$	759,925	 	
Change in Loan Loss Reserves	 	$	414,816	 	 	$	112,994	 	 	$	130,467	 	
Reserve Rate	 	 	5.45	%	 	 	4.41	%	 	 	3.65	%	
Interest-only Strip Receivable (period end)	 	$	300,120	 	 	$	408,649	 	 	$	400,313	 	
Net Revaluation of Retained Interests	 	$	(116,335	)	 	$	(33,513	)	 	$	37,475	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Per Share Statistics	 	 	 	 	 	 	 	 	 	 	 	 	
Basic EPS   1, 2	 	$	0.90	 	 	$	0.38	 	 	$	(0.12	)	
Basic EPS from Continuing Operations 1	 	$	0.92	 	 	$	0.38	 	 	$	0.44	 	
Diluted EPS   1, 2	 	$	0.89	 	 	$	0.37	 	 	$	(0.12	)	
Diluted EPS from Continuing Operations   1	 	$	0.92	 	 	$	0.37	 	 	$	0.44	 	
Stock Price (period end)	 	$	10.23	 	 	$	16.45	 	 	$	17.37	 	
Book Value	 	$	12.34	 	 	$	12.51	 	 	$	11.72	 	
Ending Shares Outstanding (000's)	 	 	479,987	 	 	 	479,764	 	 	 	477,688	 	
Weighted Average Shares Outstanding (000's)	 	 	479,931	 	 	 	479,618	 	 	 	477,567	 	
Weighted Average Shares Outstanding (fully diluted) (000's)	 	 	484,558	 	 	 	484,128	 	 	 	477,567	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables   3	 	 	 	 	 	 	 	 	 	 	 	 	
Total Loans - Owned	 	$	25,216,611	 	 	$	21,767,483	 	 	$	20,831,117	 	
Average Total Loans - Owned	 	$	22,945,494	 	 	$	21,053,804	 	 	$	19,405,775	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	11.36	%	 	 	11.41	%	 	 	10.51	%	
Net Principal Charge-off Rate	 	 	5.25	%	 	 	4.76	%	 	 	3.43	%	
Delinquency Rate (over 30 days)	 	 	4.35	%	 	 	3.58	%	 	 	3.26	%	
Delinquency Rate (over 90 days)	 	 	2.06	%	 	 	1.73	%	 	 	1.51	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Transactions Processed on Networks (000's)	 	 	 	 	 	 	 	 	 	 	 	 	
Discover Network	 	 	377,356	 	 	 	388,504	 	 	 	378,438	 	
PULSE Network	 	 	644,045	 	 	 	713,791	 	 	 	611,518	 	
Total	 	 	1,021,401	 	 	 	1,102,295	 	 	 	989,956	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Volume	 	 	 	 	 	 	 	 	 	 	 	 	
PULSE Network	 	$	25,033,235	 	 	$	28,364,575	 	 	$	23,035,361	 	
Third-Party Issuers	 	 	1,538,013	 	 	 	1,711,617	 	 	 	1,458,959	 	
Diners Club International   4	 	 	7,467,235	 	 	 	5,227,795	 	 	 	-	 	
Total Third-Party Payments	 	 	34,038,483	 	 	 	35,303,987	 	 	 	24,494,320	 	
Discover Network - Proprietary 5	 	 	22,875,272	 	 	 	25,117,321	 	 	 	23,482,095	 	
Total	 	$	56,913,755	 	 	$	60,421,308	 	 	$	47,976,415	 	

1 The quarter ended November 30, 2008 includes proceeds of $863 million pre-tax (estimated $535 million after-tax) related to the antitrust settlement.	
 	
2  The quarter ended November 30, 2007 includes a $391 million pre-tax ($279 million after-tax) non-cash impairment charge related to the company's Goldfish business.	
 	
3  Based on Continuing Operations except equity and ROE.  Equity is based on company's equity.	
 	
4 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment.	
 	
5  Gross proprietary sales volume on the Discover Network.	

 
 
Discover Financial Services	 	 	 	 	 	 	 	 	 	
Managed Basis 1	 	 	 	 	 	 	 	 	 	
(unaudited, dollars in thousands)	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended	 	
 	 	Nov 30, 2008	 	 	Aug 31, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	1,682,267	 	 	$	1,638,250	 	 	$	1,667,418	 	
Interest Expense	 	 	602,450	 	 	 	534,887	 	 	 	750,638	 	
Net Interest Income	 	 	1,079,817	 	 	 	1,103,363	 	 	 	916,780	 	
Other Income   2	 	 	1,287,213	 	 	 	536,997	 	 	 	633,014	 	
Revenue Net of Interest Expense	 	 	2,367,030	 	 	 	1,640,360	 	 	 	1,549,794	 	
Provision for Loan Losses	 	 	1,105,971	 	 	 	754,028	 	 	 	584,721	 	
Employee Compensation and Benefits	 	 	187,306	 	 	 	222,426	 	 	 	208,910	 	
Marketing and Business Development	 	 	119,382	 	 	 	137,928	 	 	 	155,976	 	
Information Processing & Communications	 	 	81,543	 	 	 	76,675	 	 	 	85,034	 	
Professional Fees	 	 	111,645	 	 	 	82,775	 	 	 	94,380	 	
Premises and Equipment	 	 	20,676	 	 	 	20,274	 	 	 	19,348	 	
Other Expense	 	 	73,530	 	 	 	72,469	 	 	 	73,083	 	
Total Other Expense	 	 	594,082	 	 	 	612,547	 	 	 	636,731	 	
Income (Loss) Before Income Taxes   2	 	 	666,977	 	 	 	273,785	 	 	 	328,342	 	
Tax Expense	 	 	223,336	 	 	 	94,885	 	 	 	118,368	 	
Income From Continuing Operations   2	 	 	443,641	 	 	 	178,900	 	 	 	209,974	 	
Discontinued Operations, Net of Tax   2, 3	 	 	(11,306	)	 	 	1,153	 	 	 	(266,458	)	
Net Income (Loss)   2, 3	 	$	432,335	 	 	$	180,053	 	 	$	(56,484	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics 4	 	 	 	 	 	 	 	 	 	 	 	 	
Total Assets	 	$	65,620,476	 	 	$	65,632,825	 	 	$	60,591,475	 	
Total Equity   5	 	$	5,924,044	 	 	$	6,000,393	 	 	$	5,599,422	 	
Total Tangible Equity   5	 	$	5,465,304	 	 	$	5,539,274	 	 	$	5,284,232	 	
Tangible Equity/Net Managed Receivables	 	 	11.0	%	 	 	11.2	%	 	 	11.1	%	
Tangible Equity/Total Managed Assets	 	 	8.3	%	 	 	8.4	%	 	 	8.7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	8.56	%	 	 	8.95	%	 	 	7.76	%	
Return on Loan Receivables 2	 	 	3.52	%	 	 	1.45	%	 	 	1.78	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables 4	 	 	 	 	 	 	 	 	 	 	 	 	
Total Loans - Managed	 	$	51,095,278	 	 	$	50,427,305	 	 	$	48,180,436	 	
Average Total Loans - Managed	 	$	50,707,090	 	 	$	49,019,083	 	 	$	47,381,471	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.65	%	 	 	12.67	%	 	 	12.84	%	
Managed Net Principal Charge-off Rate	 	 	5.48	%	 	 	5.20	%	 	 	3.85	%	
Managed Delinquency Rate (over 30 days)	 	 	4.56	%	 	 	3.85	%	 	 	3.58	%	
Managed Delinquency Rate (over 90 days)	 	 	2.17	%	 	 	1.88	%	 	 	1.67	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Volume	 	$	25,318,553	 	 	$	28,611,680	 	 	$	26,159,776	 	
Credit Card Sales Volume	 	$	22,025,264	 	 	$	24,601,611	 	 	$	22,588,639	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment - Income Before Income Taxes	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Card	 	$	646,427	 	 	$	245,241	 	 	$	320,751	 	
Third-Party Payments	 	 	20,550	 	 	 	28,544	 	 	 	7,591	 	
Total	 	$	666,977	 	 	$	273,785	 	 	$	328,342	 	

1 Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are  presented.  See Reconciliation of GAAP to Managed Data schedule.	
 	
2 The quarter ended November 30, 2008 includes proceeds of $863 million pre-tax (estimated $535 million after-tax) related to the antitrust settlement.	
 	
3  The quarter ended November 30, 2007 includes a $391 million pre-tax ($279 million after-tax) non-cash impairment charge related to the company's Goldfish business.	
 	
4  Based on Continuing Operations.  Equity is based on company's equity.	
 	
5  Balance on a GAAP and Managed basis is the same.	

 
Discover Financial Services	 	 	 	 	 	 	 	 	 	
U.S. Card Segment	 	 	 	 	 	 	 	 	 	
Managed Basis 1	 	 	 	 	 	 	 	 	 	
(unaudited, dollars in thousands)	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended	 	
 	 	Nov 30, 2008	 	 	Aug 31, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	1,680,925	 	 	$	1,637,588	 	 	$	1,666,768	 	
Interest Expense	 	 	602,386	 	 	 	534,870	 	 	 	750,638	 	
Net Interest Income	 	 	1,078,539	 	 	 	1,102,718	 	 	 	916,130	 	
Other Income 2	 	 	1,234,100	 	 	 	482,311	 	 	 	603,709	 	
Revenue Net of Interest Expense	 	 	2,312,639	 	 	 	1,585,029	 	 	 	1,519,839	 	
Provision for Loan Losses	 	 	1,105,971	 	 	 	754,028	 	 	 	584,721	 	
Total Other Expense	 	 	560,241	 	 	 	585,760	 	 	 	614,367	 	
Income (Loss) Before Income Taxes   2	 	$	646,427	 	 	$	245,241	 	 	$	320,751	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	8.55	%	 	 	8.95	%	 	 	7.76	%	
Pretax Return on Loan Receivables   2	 	 	5.13	%	 	 	1.99	%	 	 	2.72	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	 	 	 	
Total Loans	 	$	51,095,278	 	 	$	50,427,305	 	 	$	48,180,436	 	
Average Total Loans	 	$	50,707,090	 	 	$	49,019,083	 	 	$	47,381,471	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.65	%	 	 	12.67	%	 	 	12.84	%	
Managed Net Principal Charge-off Rate	 	 	5.48	%	 	 	5.20	%	 	 	3.85	%	
Managed Delinquency Rate (over 30 days)	 	 	4.56	%	 	 	3.85	%	 	 	3.58	%	
Managed Delinquency Rate (over 90 days)	 	 	2.17	%	 	 	1.88	%	 	 	1.67	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	49,692,974	 	 	$	49,348,507	 	 	$	47,929,242	 	
Average Credit Card Loans - Managed	 	$	49,420,412	 	 	$	48,168,124	 	 	$	47,251,899	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.72	%	 	 	12.70	%	 	 	12.85	%	
Managed Net Principal Charge-off Rate	 	 	5.59	%	 	 	5.28	%	 	 	3.85	%	
Managed Delinquency Rate (over 30 days)	 	 	4.66	%	 	 	3.92	%	 	 	3.59	%	
Managed Delinquency Rate (over 90 days)	 	 	2.22	%	 	 	1.92	%	 	 	1.68	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	$	25,318,553	 	 	$	28,611,680	 	 	$	26,159,776	 	
Sales Volume	 	$	22,025,264	 	 	$	24,601,611	 	 	$	22,588,639	 	

1 Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are  presented.  See Reconciliation of GAAP to Managed Data schedule.	
 	
2 The quarter ended November 30, 2008 includes proceeds of $863 million pre-tax related to the antitrust settlement.	

 
 
Discover Financial Services	 	 	 	 	 	 	 	 	 	
Third-Party Payments Segment	 	 	 	 	 	 	 	 	 	
(unaudited, dollars in thousands)	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended	 	
 	 	Nov 30, 2008	 	 	Aug 31, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	1,342	 	 	$	662	 	 	$	650	 	
Interest Expense	 	 	64	 	 	 	17	 	 	 	-	 	
Net Interest Income	 	 	1,278	 	 	 	645	 	 	 	650	 	
Other Income	 	 	53,113	 	 	 	54,686	 	 	 	29,305	 	
Revenue Net of Interest Expense	 	 	54,391	 	 	 	55,331	 	 	 	29,955	 	
Provision for Loan Losses	 	 	-	 	 	 	-	 	 	 	-	 	
Total Other Expense	 	 	33,841	 	 	 	26,787	 	 	 	22,364	 	
Income (Loss) Before Income Taxes	 	$	20,550	 	 	$	28,544	 	 	$	7,591	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Volume	 	 	 	 	 	 	 	 	 	 	 	 	
PULSE Network	 	$	25,033,235	 	 	$	28,364,575	 	 	$	23,035,361	 	
Third-Party Issuers	 	 	1,538,013	 	 	 	1,711,617	 	 	 	1,458,959	 	
Diners Club International 1	 	 	7,467,235	 	 	 	5,227,795	 	 	 	-	 	
Total Third-Party Payments	 	$	34,038,483	 	 	$	35,303,987	 	 	$	24,494,320	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Transactions Processed on PULSE Network (000's)	 	 	644,045	 	 	 	713,791	 	 	 	611,518	 	

1 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment.

 
Discover Financial Services	 	 	 	 	 	 	 	 	 	
Reconciliation of GAAP to Managed Data 1	 	 	 	 	
(unaudited, dollars in thousands)	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended	 	
 	 	Nov 30, 2008	 	 	Aug 31, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	 	 	 	
Interest Income	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	736,006	 	 	$	681,692	 	 	$	659,676	 	
Securitization Adjustments 1	 	 	946,261	 	 	 	956,558	 	 	 	1,007,742	 	
Managed Basis	 	$	1,682,267	 	 	$	1,638,250	 	 	$	1,667,418	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	329,672	 	 	$	305,643	 	 	$	350,917	 	
Securitization Adjustments	 	 	272,778	 	 	 	229,244	 	 	 	399,721	 	
Managed Basis	 	$	602,450	 	 	$	534,887	 	 	$	750,638	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Interest Income	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	406,334	 	 	$	376,049	 	 	$	308,759	 	
Securitization Adjustments	 	 	673,483	 	 	 	727,314	 	 	 	608,021	 	
Managed Basis	 	$	1,079,817	 	 	$	1,103,363	 	 	$	916,780	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Income	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,568,901	 	 	$	875,121	 	 	$	952,500	 	
Securitization Adjustments	 	 	(281,688	)	 	 	(338,124	)	 	 	(319,486	)	
Managed Basis	 	$	1,287,213	 	 	$	536,997	 	 	$	633,014	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue Net of Interest Expense	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,975,235	 	 	$	1,251,170	 	 	$	1,261,259	 	
Securitization Adjustments	 	 	391,795	 	 	 	389,190	 	 	 	288,535	 	
Managed Basis	 	$	2,367,030	 	 	$	1,640,360	 	 	$	1,549,794	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Loan Losses	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	714,176	 	 	$	364,838	 	 	$	296,186	 	
Securitization Adjustments	 	 	391,795	 	 	 	389,190	 	 	 	288,535	 	
Managed Basis	 	$	1,105,971	 	 	$	754,028	 	 	$	584,721	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Assets	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	39,892,382	 	 	$	37,283,548	 	 	$	33,449,702	 	
Securitization Adjustments	 	 	25,728,094	 	 	 	28,349,277	 	 	 	27,141,773	 	
Managed Basis	 	$	65,620,476	 	 	$	65,632,825	 	 	$	60,591,475	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Tangible Equity/Total Assets	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	13.7	%	 	 	14.9	%	 	 	15.8	%	
Securitization Adjustments	 	 	21.2	%	 	 	19.5	%	 	 	19.5	%	
Managed Basis	 	 	8.3	%	 	 	8.4	%	 	 	8.7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	 	 	 	
Total Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	25,216,611	 	 	$	21,767,483	 	 	$	20,831,117	 	
Securitization Adjustments	 	 	25,878,667	 	 	 	28,659,822	 	 	 	27,349,319	 	
Managed Basis	 	$	51,095,278	 	 	$	50,427,305	 	 	$	48,180,436	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Total Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	22,945,494	 	 	$	21,053,804	 	 	$	19,405,775	 	
Securitization Adjustments	 	 	27,761,596	 	 	 	27,965,279	 	 	 	27,975,696	 	
Managed Basis	 	$	50,707,090	 	 	$	49,019,083	 	 	$	47,381,471	 	

 
Discover Financial Services	 	 	 	 	 	 	 	 	 	
Reconciliation of GAAP to Managed Data 1	 	 	 	 	
(unaudited, dollars in thousands)	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended	 	
 	 	Nov 30, 2008	 	 	Aug 31, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	11.36	%	 	 	11.41	%	 	 	10.51	%	
Securitization Adjustments	 	 	13.71	%	 	 	13.61	%	 	 	14.45	%	
Managed Basis	 	 	12.65	%	 	 	12.67	%	 	 	12.84	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	5.25	%	 	 	4.76	%	 	 	3.43	%	
Securitization Adjustments	 	 	5.68	%	 	 	5.54	%	 	 	4.14	%	
Managed Basis	 	 	5.48	%	 	 	5.20	%	 	 	3.85	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.35	%	 	 	3.58	%	 	 	3.26	%	
Securitization Adjustments	 	 	4.77	%	 	 	4.06	%	 	 	3.82	%	
Managed Basis	 	 	4.56	%	 	 	3.85	%	 	 	3.58	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	2.06	%	 	 	1.73	%	 	 	1.51	%	
Securitization Adjustments	 	 	2.27	%	 	 	2.00	%	 	 	1.79	%	
Managed Basis	 	 	2.17	%	 	 	1.88	%	 	 	1.67	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	23,814,307	 	 	$	20,688,685	 	 	$	20,579,923	 	
Securitization Adjustments	 	 	25,878,667	 	 	 	28,659,822	 	 	 	27,349,319	 	
Managed Basis	 	$	49,692,974	 	 	$	49,348,507	 	 	$	47,929,242	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	21,658,816	 	 	$	20,202,845	 	 	$	19,276,203	 	
Securitization Adjustments	 	 	27,761,596	 	 	 	27,965,279	 	 	 	27,975,696	 	
Managed Basis	 	$	49,420,412	 	 	$	48,168,124	 	 	$	47,251,899	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	11.45	%	 	 	11.45	%	 	 	10.53	%	
Securitization Adjustments	 	 	13.71	%	 	 	13.61	%	 	 	14.45	%	
Managed Basis	 	 	12.72	%	 	 	12.70	%	 	 	12.85	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	5.47	%	 	 	4.92	%	 	 	3.44	%	
Securitization Adjustments	 	 	5.68	%	 	 	5.54	%	 	 	4.14	%	
Managed Basis	 	 	5.59	%	 	 	5.28	%	 	 	3.85	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.55	%	 	 	3.72	%	 	 	3.28	%	
Securitization Adjustments	 	 	4.77	%	 	 	4.06	%	 	 	3.82	%	
Managed Basis	 	 	4.66	%	 	 	3.92	%	 	 	3.59	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	2.16	%	 	 	1.81	%	 	 	1.53	%	
Securitization Adjustments	 	 	2.27	%	 	 	2.00	%	 	 	1.79	%	
Managed Basis	 	 	2.22	%	 	 	1.92	%	 	 	1.68	%	

1 Securitization Adjustments present the effect of loan securitization by recharacterizing as securitization income the portions of the following items that  relate to the securitized loans: interest income, interest expense, provision for loan losses, discount and interchange revenue and loan fee revenues.	
 Securitization income is reported in other income.	

 
Discover Financial Services	 	 	 	 	 	 	
GAAP Basis	 	 	 	 	 	 	
(unaudited, dollars in thousands, except per	 	 	 	 	
share statistics)	 	Year Ended	 	
 	 	Nov 30, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	
Interest Income	 	$	2,692,563	 	 	$	2,584,402	 	
Interest Expense	 	 	1,288,004	 	 	 	1,223,270	 	
Net Interest Income	 	 	1,404,559	 	 	 	1,361,132	 	
Other Income   1	 	 	4,264,458	 	 	 	3,376,682	 	
Revenue Net of Interest Expense	 	 	5,669,017	 	 	 	4,737,814	 	
Provision for Loan Losses	 	 	1,595,615	 	 	 	733,887	 	
Employee Compensation and Benefits	 	 	845,392	 	 	 	850,065	 	
Marketing and Business Development	 	 	530,901	 	 	 	576,263	 	
Information Processing & Communications	 	 	315,943	 	 	 	330,053	 	
Professional Fees	 	 	349,484	 	 	 	361,409	 	
Premises and Equipment	 	 	80,394	 	 	 	79,442	 	
Other Expense	 	 	293,683	 	 	 	280,982	 	
Total Other Expense	 	 	2,415,797	 	 	 	2,478,214	 	
Income (Loss) Before Income Taxes   1	 	 	1,657,605	 	 	 	1,525,713	 	
Tax Expense	 	 	594,692	 	 	 	561,514	 	
Income From Continuing Operations   1	 	 	1,062,913	 	 	 	964,199	 	
Discontinued Operations, Net of Tax   2, 3	 	 	(135,163	)	 	 	(375,569	)	
Net Income (Loss)   1, 2, 3	 	$	927,750	 	 	$	588,630	 	
 	 	 	 	 	 	 	 	 	
Effective Tax Rate From Continuing Operations	 	 	35.9	%	 	 	36.8	%	
 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics   4	 	 	 	 	 	 	 	 	
Total Assets	 	$	39,892,382	 	 	$	33,449,702	 	
Total Equity	 	$	5,924,044	 	 	$	5,599,422	 	
Total Tangible Equity	 	$	5,465,304	 	 	$	5,284,232	 	
Tangible Equity/Total Owned Assets	 	 	13.7	%	 	 	15.8	%	
ROE   1, 2, 3	 	 	16	%	 	 	10	%	
ROE from Continuing Operations   1	 	 	18	%	 	 	17	%	
 	 	 	 	 	 	 	 	 	
Allowance for Loan Loss (period end)	 	$	1,374,585	 	 	$	759,925	 	
Change in Loan Loss Reserves	 	$	614,660	 	 	$	56,009	 	
Reserve Rate	 	 	5.45	%	 	 	3.65	%	
Interest-only Strip Receivable (period end)	 	$	300,120	 	 	$	400,313	 	
Net Revaluation of Retained Interests	 	$	(119,324	)	 	$	51,346	 	
 	 	 	 	 	 	 	 	 	
Per Share Statistics	 	 	 	 	 	 	 	 	
Basic EPS   1, 2, 3	 	$	1.94	 	 	$	1.23	 	
Basic EPS from Continuing Operations 1	 	$	2.22	 	 	$	2.02	 	
Diluted EPS   1, 2, 3	 	$	1.92	 	 	$	1.23	 	
Diluted EPS from Continuing Operations   1	 	$	2.20	 	 	$	2.01	 	
Stock Price (period end)	 	$	10.23	 	 	$	17.37	 	
Book Value	 	$	12.34	 	 	$	11.72	 	
Ending Shares Outstanding (000's)	 	 	479,987	 	 	 	477,688	 	
Weighted Average Shares Outstanding (000's)	 	 	479,335	 	 	 	477,328	 	
Weighted Average Shares Outstanding (fully diluted) (000's)	 	 	483,470	 	 	 	478,879	 	
 	 	 	 	 	 	 	 	 	
Loan Receivables   4	 	 	 	 	 	 	 	 	
Total Loans - Owned	 	$	25,216,611	 	 	$	20,831,117	 	
Average Total Loans - Owned	 	$	21,348,493	 	 	$	19,947,784	 	
 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	10.89	%	 	 	10.73	%	
Net Principal Charge-off Rate	 	 	4.59	%	 	 	3.40	%	
Delinquency Rate (over 30 days)	 	 	4.35	%	 	 	3.26	%	
Delinquency Rate (over 90 days)	 	 	2.06	%	 	 	1.51	%	
 	 	 	 	 	 	 	 	 	
Transactions Processed on Networks (000's)	 	 	 	 	 	 	 	 	
Discover Network	 	 	1,515,368	 	 	 	1,486,366	 	
PULSE Network	 	 	2,682,312	 	 	 	2,285,061	 	
Total	 	 	4,197,680	 	 	 	3,771,427	 	
 	 	 	 	 	 	 	 	 	
Volume	 	 	 	 	 	 	 	 	
PULSE Network	 	$	106,012,108	 	 	$	86,236,408	 	
Third-Party Issuers	 	 	6,398,579	 	 	 	5,480,105	 	
Diners Club International   5	 	 	12,695,030	 	 	 	-	 	
Total Third-Party Payments	 	 	125,105,717	 	 	 	91,716,513	 	
Discover Network - Proprietary 6	 	 	95,688,443	 	 	 	93,794,500	 	
Total	 	$	220,794,160	 	 	$	185,511,013	 	

1 The quarter ended November 30, 2008 includes proceeds of $863 million pre-tax (estimated $535 million after-tax) related to the antitrust settlement.	
 	
2 The quarter ended May 31, 2008 includes income from discontinued operations, net of tax of $32.6 million consisting of a $21 million gain related to disposition of the Goldfish business and income of $12 million  related to the Goldfish business operations.  The quarter ended February 29, 2008 includes a loss from discontinued operations, net of tax of $158 million consisting of a $172 million loss related to reflecting the  Goldfish business as held for sale and income of $14 million related to the Goldfish business operations.	
 	
3 The quarter ended November 30, 2007 includes a $391 million pre-tax ($279 million after-tax) non-cash impairment charge related to the company's Goldfish business.	
 	
4 Based on Continuing Operations except equity and ROE.  Equity is based on company's equity.	
 	
5 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment.	
 	
6 Gross proprietary sales volume on the Discover Network.	

 
 
Discover Financial Services	 	 	 	 	 	 	
Managed Basis 1	 	 	 	 	 	 	
(unaudited, dollars in thousands)	 	 	 	 	 	 	
 	 	Year Ended	 	
 	 	Nov 30, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	
Interest Income	 	$	6,545,829	 	 	$	6,378,674	 	
Interest Expense	 	 	2,356,919	 	 	 	2,741,128	 	
Net Interest Income	 	 	4,188,910	 	 	 	3,637,546	 	
Other Income   2	 	 	2,953,096	 	 	 	2,219,776	 	
Revenue Net of Interest Expense	 	 	7,142,006	 	 	 	5,857,322	 	
Provision for Loan Losses	 	 	3,068,604	 	 	 	1,853,395	 	
Employee Compensation and Benefits	 	 	845,392	 	 	 	850,065	 	
Marketing and Business Development	 	 	530,901	 	 	 	576,263	 	
Information Processing & Communications	 	 	315,943	 	 	 	330,053	 	
Professional Fees	 	 	349,484	 	 	 	361,409	 	
Premises and Equipment	 	 	80,394	 	 	 	79,442	 	
Other Expense	 	 	293,683	 	 	 	280,982	 	
Total Other Expense	 	 	2,415,797	 	 	 	2,478,214	 	
Income (Loss) Before Income Taxes   2	 	 	1,657,605	 	 	 	1,525,713	 	
Tax Expense	 	 	594,692	 	 	 	561,514	 	
Income From Continuing Operations   2	 	 	1,062,913	 	 	 	964,199	 	
Discontinued Operations, Net of Tax   2, 3, 4	 	 	(135,163	)	 	 	(375,569	)	
Net Income (Loss)   2, 3, 4	 	$	927,750	 	 	$	588,630	 	
 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics 5	 	 	 	 	 	 	 	 	
Total Assets	 	$	65,620,476	 	 	$	60,591,475	 	
Total Equity   6	 	$	5,924,044	 	 	$	5,599,422	 	
Total Tangible Equity   6	 	$	5,465,304	 	 	$	5,284,232	 	
Tangible Equity/Net Managed Receivables	 	 	11.0	%	 	 	11.1	%	
Tangible Equity/Total Managed Assets	 	 	8.3	%	 	 	8.7	%	
 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	8.55	%	 	 	7.75	%	
Return on Loan Receivables 2	 	 	2.17	%	 	 	2.06	%	
 	 	 	 	 	 	 	 	 	
Loan Receivables 5	 	 	 	 	 	 	 	 	
Total Loans - Managed	 	$	51,095,278	 	 	$	48,180,436	 	
Average Total Loans - Managed	 	$	49,011,148	 	 	$	46,913,474	 	
 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.61	%	 	 	12.65	%	
Managed Net Principal Charge-off Rate	 	 	5.01	%	 	 	3.83	%	
Managed Delinquency Rate (over 30 days)	 	 	4.56	%	 	 	3.58	%	
Managed Delinquency Rate (over 90 days)	 	 	2.17	%	 	 	1.67	%	
 	 	 	 	 	 	 	 	 	
Credit Card Volume	 	$	105,734,055	 	 	$	106,620,818	 	
Credit Card Sales Volume	 	$	92,239,779	 	 	$	90,262,556	 	
 	 	 	 	 	 	 	 	 	
Segment - Income Before Income Taxes	 	 	 	 	 	 	 	 	
U.S. Card	 	$	1,576,194	 	 	$	1,488,753	 	
Third-Party Payments	 	 	81,411	 	 	 	36,960	 	
Total	 	$	1,657,605	 	 	$	1,525,713	 	

1 Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are  presented.  See Reconciliation of GAAP to Managed Data schedule.	
 	
2 The quarter ended November 30, 2008 includes proceeds of $863 million pre-tax (estimated $535 million after-tax) related to the antitrust settlement.	
 	
3 The quarter ended May 31, 2008 includes income from discontinued operations, net of tax of $32.6 million consisting of a $21 million gain related to disposition of the Goldfish business and income of $12 million  related to the Goldfish business operations.  The quarter ended February 29, 2008 includes a loss from discontinued operations, net of tax of $158 million consisting of a $172 million loss related to reflecting the  Goldfish business as held for sale and income of $14 million related to the Goldfish business operations.	
 	
4 The quarter ended November 30, 2007 includes a $391 million pre-tax ($279 million after-tax) non-cash impairment charge related to the company's Goldfish business.	
 	
5 Based on Continuing Operations.  Equity is based on company's equity.	
 	
6 Balance on a GAAP and Managed basis is the same.	

 
Discover Financial Services	 	 	 	 	 	 	
U.S. Card Segment	 	 	 	 	 	 	
Managed Basis 1	 	 	 	 	 	 	
(unaudited, dollars in thousands)	 	 	 	 	 	 	
 	 	Year Ended	 	
 	 	Nov 30, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	
Interest Income	 	$	6,542,664	 	 	$	6,376,298	 	
Interest Expense	 	 	2,356,836	 	 	 	2,741,109	 	
Net Interest Income	 	 	4,185,828	 	 	 	3,635,189	 	
Other Income 2	 	 	2,773,896	 	 	 	2,101,076	 	
Revenue Net of Interest Expense	 	 	6,959,724	 	 	 	5,736,265	 	
Provision for Loan Losses	 	 	3,068,604	 	 	 	1,853,395	 	
Total Other Expense	 	 	2,314,926	 	 	 	2,394,117	 	
Income (Loss) Before Income Taxes   2	 	$	1,576,194	 	 	$	1,488,753	 	
 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	8.54	%	 	 	7.75	%	
Pretax Return on Loan Receivables   2	 	 	3.22	%	 	 	3.17	%	
 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	
Total Loans	 	$	51,095,278	 	 	$	48,180,436	 	
Average Total Loans	 	$	49,011,148	 	 	$	46,913,474	 	
 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.61	%	 	 	12.65	%	
Managed Net Principal Charge-off Rate	 	 	5.01	%	 	 	3.83	%	
Managed Delinquency Rate (over 30 days)	 	 	4.56	%	 	 	3.58	%	
Managed Delinquency Rate (over 90 days)	 	 	2.17	%	 	 	1.67	%	
 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	49,692,974	 	 	$	47,929,242	 	
Average Credit Card Loans - Managed	 	$	48,229,519	 	 	$	46,811,570	 	
 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.65	%	 	 	12.66	%	
Managed Net Principal Charge-off Rate	 	 	5.07	%	 	 	3.84	%	
Managed Delinquency Rate (over 30 days)	 	 	4.66	%	 	 	3.59	%	
Managed Delinquency Rate (over 90 days)	 	 	2.22	%	 	 	1.68	%	
 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	$	105,734,055	 	 	$	106,620,818	 	
Sales Volume	 	$	92,239,779	 	 	$	90,262,556	 	

1 Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are  presented.  See Reconciliation of GAAP to Managed Data schedule.	
 	
2 The quarter ended November 30, 2008 includes proceeds of $863 million pre-tax related to the antitrust settlement.	

 
Discover Financial Services	 	 	 	 	 	 	
Third-Party Payments Segment	 	 	 	 	 	 	
(unaudited, dollars in thousands)	 	 	 	 	 	 	
 	 	Year Ended	 	
 	 	Nov 30, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	
Interest Income	 	$	3,165	 	 	$	2,376	 	
Interest Expense	 	 	83	 	 	 	19	 	
Net Interest Income	 	 	3,082	 	 	 	2,357	 	
Other Income	 	 	179,200	 	 	 	118,700	 	
Revenue Net of Interest Expense	 	 	182,282	 	 	 	121,057	 	
Provision for Loan Losses	 	 	-	 	 	 	-	 	
Total Other Expense	 	 	100,871	 	 	 	84,097	 	
Income (Loss) Before Income Taxes	 	$	81,411	 	 	$	36,960	 	
 	 	 	 	 	 	 	 	 	
Volume	 	 	 	 	 	 	 	 	
PULSE Network	 	$	106,012,108	 	 	$	86,236,408	 	
Third-Party Issuers	 	 	6,398,579	 	 	 	5,480,105	 	
Diners Club International 1	 	 	12,695,030	 	 	 	-	 	
Total Third-Party Payments	 	$	125,105,717	 	 	$	91,716,513	 	
 	 	 	 	 	 	 	 	 	
Transactions Processed on PULSE Network (000's)	 	 	2,682,312	 	 	 	2,285,061	 	
 
1 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment.

 
Discover Financial Services	 	 	 	 	 	 	
Reconciliation of GAAP to Managed Data 1	 	
(unaudited, dollars in thousands)	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Year Ended	 	
 	 	Nov 30, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	
Interest Income	 	 	 	 	 	 	
GAAP Basis	 	$	2,692,563	 	 	$	2,584,402	 	
Securitization Adjustments 1	 	 	3,853,266	 	 	 	3,794,272	 	
Managed Basis	 	$	6,545,829	 	 	$	6,378,674	 	
 	 	 	 	 	 	 	 	 	
Interest Expense	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,288,004	 	 	$	1,223,270	 	
Securitization Adjustments	 	 	1,068,915	 	 	 	1,517,858	 	
Managed Basis	 	$	2,356,919	 	 	$	2,741,128	 	
 	 	 	 	 	 	 	 	 	
Net Interest Income	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,404,559	 	 	$	1,361,132	 	
Securitization Adjustments	 	 	2,784,351	 	 	 	2,276,414	 	
Managed Basis	 	$	4,188,910	 	 	$	3,637,546	 	
 	 	 	 	 	 	 	 	 	
Other Income	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	4,264,458	 	 	$	3,376,682	 	
Securitization Adjustments	 	 	(1,311,362	)	 	 	(1,156,906	)	
Managed Basis	 	$	2,953,096	 	 	$	2,219,776	 	
 	 	 	 	 	 	 	 	 	
Revenue Net of Interest Expense	 	 	 	 	 	
GAAP Basis	 	$	5,669,017	 	 	$	4,737,814	 	
Securitization Adjustments	 	 	1,472,989	 	 	 	1,119,508	 	
Managed Basis	 	$	7,142,006	 	 	$	5,857,322	 	
 	 	 	 	 	 	 	 	 	
Provision for Loan Losses	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,595,615	 	 	$	733,887	 	
Securitization Adjustments	 	 	1,472,989	 	 	 	1,119,508	 	
Managed Basis	 	$	3,068,604	 	 	$	1,853,395	 	
 	 	 	 	 	 	 	 	 	
Total Assets	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	39,892,382	 	 	$	33,449,702	 	
Securitization Adjustments	 	 	25,728,094	 	 	 	27,141,773	 	
Managed Basis	 	$	65,620,476	 	 	$	60,591,475	 	
 	 	 	 	 	 	 	 	 	
Tangible Equity/Total Assets	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	13.7	%	 	 	15.8	%	
Securitization Adjustments	 	 	21.2	%	 	 	19.5	%	
Managed Basis	 	 	8.3	%	 	 	8.7	%	
 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	
Total Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	25,216,611	 	 	$	20,831,117	 	
Securitization Adjustments	 	 	25,878,667	 	 	 	27,349,319	 	
Managed Basis	 	$	51,095,278	 	 	$	48,180,436	 	
 	 	 	 	 	 	 	 	 	
Average Total Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	21,348,493	 	 	$	19,947,784	 	
Securitization Adjustments	 	 	27,662,655	 	 	 	26,965,690	 	
Managed Basis	 	$	49,011,148	 	 	$	46,913,474	 	

 
 
Discover Financial Services	 	 	 	 	 	 	
Reconciliation of GAAP to Managed Data 1	 	
(unaudited, dollars in thousands)	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Year Ended	 	
 	 	Nov 30, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	10.89	%	 	 	10.73	%	
Securitization Adjustments	 	 	13.93	%	 	 	14.07	%	
Managed Basis	 	 	12.61	%	 	 	12.65	%	
 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.59	%	 	 	3.40	%	
Securitization Adjustments	 	 	5.32	%	 	 	4.15	%	
Managed Basis	 	 	5.01	%	 	 	3.83	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.35	%	 	 	3.26	%	
Securitization Adjustments	 	 	4.77	%	 	 	3.82	%	
Managed Basis	 	 	4.56	%	 	 	3.58	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	2.06	%	 	 	1.51	%	
Securitization Adjustments	 	 	2.27	%	 	 	1.79	%	
Managed Basis	 	 	2.17	%	 	 	1.67	%	
 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	23,814,307	 	 	$	20,579,923	 	
Securitization Adjustments	 	 	25,878,667	 	 	 	27,349,319	 	
Managed Basis	 	$	49,692,974	 	 	$	47,929,242	 	
 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	20,566,864	 	 	$	19,845,880	 	
Securitization Adjustments	 	 	27,662,655	 	 	 	26,965,690	 	
Managed Basis	 	$	48,229,519	 	 	$	46,811,570	 	
 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	10.92	%	 	 	10.75	%	
Securitization Adjustments	 	 	13.93	%	 	 	14.07	%	
Managed Basis	 	 	12.65	%	 	 	12.66	%	
 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.73	%	 	 	3.41	%	
Securitization Adjustments	 	 	5.32	%	 	 	4.15	%	
Managed Basis	 	 	5.07	%	 	 	3.84	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.55	%	 	 	3.28	%	
Securitization Adjustments	 	 	4.77	%	 	 	3.82	%	
Managed Basis	 	 	4.66	%	 	 	3.59	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	2.16	%	 	 	1.53	%	
Securitization Adjustments	 	 	2.27	%	 	 	1.79	%	
Managed Basis	 	 	2.22	%	 	 	1.68	%	
 
1 Securitization Adjustments present the effect of loan securitization by recharacterizing as securitization income the portions of the following items that  relate to the securitized loans: interest income, interest expense, provision for loan losses, discount and interchange revenue and loan fee revenues.	
 Securitization income is reported in other income.	

The data is presented on both a "managed" loan basis and as reported under generally accepted accounting principles ("owned" loan basis). Managed loan data assume that the company's securitized loan receivables have not been sold and presents the results of securitized loan receivables in the same manner as the company's owned loans. The company operates its business and analyzes its financial performance on a managed basis. Accordingly, underwriting and servicing standards are comparable for both owned and securitized loans. The company believes that managed loan information is useful to investors because it provides information regarding the quality of loan origination and credit performance of the entire managed portfolio and allows investors to understand the related credit risks inherent in owned loans and retained interests in securitizations. Managed loan data is also relevant because the company services the securitized and owned loans, and the related accounts, in the same manner without regard to ownership of the loans. In addition, investors often request information on a managed basis which provides a more meaningful comparison to industry competitors.	

Exhibit 99.2
 
Discover Financial Services	
GAAP Basis	
(unaudited, dollars in thousands, except per	
share statistics)	 	Quarter Ended	 	 	Nov 30, 2008	 	 	Year Ended	 	 	 	 	 	 	 	
 	 	Nov 30,
2008	 	 	Aug 31,
2008	 	 	May 31,
2008	 	 	Feb 29,
2008	 	 	Nov 30,
2007	 	 	vs Nov 30,
2007	 	 	Nov 30,
2008	 	 	Nov 30,
2007	 	 	2008 vs 2007	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	736,006	 	 	$	681,692	 	 	$	612,063	 	 	$	662,802	 	 	$	659,676	 	 	$	76,330	 	 	 	12	%	 	$	2,692,563	 	 	$	2,584,402	 	 	$	108,161	 	 	 	4	%	
Interest Expense	 	 	329,672	 	 	 	305,643	 	 	 	313,248	 	 	 	339,441	 	 	 	350,917	 	 	 	(21,245	)	 	 	(6	%)	 	 	1,288,004	 	 	 	1,223,270	 	 	 	64,734	 	 	 	5	%	
Net Interest Income	 	 	406,334	 	 	 	376,049	 	 	 	298,815	 	 	 	323,361	 	 	 	308,759	 	 	 	97,575	 	 	 	32	%	 	 	1,404,559	 	 	 	1,361,132	 	 	 	43,427	 	 	 	3	%	
Other Income   1	 	 	1,568,901	 	 	 	875,121	 	 	 	844,892	 	 	 	975,544	 	 	 	952,500	 	 	 	616,401	 	 	 	65	%	 	 	4,264,458	 	 	 	3,376,682	 	 	 	887,776	 	 	 	26	%	
Revenue Net of Interest Expense	 	 	1,975,235	 	 	 	1,251,170	 	 	 	1,143,707	 	 	 	1,298,905	 	 	 	1,261,259	 	 	 	713,976	 	 	 	57	%	 	 	5,669,017	 	 	 	4,737,814	 	 	 	931,203	 	 	 	20	%	
Provision for Loan Losses	 	 	714,176	 	 	 	364,838	 	 	 	210,969	 	 	 	305,632	 	 	 	296,186	 	 	 	417,990	 	 	 	141	%	 	 	1,595,615	 	 	 	733,887	 	 	 	861,728	 	 	 	117	%	
Employee Compensation and Benefits	 	 	187,306	 	 	 	222,426	 	 	 	218,290	 	 	 	217,370	 	 	 	208,910	 	 	 	(21,604	)	 	 	(10	%)	 	 	845,392	 	 	 	850,065	 	 	 	(4,673	)	 	 	(1	%)	
Marketing and Business Development	 	 	119,382	 	 	 	137,928	 	 	 	132,038	 	 	 	141,553	 	 	 	155,976	 	 	 	(36,594	)	 	 	(23	%)	 	 	530,901	 	 	 	576,263	 	 	 	(45,362	)	 	 	(8	%)	
Information Processing & Communications	 	 	81,543	 	 	 	76,675	 	 	 	79,449	 	 	 	78,276	 	 	 	85,034	 	 	 	(3,491	)	 	 	(4	%)	 	 	315,943	 	 	 	330,053	 	 	 	(14,110	)	 	 	(4	%)	
Professional Fees	 	 	111,645	 	 	 	82,775	 	 	 	81,392	 	 	 	73,672	 	 	 	94,380	 	 	 	17,265	 	 	 	18	%	 	 	349,484	 	 	 	361,409	 	 	 	(11,925	)	 	 	(3	%)	
Premises and Equipment	 	 	20,676	 	 	 	20,274	 	 	 	19,803	 	 	 	19,641	 	 	 	19,348	 	 	 	1,328	 	 	 	7	%	 	 	80,394	 	 	 	79,442	 	 	 	952	 	 	 	1	%	
Other Expense	 	 	73,530	 	 	 	72,469	 	 	 	75,853	 	 	 	71,831	 	 	 	73,083	 	 	 	447	 	 	 	1	%	 	 	293,683	 	 	 	280,982	 	 	 	12,701	 	 	 	5	%	
Total Other Expense	 	 	594,082	 	 	 	612,547	 	 	 	606,825	 	 	 	602,343	 	 	 	636,731	 	 	 	(42,649	)	 	 	(7	%)	 	 	2,415,797	 	 	 	2,478,214	 	 	 	(62,417	)	 	 	(3	%)	
Income (Loss) Before Income Taxes   1	 	 	666,977	 	 	 	273,785	 	 	 	325,913	 	 	 	390,930	 	 	 	328,342	 	 	 	338,635	 	 	 	103	%	 	 	1,657,605	 	 	 	1,525,713	 	 	 	131,892	 	 	 	9	%	
Tax Expense	 	 	223,336	 	 	 	94,885	 	 	 	124,370	 	 	 	152,101	 	 	 	118,368	 	 	 	104,968	 	 	 	89	%	 	 	594,692	 	 	 	561,514	 	 	 	33,178	 	 	 	6	%	
Income From Continuing Operations   1	 	 	443,641	 	 	 	178,900	 	 	 	201,543	 	 	 	238,829	 	 	 	209,974	 	 	 	233,667	 	 	 	111	%	 	 	1,062,913	 	 	 	964,199	 	 	 	98,714	 	 	 	10	%	
Discontinued Operations, Net of Tax   2, 3	 	 	(11,306	)	 	 	1,153	 	 	 	32,605	 	 	 	(157,615	)	 	 	(266,458	)	 	 	255,152	 	 	 	96	%	 	 	(135,163	)	 	 	(375,569	)	 	 	240,406	 	 	 	64	%	
Net Income (Loss)   1, 2, 3	 	$	432,335	 	 	$	180,053	 	 	$	234,148	 	 	$	81,214	 	 	$	(56,484	)	 	$	488,819	 	 	NM	 	 	$	927,750	 	 	$	588,630	 	 	$	339,120	 	 	 	58	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective Tax Rate From Continuing Operations	 	 	33.5	%	 	 	34.7	%	 	 	38.2	%	 	 	38.9	%	 	 	36.1	%	 	 	 	 	 	 	 	 	 	 	35.9	%	 	 	36.8	%	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics   4	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Assets	 	$	39,892,382	 	 	$	37,283,548	 	 	$	34,020,245	 	 	$	34,222,732	 	 	$	33,449,702	 	 	$	6,442,680	 	 	 	19	%	 	$	39,892,382	 	 	$	33,449,702	 	 	$	6,442,680	 	 	 	19	%	
Total Equity	 	$	5,924,044	 	 	$	6,000,393	 	 	$	5,849,691	 	 	$	5,654,341	 	 	$	5,599,422	 	 	$	324,622	 	 	 	6	%	 	$	5,924,044	 	 	$	5,599,422	 	 	$	324,622	 	 	 	6	%	
Total Tangible Equity	 	$	5,465,304	 	 	$	5,539,274	 	 	$	5,538,240	 	 	$	5,341,020	 	 	$	5,284,232	 	 	$	181,072	 	 	 	3	%	 	$	5,465,304	 	 	$	5,284,232	 	 	$	181,072	 	 	 	3	%	
Tangible Equity/Total Owned Assets	 	 	13.7	%	 	 	14.9	%	 	 	16.3	%	 	 	15.6	%	 	 	15.8	%	 	 	 	 	 	 	 	 	 	 	13.7	%	 	 	15.8	%	 	 	 	 	 	 	 	 	
ROE   1, 2, 3	 	 	29	%	 	 	12	%	 	 	16	%	 	 	6	%	 	 	(4	%)	 	 	 	 	 	 	 	 	 	 	16	%	 	 	10	%	 	 	 	 	 	 	 	 	
ROE from Continuing Operations   1	 	 	30	%	 	 	12	%	 	 	14	%	 	 	17	%	 	 	15	%	 	 	 	 	 	 	 	 	 	 	18	%	 	 	17	%	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Allowance for Loan Loss (period end)	 	$	1,374,585	 	 	$	959,769	 	 	$	846,775	 	 	$	860,378	 	 	$	759,925	 	 	$	614,660	 	 	 	81	%	 	$	1,374,585	 	 	$	759,925	 	 	$	614,660	 	 	 	81	%	
Change in Loan Loss Reserves	 	$	414,816	 	 	$	112,994	 	 	$	(13,603	)	 	$	100,453	 	 	$	130,467	 	 	$	284,349	 	 	NM	 	 	$	614,660	 	 	$	56,009	 	 	$	558,651	 	 	NM	 	
Reserve Rate	 	 	5.45	%	 	 	4.41	%	 	 	4.28	%	 	 	4.16	%	 	 	3.65	%	 	 	180	 	 	bps	 	 	 	5.45	%	 	 	3.65	%	 	 	180	 	 	bps	 	
Interest-only Strip Receivable (period end)	 	$	300,120	 	 	$	408,649	 	 	$	447,994	 	 	$	468,059	 	 	$	400,313	 	 	$	(100,193	)	 	 	(25	%)	 	$	300,120	 	 	$	400,313	 	 	$	(100,193	)	 	 	(25	%)	
Net Revaluation of Retained Interests	 	$	(116,335	)	 	$	(33,513	)	 	$	(44,473	)	 	$	74,997	 	 	$	37,475	 	 	$	(153,810	)	 	NM	 	 	$	(119,324	)	 	$	51,346	 	 	$	(170,670	)	 	NM	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Per Share Statistics	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic EPS   1, 2, 3	 	$	0.90	 	 	$	0.38	 	 	$	0.49	 	 	$	0.17	 	 	$	(0.12	)	 	$	1.02	 	 	NM	 	 	$	1.94	 	 	$	1.23	 	 	$	0.71	 	 	 	58	%	
Basic EPS from Continuing Operations 1	 	$	0.92	 	 	$	0.38	 	 	$	0.42	 	 	$	0.50	 	 	$	0.44	 	 	$	0.48	 	 	 	109	%	 	$	2.22	 	 	$	2.02	 	 	$	0.20	 	 	 	10	%	
Diluted EPS   1, 2, 3	 	$	0.89	 	 	$	0.37	 	 	$	0.48	 	 	$	0.17	 	 	$	(0.12	)	 	$	1.01	 	 	NM	 	 	$	1.92	 	 	$	1.23	 	 	$	0.69	 	 	 	56	%	
Diluted EPS from Continuing Operations   1	 	$	0.92	 	 	$	0.37	 	 	$	0.42	 	 	$	0.50	 	 	$	0.44	 	 	$	0.48	 	 	 	109	%	 	$	2.20	 	 	$	2.01	 	 	$	0.19	 	 	 	9	%	
Stock Price (period end)	 	$	10.23	 	 	$	16.45	 	 	$	17.15	 	 	$	15.09	 	 	$	17.37	 	 	$	(7.14	)	 	 	(41	%)	 	$	10.23	 	 	$	17.37	 	 	$	(7.14	)	 	 	(41	%)	
Book Value	 	$	12.34	 	 	$	12.51	 	 	$	12.20	 	 	$	11.80	 	 	$	11.72	 	 	$	0.62	 	 	 	5	%	 	$	12.34	 	 	$	11.72	 	 	$	0.62	 	 	 	5	%	
Ending Shares Outstanding (000's)	 	 	479,987	 	 	 	479,764	 	 	 	479,346	 	 	 	479,127	 	 	 	477,688	 	 	 	2,299	 	 	 	0	%	 	 	479,987	 	 	 	477,688	 	 	 	2,299	 	 	 	0	%	
Weighted Average Shares Outstanding (000's)	 	 	479,931	 	 	 	479,618	 	 	 	479,270	 	 	 	478,518	 	 	 	477,567	 	 	 	2,364	 	 	 	0	%	 	 	479,335	 	 	 	477,328	 	 	 	2,007	 	 	 	0	%	
Weighted Average Shares Outstanding (fully diluted) (000's)	 	 	484,558	 	 	 	484,128	 	 	 	483,753	 	 	 	481,744	 	 	 	477,567	 	 	 	6,991	 	 	 	1	%	 	 	483,470	 	 	 	478,879	 	 	 	4,591	 	 	 	1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables   4	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Loans - Owned	 	$	25,216,611	 	 	$	21,767,483	 	 	$	20,502,063	 	 	$	21,042,681	 	 	$	20,831,117	 	 	$	4,385,494	 	 	 	21	%	 	$	25,216,611	 	 	$	20,831,117	 	 	$	4,385,494	 	 	 	21	%	
Average Total Loans - Owned	 	$	22,945,494	 	 	$	21,053,804	 	 	$	19,890,330	 	 	$	21,523,606	 	 	$	19,405,775	 	 	$	3,539,719	 	 	 	18	%	 	$	21,348,493	 	 	$	19,947,784	 	 	$	1,400,709	 	 	 	7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	11.36	%	 	 	11.41	%	 	 	10.40	%	 	 	10.34	%	 	 	10.51	%	 	 	85	 	 	bps	 	 	 	10.89	%	 	 	10.73	%	 	 	16	 	 	bps	 	
Net Principal Charge-off Rate	 	 	5.25	%	 	 	4.76	%	 	 	4.49	%	 	 	3.83	%	 	 	3.43	%	 	 	182	 	 	bps	 	 	 	4.59	%	 	 	3.40	%	 	 	119	 	 	bps	 	
Delinquency Rate (over 30 days)	 	 	4.35	%	 	 	3.58	%	 	 	3.54	%	 	 	3.63	%	 	 	3.26	%	 	 	109	 	 	bps	 	 	 	4.35	%	 	 	3.26	%	 	 	109	 	 	bps	 	
Delinquency Rate (over 90 days)	 	 	2.06	%	 	 	1.73	%	 	 	1.81	%	 	 	1.82	%	 	 	1.51	%	 	 	55	 	 	bps	 	 	 	2.06	%	 	 	1.51	%	 	 	55	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Transactions Processed on Networks (000's)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Discover Network	 	 	377,356	 	 	 	388,504	 	 	 	370,596	 	 	 	378,912	 	 	 	378,438	 	 	 	(1,082	)	 	 	(0	%)	 	 	1,515,368	 	 	 	1,486,366	 	 	 	29,002	 	 	 	2	%	
PULSE Network	 	 	644,045	 	 	 	713,791	 	 	 	703,404	 	 	 	621,072	 	 	 	611,518	 	 	 	32,527	 	 	 	5	%	 	 	2,682,312	 	 	 	2,285,061	 	 	 	397,251	 	 	 	17	%	
Total	 	 	1,021,401	 	 	 	1,102,295	 	 	 	1,074,000	 	 	 	999,984	 	 	 	989,956	 	 	 	31,445	 	 	 	3	%	 	 	4,197,680	 	 	 	3,771,427	 	 	 	426,253	 	 	 	11	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Volume	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
PULSE Network	 	$	25,033,235	 	 	$	28,364,575	 	 	$	27,830,403	 	 	$	24,783,895	 	 	$	23,035,361	 	 	$	1,997,874	 	 	 	9	%	 	$	106,012,108	 	 	$	86,236,408	 	 	$	19,775,700	 	 	 	23	%	
Third-Party Issuers	 	 	1,538,013	 	 	 	1,711,617	 	 	 	1,603,006	 	 	 	1,545,943	 	 	 	1,458,959	 	 	 	79,054	 	 	 	5	%	 	 	6,398,579	 	 	 	5,480,105	 	 	 	918,474	 	 	 	17	%	
Diners Club International   5	 	 	7,467,235	 	 	 	5,227,795	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	7,467,235	 	 	NM	 	 	 	12,695,030	 	 	 	-	 	 	 	12,695,030	 	 	NM	 	
Total Third-Party Payments	 	 	34,038,483	 	 	 	35,303,987	 	 	 	29,433,409	 	 	 	26,329,838	 	 	 	24,494,320	 	 	 	9,544,163	 	 	 	39	%	 	 	125,105,717	 	 	 	91,716,513	 	 	 	33,389,204	 	 	 	36	%	
Discover Network - Proprietary 6	 	 	22,875,272	 	 	 	25,117,321	 	 	 	23,621,519	 	 	 	24,074,331	 	 	 	23,482,095	 	 	 	(606,823	)	 	 	(3	%)	 	 	95,688,443	 	 	 	93,794,500	 	 	 	1,893,943	 	 	 	2	%	
Total	 	$	56,913,755	 	 	$	60,421,308	 	 	$	53,054,928	 	 	$	50,404,169	 	 	$	47,976,415	 	 	$	8,937,340	 	 	 	19	%	 	$	220,794,160	 	 	$	185,511,013	 	 	$	35,283,147	 	 	 	19	%	

1 The quarter ended November 30, 2008 includes proceeds of $863 million pre-tax (estimated $535 million after-tax) related to the antitrust settlement.	
 	
2 The quarter ended May 31, 2008 includes income from discontinued operations, net of tax of $32.6 million consisting of a $21 million gain related to disposition of the Goldfish business and income of $12 million related to the Goldfish business operations.  The quarter ended February 29, 2008 includes a loss from discontinued operations, net of tax of $158 million consisting of a $172 million loss related to reflecting the  Goldfish business as held for sale and income of $14 million related to the Goldfish business operations.	
 	
3 The quarter ended November 30, 2007 includes a $391 million pre-tax ($279 million after-tax) non-cash impairment charge related to the company's Goldfish business.	
 	
4 Based on Continuing Operations except equity and ROE.  Equity is based on company's equity.	
 	
5 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment.	
 	
6 Gross proprietary sales volume on the Discover Network.	

 
Discover Financial Services	 	
Managed Basis 1	 	
(unaudited, dollars in thousands)	 	
 	 	Quarter Ended	 	 	Nov 30, 2008	 	 	Year Ended	 	 	 	 	 	 	 	
 	 	Nov 30,
2008	 	 	Aug 31,
2008	 	 	May 31,
2008	 	 	Feb 29,
2008	 	 	Nov 30,
2007	 	 	vs Nov 30,
2007	 	 	Nov 30,
2008	 	 	Nov 30,
2007	 	 	2008 vs 2007	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	1,682,267	 	 	$	1,638,250	 	 	$	1,572,697	 	 	$	1,652,615	 	 	$	1,667,418	 	 	$	14,849	 	 	 	1	%	 	$	6,545,829	 	 	$	6,378,674	 	 	$	167,155	 	 	 	3	%	
Interest Expense	 	 	602,450	 	 	 	534,887	 	 	 	550,629	 	 	 	668,953	 	 	 	750,638	 	 	 	(148,188	)	 	 	(20	%)	 	 	2,356,919	 	 	 	2,741,128	 	 	 	(384,209	)	 	 	(14	%)	
Net Interest Income	 	 	1,079,817	 	 	 	1,103,363	 	 	 	1,022,068	 	 	 	983,662	 	 	 	916,780	 	 	 	163,037	 	 	 	18	%	 	 	4,188,910	 	 	 	3,637,546	 	 	 	551,364	 	 	 	15	%	
Other Income   2	 	 	1,287,213	 	 	 	536,997	 	 	 	492,207	 	 	 	636,679	 	 	 	633,014	 	 	 	654,199	 	 	 	103	%	 	 	2,953,096	 	 	 	2,219,776	 	 	 	733,320	 	 	 	33	%	
Revenue Net of Interest Expense	 	 	2,367,030	 	 	 	1,640,360	 	 	 	1,514,275	 	 	 	1,620,341	 	 	 	1,549,794	 	 	 	817,236	 	 	 	53	%	 	 	7,142,006	 	 	 	5,857,322	 	 	 	1,284,684	 	 	 	22	%	
Provision for Loan Losses	 	 	1,105,971	 	 	 	754,028	 	 	 	581,537	 	 	 	627,068	 	 	 	584,721	 	 	 	521,250	 	 	 	89	%	 	 	3,068,604	 	 	 	1,853,395	 	 	 	1,215,209	 	 	 	66	%	
Employee Compensation and Benefits	 	 	187,306	 	 	 	222,426	 	 	 	218,290	 	 	 	217,370	 	 	 	208,910	 	 	 	(21,604	)	 	 	(10	%)	 	 	845,392	 	 	 	850,065	 	 	 	(4,673	)	 	 	(1	%)	
Marketing and Business Development	 	 	119,382	 	 	 	137,928	 	 	 	132,038	 	 	 	141,553	 	 	 	155,976	 	 	 	(36,594	)	 	 	(23	%)	 	 	530,901	 	 	 	576,263	 	 	 	(45,362	)	 	 	(8	%)	
Information Processing & Communications	 	 	81,543	 	 	 	76,675	 	 	 	79,449	 	 	 	78,276	 	 	 	85,034	 	 	 	(3,491	)	 	 	(4	%)	 	 	315,943	 	 	 	330,053	 	 	 	(14,110	)	 	 	(4	%)	
Professional Fees	 	 	111,645	 	 	 	82,775	 	 	 	81,392	 	 	 	73,672	 	 	 	94,380	 	 	 	17,265	 	 	 	18	%	 	 	349,484	 	 	 	361,409	 	 	 	(11,925	)	 	 	(3	%)	
Premises and Equipment	 	 	20,676	 	 	 	20,274	 	 	 	19,803	 	 	 	19,641	 	 	 	19,348	 	 	 	1,328	 	 	 	7	%	 	 	80,394	 	 	 	79,442	 	 	 	952	 	 	 	1	%	
Other Expense	 	 	73,530	 	 	 	72,469	 	 	 	75,853	 	 	 	71,831	 	 	 	73,083	 	 	 	447	 	 	 	1	%	 	 	293,683	 	 	 	280,982	 	 	 	12,701	 	 	 	5	%	
Total Other Expense	 	 	594,082	 	 	 	612,547	 	 	 	606,825	 	 	 	602,343	 	 	 	636,731	 	 	 	(42,649	)	 	 	(7	%)	 	 	2,415,797	 	 	 	2,478,214	 	 	 	(62,417	)	 	 	(3	%)	
Income (Loss) Before Income Taxes   2	 	 	666,977	 	 	 	273,785	 	 	 	325,913	 	 	 	390,930	 	 	 	328,342	 	 	 	338,635	 	 	 	103	%	 	 	1,657,605	 	 	 	1,525,713	 	 	 	131,892	 	 	 	9	%	
Tax Expense	 	 	223,336	 	 	 	94,885	 	 	 	124,370	 	 	 	152,101	 	 	 	118,368	 	 	 	104,968	 	 	 	89	%	 	 	594,692	 	 	 	561,514	 	 	 	33,178	 	 	 	6	%	
Income From Continuing Operations   2	 	 	443,641	 	 	 	178,900	 	 	 	201,543	 	 	 	238,829	 	 	 	209,974	 	 	 	233,667	 	 	 	111	%	 	 	1,062,913	 	 	 	964,199	 	 	 	98,714	 	 	 	10	%	
Discontinued Operations, Net of Tax   2, 3, 4	 	 	(11,306	)	 	 	1,153	 	 	 	32,605	 	 	 	(157,615	)	 	 	(266,458	)	 	 	255,152	 	 	 	96	%	 	 	(135,163	)	 	 	(375,569	)	 	 	240,406	 	 	 	64	%	
Net Income (Loss)   2, 3, 4	 	$	432,335	 	 	$	180,053	 	 	$	234,148	 	 	$	81,214	 	 	$	(56,484	)	 	$	488,819	 	 	NM	 	 	$	927,750	 	 	$	588,630	 	 	$	339,120	 	 	 	58	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics 5	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Assets	 	$	65,620,476	 	 	$	65,632,825	 	 	$	62,148,577	 	 	$	61,937,501	 	 	$	60,591,475	 	 	$	5,029,001	 	 	 	8	%	 	$	65,620,476	 	 	$	60,591,475	 	 	$	5,029,001	 	 	 	8	%	
Total Equity   6	 	$	5,924,044	 	 	$	6,000,393	 	 	$	5,849,691	 	 	$	5,654,341	 	 	$	5,599,422	 	 	$	324,622	 	 	 	6	%	 	$	5,924,044	 	 	$	5,599,422	 	 	$	324,622	 	 	 	6	%	
Total Tangible Equity   6	 	$	5,465,304	 	 	$	5,539,274	 	 	$	5,538,240	 	 	$	5,341,020	 	 	$	5,284,232	 	 	$	181,072	 	 	 	3	%	 	$	5,465,304	 	 	$	5,284,232	 	 	$	181,072	 	 	 	3	%	
Tangible Equity/Net Managed Receivables	 	 	11.0	%	 	 	11.2	%	 	 	11.8	%	 	 	11.5	%	 	 	11.1	%	 	 	 	 	 	 	 	 	 	 	11.0	%	 	 	11.1	%	 	 	 	 	 	 	 	 	
Tangible Equity/Total Managed Assets	 	 	8.3	%	 	 	8.4	%	 	 	8.9	%	 	 	8.6	%	 	 	8.7	%	 	 	 	 	 	 	 	 	 	 	8.3	%	 	 	8.7	%	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	8.56	%	 	 	8.95	%	 	 	8.57	%	 	 	8.10	%	 	 	7.76	%	 	 	80	 	 	bps	 	 	 	8.55	%	 	 	7.75	%	 	 	80	 	 	bps	 	
Return on Loan Receivables 2	 	 	3.52	%	 	 	1.45	%	 	 	1.69	%	 	 	1.97	%	 	 	1.78	%	 	 	174	 	 	bps	 	 	 	2.17	%	 	 	2.06	%	 	 	11	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables 5	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Loans - Managed	 	$	51,095,278	 	 	$	50,427,305	 	 	$	47,841,491	 	 	$	47,500,410	 	 	$	48,180,436	 	 	$	2,914,842	 	 	 	6	%	 	$	51,095,278	 	 	$	48,180,436	 	 	$	2,914,842	 	 	 	6	%	
Average Total Loans - Managed	 	$	50,707,090	 	 	$	49,019,083	 	 	$	47,472,077	 	 	$	48,863,166	 	 	$	47,381,471	 	 	$	3,325,619	 	 	 	7	%	 	$	49,011,148	 	 	$	46,913,474	 	 	$	2,097,674	 	 	 	4	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.65	%	 	 	12.67	%	 	 	12.41	%	 	 	12.70	%	 	 	12.84	%	 	 	(19	)	 	bps	 	 	 	12.61	%	 	 	12.65	%	 	 	(4	)	 	bps	 	
Managed Net Principal Charge-off Rate	 	 	5.48	%	 	 	5.20	%	 	 	4.99	%	 	 	4.33	%	 	 	3.85	%	 	 	163	 	 	bps	 	 	 	5.01	%	 	 	3.83	%	 	 	118	 	 	bps	 	
Managed Delinquency Rate (over 30 days)	 	 	4.56	%	 	 	3.85	%	 	 	3.81	%	 	 	3.90	%	 	 	3.58	%	 	 	98	 	 	bps	 	 	 	4.56	%	 	 	3.58	%	 	 	98	 	 	bps	 	
Managed Delinquency Rate (over 90 days)	 	 	2.17	%	 	 	1.88	%	 	 	1.96	%	 	 	1.96	%	 	 	1.67	%	 	 	50	 	 	bps	 	 	 	2.17	%	 	 	1.67	%	 	 	50	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Volume	 	$	25,318,553	 	 	$	28,611,680	 	 	$	25,596,794	 	 	$	26,207,028	 	 	$	26,159,776	 	 	$	(841,223	)	 	 	(3	%)	 	$	105,734,055	 	 	$	106,620,818	 	 	$	(886,763	)	 	 	(1	%)	
Credit Card Sales Volume	 	$	22,025,264	 	 	$	24,601,611	 	 	$	22,457,651	 	 	$	23,155,253	 	 	$	22,588,639	 	 	$	(563,375	)	 	 	(2	%)	 	$	92,239,779	 	 	$	90,262,556	 	 	$	1,977,223	 	 	 	2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment - Income Before Income Taxes	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Card	 	$	646,427	 	 	$	245,241	 	 	$	309,123	 	 	$	375,403	 	 	$	320,751	 	 	$	325,676	 	 	 	102	%	 	$	1,576,194	 	 	$	1,488,753	 	 	$	87,441	 	 	 	6	%	
Third-Party Payments	 	 	20,550	 	 	 	28,544	 	 	 	16,790	 	 	 	15,527	 	 	 	7,591	 	 	 	12,959	 	 	 	171	%	 	 	81,411	 	 	 	36,960	 	 	 	44,451	 	 	 	120	%	
Total	 	$	666,977	 	 	$	273,785	 	 	$	325,913	 	 	$	390,930	 	 	$	328,342	 	 	$	338,635	 	 	 	103	%	 	$	1,657,605	 	 	$	1,525,713	 	 	$	131,892	 	 	 	9	%	

1 Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are  presented.  See Reconciliation of GAAP to Managed Data schedule.	
 	
2 The quarter ended November 30, 2008 includes proceeds of $863 million pre-tax (estimated $535 million after-tax) related to the antitrust settlement.	
 	
3 The quarter ended May 31, 2008 includes income from discontinued operations, net of tax of $32.6 million consisting of a $21 million gain related to disposition of the Goldfish business and income of $12 million  related to the Goldfish business operations.  The quarter ended February 29, 2008 includes a loss from discontinued operations, net of tax of $158 million consisting of a $172 million loss related to reflecting the  Goldfish business as held for sale and income of $14 million related to the Goldfish business operations.	
 	
4 The quarter ended November 30, 2007 includes a $391 million pre-tax ($279 million after-tax) non-cash impairment charge related to the company's Goldfish business.	
 	
5 Based on Continuing Operations.  Equity is based on company's equity.	
 	
6 Balance on a GAAP and Managed basis is the same.	

 
Discover Financial Services	 	
U.S. Card Segment	 	
Managed Basis 1	 	
(unaudited, dollars in thousands)	 	
 	 	Quarter Ended	 	 	Nov 30, 2008	 	 	Year Ended	 	 	 	 	 	 	 	
 	 	Nov 30,
2008	 	 	Aug 31,
2008	 	 	May 31,
2008	 	 	Feb 29,
2008	 	 	Nov 30,
2007	 	 	vs Nov 30,
2007	 	 	Nov 30,
2008	 	 	Nov 30,
2007	 	 	2008 vs 2007	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	1,680,925	 	 	$	1,637,588	 	 	$	1,572,164	 	 	$	1,651,987	 	 	$	1,666,768	 	 	$	14,157	 	 	 	1	%	 	$	6,542,664	 	 	$	6,376,298	 	 	$	166,366	 	 	 	3	%	
Interest Expense	 	 	602,386	 	 	 	534,870	 	 	 	550,629	 	 	 	668,951	 	 	 	750,638	 	 	 	(148,252	)	 	 	(20	%)	 	 	2,356,836	 	 	 	2,741,109	 	 	 	(384,273	)	 	 	(14	%)	
Net Interest Income	 	 	1,078,539	 	 	 	1,102,718	 	 	 	1,021,535	 	 	 	983,036	 	 	 	916,130	 	 	 	162,409	 	 	 	18	%	 	 	4,185,828	 	 	 	3,635,189	 	 	 	550,639	 	 	 	15	%	
Other Income 2	 	 	1,234,100	 	 	 	482,311	 	 	 	455,074	 	 	 	602,411	 	 	 	603,709	 	 	 	630,391	 	 	 	104	%	 	 	2,773,896	 	 	 	2,101,076	 	 	 	672,820	 	 	 	32	%	
Revenue Net of Interest Expense	 	 	2,312,639	 	 	 	1,585,029	 	 	 	1,476,609	 	 	 	1,585,447	 	 	 	1,519,839	 	 	 	792,800	 	 	 	52	%	 	 	6,959,724	 	 	 	5,736,265	 	 	 	1,223,459	 	 	 	21	%	
Provision for Loan Losses	 	 	1,105,971	 	 	 	754,028	 	 	 	581,537	 	 	 	627,068	 	 	 	584,721	 	 	 	521,250	 	 	 	89	%	 	 	3,068,604	 	 	 	1,853,395	 	 	 	1,215,209	 	 	 	66	%	
Total Other Expense	 	 	560,241	 	 	 	585,760	 	 	 	585,949	 	 	 	582,976	 	 	 	614,367	 	 	 	(54,126	)	 	 	(9	%)	 	 	2,314,926	 	 	 	2,394,117	 	 	 	(79,191	)	 	 	(3	%)	
Income (Loss) Before Income Taxes   2	 	$	646,427	 	 	$	245,241	 	 	$	309,123	 	 	$	375,403	 	 	$	320,751	 	 	$	325,676	 	 	 	102	%	 	$	1,576,194	 	 	$	1,488,753	 	 	$	87,441	 	 	 	6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	8.55	%	 	 	8.95	%	 	 	8.56	%	 	 	8.09	%	 	 	7.76	%	 	 	79	 	 	bps	 	 	 	8.54	%	 	 	7.75	%	 	 	79	 	 	bps	 	
Pretax Return on Loan Receivables   2	 	 	5.13	%	 	 	1.99	%	 	 	2.59	%	 	 	3.09	%	 	 	2.72	%	 	 	241	 	 	bps	 	 	 	3.22	%	 	 	3.17	%	 	 	5	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Loans	 	$	51,095,278	 	 	$	50,427,305	 	 	$	47,841,491	 	 	$	47,500,410	 	 	$	48,180,436	 	 	$	2,914,842	 	 	 	6	%	 	$	51,095,278	 	 	$	48,180,436	 	 	$	2,914,842	 	 	 	6	%	
Average Total Loans	 	$	50,707,090	 	 	$	49,019,083	 	 	$	47,472,077	 	 	$	48,863,166	 	 	$	47,381,471	 	 	$	3,325,619	 	 	 	7	%	 	$	49,011,148	 	 	$	46,913,474	 	 	$	2,097,674	 	 	 	4	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.65	%	 	 	12.67	%	 	 	12.41	%	 	 	12.70	%	 	 	12.84	%	 	 	(19	)	 	bps	 	 	 	12.61	%	 	 	12.65	%	 	 	(4	)	 	bps	 	
Managed Net Principal Charge-off Rate	 	 	5.48	%	 	 	5.20	%	 	 	4.99	%	 	 	4.33	%	 	 	3.85	%	 	 	163	 	 	bps	 	 	 	5.01	%	 	 	3.83	%	 	 	118	 	 	bps	 	
Managed Delinquency Rate (over 30 days)	 	 	4.56	%	 	 	3.85	%	 	 	3.81	%	 	 	3.90	%	 	 	3.58	%	 	 	98	 	 	bps	 	 	 	4.56	%	 	 	3.58	%	 	 	98	 	 	bps	 	
Managed Delinquency Rate (over 90 days)	 	 	2.17	%	 	 	1.88	%	 	 	1.96	%	 	 	1.96	%	 	 	1.67	%	 	 	50	 	 	bps	 	 	 	2.17	%	 	 	1.67	%	 	 	50	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	49,692,974	 	 	$	49,348,507	 	 	$	47,124,842	 	 	$	47,014,539	 	 	$	47,929,242	 	 	$	1,763,732	 	 	 	4	%	 	$	49,692,974	 	 	$	47,929,242	 	 	$	1,763,732	 	 	 	4	%	
Average Credit Card Loans - Managed	 	$	49,420,412	 	 	$	48,168,124	 	 	$	46,857,480	 	 	$	48,487,812	 	 	$	47,251,899	 	 	$	2,168,513	 	 	 	5	%	 	$	48,229,519	 	 	$	46,811,570	 	 	$	1,417,949	 	 	 	3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.72	%	 	 	12.70	%	 	 	12.43	%	 	 	12.72	%	 	 	12.85	%	 	 	(13	)	 	bps	 	 	 	12.65	%	 	 	12.66	%	 	 	(1	)	 	bps	 	
Managed Net Principal Charge-off Rate	 	 	5.59	%	 	 	5.28	%	 	 	5.05	%	 	 	4.37	%	 	 	3.85	%	 	 	174	 	 	bps	 	 	 	5.07	%	 	 	3.84	%	 	 	123	 	 	bps	 	
Managed Delinquency Rate (over 30 days)	 	 	4.66	%	 	 	3.92	%	 	 	3.85	%	 	 	3.93	%	 	 	3.59	%	 	 	107	 	 	bps	 	 	 	4.66	%	 	 	3.59	%	 	 	107	 	 	bps	 	
Managed Delinquency Rate (over 90 days)	 	 	2.22	%	 	 	1.92	%	 	 	1.99	%	 	 	1.98	%	 	 	1.68	%	 	 	54	 	 	bps	 	 	 	2.22	%	 	 	1.68	%	 	 	54	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	$	25,318,553	 	 	$	28,611,680	 	 	$	25,596,794	 	 	$	26,207,028	 	 	$	26,159,776	 	 	$	(841,223	)	 	 	(3	%)	 	$	105,734,055	 	 	$	106,620,818	 	 	$	(886,763	)	 	 	(1	%)	
Sales Volume	 	$	22,025,264	 	 	$	24,601,611	 	 	$	22,457,651	 	 	$	23,155,253	 	 	$	22,588,639	 	 	$	(563,375	)	 	 	(2	%)	 	$	92,239,779	 	 	$	90,262,556	 	 	$	1,977,223	 	 	 	2	%	

1 Managed basis assumes loans that have been securitized were not sold and presents earnings and statistical information on these loans in a manner similar to the way loans that have not been sold are  presented.  See Reconciliation of GAAP to Managed Data schedule.	
 	
2 The quarter ended November 30, 2008 includes proceeds of $863 million pre-tax related to the antitrust   settlement.	

 
Discover Financial Services	
Third-Party Payments Segment	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	 	Nov 30, 2008	 	 	Year Ended	 	 	 	 	 	 	 	
 	 	Nov 30,
2008	 	 	Aug 31,
2008	 	 	May 31,
2008	 	 	Feb 29,
2008	 	 	Nov 30,
2007	 	 	vs Nov 30,
2007	 	 	Nov 30,
2008	 	 	Nov 30,
2007	 	 	2008 vs 2007	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	1,342	 	 	$	662	 	 	$	533	 	 	$	628	 	 	$	650	 	 	$	692	 	 	 	106	%	 	$	3,165	 	 	$	2,376	 	 	$	789	 	 	 	33	%	
Interest Expense	 	 	64	 	 	 	17	 	 	 	-	 	 	 	2	 	 	 	-	 	 	 	64	 	 	 	100	%	 	 	83	 	 	 	19	 	 	 	64	 	 	NM	 	
Net Interest Income	 	 	1,278	 	 	 	645	 	 	 	533	 	 	 	626	 	 	 	650	 	 	 	628	 	 	 	97	%	 	 	3,082	 	 	 	2,357	 	 	 	725	 	 	 	31	%	
Other Income	 	 	53,113	 	 	 	54,686	 	 	 	37,133	 	 	 	34,268	 	 	 	29,305	 	 	 	23,808	 	 	 	81	%	 	 	179,200	 	 	 	118,700	 	 	 	60,500	 	 	 	51	%	
Revenue Net of Interest Expense	 	 	54,391	 	 	 	55,331	 	 	 	37,666	 	 	 	34,894	 	 	 	29,955	 	 	 	24,436	 	 	 	82	%	 	 	182,282	 	 	 	121,057	 	 	 	61,225	 	 	 	51	%	
Provision for Loan Losses	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	0	%	 	 	-	 	 	 	-	 	 	 	-	 	 	 	0	%	
Total Other Expense	 	 	33,841	 	 	 	26,787	 	 	 	20,876	 	 	 	19,367	 	 	 	22,364	 	 	 	11,477	 	 	 	51	%	 	 	100,871	 	 	 	84,097	 	 	 	16,774	 	 	 	20	%	
Income (Loss) Before Income Taxes	 	$	20,550	 	 	$	28,544	 	 	$	16,790	 	 	$	15,527	 	 	$	7,591	 	 	$	12,959	 	 	 	171	%	 	$	81,411	 	 	$	36,960	 	 	$	44,451	 	 	 	120	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Volume	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
PULSE Network	 	$	25,033,235	 	 	$	28,364,575	 	 	$	27,830,403	 	 	$	24,783,895	 	 	$	23,035,361	 	 	$	1,997,874	 	 	 	9	%	 	$	106,012,108	 	 	$	86,236,408	 	 	$	19,775,700	 	 	 	23	%	
Third-Party Issuers	 	 	1,538,013	 	 	 	1,711,617	 	 	 	1,603,006	 	 	 	1,545,943	 	 	 	1,458,959	 	 	 	79,054	 	 	 	5	%	 	 	6,398,579	 	 	 	5,480,105	 	 	 	918,474	 	 	 	17	%	
Diners Club International 1	 	 	7,467,235	 	 	 	5,227,795	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	7,467,235	 	 	NM	 	 	 	12,695,030	 	 	 	-	 	 	 	12,695,030	 	 	NM	 	
Total Third-Party Payments	 	$	34,038,483	 	 	$	35,303,987	 	 	$	29,433,409	 	 	$	26,329,838	 	 	$	24,494,320	 	 	$	9,544,163	 	 	 	39	%	 	$	125,105,717	 	 	$	91,716,513	 	 	$	33,389,204	 	 	 	36	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Transactions Processed on PULSE Network (000's)	 	 	644,045	 	 	 	713,791	 	 	 	703,404	 	 	 	621,072	 	 	 	611,518	 	 	 	32,527	 	 	 	5	%	 	 	2,682,312	 	 	 	2,285,061	 	 	 	397,251	 	 	 	17	%	

1 Volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment.	

 
DISCOVER FINANCIAL SERVICES	
 	
RECONCILIATION OF GAAP TO MANAGED DATA	

 	
The following pages present a reconciliation for certain information disclosed in the financial data supplement.	

The data is presented on both a "managed" loan basis and as reported under generally accepted accounting principles ("owned" loan basis). Managed loan data assume that the company's securitized loan receivables have not been sold and presents the results of securitized loan receivables in the same manner as the company's owned loans. The company operates its business and analyzes its financial performance on a managed basis. Accordingly, underwriting and servicing standards are comparable for both owned and securitized loans. The company believes that managed loan information is useful to investors because it provides information regarding the quality of loan origination and credit performance of the entire managed portfolio and allows investors to understand the related credit risks inherent in owned loans and retained interests in securitizations. Managed loan data is also relevant because the company services the securitized and owned loans, and the related accounts, in the same manner without regard to ownership of the loans. In addition, investors often request information on a managed basis which provides a more meaningful comparison to industry competitors.	

 
Discover Financial Services	
Reconciliation of GAAP to Managed Data 1	
(unaudited, dollars in thousands)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended	 	 	Year Ended	 	
 	 	Nov 30, 2008	 	 	Aug 31, 2008	 	 	May 31, 2008	 	 	Feb 29, 2008	 	 	Nov 30, 2007	 	 	Nov 30, 2008	 	 	Nov 30, 2007	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	736,006	 	 	$	681,692	 	 	$	612,063	 	 	$	662,802	 	 	$	659,676	 	 	$	2,692,563	 	 	$	2,584,402	 	
Securitization Adjustments 1	 	 	946,261	 	 	 	956,558	 	 	 	960,634	 	 	 	989,813	 	 	 	1,007,742	 	 	 	3,853,266	 	 	 	3,794,272	 	
Managed Basis	 	$	1,682,267	 	 	$	1,638,250	 	 	$	1,572,697	 	 	$	1,652,615	 	 	$	1,667,418	 	 	$	6,545,829	 	 	$	6,378,674	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	329,672	 	 	$	305,643	 	 	$	313,248	 	 	$	339,441	 	 	$	350,917	 	 	$	1,288,004	 	 	$	1,223,270	 	
Securitization Adjustments	 	 	272,778	 	 	 	229,244	 	 	 	237,381	 	 	 	329,512	 	 	 	399,721	 	 	 	1,068,915	 	 	 	1,517,858	 	
Managed Basis	 	$	602,450	 	 	$	534,887	 	 	$	550,629	 	 	$	668,953	 	 	$	750,638	 	 	$	2,356,919	 	 	$	2,741,128	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Interest Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	406,334	 	 	$	376,049	 	 	$	298,815	 	 	$	323,361	 	 	$	308,759	 	 	$	1,404,559	 	 	$	1,361,132	 	
Securitization Adjustments	 	 	673,483	 	 	 	727,314	 	 	 	723,253	 	 	 	660,301	 	 	 	608,021	 	 	 	2,784,351	 	 	 	2,276,414	 	
Managed Basis	 	$	1,079,817	 	 	$	1,103,363	 	 	$	1,022,068	 	 	$	983,662	 	 	$	916,780	 	 	$	4,188,910	 	 	$	3,637,546	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,568,901	 	 	$	875,121	 	 	$	844,892	 	 	$	975,544	 	 	$	952,500	 	 	$	4,264,458	 	 	$	3,376,682	 	
Securitization Adjustments	 	 	(281,688	)	 	 	(338,124	)	 	 	(352,685	)	 	 	(338,865	)	 	 	(319,486	)	 	 	(1,311,362	)	 	 	(1,156,906	)	
Managed Basis	 	$	1,287,213	 	 	$	536,997	 	 	$	492,207	 	 	$	636,679	 	 	$	633,014	 	 	$	2,953,096	 	 	$	2,219,776	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue Net of Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,975,235	 	 	$	1,251,170	 	 	$	1,143,707	 	 	$	1,298,905	 	 	$	1,261,259	 	 	$	5,669,017	 	 	$	4,737,814	 	
Securitization Adjustments	 	 	391,795	 	 	 	389,190	 	 	 	370,568	 	 	 	321,436	 	 	 	288,535	 	 	 	1,472,989	 	 	 	1,119,508	 	
Managed Basis	 	$	2,367,030	 	 	$	1,640,360	 	 	$	1,514,275	 	 	$	1,620,341	 	 	$	1,549,794	 	 	$	7,142,006	 	 	$	5,857,322	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Loan Losses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	714,176	 	 	$	364,838	 	 	$	210,969	 	 	$	305,632	 	 	$	296,186	 	 	$	1,595,615	 	 	$	733,887	 	
Securitization Adjustments	 	 	391,795	 	 	 	389,190	 	 	 	370,568	 	 	 	321,436	 	 	 	288,535	 	 	 	1,472,989	 	 	 	1,119,508	 	
Managed Basis	 	$	1,105,971	 	 	$	754,028	 	 	$	581,537	 	 	$	627,068	 	 	$	584,721	 	 	$	3,068,604	 	 	$	1,853,395	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	39,892,382	 	 	$	37,283,548	 	 	$	34,020,245	 	 	$	34,222,732	 	 	$	33,449,702	 	 	$	39,892,382	 	 	$	33,449,702	 	
Securitization Adjustments	 	 	25,728,094	 	 	 	28,349,277	 	 	 	28,128,332	 	 	 	27,714,769	 	 	 	27,141,773	 	 	 	25,728,094	 	 	 	27,141,773	 	
Managed Basis	 	$	65,620,476	 	 	$	65,632,825	 	 	$	62,148,577	 	 	$	61,937,501	 	 	$	60,591,475	 	 	$	65,620,476	 	 	$	60,591,475	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tangible Equity/Total Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	13.7	%	 	 	14.9	%	 	 	16.3	%	 	 	15.6	%	 	 	15.8	%	 	 	13.7	%	 	 	15.8	%	
Securitization Adjustments	 	 	21.2	%	 	 	19.5	%	 	 	19.7	%	 	 	19.3	%	 	 	19.5	%	 	 	21.2	%	 	 	19.5	%	
Managed Basis	 	 	8.3	%	 	 	8.4	%	 	 	8.9	%	 	 	8.6	%	 	 	8.7	%	 	 	8.3	%	 	 	8.7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	25,216,611	 	 	$	21,767,483	 	 	$	20,502,063	 	 	$	21,042,681	 	 	$	20,831,117	 	 	$	25,216,611	 	 	$	20,831,117	 	
Securitization Adjustments	 	 	25,878,667	 	 	 	28,659,822	 	 	 	27,339,428	 	 	 	26,457,729	 	 	 	27,349,319	 	 	 	25,878,667	 	 	 	27,349,319	 	
Managed Basis	 	$	51,095,278	 	 	$	50,427,305	 	 	$	47,841,491	 	 	$	47,500,410	 	 	$	48,180,436	 	 	$	51,095,278	 	 	$	48,180,436	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Total Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	22,945,494	 	 	$	21,053,804	 	 	$	19,890,330	 	 	$	21,523,606	 	 	$	19,405,775	 	 	$	21,348,493	 	 	$	19,947,784	 	
Securitization Adjustments	 	 	27,761,596	 	 	 	27,965,279	 	 	 	27,581,747	 	 	 	27,339,560	 	 	 	27,975,696	 	 	 	27,662,655	 	 	 	26,965,690	 	
Managed Basis	 	$	50,707,090	 	 	$	49,019,083	 	 	$	47,472,077	 	 	$	48,863,166	 	 	$	47,381,471	 	 	$	49,011,148	 	 	$	46,913,474	 	

 
Discover Financial Services	
Reconciliation of GAAP to Managed Data 1	
(unaudited, dollars in thousands)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Quarter Ended	 	 	Year Ended	 	
 	 	Nov 30, 2008	 	 	Aug 31, 2008	 	 	May 31, 2008	 	 	Feb 29, 2008	 	 	Nov 30, 2007	 	 	Nov 30, 2008	 	 	Nov 30, 2007	 	
 	 	 	     	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	11.36	%	 	 	11.41	%	 	 	10.40	%	 	 	10.34	%	 	 	10.51	%	 	 	10.89	%	 	 	10.73	%	
Securitization Adjustments	 	 	13.71	%	 	 	13.61	%	 	 	13.86	%	 	 	14.56	%	 	 	14.45	%	 	 	13.93	%	 	 	14.07	%	
Managed Basis	 	 	12.65	%	 	 	12.67	%	 	 	12.41	%	 	 	12.70	%	 	 	12.84	%	 	 	12.61	%	 	 	12.65	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	5.25	%	 	 	4.76	%	 	 	4.49	%	 	 	3.83	%	 	 	3.43	%	 	 	4.59	%	 	 	3.40	%	
Securitization Adjustments	 	 	5.68	%	 	 	5.54	%	 	 	5.34	%	 	 	4.73	%	 	 	4.14	%	 	 	5.32	%	 	 	4.15	%	
Managed Basis	 	 	5.48	%	 	 	5.20	%	 	 	4.99	%	 	 	4.33	%	 	 	3.85	%	 	 	5.01	%	 	 	3.83	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.35	%	 	 	3.58	%	 	 	3.54	%	 	 	3.63	%	 	 	3.26	%	 	 	4.35	%	 	 	3.26	%	
Securitization Adjustments	 	 	4.77	%	 	 	4.06	%	 	 	4.01	%	 	 	4.11	%	 	 	3.82	%	 	 	4.77	%	 	 	3.82	%	
Managed Basis	 	 	4.56	%	 	 	3.85	%	 	 	3.81	%	 	 	3.90	%	 	 	3.58	%	 	 	4.56	%	 	 	3.58	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	2.06	%	 	 	1.73	%	 	 	1.81	%	 	 	1.82	%	 	 	1.51	%	 	 	2.06	%	 	 	1.51	%	
Securitization Adjustments	 	 	2.27	%	 	 	2.00	%	 	 	2.07	%	 	 	2.08	%	 	 	1.79	%	 	 	2.27	%	 	 	1.79	%	
Managed Basis	 	 	2.17	%	 	 	1.88	%	 	 	1.96	%	 	 	1.96	%	 	 	1.67	%	 	 	2.17	%	 	 	1.67	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	23,814,307	 	 	$	20,688,685	 	 	$	19,785,414	 	 	$	20,556,810	 	 	$	20,579,923	 	 	$	23,814,307	 	 	$	20,579,923	 	
Securitization Adjustments	 	 	25,878,667	 	 	 	28,659,822	 	 	 	27,339,428	 	 	 	26,457,729	 	 	 	27,349,319	 	 	 	25,878,667	 	 	 	27,349,319	 	
Managed Basis	 	$	49,692,974	 	 	$	49,348,507	 	 	$	47,124,842	 	 	$	47,014,539	 	 	$	47,929,242	 	 	$	49,692,974	 	 	$	47,929,242	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	21,658,816	 	 	$	20,202,845	 	 	$	19,275,733	 	 	$	21,148,252	 	 	$	19,276,203	 	 	$	20,566,864	 	 	$	19,845,880	 	
Securitization Adjustments	 	 	27,761,596	 	 	 	27,965,279	 	 	 	27,581,747	 	 	 	27,339,560	 	 	 	27,975,696	 	 	 	27,662,655	 	 	 	26,965,690	 	
Managed Basis	 	$	49,420,412	 	 	$	48,168,124	 	 	$	46,857,480	 	 	$	48,487,812	 	 	$	47,251,899	 	 	$	48,229,519	 	 	$	46,811,570	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	11.45	%	 	 	11.45	%	 	 	10.40	%	 	 	10.35	%	 	 	10.53	%	 	 	10.92	%	 	 	10.75	%	
Securitization Adjustments	 	 	13.71	%	 	 	13.61	%	 	 	13.86	%	 	 	14.56	%	 	 	14.45	%	 	 	13.93	%	 	 	14.07	%	
Managed Basis	 	 	12.72	%	 	 	12.70	%	 	 	12.43	%	 	 	12.72	%	 	 	12.85	%	 	 	12.65	%	 	 	12.66	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	5.47	%	 	 	4.92	%	 	 	4.63	%	 	 	3.90	%	 	 	3.44	%	 	 	4.73	%	 	 	3.41	%	
Securitization Adjustments	 	 	5.68	%	 	 	5.54	%	 	 	5.34	%	 	 	4.73	%	 	 	4.14	%	 	 	5.32	%	 	 	4.15	%	
Managed Basis	 	 	5.59	%	 	 	5.28	%	 	 	5.05	%	 	 	4.37	%	 	 	3.85	%	 	 	5.07	%	 	 	3.84	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.55	%	 	 	3.72	%	 	 	3.63	%	 	 	3.69	%	 	 	3.28	%	 	 	4.55	%	 	 	3.28	%	
Securitization Adjustments	 	 	4.77	%	 	 	4.06	%	 	 	4.01	%	 	 	4.11	%	 	 	3.82	%	 	 	4.77	%	 	 	3.82	%	
Managed Basis	 	 	4.66	%	 	 	3.92	%	 	 	3.85	%	 	 	3.93	%	 	 	3.59	%	 	 	4.66	%	 	 	3.59	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	2.16	%	 	 	1.81	%	 	 	1.87	%	 	 	1.86	%	 	 	1.53	%	 	 	2.16	%	 	 	1.53	%	
Securitization Adjustments	 	 	2.27	%	 	 	2.00	%	 	 	2.07	%	 	 	2.08	%	 	 	1.79	%	 	 	2.27	%	 	 	1.79	%	
Managed Basis	 	 	2.22	%	 	 	1.92	%	 	 	1.99	%	 	 	1.98	%	 	 	1.68	%	 	 	2.22	%	 	 	1.68	%	

1 Securitization Adjustments present the effect of loan securitization by recharacterizing as securitization income the portions of the following items that r elate to the securitized loans: interest income, interest expense, provision for loan losses, discount and interchange revenue and loan fee revenues.	
 Securitization income is reported in other income.