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 20, 2007

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	(IRS Employer	
incorporation)	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)
 
(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 Secu rities 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 20, 2007, Discover Financial Services (the "company") released financial information with respect to its fiscal quarter ended November 30, 2007. 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 its fiscal quarter ended November 30, 2007 is attached hereto as Exhibit 99.2 and incorporated herein by reference.
 
The information furnished under Item 2.02 of this Report, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 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, except as shall be expressly set forth by specific reference to such filing.
 
Item 9.01.           Financial Statements and Exhibits.

 The exhibits accompanying this report are listed in the accompanying Exhibit Index.

 
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 20, 2007.	By:	/s/ Christopher Greene	
 	 	Name:   Christopher Greene	
 	 	Title:  Assistant Secretary	

 
EXHIBIT INDEX

Exhibit No.	Description	
99.1	Press release of the company dated December 20, 2007 containing financial information for the fourth quarter ended November 30, 2007	
99.2	Quarterly Financial Data Supplement of the company for the fourth quarter ended November 30, 2007	

Exhibit 99.1
 
DISCOVER FINANCIAL SERVICES REPORTS FOURTH QUARTER RESULTS

Riverwoods, IL, Dec. 20, 2007 - Discover Financial Services (NYSE: DFS) today reported a net loss for the fourth quarter of 2007 of $84 million ($0.18 per share), including a non-cash impairment charge related to the company’s Goldfish business in the United Kingdom of $391 million ($279 million after tax, or $0.58 per share).  Excluding the impairment charge, the company earned $195 million ($0.40 per share), 4% above last year.  On a pretax basis, the company reported a loss of $88 million for the fourth quarter of 2007 ($303 million profit excluding the impairment charge), as compared to a profit of $186 million for the fourth quarter of 2006.

For the full year, the company reported net income of $561 million, or $1.17 per share, including the impairment charge.  Without the charge, net income would have been $840 million, or $1.75 per share.

Fourth Quarter Highlights

 	·	U.S. Card managed loans reached $48.2 billion, up 5% from last year driven by a 6% increase in credit card sales volume.	
 	·	U.S. Card credit quality remained strong, although delinquency rates increased from last quarter reflecting weakening in the U.S. economy. The fourth quarter managed credit card net charge-off rate was 3.84% and the 30+ days delinquency rate was 3.59%.	
 	·	Third-Party Payment debit and credit volume was $24.5 billion for the fourth quarter, 28% above last year.	
 	·	The International Card segment reported reduced losses excluding the impairment charge.	

“While we are disappointed with the impairment charge in our UK business, Discover’s overall fourth quarter profit before tax, excluding this charge, increased by 63% over last year,” said David Nelms, chief executive officer of Discover Financial Services.  “Our U.S. Card business achieved solid growth in sales volume and receivables, strong credit results and improved revenues and operating efficiencies.  In our Third-Party Payments segment, our network volume reached almost $25 billion in the quarter, an increase of 28%.  For the International Card segment, our loss before impairment was substantially reduced despite an elevated cost of funds and high credit losses.”

1

 
Segment Results (Managed Basis):

U.S. Card

Pretax income for the fourth quarter of 2007 was $328 million, up 43% from the fourth quarter of 2006, driven by higher net interest income and other income and by lower expenses, partially offset by higher provision for loan losses.
 	·	Interest income increased due to higher average receivables and an increase in interest yield, partially offset by higher interest expense resulting from increased funding costs and borrowings.	
 	·	Other income increased, reflecting a favorable revaluation of the interest-only strip receivable, gains related to the sale of merchant contracts, higher loan fee revenue and lower rewards costs related to forfeiture changes in the program.	
 	·	Expenses decreased, reflecting timing of advertising expenditures, lower overhead costs and a decrease in legal fees related to the Visa/MasterCard litigation.	
 	·	Provision for loan losses increased due to a higher level of loans retained on the company’s balance sheet and an increase in the reserve rate that reflects recent delinquency and charge-off trends.	

Managed loans grew for the seventh consecutive quarter to $48.2 billion, up 5% from last year, and strong sales volume continued, increasing 6%.  Credit quality remained strong, but delinquency rates increased from last quarter.  The managed credit card net charge-off rate of 3.84% was up 14 basis points from the third quarter of 2007, but was 15 basis points lower than last year.  The managed credit card 30+ days delinquency rate was 3.59%, up 43 basis points from the third quarter of 2007 and 20 basis points from last year.

Full year pretax income of $1.5 billion was down $136 million from 2006, driven by an increase in provision for loan losses partially offset by higher net interest income.

2

 
 	·	The provision for loan losses increased, reflecting a trend toward more normalized levels of bankruptcy charge-offs compared to the unusually low levels in 2006 and a higher level of loans retained on the company’s balance sheet.	
 	·	An increase in interest income due to higher average receivables was partially offset by an increase in interest expense, reflecting increased funding costs and borrowings.	

Full year credit card sales volume was a record $90.3 billion, up 4% over last year. The full year managed credit card net charge-off rate of 3.84% was 12 basis points lower than 2006.

Third-Party Payments

Fourth quarter pretax income of $8 million was up 9% from the fourth quarter of 2006 due to higher revenue related to increased volumes, partially offset by higher marketing and pricing incentives.  Third-Party Payment debit and credit volume was $24.5 billion for the fourth quarter of 2007, up 28% over last year, reflecting the impact of new financial institution signings as well as increased volumes from existing financial institutions.

Full year pretax income of $37 million was up 28% from 2006, driven by higher revenue from increased volumes that was partially offset by higher marketing and pricing incentives and from higher third-party card issuer fees.  Third-Party Payment debit and credit volume was $91.7 billion for 2007, up 25% from 2006.

International Card

The pretax loss of $423 million for the fourth quarter of 2007 included the non-cash impairment charge of $391 million.  Excluding this charge, the pretax loss of $32 million compared favorably to the pretax loss of $50 million for the fourth quarter of 2006 due to lower provision for loan losses and expenses and higher other income partially offset by lower net interest income.
 	·	Net interest income decreased, reflecting higher funding costs as a result of the spin-off and the rising interest rate environment in the United Kingdom.	
 	·	The provision for loan losses decreased, reflecting lower reserve requirements.	
 	·	Other income increased primarily due to a write-down of the interest-only strip receivable in the fourth quarter of 2006 and lower rewards costs.	
 	·	Expenses decreased reflecting lower overhead costs and lower marketing and compensation expense.	

3

 
Managed loans decreased 6% from last year, reflecting increased payments and reduced emphasis on loan growth, partially offset by a favorable foreign exchange rate. The fourth quarter managed net charge-off rate of 6.65% was up 9 basis points from the third quarter of 2007 and 85 basis points from last year.  Managed net charge-off dollars have stabilized, but the rate was up due to the effect of declining receivable balances.  The managed 30+ days delinquency rate of 5.25% was up 36 basis points from the third quarter of 2007 and 67 basis points from last year.

The full year 2007 pretax loss of $596 million compared unfavorably to the loss of $87 million for 2006, largely driven by the $391 million non-cash impairment charge as well as higher provision for loan losses and expenses.
 	·	The provision for loan losses increased, reflecting a full period of charge-offs related to the Goldfish and Liverpool Victoria portfolios, weakening in the consumer credit environment in the United Kingdom, certain maturing securitized receivables being retained in the portfolio, and an increase in reserves related to implementation of higher minimum payment requirements on certain accounts.	
 	·	Expenses increased due to spin-off related costs and initiatives.	

Full year credit card sales volume was $13.0 billion, up 25% over last year reflecting a full year of sales related to the Goldfish acquisition.  The full year managed net charge-off rate of 6.54% was up 109 basis points from 2006.

Dividend Declaration /Share Repurchase

The company declared a cash dividend of $ 0.06 per share, payable on Jan. 22 , 200 8 to stockholders of record at the close of business on Jan. 3 , 200 8 .

4

 
As announced on Dec. 3, 2007, the Board of Directors approved a share repurchase program, authorizing the company to purchase up to $1 billion of its common stock. The program expires on Nov. 30, 2010, and may be terminated at any time.

Conference Call and Webcast Information

The company will host a conference call to discuss its fourth quarter results on T hursday , Dec. 20 , 2007 , at 10 a.m. C entral t ime.  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, and PULSE, one of the nation's leading ATM/debit networks. Discover also operates the Goldfish credit card business in the United Kingdom . 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 on these loans in a manner similar to the way financial information on loans that have not been sold is presented.  For more information, and a detailed reconciliation, please refer to the schedule titled “Reconciliation of GAAP to Managed” 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. 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; 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 and other market indices; the availability and cost of funding and capital; access to U.S. or U.K. debt and securitization markets; 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; 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; our ability to attract and retain employees; the ability to protect our intellectual property; the impact of our separation from Morgan Stanley; the impact of any potential future acquisitions; investor sentiment; and the restrictions on our operations resulting from indebtedness incurred during our separation from Morgan Stanley.
 
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. Additional factors that could cause Discover Financial Services' results to differ materially from those described in the forward-looking statements can be found in the Company's Form 10, as amended, 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, 2007	 	 	Aug 31, 2007	 	 	Nov 30, 2006	 	
 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	748,889	 	 	$	755,610	 	 	$	622,166	 	
    Interest Expense	 	 	400,734	 	 	 	361,469	 	 	 	243,518	 	
Net Interest Income	 	 	348,155	 	 	 	394,141	 	 	 	378,648	 	
Other Income	 	 	1,003,251	 	 	 	845,498	 	 	 	828,263	 	
Revenue Net of Interest Expense	 	 	1,351,406	 	 	 	1,239,639	 	 	 	1,206,911	 	
Provision for Loan Losses	 	 	339,916	 	 	 	211,576	 	 	 	239,693	 	
    Employee Compensation and Benefits	 	 	226,494	 	 	 	227,904	 	 	 	234,625	 	
    Marketing and Business Development	 	 	163,916	 	 	 	163,015	 	 	 	197,601	 	
    Information Processing & Communications	 	 	98,926	 	 	 	99,065	 	 	 	102,936	 	
    Professional Fees	 	 	102,742	 	 	 	94,060	 	 	 	119,049	 	
    Premises and Equipment	 	 	21,761	 	 	 	22,611	 	 	 	23,886	 	
    Other Expense 1	 	 	485,656	 	 	 	92,194	 	 	 	103,580	 	
Total Other Expense	 	 	1,099,495	 	 	 	698,849	 	 	 	781,677	 	
Income (Loss) Before Income Taxes 1	 	 	(88,005	)	 	 	329,214	 	 	 	185,541	 	
Tax Expense	 	 	(3,938	)	 	 	126,974	 	 	 	(981	)	
Net Income (Loss) 1	 	$	(84,067	)	 	$	202,240	 	 	$	186,522	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective Tax Rate	 	 	4.5	%	 	 	38.6	%	 	 	(0.5	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	23,954,295	 	 	$	22,393,598	 	 	$	23,742,750	 	
Total Assets	 	$	37,348,409	 	 	$	36,141,011	 	 	$	29,067,242	 	
Total Equity	 	$	5,571,839	 	 	$	5,667,282	 	 	$	5,774,772	 	
Total Tangible Equity	 	$	5,218,375	 	 	$	4,927,431	 	 	$	5,039,867	 	
Tangible Equity/Total Owned Assets	 	 	14.0	%	 	 	13.6	%	 	 	17.3	%	
ROE 1	 	 	(6	%)	 	 	14	%	 	 	12	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Allowance for Loan Loss (period end)	 	$	916,844	 	 	$	792,883	 	 	$	832,483	 	
Change in Loan Loss Reserves	 	$	120,703	 	 	$	1,446	 	 	$	16,623	 	
Interest-only Strip Receivable (period end)	 	$	400,313	 	 	$	353,289	 	 	$	337,752	 	
Net Revaluation of Retained Interests	 	$	37,298	 	 	$	(24,043	)	 	$	5,492	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Per Share Statistics	 	 	 	 	 	 	 	 	 	 	 	 	
Basic EPS 1	 	$	(0.18	)	 	$	0.42	 	 	$	0.39	 	
Diluted EPS 1, 2	 	$	(0.18	)	 	$	0.42	 	 	$	0.39	 	
Stock Price (period end)	 	$	17.37	 	 	$	23.14	 	 	 	 	 	
Book Value	 	$	11.66	 	 	$	11.87	 	 	 	 	 	
Ending Shares Outstanding (000's)	 	 	477,688	 	 	 	477,328	 	 	 	477,236	 	
Weighted Average Shares Outstanding (000's)	 	 	477,567	 	 	 	477,272	 	 	 	477,236	 	
Weighted Average Shares Outstanding (fully diluted) (000's)	 	 	477,567	 	 	 	480,071	 	 	 	477,236	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Owned	 	$	23,703,101	 	 	$	22,301,589	 	 	$	23,646,901	 	
Average Credit Card Loans - Owned	 	$	22,468,387	 	 	$	22,646,290	 	 	$	22,573,508	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	10.43	%	 	 	10.99	%	 	 	10.27	%	
Net Principal Charge-off Rate	 	 	3.90	%	 	 	3.71	%	 	 	3.95	%	
Delinquency Rate (over 30 days)	 	 	3.50	%	 	 	3.07	%	 	 	3.22	%	
Delinquency Rate (over 90 days)	 	 	1.63	%	 	 	1.44	%	 	 	1.53	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Transactions Processed on Networks (000's)	 	 	 	 	 	 	 	 	 	 	 	 	
Discover Network	 	 	378,438	 	 	 	384,335	 	 	 	358,152	 	
PULSE Network	 	 	611,518	 	 	 	593,866	 	 	 	488,087	 	
Total	 	 	989,956	 	 	 	978,201	 	 	 	846,239	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Network Volume	 	 	 	 	 	 	 	 	 	 	 	 	
PULSE Network	 	$	23,035,361	 	 	$	22,372,106	 	 	 	 	 	
Third Party Issuers	 	 	1,458,959	 	 	 	1,492,568	 	 	 	 	 	
     Total Third Party Payments	 	 	24,494,320	 	 	 	23,864,674	 	 	$	19,178,369	 	
U.S. Card	 	 	23,482,095	 	 	 	24,411,714	 	 	 	22,283,874	 	
Total	 	$	47,976,415	 	 	$	48,276,388	 	 	$	41,462,243	 	

1 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 in the International Card Segment. Excluding the impairment charge the company's   basic EPS would be $0.41 and $1.76, diluted EPS would be $0.40 and $1.75, and ROE would be 14% and 15% for the quarter and year end, respectively.	
 	
2 For all periods prior to the spin off from Morgan Stanley, the same number of shares is being used for diluted EPS as for basic EPS as no common stock of Discover Financial Services was traded prior to July 2, 2007 and no Discover equity awards  were outstanding for the prior periods.	

7

 
Discover Financial Services	
Managed Basis 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	Nov 30, 2006	 	
 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	
    Interest Income	 	$	1,793,072	 	 	$	1,751,919	 	 	$	1,543,806	 	
    Interest Expense	 	 	815,208	 	 	 	767,451	 	 	 	609,102	 	
Net Interest Income	 	 	977,864	 	 	 	984,468	 	 	 	934,704	 	
Other Income	 	 	682,344	 	 	 	552,621	 	 	 	560,053	 	
Revenue Net of Interest Expense	 	 	1,660,208	 	 	 	1,537,089	 	 	 	1,494,757	 	
Provision for Loan Losses	 	 	648,718	 	 	 	509,026	 	 	 	527,539	 	
    Employee Compensation and Benefits	 	 	226,494	 	 	 	227,904	 	 	 	234,625	 	
    Marketing and Business Development	 	 	163,916	 	 	 	163,015	 	 	 	197,601	 	
    Information Processing & Communications	 	 	98,926	 	 	 	99,065	 	 	 	102,936	 	
    Professional Fees	 	 	102,742	 	 	 	94,060	 	 	 	119,049	 	
    Premises and Equipment	 	 	21,761	 	 	 	22,611	 	 	 	23,886	 	
    Other Expense 2	 	 	485,656	 	 	 	92,194	 	 	 	103,580	 	
Total Other Expense	 	 	1,099,495	 	 	 	698,849	 	 	 	781,677	 	
Income (Loss) Before Income Taxes 2	 	 	(88,005	)	 	 	329,214	 	 	 	185,541	 	
Tax Expense	 	 	(3,938	)	 	 	126,974	 	 	 	(981	)	
Net Income (Loss) 2	 	$	(84,067	)	 	$	202,240	 	 	$	186,522	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	52,553,604	 	 	$	51,892,455	 	 	$	50,446,177	 	
Average Loan Receivables	 	$	51,818,029	 	 	$	51,530,934	 	 	$	49,318,549	 	
Total Assets	 	$	65,724,235	 	 	$	65,457,390	 	 	$	55,512,185	 	
Total Equity 3	 	$	5,571,839	 	 	$	5,667,282	 	 	$	5,774,772	 	
Total Tangible Equity 3	 	$	5,218,375	 	 	$	4,927,431	 	 	$	5,039,867	 	
Tangible Equity/Net Managed Receivables	 	 	10.1	%	 	 	9.6	%	 	 	10.2	%	
Tangible Equity/Total Managed Assets	 	 	7.9	%	 	 	7.5	%	 	 	9.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	7.57	%	 	 	7.58	%	 	 	7.60	%	
Return on Loan Receivables	 	 	(0.65	%)	 	 	1.56	%	 	 	1.52	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	52,302,410	 	 	$	51,800,446	 	 	$	50,350,328	 	
Average Credit Card Loans - Managed	 	$	51,688,457	 	 	$	51,440,722	 	 	$	49,214,953	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.63	%	 	 	12.52	%	 	 	12.22	%	
Managed Net Principal Charge-off Rate	 	 	4.08	%	 	 	3.95	%	 	 	4.15	%	
Managed Delinquency Rate (over 30 days)	 	 	3.73	%	 	 	3.30	%	 	 	3.50	%	
Managed Delinquency Rate (over 90 days)	 	 	1.74	%	 	 	1.55	%	 	 	1.65	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic	 	$	26,159,776	 	 	$	27,171,729	 	 	$	25,682,545	 	
International	 	 	3,428,543	 	 	 	3,601,870	 	 	 	3,547,702	 	
Total	 	$	29,588,319	 	 	$	30,773,599	 	 	$	29,230,247	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card SalesVolume	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic	 	$	22,588,639	 	 	$	23,527,999	 	 	$	21,404,325	 	
International	 	 	3,212,885	 	 	 	3,296,360	 	 	 	3,123,230	 	
Total	 	$	25,801,524	 	 	$	26,824,359	 	 	$	24,527,555	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment - Income Before Income Taxes	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Card	 	$	327,526	 	 	$	387,085	 	 	$	228,986	 	
Third Party Payments	 	 	7,591	 	 	 	9,439	 	 	 	6,946	 	
International Card	 	 	(423,122	)	 	 	(67,310	)	 	 	(50,391	)	
Total	 	$	(88,005	)	 	$	329,214	 	 	$	185,541	 	
 	
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 schedule.	
 	
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 in the International Card Segment.	
 	
3 Balance on a GAAP and Managed basis is the same.	

8

 

Discover Financial Services	
U.S. Card Segment	
Managed Basis 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	Nov 30, 2006	 	
 	 	 	 	 	 	 	 	 	 	
Earnings Summay	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	1,666,768	 	 	$	1,626,214	 	 	$	1,429,508	 	
Interest Expense	 	 	743,975	 	 	 	697,643	 	 	 	562,185	 	
Net Interest Income	 	 	922,793	 	 	 	928,571	 	 	 	867,323	 	
Other Income	 	 	603,709	 	 	 	481,060	 	 	 	493,713	 	
Revenue Net of Interest Expense	 	 	1,526,502	 	 	 	1,409,631	 	 	 	1,361,036	 	
Provision for Loan Losses	 	 	584,722	 	 	 	418,349	 	 	 	452,965	 	
Total Other Expense	 	 	614,254	 	 	 	604,197	 	 	 	679,085	 	
Income Before Income Taxes	 	$	327,526	 	 	$	387,085	 	 	$	228,986	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	48,180,436	 	 	$	47,444,107	 	 	$	45,802,071	 	
Average Loan Receivables	 	$	47,381,471	 	 	$	47,016,472	 	 	$	44,899,320	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	7.81	%	 	 	7.84	%	 	 	7.75	%	
Pretax Return on Loan Receivables	 	 	2.77	%	 	 	3.27	%	 	 	2.05	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	47,929,242	 	 	$	47,352,098	 	 	$	45,706,222	 	
Average Credit Card Loans - Managed	 	$	47,251,899	 	 	$	46,926,260	 	 	$	44,795,724	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.85	%	 	 	12.76	%	 	 	12.42	%	
Managed Net Principal Charge-off Rate	 	 	3.84	%	 	 	3.70	%	 	 	3.99	%	
Managed Delinquency Rate (over 30 days)	 	 	3.59	%	 	 	3.16	%	 	 	3.39	%	
Managed Delinquency Rate (over 90 days)	 	 	1.68	%	 	 	1.48	%	 	 	1.59	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	$	26,159,776	 	 	$	27,171,729	 	 	$	25,682,545	 	
Sales Volume	 	$	22,588,639	 	 	$	23,527,999	 	 	$	21,404,325	 	
 
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 schedule.	

9

 
Discover Financial Services	
Third Party Payments Segment	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	Nov 30, 2006	 	
 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	650	 	 	$	594	 	 	$	516	 	
Interest Expense	 	 	-	 	 	 	-	 	 	 	6	 	
Net Interest Income	 	 	650	 	 	 	594	 	 	 	510	 	
Other Income	 	 	29,305	 	 	 	29,465	 	 	 	28,077	 	
Revenue Net of Interest Expense	 	 	29,955	 	 	 	30,059	 	 	 	28,587	 	
Provision for Loan Losses	 	 	-	 	 	 	-	 	 	 	-	 	
Total Other Expense	 	 	22,364	 	 	 	20,620	 	 	 	21,641	 	
Income Before Income Taxes	 	$	7,591	 	 	$	9,439	 	 	$	6,946	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Network Volume	 	 	 	 	 	 	 	 	 	 	 	 	
PULSE Network	 	$	23,035,361	 	 	$	22,372,106	 	 	 	 	 	
Third Party Issuers	 	 	1,458,959	 	 	 	1,492,568	 	 	 	 	 	
     Total Third Party Payments	 	$	24,494,320	 	 	$	23,864,674	 	 	$	19,178,369	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Transactions Processed on PULSE Network (000's)	 	 	611,518	 	 	 	593,866	 	 	 	488,087	 	

10

 
Discover Financial Services	
International Card Segment	
Managed Basis 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	Nov 30, 2006	 	
 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	125,654	 	 	$	125,111	 	 	$	113,782	 	
Interest Expense	 	 	71,233	 	 	 	69,808	 	 	 	46,911	 	
Net Interest Income	 	 	54,421	 	 	 	55,303	 	 	 	66,871	 	
Other Income	 	 	49,330	 	 	 	42,096	 	 	 	38,263	 	
Revenue Net of Interest Expense	 	 	103,751	 	 	 	97,399	 	 	 	105,134	 	
Provision for Loan Losses	 	 	63,996	 	 	 	90,677	 	 	 	74,574	 	
Total Other Expense 2	 	 	462,877	 	 	 	74,032	 	 	 	80,951	 	
Income (Loss) Before Income Taxes 2	 	$	(423,122	)	 	$	(67,310	)	 	$	(50,391	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	4,373,168	 	 	$	4,448,348	 	 	$	4,644,106	 	
Average Loan Receivables	 	$	4,436,558	 	 	$	4,514,462	 	 	$	4,419,229	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	4.92	%	 	 	4.86	%	 	 	6.07	%	
Pretax Return on Loan Receivables 2	 	 	(38.25	%)	 	 	(5.92	%)	 	 	(4.57	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	4,373,168	 	 	$	4,448,348	 	 	$	4,644,106	 	
Average Credit Card Loans - Managed	 	$	4,436,558	 	 	$	4,514,462	 	 	$	4,419,229	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	10.32	%	 	 	10.00	%	 	 	10.23	%	
Managed Net Principal Charge-off Rate	 	 	6.65	%	 	 	6.56	%	 	 	5.80	%	
Managed Delinquency Rate (over 30 days)	 	 	5.25	%	 	 	4.89	%	 	 	4.58	%	
Managed Delinquency Rate (over 90 days)	 	 	2.43	%	 	 	2.30	%	 	 	2.22	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	$	3,428,543	 	 	$	3,601,870	 	 	$	3,547,702	 	
Sales Volume	 	$	3,212,885	 	 	$	3,296,360	 	 	$	3,123,230	 	
 
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 schedule.	
 	
2 Includes non-cash impairment charge related to the company's Goldfish business ($391 million pre-tax, $279 million after-tax).	

11

 
Discover Financial Services	
Reconciliation of GAAP to Managed 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	Nov 30, 2006	 	
 	 	 	 	 	 	 	 	 	 	
Interest Income	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	748,889	 	 	$	755,610	 	 	$	622,166	 	
Securitization Adjustments 1	 	 	1,044,183	 	 	 	996,309	 	 	 	921,640	 	
Managed Basis	 	$	1,793,072	 	 	$	1,751,919	 	 	$	1,543,806	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	400,734	 	 	$	361,469	 	 	$	243,518	 	
Securitization Adjustments	 	 	414,474	 	 	 	405,982	 	 	 	365,584	 	
Managed Basis	 	$	815,208	 	 	$	767,451	 	 	$	609,102	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Interest Income	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	348,155	 	 	$	394,141	 	 	$	378,648	 	
Securitization Adjustments	 	 	629,709	 	 	 	590,327	 	 	 	556,056	 	
Managed Basis	 	$	977,864	 	 	$	984,468	 	 	$	934,704	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Income	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,003,251	 	 	$	845,498	 	 	$	828,263	 	
Securitization Adjustments	 	 	(320,907	)	 	 	(292,877	)	 	 	(268,210	)	
Managed Basis	 	$	682,344	 	 	$	552,621	 	 	$	560,053	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue Net of Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,351,406	 	 	$	1,239,639	 	 	$	1,206,911	 	
Securitization Adjustments	 	 	308,802	 	 	 	297,450	 	 	 	287,846	 	
Managed Basis	 	$	1,660,208	 	 	$	1,537,089	 	 	$	1,494,757	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Loan Losses	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	339,916	 	 	$	211,576	 	 	$	239,693	 	
Securitization Adjustments	 	 	308,802	 	 	 	297,450	 	 	 	287,846	 	
Managed Basis	 	$	648,718	 	 	$	509,026	 	 	$	527,539	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	23,954,295	 	 	$	22,393,598	 	 	$	23,742,750	 	
Securitization Adjustments	 	 	28,599,309	 	 	 	29,498,857	 	 	 	26,703,427	 	
Managed Basis	 	$	52,553,604	 	 	$	51,892,455	 	 	$	50,446,177	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Assets	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	37,348,409	 	 	$	36,141,011	 	 	$	29,067,242	 	
Securitization Adjustments	 	 	28,375,826	 	 	 	29,316,379	 	 	 	26,444,943	 	
Managed Basis	 	$	65,724,235	 	 	$	65,457,390	 	 	$	55,512,185	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Tangible Equity/Total Assets	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	14.0	%	 	 	13.6	%	 	 	17.3	%	
Securitization Adjustments	 	 	18.4	%	 	 	16.8	%	 	 	19.1	%	
Managed Basis	 	 	7.9	%	 	 	7.5	%	 	 	9.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	23,703,101	 	 	$	22,301,589	 	 	$	23,646,901	 	
Securitization Adjustments	 	 	28,599,309	 	 	 	29,498,857	 	 	 	26,703,427	 	
Managed Basis	 	$	52,302,410	 	 	$	51,800,446	 	 	$	50,350,328	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	22,468,387	 	 	$	22,646,290	 	 	$	22,573,508	 	
Securitization Adjustments	 	 	29,220,070	 	 	 	28,794,432	 	 	 	26,641,445	 	
Managed Basis	 	$	51,688,457	 	 	$	51,440,722	 	 	$	49,214,953	 	

12

 
Discover Financial Services	
Reconciliation of GAAP to Managed 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	Nov 30, 2006	 	
 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	10.43	%	 	 	10.99	%	 	 	10.27	%	
Securitization Adjustments	 	 	14.33	%	 	 	13.73	%	 	 	13.88	%	
Managed Basis	 	 	12.63	%	 	 	12.52	%	 	 	12.22	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.90	%	 	 	3.71	%	 	 	3.95	%	
Securitization Adjustments	 	 	4.23	%	 	 	4.13	%	 	 	4.32	%	
Managed Basis	 	 	4.08	%	 	 	3.95	%	 	 	4.15	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.50	%	 	 	3.07	%	 	 	3.22	%	
Securitization Adjustments	 	 	3.92	%	 	 	3.48	%	 	 	3.76	%	
Managed Basis	 	 	3.73	%	 	 	3.30	%	 	 	3.50	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	1.63	%	 	 	1.44	%	 	 	1.53	%	
Securitization Adjustments	 	 	1.84	%	 	 	1.63	%	 	 	1.75	%	
Managed Basis	 	 	1.74	%	 	 	1.55	%	 	 	1.65	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
US CARD	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	20,831,117	 	 	$	19,170,450	 	 	$	20,790,244	 	
Securitization Adjustments	 	 	27,349,319	 	 	 	28,273,657	 	 	 	25,011,827	 	
Managed Basis	 	$	48,180,436	 	 	$	47,444,107	 	 	$	45,802,071	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	20,579,923	 	 	$	19,078,441	 	 	$	20,694,395	 	
Securitization Adjustments	 	 	27,349,319	 	 	 	28,273,657	 	 	 	25,011,827	 	
Managed Basis	 	$	47,929,242	 	 	$	47,352,098	 	 	$	45,706,222	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	19,276,203	 	 	$	19,722,180	 	 	$	19,785,248	 	
Securitization Adjustments	 	 	27,975,696	 	 	 	27,204,080	 	 	 	25,010,476	 	
Managed Basis	 	$	47,251,899	 	 	$	46,926,260	 	 	$	44,795,724	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	10.53	%	 	 	11.22	%	 	 	10.37	%	
Securitization Adjustments	 	 	14.45	%	 	 	13.88	%	 	 	14.04	%	
Managed Basis	 	 	12.85	%	 	 	12.76	%	 	 	12.42	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.43	%	 	 	3.27	%	 	 	3.67	%	
Securitization Adjustments	 	 	4.13	%	 	 	4.01	%	 	 	4.23	%	
Managed Basis	 	 	3.84	%	 	 	3.70	%	 	 	3.99	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.28	%	 	 	2.80	%	 	 	3.05	%	
Securitization Adjustments	 	 	3.82	%	 	 	3.40	%	 	 	3.67	%	
Managed Basis	 	 	3.59	%	 	 	3.16	%	 	 	3.39	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	1.53	%	 	 	1.31	%	 	 	1.44	%	
Securitization Adjustments	 	 	1.79	%	 	 	1.60	%	 	 	1.72	%	
Managed Basis	 	 	1.68	%	 	 	1.48	%	 	 	1.59	%	

13

 
Discover Financial Services	
Reconciliation of GAAP to Managed 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	Nov 30, 2006	 	

INTERNATIONAL CARD	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	3,123,178	 	 	$	3,223,148	 	 	$	2,952,506	 	
Securitization Adjustments	 	 	1,249,990	 	 	 	1,225,200	 	 	 	1,691,600	 	
Managed Basis	 	$	4,373,168	 	 	$	4,448,348	 	 	$	4,644,106	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
International Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	3,123,178	 	 	$	3,223,148	 	 	$	2,952,506	 	
Securitization Adjustments	 	 	1,249,990	 	 	 	1,225,200	 	 	 	1,691,600	 	
Managed Basis	 	$	4,373,168	 	 	$	4,448,348	 	 	$	4,644,106	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	3,192,184	 	 	$	2,924,110	 	 	$	2,788,260	 	
Securitization Adjustments	 	 	1,244,374	 	 	 	1,590,352	 	 	 	1,630,969	 	
Managed Basis	 	$	4,436,558	 	 	$	4,514,462	 	 	$	4,419,229	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	9.77	%	 	 	9.42	%	 	 	9.53	%	
Securitization Adjustments	 	 	11.75	%	 	 	11.07	%	 	 	11.41	%	
Managed Basis	 	 	10.32	%	 	 	10.00	%	 	 	10.23	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	6.70	%	 	 	6.71	%	 	 	5.88	%	
Securitization Adjustments	 	 	6.52	%	 	 	6.27	%	 	 	5.67	%	
Managed Basis	 	 	6.65	%	 	 	6.56	%	 	 	5.80	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.91	%	 	 	4.63	%	 	 	4.36	%	
Securitization Adjustments	 	 	6.09	%	 	 	5.55	%	 	 	4.96	%	
Managed Basis	 	 	5.25	%	 	 	4.89	%	 	 	4.58	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	2.27	%	 	 	2.21	%	 	 	2.16	%	
Securitization Adjustments	 	 	2.83	%	 	 	2.51	%	 	 	2.32	%	
Managed Basis	 	 	2.43	%	 	 	2.30	%	 	 	2.22	%	
 
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.	

14

 
Discover Financial Services	
GAAP Basis	
(unaudited, dollars in thousands, except per share statistics)	
 	 	Year Ended	 	
 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	
    Interest Income	 	$	2,888,169	 	 	$	2,458,526	 	
    Interest Expense	 	 	1,382,415	 	 	 	940,040	 	
Net Interest Income	 	 	1,505,754	 	 	 	1,518,486	 	
Other Income	 	 	3,546,119	 	 	 	3,538,939	 	
Revenue Net of Interest Expense	 	 	5,051,873	 	 	 	5,057,425	 	
Provision for Loan Losses	 	 	950,165	 	 	 	755,637	 	
    Employee Compensation and Benefits	 	 	922,089	 	 	 	933,196	 	
    Marketing and Business Development	 	 	610,205	 	 	 	603,556	 	
    Information Processing & Communications	 	 	388,065	 	 	 	387,595	 	
    Professional Fees	 	 	391,024	 	 	 	367,769	 	
    Premises and Equipment	 	 	91,531	 	 	 	92,278	 	
    Other Expense 1	 	 	753,598	 	 	 	335,089	 	
Total Other Expense	 	 	3,156,512	 	 	 	2,719,483	 	
Income (Loss) Before Income Taxes 1	 	 	945,196	 	 	 	1,582,305	 	
Tax Expense	 	 	384,149	 	 	 	505,689	 	
Net Income (Loss) 1	 	$	561,047	 	 	$	1,076,616	 	
 	 	 	 	 	 	 	 	 	
Effective Tax Rate	 	 	40.6	%	 	 	32.0	%	
 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	23,954,295	 	 	$	23,742,750	 	
Total Assets	 	$	37,348,409	 	 	$	29,067,242	 	
Total Equity	 	$	5,571,839	 	 	$	5,774,772	 	
Total Tangible Equity	 	$	5,218,375	 	 	$	5,039,867	 	
Tangible Equity/Total Owned Assets	 	 	14.0	%	 	 	17.3	%	
ROE 1	 	 	10	%	 	 	20	%	
 	 	 	 	 	 	 	 	 	
Allowance for Loan Loss (period end)	 	$	916,844	 	 	$	832,483	 	
Change in Loan Loss Reserves	 	$	77,580	 	 	$	(71,309	)	
Interest-only Strip Receivable (period end)	 	$	400,313	 	 	$	337,752	 	
Net Revaluation of Retained Interests	 	$	44,878	 	 	$	159,442	 	
 	 	 	 	 	 	 	 	 	
Per Share Statistics	 	 	 	 	 	 	 	 	
Basic EPS 1	 	$	1.18	 	 	$	2.26	 	
Diluted EPS 1, 2	 	$	1.17	 	 	$	2.26	 	
Stock Price (period end)	 	 	 	 	 	 	 	 	
Book Value	 	$	11.66	 	 	 	 	 	
Ending Shares Outstanding (000's)	 	 	477,688	 	 	 	477,236	 	
Weighted Average Shares Outstanding (000's)	 	 	477,328	 	 	 	477,236	 	
Weighted Average Shares Outstanding (fully diluted) (000's)	 	 	478,879	 	 	 	477,236	 	
 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	
Credit Card Loans - Owned	 	$	23,703,101	 	 	$	23,646,901	 	
Average Credit Card Loans - Owned	 	$	22,814,043	 	 	$	21,656,295	 	
 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	10.58	%	 	 	10.38	%	
Net Principal Charge-off Rate	 	 	3.82	%	 	 	3.79	%	
Delinquency Rate (over 30 days)	 	 	3.50	%	 	 	3.22	%	
Delinquency Rate (over 90 days)	 	 	1.63	%	 	 	1.53	%	
 	 	 	 	 	 	 	 	 	
Transactions Processed on Networks (000's)	 	 	 	 	 	 	 	 	
Discover Network	 	 	1,486,366	 	 	 	1,399,933	 	
PULSE Network	 	 	2,285,061	 	 	 	1,856,477	 	
Total	 	 	3,771,427	 	 	 	3,256,410	 	
 	 	 	 	 	 	 	 	 	
Network Volume	 	 	 	 	 	 	 	 	
PULSE Network	 	$	86,236,408	 	 	 	 	 	
Third Party Issuers	 	 	5,480,105	 	 	 	 	 	
     Total Third Party Payments	 	 	91,716,513	 	 	$	73,196,400	 	
U.S. Card	 	 	93,794,500	 	 	 	89,819,628	 	
Total	 	$	185,511,013	 	 	$	163,016,028	 	
 
1 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 in the International Card Segment.  Excluding the impairment charge the company's basic EPS would be $0.41 and $1.76, diluted EPS would be $0.40 and $1.75, and ROE would be 14% and 15% for the quarter and year end, respectively.	
 	
2 For all periods prior to the spin off from Morgan Stanley, the same number of shares is being used for diluted EPS as for basic EPS as no common stock of Discover Financial Services was traded prior to July 2, 2007 and no Discover equity awards were outstanding for the prior periods.	

15

 
Discover Financial Services	
Managed Basis 1	
(unaudited, dollars in thousands)	
 	 	Year Ended	 	
 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	
    Interest Income	 	$	6,860,519	 	 	$	6,167,485	 	
    Interest Expense	 	 	2,975,788	 	 	 	2,337,589	 	
Net Interest Income	 	 	3,884,731	 	 	 	3,829,896	 	
Other Income	 	 	2,387,819	 	 	 	2,373,536	 	
Revenue Net of Interest Expense	 	 	6,272,550	 	 	 	6,203,432	 	
Provision for Loan Losses	 	 	2,170,842	 	 	 	1,901,644	 	
    Employee Compensation and Benefits	 	 	922,089	 	 	 	933,196	 	
    Marketing and Business Development	 	 	610,205	 	 	 	603,556	 	
    Information Processing & Communications	 	 	388,065	 	 	 	387,595	 	
    Professional Fees	 	 	391,024	 	 	 	367,769	 	
    Premises and Equipment	 	 	91,531	 	 	 	92,278	 	
    Other Expense 2	 	 	753,598	 	 	 	335,089	 	
Total Other Expense	 	 	3,156,512	 	 	 	2,719,483	 	
Income (Loss) Before Income Taxes 2	 	 	945,196	 	 	 	1,582,305	 	
Tax Expense	 	 	384,149	 	 	 	505,689	 	
Net Income (Loss) 2	 	$	561,047	 	 	$	1,076,616	 	
 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	52,553,604	 	 	$	50,446,177	 	
Average Loan Receivables	 	$	51,440,039	 	 	$	48,401,547	 	
Total Assets	 	$	65,724,235	 	 	$	55,512,185	 	
Total Equity 3	 	$	5,571,839	 	 	$	5,774,772	 	
Total Tangible Equity 3	 	$	5,218,375	 	 	$	5,039,867	 	
Tangible Equity/Net Managed Receivables	 	 	10.1	%	 	 	10.2	%	
Tangible Equity/Total Managed Assets	 	 	7.9	%	 	 	9.1	%	
 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	7.55	%	 	 	7.91	%	
Return on Loan Receivables	 	 	1.09	%	 	 	2.22	%	
 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	52,302,410	 	 	$	50,350,328	 	
Average Credit Card Loans - Managed	 	$	51,338,135	 	 	$	48,216,546	 	
 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.44	%	 	 	12.36	%	
Managed Net Principal Charge-off Rate	 	 	4.08	%	 	 	4.08	%	
Managed Delinquency Rate (over 30 days)	 	 	3.73	%	 	 	3.50	%	
Managed Delinquency Rate (over 90 days)	 	 	1.74	%	 	 	1.65	%	
 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	 	 	 	 	 	 	 	
Domestic	 	$	106,620,818	 	 	$	102,901,893	 	
International	 	 	14,254,621	 	 	 	11,881,465	 	
Total	 	$	120,875,439	 	 	$	114,783,358	 	
 	 	 	 	 	 	 	 	 	
Total Credit Card SalesVolume	 	 	 	 	 	 	 	 	
Domestic	 	$	90,262,556	 	 	$	86,385,577	 	
International	 	 	12,955,968	 	 	 	10,335,331	 	
Total	 	$	103,218,524	 	 	$	96,720,908	 	
 	 	 	 	 	 	 	 	 	
Segment - Income Before Income Taxes	 	 	 	 	 	 	 	 	
U.S. Card	 	$	1,504,450	 	 	$	1,640,453	 	
Third Party Payments	 	 	36,960	 	 	 	28,949	 	
International Card	 	 	(596,214	)	 	 	(87,097	)	
Total	 	$	945,196	 	 	$	1,582,305	 	
 
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 schedule.	
 	
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 in the International Card Segment.	
 	
3 Balance on a GAAP and Managed basis is the same.	

16

 
Discover Financial Services	
U.S. Card Segment	
Managed Basis 1	
(unaudited, dollars in thousands)	
 	 	Year Ended	 	
 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	
Earnings Summay	 	 	 	 	 	 	
Interest Income	 	$	6,376,298	 	 	$	5,748,698	 	
Interest Expense	 	 	2,729,065	 	 	 	2,160,569	 	
Net Interest Income	 	 	3,647,233	 	 	 	3,588,129	 	
Other Income	 	 	2,101,076	 	 	 	2,097,676	 	
Revenue Net of Interest Expense	 	 	5,748,309	 	 	 	5,685,805	 	
Provision for Loan Losses	 	 	1,853,396	 	 	 	1,663,472	 	
Total Other Expense	 	 	2,390,463	 	 	 	2,381,880	 	
Income Before Income Taxes	 	$	1,504,450	 	 	$	1,640,453	 	
 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	48,180,436	 	 	$	45,802,071	 	
Average Loan Receivables	 	$	46,913,474	 	 	$	44,409,231	 	
 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	7.77	%	 	 	8.08	%	
Pretax Return on Loan Receivables	 	 	3.21	%	 	 	3.69	%	
 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	47,929,242	 	 	$	45,706,222	 	
Average Credit Card Loans - Managed	 	$	46,811,570	 	 	$	44,277,249	 	
 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.66	%	 	 	12.53	%	
Managed Net Principal Charge-off Rate	 	 	3.84	%	 	 	3.96	%	
Managed Delinquency Rate (over 30 days)	 	 	3.59	%	 	 	3.39	%	
Managed Delinquency Rate (over 90 days)	 	 	1.68	%	 	 	1.59	%	
 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	$	106,620,818	 	 	$	102,901,893	 	
Sales Volume	 	$	90,262,556	 	 	$	86,385,577	 	
 
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 schedule.	

17

 
Discover Financial Services	
Third Party Payments Segment	
(unaudited, dollars in thousands)	
 	 	Year Ended	 	
 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	
Interest Income	 	$	2,376	 	 	$	1,801	 	
Interest Expense	 	 	19	 	 	 	23	 	
Net Interest Income	 	 	2,357	 	 	 	1,778	 	
Other Income	 	 	118,700	 	 	 	110,700	 	
Revenue Net of Interest Expense	 	 	121,057	 	 	 	112,478	 	
Provision for Loan Losses	 	 	-	 	 	 	-	 	
Total Other Expense	 	 	84,097	 	 	 	83,529	 	
Income Before Income Taxes	 	$	36,960	 	 	$	28,949	 	
 	 	 	 	 	 	 	 	 	
Network Volume	 	 	 	 	 	 	 	 	
PULSE Network	 	$	86,236,408	 	 	 	 	 	
Third Party Issuers	 	 	5,480,105	 	 	 	 	 	
     Total Third Party Payments	 	$	91,716,513	 	 	$	73,196,400	 	
 	 	 	 	 	 	 	 	 	
Transactions Processed on PULSE Network (000's)	 	 	2,285,061	 	 	 	1,856,477	 	

18

 
Discover Financial Services	
International Card Segment	
Managed Basis 1	
(unaudited, dollars in thousands)	
 	 	Year Ended	 	
 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	
Interest Income	 	$	481,845	 	 	$	416,986	 	
Interest Expense	 	 	246,704	 	 	 	176,997	 	
Net Interest Income	 	 	235,141	 	 	 	239,989	 	
Other Income	 	 	168,043	 	 	 	165,160	 	
Revenue Net of Interest Expense	 	 	403,184	 	 	 	405,149	 	
Provision for Loan Losses	 	 	317,446	 	 	 	238,172	 	
Total Other Expense 2	 	 	681,952	 	 	 	254,074	 	
Income (Loss) Before Income Taxes 2	 	$	(596,214	)	 	$	(87,097	)	
 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	4,373,168	 	 	$	4,644,106	 	
Average Loan Receivables	 	$	4,526,565	 	 	$	3,992,316	 	
 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	5.19	%	 	 	6.01	%	
Pretax Return on Loan Receivables 2	 	 	(13.17	%)	 	 	(2.18	%)	
 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	4,373,168	 	 	$	4,644,106	 	
Average Credit Card Loans - Managed	 	$	4,526,565	 	 	$	3,939,297	 	
 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	10.11	%	 	 	10.38	%	
Managed Net Principal Charge-off Rate	 	 	6.54	%	 	 	5.45	%	
Managed Delinquency Rate (over 30 days)	 	 	5.25	%	 	 	4.58	%	
Managed Delinquency Rate (over 90 days)	 	 	2.43	%	 	 	2.22	%	
 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	$	14,254,621	 	 	$	11,881,465	 	
Sales Volume	 	$	12,955,968	 	 	$	10,335,331	 	
 
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 schedule.	
 	
2 Includes non-cash impairment charge related to the company's Goldfish business ($391 million pre-tax, $279 million after-tax).	

19

 
Discover Financial Services	
Reconciliation of GAAP to Managed 1	
(unaudited, dollars in thousands)	
 	 	Year Ended	 	
 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	
Interest Income	 	 	 	 	 	 	
GAAP Basis	 	$	2,888,169	 	 	$	2,458,526	 	
Securitization Adjustments 1	 	 	3,972,350	 	 	 	3,708,959	 	
Managed Basis	 	$	6,860,519	 	 	$	6,167,485	 	
 	 	 	 	 	 	 	 	 	
Interest Expense	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,382,415	 	 	$	940,040	 	
Securitization Adjustments	 	 	1,593,373	 	 	 	1,397,549	 	
Managed Basis	 	$	2,975,788	 	 	$	2,337,589	 	
 	 	 	 	 	 	 	 	 	
Net Interest Income	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,505,754	 	 	$	1,518,486	 	
Securitization Adjustments	 	 	2,378,977	 	 	 	2,311,410	 	
Managed Basis	 	$	3,884,731	 	 	$	3,829,896	 	
 	 	 	 	 	 	 	 	 	
Other Income	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	3,546,119	 	 	$	3,538,939	 	
Securitization Adjustments	 	 	(1,158,300	)	 	 	(1,165,403	)	
Managed Basis	 	$	2,387,819	 	 	$	2,373,536	 	
 	 	 	 	 	 	 	 	 	
Revenue Net of Interest Expense	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	5,051,873	 	 	$	5,057,425	 	
Securitization Adjustments	 	 	1,220,677	 	 	 	1,146,007	 	
Managed Basis	 	$	6,272,550	 	 	$	6,203,432	 	
 	 	 	 	 	 	 	 	 	
Provision for Loan Losses	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	950,165	 	 	$	755,637	 	
Securitization Adjustments	 	 	1,220,677	 	 	 	1,146,007	 	
Managed Basis	 	$	2,170,842	 	 	$	1,901,644	 	
 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	23,954,295	 	 	$	23,742,750	 	
Securitization Adjustments	 	 	28,599,309	 	 	 	26,703,427	 	
Managed Basis	 	$	52,553,604	 	 	$	50,446,177	 	
 	 	 	 	 	 	 	 	 	
Total Assets	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	37,348,409	 	 	$	29,067,242	 	
Securitization Adjustments	 	 	28,375,826	 	 	 	26,444,943	 	
Managed Basis	 	$	65,724,235	 	 	$	55,512,185	 	
 	 	 	 	 	 	 	 	 	
Tangible Equity/Total Assets	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	14.0	%	 	 	17.3	%	
Securitization Adjustments	 	 	18.4	%	 	 	19.1	%	
Managed Basis	 	 	7.9	%	 	 	9.1	%	
 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	23,703,101	 	 	$	23,646,901	 	
Securitization Adjustments	 	 	28,599,309	 	 	 	26,703,427	 	
Managed Basis	 	$	52,302,410	 	 	$	50,350,328	 	
 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	22,814,043	 	 	$	21,656,295	 	
Securitization Adjustments	 	 	28,524,092	 	 	 	26,560,251	 	
Managed Basis	 	$	51,338,135	 	 	$	48,216,546	 	

20

 
Discover Financial Services	
Reconciliation of GAAP to Managed 1	
(unaudited, dollars in thousands)	
 	 	Year Ended	 	
 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	
GAAP Basis	 	 	10.58	%	 	 	10.38	%	
Securitization Adjustments	 	 	13.93	%	 	 	13.96	%	
Managed Basis	 	 	12.44	%	 	 	12.36	%	
 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.82	%	 	 	3.79	%	
Securitization Adjustments	 	 	4.28	%	 	 	4.31	%	
Managed Basis	 	 	4.08	%	 	 	4.08	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.50	%	 	 	3.22	%	
Securitization Adjustments	 	 	3.92	%	 	 	3.76	%	
Managed Basis	 	 	3.73	%	 	 	3.50	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	1.63	%	 	 	1.53	%	
Securitization Adjustments	 	 	1.84	%	 	 	1.75	%	
Managed Basis	 	 	1.74	%	 	 	1.65	%	
 	 	 	 	 	 	 	 	 	
US CARD	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	20,831,117	 	 	$	20,790,244	 	
Securitization Adjustments	 	 	27,349,319	 	 	 	25,011,827	 	
Managed Basis	 	$	48,180,436	 	 	$	45,802,071	 	
 	 	 	 	 	 	 	 	 	
Domestic Credit Card Loans	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	20,579,923	 	 	$	20,694,395	 	
Securitization Adjustments	 	 	27,349,319	 	 	 	25,011,827	 	
Managed Basis	 	$	47,929,242	 	 	$	45,706,222	 	
 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	19,845,880	 	 	$	19,120,946	 	
Securitization Adjustments	 	 	26,965,690	 	 	 	25,156,303	 	
Managed Basis	 	$	46,811,570	 	 	$	44,277,249	 	
 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	10.75	%	 	 	10.50	%	
Securitization Adjustments	 	 	14.07	%	 	 	14.08	%	
Managed Basis	 	 	12.66	%	 	 	12.53	%	
 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.41	%	 	 	3.64	%	
Securitization Adjustments	 	 	4.15	%	 	 	4.20	%	
Managed Basis	 	 	3.84	%	 	 	3.96	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.28	%	 	 	3.05	%	
Securitization Adjustments	 	 	3.82	%	 	 	3.67	%	
Managed Basis	 	 	3.59	%	 	 	3.39	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	1.53	%	 	 	1.44	%	
Securitization Adjustments	 	 	1.79	%	 	 	1.72	%	
Managed Basis	 	 	1.68	%	 	 	1.59	%	

21

 
Discover Financial Services	
Reconciliation of GAAP to Managed 1	
(unaudited, dollars in thousands)	
 	 	Year Ended	 	
 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	
INTERNATIONAL CARD	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	
GAAP Basis	 	$	3,123,178	 	 	$	2,952,506	 	
Securitization Adjustments	 	 	1,249,990	 	 	 	1,691,600	 	
Managed Basis	 	$	4,373,168	 	 	$	4,644,106	 	
 	 	 	 	 	 	 	 	 	
International Credit Card Loans	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	3,123,178	 	 	$	2,952,506	 	
Securitization Adjustments	 	 	1,249,990	 	 	 	1,691,600	 	
Managed Basis	 	$	4,373,168	 	 	$	4,644,106	 	
 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	2,968,163	 	 	$	2,535,349	 	
Securitization Adjustments	 	 	1,558,402	 	 	 	1,403,948	 	
Managed Basis	 	$	4,526,565	 	 	$	3,939,297	 	
 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	9.42	%	 	 	9.51	%	
Securitization Adjustments	 	 	11.43	%	 	 	11.94	%	
Managed Basis	 	 	10.11	%	 	 	10.38	%	
 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	6.56	%	 	 	4.94	%	
Securitization Adjustments	 	 	6.49	%	 	 	6.36	%	
Managed Basis	 	 	6.54	%	 	 	5.45	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.91	%	 	 	4.36	%	
Securitization Adjustments	 	 	6.09	%	 	 	4.96	%	
Managed Basis	 	 	5.25	%	 	 	4.58	%	
 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	2.27	%	 	 	2.16	%	
Securitization Adjustments	 	 	2.83	%	 	 	2.32	%	
Managed Basis	 	 	2.43	%	 	 	2.22	%	
 
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.	
 
22

Exhibit 99.2
 
Discover Financial Services	
GAAP Basis	
(unaudited, dollars in thousands, except per share statistics)	
 	 	Quarter Ended	 	 	Nov 30, 2007	 	 	Year Ended  	 	 	 	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	May 31, 2007	 	 	Feb 28, 2007	 	 	Nov 30, 2006	 	 	vs Nov 30, 2006	 	 	2007	 	 	2006	 	 	2007 vs 2006	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	748,889	 	 	$	755,610	 	 	$	703,365	 	 	$	680,305	 	 	$	622,166	 	 	$	126,723	 	 	 	20	%	 	$	2,888,169	 	 	$	2,458,526	 	 	$	429,643	 	 	 	17	%	
Interest Expense	 	 	400,734	 	 	 	361,469	 	 	 	336,253	 	 	 	283,959	 	 	 	243,518	 	 	 	157,216	 	 	 	65	%	 	 	1,382,415	 	 	 	940,040	 	 	 	442,375	 	 	 	47	%	
Net Interest Income	 	 	348,155	 	 	 	394,141	 	 	 	367,112	 	 	 	396,346	 	 	 	378,648	 	 	 	(30,493	)	 	 	(8	%)	 	 	1,505,754	 	 	 	1,518,486	 	 	 	(12,732	)	 	 	(1	%)	
Other Income	 	 	1,003,251	 	 	 	845,498	 	 	 	871,693	 	 	 	825,677	 	 	 	828,263	 	 	 	174,988	 	 	 	21	%	 	 	3,546,119	 	 	 	3,538,939	 	 	 	7,180	 	 	 	0	%	
Revenue Net of Interest Expense	 	 	1,351,406	 	 	 	1,239,639	 	 	 	1,238,805	 	 	 	1,222,023	 	 	 	1,206,911	 	 	 	144,495	 	 	 	12	%	 	 	5,051,873	 	 	 	5,057,425	 	 	 	(5,552	)	 	 	(0	%)	
Provision for Loan Losses	 	 	339,916	 	 	 	211,576	 	 	 	203,287	 	 	 	195,386	 	 	 	239,693	 	 	 	100,223	 	 	 	42	%	 	 	950,165	 	 	 	755,637	 	 	 	194,528	 	 	 	26	%	
Employee Compensation and Benefits	 	 	226,494	 	 	 	227,904	 	 	 	234,373	 	 	 	233,318	 	 	 	234,625	 	 	 	(8,131	)	 	 	(3	%)	 	 	922,089	 	 	 	933,196	 	 	 	(11,107	)	 	 	(1	%)	
Marketing and Business Development	 	 	163,916	 	 	 	163,015	 	 	 	140,930	 	 	 	142,344	 	 	 	197,601	 	 	 	(33,685	)	 	 	(17	%)	 	 	610,205	 	 	 	603,556	 	 	 	6,649	 	 	 	1	%	
Information Processing & Communications	 	 	98,926	 	 	 	99,065	 	 	 	96,622	 	 	 	93,452	 	 	 	102,936	 	 	 	(4,010	)	 	 	(4	%)	 	 	388,065	 	 	 	387,595	 	 	 	470	 	 	 	0	%	
Professional Fees	 	 	102,742	 	 	 	94,060	 	 	 	113,264	 	 	 	80,958	 	 	 	119,049	 	 	 	(16,307	)	 	 	(14	%)	 	 	391,024	 	 	 	367,769	 	 	 	23,255	 	 	 	6	%	
Premises and Equipment	 	 	21,761	 	 	 	22,611	 	 	 	24,350	 	 	 	22,809	 	 	 	23,886	 	 	 	(2,125	)	 	 	(9	%)	 	 	91,531	 	 	 	92,278	 	 	 	(747	)	 	 	(1	%)	
Other Expense 1	 	 	485,656	 	 	 	92,194	 	 	 	93,453	 	 	 	82,295	 	 	 	103,580	 	 	 	382,076	 	 	NM	 	 	 	753,598	 	 	 	335,089	 	 	 	418,509	 	 	 	125	%	
Total Other Expense	 	 	1,099,495	 	 	 	698,849	 	 	 	702,992	 	 	 	655,176	 	 	 	781,677	 	 	 	317,818	 	 	 	41	%	 	 	3,156,512	 	 	 	2,719,483	 	 	 	437,029	 	 	 	16	%	
Income (Loss) Before Income Taxes 1	 	 	(88,005	)	 	 	329,214	 	 	 	332,526	 	 	 	371,461	 	 	 	185,541	 	 	 	(273,546	)	 	 	(147	%)	 	 	945,196	 	 	 	1,582,305	 	 	 	(637,109	)	 	 	(40	%)	
Tax Expense	 	 	(3,938	)	 	 	126,974	 	 	 	123,284	 	 	 	137,829	 	 	 	(981	)	 	 	(2,957	)	 	NM	 	 	 	384,149	 	 	 	505,689	 	 	 	(121,540	)	 	 	(24	%)	
Net Income (Loss) 1	 	$	(84,067	)	 	$	202,240	 	 	$	209,242	 	 	$	233,632	 	 	$	186,522	 	 	$	(270,589	)	 	 	(145	%)	 	$	561,047	 	 	$	1,076,616	 	 	$	(515,569	)	 	 	(48	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective Tax Rate	 	 	4.5	%	 	 	38.6	%	 	 	37.1	%	 	 	37.1	%	 	 	(0.5	%)	 	 	 	 	 	 	 	 	 	 	40.6	%	 	 	32.0	%	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	23,954,295	 	 	$	22,393,598	 	 	$	22,788,042	 	 	$	22,611,707	 	 	$	23,742,750	 	 	$	211,545	 	 	 	1	%	 	$	23,954,295	 	 	$	23,742,750	 	 	$	211,545	 	 	 	1	%	
Total Assets	 	$	37,348,409	 	 	$	36,141,011	 	 	$	35,672,568	 	 	$	29,763,803	 	 	$	29,067,242	 	 	$	8,281,167	 	 	 	28	%	 	$	37,348,409	 	 	$	29,067,242	 	 	$	8,281,167	 	 	 	28	%	
Total Equity	 	$	5,571,839	 	 	$	5,667,282	 	 	$	5,780,284	 	 	$	5,528,658	 	 	$	5,774,772	 	 	$	(202,933	)	 	 	(4	%)	 	$	5,571,839	 	 	$	5,774,772	 	 	$	(202,933	)	 	 	(4	%)	
Total Tangible Equity	 	$	5,218,375	 	 	$	4,927,431	 	 	$	5,044,586	 	 	$	4,797,784	 	 	$	5,039,867	 	 	$	178,508	 	 	 	4	%	 	$	5,218,375	 	 	$	5,039,867	 	 	$	178,508	 	 	 	4	%	
Tangible Equity/Total Owned Assets	 	 	14.0	%	 	 	13.6	%	 	 	14.1	%	 	 	16.1	%	 	 	17.3	%	 	 	 	 	 	 	 	 	 	 	14.0	%	 	 	17.3	%	 	 	 	 	 	 	 	 	
ROE 1	 	 	(6	%)	 	 	14	%	 	 	15	%	 	 	16	%	 	 	12	%	 	 	 	 	 	 	 	 	 	 	10	%	 	 	20	%	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Allowance for Loan Loss (period end)	 	$	916,844	 	 	$	792,883	 	 	$	788,748	 	 	$	793,850	 	 	$	832,483	 	 	$	84,361	 	 	 	10	%	 	$	916,844	 	 	$	832,483	 	 	$	84,361	 	 	 	10	%	
Change in Loan Loss Reserves	 	$	120,703	 	 	$	1,446	 	 	$	(6,098	)	 	$	(38,471	)	 	$	16,623	 	 	$	104,080	 	 	NM	 	 	$	77,580	 	 	$	(71,309	)	 	$	148,889	 	 	NM	 	
Interest-only Strip Receivable (period end)	 	$	400,313	 	 	$	353,289	 	 	$	372,796	 	 	$	331,621	 	 	$	337,752	 	 	$	62,561	 	 	 	19	%	 	$	400,313	 	 	$	337,752	 	 	$	62,561	 	 	 	19	%	
Net Revaluation of Retained Interests	 	$	37,298	 	 	$	(24,043	)	 	$	35,620	 	 	$	(3,997	)	 	$	5,492	 	 	$	31,806	 	 	NM	 	 	$	44,878	 	 	$	159,442	 	 	$	(114,564	)	 	 	(72	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Per Share Statistics	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic EPS 1	 	$	(0.18	)	 	$	0.42	 	 	$	0.44	 	 	$	0.49	 	 	$	0.39	 	 	$	(0.57	)	 	 	(146	%)	 	$	1.18	 	 	$	2.26	 	 	$	(1.08	)	 	 	(48	%)	
Diluted EPS 1, 2	 	$	(0.18	)	 	$	0.42	 	 	$	0.44	 	 	$	0.49	 	 	$	0.39	 	 	$	(0.57	)	 	 	(146	%)	 	$	1.17	 	 	$	2.26	 	 	$	(1.09	)	 	 	(48	%)	
Stock Price (period end)	 	$	17.37	 	 	$	23.14	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Book Value	 	$	11.66	 	 	$	11.87	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	11.66	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ending Shares Outstanding (000's)	 	 	477,688	 	 	 	477,328	 	 	 	477,236	 	 	 	477,236	 	 	 	477,236	 	 	 	452	 	 	 	0	%	 	 	477,688	 	 	 	477,236	 	 	 	452	 	 	 	0	%	
Weighted Average Shares Outstanding (000's)	 	 	477,567	 	 	 	477,272	 	 	 	477,236	 	 	 	477,236	 	 	 	477,236	 	 	 	331	 	 	 	0	%	 	 	477,328	 	 	 	477,236	 	 	 	92	 	 	 	0	%	
Weighted Average Shares Outstanding (fully diluted) (000's)	 	 	477,567	 	 	 	480,071	 	 	 	477,236	 	 	 	477,236	 	 	 	477,236	 	 	 	331	 	 	 	0	%	 	 	478,879	 	 	 	477,236	 	 	 	1,643	 	 	 	0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Owned	 	$	23,703,101	 	 	$	22,301,589	 	 	$	22,698,457	 	 	$	22,520,861	 	 	$	23,646,901	 	 	$	56,200	 	 	 	0	%	 	$	23,703,101	 	 	$	23,646,901	 	 	$	56,200	 	 	 	0	%	
Average Credit Card Loans - Owned	 	$	22,468,387	 	 	$	22,646,290	 	 	$	21,419,465	 	 	$	24,760,587	 	 	$	22,573,508	 	 	$	(105,121	)	 	 	(0	%)	 	$	22,814,043	 	 	$	21,656,295	 	 	$	1,157,748	 	 	 	5	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	10.43	%	 	 	10.99	%	 	 	10.50	%	 	 	10.41	%	 	 	10.27	%	 	 	16	 	 	bps	 	 	 	10.58	%	 	 	10.38	%	 	 	20	 	 	bps	 	
Net Principal Charge-off Rate	 	 	3.90	%	 	 	3.71	%	 	 	3.91	%	 	 	3.77	%	 	 	3.95	%	 	 	(5	)	 	bps	 	 	 	3.82	%	 	 	3.79	%	 	 	3	 	 	bps	 	
Delinquency Rate (over 30 days)	 	 	3.50	%	 	 	3.07	%	 	 	2.94	%	 	 	3.15	%	 	 	3.22	%	 	 	28	 	 	bps	 	 	 	3.50	%	 	 	3.22	%	 	 	28	 	 	bps	 	
Delinquency Rate (over 90 days)	 	 	1.63	%	 	 	1.44	%	 	 	1.43	%	 	 	1.55	%	 	 	1.53	%	 	 	10	 	 	bps	 	 	 	1.63	%	 	 	1.53	%	 	 	10	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Transactions Processed on Networks (000's)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Discover Network	 	 	378,438	 	 	 	384,335	 	 	 	361,893	 	 	 	361,700	 	 	 	358,152	 	 	 	20,286	 	 	 	6	%	 	 	1,486,366	 	 	 	1,399,933	 	 	 	86,433	 	 	 	6	%	
PULSE Network	 	 	611,518	 	 	 	593,866	 	 	 	558,811	 	 	 	520,866	 	 	 	488,087	 	 	 	123,431	 	 	 	25	%	 	 	2,285,061	 	 	 	1,856,477	 	 	 	428,584	 	 	 	23	%	
Total	 	 	989,956	 	 	 	978,201	 	 	 	920,704	 	 	 	882,566	 	 	 	846,239	 	 	 	143,717	 	 	 	17	%	 	 	3,771,427	 	 	 	3,256,410	 	 	 	515,017	 	 	 	16	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Network Volume	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
PULSE Network	 	$	23,035,361	 	 	$	22,372,106	 	 	$	20,799,365	 	 	$	20,029,576	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	86,236,408	 	 	 	 	 	 	 	 	 	 	 	 	 	
Third Party Issuers	 	 	1,458,959	 	 	 	1,492,568	 	 	 	1,313,438	 	 	 	1,215,140	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,480,105	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Third Party Payments	 	 	24,494,320	 	 	 	23,864,674	 	 	 	22,112,803	 	 	 	21,244,716	 	 	$	19,178,369	 	 	$	5,315,951	 	 	 	28	%	 	 	91,716,513	 	 	$	73,196,400	 	 	$	18,520,113	 	 	 	25	%	
U.S. Card	 	 	23,482,095	 	 	 	24,411,714	 	 	 	22,975,645	 	 	 	22,925,046	 	 	 	22,283,874	 	 	 	1,198,221	 	 	 	5	%	 	 	93,794,500	 	 	 	89,819,628	 	 	 	3,974,872	 	 	 	4	%	
Total	 	$	47,976,415	 	 	$	48,276,388	 	 	$	45,088,448	 	 	$	44,169,762	 	 	$	41,462,243	 	 	$	6,514,172	 	 	 	16	%	 	$	185,511,013	 	 	$	163,016,028	 	 	$	22,494,985	 	 	 	14	%	

1 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 in the International Card Segment. Excluding the impairment charge the company's basic EPS would be $0.41 and $1.76, diluted EPS would be $0.40 and $1.75, and ROE would be 14% and 15% for the quarter and year end, respectively.	
                                       	
2 For all periods prior to the spin off from Morgan Stanley, the same number of shares is being used for diluted EPS as for basic EPS as no common stock of Discover Financial Services was traded prior to July 2, 2007 and no Discover equity awards were outstanding for the prior periods.	

 
Discover Financial Services	
Managed Basis 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	 	Nov 30, 2007	 	 	Year Ended	 	 	   	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	May 31, 2007	 	 	Feb 28, 2007	 	 	Nov 30, 2006	 	 	vs Nov 30, 2006	 	 	2007	 	 	2006	 	 	2007 vs 2006    	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	1,793,072	 	 	$	1,751,919	 	 	$	1,715,844	 	 	$	1,599,684	 	 	$	1,543,806	 	 	$	249,266	 	 	 	16	%	 	$	6,860,519	 	 	$	6,167,485	 	 	$	693,034	 	 	 	11	%	
Interest Expense	 	 	815,208	 	 	 	767,451	 	 	 	747,303	 	 	 	645,826	 	 	 	609,102	 	 	 	206,106	 	 	 	34	%	 	 	2,975,788	 	 	 	2,337,589	 	 	 	638,199	 	 	 	27	%	
Net Interest Income	 	 	977,864	 	 	 	984,468	 	 	 	968,541	 	 	 	953,858	 	 	 	934,704	 	 	 	43,160	 	 	 	5	%	 	 	3,884,731	 	 	 	3,829,896	 	 	 	54,835	 	 	 	1	%	
Other Income	 	 	682,344	 	 	 	552,621	 	 	 	597,415	 	 	 	555,439	 	 	 	560,053	 	 	 	122,291	 	 	 	22	%	 	 	2,387,819	 	 	 	2,373,536	 	 	 	14,283	 	 	 	1	%	
Revenue Net of Interest Expense	 	 	1,660,208	 	 	 	1,537,089	 	 	 	1,565,956	 	 	 	1,509,297	 	 	 	1,494,757	 	 	 	165,451	 	 	 	11	%	 	 	6,272,550	 	 	 	6,203,432	 	 	 	69,118	 	 	 	1	%	
Provision for Loan Losses	 	 	648,718	 	 	 	509,026	 	 	 	530,438	 	 	 	482,660	 	 	 	527,539	 	 	 	121,179	 	 	 	23	%	 	 	2,170,842	 	 	 	1,901,644	 	 	 	269,198	 	 	 	14	%	
Employee Compensation and Benefits	 	 	226,494	 	 	 	227,904	 	 	 	234,373	 	 	 	233,318	 	 	 	234,625	 	 	 	(8,131	)	 	 	(3	%)	 	 	922,089	 	 	 	933,196	 	 	 	(11,107	)	 	 	(1	%)	
Marketing and Business Development	 	 	163,916	 	 	 	163,015	 	 	 	140,930	 	 	 	142,344	 	 	 	197,601	 	 	 	(33,685	)	 	 	(17	%)	 	 	610,205	 	 	 	603,556	 	 	 	6,649	 	 	 	1	%	
Information Processing & Communications	 	 	98,926	 	 	 	99,065	 	 	 	96,622	 	 	 	93,452	 	 	 	102,936	 	 	 	(4,010	)	 	 	(4	%)	 	 	388,065	 	 	 	387,595	 	 	 	470	 	 	 	0	%	
Professional Fees	 	 	102,742	 	 	 	94,060	 	 	 	113,264	 	 	 	80,958	 	 	 	119,049	 	 	 	(16,307	)	 	 	(14	%)	 	 	391,024	 	 	 	367,769	 	 	 	23,255	 	 	 	6	%	
Premises and Equipment	 	 	21,761	 	 	 	22,611	 	 	 	24,350	 	 	 	22,809	 	 	 	23,886	 	 	 	(2,125	)	 	 	(9	%)	 	 	91,531	 	 	 	92,278	 	 	 	(747	)	 	 	(1	%)	
Other Expense 2	 	 	485,656	 	 	 	92,194	 	 	 	93,453	 	 	 	82,295	 	 	 	103,580	 	 	 	382,076	 	 	NM	 	 	 	753,598	 	 	 	335,089	 	 	 	418,509	 	 	 	125	%	
Total Other Expense	 	 	1,099,495	 	 	 	698,849	 	 	 	702,992	 	 	 	655,176	 	 	 	781,677	 	 	 	317,818	 	 	 	41	%	 	 	3,156,512	 	 	 	2,719,483	 	 	 	437,029	 	 	 	16	%	
Income (Loss) Before Income Taxes 2	 	 	(88,005	)	 	 	329,214	 	 	 	332,526	 	 	 	371,461	 	 	 	185,541	 	 	 	(273,546	)	 	 	(147	%)	 	 	945,196	 	 	 	1,582,305	 	 	 	(637,109	)	 	 	(40	%)	
Tax Expense	 	 	(3,938	)	 	 	126,974	 	 	 	123,284	 	 	 	137,829	 	 	 	(981	)	 	 	(2,957	)	 	NM	 	 	 	384,149	 	 	 	505,689	 	 	 	(121,540	)	 	 	(24	%)	
Net Income (Loss) 2	 	$	(84,067	)	 	$	202,240	 	 	$	209,242	 	 	$	233,632	 	 	$	186,522	 	 	$	(270,589	)	 	 	(145	%)	 	$	561,047	 	 	$	1,076,616	 	 	$	(515,569	)	 	 	(48	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Statistics	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	52,553,604	 	 	$	51,892,455	 	 	$	51,505,397	 	 	$	50,931,556	 	 	$	50,446,177	 	 	$	2,107,427	 	 	 	4	%	 	$	52,553,604	 	 	$	50,446,177	 	 	$	2,107,427	 	 	 	4	%	
Average Loan Receivables	 	$	51,818,029	 	 	$	51,530,934	 	 	$	50,843,952	 	 	$	51,574,268	 	 	$	49,318,549	 	 	$	2,499,480	 	 	 	5	%	 	$	51,440,039	 	 	$	48,401,547	 	 	$	3,038,492	 	 	 	6	%	
Total Assets	 	$	65,724,235	 	 	$	65,457,390	 	 	$	65,112,826	 	 	$	57,782,359	 	 	$	55,512,185	 	 	$	10,212,050	 	 	 	18	%	 	$	65,724,235	 	 	$	55,512,185	 	 	$	10,212,050	 	 	 	18	%	
Total Equity 3	 	$	5,571,839	 	 	$	5,667,282	 	 	$	5,780,284	 	 	$	5,528,658	 	 	$	5,774,772	 	 	$	(202,933	)	 	 	(4	%)	 	$	5,571,839	 	 	$	5,774,772	 	 	$	(202,933	)	 	 	(4	%)	
Total Tangible Equity 3	 	$	5,218,375	 	 	$	4,927,431	 	 	$	5,044,586	 	 	$	4,797,784	 	 	$	5,039,867	 	 	$	178,508	 	 	 	4	%	 	$	5,218,375	 	 	$	5,039,867	 	 	$	178,508	 	 	 	4	%	
Tangible Equity/Net Managed Receivables	 	 	10.1	%	 	 	9.6	%	 	 	10.0	%	 	 	9.6	%	 	 	10.2	%	 	 	 	 	 	 	 	 	 	 	10.1	%	 	 	10.2	%	 	 	(0	)	 	bps	 	
Tangible Equity/Total Managed Assets	 	 	7.9	%	 	 	7.5	%	 	 	7.8	%	 	 	8.3	%	 	 	9.1	%	 	 	 	 	 	 	 	 	 	 	7.9	%	 	 	9.1	%	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	7.57	%	 	 	7.58	%	 	 	7.56	%	 	 	7.50	%	 	 	7.60	%	 	 	(3	)	 	bps	 	 	 	7.55	%	 	 	7.91	%	 	 	(36	)	 	bps	 	
Return on Loan Receivables	 	 	(0.65	%)	 	 	1.56	%	 	 	1.63	%	 	 	1.84	%	 	 	1.52	%	 	 	(217	)	 	bps	 	 	 	1.09	%	 	 	2.22	%	 	 	(113	)	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	52,302,410	 	 	$	51,800,446	 	 	$	51,415,812	 	 	$	50,840,710	 	 	$	50,350,328	 	 	$	1,952,082	 	 	 	4	%	 	$	52,302,410	 	 	$	50,350,328	 	 	$	1,952,082	 	 	 	4	%	
Average Credit Card Loans - Managed	 	$	51,688,457	 	 	$	51,440,722	 	 	$	50,751,580	 	 	$	51,478,643	 	 	$	49,214,953	 	 	$	2,473,504	 	 	 	5	%	 	$	51,338,135	 	 	$	48,216,546	 	 	$	3,121,589	 	 	 	6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.63	%	 	 	12.52	%	 	 	12.35	%	 	 	12.25	%	 	 	12.22	%	 	 	41	 	 	bps	 	 	 	12.44	%	 	 	12.36	%	 	 	8	 	 	bps	 	
Managed Net Principal Charge-off Rate	 	 	4.08	%	 	 	3.95	%	 	 	4.23	%	 	 	4.05	%	 	 	4.15	%	 	 	(7	)	 	bps	 	 	 	4.08	%	 	 	4.08	%	 	 	0	 	 	bps	 	
Managed Delinquency Rate (over 30 days)	 	 	3.73	%	 	 	3.30	%	 	 	3.12	%	 	 	3.44	%	 	 	3.50	%	 	 	23	 	 	bps	 	 	 	3.73	%	 	 	3.50	%	 	 	23	 	 	bps	 	
Managed Delinquency Rate (over 90 days)	 	 	1.74	%	 	 	1.55	%	 	 	1.51	%	 	 	1.68	%	 	 	1.65	%	 	 	9	 	 	bps	 	 	 	1.74	%	 	 	1.65	%	 	 	9	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic	 	$	26,159,776	 	 	$	27,171,729	 	 	$	26,408,578	 	 	$	26,880,735	 	 	$	25,682,545	 	 	$	477,231	 	 	 	2	%	 	$	106,620,818	 	 	$	102,901,893	 	 	$	3,718,925	 	 	 	4	%	
International	 	 	3,428,543	 	 	 	3,601,870	 	 	 	3,646,009	 	 	 	3,578,199	 	 	 	3,547,702	 	 	 	(119,159	)	 	 	(3	%)	 	 	14,254,621	 	 	 	11,881,465	 	 	 	2,373,156	 	 	 	20	%	
Total	 	$	29,588,319	 	 	$	30,773,599	 	 	$	30,054,587	 	 	$	30,458,934	 	 	$	29,230,247	 	 	$	358,072	 	 	 	1	%	 	$	120,875,439	 	 	$	114,783,358	 	 	$	6,092,081	 	 	 	5	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Sales Volume	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic	 	$	22,588,639	 	 	$	23,527,999	 	 	$	22,108,865	 	 	$	22,037,053	 	 	$	21,404,325	 	 	$	1,184,314	 	 	 	6	%	 	$	90,262,556	 	 	$	86,385,577	 	 	$	3,876,979	 	 	 	4	%	
International	 	 	3,212,885	 	 	 	3,296,360	 	 	 	3,277,439	 	 	 	3,169,284	 	 	 	3,123,230	 	 	 	89,655	 	 	 	3	%	 	 	12,955,968	 	 	 	10,335,331	 	 	 	2,620,637	 	 	 	25	%	
Total	 	$	25,801,524	 	 	$	26,824,359	 	 	$	25,386,304	 	 	$	25,206,337	 	 	$	24,527,555	 	 	$	1,273,969	 	 	 	5	%	 	$	103,218,524	 	 	$	96,720,908	 	 	$	6,497,616	 	 	 	7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment - Income Before Income Taxes	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
U.S. Card	 	$	327,526	 	 	$	387,085	 	 	$	388,813	 	 	$	401,026	 	 	$	228,986	 	 	$	98,540	 	 	 	43	%	 	$	1,504,450	 	 	$	1,640,453	 	 	$	(136,003	)	 	 	(8	%)	
Third Party Payments	 	 	7,591	 	 	 	9,439	 	 	 	8,010	 	 	 	11,920	 	 	 	6,946	 	 	 	645	 	 	 	9	%	 	 	36,960	 	 	 	28,949	 	 	 	8,011	 	 	 	28	%	
International Card	 	 	(423,122	)	 	 	(67,310	)	 	 	(64,297	)	 	 	(41,485	)	 	 	(50,391	)	 	 	(372,731	)	 	NM	 	 	 	(596,214	)	 	 	(87,097	)	 	 	(509,117	)	 	NM	 	
Total	 	$	(88,005	)	 	$	329,214	 	 	$	332,526	 	 	$	371,461	 	 	$	185,541	 	 	$	(273,546	)	 	 	(147	%)	 	$	945,196	 	 	$	1,582,305	 	 	$	(637,109	)	 	 	(40	%)	

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 schedule.	
 	
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 in the International Card Segment.	
 	
3  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, 2007	 	 	Year Ended    	 	 	   	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	May 31, 2007	 	 	Feb 28, 2007	 	 	Nov 30, 2006	 	 	vs Nov 30, 2006	 	 	2007	 	 	2006	 	 	2007 vs 2006	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	1,666,768	 	 	$	1,626,214	 	 	$	1,601,324	 	 	$	1,481,992	 	 	$	1,429,508	 	 	$	237,260	 	 	 	17	%	 	$	6,376,298	 	 	$	5,748,698	 	 	$	627,600	 	 	 	11	%	
Interest Expense	 	 	743,975	 	 	 	697,643	 	 	 	693,837	 	 	 	593,610	 	 	 	562,185	 	 	 	181,790	 	 	 	32	%	 	 	2,729,065	 	 	 	2,160,569	 	 	 	568,496	 	 	 	26	%	
Net Interest Income	 	 	922,793	 	 	 	928,571	 	 	 	907,487	 	 	 	888,382	 	 	 	867,323	 	 	 	55,470	 	 	 	6	%	 	 	3,647,233	 	 	 	3,588,129	 	 	 	59,104	 	 	 	2	%	
Other Income	 	 	603,709	 	 	 	481,060	 	 	 	526,304	 	 	 	490,003	 	 	 	493,713	 	 	 	109,996	 	 	 	22	%	 	 	2,101,076	 	 	 	2,097,676	 	 	 	3,400	 	 	 	0	%	
Revenue Net of Interest Expense	 	 	1,526,502	 	 	 	1,409,631	 	 	 	1,433,791	 	 	 	1,378,385	 	 	 	1,361,036	 	 	 	165,466	 	 	 	12	%	 	 	5,748,309	 	 	 	5,685,805	 	 	 	62,504	 	 	 	1	%	
Provision for Loan Losses	 	 	584,722	 	 	 	418,349	 	 	 	444,249	 	 	 	406,076	 	 	 	452,965	 	 	 	131,757	 	 	 	29	%	 	 	1,853,396	 	 	 	1,663,472	 	 	 	189,924	 	 	 	11	%	
Total Other Expense	 	 	614,254	 	 	 	604,197	 	 	 	600,729	 	 	 	571,283	 	 	 	679,085	 	 	 	(64,831	)	 	 	(10	%)	 	 	2,390,463	 	 	 	2,381,880	 	 	 	8,583	 	 	 	0	%	
Income Before Income Taxes	 	$	327,526	 	 	$	387,085	 	 	$	388,813	 	 	$	401,026	 	 	$	228,986	 	 	$	98,540	 	 	 	43	%	 	$	1,504,450	 	 	$	1,640,453	 	 	$	(136,003	)	 	 	(8	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	48,180,436	 	 	$	47,444,107	 	 	$	46,953,902	 	 	$	46,356,858	 	 	$	45,802,071	 	 	$	2,378,365	 	 	 	5	%	 	$	48,180,436	 	 	$	45,802,071	 	 	$	2,378,365	 	 	 	5	%	
Average Loan Receivables	 	$	47,381,471	 	 	$	47,016,472	 	 	$	46,296,296	 	 	$	46,965,884	 	 	$	44,899,320	 	 	$	2,482,151	 	 	 	6	%	 	$	46,913,474	 	 	$	44,409,231	 	 	$	2,504,243	 	 	 	6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	7.81	%	 	 	7.84	%	 	 	7.78	%	 	 	7.67	%	 	 	7.75	%	 	 	6	 	 	bps	 	 	 	7.77	%	 	 	8.08	%	 	 	(31	)	 	bps	 	
Pretax Return on Loan Receivables	 	 	2.77	%	 	 	3.27	%	 	 	3.33	%	 	 	3.46	%	 	 	2.05	%	 	 	72	 	 	bps	 	 	 	3.21	%	 	 	3.69	%	 	 	(48	)	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	47,929,242	 	 	$	47,352,098	 	 	$	46,864,317	 	 	$	46,266,012	 	 	$	45,706,222	 	 	$	2,223,020	 	 	 	5	%	 	$	47,929,242	 	 	$	45,706,222	 	 	$	2,223,020	 	 	 	5	%	
Average Credit Card Loans - Managed	 	$	47,251,899	 	 	$	46,926,260	 	 	$	46,203,924	 	 	$	46,870,259	 	 	$	44,795,724	 	 	$	2,456,175	 	 	 	5	%	 	$	46,811,570	 	 	$	44,277,249	 	 	$	2,534,321	 	 	 	6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	12.85	%	 	 	12.76	%	 	 	12.59	%	 	 	12.45	%	 	 	12.42	%	 	 	43	 	 	bps	 	 	 	12.66	%	 	 	12.53	%	 	 	13	 	 	bps	 	
Managed Net Principal Charge-off Rate	 	 	3.84	%	 	 	3.70	%	 	 	4.00	%	 	 	3.81	%	 	 	3.99	%	 	 	(15	)	 	bps	 	 	 	3.84	%	 	 	3.96	%	 	 	(12	)	 	bps	 	
Managed Delinquency Rate (over 30 days)	 	 	3.59	%	 	 	3.16	%	 	 	2.97	%	 	 	3.31	%	 	 	3.39	%	 	 	20	 	 	bps	 	 	 	3.59	%	 	 	3.39	%	 	 	20	 	 	bps	 	
Managed Delinquency Rate (over 90 days)	 	 	1.68	%	 	 	1.48	%	 	 	1.44	%	 	 	1.63	%	 	 	1.59	%	 	 	9	 	 	bps	 	 	 	1.68	%	 	 	1.59	%	 	 	9	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	$	26,159,776	 	 	$	27,171,729	 	 	$	26,408,578	 	 	$	26,880,735	 	 	$	25,682,545	 	 	$	477,231	 	 	 	2	%	 	$	106,620,818	 	 	$	102,901,893	 	 	$	3,718,925	 	 	 	4	%	
Sales Volume	 	$	22,588,639	 	 	$	23,527,999	 	 	$	22,108,865	 	 	$	22,037,053	 	 	$	21,404,325	 	 	$	1,184,314	 	 	 	6	%	 	$	90,262,556	 	 	$	86,385,577	 	 	$	3,876,979	 	 	 	4	%	

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 schedule.	

 
Discover Financial Services	
Third Party Payments Segment	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	 	Nov 30, 2007	 	 	Year Ended	 	 	   	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	May 31, 2007	 	 	Feb 28, 2007	 	 	Nov 30, 2006	 	 	vs Nov 30, 2006	 	 	2007	 	 	2006	 	 	2007 vs 2006	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	650	 	 	$	594	 	 	$	558	 	 	$	574	 	 	$	516	 	 	$	134	 	 	 	26	%	 	$	2,376	 	 	$	1,801	 	 	$	575	 	 	 	32	%	
Interest Expense	 	 	-	 	 	 	-	 	 	 	4	 	 	 	15	 	 	 	6	 	 	 	(6	)	 	 	(100	%)	 	 	19	 	 	 	23	 	 	 	(4	)	 	 	(17	%)	
Net Interest Income	 	 	650	 	 	 	594	 	 	 	554	 	 	 	559	 	 	 	510	 	 	 	140	 	 	 	27	%	 	 	2,357	 	 	 	1,778	 	 	 	579	 	 	 	33	%	
Other Income	 	 	29,305	 	 	 	29,465	 	 	 	29,248	 	 	 	30,682	 	 	 	28,077	 	 	 	1,228	 	 	 	4	%	 	 	118,700	 	 	 	110,700	 	 	 	8,000	 	 	 	7	%	
Revenue Net of Interest Expense	 	 	29,955	 	 	 	30,059	 	 	 	29,802	 	 	 	31,241	 	 	 	28,587	 	 	 	1,368	 	 	 	5	%	 	 	121,057	 	 	 	112,478	 	 	 	8,579	 	 	 	8	%	
Provision for Loan Losses	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	0	%	 	 	-	 	 	 	-	 	 	 	-	 	 	 	0	%	
Total Other Expense	 	 	22,364	 	 	 	20,620	 	 	 	21,792	 	 	 	19,321	 	 	 	21,641	 	 	 	723	 	 	 	3	%	 	 	84,097	 	 	 	83,529	 	 	 	568	 	 	 	1	%	
Income Before Income Taxes	 	$	7,591	 	 	$	9,439	 	 	$	8,010	 	 	$	11,920	 	 	$	6,946	 	 	$	645	 	 	 	9	%	 	$	36,960	 	 	$	28,949	 	 	$	8,011	 	 	 	28	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Network Volume	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
PULSE Network	 	$	23,035,361	 	 	$	22,372,106	 	 	$	20,799,365	 	 	$	20,029,576	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	86,236,408	 	 	 	 	 	 	 	 	 	 	 	 	 	
Third Party Issuers	 	 	1,458,959	 	 	 	1,492,568	 	 	 	1,313,438	 	 	 	1,215,140	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,480,105	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Third Party Payments	 	$ 	24,494,320	 	 	$	23,864,674	 	 	$	22,112,803	 	 	$	21,244,716	 	 	$	19,178,369	 	 	$	5,315,951	 	 	 	28	%	 	$	91,716,513	 	 	$	73,196,400	 	 	$	18,520,113	 	 	 	25	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Transactions Processed on PULSE Network (000's)	 	 	611,518	 	 	 	593,866	 	 	 	558,811	 	 	 	520,866	 	 	 	488,087	 	 	 	123,431	 	 	 	25	%	 	 	2,285,061	 	 	 	1,856,477	 	 	 	428,584	 	 	 	23	%	

 
Discover Financial Services	
International Card Segment	
Managed Basis 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	 	Nov 30, 2007	 	 	Year Ended	 	 	       	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	May 31, 2007	 	 	Feb 28, 2007	 	 	Nov 30, 2006	 	 	vs Nov 30, 2006	 	 	2007	 	 	2006	 	 	2007 vs 2006	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Summary	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	$	125,654	 	 	$	125,111	 	 	$	113,962	 	 	$	117,118	 	 	$	113,782	 	 	$	11,872	 	 	 	10	%	 	$	481,845	 	 	$	416,986	 	 	$	64,859	 	 	 	16	%	
Interest Expense	 	 	71,233	 	 	 	69,808	 	 	 	53,462	 	 	 	52,201	 	 	 	46,911	 	 	 	24,322	 	 	 	52	%	 	 	246,704	 	 	 	176,997	 	 	 	69,707	 	 	 	39	%	
Net Interest Income	 	 	54,421	 	 	 	55,303	 	 	 	60,500	 	 	 	64,917	 	 	 	66,871	 	 	 	(12,450	)	 	 	(19	%)	 	 	235,141	 	 	 	239,989	 	 	 	(4,848	)	 	 	(2	%)	
Other Income	 	 	49,330	 	 	 	42,096	 	 	 	41,863	 	 	 	34,754	 	 	 	38,263	 	 	 	11,067	 	 	 	29	%	 	 	168,043	 	 	 	165,160	 	 	 	2,883	 	 	 	2	%	
Revenue Net of Interest Expense	 	 	103,751	 	 	 	97,399	 	 	 	102,363	 	 	 	99,671	 	 	 	105,134	 	 	 	(1,383	)	 	 	(1	%)	 	 	403,184	 	 	 	405,149	 	 	 	(1,965	)	 	 	(0	%)	
Provision for Loan Losses	 	 	63,996	 	 	 	90,677	 	 	 	86,189	 	 	 	76,584	 	 	 	74,574	 	 	 	(10,578	)	 	 	(14	%)	 	 	317,446	 	 	 	238,172	 	 	 	79,274	 	 	 	33	%	
Total Other Expense 2	 	 	462,877	 	 	 	74,032	 	 	 	80,471	 	 	 	64,572	 	 	 	80,951	 	 	 	381,926	 	 	NM	 	 	 	681,952	 	 	 	254,074	 	 	 	427,878	 	 	 	168	%	
Income (Loss) Before Income Taxes 2	 	$	(423,122	)	 	$	(67,310	)	 	$	(64,297	)	 	$	(41,485	)	 	$	(50,391	)	 	$	(372,731	)	 	NM	 	 	$	(596,214	)	 	$	(87,097	)	 	$	(509,117	)	 	NM	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	$	4,373,168	 	 	$	4,448,348	 	 	$	4,551,495	 	 	$	4,574,698	 	 	$	4,644,106	 	 	$	(270,938	)	 	 	(6	%)	 	$	4,373,168	 	 	$	4,644,106	 	 	$	(270,938	)	 	 	(6	%)	
Average Loan Receivables	 	$	4,436,558	 	 	$	4,514,462	 	 	$	4,547,656	 	 	$	4,608,384	 	 	$	4,419,229	 	 	$	17,329	 	 	 	0	%	 	$	4,526,565	 	 	$	3,992,316	 	 	$	534,249	 	 	 	13	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Yield on Loan Receivables	 	 	4.92	%	 	 	4.86	%	 	 	5.28	%	 	 	5.71	%	 	 	6.07	%	 	 	(115	)	 	bps	 	 	 	5.19	%	 	 	6.01	%	 	 	(82	)	 	bps	 	
Pretax Return on Loan Receivables 2	 	 	(38.25	%)	 	 	(5.92	%)	 	 	(5.61	%)	 	 	(3.65	%)	 	 	(4.57	%)	 	 	(3,368	)	 	bps	 	 	 	(13.17	%)	 	 	(2.18	%)	 	 	(1099	)	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans - Managed	 	$	4,373,168	 	 	$	4,448,348	 	 	$	4,551,495	 	 	$	4,574,698	 	 	$	4,644,106	 	 	$	(270,938	)	 	 	(6	%)	 	$	4,373,168	 	 	$	4,644,106	 	 	$	(270,938	)	 	 	(6	%)	
Average Credit Card Loans - Managed	 	$	4,436,558	 	 	$	4,514,462	 	 	$	4,547,656	 	 	$	4,608,384	 	 	$	4,419,229	 	 	$	17,329	 	 	 	0	%	 	$	4,526,565	 	 	$	3,939,297	 	 	$	587,268	 	 	 	15	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed Interest Yield	 	 	10.32	%	 	 	10.00	%	 	 	9.89	%	 	 	10.25	%	 	 	10.23	%	 	 	9	 	 	bps	 	 	 	10.11	%	 	 	10.38	%	 	 	(27	)	 	bps	 	
Managed Net Principal Charge-off Rate	 	 	6.65	%	 	 	6.56	%	 	 	6.50	%	 	 	6.45	%	 	 	5.80	%	 	 	85	 	 	bps	 	 	 	6.54	%	 	 	5.45	%	 	 	109	 	 	bps	 	
Managed Delinquency Rate (over 30 days)	 	 	5.25	%	 	 	4.89	%	 	 	4.69	%	 	 	4.75	%	 	 	4.58	%	 	 	67	 	 	bps	 	 	 	5.25	%	 	 	4.58	%	 	 	67	 	 	bps	 	
Managed Delinquency Rate (over 90 days)	 	 	2.43	%	 	 	2.30	%	 	 	2.25	%	 	 	2.25	%	 	 	2.22	%	 	 	21	 	 	bps	 	 	 	2.43	%	 	 	2.22	%	 	 	21	 	 	bps	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Volume	 	$	3,428,543	 	 	$	3,601,870	 	 	$	3,646,009	 	 	$	3,578,199	 	 	$	3,547,702	 	 	$	(119,159	)	 	 	(3	%)	 	$	14,254,621	 	 	$	11,881,465	 	 	$	2,373,156	 	 	 	20	%	
Sales Volume	 	$	3,212,885	 	 	$	3,296,360	 	 	$	3,277,439	 	 	$	3,169,284	 	 	$	3,123,230	 	 	$	89,655	 	 	 	3	%	 	$	12,955,968	 	 	$	10,335,331	 	 	$	2,620,637	 	 	 	25	%	

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 schedule.	
 	
2 Includes non-cash impairment charge related to the company's Goldfish business ($391 million pre-tax, $279 million after-tax).	

 
DISCOVER FINANCIAL SERVICES	
 	
RECONCILIATION OF GAAP TO MANAGED	

 	

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 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	 	Year Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	May 31, 2007	 	 	Feb 28, 2007	 	 	Nov 30, 2006	 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	748,889	 	 	$	755,610	 	 	$	703,365	 	 	$	680,305	 	 	$	622,166	 	 	$	2,888,169	 	 	$	2,458,526	 	
Securitization Adjustments 1	 	 	1,044,183	 	 	 	996,309	 	 	 	1,012,479	 	 	 	919,379	 	 	 	921,640	 	 	 	3,972,350	 	 	 	3,708,959	 	
Managed Basis	 	$	1,793,072	 	 	$	1,751,919	 	 	$	1,715,844	 	 	$	1,599,684	 	 	$	1,543,806	 	 	$	6,860,519	 	 	$	6,167,485	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	400,734	 	 	$	361,469	 	 	$	336,253	 	 	$	283,959	 	 	$	243,518	 	 	$	1,382,415	 	 	$	940,040	 	
Securitization Adjustments	 	 	414,474	 	 	 	405,982	 	 	 	411,050	 	 	 	361,867	 	 	 	365,584	 	 	 	1,593,373	 	 	 	1,397,549	 	
Managed Basis	 	$	815,208	 	 	$	767,451	 	 	$	747,303	 	 	$	645,826	 	 	$	609,102	 	 	$	2,975,788	 	 	$	2,337,589	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Interest Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	348,155	 	 	$	394,141	 	 	$	367,112	 	 	$	396,346	 	 	$	378,648	 	 	$	1,505,754	 	 	$	1,518,486	 	
Securitization Adjustments	 	 	629,709	 	 	 	590,327	 	 	 	601,429	 	 	 	557,512	 	 	 	556,056	 	 	 	2,378,977	 	 	 	2,311,410	 	
Managed Basis	 	$	977,864	 	 	$	984,468	 	 	$	968,541	 	 	$	953,858	 	 	$	934,704	 	 	$	3,884,731	 	 	$	3,829,896	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,003,251	 	 	$	845,498	 	 	$	871,693	 	 	$	825,677	 	 	$	828,263	 	 	$	3,546,119	 	 	$	3,538,939	 	
Securitization Adjustments	 	 	(320,907	)	 	 	(292,877	)	 	 	(274,278	)	 	 	(270,238	)	 	 	(268,210	)	 	 	(1,158,300	)	 	 	(1,165,403	)	
Managed Basis	 	$	682,344	 	 	$	552,621	 	 	$	597,415	 	 	$	555,439	 	 	$	560,053	 	 	$	2,387,819	 	 	$	2,373,536	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue Net of Interest Expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	1,351,406	 	 	$	1,239,639	 	 	$	1,238,805	 	 	$	1,222,023	 	 	$	1,206,911	 	 	$	5,051,873	 	 	$	5,057,425	 	
Securitization Adjustments	 	 	308,802	 	 	 	297,450	 	 	 	327,151	 	 	 	287,274	 	 	 	287,846	 	 	 	1,220,677	 	 	 	1,146,007	 	
Managed Basis	 	$	1,660,208	 	 	$	1,537,089	 	 	$	1,565,956	 	 	$	1,509,297	 	 	$	1,494,757	 	 	$	6,272,550	 	 	$	6,203,432	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for Loan Losses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	339,916	 	 	$	211,576	 	 	$	203,287	 	 	$	195,386	 	 	$	239,693	 	 	$	950,165	 	 	$	755,637	 	
Securitization Adjustments	 	 	308,802	 	 	 	297,450	 	 	 	327,151	 	 	 	287,274	 	 	 	287,846	 	 	 	1,220,677	 	 	 	1,146,007	 	
Managed Basis	 	$	648,718	 	 	$	509,026	 	 	$	530,438	 	 	$	482,660	 	 	$	527,539	 	 	$	2,170,842	 	 	$	1,901,644	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	23,954,295	 	 	$	22,393,598	 	 	$	22,788,042	 	 	$	22,611,707	 	 	$	23,742,750	 	 	$	23,954,295	 	 	$	23,742,750	 	
Securitization Adjustments	 	 	28,599,309	 	 	 	29,498,857	 	 	 	28,717,355	 	 	 	28,319,849	 	 	 	26,703,427	 	 	 	28,599,309	 	 	 	26,703,427	 	
Managed Basis	 	$	52,553,604	 	 	$	51,892,455	 	 	$	51,505,397	 	 	$	50,931,556	 	 	$	50,446,177	 	 	$	52,553,604	 	 	$	50,446,177	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	37,348,409	 	 	$	36,141,011	 	 	$	35,672,568	 	 	$	29,763,803	 	 	$	29,067,242	 	 	$	37,348,409	 	 	$	29,067,242	 	
Securitization Adjustments	 	 	28,375,826	 	 	 	29,316,379	 	 	 	29,440,258	 	 	 	28,018,556	 	 	 	26,444,943	 	 	 	28,375,826	 	 	 	26,444,943	 	
Managed Basis	 	$	65,724,235	 	 	$	65,457,390	 	 	$	65,112,826	 	 	$	57,782,359	 	 	$	55,512,185	 	 	$	65,724,235	 	 	$	55,512,185	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tangible Equity/Total Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	14.0	%	 	 	13.6	%	 	 	14.1	%	 	 	16.1	%	 	 	17.3	%	 	 	14.0	%	 	 	17.3	%	
Securitization Adjustments	 	 	18.4	%	 	 	16.8	%	 	 	17.1	%	 	 	17.1	%	 	 	19.1	%	 	 	18.4	%	 	 	19.1	%	
Managed Basis	 	 	7.9	%	 	 	7.5	%	 	 	7.8	%	 	 	8.3	%	 	 	9.1	%	 	 	7.9	%	 	 	9.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	23,703,101	 	 	$	22,301,589	 	 	$	22,698,457	 	 	$	22,520,861	 	 	$	23,646,901	 	 	$	23,703,101	 	 	$	23,646,901	 	
Securitization Adjustments	 	 	28,599,309	 	 	 	29,498,857	 	 	 	28,717,355	 	 	 	28,319,849	 	 	 	26,703,427	 	 	 	28,599,309	 	 	 	26,703,427	 	
Managed Basis	 	$	52,302,410	 	 	$	51,800,446	 	 	$	51,415,812	 	 	$	50,840,710	 	 	$	50,350,328	 	 	$	52,302,410	 	 	$	50,350,328	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	22,468,387	 	 	$	22,646,290	 	 	$	21,419,465	 	 	$	24,760,587	 	 	$	22,573,508	 	 	$	22,814,043	 	 	$	21,656,295	 	
Securitization Adjustments	 	 	29,220,070	 	 	 	28,794,432	 	 	 	29,332,115	 	 	 	26,718,056	 	 	 	26,641,445	 	 	 	28,524,092	 	 	 	26,560,251	 	
Managed Basis	 	$	51,688,457	 	 	$	51,440,722	 	 	$	50,751,580	 	 	$	51,478,643	 	 	$	49,214,953	 	 	$	51,338,135	 	 	$	48,216,546	 	

 
Discover Financial Services	
Reconciliation of GAAP to Managed 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	 	Year Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	May 31, 2007	 	 	Feb 28, 2007	 	 	Nov 30, 2006	 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	10.43	%	 	 	10.99	%	 	 	10.50	%	 	 	10.41	%	 	 	10.27	%	 	 	10.58	%	 	 	10.38	%	
Securitization Adjustments	 	 	14.33	%	 	 	13.73	%	 	 	13.69	%	 	 	13.96	%	 	 	13.88	%	 	 	13.93	%	 	 	13.96	%	
Managed Basis	 	 	12.63	%	 	 	12.52	%	 	 	12.35	%	 	 	12.25	%	 	 	12.22	%	 	 	12.44	%	 	 	12.36	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.90	%	 	 	3.71	%	 	 	3.91	%	 	 	3.77	%	 	 	3.95	%	 	 	3.82	%	 	 	3.79	%	
Securitization Adjustments	 	 	4.23	%	 	 	4.13	%	 	 	4.46	%	 	 	4.30	%	 	 	4.32	%	 	 	4.28	%	 	 	4.31	%	
Managed Basis	 	 	4.08	%	 	 	3.95	%	 	 	4.23	%	 	 	4.05	%	 	 	4.15	%	 	 	4.08	%	 	 	4.08	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.50	%	 	 	3.07	%	 	 	2.94	%	 	 	3.15	%	 	 	3.22	%	 	 	3.50	%	 	 	3.22	%	
Securitization Adjustments	 	 	3.92	%	 	 	3.48	%	 	 	3.26	%	 	 	3.67	%	 	 	3.76	%	 	 	3.92	%	 	 	3.76	%	
Managed Basis	 	 	3.73	%	 	 	3.30	%	 	 	3.12	%	 	 	3.44	%	 	 	3.50	%	 	 	3.73	%	 	 	3.50	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	1.63	%	 	 	1.44	%	 	 	1.43	%	 	 	1.55	%	 	 	1.53	%	 	 	1.63	%	 	 	1.53	%	
Securitization Adjustments	 	 	1.84	%	 	 	1.63	%	 	 	1.58	%	 	 	1.79	%	 	 	1.75	%	 	 	1.84	%	 	 	1.75	%	
Managed Basis	 	 	1.74	%	 	 	1.55	%	 	 	1.51	%	 	 	1.68	%	 	 	1.65	%	 	 	1.74	%	 	 	1.65	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
US CARD	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	20,831,117	 	 	$	19,170,450	 	 	$	19,938,986	 	 	$	19,727,837	 	 	$	20,790,244	 	 	$	20,831,117	 	 	$	20,790,244	 	
Securitization Adjustments	 	 	27,349,319	 	 	 	28,273,657	 	 	 	27,014,916	 	 	 	26,629,021	 	 	 	25,011,827	 	 	 	27,349,319	 	 	 	25,011,827	 	
Managed Basis	 	$	48,180,436	 	 	$	47,444,107	 	 	$	46,953,902	 	 	$	46,356,858	 	 	$	45,802,071	 	 	$	48,180,436	 	 	$	45,802,071	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	20,579,923	 	 	$	19,078,441	 	 	$	19,849,401	 	 	$	19,636,991	 	 	$	20,694,395	 	 	$	20,579,923	 	 	$	20,694,395	 	
Securitization Adjustments	 	 	27,349,319	 	 	 	28,273,657	 	 	 	27,014,916	 	 	 	26,629,021	 	 	 	25,011,827	 	 	 	27,349,319	 	 	 	25,011,827	 	
Managed Basis	 	$	47,929,242	 	 	$	47,352,098	 	 	$	46,864,317	 	 	$	46,266,012	 	 	$	45,706,222	 	 	$	47,929,242	 	 	$	45,706,222	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	19,276,203	 	 	$	19,722,180	 	 	$	18,581,153	 	 	$	21,841,166	 	 	$	19,785,248	 	 	$	19,845,880	 	 	$	19,120,946	 	
Securitization Adjustments	 	 	27,975,696	 	 	 	27,204,080	 	 	 	27,622,771	 	 	 	25,029,093	 	 	 	25,010,476	 	 	 	26,965,690	 	 	 	25,156,303	 	
Managed Basis	 	$	47,251,899	 	 	$	46,926,260	 	 	$	46,203,924	 	 	$	46,870,259	 	 	$	44,795,724	 	 	$	46,811,570	 	 	$	44,277,249	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	10.53	%	 	 	11.22	%	 	 	10.72	%	 	 	10.55	%	 	 	10.37	%	 	 	10.75	%	 	 	10.50	%	
Securitization Adjustments	 	 	14.45	%	 	 	13.88	%	 	 	13.85	%	 	 	14.10	%	 	 	14.04	%	 	 	14.07	%	 	 	14.08	%	
Managed Basis	 	 	12.85	%	 	 	12.76	%	 	 	12.59	%	 	 	12.45	%	 	 	12.42	%	 	 	12.66	%	 	 	12.53	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.43	%	 	 	3.27	%	 	 	3.51	%	 	 	3.43	%	 	 	3.67	%	 	 	3.41	%	 	 	3.64	%	
Securitization Adjustments	 	 	4.13	%	 	 	4.01	%	 	 	4.34	%	 	 	4.14	%	 	 	4.23	%	 	 	4.15	%	 	 	4.20	%	
Managed Basis	 	 	3.84	%	 	 	3.70	%	 	 	4.00	%	 	 	3.81	%	 	 	3.99	%	 	 	3.84	%	 	 	3.96	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	3.28	%	 	 	2.80	%	 	 	2.71	%	 	 	2.97	%	 	 	3.05	%	 	 	3.28	%	 	 	3.05	%	
Securitization Adjustments	 	 	3.82	%	 	 	3.40	%	 	 	3.16	%	 	 	3.56	%	 	 	3.67	%	 	 	3.82	%	 	 	3.67	%	
Managed Basis	 	 	3.59	%	 	 	3.16	%	 	 	2.97	%	 	 	3.31	%	 	 	3.39	%	 	 	3.59	%	 	 	3.39	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	1.53	%	 	 	1.31	%	 	 	1.31	%	 	 	1.46	%	 	 	1.44	%	 	 	1.53	%	 	 	1.44	%	
Securitization Adjustments	 	 	1.79	%	 	 	1.60	%	 	 	1.54	%	 	 	1.75	%	 	 	1.72	%	 	 	1.79	%	 	 	1.72	%	
Managed Basis	 	 	1.68	%	 	 	1.48	%	 	 	1.44	%	 	 	1.63	%	 	 	1.59	%	 	 	1.68	%	 	 	1.59	%	

 
Discover Financial Services	
Reconciliation of GAAP to Managed 1	
(unaudited, dollars in thousands)	
 	 	Quarter Ended	 	 	Year Ended	 	
 	 	Nov 30, 2007	 	 	Aug 31, 2007	 	 	May 31, 2007	 	 	Feb 28, 2007	 	 	Nov 30, 2006	 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
INTERNATIONAL CARD	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loan Receivables	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	3,123,178	 	 	$	3,223,148	 	 	$	2,849,056	 	 	$	2,883,870	 	 	$	2,952,506	 	 	$	3,123,178	 	 	$	2,952,506	 	
Securitization Adjustments	 	 	1,249,990	 	 	 	1,225,200	 	 	 	1,702,439	 	 	 	1,690,828	 	 	 	1,691,600	 	 	 	1,249,990	 	 	 	1,691,600	 	
Managed Basis	 	$	4,373,168	 	 	$	4,448,348	 	 	$	4,551,495	 	 	$	4,574,698	 	 	$	4,644,106	 	 	$	4,373,168	 	 	$	4,644,106	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
International Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	3,123,178	 	 	$	3,223,148	 	 	$	2,849,056	 	 	$	2,883,870	 	 	$	2,952,506	 	 	$	3,123,178	 	 	$	2,952,506	 	
Securitization Adjustments	 	 	1,249,990	 	 	 	1,225,200	 	 	 	1,702,439	 	 	 	1,690,828	 	 	 	1,691,600	 	 	 	1,249,990	 	 	 	1,691,600	 	
Managed Basis	 	$	4,373,168	 	 	$	4,448,348	 	 	$	4,551,495	 	 	$	4,574,698	 	 	$	4,644,106	 	 	$	4,373,168	 	 	$	4,644,106	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Average Credit Card Loans	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	$	3,192,184	 	 	$	2,924,110	 	 	$	2,838,312	 	 	$	2,919,421	 	 	$	2,788,260	 	 	$	2,968,163	 	 	$	2,535,349	 	
Securitization Adjustments	 	 	1,244,374	 	 	 	1,590,352	 	 	 	1,709,344	 	 	 	1,688,963	 	 	 	1,630,969	 	 	 	1,558,402	 	 	 	1,403,948	 	
Managed Basis	 	$	4,436,558	 	 	$	4,514,462	 	 	$	4,547,656	 	 	$	4,608,384	 	 	$	4,419,229	 	 	$	4,526,565	 	 	$	3,939,297	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest Yield	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	9.77	%	 	 	9.42	%	 	 	9.09	%	 	 	9.38	%	 	 	9.53	%	 	 	9.42	%	 	 	9.51	%	
Securitization Adjustments	 	 	11.75	%	 	 	11.07	%	 	 	11.20	%	 	 	11.77	%	 	 	11.41	%	 	 	11.43	%	 	 	11.94	%	
Managed Basis	 	 	10.32	%	 	 	10.00	%	 	 	9.89	%	 	 	10.25	%	 	 	10.23	%	 	 	10.11	%	 	 	10.38	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Principal Charge-off Rate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	6.70	%	 	 	6.71	%	 	 	6.53	%	 	 	6.29	%	 	 	5.88	%	 	 	6.56	%	 	 	4.94	%	
Securitization Adjustments	 	 	6.52	%	 	 	6.27	%	 	 	6.45	%	 	 	6.72	%	 	 	5.67	%	 	 	6.49	%	 	 	6.36	%	
Managed Basis	 	 	6.65	%	 	 	6.56	%	 	 	6.50	%	 	 	6.45	%	 	 	5.80	%	 	 	6.54	%	 	 	5.45	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 30 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	4.91	%	 	 	4.63	%	 	 	4.55	%	 	 	4.35	%	 	 	4.36	%	 	 	4.91	%	 	 	4.36	%	
Securitization Adjustments	 	 	6.09	%	 	 	5.55	%	 	 	4.93	%	 	 	5.42	%	 	 	4.96	%	 	 	6.09	%	 	 	4.96	%	
Managed Basis	 	 	5.25	%	 	 	4.89	%	 	 	4.69	%	 	 	4.75	%	 	 	4.58	%	 	 	5.25	%	 	 	4.58	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Delinquency Rate (over 90 days)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Basis	 	 	2.27	%	 	 	2.21	%	 	 	2.24	%	 	 	2.16	%	 	 	2.16	%	 	 	2.27	%	 	 	2.16	%	
Securitization Adjustments	 	 	2.83	%	 	 	2.51	%	 	 	2.26	%	 	 	2.40	%	 	 	2.32	%	 	 	2.83	%	 	 	2.32	%	
Managed Basis	 	 	2.43	%	 	 	2.30	%	 	 	2.25	%	 	 	2.25	%	 	 	2.22	%	 	 	2.43	%	 	 	2.22	%	

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.