RIVERWOODS, Ill.--(BUSINESS WIRE)--Dec. 3, 2007--Discover
Financial Services (NYSE: DFS) announced today that it expects to
record a non-cash impairment charge related to its Goldfish MasterCard
and Visa credit card business in the United Kingdom in the quarter
ending Nov. 30, 2007. The estimated impairment charge will be equal to
all or substantially all of the goodwill and other intangible assets
of the Goldfish business, which as of Aug. 31, 2007, approximated $422
million.
David Nelms, chief executive officer of Discover, said, "We have
concluded that continued disruption in the UK financial markets,
higher interest rates and our decision to reduce our loan exposure to
the UK market have negatively affected the book value of our Goldfish
business. While the UK credit card market remains very challenging,
our efforts to refocus this business have begun to produce positive
results. We will continue implementation of significant actions to
improve the performance of our UK business, and will continuously
monitor our progress and assess options to maximize shareholder
returns."
The non-cash impairment charge results from a review of goodwill
and other intangible assets in accordance with SFAS No. 142, "Goodwill
and Other Intangible Assets." The company expects to provide a refined
estimate of the impairment charge in its fourth quarter earnings
release, tentatively scheduled for Dec. 20, 2007.
Separately, the company announced that its Board of Directors has
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.
Nelms commented, "The share repurchase program reflects our
commitment to be efficient managers of our shareholders' capital over
the long term. We are taking significant actions to improve returns on
capital in our UK business and we continue to generate significant
excess capital from our profitable and growing US businesses. We also
are pleased with the results of our continued focus on risk
management, as charge-offs for the US Card segment are expected to
remain below 4 percent in the fourth quarter."
Share repurchases will be made from time to time based on market
conditions and other factors and will be subject to securities laws.
Any shares acquired will be available for general corporate purposes.
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, with more than 50
million cardmembers. Since its inception in 1986, the company has
become one of the largest card issuers in the U.S. Its Third-Party
Payments business consists 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.
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. and U.K. debt markets; the ability
to increase or sustain Discover Card usage or attract new cardmembers
and introduce new products and 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).
CONTACT: Discover Financial Services
Investor Contact
Craig Streem
Vice President, Investor Relations
224-405-3575
or
Media Contact
Leslie Sutton
Director, Public Relations
224-405-3965
SOURCE: Discover Financial Services