RIVERWOODS, Ill., May 29, 2008 (BUSINESS WIRE) -- Discover Financial Services (NYSE: DFS) announced today that in
the quarter ending May 31, 2008, it expects to partially write down a
previously disclosed investment in the asset-backed commercial paper
notes of Golden Key U.S. LLC, which had invested in U.S.
mortgage-backed securities. The estimated charge will range from $18
million to $31 million pretax, or $11 million to $19 million after
tax. Discover currently has no other investments of this type.
The company's original investment in the notes was $120.1 million
and it recorded an $11.4 million write down of the investment in the
quarter ended Nov. 30, 2007. The company expects that the investment
will be restructured by the issuer in the third or fourth quarter of
2008. A restructuring or further deterioration in market conditions
could result in further impairment.
The original investment of $120.1 million represented
approximately 1 percent of the company's cash and cash equivalents and
investment securities, which totaled $9.2 billion as of Feb. 29, 2008.
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. 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 the
Company's management and are subject to significant risks and
uncertainties. Actual results may differ materially from those set
forth in the forward-looking statements. These forward-looking
statements speak only as of the date of this press release, and there
is no undertaking to update or revise them as more information becomes
available. The following factors, among others, could cause actual
results to differ materially from those set forth in the
forward-looking statements: the actions and initiatives of current and
potential competitors; our ability to manage credit risks and
securitize our receivables at acceptable rates; changes in economic
variables, such as the number and size of personal bankruptcy filings,
the rate of unemployment and the levels of consumer confidence and
consumer debt; the level and volatility of equity prices, commodity
prices and interest rates, currency values, investments, other market
fluctuations and other market indices; the availability and cost of
funding and capital; access to U.S. debt and deposit markets; losses
in our investment portfolio; the ability to increase or sustain
Discover Card usage or attract new cardmembers and introduce new
products 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.
Additional factors that could cause the Company's results to differ
materially from those described in the forward-looking statements can
be found in the Company's annual report on Form 10-K, filed with the
SEC and available at the SEC's internet site (http://www.sec.gov).
SOURCE: Discover Financial Services
Discover Financial Services
Investors
Craig Streem
Vice President, Investor Relations
224-405-3575
or
Media
Leslie Sutton
Director, Public Relations
224-405-3965