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CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 0-19759
DISCOVER CARD TRUST 1991 E
--------------------------
(Exact name of registrant as specified in its charter)
Delaware Not Applicable
- ----------------------- ------------------------------------
(State of Organization) (I.R.S. Employer Identification No.)
c/o Discover Receivables Financing Group, Inc.
12 Read's Way
New Castle, Delaware 19720
- ----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302) 323-7184
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class
to be so registered is to be registered
- ------------------- ---------------------
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
7.30% Class A Credit Card Pass-Through Certificates
7.85% Class B Credit Card Pass-Through Certificates
---------------------------------------------------
(Title of Class)
Registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90 days.
Yes x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's
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knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Index to Exhibits Appears on Page 6
PART I
Item 1. Business
The Discover Card Trust 1991 E (the "Trust") was formed pursuant to a
Pooling and Servicing Agreement dated as of November 1, 1991 (the "Pooling and
Servicing Agreement") among Greenwood Trust Company ("Greenwood") as Servicer,
Discover Receivables Financing Group, Inc. ("DRFG") as Seller, and Wilmington
Trust Company as Trustee (the "Trustee"). The Trust's only business is to act
as a passive conduit to permit investment in a pool of retail consumer
receivables.
Item 2. Properties
The property of the Trust includes a portfolio of receivables (the
"Receivables") arising under selected Discover Card accounts (the "Accounts")
originated by Greenwood, all monies due or to become due in payment of the
Receivables, all proceeds of the Receivables, all monies on deposit in certain
accounts and a certain limited credit enhancement for the exclusive direct
benefit of holders of 7.85% Class B Credit Card Pass-Through Certificates of
the Trust (the "Class B Certificates"). At or prior to the time of the Trust's
formation, Sears, Roebuck and Co. ("Sears") sold or contributed to DRFG,
Receivables existing under the Accounts as of November 1, 1991 and theretofore
acquired by Sears from Greenwood; SCFC Receivables Corp. ("SRC") sold or
contributed to DRFG Receivables existing under the Accounts as of November 1,
1991 and theretofore acquired by SRC from Greenwood; and Greenwood sold to
DRFG, all other Receivables existing under the Accounts as of November 1, 1991
and all Receivables existing under the Accounts from time to time thereafter.
DRFG, in turn, transferred to the Trust all Receivables existing under the
Accounts as of November 1, 1991 and all Receivables arising under the Accounts
from time to time thereafter until the termination of the Trust. Information
related to the performance of the Receivables during 1996 is set forth in the
ANNUAL AGGREGATE APPENDIX filed as Exhibit 99(A) to this Annual Report on Form
10-K.
Item 3. Legal Proceedings
Greenwood is involved from time to time in various legal proceedings that
arise in the ordinary course of its business. Greenwood does not believe that
the resolution of any of these proceedings will have a material adverse effect
on Greenwood's financial condition or on the Receivables. There can be no
assurance, however, regarding any of these effects.
Certain legal and administrative proceedings challenged, under the
laws of several states, the imposition of late payment fees (or other
incidental charges) by Greenwood on Discover Cardmembers. In each of these
matters, the party proceeding against Greenwood claimed that applicable
state law prohibits or limits the imposition of late payment fees, sought
to enjoin Greenwood from imposing late payment fees on Discover Card accounts
of residents of the state in question and sought refunds of (and, in some
cases, civil penalties with respect to) late payment fees previously imposed on
such accounts. Greenwood asserted a defense in these proceedings that federal
law preempts any state law prohibition against or
2
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limitation on charging a late fee payment or other fee with respect to Discover
Card accounts. On June 3, 1996, the United States Supreme Court issued a
decision holding that state laws limiting late charges are preempted with
respect to national banks by federal law, and the Court remanded for
reconsideration lower-court decisions that had held that such state laws were
not similarly preempted with respect to other federally insured banks. In
light of these rulings, all of the outstanding legal and administrative
proceedings challenging, on the basis of state law, Greenwood's imposition of
late fees and other incidental charges on Discover Cardmembers were resolved in
1996 in Greenwood's favor. No such proceedings are currently pending.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The 7.30% Class A Credit Card Pass-Through Certificates (the "Class A
Certificates") and the Class B Certificates are held and delivered in
book-entry form through the facilities of The Depository Trust Company ("DTC"),
a "clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. The definitive Class A
Certificates and Class B Certificates are held by Cede & Co., the nominee of
DTC.
Item 9. Changes in and Disagreement with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 17, 1997, 100% of the Class A Certificates and the Class B
Certificates was held in the nominee name Cede & Co. for beneficial owners.
As of March 17, 1997, Greenwood and DRFG, as tenants-in-common, held 100%
of the Seller Certificate, which represented beneficial ownership of a residual
interest in the assets of the Trust as provided in the Pooling and Servicing
Agreement.
Item 13. Certain Relationships and Related Transactions
None
3
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Exhibits:
99. (A) 1996 ANNUAL AGGREGATE REPORT prepared by the Servicer.
(B) ANNUAL INDEPENDENT AUDITOR'S REPORTS
pursuant to Section 3.06 of the Pooling and Servicing
Agreement.
(i) Review of servicing procedures.
(ii) Annual Servicing Letter.
(b) Reports on Form 8-K:
Current reports on Form 8-K are filed on or about the Distribution
Date each month (typically the 15th of the month). The reports
include as an exhibit, the MONTHLY INVESTOR CERTIFICATEHOLDERS'
STATEMENT.
Current Reports on Form 8-K were filed on January 15, 1996,
February 15, 1996, March 15, 1996, April 15, 1996, May 15, 1996, June
17, 1996, July 15, 1996, August 15, 1996, September 16, 1996, October
15, 1996, November 15, 1996 and December 16, 1996.
4
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SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Discover Card Trust 1991 E
(Registrant)
By: Discover Receivables Financing Group, Inc.
(Originator of the Trust)
Dated: March 27, 1997 By: /s/ Birendra Kumar
--------------------------------
Title: Senior Vice President
S-1
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EXHIBIT INDEX
Exhibit No.
99. (A) 1996 ANNUAL AGGREGATE REPORT prepared by the Servicer.
(B) ANNUAL INDEPENDENT AUDITOR'S REPORTS pursuant to Section 3.06
of the Pooling and Servicing Agreement.
(i) Review of servicing procedures.
(ii) Annual Servicing Letter.
6
<PAGE> 1
Exhibit 99(A)
DISCOVER CARD TRUST 1991 E
Credit Card Pass-Through Certificates
Distribution and Performance
Annual Aggregate Report - 1996
Under the Pooling and Servicing Agreement dated as of November 1, 1991 (the
"Agreement") by and among Greenwood Trust Company (the "Servicer"),
Discover Receivables Financing Group, Inc. and Wilmington Trust Company, as
Trustee, the Servicer is required to prepare certain information each month
regarding current distributions to Investor Certificateholders and the
performance of the Trust during the previous month. For purposes of filing
Form 10-K, certain information is required to be prepared with respect to the
Distribution Dates occurring during the calendar year 1996. The information
which is required to be prepared with respect to such Distribution Dates
related to the year mentioned above is set forth below. Certain of the
information is presented on the basis of an original principal amount of $1,000
per Investor Certificate. Certain other information is presented based upon
the aggregate amounts for the Trust as a whole.
A. Information Regarding the Aggregate Distributions for 1996.
<TABLE>
<CAPTION>
1. Class A Certificates
--------------------
<S> <C> <C>
(a) The aggregate amount of the distribution to
Class A Certificateholders on the related Distribution
Dates. $258,275,000.03
(b) The amount of the distribution set forth in
paragraph (a) above in respect of interest. $24,941,666.65
(c) The amount of the distribution set forth in
paragraph (a) above in respect of principal. $233,333,333.38
(d) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest. $645.687500075
(e) The amount of the distribution set forth in
paragraph (b) above, per $1,000 interest. $62.354166625
(f) The amount of the distribution set forth in
Paragraph (c) above, per $1,000 interest. $583.333333450
<CAPTION>
2. Class B Certificates
--------------------
<S> <C> <C>
(a) The aggregate amount of the distribution to
Class B Certificateholders on the related Distribution
Dates. $3,140,000.04
(b) The amount of the distribution set forth in
paragraph (a) above in respect of interest. $3,140,000.04
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
(c) The amount of the distribution set forth in
paragraph (a) above in respect of principal. $0.00
(d) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest. $78.500001000
(e) The amount of the distribution set forth in
paragraph (b) above, per $1,000 interest. $78.500001000
(f) The amount of the distribution set forth in
Paragraph (c) above, per $1,000 interest. $0.000000000
<CAPTION>
B. Information Regarding the Performance of the Trust
--------------------------------------------------
1. Collections of Receivables
--------------------------
<S> <C> <C>
(a) The aggregate amount of Finance Charge
Collections processed during the related Due Periods. $93,164,373.94
(b) The aggregate amount of Principal
Collections processed during the related Due Periods. $994,936,124.42
(c) The aggregate amount of Finance Charge
Collections processed during the related Due Periods
which was allocated in respect of the Investor
Certificates. $67,250,809.52
(d) The aggregate amount of Principal
Collections processed during the related Due Periods
which was allocated in respect of the Investor
Certificates. $831,874,623.58
(e) The aggregate amount of Finance Charge
Collections processed during the related Due Periods
which was allocated in respect of the Class A
Certificates. $60,184,429.49
(f) The aggregate amount of Principal
Collections processed during the related Due Periods
which was allocated in respect of the Class A
Certificates. $756,229,777.70
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $7,066,380.03
(h) The aggregate amount of Principal
Collections processed during the related Due Periods
which was allocated in respect of the Class B
Certificates. $75,644,845.88
(i) The aggregate amount of Finance Charge
Collections processed during the related Due Periods
which was allocated in respect of the Seller
Certificate. $25,913,564.42
(j) The aggregate amount of Principal
Collections processed during the related Due Periods
which was allocated in respect of the Seller
Certificate. $163,061,500.84
</TABLE>
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<TABLE>
<CAPTION>
2. Investor Losses; Reimbursement of Charge-Offs
---------------------------------------------
<S> <C> <C>
(a) The aggregate amount of Class A Investor
Losses, as defined in Section 4.04 (b) of the
Agreement, during the related Due Periods. $0.00
(b) The aggregate amount of Class B Investor
Losses, as defined in Section 4.04 (b) of the
Agreement, during the related Due Periods. $0.00
(c) The amount of Class A Investor Losses set
forth in paragraph (a) above, per $1,000 interest. $0.000000000
(d) The amount of Class B Investor Losses set
forth in paragraph (b) above, per $1,000 interest. $0.000000000
(e) The total amount reimbursed to the Trust
in the current year pursuant to Section 4.04 (c)
of the Agreement, if any, in respect of Class A
Investor Losses. $0.00
(f) The total amount reimbursed to the Trust
in the current year pursuant to Section 4.04 (c)
of the Agreement, if any, in respect of Class B
Investor Losses. $0.00
(g) The amount set forth in paragraph (e)
above, per $1,000 interest. $0.000000000
(h) The amount set forth in paragraph (f)
above, per $1,000 interest. $0.000000000
(i) The aggregate amount of unreimbursed
Class A Investor Losses in the Trust as of the end
of the calendar year 1996. $0.00
(j) The aggregate amount of unreimbursed
Class B Investor Losses in the Trust as of the end
of the calendar year 1996. $0.00
(k) The amount set forth in paragraph (i)
above, per $1,000 interest. $0.000000000
(l) The amount set forth in paragraph (j)
above, per $1,000 interest. $0.000000000
<CAPTION>
3. Investor Servicing Fee
----------------------
<S> <C> <C>
(a) The amount of the Class A Monthly
Servicing Fee payable by the Trust to the Servicer for the
year ended December 31, 1996. $6,833,259.58
(b) The amount of the Class B Monthly
Servicing Fee payable by the Trust to the Servicer for the
year ended December 31, 1996. $800,066.87
</TABLE>
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<TABLE>
<CAPTION>
4. Available Class B Credit Enhancement Amount
-------------------------------------------
<S> <C> <C>
(a) The amount available to be drawn under the
Class B Credit Enhancement pursuant to Section
4.03 (c) (i), (G) and (H) of the Agreement as of the
end of the day on December 31, 1996. $30,400,000.00
(b) The amount set forth in paragraph (a) above
as a percentage of the Class B Interest. 76.00%
<CAPTION>
5. The Pool Factor
---------------
<S> <C> <C>
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1996 to the amount
of the Investor Interest as of the Closing Date. The amount of a
Certificateholder's pro-rata share of the Investor Interest can be
determined by multiplying the original denomination of the
Certificateholder's Certificate by the Pool Factor.
(a) Class A Certificates. 0.416666667
(b) Class B Certificates. 1.000000000
</TABLE>
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EXHIBIT 99(B)(i)
February 21, 1997
The Board of Directors
Greenwood Trust Company and
Wilmington Trust Company:
At your request, we have performed the procedure listed below with respect to
the accounting records of Greenwood Trust Company ("GTC"), relating to the
servicing procedures performed by GTC as Servicer under Section 3.06(b) of the
Pooling and Servicing Agreement (the "Agreement"), dated November 1, 1991, for
Discover Card Trust 1991E. This report is solely for your information and is
not to be referred to by, or distributed for any purpose to, anyone other than
Wilmington Trust Company as Trustee, Investor Certificateholders, or management
of GTC. The procedure we performed is as follows:
- - Compared the amounts set forth in each monthly certificate forwarded by
the Servicer, pursuant to Section 3.04(b) of the Agreement, during the
calendar year 1996 to the Servicer's computer-generated Monthly
Preliminary Calculations report, and found them to be in agreement.
Because the above procedure does not constitute an audit conducted in
accordance with generally accepted auditing standards, we do not express an
opinion on any of the items referred to above. Had we performed additional
procedures, or had we conducted an audit of the monthly certificates in
accordance with generally accepted auditing standards, further matters might
have come to our attention that would have been reported to you. This report
relates only to the items specified above and does not extend to any financial
statements of GTC taken as a whole for any date or period.
/s/
Deloitte & Touche LLP
<PAGE> 1
EXHIBIT 99(B)(ii)
February 21, 1997
ANNUAL SERVICING LETTER
The Board of Directors
Greenwood Trust Company and
Wilmington Trust Company:
We have examined management's assertion, included in its representation letter,
dated February 21, 1997, that Greenwood Trust Company ("GTC") maintained an
effective internal control structure over financial reporting as of December
31, 1996, insofar as such system relates to the servicing procedures provided
by GTC to prevent or detect errors or irregularities in amounts that would be
material in relation to the assets of the Discover Card Trust 1991E (the
"Trust") under the Pooling and Servicing Agreement Sections 3.02, 4.03, 4.04,
4.05, 4.07, and 8.07, dated November 1, 1991 (the "Agreement").
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
obtaining an understanding of the internal control structure over financial
reporting, testing, and evaluating the design and operating effectiveness of
the internal control structure, and such other procedures as we considered
necessary in the circumstances. We believe that our examination provides a
reasonable basis for our opinion.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projections of any
evaluation of the internal control structure over financial reporting to future
periods are subject to the risk that the internal control structure may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our opinion, management's assertion that GTC maintained an effective
internal control structure as of December 31, 1996, insofar as such system
relates to the servicing procedures provided by GTC, to prevent or detect
errors or irregularities in amounts that would be material in relation to the
assets of the Trust under the Agreement, taken as a whole, is fairly stated, in
all material respects, based upon criteria established in "Internal Control -
Integrated Framework" issued by the Committee of Sponsoring Organizations of
the Treadway Commission.
This report is intended for the information and use of the Board of Directors
and management of GTC, Wilmington Trust Company as Trustee, and the Investor
Certificateholders, and should not be used for any other purpose.
/s/
Deloitte & Touche LLP
