<PAGE> 1
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, 1997
Commission File Number 0-23108
DISCOVER CARD MASTER TRUST I
(Exact name of registrant as specified in its charter)
DELAWARE NOT APPLICABLE
(State of Organization) (I.R.S. Employer Identification No.)
c/o Greenwood Trust Company
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:
SERIES 1993-1:
Floating Rate Class A Credit Card Pass-Through Certificates
5.30% Class B Credit Card Pass-Through Certificates
SERIES 1993-2:
5.40% Class A Credit Card Pass-Through Certificates
5.75% Class B Credit Card Pass-Through Certificates
SERIES 1993-3:
6.20% Class A Credit Card Pass-Through Certificates
<PAGE> 2
6.45% Class B Credit Card Pass-Through Certificates
SERIES 1994-2:
Floating Rate Class A Credit Card Pass-Through Certificates
8.05% Class B Credit Card Pass-Through Certificates
SERIES 1994-3:
Floating Rate Class A Credit Card Pass-Through Certificates
7.75% Class B Credit Card Pass-Through Certificates
SERIES 1995-1:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
SERIES 1995-2:
6.55% Class A Credit Card Pass-Through Certificates
6.75% Class B Credit Card Pass-Through Certificates
SERIES 1995-3:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
SERIES 1996-1:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
SERIES 1996-2:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
SERIES 1996-3:
6.05% Class A Credit Card Pass-Through Certificates
6.25% Class B Credit Card Pass-Through Certificates
SERIES 1996-4:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
SERIES 1997-1:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
SERIES 1997-2:
6.792% Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
SERIES 1997-3:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
<PAGE> 3
SERIES 1997-4:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
SERIES 1998-1:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
SERIES 1998-2:
5.80% Class A Credit Card Pass-Through Certificates
5.95% Class B Credit Card Pass-Through Certificates
SERIES 1998-3:
Floating Rate Class A Credit Card Pass-Through Certificates
Floating Rate Class B Credit Card Pass-Through Certificates
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 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 10
PART I
ITEM 1. BUSINESS
The Discover Card Master Trust I (the "Trust") was formed pursuant to a
Pooling and Servicing Agreement dated as of October 1, 1993, as amended (the
"Pooling and Servicing Agreement") by and between Greenwood Trust Company
("Greenwood") as Master Servicer, Servicer and Seller, and U.S. Bank National
Association (formerly First Bank National Association successor trustee to Bank
of America Illinois, formerly Continental Bank, National Association) 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.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1993-1 Class A Certificates") and the 5.30% Class B Credit Card
Pass-Through Certificates (the "Series 1993-1 Class B Certificates") of Series
1993-1 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of October 27, 1993,
by and between Greenwood and the Trustee.
<PAGE> 4
The 5.40% Class A Credit Card Pass-Through Certificates (the "Series
1993-2 Class A Certificates") and the 5.75% Class B Credit Card Pass-Through
Certificates (the "Series 1993-2 Class B Certificates") of Series 1993-2 were
issued pursuant to the Pooling and Servicing Agreement and a Series Supplement
to the Pooling and Servicing Agreement dated as of December 1, 1993, by and
between Greenwood and the Trustee.
The 6.20% Class A Credit Card Pass-Through Certificates (the "Series
1993-3 Class A Certificates") and the 6.45% Class B Credit Card Pass-Through
Certificates (the "Series 1993-3 Class B Certificates") of Series 1993-3 were
issued pursuant to the Pooling and Servicing Agreement and a Series Supplement
to the Pooling and Servicing Agreement dated as of November 23, 1993, by and
between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1994-2 Class A Certificates") and the 8.05% Class B Credit Card
Pass-Through Certificates (the "Series 1994-2 Class B Certificates") of Series
1994-2 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of October 14, 1994,
as amended, by and between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1994-3 Class A Certificates") and the 7.75% Class B Credit Card
Pass-Through Certificates (the "Series 1994-3 Class B Certificates") of Series
1994-3 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of October 20, 1994,
by and between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificate (the
"Series 1994-A Class A Certificate") of Series 1994-A was issued pursuant to
the Pooling and Servicing Agreement and a Series Supplement to the Pooling and
Servicing Agreement dated as of December 20, 1994, as amended, by and between
Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1995-1 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1995-1 Class B Certificates") of Series
1995-1 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of April 19, 1995,
by and between Greenwood and the Trustee.
The 6.55% Class A Credit Card Pass-Through Certificates (the "Series
1995-2 Class A Certificates") and the 6.75% Class B Credit Card Pass-Through
Certificates (the "Series 1995-2 Class B Certificates") of Series 1995-2 were
issued pursuant to the Pooling and Servicing Agreement and a Series Supplement
to the Pooling and Servicing Agreement dated as of August 1, 1995, by and
between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1995-3 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1995-3 Class B Certificates") of Series
1995-3 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of September 28,
1995, by and between Greenwood and the Trustee.
<PAGE> 5
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1996-1 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1996-1 Class B Certificates") of Series
1996-1 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of January 18, 1996,
by and between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1996-2 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1996-2 Class B Certificates") of Series
1996-2 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of January 29, 1996,
by and between Greenwood and the Trustee.
The 6.05% Class A Credit Card Pass-Through Certificates (the "Series
1996-3 Class A Certificates") and the 6.25% Class B Credit Card Pass-Through
Certificates (the "Series 1996-3 Class B Certificates") of Series 1996-3 were
issued pursuant to the Pooling and Servicing Agreement and a Series Supplement
to the Pooling and Servicing Agreement dated as of February 21, 1996, by and
between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1996-4 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1996-4 Class B Certificates") of Series
1996-4 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of April 30, 1996,
by and between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1996-5 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1996-5 Class B Certificates") of Series
1996-5 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of July 24, 1996, by
and between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1997-1 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1997-1 Class B Certificates") of Series
1997-1 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of August 26, 1997,
by and between Greenwood and the Trustee.
The 6.792% Class A Credit Card Pass-Through Certificates (the "Series
1997-2 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1997-2 Class B Certificates") of Series
1997-2 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of October 15, 1997,
by and between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1997-3 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1997-3 Class B Certificates") of Series
1997-3 were issued pursuant to
<PAGE> 6
the Pooling and Servicing Agreement and a Series Supplement to the Pooling and
Servicing Agreement dated as of October 23, 1997, by and between Greenwood and
the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1997-4 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1997-4 Class B Certificates") of Series
1997-4 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of October 31, 1997,
by and between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1998-1 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1998-1 Class B Certificates") of Series
1998-1 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of January 14, 1998,
by and between Greenwood and the Trustee.
The 5.80% Class A Credit Card Pass-Through Certificates (the "Series
1998-2 Class A Certificates") and the 5.95% Class B Credit Card Pass-Through
Certificates (the "Series 1998-2 Class B Certificates") of Series 1998-2 were
issued pursuant to the Pooling and Servicing Agreement and a Series Supplement
to the Pooling and Servicing Agreement dated as of March 4, 1998, by and
between Greenwood and the Trustee.
The Floating Rate Class A Credit Card Pass-Through Certificates (the
"Series 1998-3 Class A Certificates") and the Floating Rate Class B Credit Card
Pass-Through Certificates (the "Series 1998-3 Class B Certificates") of Series
1998-3 were issued pursuant to the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement dated as of March 25, 1998,
by and between Greenwood and the Trustee.
The Trust's Series 1993-1 Class A Certificates, Series 1993-2 Class A
Certificates, Series 1993-3 Class A Certificates, Series 1994-2 Class A
Certificates, Series 1994-3 Class A Certificates, Series 1995-1 Class A
Certificates, Series 1995-2 Class A Certificates, Series 1995-3 Class A
Certificates, Series 1996-1 Class A Certificates, Series 1996-2 Class A
Certificates, Series 1996-3 Class A Certificates, Series 1996-4 Class A
Certificates, Series 1997-1 Class A Certificates, Series 1997-2 Class A
Certificates, Series 1997-3 Class A Certificates, Series 1997-4 Class A
Certificates, Series 1998-1 Class A Certificates, Series 1998-2 Class A
Certificates and Series 1998-3 Class A Certificates shall, collectively, be
known as the "Class A Certificates." Similarly, the Trust's Series 1993-1
Class B Certificates, Series 1993-2 Class B Certificates, Series 1993-3 Class B
Certificates, Series 1994-2 Class B Certificates, Series 1994-3 Class B
Certificates, Series 1995-1 Class B Certificates, Series 1995-2 Class B
Certificates, Series 1995-3 Class B Certificates, Series 1996-1 Class B
Certificates, Series 1996-2 Class B Certificates, Series 1996-3 Class B
Certificates, Series 1996-4 Class B Certificates, Series 1996-5 Class B
Certificates, Series 1997-1 Class B Certificates, Series 1997-2 Class B
Certificates, Series 1997-3 Class B Certificates, Series 1997-4 Class B
Certificates, Series 1998-1 Class B Certificates, Series 1998-2 Class B
Certificates and Series 1998-3 Class B Certificates shall, collectively, be
known as the "Class B Certificates."
ITEM 2. PROPERTIES
<PAGE> 7
The property of the Trust includes a portfolio of receivables (the
"Receivables") arising under selected Discover Card accounts (the "Accounts")
originated by Greenwood, the cash received in payment of those Receivables
(including recoveries on charged-off Receivables), funds on deposit in the
Credit Enhancement Account for each Series, a currency swap with respect to
Series 1996-5 and an interest rate swap with respect to Series 1997-2. At or
prior to the time of the Trust's formation, Greenwood transferred to the Trust
all the Receivables in the Accounts designated as such at or prior to such
time. Greenwood has also transferred to the Trust the Receivables in accounts
that were designated as Accounts after the time of formation of the Trust, as
of the time of such designation. Greenwood also has transferred and will
transfer additional Receivables generated in the Accounts to the Trust on an
ongoing basis and in the future may transfer Receivables in Additional Accounts
to the Trust from time to time. Information related to the performance of the
Receivables during 1997 is set forth in the ANNUAL AGGREGATE REPORT 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.
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 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") (in the United States), a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934, as
amended, or Cedel Bank, societe anonyme or Euroclear (in Europe). 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 25, 1998, 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 25, 1998, 100% of the beneficial ownership of the Series 1994-A Class
A Certificate was held by Riverwoods Funding Corporation. As of March 25,
1998, 100% of the beneficial ownership of
<PAGE> 8
the Series 1996-5 Class A Certificates was held in bearer form by Deutscher
Kassenverein Aktiengesellschaft, a German clearing agency, for beneficial
owners.
As of March 25, 1998, Greenwood 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
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits:
23. Consent of Deloitte & Touche LLP.
99. (A) 1997 ANNUAL AGGREGATE REPORT prepared by the Servicer.
(B) ANNUAL INDEPENDENT AUDITOR'S REPORT pursuant to Section 3.08 of
the Pooling and Servicing Agreement.
(C) DESCRIPTION OF RECENT DEVELOPMENTS.
(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) with respect to each Series of
Investor Certificates issued by the Trust. The reports include as exhibits the
MONTHLY INVESTOR CERTIFICATEHOLDERS' STATEMENTS. Current Reports on Form 8-K
were filed on January 6, 1997, January 15, 1997, February 18, 1997, March 17,
1997, April 15, 1997, May 15, 1997, June 16, 1997, July 15, 1997, August 15,
1997, August 19, 1997, August 21, 1997, August 26, 1997, September 19, 1997,
October 15, 1997, October 20, 1997, October 28, 1997, November 4, 1997,
November 5, 1997, November 17, 1997, December 15, 1997, January 15, 1998,
January 16, 1998, February 17, 1998, February 25, 1998, February 27, 1998,
March 5, 1998, March 12, 1998, March 18, 1998, March 23, 1998 and March 27,
1998.
<PAGE> 9
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 Master Trust I
(Registrant)
By: Greenwood Trust Company
(Originator of the Trust)
Dated: March 30, 1998 By: /s/ John J. Coane
Title: Vice President, Director of
Accounting and Treasurer
<PAGE> 10
EXHIBIT INDEX
EXHIBIT NO.
23. Consent of Deloitte & Touche LLP.
99. (A) 1997 ANNUAL AGGREGATE REPORT prepared by the Servicer.
(B) ANNUAL INDEPENDENT AUDITOR'S REPORT pursuant to Section 3.08 of the
Pooling and Servicing Agreement.
(C) DESCRIPTION OF RECENT DEVELOPMENTS.
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to incorporation by reference in the Registration Statement on Form
S-3 of Discover Card Master Trust I (Registration Number 333-16103) of the
Annual Independent Auditors' Report pursuant to Section 3.08 of the Pooling and
Servicing Agreement dated as of October 1, 1993, as amended, between Greenwood
Trust Company and First Bank National Association (successor trustee to Bank of
America Illinois, formerly Continental Bank, National Association) as Trustee,
filed as Exhibit 99(B) to the Annual Report on Form 10-K of Discover Card
Master Trust I for the fiscal year ended December 31, 1997.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 18, 1998
<PAGE> 1
Exhibit 99(A)
DISCOVER CARD MASTER TRUST
Series 1993-1
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of October 27, 1993, for Series
1993-1, and relating to the Pooling and Servicing Agreement dated as of October
1, 1993, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$44,591,858.55 $44,591,858.55 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$ 59.45581140 $ 59.45581140 $ 0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$ 2,537,268.96 $ 2,537,268.96 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$ 52.99999916 $ 52.99999916 $0.00000000
<PAGE> 2
Series 1993-1
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $148,586,346.04
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $1,126,440,298.52
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $9,442,120.16
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $71,566,416.75
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 3
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$15,000,000.00 $957,459.96
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$19,946,825.00 $15,957,460.00
<PAGE> 4
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
2.50% 33.33%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 5
DISCOVER CARD MASTER TRUST
Series 1993-2
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of December 1, 1993, for Series
1993-2, and relating to the Pooling and Servicing Agreement dated as of
November 1, 1993, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, as Trustee, the Servicer is
required to prepare 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 such Distribution Dates occurring
during the calendar year 1997. The information which is required to be
prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$43,200,000.00 $43,200,000.00 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$ 54.00000000 $ 54.00000000 $ 0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$ 1,916,705.04 $ 1,916,705.04 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$ 57.50000120 $ 57.50000120 $0.00000000
<PAGE> 6
Series 1993-2
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $158,552,749.54
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $1,201,954,396.33
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $6,612,345.46
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $50,120,765.21
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 7
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$15,999,999.96 $666,680.04
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$20,833,350.00 $8,333,340.00
<PAGE> 8
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
2.50% 25.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 9
DISCOVER CARD MASTER TRUST
Series 1993-3
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of November 23, 1993, for Series
1993-3, and relating to the Pooling and Servicing Agreement dated as of
November 1, 1993,(the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$21,699,999.96 $21,699,999.96 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$61.99999989 $61.99999989 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$1,063,798.56 $1,063,798.56 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$64.50000364 $64.50000364 $0.00000000
<PAGE> 10
Series 1993-3
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $69,400,084.88
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $526,133,392.45
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $3,146,659.00
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $23,874,157.45
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 11
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$6,999,999.96 $329,859.96
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$9,162,325.00 $5,497,395.00
<PAGE> 12
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
2.50% 33.33%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 13
Exhibit D
DISCOVER CARD MASTER TRUST
Series 1994-2
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of October 14, 1994, for Series
1994-2, and relating to the Pooling and Servicing Agreement dated as of October
1, 1994, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to be
prepared with respect to such Distribution Dates related to the period mentioned
above is set forth below. Certain of the information is presented on the basis
of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$51,224,995.24 $51,224,995.24 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$60.26470028 $60.26470028 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$3,601,328.52 $3,601,328.52 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$80.50000045 $80.50000045 $0.00000000
<PAGE> 14
Series 1994-2
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $168,458,301.58
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $1,277,077,247.01
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $8,867,524.42
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $67,239,950.14
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 15
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$17,000,000.04 $894,740.04
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $44,736,850.00
<PAGE> 16
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 100.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 17
DISCOVER CARD MASTER TRUST
Series 1994-3
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of October 20, 1994, for Series
1994-3, and relating to the Pooling and Servicing Agreement dated as of October
1, 1994, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$43,985,191.88 $43,985,191.88 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$58.64692251 $58.64692251 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$3,059,235.00 $3,059,235.00 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$77.50000000 $77.50000000 $0.00000000
<PAGE> 18
Series 1994-3
B.Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $148,586,346.04
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $1,126,440,298.52
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $7,824,665.32
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $59,340,732.76
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 19
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$15,000,000.00 $789,480.00
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $39,473,700.00
<PAGE> 20
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 100.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 21
DISCOVER CARD MASTER TRUST
Series 1995-1
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of April 19, 1995, for Series
1995-1, and relating to the Pooling and Servicing Agreement dated as of April
1, 1995, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$35,734,153.50 $35,734,153.50 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$59.55692250 $59.55692250 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$1,935,028.87 $1,935,028.87 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$61.27581209 $61.27581209 $0.00000000
<PAGE> 22
Series 1995-1
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $118,899,549.71
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $901,360,027.11
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $6,240,317.24
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $47,297,156.83
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 23
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$12,000,000.00 $631,580.04
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $37,894,740.00
<PAGE> 24
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 120.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 25
DISCOVER CARD MASTER TRUST
Series 1995-2
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of August 1, 1995, for Series
1995-2, and relating to the Pooling and Servicing Agreement dated as of August
1, 1995, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$32,750,000.04 $32,750,000.04 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$65.50000008 $65.50000008 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$1,776,330.00 $1,776,330.00 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$67.50000000 $67.50000000 $0.00000000
<PAGE> 26
Series 1995-2
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $99,116,781.96
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $751,391,293.07
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $5,228,193.57
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $39,602,506.00
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 27
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$9,999,999.96 $526,320.00
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $15,789,480.00
<PAGE> 28
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 60.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 29
DISCOVER CARD MASTER TRUST
Series 1995-3
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of September 28, 1995, for Series
1995-3, and relating to the Pooling and Servicing Agreement dated as of
September 1, 1995(the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$29,424,572.36 $29,424,572.36 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$58.84914472 $58.84914472 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$1,580,604.19 $1,580,604.19 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$60.06247872 $60.06247872 $0.00000000
<PAGE> 30
Series 1995-3
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $99,116,781.96
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $751,391,293.07
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $5,228,193.57
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $39,602,506.00
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 31
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
$9,999,999.96 $526,320.00
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
$0.00 $31,578,960.00
<PAGE> 32
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 120.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 33
DISCOVER CARD MASTER TRUST
Series 1996-1
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of January 18, 1996, for Series
1996-1, and relating to the Pooling and Servicing Agreement dated as of January
1, 1996, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$58,444,700.29 $58,444,700.29 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$58.44470029 $58.44470029 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$3,145,243.31 $3,145,243.31 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$59.75914482 $59.75914482 $0.00000000
<PAGE> 34
Series 1996-1
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $198,173,349.13
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $1,502,356,534.16
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $10,454,243.88
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $79,261,067.62
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
-------- -------
$0.00 $0.00
<PAGE> 35
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$20,000,000.04 $1,052,640.00
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
-------------- --------------
$0.00 $57,894,760.00
<PAGE> 36
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 110.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 37
DISCOVER CARD MASTER TRUST
Series 1996-2
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of January 29, 1996, for Series
1996-2, and relating to the Pooling and Servicing Agreement dated as of January
1, 1996, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$53,055,230.25 $53,055,230.25 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$58.95025583 $58.95025583 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$2,859,468.13 $2,859,468.13 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$60.36581161 $60.36581161 $0.00000000
<PAGE> 38
Series 1996-2
B.Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $178,391,917.38
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $1,352,361,173.89
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $9,386,976.25
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $71,171,314.30
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 39
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$18,000,000.00 $947,379.96
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $56,842,140.00
<PAGE> 40
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 120.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 41
DISCOVER CARD MASTER TRUST
Series 1996-3
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of February 21, 1996, for Series
1996-3, and relating to the Pooling and Servicing Agreement dated as of
February 1, 1996,(the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$36,300,000.00 $36,300,000.00 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$60.50000000 $60.50000000 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$1,973,687.52 $1,973,687.52 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$62.50000063 $62.50000063 $0.00000000
<PAGE> 42
Series 1996-3
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $118,899,549.71
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $901,360,027.11
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $6,240,317.24
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $47,297,156.83
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 43
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$12,000,000.00 $631,580.04
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $18,947,370.00
<PAGE> 44
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 60.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 45
DISCOVER CARD MASTER TRUST
Series 1996-4
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of April 30, 1996, for Series
1996-4, and relating to the Pooling and Servicing Agreement dated as of April
1, 1996, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$60,517,478.06 $60,517,478.06 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$60.51747806 $60.51747806 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$3,278,285.30 $3,278,285.30 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$62.28692240 $62.28692240 $0.00000000
<PAGE> 46
Series 1996-4
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $198,173,349.13
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $1,502,356,534.16
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $10,454,243.88
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $79,261,067.62
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 47
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$20,000,000.04 $1,052,640.00
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $63,157,920.00
<PAGE> 48
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 120.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 49
DISCOVER CARD MASTER TRUST
Series 1997-1
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of August 26, 1997, for Series
1997-1, and relating to the Pooling and Servicing Agreement dated as of August
1, 1997, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$13,271,927.08 $13,271,927.08 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$17.69590277 $17.69590277 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$720,436.14 $720,436.14 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$18.25090287 $18.25090287 $0.00000000
<PAGE> 50
Series 1997-1
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $48,782,038.35
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $365,038,546.66
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $2,525,880.98
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $18,902,733.34
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 51
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$5,000,000.00 $263,160.00
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $59,210,550.00
<PAGE> 52
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 150.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 53
DISCOVER CARD MASTER TRUST
Series 1997-2
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of October 15, 1997, for Series
1997-2, and relating to the Pooling and Servicing Agreement dated as of October
1, 1997, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$5,660,000.00 $5,660,000.00 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$11.32000000 $11.32000000 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$269,940.03 $269,940.03 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$10.25763908 $10.25763908 $0.00000000
<PAGE> 54
Series 1997-2
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $16,121,529.11
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $118,972,795.41
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $862,960.88
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $6,360,126.71
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 55
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$1,666,666.66 $87,720.00
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $21,052,640.00
<PAGE> 56
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- -------------
0.00% 80.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 57
DISCOVER CARD MASTER TRUST
Series 1997-3
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of October 23, 1997, for Series
1997-3, and relating to the Pooling and Servicing Agreement dated as of October
1, 1997, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$5,551,153.47 $5,551,153.47 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$8.54023611 $8.54023611 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$301,235.93 $301,235.93 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$8.80523604 $8.80523604 $0.00000000
<PAGE> 58
Series 1997-3
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $20,939,924.81
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $154,536,191.48
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $1,101,279.90
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $8,110,711.58
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was $930,303,160.92
allocated in respect of the Seller Certificate.
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was $7,049,654,379.31
allocated in respect of the Seller Certificate.
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------ -------
$0.00 $0.00
<PAGE> 59
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$2,166,666.66 $114,036.66
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $51,315,825.00
<PAGE> 60
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 150.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 61
DISCOVER CARD MASTER TRUST
Series 1997-4
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of October 31, 1997, for Series
1997-4, and relating to the Pooling and Servicing Agreement dated as of October
1, 1997, (the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$5,386,588.55 $5,386,588.55 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$7.18211807 $7.18211807 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$292,388.58 $292,388.58 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$7.40711810 $7.40711810 $0.00000000
<PAGE> 62
Series 1997-4
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $24,122,713.91
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $178,021,546.89
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $1,249,283.75
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $9,219,083.68
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 63
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$2,500,000.00 $131,580.00
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$0.00 $59,210,550.00
<PAGE> 64
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
0.00% 150.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 1.00000000
<PAGE> 65
DISCOVER CARD MASTER TRUST
Series 1994-A
Credit Card Pass - Through Certificates
Distribution and Performance
Annual Aggregate Report - 1997
Pursuant to the Series Supplement dated as of December 20, 1994, for Series
1994-A, and relating to the Pooling and Servicing Agreement dated as of
December 1, 1994,(the "Agreement") by and between Greenwood Trust Company (the
"Servicer"), and U.S. Bank National Association, 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 such Distribution Dates
occurring during the calendar year 1997. The information which is required to
be prepared with respect to such Distribution Dates related to the period
mentioned above is set forth below. Certain of the information is presented on
the basis of an original principal amount of $1000 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 1997
1. Class A Certificates
(a) The amount of distribution to Class A
Certificateholders on the related Distribution
Dates.
Total Interest Principal
--------------------------------------------------
$124,975,620.69 $124,975,620.69 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$57.42698570 $57.42698570 $0.00000000
2. Class B Certificates
(a) The amount of distribution to Class
B Certificateholders on the related Distribution
Dates.
Total Interest Principal
-------------------------------------------------
$0.00 $0.00 $0.00
(b) The amount of the distribution set forth in
paragraph (a) above, per $1,000 interest.
Total Interest Principal
-------------------------------------------------
$0.00000000 $0.00000000 $0.00000000
<PAGE> 66
Series 1994-A
B. Information Regarding the Performance of the Trust
1. Collections of Receivables
(a) The aggregate amount of Finance Charge Collections
processed during the related Due Periods. $3,476,197,138.29
(b) The aggregate amount of Principal Collections
processed during the related Due Periods. $26,330,724,676.33
(c) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $430,702,602.76
(d) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class A Certificates. $3,262,234,337.53
(e) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $0.00
(f) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Class B Certificates. $0.00
(g) The aggregate amount of Finance Charge Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $930,303,160.92
(h) The aggregate amount of Principal Collections
processed during the related Due Periods which was
allocated in respect of the Seller Certificate. $7,049,654,379.31
2. Investor Losses: Reimbursement of Charge-Offs
(a) The aggregate amount of Class A and Class B
Investor Losses, as defined in the Agreement,
during the related Due Periods.
Class A Class B
------- -------
$0.00 $0.00
<PAGE> 67
(b) The amount of Class A and Class B Investor Losses
set forth in paragraph (a) above, per $1,000 interest
Class A Class B
------- -------
0.00000000 0.00000000
(c) The total amount reimbursed to the Trust in the
current year pursuant to the Agreement, if any,
in respect of Class A and Class B Investor Losses
Class A Class B
------- -------
$0.00 $0.00
(d) The amount set forth in paragraph (c)above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
(e) The aggregate amount of unreimbursed Class A
and Class B Investor Losses in the Trust as of the
end of the calendar year 1997.
Class A Class B
------- -------
$0.00 $0.00
(f) The amount set forth in paragraph (e) above, per
$1,000 interest.
Class A Class B
------- -------
0.00000000 0.00000000
3. Investor Servicing Fee
(a) The amount of Class A and Class B Monthly
Servicing Fee payable by Trust to the Servicer
for the year ended December 31, 1997.
Class A Class B
------- -------
$43,500,000.00 $0.00
4. Available Credit Enhancement Amount
(a) The Amount available to be drawn from both the shared
and Class B portion of the Credit Enhancement in
accordance with the Pooling and Servicing Agreement and
its respective Series Supplement as of the end of the
day on December 31, 1997.
Shared Amount Class B Amount
------------- --------------
$204,000,000.00 $0.00
<PAGE> 68
(b) The amount set forth in paragraph (a) above as a
percentage of the Series Invested amount and the
Class B Interest.
Shared Amount Class B Amount
------------- --------------
8.00% 0.00%
5. The Pool Factor
The Pool Factor represents the ratio of the amount of the Investor
Interest as of the end of the day on December 31, 1997, 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 and Class B Certificates.
Class A Class B
------- -------
1.00000000 0.00000000
<PAGE> 1
EXHIBIT 99(B)
February 18, 1998
The Board of Directors
Greenwood Trust Company and
U.S. Bank National Association:
We have examined management's assertion, included in its representation letter,
dated February 18, 1998, that Greenwood Trust Company ("GTC") maintained
effective internal control over financial reporting as of December 31, 1997,
insofar as such system relates to the servicing procedures provided by GTC to
prevent or detect misstatements due to error or fraud in amounts that would be
material in relation to the assets of the Discover Card Master Trust I, Series:
1993-1, 1993-2, 1993-3, 1994-1, 1994-2, 1994-3, 1994-A, 1995-1, 1995-2, 1995-3,
1996-1, 1996-2, 1996-3, 1996-4, 1996-5, 1997-1, 1997-2, 1997-3, and 1997-4 (the
"Trust") under Sections 3.03, 4.03, 4.04, 4.05, and 8.07 of the Pooling and
Servicing Agreement, dated October 1, 1993, as amended; and Sections 9, 13 and
14 of the Series Supplements, dated October 27, December 1, and November 23,
1993; August 24, October 14, as amended, October 20, and December 20, 1994; and
April 19, August 1, and September 28, 1995; as amended, January 18, January 29,
February 21, April 30 and July 24, 1996; and August 26, October 15, October 23,
and October 31, 1997, respectively (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 internal control over financial reporting,
testing, and evaluating the design and operating effectiveness of internal
control, 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,
misstatements due to error or fraud 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 effective internal
control as of December 31, 1997, insofar as such system relates to the
servicing procedures provided by GTC, to prevent or detect misstatements due to
error or fraud 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.
<PAGE> 2
This report is intended for the information and use of the Board of Directors
and management of GTC, U.S. Bank National Association as Trustee, and the
Investor Certificateholders, and should not be used for any other purpose.
/s/ Deloitte & Touche LLP
<PAGE> 1
EXHIBIT 99(C)
DISCOVER CARD MASTER TRUST I
DESCRIPTION OF RECENT DEVELOPMENTS
The following describes certain recent developments relating to the
Discover(R) Card Master Trust I (the "Master Trust"). Capitalized terms used
herein and not otherwise defined will have the meaning ascribed to them in the
relevant prospectus or prospectus supplement.
A. THE SELLER
On May 31, 1997, Dean Witter, Discover & Co., and Morgan Stanley Group
Inc. consummated their previously announced merger. Dean Witter, Discover &
Co., the indirect parent of Greenwood Trust Company, is the surviving
corporation in the merger and will continue its corporate existence under the
name "Morgan Stanley Dean Witter & Co." ("MSDW"). Dean Witter Reynolds
Inc. ("DWR"), Dean Witter International Ltd. ("DWIL"), Morgan Stanley & Co.
Incorporated ("MS & Co.), and Morgan Stanley International Limited (MSIL") are
wholly-owned subsidiaries of MSDW.
B. DISCOVER CARD BUSINESS
1. GENERAL
The number of service establishments that accept the Discover Card has
continued to increase. For the 12 months ended November 30, 1997,
approximately 405,000 new service establishments were enrolled. As of November
30, 1997, there were 34.5 million Discover Card accounts with 43.4 million
cardmembers. Each Discover cardmember is subject to account terms and
conditions that are uniform from state to state. The credit limits on Discover
Card accounts generally range from $1,000 to $6,000, although on occasion
higher or lower limits may be authorized. Effective March 1, 1998, a
cardmember will not be granted cash advances that exceed, in the aggregate, an
amount equal to 50% of such cardmember's credit limit.
2. CREDIT-GRANTING PROCEDURES
Accounts in the Discover Card Portfolio have been solicited by various
techniques and have undergone credit review to establish that the cardmembers
meet standards of stability and ability and willingness to pay. Principally,
the accounts have been solicited (i) via "pre-selected" direct mail or
telemarketing, (ii) by "take-one" applications distributed in many service
establishments that accept the Discover Card and (iii) with various other
programs targeting specific segments of the population. Solicitations have
been supported by general broadcast and print media advertising. Potential
applicants who are sent pre-selected solicitations have met certain credit
criteria relating to their previous payment patterns and longevity of account
relationships with other credit grantors. Since September 1987, all lists have
been pre-screened through credit bureaus before mailing. Pre-screening is a
process by which an independent credit reporting agency evaluates the lists of
names supplied by
<PAGE> 2
Greenwood against credit-worthiness criteria supplied by Greenwood that are
intended to provide a general indication, based on available information, of
the stability and of the willingness and ability of such persons to repay their
obligations; the credit bureaus return to Greenwood only the names of those
persons meeting these criteria. Applicants who respond to such pre-selected
solicitations are subject to a subsequent screening upon receipt of their
completed applications, to ensure that such individuals continue to meet
selection and credit criteria. Applications that are not pre-selected are
evaluated by using credit-scoring systems (statistical evaluation models that
assign point values to credit information regarding applications). The
credit-scoring systems used by Greenwood are based on the credit-scoring
systems developed by a scoring model vendor. Certain applications not approved
under the credit-scoring systems are reviewed by credit analysts. Any such
application as to which a credit analyst recommends approval is processed in
Greenwood's main office in New Castle, Delaware by senior bank review analysts
and may be approved by them.
3. COLLECTION EFFORTS
Efforts to collect past-due Discover Card account receivables currently
are made primarily by collections personnel of NOVUS Services, Inc. ("NSI") or
Greenwood. Under current practice, Greenwood includes a request for payment of
past-due amounts on the monthly billing statement of all accounts with such
amounts. Accounts with past-due amounts also receive a written notice of late
fee charges on their statements and an additional request for payment after any
monthly statement which includes a past-due amount. Collection personnel
generally initiate telephone contact with cardmembers within 30 days after any
portion of their balance becomes past due. In the event that initial telephone
contacts fail to elicit a payment, Greenwood continues to contact the
cardmember by telephone and by mail. Greenwood also may enter into
arrangements with cardmembers to waive finance charges, late fees and principal
due, and extend or otherwise change payment schedules.
C. THE ACCOUNTS
1. BILLING AND PAYMENTS
In addition to periodic finance charges, Greenwood may impose certain
other charges and fees on Discover Card accounts. Greenwood currently charges
a cash advance transaction fee equal to 2.5% of each new cash advance, with a
minimum fee of $3.00 per transaction. Greenwood also currently charges a $20
late fee on Discover Card accounts each time a payment has not been made by the
required due date, a $20 fee for balances exceeding a cardmember's credit limit
as of the close of such cardmember's monthly billing cycle, a $20 fee for any
payment check returned unpaid and a $20 fee for Discover Card cash advance,
balance transfer or other promotional checks that are returned by Greenwood due
to insufficient credit availability.
<PAGE> 3
2. COMPOSITION OF THE ACCOUNTS
The Receivables in the Accounts as of March 1, 1998 totaled
$20,006,241,003.28. The Accounts had an average balance of $890 and an average
credit limit of $4,675 as of March 1, 1998.
Geographic Distribution. As of March, 1, 1998, the five states with the
largest Receivables balances were as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL RECEIVABLES
STATE BALANCE IN THE ACCOUNTS
- ----- -----------------------
<S> <C>
California 11.7%
Texas 9.3%
New York 6.8%
Florida 5.9%
Illinois 4.8%
</TABLE>
Credit Limit Information. Credit limit information as of March 1, 1998
with respect to the Accounts is summarized as follows:
<TABLE>
<CAPTION>
PERCENTAGE
RECEIVABLES OF TOTAL
OUTSTANDING RECEIVABLES
CREDIT LIMIT (000)'s OUTSTANDING
- ------------ ----------- -----------
<S> <C> <C>
Less than or equal to $1,000.00 $ 383,445 1.9%
$1,000.01 to $2,000.00 $ 2,908,360 14.5%
$2,000.01 to $3,000.00 $ 3,012,781 15.1%
Over $3,000.00 $13,701,655 68.5%
----------- -----------
Total $20,006,241 100.0%
=========== ===========
</TABLE>
Seasoning. As of March 1, 1998, 84% of the Accounts were at least 24
months old. The distribution of the age of Accounts as of March 1, 1998 was as
follows:
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
AGE OF ACCOUNTS OF ACCOUNTS OF BALANCES
- --------------- ----------- -----------
<S> <C> <C>
Less than 12 Months 4.8% 4.0%
12 to 23 months 11.2% 11.7%
24 to 35 months 16.6% 17.5%
36 Months and Greater 67.4% 66.8%
------- --------
Total 100.0% 100.0%
======= ========
</TABLE>
Summary Current Delinquency Information. Current delinquency information
as of March 1, 1998 with respect to the Accounts is summarized as follows:
<TABLE>
<CAPTION>
RECEIVABLES
OUTSTANDING PERCENTAGE
PAYMENT STATUS (000)'s OF BALANCES
- -------------- ------- -----------
<S> <C> <C>
Current $ 17,287,575 86.4%
1 to 29 Days $ 1,193,271 6.0%
30 to 59 Days $ 561,303 2.8%
60 to 89 Days $ 346,830 1.7%
90 to 119 Days $ 262,444 1.3%
120 to 149 Days $ 176,252 0.9%
150 to 179 Days $ 178,566 0.9%
------- ----
Total $ 20,006,241 100.0%
------------- =======
</TABLE>
<PAGE> 4
D. COMPOSITION AND HISTORICAL PERFORMANCE OF THE DISCOVER CARD PORTFOLIO.
The following updates information relating to the Discover Card Portfolio
contained in the prospectuses relating to the Master Trust.
1. COMPOSITION OF DISCOVER CARD PORTFOLIO
Geographic Distribution. The Discover Card Portfolio is not concentrated
geographically. As of November 30, 1997, the five states with the largest
receivables balances were as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL RECEIVABLES BALANCE
OF DISCOVER CARD PORTFOLIO
STATE AS OF NOVEMBER 30, 1997
- ----- -----------------------
<S> <C>
California 11.3%
Texas 9.3%
New York 6.7%
Florida 5.9%
Illinois 5.0%
</TABLE>
No other state accounted for more than 5% of the total receivables balance
of the Discover Card Portfolio as of November 30, 1997.
Credit Limit Information. Credit limit information as of November 30,
1997 with respect to the Discover Card Portfolio is summarized as follows:
<TABLE>
<CAPTION>
PERCENTAGE
RECEIVABLES OF TOTAL
OUTSTANDING RECEIVABLES
CREDIT LIMIT (000)'s OUTSTANDING
- ------------ ----------- -----------
<S> <C> <C>
Less than or equal to $1,000.00 $ 528,792 1.8%
$1,000.01 to $2,000.00 $ 4,088,654 13.7%
$2,000.01 to $3,000.00 $ 3,927,544 13.2%
Over $3,000.00 $21,207,550 71.3%
----------- -------
Total $29,752,540 100.0%
=========== =======
</TABLE>
Seasoning. As of November 30, 1997, 84.5% of the accounts in the Discover
Card Portfolio were at least 24 months old. The distribution of the age of
accounts in the Discover Card Portfolio as of November 30, 1997 was as follows:
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
AGE OF ACCOUNTS OF ACCOUNTS OF BALANCES
- --------------- ----------- -----------
<S> <C> <C>
Less than 12 Months 6.6% 5.0%
12 to 23 months 8.9% 9.3%
24 to 35 months 11.7% 12.4%
36 Months and Greater 72.8% 73.3%
------- -------
Total 100.0% 100.0%
======= =======
</TABLE>
<PAGE> 5
Summary Yield Information. The annualized aggregate monthly yield for the
Discover Card Portfolio is summarized as follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS ENDED YEAR ENDED DECEMBER 31,
----------------------------
NOVEMBER 30, 1997 1996 1995 1994
------------------- ---- ---- ----
<S> <C> <C> <C> <C>
Aggregate Monthly Yields(1)
Excluding Recoveries(2) 18.19% 17.72% 16.95% 16.65%
Including Recoveries(3) 18.90% 18.20% 17.39% 17.07%
</TABLE>
(1) Monthly Yield is calculated by dividing Monthly Finance Charges billed by
beginning monthly balance. Monthly Finance Charges include periodic
finance charges, cash advance item charges, late fees, and as of March 1,
1996, overlimit fees, but exclude certain other items, such as annual
membership fees, if any, which are included in Finance Charge Receivables.
Aggregate Monthly Yield is the average of Monthly Yields annualized for
each period shown.
(2) Monthly Yield excluding any recoveries received with respect to
charged-off accounts.
(3) Monthly Yield including recoveries received with respect to charged-off
accounts. Recoveries received with respect to Charged-Off Accounts (other
than the proceeds of sales of Charged-Off Accounts that have been removed
from the Trust) are included in the Trust and are treated as Finance
Charge Collections. However, the level of recoveries for the Trust will
initially be lower than the level of recoveries for the Discover Card
Portfolio because charged-off accounts were not included in the Accounts
selected for inclusion in the Trust. The level of recoveries on
Additional Accounts will also initially be lower than the level of
recoveries for the Discover Card Portfolio because charged-off accounts
will not be included in Additional Accounts selected for inclusion in the
Trust. Greenwood believes that, over time, the level of recoveries on the
Accounts (including on any Additional Accounts), as a percentage of the
Receivables in the Trust will increase to more closely approximate the
level of recoveries in the Discover Card Portfolio, although the extent of
such increase cannot be predicted and may be limited by removals of
Charged-Off Accounts from the Trust and there can be no assurance that the
level of recoveries for the Trust will ever equal the level of recoveries
for the Discover Card Portfolio.
Summary Current Delinquency Information. Current delinquency information
as of November 30, 1997 with respect to the Discover Card Portfolio is
summarized as follows:
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
PAYMENT STATUS OF ACCOUNTS OF BALANCES
- -------------- ----------- -----------
<S> <C> <C>
Current $25,546,310 85.8%
1 to 29 Days $ 2,194,931 7.4%
30 to 59 Days $ 658,518 2.2%
60 to 89 Days $ 466,870 1.6%
90 to 119 Days $ 353,093 1.2%
120 to 149 Days $ 294,001 1.0%
150 to 179 Days $ 238,817 0.8%
----------- -------
Total $29,752,540 100.0%
=========== =======
</TABLE>
<PAGE> 6
Summary Historical Delinquency Information. Historical delinquency
information with respect to the Discover Card Portfolio is summarized as
follows:
<TABLE>
<CAPTION>
AVERAGE OF ELEVEN MONTHS AVERAGE OF TWELVE MONTHS ENDED DECEMBER 31,
-------------------------------------------------------------------------------
ENDED NOVEMBER 30, 1997 1996 1995 1994
----------------------- ---------------------------- ------------------------ ------------------------
DELINQUENT DELINQUENT DELINQUENT DELINQUENT
AMOUNT AMOUNT AMOUNT AMOUNT
(000's) PERCENTAGE(1) (000's) PERCENTAGE(1) (000's) PERCENTAGE(1) (000's) PERCENTAGE(1)
------- ------------- ------ ------------- ---------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30-59 Days........ $ 743,464 2.6% $ 680,645 2.7% $ 568,382 2.6% $405,942 2.2%
60-89 Days........ $ 432,410 1.5% $ 361,992 1.4% $ 276,821 1.3% $193,582 1.1%
90-179 Days....... $ 803,204 2.8% $ 593,661 2.3% $ 403,134 1.8% $282,080 1.5%
---------- ----- ---------- ---- ---------- ---- -------- ------
Total......... $1,979,078 6.9% $1,636,298 6.4% $1,248,337 5.7% $881,604 4.8%
========== ===== ========== ==== ========== ==== ======== =====
</TABLE>
(1) The percentages are the result of dividing Delinquent Amount by Average
Receivables Outstanding for the applicable period. Delinquent Amount is
the average of the monthly ending balances of delinquent accounts during
the periods indicated. Average Receivables Outstanding is the average of
the monthly average amount of receivables outstanding during the periods
indicated.
Summary Charge-Off Information. Charge-off information with respect to
the Discover Card Portfolio is summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
ELEVEN MONTHS ------------------------------------------
----------------- 1996 1995 1994
ENDED ------------ ------------- -------------
NOVEMBER 30, 1997 (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1) .......................... $28,403,076 $25,542,718 $22,031,829 $18,464,611
Gross Charge Offs............................................ $ 1,891,601 $ 1,458,450 $ 923,836 $ 680,487
Gross Charge-Offs as a Percentage of
Average Receivables Outstanding (2).......................... 7.27% 5.71% 4.19% 3.69%
</TABLE>
(1) Average Receivables Outstanding is the average of the monthly average
amount of receivables outstanding during the periods indicated.
(2) Recoveries with respect to charged-off Receivables (other than the
proceeds of sales of Charged-Off Accounts that have been removed from the
Trust) are property of the Trust and are treated as Finance Charge
Collections.
Summary Payment Rate Information(1). The monthly rate of payments in the
Discover Card Portfolio is summarized as follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------
NOVEMBER 30, 1997 1996 1995 1994
----------------- -------- -------- --------
<S> <C> <C> <C> <C>
Average Monthly Payment
Rate(2).................. 14.51% 15.24% 16.20% 16.65%
High Monthly Payment Rate....................... 16.31% 18.08% 18.97% 17.89%
Low Monthly Payment Rate........................ 12.41% 13.33% 13.67% 15.16%
</TABLE>
(1) Monthly Payment Rate is calculated by dividing monthly cardmember
remittances by the cardmember receivable balance outstanding as of the
beginning of the month.
(2) Average Monthly Payment Rate for a period is equal to the sum of
individual monthly payment rates for the period divided by the number of
months in the period.
<PAGE> 7
2. PAYMENT OF THE INVESTOR CERTIFICATES
Each Series Supplement provides that an Amortization Event will occur on
any Distribution Date on which the three-month rolling average Series Excess
Spread is less than zero and the three-month rolling average Group Excess
Spread is less than zero. "Series Excess Spread" for any Distribution Date
equals (a) the sum of Series Finance Charge Collections, Series Yield
Collections, Series Additional Investor Funds and any Class Investment Income
for any Class of the Series minus (b) the sum of (i) the amount of Certificate
Interest for each Class of such Series, (ii) the Investor Servicing Fee, (iii)
the product of the Series Percentage with respect to the Charged-Off Amount and
the Charged-Off Amount and (iv) the Credit Enhancement Fee, in each case for
the Distribution Date. "Group Excess Spread" for any Distribution Date is the
sum of the Series Excess Spreads for each Series in the Group.
The three-month rolling average Group Excess Spread Percentage for Group
One has declined from 6.02% for the Distribution Date in March 1997 to 4.35%
for the Distribution Date in March 1998, primarily as a result of increases in
the Charged-Off Amount. "Group Excess Spread Percentage" for any Distribution
Date is the product of (a) the Group Excess Spread for such Distribution Date
divided by the sum of the Series Investor Interests for each Series in Group
One and (b) twelve.
E. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following sections of "Certain Federal Income Tax Consequences" are
updated as follows:
GENERAL
The following summary of certain anticipated federal income tax
consequences of the purchase, ownership and disposition of investor
certificates of a series is based on the advice of Latham & Watkins ("Tax
Counsel") as counsel to Greenwood. The summary is based on current provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), currently
applicable Treasury Regulations and judicial and administrative rulings and
decisions ("Current Law"). There can be no assurance that the Internal Revenue
Service (the "IRS") will not take a
<PAGE> 8
contrary view, and no ruling from the IRS has been or will be sought.
Legislative, judicial or administrative changes may be forthcoming that could
alter or modify the statements and conclusions set forth herein. Any
legislative, judicial or administrative changes or interpretations may or may
not be retroactive and could affect tax consequences to investor
certificateholders of one or more series.
The summary does not purport to deal with all aspects of federal income
taxation that may affect particular investor certificateholders in light of
their individual circumstances, and, except for certain limited discussions of
particular topics, is not intended for investor certificateholders subject to
special treatment under the federal income tax laws (e.g., life insurance
companies, tax-exempt organizations, financial institutions, broker-dealers and
investors that have a functional currency other than the United States dollar
or hold their investor certificates as part of a hedge, straddle or conversion
transaction). PROSPECTIVE INVESTOR CERTIFICATEHOLDERS SHOULD CONSULT THEIR OWN
TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF INVESTOR
CERTIFICATES.
The discussion assumes that an investor certificate (i) is issued in
registered form, (ii) has all payments denominated in United States dollars and
not determined by reference to the value of any other currency, and (iii) has a
term that exceeds one year. Moreover, the discussion assumes that, unless
Section 1272(a)(6) applies to the investor certificate, the interest formula
for the investor certificate meets the requirements for "qualified stated
interest" under Treasury Regulations relating to original issue discount
("OID"), and that any OID on an investor certificate arising from any excess of
the principal amount of such investor certificate over its issue price is de
minimis (i.e., is less than 1/4% of its principal amount multiplied by the
number of full years until its maturity date).
TAX TREATMENT TO THE INVESTOR CERTIFICATES AS INDEBTEDNESS
Tax Counsel has advised Greenwood that, in their opinion, although the
matter is not free from doubt, under Current Law the investor certificates of
all previously issued series will be treated as indebtedness of Greenwood for
federal income tax purposes. Such opinions were based, in part, upon (i) the
expressed intent of Greenwood to treat the investor certificates for federal,
state and local income and franchise tax purposes as indebtedness secured by
the Receivables and other assets held in the Trust, (ii) the commitment of each
investor certificateholder, by the acceptance of an investor certificate,
similarly to treat the investor certificates for federal, state and local
income and franchise tax purposes as indebtedness, (iii) Tax Counsel's
conclusion that the federal income tax treatment of the investor certificates
should be determined based on the economic substance of the arrangement created
by the Pooling and Servicing Agreement and the Series Supplement of each
series, and (iv) Tax Counsel's analysis of such economic substance. There can
be no assurance, however, that the IRS or the courts will agree with the
conclusions of Tax Counsel. In that regard, the Pooling and Servicing
Agreement and the Series Supplement of a series generally refer to the transfer
of the Receivables as a
<PAGE> 9
"sale," and Greenwood has informed Tax Counsel (i) that different criteria are
used in determining the non-tax accounting treatment of the transaction and
(ii) that, for regulatory and financial accounting purposes, Greenwood will
treat the transfer of the Receivables under the Pooling and Servicing Agreement
and the Series Supplement with respect to such series as a transfer of an
ownership interest in the Receivables and not as the creation of a debt
obligation. Notwithstanding the foregoing, Greenwood will treat the investor
certificates as indebtedness for federal, state and local income and franchise
tax purposes and the investor certificateholders, by acceptance of the investor
certificates, agree to treat such investor certificates of a series as
indebtedness of Greenwood for federal, state and local income and franchise tax
purposes. Except for the discussion in "-- Possible Characterization of the
Investor Certificates" below, the following discussion of federal income tax
consequences assumes that the investor certificates of a series will be treated
as indebtedness of Greenwood for federal income tax purposes.
The above discussion is qualified in its entirety by reference to the tax
opinions delivered in connection with any issuance of the investor certificates
of a series, and filed as an exhibit to the Registration Statement to which
such series relates.
UNITED STATES INVESTOR CERTIFICATEHOLDERS
The rules set forth below apply to investor certificateholders who are
"United States Persons." A "United States Person" is (i) a citizen or resident
of the United States, (ii) a corporation or partnership created or organized in
the United States or under the laws of the United States or of any state, (iii)
an estate the income of which is subject to United States federal income
taxation regardless of its source, or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust, and one or more United States persons have the authority to control all
substantial decisions of the trust (or, under certain circumstances, a trust
the income of which is subject to United States federal income taxation
regardless of its source).
Stated Interest on Investor Certificates. Subject to the discussion
below, interest paid on the investor certificates will be taxable as ordinary
income when received or accrued by investor certificateholders in accordance
with their method of accounting. Generally, interest received on the investor
certificates will constitute "investment income" for purposes of certain
limitations of the Code concerning the deductibility of investment interest
expense.
Original Issue Discount. In general, the excess of the stated redemption
price at maturity of the investor certificates of a series over their issue
price will constitute OID, unless such excess is within a statutorily-defined
de minimis exception.
If the investor certificates of a series are issued with OID, investor
certificateholders generally will be required to include OID in income for each
accrual period in advance of receipt of the cash representing such OID. A
holder of a debt instrument issued with OID is required to recognize as
ordinary income the amount of OID on the debt instrument as such discount
accrues, in accordance with a constant yield method. Under Section 1272(a)(6)
of the Code, special provisions apply to debt instruments on which payments may
be accelerated due to prepayments of other obligations securing those debt
instruments or, to the extent
<PAGE> 10
provided in Treasury Regulations, by reason of other events. Under these
provisions, the computation of OID (and market discount, see "-- Market
Discount," below) on such debt instruments must be determined by taking into
account both the prepayment assumptions used in pricing the debt instrument and
the actual prepayment experience. As a result, the amount of OID on such debt
instruments that will accrue in any given accrual period may either increase or
decrease depending upon the actual prepayment rate. Because no Treasury
Regulations have been issued interpreting Section 1272(a)(6), investor
certificateholders should consult their own tax advisors regarding the impact
of the OID rules in the event the investor certificates of a series are issued
with OID.
Market Discount. Investor certificateholders should be aware that the
resale of an investor certificate may be affected by the market discount
provisions of the Code. These rules generally provide that, subject to a
statutorily-defined de minimis exception, if an investor certificateholder
acquires an investor certificate at a market discount (i.e., at a price below
its stated redemption price at maturity or its revised issue price if it was
issued with OID) and thereafter recognizes gain upon a disposition of the
investor certificate (or disposes of it in certain non-recognition transactions
such as a gift), the lesser of such gain (or appreciation, in the case of an
applicable non-recognition transaction) or the portion of the market discount
that accrued while the investor certificate was held by such investor
certificateholder will be treated as ordinary interest income at the time of
the disposition. The market discount rules also provide that an investor
certificateholder who acquires an investor certificate at a market discount may
be required to defer a portion of any interest expense that otherwise may be
deductible on any indebtedness incurred or maintained to purchase or carry the
investor certificate until the investor certificateholder disposes of the
investor certificate in a taxable transaction.
Principal payments on the investor certificates of a series will be made
monthly, semi-annually or at other regular intervals. An investor
certificateholder who acquired an investor certificate at a market discount
would be required to treat as ordinary interest income the portion of any
principal payment attributable to accrued market discount on such investor
certificate.
An investor certificateholder who acquired an investor certificate at a
market discount may elect to include market discount in income as the discount
accrues, either on a ratable basis or, if elected, on a constant interest rate
basis. The current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies and may not be revoked without the consent
of the IRS. If an investor certificateholder elects to include market discount
in income in accordance with the preceding sentence, the foregoing rules with
respect to the recognition of ordinary income on sales, principal payments and
certain other dispositions of the investor certificates and the deferral of
interest deductions on indebtedness related to the investor certificates will
not apply.
Amortizable Bond Premium. Generally, if the price or tax basis of an
investor certificate held as a capital asset exceeds the sum of all amounts
payable on the investor certificate after the acquisition date (other than
payments of qualified stated interest), such excess
<PAGE> 11
may constitute amortizable bond premium that the investor certificateholder may
elect to amortize under the constant interest rate method over the period from
the investor certificateholder's acquisition date to the investor certificate's
maturity date. Treasury Regulations specifically exclude debt instruments
acquired on or after March 2, 1998 that are subject to Section 1272(a)(6) of
the Code from the amortizable bond premium rules contained in such Regulations.
See discussion of Section 1272(a)(6) in "-- Original Issue Discount."
Amortizable bond premium generally will be treated as an offset to interest
income on the investor certificate, rather than as a separate interest
deduction item subject to the investment interest limitations of the Code. An
investor certificateholder that elects to amortize bond premium must generally
reduce the tax basis in the related investor certificate by the amount of bond
premium used to offset interest income. If an investor certificate purchased
at a premium is redeemed in full prior to its maturity, an investor
certificateholder who has elected to amortize bond premium should be entitled
to a deduction for any remaining unamortized bond premium in the taxable year
of redemption.
Sales of Investor Certificates. In general, an investor certificateholder
will recognize gain or loss upon the sale, exchange, redemption or other
taxable disposition of an investor certificate measured by the difference
between (i) the amount of cash and the fair market value of any property
received (other than the amount attributable to, and taxable as, accrued but
unpaid interest) and (ii) the investor certificateholder's tax basis in the
investor certificate (as increased by any OID or market discount previously
included in income by the investor certificateholder and decreased by any
deductions previously allowed for amortizable bond premium and by any payments
reflecting principal or OID received with respect to such investor
certificate).
Subject to the OID and market discount rules discussed above and to the
one-year holding period requirement for long-term capital gain treatment, any
such gain or loss generally will be long-term capital gain or loss, provided
the investor certificate was held as a capital asset. The maximum federal
income tax rate applicable to capital gains and ordinary income for
corporations is 35%. Moreover, capital losses generally may be used only to
offset capital gains. The maximum ordinary federal income tax rate for
individuals, estates and trusts is 36% (for married individuals filing joint
returns with taxable income in excess of $155,950 ($128,100 for certain
unmarried individuals)), whereas the maximum long-term capital gains rate
applicable to the sale of an investor certificate is 20% for such taxpayers
who, at the time of such sale, have held such investor certificate for more
than 18 months, and 28% for such taxpayers who, at the time of such sale, have
held such investor certificate for more than one year but not more than 18
months. A further 10% surtax will be imposed on ordinary income of individuals
with taxable incomes in excess of $278,450 (for married individuals filing
joint returns and for certain unmarried individuals) and estates and trusts
with taxable incomes in excess of $8,350 (thereby creating a maximum federal
income tax rate for such taxpayers of 39.6%).
FOREIGN INVESTOR CERTIFICATEHOLDERS
Set forth below is a general discussion of the United States federal
income and estate tax consequences of the purchase, ownership, sale or other
disposition of an investor
<PAGE> 12
certificate by an investor certificateholder that, for United States federal
income tax purposes, is (i) a foreign corporation, (ii) a non-resident alien
individual, (iii) a foreign estate or trust or (iv) a foreign partnership, as
such terms are defined in the Code (a "non-U.S. Holder"). Some non-U.S.
Holders (including certain residents of certain United States possessions or
territories) may be subject to special rules not discussed herein.
Interest (including OID, if any) paid to a non-U.S. Holder of investor
certificates will not be subject to a required withholding of United States
federal income tax, provided that (i) such interest payments are effectively
connected with the conduct of a trade or business of the non-U.S. Holder within
the United States and such non-U.S. Holder provides an appropriate statement to
such effect, or (ii)(a) the holder is not (1) a "10 percent shareholder" of
Greenwood or (2) a "controlled foreign corporation" with respect to which
Greenwood is a "related person" within the meaning of the Code and (b) the
beneficial owner (and, if relevant, a financial institution on the beneficial
owner's behalf ) provides an appropriate statement, signed under penalty of
perjury, certifying that the beneficial owner of such investor certificate is
not a United States Person and providing the beneficial owner's name and
address. The statement generally must be provided in the year a payment occurs
or in either of the two preceding years. For years after 1998, certain
Treasury Regulations specify that the statement must be made on Form W-8 and
provided prior to payment.
A non-U.S. Holder generally will not be subject to United States federal
income tax on gain realized on the disposition of an investor certificate
(other than gain attributable to accrued interest or OID, which is addressed in
the preceding paragraph); provided that (i) the gain is not effectively
connected with the conduct of a trade or business within the United States by
the non-U.S. Holder and (ii) in the case of an individual holder, (A) the
non-U.S. Holder is not present in the United States for 183 days or more in the
taxable year of the sale, exchange or redemption or (B)(1) the non-U.S. Holder
does not have a "tax home" in the United States and (2) the gain is not
attributable to an office or other fixed place of business maintained in the
United States by the non-U.S. Holder.
If the interest or gain on an investor certificate held by a non-U.S.
Holder is effectively connected with the conduct of a trade or business within
the United States by the non-U.S. Holder, then the non-U.S. Holder (although
exempt from the withholding of tax previously discussed if the non-U.S. Holder
provides an appropriate statement) generally will be subject to United States
federal income tax on the interest (including OID, if any) or gain at regular
federal income tax rates in a similar fashion to a United States Person. See
"-- United States Investor Certificateholders," above. In addition, if the
non-U.S. Holder is a foreign corporation, it may be subject to a branch profits
tax equal to 30% of its "effectively connected earnings and profits" within the
meaning of the Code for the taxable year, as adjusted for certain items, unless
it qualifies for a lower rate under an applicable tax treaty.
An investor certificate held by an individual who at the time of death is
a non-U.S. Holder will not be subject to United States federal estate tax as a
result of such individual's death if, immediately before death, (i) the
individual was not a 10 percent
<PAGE> 13
shareholder" of Greenwood and (ii) interest on such investor certificate was
not effectively connected with the conduct of a trade or business within the
United States by the individual.
THE FOREGOING DESCRIPTION OF THE POTENTIAL UNITED STATES FEDERAL INCOME
AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS IS NECESSARILY INCOMPLETE.
NON-U.S. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE APPLICATION OF THE FOREGOING MATTERS TO THEM.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting requirements apply to certain payments of principal
of and interest on (and the amount of OID, if any, accrued on) an obligation,
and to proceeds of certain sales of an obligation before maturity, to certain
nonexempt investor certificateholders who are United States Persons. Payments
to certain entities, including, but not limited to, corporations and financial
institutions, are exempt from information reporting. In addition, a backup
withholding tax also may apply with respect to such amounts if such investor
certificateholders fail to provide correct taxpayer identification numbers and
other information. The backup withholding tax rate is 31%. Greenwood, or a
paying agent or a broker, as the case may be, will be required to withhold from
any payment that is subject to backup withholding unless the investor
certificateholder has provided the required certification in the manner
prescribed in applicable Treasury Regulations.
In the case of payments of principal of and interest on (and the amount of
OID, if any, accrued on) investor certificates by Greenwood or its paying
agents to non-U.S. Holders, Treasury Regulations provide that backup
withholding and information reporting will not apply to payments with respect
to which either requisite certification has been received or an exemption has
otherwise been established (provided that neither Greenwood nor its paying
agents has actual knowledge that the holder is a United States Person or that
the conditions of any other exemption are not in fact satisfied). Payments of
the proceeds of the sale of an investor certificate to or through a foreign
office of a United States broker or foreign brokers with certain types of
relationships to the United States, however, are subject to certain information
reporting requirements, unless the payee is an exempt recipient or such broker
has evidence in its records that the payee is not a United States Person and no
actual knowledge that such evidence is false and certain other conditions are
met. After 1998, unless exempt from information reporting, such payments may
be subject to backup withholding. Payments of the proceeds of a sale to or
through the United States office of a broker will be subject to information
reporting and backup withholding unless the payee makes appropriate
certifications (and no agent of the broker who is responsible for receiving or
reviewing such statement has actual knowledge that it is incorrect) or an
exemption is otherwise established.
Any amounts withheld under the backup withholding rules from a payment to
an investor certificateholder will be allowed as a refund or a credit against
such investor certificateholder's United States federal income tax.
<PAGE> 14
Recently, the Treasury Department has promulgated final regulations
regarding the withholding and information reporting rules discussed above. In
general, the final regulations do not significantly alter the substantive
withholding and information reporting requirements but unify current
certification procedures and forms and clarify reliance standards. Special
rules apply which permit the shifting of primary responsibility for withholding
to certain financial intermediaries acting on behalf of beneficial owners. The
final regulations are generally effective for payments made after December 31,
1998, subject to certain transition rules. Non-U.S. Holders are urged to
consult their own tax advisors with respect to these final regulations.
POSSIBLE CHARACTERIZATION OF THE INVESTOR CERTIFICATES
The foregoing discussion assumes that the investor certificates of a
series will be treated as indebtedness of Greenwood for federal income tax
purposes. However, although Tax Counsel has opined to such effect with respect
to each previously issued series of investor certificates, the matter is not
free from doubt, and there can be no assurance that the IRS or the courts will
agree with Tax Counsel's opinion. If the IRS were to contend successfully that
the investor certificates of a series are not indebtedness of Greenwood for
federal income tax purposes, it could find that the arrangement created by the
Pooling and Servicing Agreement and the Series Supplement with respect to such
series constitutes a partnership which could be treated as a "publicly traded
partnership" taxable as a corporation.
If the investor certificates of a series were treated as interests in a
partnership, the partnership in all likelihood would be treated as a "publicly
traded partnership." If the partnership were nevertheless not taxable as a
corporation (for example, because of an exception for a "publicly traded
partnership" whose income is interest that is not derived in the conduct of a
financial business), such partnership would not be subject to federal income
tax. Rather, the investor certificateholders of such series would be required
to include in income their share of the income and deductions generated by the
assets of the Trust, as determined under partnership tax accounting rules. In
such event, the amount, timing and character of the income required to be
recognized by an investor certificateholder could differ materially from the
amount, timing and character thereof if the investor certificates were
characterized as indebtedness of Greenwood. It also is possible that such a
partnership could be subject to tax in certain states where the partnership is
considered to be engaged in business, and that the investor certificateholders,
as partners in such a partnership, could be taxed on their share of the
partnership's income in such states.
In addition, if such a partnership is considered to be engaged in a trade
or business within the United States, the partnership would be subject to a
withholding tax on distributions to (or, at its election, income allocable to)
non-U.S. Holders, and each such non-U.S. Holder would be credited for such
non-U.S. Holder's share of the withholding tax paid by the partnership.
Moreover, the non-U.S. Holder generally would be subject to United States
federal income tax at regular federal income tax rates, and possibly a branch
profits tax (in the case of a corporate non-U.S. Holder), as previously
described. See "- Foreign Investor Certificateholders" above.
<PAGE> 15
Further, even if the partnership is not considered to be engaged in a trade or
business within the United States, it appears that partnership withholding will
be required in the case of any such non-U.S. Holder that is engaged in a trade
or business within the United States to which the investor certificate income
is effectively connected.
Alternatively, although there may be arguments to the contrary, it appears
that if such a partnership is not considered to be engaged in a trade or
business within the United States and if income with respect to an investor
certificate is not otherwise effectively connected with the conduct of a trade
or business within the United States by a non-U.S. Holder, the non-U.S. Holder
would be subject to United States federal income tax and withholding at a rate
of 30% (unless reduced by an applicable treaty) on such non-U.S. Holder's
distributive share of the partnership's interest income.
If the investor certificates of a series were treated as interests in a
"publicly traded partnership" taxable as a corporation, the income from the
assets of the Trust would be subject to federal income tax and tax imposed by
certain states where the entity would be considered to have operations at
corporate rates, which would reduce the amounts available for distribution to
the investor certificateholders. Under such circumstances, the investor
certificates may be treated as debt of an entity taxable as a corporation or,
alternatively, as equity of such an entity in which latter case interest
payments to investor certificateholders could be treated as dividends and, if
made to non-U.S. Holders, could be subject to United States federal income tax
and withholding at a rate of 30% (unless reduced by an applicable tax treaty).
Finally, with respect to a series having a class of subordinated
certificates, the IRS might contend that even though the Class A certificates
are properly classified as debt obligations for federal income tax purposes,
the Class B certificates are not properly classified as such. Under this
approach, the Class B certificates might be viewed as equity interests in an
entity (such as Greenwood or a joint venture consisting of Greenwood and the
Class B certificateholders), with the Class A certificates treated as debt
obligations of such entity. If such an entity were characterized as a
partnership not taxable as a corporation, the entity would not be subject to
federal income tax, although the Class B certificateholders would be subject to
the tax consequences previously described with respect to interests in a
partnership that is not taxable as a corporation. Alternatively, if such an
entity were characterized as a "publicly traded partnership" taxable as a
corporation, the tax liability on the income of the entity might, in certain
circumstances, reduce distributions on both the Class A certificates and the
Class B certificates, and the Class B certificateholders would be subject to
the tax consequences previously described with respect to interests in a
"publicly traded partnership" taxable as a corporation. In addition, any
non-U.S. Holder of a Class A certificate who is the actual or constructive
owner of 10% or more of the outstanding principal amount of the Class B
certificates may be treated as a "10 percent shareholder." See "- Foreign
Investor Certificateholders" above.
Based on Tax Counsel's advice as to the likely treatment of the investor
certificates for federal income tax purposes, Greenwood and the Trust will not
attempt to cause the arrangement created by the Pooling and Servicing Agreement
and the Series Supplement
<PAGE> 16
with respect to a series to comply with the federal or state income tax
reporting requirements applicable to partnerships or corporations. If such
arrangement were later held to constitute a partnership or corporation, the
manner of bringing it into compliance with such requirements is unclear.
Prospective investor certificateholders should consult their own tax
advisors as to the risk that the investor certificates will not be treated as
indebtedness of Greenwood, and the possible tax consequences of potential
alternative treatments.
F. ERISA CONSIDERATIONS
The section entitled "ERISA Considerations" is updated as follows:
If the investor certificates were deemed to be an extension of credit for
ERISA purposes, the purchase of the investor certificates by a Plan with
respect to which Greenwood or one of its affiliates is a "party in interest" or
"disqualified person" might be considered a prohibited extension of credit
under Section 406 of ERISA and Section 4975 of the Code unless an exemption is
applicable. There are at least four prohibited transaction class exemptions
issued by the DOL that might apply, depending in part on who decided to acquire
the investor certificates for the Plan: DOL Prohibited Transaction Exemption
("PTE") 84-14 (Class Exemption for Plan Asset Transactions determined by
Independent Qualified Professional Asset Managers); PTE 91-38 (Class Exemption
for Certain Transactions Involving Bank Collective Investment Funds); PTE 90-1
(Class Exemption for Certain Transactions Involving Insurance Company Pooled
Separate Accounts); and PTE 96-23 (Class Exemption for Plan Asset Transactions
Determined by In-House Asset Managers).
Moreover, whether the investor certificates are debt or equity for ERISA
purposes, a possible violation of the prohibited transaction rules could occur
if the investor certificates were purchased during the offering with assets of
a Plan if Greenwood, the Trustee, any Underwriter or any of their affiliates
were a fiduciary with respect to such Plan. Under ERISA and the Code, a person
is a "fiduciary" with respect to a Plan to the extent (i) he exercises any
discretionary authority or discretionary control respecting management of such
Plan or exercises any authority or control respecting management or disposition
of its assets, (ii) he renders investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys or other property
of such Plan, or has any authority or responsibility to do so or (iii) he has
any discretionary authority or discretionary responsibility in the
administration of such Plan. Accordingly, the fiduciaries of any Plan should
not purchase the investor certificates during the offering with assets of any
Plan if Greenwood, the Trustee, the Underwriters or any of their affiliates is
a fiduciary with respect to the Plan.
In light of the foregoing, fiduciaries of Plans considering the purchase
of the investor certificates should consult their own tax or other appropriate
counsel regarding the application of ERISA and the Code to their purchase of
the investor certificates.
In particular, insurance companies considering the purchase of investor
certificates should consult their own benefits counsel or other appropriate
counsel with respect to
<PAGE> 17
the United States Supreme Court's decision in John Hancock Mutual Life
Insurance Co. v. Harris Trust & Savings Bank, 114 S. Ct. 517 (1993) ("John
Hancock"), DOL PTE 95-60 (Class Exemption for Certain Transactions Involving
Insurance Company General Accounts) and Section 401(c) of ERISA. In John
Hancock, the Supreme Court held that the assets held in an insurance company's
general account may be deemed to be "plan assets" under certain circumstances.
Subject to numerous conditions and limitations, PTE 95-60 effectively reverses
this portion of the holding in John Hancock. Section 401(c) of ERISA was added
by the Small Business Job Protection Act of 1996 and requires the Secretary of
Labor to issue final regulations by December 31, 1997 which are to provide
guidance for the purpose of determining, in cases where an insurer issues one
or more policies (supported by the assets of the insurer's general account) to
or for the benefit of an employee benefit plan, which assets of such insurer
(other than assets held in a separate account) constitute "plan assets" for the
purposes of the fiduciary responsibility provisions of ERISA and Section 4975
of the Code. Such regulations shall only apply with respect to policies which
are issued by an insurer on or before December 31, 1998, to or for the benefit
of an employee benefit plan which is supported by the assets of such insurer's
general account. With respect to policies issued on or before December 31,
1998, such regulations shall take effect at the end of the 18-month period
following the date on which such regulations become final. Section 401(c) of
ERISA also provides that no person will be subject to liability under Section
4975 of the Code and the fiduciary responsibility provisions of ERISA on the
basis of a claim that the assets of an insurer (other than assets held in a
separate account) are "plan assets," for conduct occurring before the date
which is 18 months following the date the final regulations become final. On
December 22, 1997, the DOL issued proposed regulations under Section 401(c) of
ERISA. 29 CFR 2550.401c-1.
Accordingly, investors should analyze whether John Hancock, PTE 95-60,
Section 401(c) of ERISA and any regulations issued pursuant to Section 401(c)
of ERISA may have an impact with respect to their purchase of investor
certificates.
G. GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of
a Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency) an investor certificate.
Treasury Regulations issued on October 14, 1997, which will be applicable
to payments made after 1998 (with certain transition rules), provide for the
unification and simplification of certain current certification procedures.
Under these regulations, a Form W-8 will replace Forms 1001 and 4224 and become
the only form necessary to obtain a withholding exemption or reduction for
non-U.S. Holders. Further, pursuant to these new regulations, special rules
permit the shifting of primary responsibility for withholding to certain
financial intermediaries acting on behalf of beneficial owners. Although a
beneficial owner will still be required to submit a Form W-8 to such an
intermediary, such intermediary generally will not be required to forward the
Form W-8 received from such beneficial owner to the withholding agent. Both
U.S. Holders and non-U.S. Holders are urged to consult their own tax advisors
with respect to these new regulations.
<PAGE> 18
The term "U.S. Holder" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any state, (iii) an estate the income of which is includible
in gross income for United States tax purposes, regardless of its source, or
(iv) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust, and one or more United States
persons have the authority to control all substantial decisions of the trust
(or, under certain circumstances, a trust the income of which is subject to
United States federal income taxation regardless of its source).
