<PAGE> 1
SUBJECT TO REVISION
SERIES TERM SHEET DATED JANUARY 8, 2001
DISCOVER(R) CARD MASTER TRUST I, SERIES 2001-2
$1,000,000,000 FLOATING RATE CLASS A CERTIFICATES
$52,632,000 FLOATING RATE CLASS B CERTIFICATES
DISCOVER BANK
MASTER SERVICER, SERVICER AND SELLER
THE CERTIFICATES REPRESENT INTERESTS IN THE DISCOVER CARD MASTER TRUST
I. THE CERTIFICATES ARE NOT OBLIGATIONS OF DISCOVER BANK OR ANY OF ITS
AFFILIATES, AND NEITHER THE CERTIFICATES NOR THE UNDERLYING CREDIT CARD
RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THIS SERIES TERM SHEET CONTAINS STRUCTURAL AND COLLATERAL INFORMATION
ABOUT THE CERTIFICATES; HOWEVER, THIS SERIES TERM SHEET DOES NOT CONTAIN
COMPLETE INFORMATION ABOUT THE CERTIFICATES. THE INFORMATION IN THIS SERIES TERM
SHEET IS PRELIMINARY AND WILL BE SUPERSEDED BY THE INFORMATION CONTAINED IN THE
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. YOU SHOULD READ BOTH THE PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS. THE TRUST AND THE DISCOVER CARD PORTFOLIO MAY NOT
PERFORM IN THE FUTURE AS THEY HAVE PERFORMED IN THE PAST. PRICE AND AVAILABILITY
OF THE CERTIFICATES MAY CHANGE WITHOUT NOTICE.
WE HAVE PREPARED THIS SERIES TERM SHEET SOLELY FOR INFORMATIONAL
PURPOSES. THIS SERIES TERM SHEET IS NOT AN OFFER TO BUY OR SELL ANY SECURITY,
NOR IS IT A REQUEST TO PARTICIPATE IN ANY PARTICULAR TRADING STRATEGY. DISCOVER
BANK MAY NOT OFFER OR SELL THE CERTIFICATES IN ANY STATE WHERE THE OFFER OR SALE
IS PROHIBITED. DISCOVER BANK WILL NOT SELL YOU ANY OF THE CERTIFICATES UNLESS
YOU HAVE RECEIVED BOTH THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THE
UNDERWRITERS MAY HOLD OR TRADE SECURITIES OF THE TRUST OR DISCOVER BANK AND MAY
ALSO PERFORM INVESTMENT BANKING SERVICES FOR THE TRUST AND DISCOVER BANK.
MORGAN STANLEY DEAN WITTER
BANC OF AMERICA SECURITIES LLC
BARCLAYS CAPITAL
DRESDNER KLEINWORT BENSON
THIS SERIES TERM SHEET MAY NOT BE DISTRIBUTED TO PRIVATE CUSTOMERS AS
DEFINED BY THE U.K. SECURITIES AND FUTURES AUTHORITY.
<PAGE> 2
This series term sheet will be superseded in its entirety by the
information appearing in the prospectus supplement, the prospectus and the
Series 2001-2 Supplement to the Pooling and Servicing Agreement.
TITLE OF SECURITIES....................... Discover Card Master Trust I,
Series 2001-2 Floating Rate Class
A Credit Card Pass-Through
Certificates and Discover Card
Master Trust I, Series 2001-2
Floating Rate Class B Credit Card
Pass-Through Certificates.
INTEREST RATE............................. Class A Certificates: LIBOR plus
___% per year.
Class B Certificates: LIBOR plus
___% per year.
The trustee will calculate
interest on the certificates on
the basis of the actual number of
days elapsed and a 360-day year.
"LIBOR" will mean the London
interbank offered rate for
one-month United States dollar
deposits, determined two business
days before the start of each
interest accrual period.
INTEREST PAYMENT DATES.................... The 15th day of each month, or the
next business day, beginning in
February 2001.
EXPECTED MATURITY DATES................... Class A Certificates: January 15,
2006, or the next business day. If
an Amortization Event occurs, the
trust will pay principal monthly
and the final principal payment
may be made before or after
January 15, 2006.
Class B Certificates: February 15,
2006, or the next business day. If
an Amortization Event occurs, the
trust will pay principal monthly
and the final payment of principal
may be made either before or after
February 15, 2006. The trust must
generally pay all Class A
principal before it pays any Class
B principal.
An "Amortization Event" is an
event that will cause the trust to
begin repaying principal on a
monthly basis.
SERIES TERMINATION DATE................... The first business day following
July 15, 2008, or if July 15, 2008
is not a business day, the second
business day following July 15,
2008. The Series Termination Date
is the last day on which the trust
will pay principal on the
certificates.
SUBORDINATION OF CLASS B CERTIFICATES
(CLASS A CREDIT ENHANCEMENT).............. The Class B Certificates are
subordinated to the Class A
Certificates, up to a specified
dollar amount, known as the
"Available Subordinated Amount."
AVAILABLE SUBORDINATED AMOUNT............. Initially $131,579,000, which may
be reduced, reinstated or
increased from time to time. The
Available Subordinated Amount will
increase by:
2
<PAGE> 3
- $5,263,160 after a Supplemental
Credit Enhancement Event, if
Discover Bank has not made an
Effective Alternative Credit
Support Election;
- $47,368,440 after an Effective
Alternative Credit Support
Election, if a Supplemental
Credit Enhancement Event has
occurred; or
- $52,631,600 after an Effective
Alternative Credit Support
Election, if a Supplemental
Credit Enhancement Event has
not occurred.
A "Supplemental Credit Enhancement
Event" will occur the first time
Standard & Poor's Ratings Services
withdraws the long-term debt or
deposit rating of Discover Bank,
or an additional seller, if any,
or reduces this rating below BBB-.
"Effective Alternative Credit
Support Election" will mean an
effective election made by
Discover Bank to change the way in
which the trust allocates finance
charge collections to this Series.
To make this election, Discover
Bank must deposit additional funds
into the cash collateral account
discussed below.
CASH COLLATERAL ACCOUNT
(CLASS B CREDIT ENHANCEMENT).............. Discover Bank will arrange to have
a cash collateral account
established and funded with
$78,947,400 for the direct benefit
of the Class B investors, the
"Credit Enhancement Account," on
the date the certificates are
issued. The trustee may withdraw
funds from this account to
reimburse the Class B investors
for amounts that would otherwise
reduce their interest in the trust
or affect their interest payments.
The amount on deposit in this
account may decrease or increase
on future Distribution Dates. A
"Distribution Date" is the 15th
calendar day of each month, or the
next business day, beginning in
February 2001.
The maximum amount of Credit
Enhancement as of any Distribution
Date will be:
Before a Supplemental Credit
Enhancement Event or an Effective
Alternative Credit Support
Election
- 7.5% of the Series Investor
Interest as of the end of the
preceding month, but not less
than $10,526,320; or
After a Supplemental Credit
Enhancement Event but before an
Effective Alternative Credit
Support Election
3
<PAGE> 4
- 8.0% of the Series Investor
Interest as of the end of the
preceding month, but not less
than $10,526,320; or
After an Effective Alternative
Credit Support Election
- 12.5% of the Series Investor
Interest as of the end of the
preceding month, but not less
than $10,526,320.
However, if an Amortization Event
has occurred, the maximum amount
of Credit Enhancement will be the
amount on deposit in the Credit
Enhancement Account on the
Distribution Date immediately
before the Amortization Event
occurred.
"Series Investor Interest" will
mean $1,052,632,000 minus
- the amount of principal
collections on deposit for the
benefit of investors in this
Series, after giving effect to
losses of principal on
investments of these funds,
- the aggregate amount of
principal previously paid to
investors in this Series, and
- the aggregate amount of
investor losses resulting from
accounts in which the
receivables have been
charged-off as uncollectible,
after giving effect to all
provisions in the Series
Supplement to reimburse these
charged-off amounts.
THE RECEIVABLES........................... The receivables in the Accounts
included in the trust as of
December 1, 2000 totaled
$33,817,556,119.54.
GROUP EXCESS SPREAD....................... The certificates initially will be
included in the "Group One" group
of series. The three-month rolling
average Group Excess Spread
Percentage, as defined below, will
be 4.24% for the Distribution Date
in January 2001.
"Group Excess Spread Percentage"
for any Distribution Date is a
percentage calculated by
multiplying:
- twelve, by
- an amount for all series in
Group One equal to
- the total amount of finance
charge collections,
investment income and other
similar collections
allocable to each series for
the prior calendar month,
minus
- the total amount of interest
and certain fees payable for
each series and the amount
of receivables allocable to
each series that have
4
<PAGE> 5
been charged off as
uncollectible for the prior
calendar month;
and then dividing the product by
an amount equal to the sum of all
investor interests for each series
in Group One, in each case for the
Distribution Date.
RATING OF THE INVESTOR CERTIFICATES....... The trust will only issue the
certificates if Standard & Poor's
has rated the Class A Certificates
"AAA" and the Class B Certificates
at least "A" and Moody's Investors
Service, Inc. has rated the Class
A Certificates "Aaa" and has rated
the Class B Certificates at least
"A2."
ERISA CONSIDERATIONS...................... Discover Bank believes that
employee benefit plans subject to
ERISA may acquire Class A
Certificates; however, advisers to
these plans should consult their
own counsel. Employee benefit
plans subject to ERISA may not
acquire the Class B Certificates.
LISTING................................... Discover Bank expects to list the
certificates on the Luxembourg
Stock Exchange to facilitate
trading in non-U.S. markets.
5
<PAGE> 6
COMPOSITION OF THE ACCOUNTS
We have set forth information below about the Accounts that are part of
the trust. We provide additional information about all accounts in the Discover
Card portfolio under "Composition and Historical Performance of the Discover
Card Portfolio."
GEOGRAPHIC DISTRIBUTION. As of December 1, 2000, the following five
states had the largest receivables balances :
PERCENTAGE OF TOTAL
RECEIVABLES
STATE BALANCE IN THE ACCOUNTS
----- -----------------------
California..................... 10.9%
Texas.......................... 9.1%
New York....................... 7.0%
Florida........................ 6.0%
Illinois....................... 5.2%
CREDIT LIMIT INFORMATION. As of December 1, 2000, the Accounts had the
following credit limits:
RECEIVABLES PERCENTAGE OF
OUTSTANDING TOTAL RECEIVABLES
CREDIT LIMIT (000'S) OUTSTANDING
------------ ------- -----------
Less than or equal to $1,000.00.......... $ 410,720 1.2%
$1,000.01 to $2,000.00................... $ 1,691,856 5.0%
$2,000.01 to $3,000.00................... $ 2,014,869 6.0%
Over $3,000.00........................... $29,700,111 87.8%
----------- ------
Total.................................. $33,817,556 100.0%
=========== ======
SEASONING. As of December 1, 2000, 87.9% of the Accounts were at least
24 months old. The ages of Accounts as of December 1, 2000 were distributed as
follows:
PERCENTAGE PERCENTAGE
AGE OF ACCOUNTS OF ACCOUNTS OF BALANCES
--------------- ----------- -----------
Less than 12 Months............ 4.6% 5.7%
12 to 23 Months................ 7.5% 7.9%
24 to 35 Months................ 4.5% 2.8%
36 Months and Greater.......... 83.4% 83.6%
------ ------
100.0% 100.0%
====== ======
6
<PAGE> 7
SUMMARY CURRENT DELINQUENCY INFORMATION. As of December 1, 2000, the
Accounts had the following delinquency statuses:
AGGREGATE
BALANCES PERCENTAGE
PAYMENT STATUS (000'S) OF BALANCES
-------------- ------- -----------
Current........................ $29,426,683 87.1%
1 to 29 Days................... $ 2,134,340 6.3%
30 to 59 Days.................. $ 784,060 2.3%
60 to 89 Days.................. $ 540,743 1.6%
90 to 119 Days................. $ 382,037 1.1%
120 to 149 Days................ $ 300,479 0.9%
150 to 179 Days................ $ 249,214 0.7%
----------- -------
$33,817,556 100.0%
=========== ======
COMPOSITION AND HISTORICAL PERFORMANCE
OF THE DISCOVER CARD PORTFOLIO
GEOGRAPHIC DISTRIBUTION. The Discover Card portfolio is not highly
concentrated geographically. As of November 30, 2000, the following five states
had the largest receivables balances:
PERCENTAGE OF TOTAL RECEIVABLES BALANCE
OF DISCOVER CARD PORTFOLIO
STATE AS OF NOVEMBER 30, 2000
----- -----------------------
California............... 11.4%
Texas.................... 8.9%
New York................. 7.2%
Florida.................. 6.0%
Illinois................. 5.2%
No other state accounted for more than 5% of the total receivables
balance of the Discover Card portfolio as of November 30, 2000.
CREDIT LIMIT INFORMATION. As of November 30, 2000, the accounts in the
Discover Card portfolio had the following credit limits:
PERCENTAGE
RECEIVABLES OF TOTAL
OUTSTANDING RECEIVABLES
CREDIT LIMIT (000'S) OUTSTANDING
------------ ----------- -----------
Less than or equal to $1,000.00......... $ 633,824 1.5%
$1,000.01 to $2,000.00.................. $ 2,125,994 4.8%
$2,000.01 to $3,000.00.................. $ 2,439,934 5.5%
Over $3,000.00.......................... $38,985,010 88.2%
----------- -----
Total................................. $44,184,762 100.0%
=========== ======
7
<PAGE> 8
SEASONING. As of November 30, 2000, 73.0% of the accounts in the
Discover Card portfolio were at least 24 months old. The ages of the accounts in
the Discover Card portfolio as of November 30, 2000 were distributed as follows:
PERCENTAGE PERCENTAGE
AGE OF ACCOUNTS OF ACCOUNTS OF BALANCES
--------------- ----------- -----------
Less than 12 Months................. 14.2% 16.8%
12 to 23 Months..................... 12.8% 13.2%
24 to 35 Months..................... 3.9% 2.4%
36 Months and Greater............... 69.1% 67.6%
------ ------
100.0% 100.0%
====== ======
SUMMARY YIELD INFORMATION. Discover Bank calculates the monthly yield
for the Discover Card portfolio by dividing the monthly finance charges billed
by beginning monthly receivables balance. Monthly finance charges include
periodic finance charges, cash advance item charges, late fees, and overlimit
fees. Aggregate monthly yield is the average of monthly yields annualized for
each period shown. The annualized aggregate monthly yield for the Discover Card
portfolio is summarized as follows:
YEAR ENDED NOVEMBER 30,
-----------------------------
2000 1999 1998
---- ---- ----
Aggregate Monthly Yields
Excluding Recoveries 16.34% 17.48% 18.02%
Including Recoveries 16.97% 18.26% 18.76%
Recoveries received with respect to receivables in the trust that have
been charged off as uncollectible, including the proceeds of sales of these
receivables by the trust, but excluding proceeds of sales of charged-off
receivables that Discover Bank has removed from the trust, are included in the
trust and are treated as finance charge collections.
SUMMARY CURRENT DELINQUENCY INFORMATION. As of November 30, 2000, the
accounts in the Discover Card portfolio had the following delinquency statuses:
AGGREGATE
BALANCES PERCENTAGE
PAYMENT STATUS (000'S) OF BALANCES
-------------- -------------- -----------
Current............................... $ 38,944,275 88.1%
1 to 29 Days.......................... $ 2,593,104 5.9%
30 to 59 Days......................... $ 925,343 2.1%
60 to 89 Days......................... $ 634,550 1.4%
90 to 119 Days........................ $ 446,540 1.0%
120 to 149 Days....................... $ 350,347 0.8%
150 to 179 Days....................... $ 290,603 0.7%
-------------- ------
$ 44,184,762 100.0%
============== ======
8
<PAGE> 9
SUMMARY HISTORICAL DELINQUENCY INFORMATION. The accounts in the
Discover Card portfolio had the following historical delinquency rates:
<TABLE>
<CAPTION>
AVERAGE OF TWELVE MONTHS ENDED NOVEMBER 30,
--------------------------------------------------------------------------
2000 1999 1998
---- ---- ----
DELINQUENT DELINQUENT DELINQUENT
AMOUNT AMOUNT AMOUNT
(000'S) PERCENTAGE (000'S) PERCENTAGE (000'S) PERCENTAGE
------- ---------- ------- ---------- ------- ----------
<C> <C> <C> <C> <C> <C> <C>
30-59 Days..... $ 831,836 2.0% $ 791,325 2.6% $ 759,521 2.6%
60-89 Days..... $ 547,193 1.3% $ 471,838 1.5% $ 456,059 1.5%
90-179 Days.... $ 930,066 2.3% $ 815,619 2.6% $ 853,961 2.9%
---------- --- ---------- --- ---------- ---
Total........ $2,309,095 5.6% $2,078,782 6.7% $2,069,541 7.0%
========== --- ========== --- ========== ===
</TABLE>
Discover Bank calculates the percentages by dividing the delinquent
amount by the average receivables outstanding for each period. The delinquent
amount is the average of the monthly ending balances of delinquent accounts
during the periods indicated. The average receivables outstanding is the average
of the monthly average amount of receivables outstanding during the periods
indicated.
SUMMARY CHARGE-OFF INFORMATION. The accounts in the Discover Card
portfolio have had the following historical charge-offs:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
------------------------------------------
2000 1999 1998
---- ---- ----
(DOLLARS IN THOUSANDS)
----------------------
<S> <C> <C> <C>
Average Receivables Outstanding...... $41,064,509 $31,554,086 $29,749,158
Gross Charge-Offs.................... $ 2,059,933 $ 1,955,514 $ 2,215,002
Gross Charge-Offs as an Annualized
Percentage of Average Receivables
Outstanding....................... 5.02% 6.20% 7.45%
</TABLE>
Average receivables outstanding is the average of the monthly average
amount of receivables outstanding during the periods indicated.
SUMMARY PAYMENT RATE INFORMATION. Discover Bank calculates the monthly
payment rate by dividing monthly cardmember remittances by the cardmember
receivable balance outstanding as of the beginning of the month. Discover Bank
calculates the average monthly payment rate for a period by dividing the sum of
individual monthly payment rates for the period by the number of months in the
period. The accounts in the Discover Card portfolio have had the following
historical monthly payment rates:
YEAR ENDED NOVEMBER 30,
----------------------------
2000 1999 1998
---- ---- ----
Average Monthly Payment Rate..... 16.24% 16.73% 15.42%
Highest Monthly Payment Rate...... 17.25% 17.83% 17.01%
Lowest Monthly Payment Rate....... 14.75% 15.19% 13.90%
9
