*Company Returns to Revenue Growth for First Time in More Than a
Year *Epsilon Posts Best Quarter in its History *2010 Guidance
Reaffirmed DALLAS, Feb. 2 /PRNewswire-FirstCall/ -- Alliance Data
Systems Corporation (NYSE:ADS), a leading provider of loyalty and
marketing solutions derived from transaction-rich data, today
announced results for the fourth quarter and full-year 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20051024/ADSLOGO ) Total fourth
quarter 2009 revenue of $546 million, adjusted EBITDA of $176
million, income from continuing operations of $60 million, and
income from continuing operations per diluted share of $1.07
represented increases of 8%, 11%, 22% and 45%, respectively,
compared to fourth quarter 2008. Cash earnings per diluted share
increased 40% to $1.67 from the prior year period. See "Financial
Measures" below for a discussion of adjusted EBITDA, cash earnings
per diluted share and other non-GAAP financial measures.
Fourth-Quarter 2009 Summary ($ in millions, except per share data)
Quarter Ended December 31, -------------------------- 2009 2008
Change ---- ---- ------ Reported Revenues $546 $508 8% Normalized
Revenues $539 (a) $500 (c) 8% Reported Adjusted EBITDA $176 $159
11% Normalized Adjusted EBITDA $148 (b) $149 (d) - Reported Cash
Earnings per Diluted Share $1.67 $1.19 40% Normalized Cash Earnings
per Diluted Share $1.21 (b) $1.09 (d) 11% (a) Excludes $7 million
benefit from change in bankruptcy treatment. (b) Excludes the $7
million benefit in (a) and a $21 million acquisition gain. (c)
Excludes $8 million of servicing revenue related to divested
operations. (d) Excludes a $10 million foreign exchange gain on
U.S. investments held by the Company's Canadian business. Revenues
of $546 million for the fourth quarter represented an 8% growth
rate compared to fourth quarter 2008, marking the first quarter of
positive topline growth in more than a year. Fourth quarter
revenues included a $7 million benefit due to a change in treatment
for bankrupt private label accounts, which was made to conform to
credit card industry standards and FFIEC guidelines. After
adjusting 2008 for servicing revenue associated with divested
operations, normalized revenues also increased 8%. Adjusted EBITDA
of $176 million for the fourth quarter represented an 11% growth
rate compared to the fourth quarter of 2008, marking the first
quarter of growth in 2009. The quarter's adjusted EBITDA included
the $7 million gain noted above and a $21 million gain associated
with the acquisition of a private label program and related
portfolio, which was accounted for as a bargain purchase under
Accounting Standards Codification ("ASC") 805. Adjusted EBITDA for
the fourth quarter of 2008 included a $10 million gain associated
with a foreign exchange translation benefit on U.S. investments
held by the Company's Canadian business. Excluding these 2008 and
2009 gains, fourth quarter adjusted EBITDA would have been flat
compared to fourth quarter 2008, a notable change from the
significant declines experienced during the first three quarters of
2009. Cash earnings per diluted share of $1.67 for the fourth
quarter represented a 40% increase compared to the $1.19 earned for
the fourth quarter in 2008. Excluding the gains listed above, cash
earnings per diluted share would have been $1.21 and $1.09 for
fourth quarter 2009 and 2008, respectively, representing an 11%
growth rate. Ed Heffernan, president and chief executive officer,
commented, "Even taking into account the 'noise' in the numbers, it
was still an impressive quarter, with topline revenue returning to
growth after more than a year of negative comps, adjusted EBITDA
holding flat after being down on average about $30 million each
quarter in 2009, and cash earnings per share increasing at a double
digit rate. "It's been a tough year as we fought through
approximately $160 million (or $1.75 per diluted share) of economic
headwinds, primarily from higher credit losses and unfavorable
foreign exchange translations. Despite this, full-year revenues
were relatively flat and cash earnings per diluted share grew
solidly. Perhaps more encouraging, however, are the trends. Our
financials have started to return to a more customary growth mode,
and our key metrics continue to accelerate. Specifically, Epsilon®
announced record signings during the year, the LoyaltyOne(TM) AIR
MILES® Reward Program has successfully recharged, as evidenced by
miles issued moving from a 4% decline in the first quarter to an
increase of 9% in the fourth quarter, and Private Label Services
and Credit generated 19% growth in both credit sales and portfolio
growth during the fourth quarter versus negative growth and no
growth for these two metrics, respectively, during all of 2008. On
the cost side, Private Label's credit loss and funding rates have
remained stable since the second quarter of 2009." SEGMENT REVIEW
LoyaltyOne: The fourth quarter was LoyaltyOne's first in 2009 to
post revenue growth, which was attributable to strong redemption
activity and a stronger Canadian dollar. Revenues of $210 million
represented a 7% growth rate compared to the fourth quarter of
2008. Adjusted EBITDA of $54 million was also solid, comparing
favorably to the prior year period. Fourth quarter 2008 included a
$10 million currency translation gain on U.S. held investments.
Excluding this gain, the fourth quarter of 2009 would have shown a
5% increase. Operating EBITDA of $75 million came in $21 million
ahead of reported adjusted EBITDA, reflecting strong free cash flow
generated from increased issuance. Some of the quarter's most
encouraging news was related to miles issued, LoyaltyOne's key
growth and cash flow metric and primary driver of both current
period cash flow and longer-term accounting profits. Issuance moved
from a 4% year-over-year decline in the first quarter to a 2%
year-over-year decline in the second quarter, a 3% year-over-year
increase in the third quarter and a higher than anticipated 9%
year-over-year increase in the fourth quarter. This rate of
increase approximates the program's long-term growth rate for
issuance during historical economic growth periods, suggesting a
return to a stronger Canadian macro-economic environment.
LoyaltyOne also announced the addition of rewards supplier Best
Western, with approximately 4,000 hotels worldwide, as a new
sponsor and the launch of DOTZ, a Brazilian loyalty coalition
program. Epsilon: With double digit increases in both revenues and
adjusted EBITDA compared to the prior year, Epsilon produced the
strongest quarter in its history. Revenues of $142 million and
adjusted EBITDA of $41 million for the fourth quarter represented
growth rates of 10% and 11%, respectively. Results were driven by
two trends. First, approximately two-thirds of Epsilon consists of
those areas that create, build and drive the large database/loyalty
programs for Epsilon's largest clients. This business grew
throughout 2009 and continued to perform well in the fourth
quarter. Second, Epsilon's data business (consisting primarily of
its Abacus catalog co-op), which had been posting significant
declines during the year, performed well in the fourth quarter,
showing stability for the first time in 2009. These successes
combined to produce the strongest quarter in Epsilon's history.
Major signings and renewals continued at a record pace during the
quarter, highlighted by the signing of Epsilon's agreement with
Visa® to develop, host and operate Visa's next generation loyalty
program for its issuers. A significant expansion of Epsilon's
relationship with Capital One® was also announced, in which Epsilon
will provide additional marketing support for Capital One's No
Hassle Rewards(SM) customer loyalty program. Lastly, KeyBank, a
top-10 Epsilon client, renewed its long-standing relationship.
Private Label Services and Credit: After almost two years of
continual declines, fourth quarter revenues and adjusted EBITDA
were up 11% and 36%, respectively, compared to the prior year
period. Current year results benefited from the infrequently
occurring items noted above. Specifically, 2009's fourth quarter
revenues were boosted by a $7 million gain due to a change in
treatment for bankrupt private label accounts, which was made to
conform to credit card industry standards and FFIEC guidelines.
Excluding this item, revenues would have been $187 million, a 7%
increase compared to the prior year period. Adjusted EBITDA also
benefited from this $7 million item and a $21 million gain
associated with the acquisition of a private label program and
related portfolio, which was accounted for as a bargain purchase
under ASC 805. Excluding these two items, adjusted EBITDA for the
fourth quarter would have been $70 million, or approximately flat
compared to the prior year for the combined segments. During the
first three quarters of 2009, adjusted EBITDA for Private Label
declined by a total of $81 million compared to the same period in
2008, with revenues experiencing a similar $75 million decline. By
contrast, in the fourth quarter of 2009, this trend reversed. Even
when the benefits listed above are excluded, revenues grew
modestly, and adjusted EBITDA moved to a relatively flat position.
Private Label's key metrics provided additional encouraging
results, with credit sales continuing to accelerate from a negative
3% for full-year 2008 to essentially flat in the first quarter of
2009, and increases of 4%, 13% and 19% in the second, third and
fourth quarters, respectively. The core client base plus new
clients contributed evenly to the growth. Portfolio growth was
equally positive, moving from flat in 2008 to single digit growth
in the first-half of 2009, and accelerating throughout the year to
finish the fourth quarter at a 19% year-over-year growth rate. The
other two metrics for the Private Label Credit are funding and
credit loss rates. Funding rates remained flat compared to the
third quarter of 2009 and slightly better than the comparable prior
year period. Despite rising unemployment, credit loss rates
(excluding the benefit noted above) remained relatively stable for
the third consecutive quarter at the mid-9% level. The fourth
quarter delinquency rate of 5.9% was flat to the prior year period,
representing, for the first time in 2009, the anniversary of this
key metric. OTHER MATTERS The Company posted a $19 million
after-tax charge in the fourth quarter related to the cancellation
of its program for web and catalog retailer VENUE. This
cancellation has been treated as a discontinued operation under ASC
205-20. VENUE offered high ticket, luxury goods sold exclusively
through the web and catalogs, with financing (provided by the
Company starting in late 2008) that allowed for an interest-free
period and installment payments thereafter. The Company believes
that negative account selection combined with the recessionary
environment were the primary causes for the venture to become
insolvent. VENUE was the Company's only client in this niche retail
segment, and the Company has no plans to participate in any future
ventures in that segment. The Company's effective tax rate for the
fourth quarter of 2009 was 34%, resulting from the inclusion of the
previously described non-taxable $21 million acquisition gain and
the exclusion of VENUE as a discontinued operation for 2009.
Adjusting for these items, the Company's effective tax rate would
have been 38%, which was the rate used to normalize our cash
earnings per diluted share for the fourth quarter. CAPITAL
STRUCTURE The Company repurchased less than $30 million of its
common stock during the fourth quarter of 2009. Approximately $1.5
billion of the repurchase program's aggregate $1.8 billion
authorization has been used to buy back approximately 30 million
shares of the Company's outstanding common stock, or 35% of the
Company's fully-diluted shares, since its inception in early 2008.
The program expired December 31, 2009, and a new program was
recently established. See "Subsequent Events." FULL-YEAR 2009
RESULTS Total 2009 revenue of $1,964 million, adjusted EBITDA of
$590 million, income from continuing operations of $177 million,
and income from continuing operations per diluted share of $3.06
represented decreases of 3%, 10%, 24% and 3%, respectively,
compared to 2008. Cash earnings per diluted share increased 17% to
$5.16 from the prior year period. Full-Year Summary ($ in millions,
except per share data) Year Ended December 31,
----------------------- 2009 2008 Change ---- ---- ------ Reported
Revenues $1,964 $2,025 (3%) Normalized Revenues $1,929 (a) $2,008
(d) (4%) Reported Adjusted EBITDA $590 $655 (10%) Normalized
Adjusted EBITDA $573 (b) $645 (e) (11%) Reported Cash Earnings per
Diluted Share $5.16 $4.42 17% Normalized Cash Earnings per Diluted
Share $4.64 (c) $4.34 (e) 7% (a) Excludes $7 million benefit from
change in bankruptcy treatment and $29 million of servicing revenue
related to divested operations. (b) Excludes the $7 million benefit
in (a), a $21 million acquisition gain and an $11 million foreign
exchange loss on U.S. investments held by our Canadian business.
(c) Excludes the items in (b) and a $12 million tax credit taken in
the third quarter of 2009. (d) Excludes $17 million of servicing
revenue related to divested operations. (e) Excludes a $10 million
foreign exchange gain on U.S. investments held by the Company's
Canadian business. After adjusting both periods for these
infrequently occurring items, the impact to 2009 was a net benefit
of $0.44 per diluted share compared to 2008. Normalized cash
earnings per diluted share still increased 7% from 2008. Countering
the net benefit in 2009, the Company fought through recession
related headwinds of approximately $160 million, or $1.75 per
share, consisting of credit losses, foreign exchange translation
losses on operations and interest only strip growover. FULL-YEAR
2010 OUTLOOK ($ in millions, except per share data) Year Ended
December 31, ----------------------- 2010 2009 Change ---- ----
------ Guidance Reported Revenues $2,150 $1,964 9% Normalized
Revenues $2,150 $1,929 (1) 11% Adjusted EBITDA $650 $590 10%
Normalized Adjusted EBITDA $650 $573 (1) 13% Cash Earnings per
Diluted Share $6.00 $5.16 16% Normalized Cash Earnings per Diluted
Share $6.00 $4.64 (1) 29% (1) See Full-Year 2009 Summary. The
Company reiterates its previously stated guidance for 2010 of $2.15
billion in revenues, $650 million in adjusted EBITDA and $6.00 in
cash earnings per diluted share. This represents anticipated
year-over-year growth rates of 9%, 10% and 16% for revenues,
adjusted EBITDA and cash earnings per diluted share, respectively.
The 2010 guidance includes two items, card legislation expense and
international coalition development expense, which total $35
million, or ($0.38) per diluted share. SUBSEQUENT EVENT: The
Company's board of directors previously determined in its good
faith judgment that it was advisable and in the best interests of
the Company and its stockholders to establish, and subsequently
extend, a stock repurchase program under which the Company was
authorized to repurchase an aggregate of up to $1.8 billion of its
common stock. The repurchase program expired by its terms on
December 31, 2009 with $275.1 million remaining unused. The
Company's board has approved a new stock repurchase program to
acquire up to $275.1 million of the Company's common stock through
December 31, 2010 in order to carry out the intent of the recently
expired repurchase program. The $275.1 million authorization will
be financed through a combination of the Company's credit facility
and free cash flow. Under the new repurchase program the Company is
authorized to repurchase shares in open market purchases as well as
privately negotiated transactions from time to time through
December 31, 2010. Stock purchased as part of the new program
initially will be held as treasury stock. The repurchase program's
terms have been structured to comply with the SEC's Rule 10b-18 and
the program is subject to market conditions, applicable legal
requirements and other factors. The repurchase program does not
obligate the Company to acquire any specific number of shares and
may be suspended or terminated at any time. The timing and extent
of any accretion associated with the repurchase program and the
impact on earnings and guidance will be updated on the Company's
quarterly earnings conference calls. Financial Measures In addition
to the results presented in accordance with generally accepted
accounting principles, or GAAP, the Company presents financial
measures that are non-GAAP measures, such as constant currency
financial measures, adjusted EBITDA, operating EBITDA, cash
earnings and cash earnings per diluted share. Constant currency
eliminates the effect of foreign currency fluctuations. These
non-GAAP financial measures exclude the loss associated with the
sale of the Mail Services business unit, costs associated with the
terminated merger with affiliates of The Blackstone Group and other
costs. The Company believes that these non-GAAP financial measures,
viewed in addition to and not in lieu of the Company's reported
GAAP results, provide useful information to investors regarding the
Company's performance and overall results of operations. These
metrics are an integral part of the Company's internal reporting to
measure the performance of reportable segments and the overall
effectiveness of senior management. Reconciliations to comparable
GAAP financial measures are available in the accompanying schedules
and on the Company's website. The financial measures presented are
consistent with the Company's historical financial reporting
practices. The non-GAAP financial measures presented herein may not
be comparable to similarly titled measures presented by other
companies, and are not identical to corresponding measures used in
other various agreements or public filings. Conference Call
Alliance Data will host a conference call on February 2, 2010 at
5:00 p.m. (Eastern) to discuss the Company's fourth quarter and
full year results. The conference call will be available via the
Internet at http://www.alliancedata.com/. There will be several
slides accompanying the webcast. Please go to the website at least
15 minutes prior to the call to register, download and install any
necessary software. The recorded webcast will also be available on
the Company's website. If you are unable to participate in the
conference call, a replay will be available. To access the replay,
please dial 706-645-9291 and enter "34559518". The replay will be
available from two hours after the end of the call until 11:59 P.M.
(Eastern Time) on February 9, 2010. About Alliance Data Alliance
Data (NYSE:ADS) and its family of businesses is a leading provider
of loyalty and marketing solutions derived from transaction-rich
data. Through the creation and deployment of customized solutions
that measurably change consumer behavior, Alliance Data helps its
clients to create and enhance customer loyalty to build stronger,
mutually beneficial relationships with their customers. The Company
manages millions of customer relationships for some of North
America's largest and most recognizable brands, helping them grow
their businesses and drive profitability. Headquartered in Dallas,
Alliance Data employs approximately 7,000 associates at
approximately 50 locations worldwide. Alliance Data is a leading
provider of marketing-driven credit solutions, and is the parent
company of Epsilon®, a leading provider of multi-channel,
data-driven technologies and marketing services, and
LoyaltyOne(TM), which owns and operates the AIR MILES® Reward
Program, Canada's premier coalition loyalty program. For more
information about the company, visit its web site,
http://www.alliancedata.com/ . Alliance Data's Safe Harbor
Statement/Forward Looking Statements This release may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements may
use words such as "anticipate," "believe," "estimate," "expect,"
"intend," "predict," "project" and similar expressions as they
relate to us or our management. When we make forward-looking
statements, we are basing them on our management's beliefs and
assumptions, using information currently available to us. Although
we believe that the expectations reflected in the forward-looking
statements are reasonable, these forward-looking statements are
subject to risks, uncertainties and assumptions, including those
discussed in our filings with the Securities and Exchange
Commission. If one or more of these or other risks or uncertainties
materialize, or if our underlying assumptions prove to be
incorrect, actual results may vary materially from what we
projected. Any forward-looking statements contained in this
presentation reflect our current views with respect to future
events and are subject to these and other risks, uncertainties and
assumptions relating to our operations, results of operations,
growth strategy and liquidity. We have no intention, and disclaim
any obligation, to update or revise any forward-looking statements,
whether as a result of new information, future results or
otherwise. "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: Statements in this presentation
regarding Alliance Data Systems Corporation's business which are
not historical facts are "forward-looking statements" that involve
risks and uncertainties. For a discussion of such risks and
uncertainties, which could cause actual results to differ from
those contained in the forward-looking statements, see "Risk
Factors" in the Company's Annual Report on Form 10-K for the most
recently ended fiscal year. Risk factors may be updated in Item 1A
in each of the Company's Quarterly Reports on Form 10-Q for each
quarterly period subsequent to the Company's most recent Form 10-K.
ALLIANCE DATA SYSTEMS CORPORATION SUMMARY FINANCIAL HIGHLIGHTS (In
millions, except per share amounts) (Unaudited) Three Months Ended
Year Ended December 31, December 31, 2009 2008 Change 2009 2008
Change ------ ------ ------ -------- -------- ------ Revenue $545.9
$507.6 8% $1,964.3 $2,025.3 (3)% Income from continuing operations
$60.0 $49.0 22% $176.7 $232.6 (24)% Income from continuing
operations per share - diluted $1.07 $0.74 45% $3.06 $3.16 (3)%
Adjusted EBITDA $175.6 $158.8 11% $590.1 $655.2 (10)% Operating
EBITDA $196.8 $182.0 8% $639.7 $711.4 (10)% Cash Earnings $93.6
$78.2 20% $297.9 $325.6 (9)% Cash Earnings per share - diluted
$1.67 $1.19 40% $5.16 $4.42 17% As of As of December 31, December
31, 2009 2008 -------- -------- Cash and cash equivalents $213.4
$156.9 Seller's interest and credit card receivables 913.4 612.9
Redemption settlement assets 574.0 531.6 Intangible assets, net
316.6 297.8 Goodwill 1,166.3 1,133.8 Total assets $5,225.7 $4,342.0
Deferred revenue $1,146.1 $995.6 Certificates of deposit 1,465.0
688.9 Debt(1) 1,782.4 1,491.3 Total liabilities 4,952.9 3,794.7
Stockholders' equity $272.8 $547.3 (1) Excludes certificates of
deposit. Included in debt is a discount of $299.1 million and
$235.9 million as of December 31, 2009 and December 31, 2008,
respectively, associated with the Company's adoption of an
accounting standard associated with its convertible debt. ALLIANCE
DATA SYSTEMS CORPORATION SUMMARY FINANCIAL HIGHLIGHTS (In millions)
(Unaudited) Three Months Ended Year Ended December 31, December 31,
2009 2008 Change 2009 2008 Change ------ ------- ------ -------
-------- ------ Segment Revenue: Loyalty Services $210.1 $196.1 7%
$715.1 $755.5 (5)% Epsilon Marketing Services 141.8 129.2 10% 514.3
491.0 5% Private Label Services 115.9 97.6 19% 396.6 382.7 4%
Private Label Credit 190.5 171.4 11% 693.2 750.4 (8)%
Corporate/Other (0.3) 7.6 Nm 28.6 17.3 Nm Intersegment (112.1)
(94.3) 19% (383.5) (371.6) 3% ------ ----- ------ ------ $545.9
$507.6 8% $1,964.3 $2,025.3 (3)% ====== ====== ======== ========
Segment Adjusted EBITDA: Loyalty Services $54.3 $61.5 (12)% $200.7
$204.9 (2)% Epsilon Marketing Services 40.5 36.4 11% 128.3 126.6 1%
Private Label Services 37.8 28.6 32% 120.8 115.9 4% Private Label
Credit 60.9 43.9 39% 194.4 254.2 (24)% Corporate/Other (17.9)
(11.6) 54% (54.1) (46.4) 17% ----- ----- ----- ----- $175.6 $158.8
11% $590.1 $655.2 (10)% ====== ====== ====== ====== Key Performance
Indicators: Private label statements generated 36.1 31.9 13% 130.2
125.2 4% Average managed receivables $4,846.2 $4,085.1 19% $4,359.6
$3,915.7 11% Private label credit sales $2,566.6 $2,151.6 19%
$7,968.1 $7,242.4 10% AIR MILES Reward Miles issued 1,267.5 1,162.6
9% 4,545.8 4,463.2 2% AIR MILES Reward Miles redeemed 1,004.9 897.1
12% 3,326.3 3,121.8 7% Nm-Not Meaningful ALLIANCE DATA SYSTEMS
CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In
millions, except per share amounts) (Unaudited) Three Months Ended
Year Ended December 31, December 31, 2009 2008 2009 2008 ---- ----
---- ---- Total revenue $545.9 $507.6 $1,964.3 2,025.3 Total
operating expenses 413.9 399.5 1,556.6 1,564.8 ----- ----- -------
------- Operating income 132.0 108.1 407.7 460.5 Interest expense,
net 40.8 26.1 144.8 80.3 ---- ---- ----- ---- Income from
continuing operations before income taxes 91.2 82.0 262.9 380.2
Income tax expense 31.2 33.0 86.2 147.6 ---- ---- ---- ----- Income
from continuing operations 60.0 49.0 176.7 232.6 Loss from
discontinued operations, net of taxes (19.3) (3.7) (33.0) (26.2)
----- ---- ----- ----- Net income $40.7 $45.3 $143.7 206.4 =====
===== ====== ===== Per share data: Basic - Income from continuing
operations $1.15 $0.77 $3.17 3.25 Basic - Loss from discontinued
operations (0.37) (0.06) (0.59) (0.37) ----- ----- ----- -----
Basic - Net income $0.78 $0.71 $2.58 2.88 ===== ===== ===== ====
Diluted - Income from continuing operations $1.07 $0.74 $3.06 3.16
Diluted - Loss from discontinued operations (0.34) (0.06) (0.57)
(0.36) ----- ----- ----- ----- Diluted - Net income $0.73 $0.68
$2.49 2.80 ===== ===== ===== ==== Weighted average shares
outstanding - basic 52.2 63.5 55.8 71.5 Weighted average shares
outstanding - diluted 56.1 65.9 57.7 73.6 ALLIANCE DATA SYSTEMS
CORPORATION RECONCILIATION OF NON-GAAP INFORMATION (In millions,
except per share amounts) (Unaudited) Three Months Ended Year Ended
EBITDA, Adjusted EBITDA and December 31, December 31, Operating
EBITDA: 2009 2008 2009 2008 ---- ---- ---- ---- Income from
continuing operations $60.0 $49.0 $176.7 $232.6 Income tax expense
31.2 33.0 86.2 147.6 Interest expense, net 40.8 26.1 144.8 80.3
Depreciation and other amortization 16.5 15.8 62.2 68.5
Amortization of purchased intangibles 17.3 16.6 63.1 67.3 ---- ----
---- ---- EBITDA 165.8 140.5 533.0 596.3 Stock compensation expense
10.3 17.5 53.6 48.7 Loss on sale of assets - - - 1.1 Merger and
other costs (0.5) 0.8 3.5 9.1 ---- --- --- --- Adjusted EBITDA
175.6 158.8 590.1 655.2 Change in deferred revenue(1) 16.0 (146.1)
150.5 167.3 Change in redemption settlement assets(1) 18.3 112.6
(42.4) (214.5) Foreign currency impact (13.1) 56.7 (58.5) 103.4
----- ---- ----- ----- Operating EBITDA $196.8 182.0 $639.7 $711.4
====== ===== ====== ====== Cash Earnings: Income from continuing
operations (GAAP measure) $60.0 $49.0 $176.7 $232.6 Add back
non-cash non- operating items and merger and other costs: Stock
compensation expense 10.3 17.5 53.6 48.7 Amortization of purchased
intangibles 17.3 16.6 63.1 67.3 Non-cash interest expense(2) 18.0
11.9 61.8 21.1 Loss on the sale of assets - - - 1.1 Merger and
other costs (0.5) 0.8 3.5 9.1 Income tax effect (3) (11.5) (17.6)
(60.8) (54.3) ----- ----- ----- ----- Cash earnings $93.6 78.2
$297.9 $325.6 ===== ==== ====== ====== Weighted average shares
outstanding - diluted 56.1 65.9 57.7 73.6 Cash earnings per share -
diluted $1.67 $1.19 $5.16 4.42 (1) Increases to deferred revenue
and redemption settlement assets in 2008 from a transaction
completed with the Bank of Montreal in the second quarter of 2008.
(2) Represents amortization of imputed interest expense associated
with our convertible debt and related amortization of debt issuance
costs. (3) Represents income taxes adjusted for the related tax
benefit or expense for the non-GAAP measure adjustments. ALLIANCE
DATA SYSTEMS CORPORATION RECONCILIATION OF SEGMENT ADJUSTED EBITDA
(In millions) (Unaudited) Three Months Ended December 31, 2009
---------------------------------------------------------------
Merger and Depreciation Stock Other Non- Operating and Compensation
Routine Adjusted Income Amortization Expense Costs EBITDA (1)
--------- ------------ ------------ ---------- ------------ Loyalty
Services $46.3 $5.9 $2.1 $- $54.3 Epsilon Marketing Services 20.5
18.1 1.9 - 40.5 Private Label Services 33.5 2.9 1.4 - 37.8 Private
Label Credit 55.6 5.0 0.3 - 60.9 Corporate/ Other (23.9) 1.9 4.6
(0.5) (17.9) --------- ------------ ------------ ----------
------------ $132.0 $33.8 $10.3 $(0.5) $175.6 =========
============ ============ ========== ============ Three Months
Ended December 31, 2008
---------------------------------------------------------------
Merger and Depreciation Stock Other Non- Operating and Compensation
Routine Adjusted Income Amortization Expense Costs EBITDA (1)
--------- ------------ ------------ ---------- ------------ Loyalty
Services $51.2 $6.1 $4.2 $- $61.5 Epsilon Marketing Services 13.9
18.7 3.8 - 36.4 Private Label Services 24.2 2.1 2.3 - 28.6 Private
Label Credit 40.4 3.0 0.5 - 43.9 Corporate/ Other (21.6) 2.5 6.7
0.8 (11.6) --------- ------------ ------------ ----------
------------ $108.1 $32.4 $17.5 $0.8 $158.8 ========= ============
============ ========== ============ Year Ended December 31, 2009
---------------------------------------------------------------
Merger and Depreciation Stock Other Non- Operating and Compensation
Routine Adjusted Income Amortization Expense Costs EBITDA (1)
--------- ------------ ------------ ---------- ------------ Loyalty
Services $166.7 $21.8 $12.2 - 200.7 Epsilon Marketing Services 49.6
69.9 8.8 - 128.3 Private Label Services 104.4 9.8 6.6 - 120.8
Private Label Credit 177.4 15.4 1.6 - 194.4 Corporate/ Other (90.4)
8.4 24.4 3.5 (54.1) --------- ------------ ------------ ----------
------------ $407.7 $125.3 $53.6 3.5 590.1 ========= ============
============ ========== ============ Year Ended December 31, 2008
---------------------------------------------------------------
Merger and Depreciation Stock Other Non- Operating and Compensation
Routine Adjusted Income Amortization Expense Costs EBITDA (1)
--------- ------------ ------------ ---------- ------------ Loyalty
Services $162.5 $29.8 $12.6 $- $204.9 Epsilon Marketing Services
39.6 75.5 8.9 2.6 126.6 Private Label Services 99.0 8.8 6.6 1.5
115.9 Private Label Credit 241.0 11.5 1.7 - 254.2 Corporate/ Other
(81.6) 10.2 18.9 6.1 (46.4) --------- ------------ ------------
---------- ------------ $460.5 $135.8 $48.7 $10.2 $655.2 =========
============ ============ ========== ============ (1) Represents
segment Adjusted EBITDA and is equal to operating income plus
depreciation, amortization, stock compensation expense and merger
and other costs.
http://www.newscom.com/cgi-bin/prnh/20051024/ADSLOGO
http://photoarchive.ap.org/ DATASOURCE: Alliance Data Systems
Corporation CONTACT: Investors/Analysts, Julie Prozeller, FD,
+1-212-850-5721, ; or Media, Shelley Whiddon, Alliance Data,
+1-972-348-4310, , or Laura Novak, FD, +1-212-850-5682, Web Site:
http://www.alliancedata.com/
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