View:
Download DOC
Download PDF
Download XLS
Form 8-K

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

March 10, 2008

 

 

ALLIANCE DATA SYSTEMS CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

DELAWARE   001-15749   31-1429215
(State or Other Jurisdiction   (Commission   (IRS Employer
of Incorporation)   File Number)   Identification No.)

17655 WATERVIEW PARKWAY

DALLAS, TEXAS 75252

(Address and Zip Code of Principal Executive Offices)

(972) 348-5100

(Registrant’s Telephone Number, including Area Code)

NOT APPLICABLE

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

 

 

 

 

ITEM 2.05    Costs Associated with Exit or Disposal Activities.

On March 10, 2008 Alliance Data Systems Corporation’s (the “Company”) board of directors approved management’s proposed disposition plan related to the Company’s merchant services and utility services business units based on its conclusion that these business units no longer fit within the Company’s business strategy of being a leading provider of data-driven and transaction-based marketing and customer loyalty solutions. Management is exploring the potential sale of each of these business units. It is expected that any disposition of our merchant services or utility services business units would be completed within the next twelve months. At the time of this filing, the Company is unable to make a determination of the total estimated amount or range of amounts expected to be incurred with the disposition of these business units.

 

ITEM 7.01    Regulation FD Disclosure.

Beginning with the first quarter of 2008, and for all prior periods, the results of the merchant services and utility services business units have been removed from the Transaction Services segment and reclassified to the discontinued operations line on the Company’s Consolidated Statements of Income.

Also, beginning with the first quarter of 2008, the Company has reorganized its businesses into four reportable operating segments as follows:

 

 

(1)

Loyalty Services, which includes the Company’s Canadian AIR MILES® Reward Program;

 

  (2) Epsilon Marketing Services;

 

  (3) Private Label Services, which includes transaction processing, customer care and collections services for the Company’s private label and other retail card programs; and

 

  (4) Private Label Credit, which includes risk management solutions, account origination and funding services for the Company’s private label and other retail card programs.

In addition, corporate and all other immaterial businesses will be reported collectively as an “all other” category labeled “Corporate/Other.” Neither the reclassification of the Company’s merchant services and utility services business units as discontinued operations nor the reorganization of the Company’s reportable operating segments had an impact on the Company’s net income. Financial and other information reflecting the reorganization of the Company’s reportable operating segments and the reclassification of the merchant services and the utility services business units as discontinued operations are furnished in Exhibit 99.1 and incorporated by reference herein.

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 adjusted EBITDA, operating EBITDA, cash earnings and cash earnings per diluted share. These non-GAAP financial measures also exclude the impact of the loss associated with the sale of the mail services business unit and merger 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 operating segments and the overall effectiveness of senior management. Reconciliations to comparable GAAP financial measures are available in Exhibit 99.1. 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 our various agreements or public filings.

 

2

The Company will host a conference call on March 13, 2008 at 4:30 p.m. (Eastern) to provide a business update and conduct a question and answer session. The conference call will be available via the Internet at www.alliancedata.com. The slide presentation to be discussed during the conference call is furnished as Exhibit 99.2 to this report.

 

ITEM 9.01    Financial Statements and Exhibits

 

(d) Exhibits

 

EXHIBIT
NUMBER

   

DESCRIPTION

99.1    Unaudited Consolidated Statements of Income for the quarters ended March 31, 2007, 2006 and 2005; June 30, 2007, 2006 and 2005; September 30, 2007, 2006 and 2005; and December 31, 2007, 2006 and 2005; and for the years ended December 31, 2007, 2006 and 2005.
   Unaudited Segment Information for the quarters ended March 31, 2007, 2006 and 2005; June 30, 2007, 2006 and 2005; September 30, 2007, 2006 and 2005; and December 31, 2007, 2006 and 2005; and for the years ended December 31, 2007, 2006 and 2005.
   Unaudited Reconciliation of Non-GAAP Information for the quarters ended March 31, 2007, 2006 and 2005; June 30, 2007, 2006 and 2005; September 30, 2007, 2006 and 2005; and December 31, 2007, 2006 and 2005; and for the years ended December 31, 2007, 2006 and 2005.
99.2    Investor Presentation Materials.

Note: The information contained in Exhibits 99.1 and 99.2 of this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

 

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    Alliance Data Systems Corporation
Date: March 13, 2008     By:   /s/ Edward J. Heffernan
       

Edward J. Heffernan

Executive Vice President and

Chief Financial Officer

 

 

 

EXHIBIT INDEX

 

EXHIBIT
NUMBER

   

DESCRIPTION

99.1    Unaudited Consolidated Statements of Income for the quarters ended March 31, 2007, 2006 and 2005; June 30, 2007, 2006 and 2005; September 30, 2007, 2006 and 2005; and December 31, 2007, 2006 and 2005; and for the years ended December 31, 2007, 2006 and 2005.
   Unaudited Segment Information for the quarters ended March 31, 2007, 2006 and 2005; June 30, 2007, 2006 and 2005; September 30, 2007, 2006 and 2005; and December 31, 2007, 2006 and 2005; and for the years ended December 31, 2007, 2006 and 2005.
   Unaudited Reconciliation of Non-GAAP Information for the quarters ended March 31, 2007, 2006 and 2005; June 30, 2007, 2006 and 2005; September 30, 2007, 2006 and 2005; and December 31, 2007, 2006 and 2005; and for the years ended December 31, 2007, 2006 and 2005.
99.2    Investor Presentation Materials.

 

5

Unaudited Financials

Exhibit 99.1

Financial information for the following tables has been revised to reflect our merchant processing and our utility services businesses as discontinued operations. Additionally, segment information has been revised to reflect the Company’s organizational changes that were effective in the first quarter of 2008.

 

     Three Months Ended     Year Ended  
     March 31,
2007		     June 30,
2007		     September 30,
2007		     December 31,
2007		     December 31,
2007		  
     (In thousands, except per share amounts)  

Total revenue

    $ 466,347     $ 481,820     $ 492,026     $ 521,966     $ 1,962,159  

Operating expenses

           

Cost of operations (exclusive of depreciation and amortization disclosed separately below)

      293,591       319,870       319,085       372,085       1,304,631  

General and administrative

      23,303       21,216       22,488       13,891       80,898  

Depreciation and other amortization

      13,749       14,919       15,368       15,652       59,688  

Amortization of purchased intangibles

      15,133       17,423       17,380       17,387       67,323  

Loss on the sale of assets

      —         —         —         16,045       16,045  

Merger costs

      —         6,171       2,133       4,045       12,349  
                                        

Total operating expenses

      345,776       379,599       376,454       439,105       1,540,934  

Operating income

      120,571       102,221       115,572       82,861       421,225  

Interest income

      (2,775 )     (1,997 )     (2,851 )     (2,817 )     (10,440 )

Interest expense

      18,575       20,931       20,622       19,693       79,821  
                                        

Income from continuing operations before income taxes

      104,771       83,287       97,801       65,985       351,844  

Provision for income taxes

      40,056       31,752       36,535       29,060       137,403  

Income from continuing operations

      64,715       51,535       61,266       36,925       214,441  

Discontinued operations, net of taxes(1)

     (7,855 )     (7,446 )     (32,093 )     (2,986 )     (50,380 )
                                        

Net income

    $ 56,860     $ 44,089     $ 29,173     $ 33,939     $ 164,061  
                                        

Per share data:

           

Basic – Income from continuing operations

    $ 0.82     $ 0.66     $ 0.78     $ 0.47     $ 2.74  

Basic – Discontinued operations

    $ (0.10 )   $ (0.10 )   $ (0.41 )   $ (0.04 )   $ (0.64 )

Basic – Net income

    $ 0.72     $ 0.56     $ 0.37     $ 0.43     $ 2.09  

Diluted – Income from continuing operations

    $ 0.80     $ 0.64     $ 0.76     $ 0.46     $ 2.65  

Diluted – Discontinued operations

    $ (0.10 )   $ (0.09 )   $ (0.40 )   $ (0.04 )   $ (0.62 )

Diluted – Net income

    $ 0.70     $ 0.55     $ 0.36     $ 0.42     $ 2.03  

Weighted average shares:

           

Basic

      79,016       78,160       78,201       78,226       78,403  

Diluted

      81,109       80,504       80,734       81,011       80,811  

 

(1)

During the third quarter of 2007, the Company recorded a pre-tax impairment charge of $40.0 million related to the write-down of certain long-lived assets in the Company’s utility services business. The amount net of tax is classified as part of our discontinued operations.

     Three Months Ended     Year Ended  
     March 31,
2006		     June 30,
2006		     September 30,
2006		     December 31,
2006		     December 31,
2006		  
     (In thousands, except per share amounts)  

Total revenue

    $ 392,700     $ 402,233     $ 416,961     $ 438,655     $ 1,650,549  

Operating expenses

           

Cost of operations (exclusive of depreciation and amortization disclosed separately below)

      248,552       271,071       270,696       305,610       1,095,929  

General and administrative

      19,966       21,001       28,150       22,698       91,815  

Depreciation and other amortization

      11,502       11,595       12,360       13,042       48,499  

Amortization of purchased intangibles

      7,660       11,390       10,414       11,462       40,926  
                                        

Total operating expenses

      287,680       315,057       321,620       352,812       1,277,169  

Operating income

      105,020       87,176       95,341       85,843       373,380  

Interest income

      (1,737 )     (1,230 )     (1,534 )     (1,767 )     (6,268 )

Interest expense

      10,126       11,206       12,107       13,551       46,990  
                                        

Income from continuing operations before income taxes

      96,631       77,200       84,768       74,059       332,658  

Provision for income taxes

      36,548       29,818       32,041       27,854       126,261  

Income from continuing operations

      60,083       47,382       52,727       46,205       206,397  

Discontinued operations, net of taxes

      (3,663 )     (2,587 )     (3,947 )     (6,595 )     (16,792 )
                                        

Net income

    $ 56,420     $ 44,795     $ 48,780     $ 39,610     $ 189,605  
                                        

Per share data:

           

Basic – Income from continuing operations

    $ 0.75     $ 0.59     $ 0.66     $ 0.58     $ 2.59  

Basic – Discontinued operations

    $ (0.05 )   $ (0.03 )   $ (0.05 )   $ (0.08 )   $ (0.21 )

Basic – Net income

    $ 0.70     $ 0.56     $ 0.61     $ 0.50     $ 2.38  

Diluted – Income from continuing operations

    $ 0.74     $ 0.58     $ 0.65     $ 0.57     $ 2.53  

Diluted – Discontinued operations

    $ (0.04 )   $ (0.03 )   $ (0.05 )   $ (0.08 )   $ (0.21 )

Diluted – Net income

    $ 0.69     $ 0.55     $ 0.60     $ 0.48     $ 2.32  

Weighted average shares:

           

Basic

      80,065       80,074       79,612       79,269       79,735  

Diluted

      81,667       81,924       81,491       81,743       81,686  

     Three Months Ended     Year Ended  
     March 31,
2005		     June 30,
2005		     September 30,
2005		     December 31,
2005		     December 31,
2005		  
     (In thousands, except per share amounts)  

Total revenue

    $ 305,393     $ 292,569     $ 298,056     $ 336,462     $ 1,232,480  

Operating expenses

           

Cost of operations (exclusive of depreciation and amortization disclosed separately below)

      196,526       201,110       200,129       232,783       830,548  

General and administrative

      24,299       18,611       23,050       25,572       91,532  

Depreciation and other amortization

      9,519       9,777       9,997       11,252       40,545  

Amortization of purchased intangibles

      5,656       5,646       5,614       6,088       23,004  
                                        

Total operating expenses

      236,000       235,144       238,790       275,695       985,629  

Operating income

      69,393       57,425       59,266       60,767       246,851  

Interest income

      (751 )     (671 )     (855 )     (1,525 )     (3,802 )

Interest expense

      3,283       2,931       3,137       8,356       17,707  
                                        

Income from continuing operations before income taxes

      66,861       55,165       56,984       53,936       232,946  

Provision for income taxes

      24,553       20,488       21,294       19,983       86,318  

Income from continuing operations

      42,308       34,677       35,690       33,953       146,628  

Discontinued operations, net of taxes

      (5,126 )     (295 )     162       (2,624 )     (7,883 )
                                        

Net income

    $ 37,182     $ 34,382     $ 35,852     $ 31,329     $ 138,745  
                                        

Per share data:

           

Basic – Income from continuing operations

    $ 0.51     $ 0.42     $ 0.43     $ 0.42     $ 1.78  

Basic – Discontinued operations

    $ (0.06 )   $ 0.00     $ 0.00     $ (0.03 )   $ (0.10 )

Basic – Net income

    $ 0.45     $ 0.42     $ 0.43     $ 0.39     $ 1.69  

Diluted – Income from continuing operations

    $ 0.49     $ 0.40     $ 0.42     $ 0.41     $ 1.73  

Diluted – Discontinued operations

    $ (0.06 )   $ 0.00     $ 0.00     $ (0.03 )   $ (0.09 )

Diluted – Net income

    $ 0.43     $ 0.40     $ 0.42     $ 0.38     $ 1.64  

Weighted average shares:

           

Basic

      82,329       82,750       82,755       81,003       82,208  

Diluted

      85,713       85,638       85,249       82,423       84,637  

     Three Months Ended     Year Ended  
     March 31,
2007		     June 30,
2007		     September 30,
2007		     December 31,
2007		     December 31,
2007		  
     (In thousands, except per share amounts)  

Income from continuing operations (GAAP Measure)

    $ 64,715     $ 51,535     $ 61,266     $ 36,925     $ 214,441  

Stock compensation expense

      10,434       10,185       14,539       13,153       48,311  

Provision for income taxes

      40,056       31,752       36,535       29,060       137,403  

Interest expense, net

      15,800       18,934       17,771       16,876       69,381  

Loss on sale of assets

      —         —         —         16,045       16,045  

Merger and other costs

      —         6,171       6,049       7,373       19,593  

Depreciation and other amortization

      13,749       14,919       15,368       15,652       59,688  

Amortization of purchased intangibles

      15,133       17,423       17,380       17,387       67,323  
                                        

Adjusted EBITDA

    $ 159,887     $ 150,919     $ 168,908     $ 152,471     $ 632,185  

Change in deferred revenue

      13,058       73,612       65,986       24,186       176,842  

Change in redemption settlement assets

      (16,630 )     (11,391 )     (26,623 )     (1,452 )     (56,096 )

Foreign currency impact

      (4,888 )     (38,737 )     (29,798 )     (5,083 )     (78,506 )
                                        

Operating EBITDA

    $ 151,427     $ 174,403     $ 178,473     $ 170,122     $ 674,425  
                                        

Cash Earnings:

           

Income from continuing operations (GAAP Measure)

    $ 64,715     $ 51,535     $ 61,266     $ 36,925     $ 214,441  

Add back non-cash operating items and merger and other costs:

           

Amortization of purchased intangibles

      15,133       17,423       17,380       17,387       67,323  

Stock compensation expense

      10,434       10,185       14,539       13,153       48,311  

Loss on the sale of assets

      —         —         —         16,045       16,045  

Merger and other costs

      —         6,171       6,049       7,373       19,593  

Income tax effect

      (9,040 )     (12,189 )     (13,486 )     (17,203 )     (51,918 )
                                        

Cash Earnings

    $ 81,242     $ 73,125     $ 85,748     $ 73,680     $ 313,795  
                                        

Weighted average diluted shares

      81,109       80,504       80,734       81,011       80,811  

Cash earnings per diluted share

    $ 1.00     $ 0.91     $ 1.06     $ 0.91     $ 3.88  

     Three Months Ended     Year Ended  
     March 31,
2006		     June 30,
2006		     September 30,
2006		     December 31,
2006		     December 31,
2006		  
                    (In thousands, except per share amounts)  

Income from continuing operations (GAAP Measure)

    $ 60,083     $ 47,382     $ 52,727     $ 46,205     $ 206,397  

Stock compensation expense

      5,530       10,633       9,793       9,835       35,791  

Provision for income taxes

      36,548       29,818       32,041       27,854       126,261  

Interest expense, net

      8,389       9,976       10,573       11,784       40,722  

Depreciation and other amortization

      11,502       11,595       12,360       13,042       48,499  

Amortization of purchased intangibles

      7,660       11,390       10,414       11,462       40,926  
                                                 

Adjusted EBITDA

    $ 129,712     $ 120,794     $ 127,908     $ 120,182     $ 498,596  

Change in deferred revenue

      8,253       43,541       16,087       (26,908 )     40,973  

Change in redemption settlement assets

      (5,431 )     (14,371 )     (9,188 )     28,996       6  

Foreign currency impact

      1,958       (17,308 )     (120 )     17,440       1,970  
                                                 

Operating EBITDA

    $ 134,492     $ 132,656     $ 134,687     $ 139,710     $ 541,545  
                                                 

Cash Earnings:

           

Income from continuing operations (GAAP Measure)

    $ 60,083     $ 47,382     $ 52,727     $ 46,205     $ 206,397  

Add back non-cash operating items and merger and other costs:

           

Amortization of purchased intangibles

      7,660       11,390       10,414       11,462       40,926  

Stock compensation expense

      5,530       10,633       9,793       9,835       35,791  

Income tax effect

      (4,343 )     (7,711 )     (6,927 )     (7,299 )     (26,280 )
                                                 

Cash Earnings

    $ 68,930     $ 61,694     $ 66,007     $ 60,203     $ 256,834  
                                                 

Weighted average diluted shares

      81,667       81,924       81,491       81,743       81,686  

Cash earnings per diluted share

    $ 0.84     $ 0.75     $ 0.81     $ 0.74     $ 3.14  

     Three Months Ended     Year Ended  
     March 31,
2005		     June 30,
2005		     September 30,
2005		     December 31,
2005		     December 31,
2005		  
                    (In thousands, except per share amounts)  

Income from continuing operations (GAAP Measure)

    $ 42,308     $ 34,677     $ 35,690     $ 33,953     $ 146,628  

Stock compensation expense

      802       1,203       1,257       7,699       10,961  

Provision for income taxes

      24,553       20,488       21,294       19,983       86,318  

Interest expense, net

      2,532       2,260       2,282       6,831       13,905  

Depreciation and other amortization

      9,519       9,777       9,997       11,252       40,545  

Amortization of purchased intangibles

      5,656       5,646       5,614       6,088       23,004  
                                                 

Adjusted EBITDA

    $ 85,370     $ 74,051     $ 76,134     $ 85,806     $ 321,361  

Change in deferred revenue

      2,712       4,387       44,092       12,219       63,410  

Change in redemption settlement assets

      (312 )     4,748       (18,265 )     (3,642 )     (17,471 )

Foreign currency impact

      1,689       3,599       (18,329 )     (1,351 )     (14,392 )
                                                 

Operating EBITDA

    $ 89,459     $ 86,785     $ 83,632     $ 93,032     $ 352,908  
                                                 

Cash Earnings:

           

Income from continuing operations (GAAP Measure)

    $ 42,308     $ 34,677     $ 35,690     $ 33,953     $ 146,628  

Add back non-cash operating items and merger and other costs:

           

Amortization of purchased intangibles

      5,656       5,646       5,614       6,088       23,004  

Stock compensation expense

      802       1,203       1,257       7,699       10,961  

Income tax effect

      (2,372 )     (2,544 )     (2,568 )     (4,523 )     (12,007 )
                                                 

Cash Earnings

    $ 46,394     $ 38,982     $ 39,993     $ 43,217     $ 168,586  
                                                 

Weighted average diluted shares

      85,713       85,638       85,249       82,423       84,637  

Cash earnings per diluted share

    $ 0.54     $ 0.46     $ 0.47     $ 0.52     $ 1.99  

     Three Months Ended     Year Ended  
     March 31,
2007		     June 30,
2007		     September
30, 2007		     December
31, 2007		     December
31, 2007		  
     (In thousands, except percentages)  

Revenue:

           

Loyalty Services

    $ 131,816     $ 153,228     $ 150,304     $ 193,444     $ 628,792  

Epsilon Marketing Services

      98,582       109,369       122,866       127,793       458,610  

Private Label Services

      97,896       91,546       92,552       88,838       370,832  

Private Label Credit

      219,816       206,251       207,587       194,298       827,952  

Corporate/Other

      11,186       10,183       8,633       3,358       33,360  

Eliminations

      (92,949 )     (88,757 )     (89,916 )     (85,765 )     (357,387 )
                                        

Total

    $ 466,347     $ 481,820     $ 492,026     $ 521,966     $ 1,962,159  
                                        

Adjusted EBITDA:

           

Loyalty Services

    $ 25,495     $ 32,295     $ 35,520     $ 38,826     $ 132,136  

Epsilon Marketing Services

      20,941       23,595       36,820       36,863       118,219  

Private Label Services

      32,503       24,620       24,222       17,739       99,084  

Private Label Credit

      99,975       89,360       89,041       71,703       350,079  

Corporate/Other

      (19,027 )     (18,951 )     (16,695 )     (12,660 )     (67,333 )
                                        

Total

    $ 159,887     $ 150,919     $ 168,908     $ 152,471     $ 632,185  
                                        

Stock compensation expense:

           

Loyalty Services

    $ 1,922     $ 1,804     $ 1,833     $ 1,794     $ 7,353  

Epsilon Marketing Services

      2,036       2,469       2,871       4,004       11,380  

Private Label Services

      1,344       1,314       1,292       1,663       5,613  

Private Label Credit

      202       193       190       189       774  

Corporate/Other

      4,930       4,405       8,353       5,503       23,191  
                                        

Total

    $ 10,434     $ 10,185     $ 14,539     $ 13,153     $ 48,311  
                                        

Depreciation and amortization:

           

Loyalty Services

    $ 5,455     $ 6,035     $ 6,146     $ 6,965     $ 24,601  

Epsilon Marketing Services

      15,403       18,425       18,794       19,279       71,901  

Private Label Services

      2,353       2,165       2,009       1,902       8,429  

Private Label Credit

      2,830       2,789       2,776       2,836       11,231  

Corporate/Other

      2,841       2,928       3,023       2,057       10,849  
                                        

Total

    $ 28,882     $ 32,342     $ 32,748     $ 33,039     $ 127,011  
                                        

Operating expenses(1):

           

Loyalty Services

    $ 106,321     $ 120,933     $ 114,784     $ 154,618     $ 496,656  

Epsilon Marketing Services

      77,641       85,774       86,046       90,930       340,391  

Private Label Services

      65,393       66,926       68,330       71,099       271,748  

Private Label Credit

      119,841       116,891       118,546       122,595       477,873  

Corporate/Other

      30,213       29,134       25,328       16,018       100,693  

Eliminations

      (92,949 )     (88,757 )     (89,916 )     (85,765 )     (357,387 )
                                        

Total

    $ 306,460     $ 330,901     $ 323,118     $ 369,495     $ 1,329,974  
                                        

Operating income from continuing operations:

           

Loyalty Services

    $ 18,119     $ 24,456     $ 27,540     $ 30,069     $ 100,184  

Epsilon Marketing Services

      3,501       2,701       15,154       13,579       34,935  

Private Label Services

      28,806       21,142       20,921       14,173       85,042  

Private Label Credit

      96,943       86,378       86,076       68,678       338,075  

Corporate/Other

      (26,798 )     (32,456 )     (34,119 )     (43,638 )     (137,011 )
                                        

Total

    $ 120,571     $ 102,221     $ 115,572     $ 82,861     $ 421,225  
                                        

Adjusted EBITDA margin(2):

           

Loyalty Services

      19.3 %     21.1 %     23.6 %     20.1 %     21.0 %

Epsilon Marketing Services

      21.2 %     21.6 %     30.0 %     28.8 %     25.8 %

Private Label Services

      33.2 %     26.9 %     26.2 %     20.0 %     26.7 %

Private Label Credit

      45.5 %     43.3 %     42.9 %     36.9 %     42.3 %

Total

      34.3 %     31.3 %     34.3 %     29.2 %     32.2 %
                                        

Segment operating data:

           

AIR MILES reward miles issued

      942,106       1,036,083       1,019,968       1,144,844       4,143,001  

AIR MILES reward miles redeemed

      644,329       673,923       615,348       789,924       2,723,524  

Private Label statements generated

      34,425       33,748       33,931       33,157       135,261  

Credit sales

    $ 1,586,455     $ 1,917,194     $ 1,773,529     $ 2,225,769     $ 7,502,947  

Average managed receivables

    $ 3,916,191     $ 3,853,346     $ 3,901,632     $ 3,967,339     $ 3,909,627  

 

(1) Operating expenses excludes stock compensation expense, depreciation, amortization, loss on the sale of assets, merger and other costs.
(2) Adjusted EBITDA margin is adjusted EBITDA divided by revenue. Management uses adjusted EBITDA margin to analyze the operating performance of the segments and the impact revenue growth has on operating expenses.

     Three Months Ended     Year Ended  
     March 31,
2006		     June 30,
2006		     September
30, 2006		     December
31, 2006		     December
31, 2006		  
     (In thousands, except percentages)  

Revenue:

           

Loyalty Services

    $ 116,875     $ 132,223     $ 135,998     $ 156,131     $ 541,227  

Epsilon Marketing Services

      58,654       75,385       80,551       87,480       302,070  

Private Label Services

      96,589       94,371       94,760       96,960       382,680  

Private Label Credit

      202,037       180,134       185,064       178,101       745,336  

Corporate/Other

      8,679       8,472       9,527       10,347       37,025  

Eliminations

      (90,134 )     (88,352 )     (88,939 )     (90,364 )     (357,789 )
                                        

Total

    $ 392,700     $ 402,233     $ 416,961     $ 438,655     $ 1,650,549  
                                        

Adjusted EBITDA:

           

Loyalty Services

    $ 20,350     $ 23,950     $ 29,977     $ 29,375     $ 103,652  

Epsilon Marketing Services

      10,500       16,992       21,342       25,324       74,158  

Private Label Services

      32,168       29,668       30,390       27,609       119,835  

Private Label Credit

      87,052       67,143       71,189       57,321       282,705  

Corporate/Other

      (20,358 )     (16,959 )     (24,990 )     (19,447 )     (81,754 )
                                        

Total

    $ 129,712     $ 120,794     $ 127,908     $ 120,182     $ 498,596  
                                        

Stock compensation expense:

           

Loyalty Services

    $ 1,701     $ 2,050     $ 1,867     $ 1,874     $ 7,492  

Epsilon Marketing Services

      1,127       1,425       1,462       1,475       5,489  

Private Label Services

      1,276       1,491       1,336       1,379       5,482  

Private Label Credit

      204       237       213       215       869  

Corporate/Other

      1,222       5,430       4,915       4,892       16,459  
                                        

Total

    $ 5,530     $ 10,633     $ 9,793     $ 9,835     $ 35,791  
                                        

Depreciation and amortization:

           

Loyalty Services

    $ 5,333     $ 5,893     $ 5,769     $ 5,798     $ 22,793  

Epsilon Marketing Services

      6,369       8,707       8,997       10,400       34,473  

Private Label Services

      2,609       2,621       2,592       2,603       10,425  

Private Label Credit

      2,531       3,262       2,817       2,798       11,408  

Corporate/Other

      2,320       2,502       2,599       2,905       10,326  
                                        

Total

    $ 19,162     $ 22,985     $ 22,774     $ 24,504     $ 89,425  
                                        

Operating expenses(1):

           

Loyalty Services

    $ 96,525     $ 108,273     $ 106,021     $ 126,756     $ 437,575  

Epsilon Marketing Services

      48,154       58,393       59,209       62,156       227,912  

Private Label Services

      64,421       64,703       64,370       69,351       262,845  

Private Label Credit

      114,985       112,991       113,875       120,780       462,631  

Corporate/Other

      29,037       25,431       34,517       29,794       118,779  

Eliminations

      (90,134 )     (88,352 )     (88,939 )     (90,364 )     (357,789 )
                                        

Total

    $ 262,988     $ 281,439     $ 289,053     $ 318,473     $ 1,151,953  
                                        

Operating income from continuing operations:

           

Loyalty Services

    $ 13,317     $ 16,006     $ 22,342     $ 21,704     $ 73,369  

Epsilon Marketing Services

      3,004       6,860       10,884       13,448       34,196  

Private Label Services

      28,283       25,556       26,461       23,627       103,927  

Private Label Credit

      84,317       63,645       68,158       54,308       270,428  

Corporate/Other

      (23,901 )     (24,891 )     (32,504 )     (27,244 )     (108,540 )
                                        

Total

    $ 105,020     $ 87,176     $ 95,341     $ 85,843     $ 373,380  
                                        

Adjusted EBITDA margin(2):

           

Loyalty Services

      17.4 %     18.1 %     22.0 %     18.8 %     19.2 %

Epsilon Marketing Services

      17.9 %     22.5 %     26.5 %     28.9 %     24.5 %

Private Label Services

      33.3 %     31.4 %     32.1 %     28.5 %     31.3 %

Private Label Credit

      43.1 %     37.3 %     38.5 %     32.2 %     37.9 %

Total

      33.0 %     30.0 %     30.7 %     27.4 %     30.2 %
                                        

Segment operating data:

           

AIR MILES reward miles issued

      856,434       963,921       936,553       984,926       3,741,834  

AIR MILES reward miles redeemed

      554,311       580,252       578,564       743,806       2,456,933  

Private Label statements generated

      33,681       33,591       33,562       34,930       135,764  

Credit sales

    $ 1,494,090     $ 1,884,168     $ 1,763,339     $ 2,302,701     $ 7,444,298  

Average managed receivables

    $ 3,581,879     $ 3,556,953     $ 3,602,336     $ 3,819,060     $ 3,640,057  

 

(1) Operating expenses excludes stock compensation expense, depreciation and amortization.
(2) Adjusted EBITDA margin is adjusted EBITDA divided by revenue. Management uses adjusted EBITDA margin to analyze the operating performance of the segments and the impact revenue growth has on operating expenses.

     Three Months Ended     Year Ended  
     March 31,
2005		     June 30,
2005		     September
30, 2005		     December
31, 2005		     December
31, 2005		  
     (In thousands, except percentages)  

Revenue:

           

Loyalty Services

    $ 86,757     $ 95,117     $ 95,749     $ 110,580     $ 388,203  

Epsilon Marketing Services

      47,225       47,556       46,977       65,024       206,782  

Private Label Services

      88,747       82,385       84,693       89,898       345,723  

Private Label Credit

      153,308       132,662       139,142       144,661       569,773  

Corporate/Other

      9,998       9,346       8,108       7,553       35,005  

Eliminations

      (80,642 )     (74,497 )     (76,613 )     (81,254 )     (313,006 )
                                        

Total

    $ 305,393     $ 292,569     $ 298,056     $ 336,462     $ 1,232,480  
                                        

Adjusted EBITDA:

           

Loyalty Services

    $ 17,927     $ 19,398     $ 18,095     $ 16,746     $ 72,166  

Epsilon Marketing Services

      7,485       9,042       9,191       15,023       40,741  

Private Label Services

      28,831       21,791       23,355       24,508       98,485  

Private Label Credit

      57,559       41,597       48,168       48,257       195,581  

Corporate/Other

      (26,432 )     (17,777 )     (22,675 )     (18,728 )     (85,612 )
                                        

Total

    $ 85,370     $ 74,051     $ 76,134     $ 85,806     $ 321,361  
                                        

Stock compensation expense:

           

Loyalty Services

    $ 72     $ 108     $ 108     $ 1,287     $ 1,575  

Epsilon Marketing Services

      54       54       54       121       283  

Private Label Services

      49       73       73       732       927  

Private Label Credit

      2       3       3       91       99  

Corporate/Other

      625       965       1,019       5,468       8,077  
                                        

Total

    $ 802     $ 1,203     $ 1,257     $ 7,699     $ 10,961  
                                        

Depreciation and amortization:

           

Loyalty Services

    $ 3,477     $ 3,424     $ 3,632       4,020       14,553  

Epsilon Marketing Services

      4,722       4,751       4,619       6,423       20,515  

Private Label Services

      3,308       3,349       3,425       3,359       13,441  

Private Label Credit

      1,948       1,876       1,894       929       6,647  

Corporate/Other

      1,720       2,023       2,041       2,609       8,393  
                                        

Total

    $ 15,175     $ 15,423     $ 15,611     $ 17,340     $ 63,549  
                                        

Operating expenses(1):

           

Loyalty Services

    $ 68,830     $ 75,719     $ 77,654     $ 93,834     $ 316,037  

Epsilon Marketing Services

      39,740       38,514       37,786       50,001       166,041  

Private Label Services

      59,916       60,594       61,338       65,390       247,238  

Private Label Credit

      95,749       91,065       90,974       96,404       374,192  

Corporate/Other

      36,430       27,123       30,783       26,281       120,617  

Eliminations

      (80,642 )     (74,497 )     (76,613 )     (81,254 )     (313,006 )
                                        

Total

    $ 220,023     $ 218,518     $ 221,922     $ 250,656     $ 911,119  
                                        

Operating income from continuing operations:

           

Loyalty Services

    $ 14,379     $ 15,866     $ 14,356     $ 11,438     $ 56,039  

Epsilon Marketing Services

      2,709       4,237       4,518       8,480       19,944  

Private Label Services

      25,474       18,368       19,855       20,418       84,115  

Private Label Credit

      55,608       39,718       46,272       47,236       188,834  

Corporate/Other

      (28,777 )     (20,764 )     (25,735 )     (26,805 )     (102,081 )
                                        

Total

    $ 69,393     $ 57,425     $ 59,266     $ 60,767     $ 246,851  
                                        

Adjusted EBITDA margin(2):

           

Loyalty Services

      20.7 %     20.4 %     18.9 %     15.1 %     18.6 %

Epsilon Marketing Services

      15.8 %     19.0 %     19.6 %     23.1 %     19.7 %

Private Label Services

      32.5 %     26.5 %     27.6 %     27.3 %     28.5 %

Private Label Credit

      37.5 %     31.4 %     34.6 %     33.4 %     34.3 %

Total

      28.0 %     25.3 %     25.5 %     25.5 %     26.1 %
                                        

Segment operating data:

           

AIR MILES reward miles issued

      710,762       816,186       830,604       889,001       3,246,553  

AIR MILES reward miles redeemed

      459,647       514,041       475,400       574,130       2,023,218  

Private Label statements generated

      31,028       30,374       30,879       32,555       124,836  

Credit sales

    $ 1,339,222     $ 1,637,592     $ 1,508,123     $ 2,097,863     $ 6,582,800  

Average managed receivables

    $ 3,137,368     $ 3,070,988     $ 3,114,452     $ 3,359,131     $ 3,170,485  

 

(1) Operating expenses excludes stock compensation expense, depreciation and amortization.
(2) Adjusted EBITDA margin is adjusted EBITDA divided by revenue. Management uses adjusted EBITDA margin to analyze the operating performance of the segments and the impact revenue growth has on operating expenses.
Investor Presentation Materials
©2008 ADS Alliance Data Systems, Inc.
Alliance Data
NYSE:ADS
Investor/Analyst
Call
March 13, 2008
Exhibit 99.2

Investor/Analyst Call–
March 13, 2008
2
©2008 ADS Alliance Data Systems, Inc.
Alliance Data’s Safe Harbor Statement/Forward-Looking Statements
•
This presentation 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. These
risks, uncertainties and assumptions include those made with respect to and any developments related to the
proposed merger with an affiliate of The Blackstone Group, including the risk that conditions to closing, including
the
condition
relating
to
OCC
approval,
may
not
be
satisfied
and
that
the
proposed
merger
may
not
be
consummated, as well as risks and uncertainties arising from actions that the respective parties to the merger
agreement may take in connection therewith. The Company cannot provide any assurance that the conditions to
closing the transaction will be satisfied or that the proposed merger will be completed. 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.

Investor/Analyst Call–
March 13, 2008
3
©2008 ADS Alliance Data Systems, Inc.
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 adjusted EBITDA, operating EBITDA and cash earnings per share. The
Company believes that these non-GAAP measures, viewed in addition to and not in lieu of
the Company's reported GAAP results, provide useful information to investors regarding its
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.
Definitions
of
these
financial
terms
and
reconciliations of these financial measures to comparable GAAP measures are available
on the Company's website, except where, as in the case of adjusted EBITDA, operating
EBITDA and cash earnings per share, the appropriate GAAP financial measure is not
available on a forward-looking basis. The financial measures presented are consistent with
the Company's historical financial reporting practices, except as noted with respect to the
Company’s revised segment reporting. The non-GAAP measures presented herein may
not be comparable to similarly titled measures presented by other companies, and are not
identical to corresponding measures used in our various agreements or public filings.

Investor/Analyst Call–
March 13, 2008
4
©2008 ADS Alliance Data Systems, Inc.
Agenda
•
Introduction
•
Business Update
•
Q&A

Investor/Analyst Call–
March 13, 2008
5
©2008 ADS Alliance Data Systems, Inc.
Business Update
•
Business Model & Key Financial Objectives
•
Loyalty
Services
(AIR
MILES
®
Reward
Program
-
Canada)
•
Epsilon Marketing Services
•
Private Label Services
•
Private Label Credit
•
New Segmentation and Discontinued Operations
•
Consolidated Alliance Data Financials & Guidance
•
Consolidated Free Cash Flow
•
Liquidity
•
Q&A

Investor/Analyst Call–
March 13, 2008
6
©2008 ADS Alliance Data Systems, Inc.
Business Model
•
Highly sophisticated transaction-based programs are measurable,
trackable
and
allow
for
micro-segmentation
of
clients’
customers.
•
Drives
high
ROIs
for
our
clients
and
displaces
traditional
marketing
channels, a $670 billion market.
•
Comprehensive nature of our programs cuts across many traditional
industries.
Largest and Most Comprehensive Provider of Transaction-
based Marketing and Loyalty Solutions
Very “sticky”
programs:  recession resistant and resilient pricing power
•
Multi-channel marketing strategy
•
Data products
•
Database design and build
•
Analytics
•
Permission-based email
•
Customer care
•
Processing
•
Credit

Investor/Analyst Call–
March 13, 2008
7
©2008 ADS Alliance Data Systems, Inc.
Business Model
We capture
past and
current
consumer
transactions
Through our
analysis over
the past 25
years we know
this is the best
predictor of
future behavior
We develop,
implement and
drive complex 
marketing and
loyalty
programs
Our micro-
segmentation
drives
significant ROIs
for clients
Captures past and current
transactions from
purchases, in-store and
online interactions,
responses to offers, etc.
Analyzes the data to
know that the customer
opts in to receive email
offers, buys newest book
releases online using
special membership
rate, also likes to browse
in-store for paperbacks
and music.
Customer receives email
and buys promoted book
and makes another
selection, attends autograph
signing the following month
where additional book
purchase was made.
The program yielded
higher response rate to
email campaign, larger
average ticket and
increased store traffic.
Develops permission-
based email campaign for
advance orders of newest
release, suggests
additional book titles and
announces autograph
signing at nearby store the
following month.
Example:

Investor/Analyst Call–
March 13, 2008
8
©2008 ADS Alliance Data Systems, Inc.
Four Key Financial Objectives
1.
Double-digit Organic Growth
2.
Strong Free Cash Flow Conversion
•
Double-digit organic business growth, plus
•
Margin expansion:  14% (2000)
32% (2007); >250bps a year
•
Capex
improving from 5%
3% of top-line
3.
Strong Visibility, Predictability and Transparency
•
27 consecutive quarters since IPO
•
High recession resiliency
4.
Excellent Liquidity
•
$3.8BN Capacity in Place
$1.8BN Unused
•
Leverage <1x
Comfort at 3x
$2.0BN Available
$3.8BN Unused/Available
(“investment grade”)

Investor/Analyst Call–
March 13, 2008
9
©2008 ADS Alliance Data Systems, Inc.
2008 Outlook:  Loyalty Services -
Canada
•
AIR MILES
®
Reward Program is the Largest Mass
Consumer Coalition Loyalty Program in Canada
•
70% of Canadian Households Active in the Program
•
One of Canada’s Most Recognizable Brands
•
Despite Name, Revenues are not Driven by Airline
Industry.
•
Revenues Generated from Consumers’
Non-discretionary, High Frequency, Everyday Spend
•
Gas, Grocery, Pharmacy, Etc.
•
Long Term Contracts with High Renewal Rate
•
2007 Operating EBITDA of $174MM
•
(Adjusted EBITDA plus Loyalty Adjustment)
•
Expect Mid-teens
Adjusted EBITDA Growth in 2008
•
100% Organic; driven by network effect, new sponsors, and
larger commitments from current sponsors
Shell Oil of Canada

Investor/Analyst Call–
March 13, 2008
10
©2008 ADS Alliance Data Systems, Inc.
2008 Outlook:  Epsilon Marketing Services
•
Only Recognized Leader in Both Database Marketing and Email
Marketing Services by Forrester
•
Most Comprehensive and Only Integrated Database Marketing
Services Firm in the Industry
•
Marketing Strategy
•
Database Management
•
Proprietary Data Services
•
Analytical Services
•
Distribution (35 BN+ Permission-based Emails Sent Annually)
•
Coalition
Programs:
Abacus,
Citi
ThankYou
Network
•
Individual Programs: Hilton HHonors, Barnes & Noble, Pfizer
•
Top 25 Clients have Average Tenure of 10 Years
•
2007 Adjusted EBITDA of $118MM
•
Expect Mid-teens
Adjusted EBITDA Growth in 2008
•
$670BN Market:  TV, radio, newspapers, magazines, outdoor,
direct response & mail, events & promos
•
Massive Shift to ROI-based Programs
•
100% Organic: Larger Commitments from Existing Clients and
New Clients

Investor/Analyst Call–
March 13, 2008
11
©2008 ADS Alliance Data Systems, Inc.
2008 Outlook:  Private Label Services
•
Fully Integrated Loyalty-driven Private Label and
Co-brand Programs
•
Loyalty & Marketing Programs
•
High-end Customer Care
•
Transaction Processing
•
Consumer’s Choice Driven by Loyalty and Relationship
to Retailer, not a Need for Credit
•
2 of 3 Services (Loyalty/Marketing and Customer Care)
Provide “Special Sauce”
That Makes the Business
Unique
•
High Renewal Rate; Key Clients with Long Tenure
•
2007 Adjusted EBITDA of $99MM
•
Expect Mid-single
Digit Adjusted EBITDA Growth in
2008
•
Grow-over from Lane Bryant
•
280+ potential clients (50% have a program today)
•
Sign 4-5 new clients per year

Investor/Analyst Call–
March 13, 2008
12
©2008 ADS Alliance Data Systems, Inc.
2008 Outlook: Private Label Credit
•
11MM Active Households Each Month
•
85% Female; Mid-to High-Income
•
Customer Views as Loyalty Program, not an Extension of Credit
•
700 Average Bureau Score; Small Average Balances ($350/acct.)
•
No Sub-prime Targeting
•
2007 Adjusted EBITDA of $350MM
•
Expect
Mid-single Digit Adjusted
EBITDA
Growth
in
2008
–
It’s Not the Macro Issues;
It’s Lane Bryant v. ramp-ups
•
(+) Yields Solid
•
(+)
Portfolio
Growth
Solid
–
excl.
Lane
Bryant:
6%;
including
:
flat
•
(+)
Portfolio
Sales
Decent
–
excl.
Lane
Bryant:
5%;
including:
flat
•
(+) Funding Rates 
•
(-)
Slight
Creep
in
Credit
Losses
–
Master
Trust
Sep ‘07
Oct ‘07
Nov ‘07
Dec ‘07
Jan ‘08
Feb ‘08
Delinquencies
5.4%
5.5%
5.3%
5.1%
5.4%
Losses
5.7%
5.4%
6.2%
5.7%
6.5%
}
Offset –
Natural Hedge
5.3%
6.3%

Investor/Analyst Call–
March 13, 2008
13
©2008 ADS Alliance Data Systems, Inc.
Historical Segment Presentation
•
Original Reporting Unchanged in 8 Years
•
Credit (Private Label)
•
Corporate
•
Transaction
Processing/Customer
Care/Marketing (Private
Label)
•
Merchant Bankcard
Acquiring Services
•
Utility Services
•
Corporate
•
Loyalty AIR MILES 
Reward Program
(Canada)
•
Epsilon Marketing
Services
•
Corporate
Credit
Transaction
Marketing
Segment:
Products  
and
Services:

Investor/Analyst Call–
March 13, 2008
14
©2008 ADS Alliance Data Systems, Inc.
New Segment Presentation
•
Corporate:  will be reported separately
•
Inter-segment:  processing, customer care and loyalty/marketing services for Private Label will be
marked up based on public comps and charged to Credit.  Inter-segment revenues eliminated
during consolidations.
•
Discontinued Ops:  due to commodity-type nature of Merchant Bankcard Acquiring Services &
Utility
Services
businesses,
fit
is
no
longer
strategic
and
will
be
moved
to
discontinued
ops. 
Positive EBITDA, but, overall, negative cash flow due to capex.
•
A complete PDF file of the new segment presentations will be posted on our website at:
http://www.alliancedata.com/downloads/segments.pdf
Private Label
(processing,
customer care,
loyalty)
Private Label
Services
Private Label 
(credit)
Epsilon
Loyalty
AIR MILES
Reward Program
Private Label
Credit
Epsilon
Marketing
Services
Loyalty
Services
Segment:
Services
and
Products:
Transparency Objective Plus Shift in Business Mix Dictate
“More User Friendly”
Approach

Investor/Analyst Call–
March 13, 2008
15
©2008 ADS Alliance Data Systems, Inc.
2008 Outlook –
Consolidated Alliance Data
2007
Operating EBITDA*
2008
•
Loyalty
Services
$174MM
•
Epsilon
Marketing Services
$118MM
•
Private Label Services
$  99MM
•
Private Label Credit
$350MM
$741MM
•
Corporate
$(67)MM
•
Operating EBITDA
$674MM
>$730MM
•
Adjusted EBITDA
$632MM           
>$700MM
*Reflects impact of discontinued operations

Investor/Analyst Call–
March 13, 2008
16
©2008 ADS Alliance Data Systems, Inc.
2008 Guidance
•
Reiterate Organic Growth Targets:
•
Operating EBITDA
>$730MM
•
Adjusted EBITDA
>$700MM
•
Cash EPS
$4.30
Cash EPS:  Mid-teens Organic Growth
Q1:  Flat
(-) Lane Bryant Drag
($.98-1.00)
(-) 2008’s Most Difficult Comps
Q2:  Low to Mid-teens    (-) Lane Bryant Drag 
(+) Private Label Ramp-ups
($1.00)
(+) Funding Benefits
Q3:  Mid to High-teens    (-) Lane Bryant Drag    
(+) Private Label Ramp-ups
($1.15)
(+) Funding Benefits 
(+) Loyalty & Epsilon
Q4:  Mid-20’s
(+) Lane Bryant Anniv.
(+) Private Label Ramp-ups
(>$1.15)
(+) Funding Benefits
(+) Loyalty & Epsilon
Note: Adjusted EBITDA Will Follow A Similar Distribution

Investor/Analyst Call–
March 13, 2008
17
©2008 ADS Alliance Data Systems, Inc.
2008 Est. Free Cash Flow
($MM, Except per Share)
Adjusted EBITDA
> $700
Loyalty Adjustment
30
Operating EBITDA
> $730
Less Capex/Int./Taxes
(330)
Free Cash Flow
$400
Per Share
$5.00
+ Asset Sales / Other Initiatives
TBD
(11% yield)

Investor/Analyst Call–
March 13, 2008
18
©2008 ADS Alliance Data Systems, Inc.
Liquidity -
$1.5 Billion New or Renewed Since October
-
Barclay’s, Wachovia, J.P. Morgan, RBS
1.
CDs
2.
Conduits (Off B/S)
3.
Revolver (Off B/S)
4.
Warehouse (Off B/S)
5.
Cash
6.
Net Debt (excludes CDs)                     
$655
Corp. 2008 FCF
($400)
$255
2008 Op. EBITDA
$730
Leverage
0.3x
7.  Private Markets
8.  Public ABS
}
$3.8 Billion
Capacity
$1.8 Billion
Unused
$2.0 Billion
Available at 3x
(Investment Grade)

Investor/Analyst Call–
March 13, 2008
19
©2008 ADS Alliance Data Systems, Inc.
2003-2008e
(in $MM, except per share)
Adjusted EBITDA
>$700
2003             2004           2005           2006         
2007           2008e
Cash EPS
2003           2004            2005           2006             2007            2008e
$1.00
$1.54
$1.99
$3.14
$3.88
$4.30
$189
$255
$321
$498
$632