* Reiterates Full-Year Cash Earnings per Share Guidance of $5.15,
up 17 percent from Prior Year * Epsilon Marketing Services Returns
to Growth DALLAS, July 22 /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 second quarter ended June 30, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20051024/ADSLOGO ) Total
second-quarter 2009 revenue of $460 million, adjusted EBITDA of
$125 million, net income of $29.4 million, net income per diluted
share of $0.51 and cash earnings per diluted share of $0.95
represented declines of 9 percent, 23 percent, 37 percent, 15
percent, and 9 percent, respectively, versus the second quarter of
2008. See "Financial Measures" below for a discussion of adjusted
EBITDA, cash earnings per diluted share and other non-GAAP
financial measures. Excluding changes in the foreign exchange rate
for the Canadian dollar, revenue would have been $486 million,
representing a 4-percent decline; adjusted EBITDA would have been
$149 million, representing an 8-percent decline; and cash earnings
per diluted share would have increased 16 percent to $1.21,
compared to the second quarter of 2008 in each case. The Company's
previously issued second-quarter guidance for cash earnings per
diluted share of $1.05 assumed an exchange rate of $0.80 US per
Canadian dollar. Actual results reflect a significantly stronger
Canadian dollar, which averaged $0.86 US per Canadian dollar for
the quarter. The higher Canadian dollar benefited Canadian
operations by approximately $3 million, but resulted in a $16
million foreign exchange loss on its U.S. dollar denominated
investments. Thus, against guidance, results were impacted by a net
$13 million foreign exchange loss, or $0.14 on a cash earnings per
diluted share basis. Had the Canadian dollar tracked to the
Company's guidance of an exchange rate of $0.80 US per Canadian
dollar, cash earnings per diluted share would have been $1.09, or
$0.04 above guidance. The $0.14 incremental foreign exchange loss
is not expected to impact the Company's ability to achieve its
full-year guidance. It is expected that a stronger Canadian dollar
will continue to benefit operations in the third and fourth
quarters and mitigate the impact of the second-quarter loss. In
summary, in 2009 versus the prior year, the Company is facing three
major headwinds: higher loss rates amounting to $90 million;
interest only strip grow-over of $30 million related to the
Company's securitization program; and an impact of $40 million due
to foreign exchange rate fluctuations. In total, these headwinds
equate to $160 million, or approximately $1.75 of a negative impact
to cash earnings per diluted share. The Company expects the first
half of the year to be the most challenging. Ed Heffernan,
president and chief executive officer of Alliance Data, commented,
"Despite these significant headwinds that we faced this quarter and
a challenging first half of the year, we saw positive trends in all
of our businesses this quarter. "We announced sizeable client wins,
expansions and/or renewals across all three businesses and also
successfully completed several capital raising transactions for
securing additional liquidity for both corporate operations and
Private Label funding." Heffernan continued, "Our Loyalty Services
segment, specifically the Canadian AIR MILES Reward Miles program,
continued its strong performance. This quarter Epsilon has returned
to solid organic growth, and our Private Label business is showing
accelerated growth in sales, portfolio size, and statements, as
well as lower funding costs and stabilizing delinquencies. Also,
while the U.S. unemployment rate continues to increase above all
initial estimates, we believe our strategy of continuing to grow
our private label file through the addition of high-quality
accounts while writing-off the less creditworthy accounts will
serve as a stabilizing force against factors associated with higher
macro unemployment. "Combined, these positive factors are helping
to mitigate many of the headwinds. With our plans to acquire
additional private label files and continue with our highly
accretive common stock repurchase program, we remain confident with
meeting our full-year cash earnings per diluted share guidance.
Looking ahead, 2010 is shaping up nicely as all three businesses
are well positioned for growth, which along with a significantly
lower share count and much of the headwinds behind us, should drive
strong results and even more significant free cash flow per share."
SEGMENT REVIEW Loyalty Services: On a constant currency basis,
revenue was relatively flat as compared to the prior year period
($193 million for the second quarter of 2009 versus $200 million in
the prior year) reflecting a slowdown in collectors redeeming their
AIR MILES reward miles and lower revenue from other products. U.S.
dollar reported segment revenue was $167 million, or a 16 percent
decline. This suggests that collectors are "hoarding" reward miles
and viewing them as a liquidity source to be tapped as needed until
the recession recedes. On a constant currency basis, adjusted
EBITDA continued at a strong pace, growing 17 percent to $62
million versus $53 million last year. Results continue to be driven
by prior years' strong issuance growth combined with firm pricing,
virtually 100 percent client retention, a fully built-out
infrastructure and strong leverage on reward costs. The slowdown in
redemptions softened revenue but had little impact on earnings.
Adjusted EBITDA margin expanded to 32 percent, reflecting continued
leverage in the program and the impact of the reduced low-margin
redemption and other product revenue. Operating EBITDA added $31
million of cash flow above the reported adjusted EBITDA, reflecting
primarily the timing of cash receipts/disbursements. Reward miles
issued, a key metric to drive future earnings, as expected remained
soft but is trending in the right direction. Issuance was down less
than 2 percent in the second quarter versus the prior year period,
reflecting a moderate improvement from the first quarter's decline
of 4 percent. Soft issuance can be attributed to less usage on
sponsors' credit card programs as consumers cut back on
discretionary spend and the continued grow-over from high gas
prices last year, which drove strong issuance. Outlook: On a
constant currency basis, full-year revenue is expected to increase
in the single-digits reflecting the slowdown in reward miles
redeemed, while adjusted EBITDA is expected to continue with strong
double-digit organic growth for the year. Operating EBITDA is back
on track and is expected to add approximately $40 million of cash
flow to reported results for the year. Reward miles issued growth
is expected to turn positive in the third quarter and exit the year
in the high single-digit growth range. The grow-over impact from
issuances from high gas prices will anniversary in the third
quarter and the fourth quarter, as will the softness in consumer
spend on sponsors' credit cards in the fourth quarter. The combined
impact of these anniversaries is expected to return reward miles
issued to positive growth rates. As announced last week, the launch
of BMO Bank of Montreal's new and increased value proposition on
the bulk of its credit cards is expected to be a significant driver
in additional issuance growth. Finally, the headwind from a weaker
Canadian dollar this year ($0.85 full-year 2009 estimate versus
$0.94 in 2008) will continue to dissipate and finally anniversary
in the fourth quarter. This impact from the lower exchange rate and
foreign exchange losses on U.S. investments will hit 2009 for
approximately $40 million in adjusted EBITDA (over $0.40 per
share). Fortunately, two-thirds have been absorbed through the
first half of 2009 and the full anniversary will occur in the
fourth quarter leading to a strong start in 2010. Epsilon Marketing
Services: Epsilon returned to growth in the second quarter after
two quarters of flat performance. Revenue grew 7 percent to $123
million, and adjusted EBITDA grew by 15 percent to $30 million
versus the second quarter of last year. The segment's largest
service offerings, including database and digital marketing
solutions, continued to drive the results, and Epsilon's large
database clients maintained or expanded their significant
commitments to their loyalty programs. Additionally, Epsilon signed
a record number of new digital clients in the first half of the
year as marketing dollars continued to shift away from traditional
spending verticals and into Epsilon's highly targeted ROI-based
universe. The remaining one-third of Epsilon's business, consisting
of proprietary data services including the Abacus catalog
coalition, turned in a flat performance versus prior year. The
Company views this as a positive trend that will lead to future
growth. Outlook: Epsilon's return to solid growth is consistent
with the Company's previous guidance of approximately 7 percent top
and bottom line organic growth for the full year. Despite
tremendous cutbacks in marketing spend across the globe, the
ongoing migration away from traditional channels and toward
Epsilon's transactional and digital based offerings continues. The
pipeline at Epsilon is the strongest in the history of the
business, resulting from both signed deals and deals in progress.
Private Label Services and Private Label Credit: The financial
performance for Private Label Services and Private Label Credit
continued to negatively affect the Company's overall performance.
For the second quarter of 2009, Private Label Services revenue and
adjusted EBITDA were down 10 percent and 18 percent, respectively,
versus the prior year. Private Label Credit revenue and adjusted
EBITDA were down 17 percent and 39 percent, respectively, versus
the prior year. On a combined basis, eliminating intercompany
activity between the two, Private Label revenue of $159 million was
down 16 percent from the second quarter 2008, and adjusted EBITDA
of $63 million was down 33 percent, or $30 million, from the second
quarter 2008. Despite this performance, new client signings and a
return to positive trends, specifically credit sales, portfolio
growth, funding and delinquencies, were seen. Recent signings from
both Justice and Big M, Inc. following the first-quarter signings
of HSN, Haband and Springstone Financial continue to demonstrate
that private label programs provide retailers with a proven tool to
drive their sales. Credit losses increased to 9.8 percent during
the quarter, reflecting both the expected seasonal upturn in losses
as well as the more challenging macro environment for the Company's
retail clients. Losses were up approximately 300 basis points
versus the prior year, which resulted in a decrease of
approximately $30 million on revenue and adjusted EBITDA for the
quarter. The loss rate is running approximately 50 basis points
above the unemployment rate, somewhat better than the expected
spread, but offset by higher than expected unemployment levels.
Delinquencies remained stable at 6.2 percent for the quarter. This
marks the fourth consecutive quarter of stable delinquencies.
Credit sales growth continued to accelerate and grew 6 percent in
the second quarter versus last year, double the 3 percent growth
rate in the first quarter. This positive trend follows last year
where sales were down 3 percent for the entire year. Portfolio
growth continued to grow solidly and posted a 10 percent growth
rate in the quarter, consistent with the Company's long-term
average. Funding rates for the second quarter declined versus the
prior year and benefited from the return of liquidity to the
markets. Specifically, spreads on borrowings narrowed, and the
Company placed $709 million in term fixed-rate borrowings and
completed the renewal of a $550 million conduit facility, securing
liquidity at favorable rates and ensuring additional available
funding for both existing and new private label programs.
Statements generated for the second quarter grew approximately 2
percent versus the prior year, which is another positive growth
trend following the first quarter's flat year-over-year
performance. Outlook: Improved performance is expected to
accelerate from a combination of the positive trends outlined
above, anticipated file acquisitions, and the diminishing spread in
year-over-year credit losses. The Company expects adjusted EBITDA
for the fourth quarter to be flat versus the prior year. Of
interest is the lessening of the spread between credit losses and
the unemployment rate. Historically, credit losses run
approximately 100-120 basis points above the unemployment rate.
However, during the first quarter of 2009, the spread narrowed to
approximately 70 basis points while in the second quarter it
narrowed to approximately 50 basis points as a result of adding
high-quality accounts and writing-off accounts that are no longer
creditworthy. The Company expects this compression to continue.
Additionally, this trend further supports the Company's belief that
private label will move from a deficit to a flat position by the
fourth quarter and return to positive growth in 2010. Capital
Structure and Liquidity During the second quarter, the Company
completed a $345 million convertible debt deal as well as a new
$161 million bank facility. Over half the proceeds were used to pay
off $250 million in private placement notes, which matured in May
2009. Much of the remaining proceeds were used to repurchase stock.
The current net core debt to LTM Operating EBITDA ratio is 2.4x,
well inside the Company's targeted level of 3x. The Company also
continued its stock repurchase program in the second quarter with
more than $225 million in funds utilized, covering over 5 million
shares. To date, the Company has completed $1.4 billion of its $1.8
billion program and has repurchased approximately 27 million
shares, or one-third of fully-diluted shares outstanding when the
program began. At the corporate level, the Company has
approximately $600 million in available liquidity to support
operations. It consists of approximately $300 million of
availability on existing bank loan facilities, approximately $100
million in cash on hand and an anticipated $200 million in cash
flow from operations through year-end. In addition to corporate
liquidity, the Private Label business has secured approximately
$5.5 billion of available funding via numerous sources, primarily
consisting of FDIC insured CDs, bank conduits, existing term debt
and new term debt via the TALF program. This provides $1.3 billion
of excess capacity based on the current managed receivable
portfolio size of $4.2 billion. THIRD-QUARTER OUTLOOK The Company's
current guidance for third quarter cash earnings per diluted share
is $1.34, up 10 percent over the prior year. The guidance uses the
second-quarter cash earnings per diluted share of $0.95 as a
starting point and adds the following factors: Epsilon seasonality
$0.10; Private Label seasonality $0.10; the impact of the stock
repurchase program $0.05; and non-recurrence of the second-quarter
foreign exchange loss of $0.14. The exchange rate assumed for this
guidance is $0.87 US to $1 CDN. On a constant currency basis, cash
earnings per diluted share guidance is $1.40, up 15 percent over
the third quarter of 2008. FULL-YEAR 2009 OUTLOOK The Company is
maintaining full-year guidance of $5.15 cash earnings per diluted
share, an increase of 17 percent versus the prior year. On a
constant currency basis, cash earnings per diluted share guidance
is $5.55, up 25 percent versus the prior year. Key factors assumed
in meeting guidance for the full-year include: foreign exchange
averages $0.87 US to $1 CDN for the balance of 2009; LoyaltyOne,
Epsilon and Private Label businesses continue as expected and
outlined; moderate size portfolio acquisition; and accretion from
the Company's common stock repurchase program. 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 our various agreements or public
filings. Conference Call Alliance Data will host a conference call
on July 22, 2009 at 5:00 p.m. (Eastern) to discuss the Company's
second-quarter 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 "18453283". The replay will be
available from two hours after the end of the call until 11:59 P.M.
(Eastern Time) on July 29, 2009. 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
Six Months Ended June 30, June 30, 2009 2008 Change 2009 2008
Change Revenue $460.4 $507.2 (9)% $940.7 $1,006.5 (7)% Net income
$29.4 $46.9 (37)% $57.3 $96.3 (40)% Net income per share - diluted
$0.51 $0.60 (15)% $0.96 $1.21 (21)% Adjusted EBITDA $124.7 $161.9
(23)% $276.7 $326.4 (15)% Operating EBITDA $156.0 $169.3 (8)%
$294.8 $344.5 (14)% Cash Earnings $55.1 $81.7 (33)% $128.6 $162.5
(21)% Cash Earnings per share - diluted $0.95 $1.04 (9)% $2.15
$2.04 5% As of As of June 30, December 31, 2009 2008 ---- ---- Cash
and cash equivalents $118.4 $156.9 Seller's interest and credit
card receivables 691.3 639.6 Redemption settlement assets 524.7
531.6 Intangible assets, net 273.3 297.8 Goodwill 1,145.2 1,133.8
Total assets 4,369.4 4,342.0 Deferred revenue 1,028.4 995.6
Certificates of deposit 797.8 688.9 Debt(1) 1,732.6 1,491.3 Total
liabilities 4,110.5 3,794.7 Stockholders' equity 258.9 547.3 (1)
Excludes certificates of deposit. Included in debt is a discount of
$329.5 million and $235.9 million as of June 30, 2009 and December
31, 2008, respectively, associated with the Company's convertible
debt as a result of the adoption of FSP APB 14-1 - "Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon
Conversion (Including Partial Cash Settlement)". ALLIANCE DATA
SYSTEMS CORPORATION SUMMARY FINANCIAL HIGHLIGHTS (In millions)
(Unaudited) Three Months Ended Six Months Ended June 30, June 30,
2009 2008 Change 2009 2008 Change Segment Revenue: Loyalty Services
$167.4 $200.0 (16)% $328.0 $371.8 (12)% Epsilon Marketing Services
123.0 115.4 7 240.6 230.8 4 Private Label Services 85.8 95.8 (10)
184.2 190.4 (3) Private Label Credit 156.2 187.6 (17) 342.7 396.7
(14) Corporate/Other 10.7 1.6 Nm 23.1 2.1 Nm Intersegment (82.7)
(93.2) (11) (177.9) (185.3) (4) $460.4 $507.2 (9)% $940.7 $1,006.5
(7)% Segment Adjusted EBITDA: Loyalty Services $38.4 $53.5 (28)%
$93.3 $94.2 (1)% Epsilon Marketing Services 30.4 26.4 15 52.5 50.0
5 Private Label Services 24.6 29.9 (18) 54.5 56.9 (4) Private Label
Credit 38.5 63.6 (39) 96.4 150.7 (36) Corporate/Other (7.2) (11.5)
(37) (20.0) (25.4) (21) $124.7 $161.9 (23)% $276.7 $326.4 (15)% Key
Performance Indicators: Private label statements generated 31.3
30.8 2% 63.3 62.6 1% Average managed receivables $4,207.7 $3,831.4
10% $4,243.5 $3,869.1 10% Private label credit sales $1,976.9
$1,863.8 6% $3,553.1 $3,401.9 4% AIR MILES Reward Miles issued
1,122.6 1,139.9 (2)% 2,108.8 2,162.9 (3)% AIR MILES Reward Miles
redeemed 757.0 786.3 (4)% 1,554.0 1,487.9 4% Nm-Not Meaningful
ALLIANCE DATA SYSTEMS CORPORATION CONSOLIDATED CONDENSED STATEMENTS
OF INCOME (In millions, except per share amounts) (Unaudited) Three
Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008
Total revenue $460.4 $507.2 $940.7 $1,006.5 Total operating
expenses 377.7 393.1 756.2 773.8 Operating income 82.7 114.1 184.5
232.7 Interest expense, net 34.6 13.9 66.2 31.0 Income from
continuing operations before income taxes 48.1 100.2 118.3 201.7
Income tax expense 18.7 38.3 45.9 77.0 Income from continuing
operations 29.4 61.9 72.4 124.7 Loss from discontinued operations,
net of taxes - (15.0) (15.1) (28.4) Net income $29.4 $46.9 $57.3
$96.3 Per share data: Basic - Income from continuing operations
$0.52 $0.81 $1.23 $1.61 Basic - Loss from discontinued operations -
(0.20) (0.26) (0.37) Basic - Net income $0.52 $0.61 $0.97 $1.24
Diluted - Income from continuing operations $0.51 $0.79 $1.21 $1.57
Diluted - Loss from discontinued operations - (0.19) (0.25) (0.36)
Diluted - Net income $0.51 $0.60 $0.96 $1.21 Weighted average
shares outstanding - basic 56.9 76.6 59.0 77.5 Weighted average
shares outstanding - diluted 57.8 78.6 59.7 79.5 ALLIANCE DATA
SYSTEMS CORPORATION RECONCILIATION OF NON-GAAP INFORMATION (In
millions, except per share amounts) (Unaudited) Three Months Ended
Six Months Ended June 30, June 30, 2009 2008 2009 2008 Adjusted
EBITDA and Operating EBITDA: Income from continuing operations
(GAAP measure) $29.4 $61.9 $72.4 $124.7 Stock compensation expense
10.7 7.7 28.7 14.0 Income tax expense 18.7 38.3 45.9 77.0 Interest
expense, net 34.6 13.9 66.2 31.0 Depreciation and other
amortization 15.3 17.6 30.4 35.3 Amortization of purchased
intangibles 15.9 16.8 30.1 34.0 Loss on sale of assets - - - 1.0
Merger and other costs 0.1 5.7 3.0 9.4 Adjusted EBITDA 124.7 161.9
276.7 326.4 Change in deferred revenue(1) 82.3 373.2 32.8 351.0
Change in redemption settlement assets(1) (10.4) (365.6) 6.9
(356.0) Foreign currency impact (40.6) (0.2) (21.6) 23.1 Operating
EBITDA $156.0 $169.3 $294.8 $344.5 Cash Earnings: Income from
continuing operations (GAAP measure) $29.4 $61.9 $72.4 $124.7 Add
back non-cash non-operating items and merger and other costs: Stock
compensation expense 10.7 7.7 28.7 14.0 Amortization of purchased
intangibles 15.9 16.8 30.1 34.0 Non-cash interest expense(2) 14.0 -
26.1 - Loss on the sale of assets - - - 1.0 Merger and other costs
0.1 5.7 3.0 9.4 Income tax effect (3) (15.0) (10.4) (31.7) (20.6)
Cash earnings $55.1 $81.7 $128.6 $162.5 Weighted average shares
outstanding - diluted 57.8 78.6 59.7 79.5 Cash earnings per share -
diluted $0.95 $1.04 $2.15 $2.04 (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 the adoption of FSP APB No. 14-1 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 June 30, 2009 Merger & Depreciation Stock
other non- Operating & compensation routine Adjusted Income
amortization expense costs EBITDA(1) Loyalty Services $31.1 $5.0
$2.3 $- $38.4 Epsilon Marketing Services 10.7 17.8 1.9 - 30.4
Private Label Services 20.9 2.3 1.4 - 24.6 Private Label Credit
34.8 3.4 0.3 - 38.5 Corporate/ Other (14.8) 2.7 4.8 0.1 (7.2) $82.7
$31.2 $10.7 $0.1 $124.7 Three months ended June 30, 2008 Merger
& Depreciation Stock other non- Operating & compensation
routine Adjusted Income amortization expense costs EBITDA(1)
Loyalty Services $42.3 $8.2 $3.0 $- $53.5 Epsilon Marketing
Services 4.2 18.9 0.7 2.6 26.4 Private Label Services 25.9 2.2 1.2
0.6 29.9 Private Label Credit 60.4 2.8 0.4 - 63.6 Corporate/ Other
(18.7) 2.3 2.4 2.5 (11.5) $114.1 $34.4 $7.7 $5.7 $161.9 Six Months
ended June 30, 2009 Merger & Depreciation Stock other non-
Operating & compensation routine Adjusted Income amortization
expense costs EBITDA(1) Loyalty Services $77.0 $10.0 $6.3 $- $93.3
Epsilon Marketing Services 13.5 33.8 5.2 - 52.5 Private Label
Services 46.2 4.6 3.7 - 54.5 Private Label Credit 88.3 7.1 1.0 -
96.4 Corporate/ Other (40.5) 5.0 12.5 3.0 (20.0) $184.5 $60.5 $28.7
$3.0 $276.7 Six Months ended June 30, 2008 Merger &
Depreciation Stock other non- Operating & compensation routine
Adjusted Income amortization expense costs EBITDA(1) Loyalty
Services $73.2 $16.6 $4.4 $- $94.2 Epsilon Marketing Services 7.8
38.1 1.5 2.6 50.0 Private Label Services 48.9 4.5 2.0 1.5 56.9
Private Label Credit 144.3 5.6 0.8 - 150.7 Corporate/ Other (41.5)
4.5 5.3 6.3 (25.4) $232.7 $69.3 $14.0 $10.4 $326.4 (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/ADSLOGODATASOURCE:
Alliance Data Systems Corporation CONTACT: Investors/Analysts,
Julie Prozeller of Financial Dynamics for Alliance Data,
+1-212-850-5721, ; or Media, Shelley Whiddon of Alliance Data,
+1-972-348-4310, Web Site: http://www.alliancedata.com/
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