Slide 1: Alliance Data Systems Q4 2002
Alliance Data Systems NYSE : ADS Q4 2002 Forward Looking Statements Statements contained in this presentation that are not historical facts may be forward-looking statements within the meaning of the Private Litigation Reform Act. Such statements may use words such as “anticipate,” “believe,” “estim
Slide 2: Private Label Services and Utility Services
Private Label Services (50% of Company) • Solid Low-teens Growth • Services: • Private Label Processing • Customer Care / Call Center • Database Marketing Services • Credit (700 FICO, No Sub-Prime Targeting) • Income Streams: Split Between Processing and Credit • Clients: Victoria s Secret, Pottery
Slide 3: Experienced Management Team
• Coalition Loyalty Program • 2/3 of Canada Active • Income Stream: Earnings and Cash Flow Generated When Points Issued at Point of Sale • Clients: Shell Oil, Safeway, American Express, Bank of Montreal • Our Advantages • Dominant Position • Over 10 Years of History • Coalition Concept vs. “One-off”
Slide 4: Financial Themes
John Scullion President, Loyalty Marketing 14 The Rider Group Dwayne Tucker EVP and CAO 23 Northwest Airlines, First Data Alan Utay EVP and General Counsel 12 Akin Gump Strauss Hauer and Feld 8 Financial Themes - Growth - Visibility & Predictability - Operating Leverage - Free Cash Flow 9 2000 — 200
Slide 5: Visibility and Predictability
• Targets: 12% Revenue, 15% EBITDA, High-Teens Cash EPS 10 Visibility and Predictability • Model Validated During Difficult 2001 – 2002 Macro Environment • Strong Recurring Revenue Base • 95% of Revenue Retained Each Year • 3 – 5 Year Average Contract Term • Deep Relationships Preserve Pricing Power
Slide 6: Operating Leverage and 2002E Free Cash Flow
12 Operating Leverage • Margin Expansion • Increased Scale • Modest Capex (< 5% of Revenues) • Deferred Revenue Model EBITDA Margin: Long-term Goal of 20% 13 2002E Free Cash Flow ($MM, Except per Share) • EBITDA $ 148 • Cash Flow Adjustment (Canada) 20 • Operating EBITDA $ 168 • Less Capex (40 ) • N
Slide 7: Investment Highlights
• Experienced Management Team • Strong Financial Track Record 15