What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-02-25 compared with 2021-02-26 · 5 added, 109 removed, 40 unchanged (74% of the section changed)

25 unchanged sentences

(1) During the period represented by the table, 13,740 shares of our common stock were purchased by the administrator of our 401(k) and Retirement Saving Plan for the benefit of the employees who participated in that portion of the plan.

(2) The Company’s stock repurchase program expired on June 30, 2020.

Performance Graph

The following graph compares the yearly percentage change in cumulative total stockholder return on our common stock since December 31, 2015, with the cumulative total return over the same period of (1) the S&P 500 Index and (2) a peer group of fifteen companies selected by us and utilized in our prior Annual Report on Form 10-K, which we will refer to as the 2019 Peer Group Index, and (3) a new peer group of fifteen companies selected by us, which we will refer to as the 2020 Peer Group Index.

The fifteen companies in the 2019 Peer Group Index are PayPal Holdings, Inc., MasterCard Incorporated, Synchrony Financial, Discover Financial Services, Fifth Third Bancorp, Key Corp, Citizens Financial Group, Inc., Ally Financial Inc., M&T Bank Corporation, Regions Financial Corporation, Huntington Bancshares Incorporated, Santander Consumer USA Holdings Inc., Comerica Incorporated, SVB Financial Group and Popular, Inc.

The fifteen companies in the 2020 Peer Group Index are PayPal Holdings, Inc., MasterCard Incorporated, Synchrony Financial, Discover Financial Services, Fifth Third Bancorp, Key Corp, Citizens Financial Group, Inc., Ally Financial Inc., M&T Bank Corporation, Regions Financial Corporation, Huntington Bancshares Incorporated, Santander Consumer USA Holdings Inc., Comerica Incorporated, SVB Financial Group and Capital One Financial Corporation.

The following graph compares the yearly percentage change in cumulative total stockholder return on our common stock since December 31, 2016, with the cumulative total return over the same period of (1) the S&P 500 Index and (2) a peer group of fifteen companies selected by us for fiscal year 2021 (which was the same peer group utilized as our 2020 peer group in our prior Annual Report on Form 10-K).

The fifteen companies utilized in our peer group are PayPal Holdings, Inc., MasterCard Incorporated, Synchrony Financial, Discover Financial Services, Fifth Third Bancorp, Key Corp, Citizens Financial Group, Inc., Ally Financial Inc., M&T Bank Corporation, Regions Financial Corporation, Huntington Bancshares Incorporated, Santander Consumer USA Holdings Inc., Comerica Incorporated, SVB Financial Group and Capital One Financial Corporation.

Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2016 in our common stock and in each of the indices and assumes reinvestment of dividends, if any.

1 unchanged sentence

Historical stock prices are not indicative of future stock price performance.

For the purpose of this graph, historical stock prices have been adjusted to reflect the impact of the spinoff of Loyalty Ventures Inc.

on November 5, 2021.

Alliance Data

8 unchanged sentences

Selected Financial Data .

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

The following table sets forth our summary historical consolidated financial information for the periods ended and as of the dates indicated.

You should read the following historical consolidated financial information along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this Form 10-K.

Years Ended December 31,

(in millions, except per share amounts)

Income statement data

Total revenue

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

Provision for loan loss

General and administrative

Depreciation and other amortization

Amortization of purchased intangibles

Loss on extinguishment of debt

Total operating expenses

Operating income

Interest expense, net

Income from continuing operations before income taxes

Provision for income taxes

Income from continuing operations

(Loss) income from discontinued operations, net of taxes

Net income attributable to non-controlling interest

Net income attributable to common stockholders

Basic income attributable to common stockholders per share:

Income from continuing operations

(Loss) income from discontinued operations

Net income attributable to common stockholders per share

Diluted income attributable to common stockholders per share:

Income from continuing operations

(Loss) income from discontinued operations

Net income attributable to common stockholders per share

Weighted average shares:

Dividends declared per share:

As of December 31,

(in millions)

Balance sheet data

Credit card and loan receivables, net

Redemption settlement assets, restricted

Deferred revenue

Non-recourse borrowings of consolidated securitization entities

Long-term and other debt, including current maturities

Total liabilities

Total stockholders’ equity

Years Ended December 31,

(in millions)

Cash flow data

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA, net

Segment operating data

Credit card statements generated

Average credit card and loan receivables

Normalized average credit card and loan receivables (1)

AIR MILES reward miles issued

AIR MILES reward miles redeemed

(1) Normalized average credit card and loan receivables includes held for sale receivables.

Use of Non-GAAP Financial Measures

Adjusted EBITDA is a non-GAAP financial measure equal to income from continuing operations, the most directly comparable financial measure based on accounting principles generally accepted in the United States of America, or GAAP, plus stock compensation expense, provision for income taxes, interest expense, net, depreciation and other amortization, and the amortization of purchased intangibles.

Adjusted EBITDA excludes the gain on the sale of Precima, strategic transaction costs, which represent costs for professional services associated with strategic initiatives, asset impairments, and restructuring and other charges.

In 2019, adjusted EBITDA also excluded loss related to the extinguishment of debt in July 2019.

In 2016, adjusted EBITDA excluded the impact of the cancellation of the AIR MILES Reward Program’s five-year expiry policy on December 1, 2016.

These costs, as well as stock compensation expense, were not included in the measurement of segment adjusted EBITDA as the chief operating decision maker did not factor these expenses for purposes of assessing segment performance and decision making with respect to resource allocations.

Adjusted EBITDA, net is also a non-GAAP financial measure equal to adjusted EBITDA less securitization funding costs, interest expense on deposits and adjusted EBITDA attributable to the non-controlling interest.

Effective April 1, 2016, we acquired the remaining 20% interest in BrandLoyalty, which increased our ownership percentage to 100%.

We use adjusted EBITDA and adjusted EBITDA, net as an integral part of our internal reporting to measure the performance of our reportable segments and to evaluate the performance of our senior management, and we believe it

provides useful information to our investors regarding our performance and overall results of operations.

Adjusted EBITDA and adjusted EBITDA, net are each considered an important indicator of the operational strength of our businesses.

Adjusted EBITDA eliminates the uneven effect across all business segments of considerable amounts of non-cash depreciation of tangible assets and amortization of intangible assets, including certain intangible assets that were recognized in business combinations.

A limitation of this measure, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses.

Management evaluates the costs of such tangible and intangible assets, such as capital expenditures, investment spending and return on capital and therefore the effects are excluded from adjusted EBITDA.

Adjusted EBITDA also eliminates the non-cash effect of stock compensation expense.

Adjusted EBITDA and adjusted EBITDA, net are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, either income from continuing operations or net income as indicators of operating performance or to cash flows from operating activities as a measure of liquidity.

In addition, adjusted EBITDA and adjusted EBITDA, net are not intended to represent funds available for dividends, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

The adjusted EBITDA and adjusted EBITDA, net measures presented in this Annual Report on Form 10-K may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements.

Years Ended December 31,

(in millions)

Income from continuing operations

Stock compensation expense

Provision for income taxes

Interest expense, net

Depreciation and other amortization

Amortization of purchased intangibles

Impact of expiry (1)

Gain on sale of business, net of strategic transaction costs (2)

Strategic transaction costs (3)

Asset impairments (4)

Restructuring and other charges (5)

Loss on extinguishment of debt (6)

Adjusted EBITDA

Securitization funding costs

Interest expense on deposits

Adjusted EBITDA attributable to non-controlling interest

Adjusted EBITDA, net

(1) Represents the impact of the cancellation of the AIR MILES Reward Program’s five-year expiry policy on December 1, 2016.

(2) Represents gain on sale of Precima in January 2020, net of strategic transaction costs.

Precima was included in the Company’s LoyaltyOne segment.

See Note 6, “Disposition,” of the Notes to Consolidated Financial Statements for more information.

(3) Represents costs for professional services associated with strategic initiatives.

(4) Represents asset impairment charges related to certain deferred contract costs, fixed assets and right of use assets.

See Note 3, “Revenue,” Note 12, “Leases,” and Note 13, “Property and Equipment,” of the Notes to Consolidated Financial Statements for more information.

(5) Represents costs associated with restructuring or other exit activities.

See Note 15, “Restructuring and Other Charges,” of the Notes to Consolidated Financial Statements for more information.

(6) Represents loss on extinguishment of debt resulting from the redemption price of senior notes and the write-off of deferred issuance costs related to the July 2019 early extinguishment of $1.9 billion of outstanding senior notes and the amendment to the credit agreement, which was effective upon the consummation of the sale of Epsilon.

Part II, Item 6 is no longer required as the Company has adopted certain provisions within the amendments to Regulation S-K that eliminates Item 301 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity