United States Securities and Exchange Commission Form

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-15749 ALLIANCE DATA SYSTEMS CORPORATION (Exact name of registrant as specified in its charter) Delaware 31-1429215 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3075 Loyalty Circle 43219 Columbus, Ohio (Zip Code) (Address of principal executive offices) (614) 729-4000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading symbol Name of each exchange on which registered Common stock, par value $0.01 per share ADS New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None (Title of class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ⌧ No ◻ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ◻ No ⌧ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S- T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ⌧ Accelerated filer ◻ Non-accelerated filer (Do not check if a smaller reporting company) ◻ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ⌧ As of June 30, 2019, the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $7.0 billion, based upon the closing price of $140.13 per share on the New York Stock Exchange on June 28, 2019, which was the last business day of the registrant’s most recently completed second fiscal quarter. As of February 20, 2020, 47,627,611 shares of common stock were outstanding. Documents Incorporated By Reference Certain information called for by Part III is incorporated by reference to certain sections of the Proxy Statement for the 2019 Annual Meeting of our stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2019. Table of Contents ALLIANCE DATA SYSTEMS CORPORATION INDEX Form 10-K Report Item No. Page Caution Regarding Forward-Looking Statements 1 PART I 1. Business 2 1A. Risk Factors 10 1B. Unresolved Staff Comments 24 2. Properties 24 3. Legal Proceedings 24 4. Mine Safety Disclosures 24 PART II 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 25 Securities 6. Selected Financial Data 28 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 7A. Quantitative and Qualitative Disclosures About Market Risk 47 8. Financial Statements and Supplementary Data 48 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 48 9A. Controls and Procedures 48 9B. Other Information 49 PART III 10. Directors, Executive Officers and Corporate Governance 50 11. Executive Compensation 50 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 50 13. Certain Relationships and Related Transactions, and Director Independence 50 14. Principal Accounting Fees and Services 50 PART IV 15. Exhibits, Financial Statement Schedules 51 16. Form 10-K Summary 62 Table of Contents Caution Regarding Forward-Looking Statements This Form 10-K and the documents incorporated by reference herein 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. Forward-looking statements give our expectations or forecasts of future events and can generally be identified by the use of words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan,” “likely,” “may,” “should” or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding strategic initiatives, our expected operating results, future economic conditions including currency exchange rates, future dividend declarations and the guidance we give with respect to our anticipated financial performance. We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this report, and no assurances can be given that our expectations will prove to have been correct. These risks and uncertainties include, but are not limited to, the following: ● loss of, or reduction in demand for services from, significant clients; ● increases in net charge-offs in credit card and loan receivables and increases in the allowance for loan loss that may result from the application of the current expected credit loss model; ● failure to identify, complete or successfully integrate or disaggregate business acquisitions or divestitures; ● continued financial responsibility with respect to a divested business, including required equity ownership, guarantees, indemnities or other financial obligations; ● failure to realize expected cost savings from restructuring plans; ● increases in the cost of doing business, including market interest rates; ● inability to access the asset-backed securitization funding market or deposits market; ● loss of active AIR MILES® Reward Program collectors; ● continuing impacts related to COVID-19, including reduction in demand from clients, supply chain disruption for our reward suppliers and disruptions in the airline or travel industries; ● increased redemptions by AIR MILES Reward Program collectors; ● unfavorable fluctuations in foreign currency exchange rates; ● limitations on consumer credit, loyalty or marketing services from new legislative or regulatory actions related to consumer protection and consumer privacy; ● increases in Federal Deposit Insurance Corporation (“FDIC”), Delaware or Utah regulatory capital requirements for banks; ● failure to maintain exemption from regulation under the Bank Holding Company Act; ● loss or disruption, due to cyber attack or other service failures, of data center operations or capacity; ● loss of consumer information due to compromised physical or cyber security; and ● those factors discussed in Item 1A of this Form 10-K, elsewhere in this Form 10-K and in the documents incorporated by reference in this Form 10-K. 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. Further risks and uncertainties include, but are not limited to, the impact of strategic initiatives on us or our business if any transactions are undertaken, and whether the anticipated benefits of such transactions can be realized. Any forward-looking statements contained in this Form 10-K speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise. 1 Table of Contents PART I Item 1. Business. We are a leading global provider of data-driven marketing and loyalty solutions serving large, consumer-based industries. We create and deploy customized solutions, enhancing the critical customer marketing experience and measurably changing consumer behavior while driving business growth and profitability for some of today’s most recognizable brands. We help our clients create and increase customer loyalty through solutions that engage millions of customers each day across multiple touch points using traditional, digital, mobile and emerging technologies. Our LoyaltyOne® business owns and operates

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