Going Global Without Going Nuts

1. Going Global Without Going Nuts

2. Agenda:

3. About Alliance Data Systems Corporation is a leading provider of market-driven credit solutions and a leading power of multi-channel, data driven technologies, marketing services and Loyalty programs • 4 Divisions • Alliance Data - Retail • Epsilon • LoyaltyOne • Aspen Marketing Services • Over 8,500 employees Worldwide in over 50 offices • Canada, London, Ireland, France, Germany, Hong Kong, Singapore, Australia, China, Japan, India, Brazil, USA

4. So your Going Global • Congratulations! • Expanded Market share/Growth into a new line of business • Opportunity to learn about different cultures and talk with people around the world. • Increase the value to your company and to your own personal growth • Gain a better insight into how business is done around the world

5. So your Going Global • Sorry to Hear! • It will take longer than you expect to open accounts and do business around the world • You could be seen as a stumbling block when the process does not go as fast as everyone wants it to • Every country is different in their policies and procedures. Even in the European Union • Trying to determine what is needed and how to get it done will take you a longer than expected • Will you have existing employees • Will you be a new company to the market or a partnership

6. Pre-Implemenation Phase – Essential Factors for a Successful Project Communication Clearly articulate the corporate benefit and communicate often to each party Communication Stated Corporate Initiative Stated Company Objective Clearly defined corporate objectives that outlines benefits to entire organization Assemble the Team Ensure appropriate representation from the entities as well as IT resources Team the Project CFO Support Essential for a success projet to have the support of the CFO Senior Management Support Comprehensive Project Plan Ensure all the needs of each subsidiary is met and the corporate goals are clearly articulated Comprehensive Project Plan

7. Pre-Implementation Phase – Gathering the necessary information Ensure you understand each country’s/subsidiaries banking practices today – and their needs going forward. • Things to Consider: • Payables/Receivables: How are they processed? • Mix of electronic versus paper? • What manual processes are involved? • What effeciences can be brought to the processes? • How is payroll processed (third party or in-house? What are the local petty cash requirements? • Are there any direct connections to the bank today for processing (information reporting, payables process, reconcilation files)? • Are their any local lines of credit or overdraft facilities in place? – what is their usage and cost? • What Trade needs does each entity have? What bank guarantees/letters of credit are outstanding • How are these financed locally? Cash collateral? • Do the local banks issue credit cards to the local entities?

8. Pre-Implementation – Analyzing the Data Building a Business Case

9. Implementation Phase: Establishing a foundation for a successful Implementation Planning Strategy • Develop project plan in conjunction with all areas affected • Treasury/Finance/Accounting – Corporate and abroad • External Providers (banking partner, treasury workstation) • IT resources • Establish realistic goals and roadmap for implementation • Phased approach or big bang change • Select phases carefully understanding other intiatives affecting each subsidiary Implementation Communication • Hold initial kick off meeting with the team • Roles and responsibilities of each member • Implementation approach • Timeline for completion • Constent communication to ensure all parties understand delieverables • Weekly meetings to ensure project is progressing with all parties involved • Communication from Senior Management of the priority of the project

10. Determining the Team • Make sure there is a clear expectation of what is to be accomplished by expanding Internationally • What experiences does each Team Member have about expanding internationally? • Decide if a consultant would be a wise investment • By Region/Country • Start a Project Plan, set the dates, then add 3 months • Make sure to keep upper management informed of the issues

11. Determining the Team – Who/What you will need • Official Letterhead • Legal • Tax • Human Resources • Business Development • In-country employees or contractors • Google • Signers – local/non-local • All electronic/checks

12. All Hands on the Globe – Legal & Tax • Legal & Tax - how is the company formed • Has the entity been set up • Tax ID – must have to set up a bank account/entity • Articles of Incorporation/Articles of Association • Banking Resolution – be generic, but inclusive • No names – titles only – make sure the titles on the Banking Resolution match what the person is titled • How will the new company fit into your current structure? • Will a Holding Company be formed? • Prepare an Org Chart • Tax implications of structure

13. All Hands on the Globe – Legal & Tax • Who are the Directors/Officers of the new company? • Local, in the US, other countries • Any signing authority • What Accounting Firm/Law Firm is Representing you? • Do you have a clause for bad advice or missed information? • Are forms to be on a specific weight of paper • What is a “true copy” • What color of ink

14. All Hands on the Globe- Tax & Legal – continued • What taxes need to be paid (corporate, payroll, local, property, VAT, etc.)? • WHEN do they need to be paid and HOW? • Domestic banks only?

15. All Hands on the Globe - HR • Employees, Payroll and Benefits • What pensions and insurance are you going to offer and can you? • What are you required to pay & when • Are you going to use a Payroll company • Which ones are allowed in that country • What services can they offer • How do you handle terminations (voluntary or forced) • What are you responsible to provide – severance • What laws do you have to comply with • Rights of Information

16. All Hands on the Globe – HR cont. • Employees, Payroll and Benefits • Are you assuming employees, hiring (contractors or employees), benefits, signing bonuses – are they allowed? • Are you going to pay in local currency or USD • When is pay date going to be (bi-weekly, monthly) • What is common in that country • How are you going to pay your employees/contractors

17. All Hands on the Globe - AP • Accounts Payable • How are you going to pay your expenses? • USD payments will not make local vendors happy • Can your current AP system handle multi-currencies? • Will you process manually or with your ERP or finance system? • What are the requirements to pay vendors? • Where are how will invoices get to you to be paid and how will they get to Treasury to pay? • Corporate Cards, Purchasing Card, Checks, Wires, EFTs (ACH like) – what will you use? • What currencies – USD based or local currencies

18. All Hands on the Globe - AR • Accounts Receivable • Can you bill in different currencies? • USD billing will not make local companies happy • What will be your invoicing structure per country, region or industry be? • Who is going to be responsible for the currency exchange • How will the invoices appear on your bank’s online system or bank statements?

19. All Hands on the Globe – GL & Accounting • General Ledger and Accounting • Who will determine and set up the new company and entities into your ledger system? • How will expenses and revenue be recorded? • Who is responsible for reconciling? • Where and Who gets the bank statements? • Inter-Company Loans/Transfers • YIKES –Allow? • Audits

20. All Hands on the Globe - Insurance • Insurance • Does your current Insurance Provider cover internationally? • Need to know what are the insurance requirements of each country • Office space • Need to know - Square Foot& Square Meters, how many employees, what is in the office, uses of the office, structure of the office • Remote employees or Contractors

21. Location of your international office • Before you set up an office, make sure you want to be there and can expand • China example • Local government officials and mayors have to give permission for you to leave their district • All taxes have to be paid

22. Chinese quote about moving offices • The day after a fortune 500 company submitted the application, the mayor of old district visited company and expressed their unwillingness about the relocation plan. The phrase used by the mayor was “When a tree grows big and matures, its fruit should be contributed to the mother land where it was originally raised but not to the land of someone else...” • After that meeting, the old district immediately initiated a tax audit of the company on its historical tax position.

23. All Hands on the Globe - Treasury • Treasury – The Banking • What about the FX exposure, currency conversion fees, timing of payments? • What are the requirements to make payments? • How are you going to fund the accounts? • Different legal entities – how to handle • Can you see all the accounts around the world? • Can you pool funds? • How does a Line of Credit Work – in each country? • Fees – who pays?

24. All Hands on the Globe - Treasury • Treasury – Setting up the Accounts • What is a …. • Current account/Normal account • Scheme – What is a Scheme? • Does your current bank have local offices? • Can your bank make payments in local currencies? • Can your bank receive local currency payments? • Who will the signers be? • Does someone have to be local • What are the requirements to set up a bank account

25. Implementation Phase –Degree of difficulty by country

26. Implementation Phase: Documentation can be daunting • Corporate Documentation • Each country requirement is different – ensure you know what the requriements are for each • Do you need to send originals – Assume YES • Verficiation of signers • Who needs to be listed as a signer on accounts? Will someone from corporate be listed on all global accounts? • Provide passport copies for each signer. Some countries require them to be notorized • Account Opening Application • Ensure all services are added to the accounts (internet statements, on-line f/x, internet banking, local ACH • Credit needs • Communicate with your global provider your credit needs early in the process • Example of credit needs include overdraft facilities, ACH credit lines, F/X lines, Bank gaurantees, letters of credit , cross border sweeping

27. Implementation Phase: Sample of Documents needed for Hong Kong

28. Document Checklist Continued – Hong Kong Privately Held Company

29. Post Implementation – Things you should know - Europe • Banking Requirements by Country – Swift/ BIC • Decoding the SWIFT Code • IBAN (International Bank Account Number) • Bank account information for your accounts throughout Europe (in the Eurozone) • Each IBAN is a combination of the bank routing information and your account number • SEPA • Pan European “ACH” settlement for the Euro zone. • International Euro payments throughout Europe can now be made by “ACH” vesus wire. Reduce your cost.

30. Post Implementation – Things you should know - Asia • Banking Requirements by Country – Swift • Understand local banking practices and how clearing is handled (paper, local ACH, timing of clearing, return policy • Foreign Exchange requirements • There are many regulated currencies in Asia that must be held in country. • Interest Income • Regulations differ by country on paying interest on deposits. • Some countries are regulated on the amount and the tenor that can be paid (China) • Resident vs. Non-Resident Accounts • Some countries will not permit non-resident accounts in local currency (Taiwan,

31. 2012 Holiday Calendar

32. Questions & Answers Bob Barnes CTP, AAP Director of Treasury Alliance Data Bob.Barnes@AllianceData.com 614-729-4725 Janette Hutton, CTP International Treasury Specialist JPMorgan Janette.M.Hutton@AllianceData.com 317-826-2198