© Affiliated Computer Services, Inc. (ACS) 2007, 2008 Gift Cards and Stored Value Cards James A. Sadik Affiliated Computer Services

© Affiliated Computer Services, Inc. (ACS) 2007 Slide 2 Topics of Discussion  ● Evolution of Gift Certificates and Gift Cards  ● Market Size & Product Innovations  ● Conditions Impacting Usage of Gift Cards  ● “Non-Usage” Issues and Unclaimed Property Implications

© Affiliated Computer Services, Inc. (ACS) 2007 Slide 3 Product Evolution  Gift Certificates  Sold for decades  Typically sold by individual retailers  Valid only at a particular store  Most appropriate for individuals living near (and who would likely frequent) the issuing retailer  Many included expiration dates, some included small fees paid by giver, others had redemption fees for user

© Affiliated Computer Services, Inc. (ACS) 2007 Slide 4 Product Evolution (cont.)  Store Branded Gift Cards (Closed Loop)  Issued by retailers  Machine readable  Pre-loaded with a fixed dollar amount, or  Loaded with a specified amount at time of purchase  Inventory of cards electronically tracked  Outstanding balances electronically tracked  Revenue recognition process more manageable

© Affiliated Computer Services, Inc. (ACS) 2007 Slide 5 Product Evolution (cont.)  Stored Value Cards  Rechargeable features  Alternative to cash  Open Loop Gift Cards  Issued by banks of credit card companies  Can be redeemed “virtually” anywhere  More likely to include issuance, redemption, or dormancy fees where allowed by law

© Affiliated Computer Services, Inc. (ACS) 2007 Slide 6 Market Size  ● $55 billion sold in 2004 (Boston Globe)  ● $25 billion sold during 2006 holiday season alone (National Retail Federation)  ● Estimates for recent years (TowerGroup):  $67 billion (2005)  $82 billion (2006)  $97 billion (2007) Estimated Non-Usage Rate: Up to 10%!

© Affiliated Computer Services, Inc. (ACS) 2007 Slide 7 Industry & Product Innovations  ● Cards for multiple retailers sold in other retailer’s locations (greater distribution)  ● Cards are personalized for particular occasion or interest  Birthday/holiday  Characteristics of the recipient (relative, personal interests)  ● Development of “secondary market” for the re-sale of unwanted/unused cards  ● “Pre-paid” cards issued as a substitute for consumer rebate checks

© Affiliated Computer Services, Inc. (ACS) 2007 Slide 8 Conditions Impacting Card Usage  ● “Mis-matching” of retailer with interest of recipient  ● Ease of usage (number of location, access, etc.)  ● Forgetting or losing card  ● Theft  ● Terms & conditions placed on cards

© Affiliated Computer Services, Inc. (ACS) 2007 Slide 9 Non-Usage Issues & Unclaimed Property  ● Where do unused balances end up?  $43 million (home goods retailer, 2005)  $16 million (electronics retailer, 2006)  $47 million (personal apparel retailer, 2008)  ● Historical redemption patterns  ● State laws governing expiration dates and fees  ● Recovery of unused balances  ● State unclaimed property reporting issues

© Affiliated Computer Services, Inc. (ACS) 2007 Slide 10 Questions?