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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
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Delaware
|
|
43-2099257
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
|
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||
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6220 Stoneridge Mall Road
Pleasanton, CA
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94588
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
|
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¨
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Page
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PART I. FINANCIAL STATEMENTS
|
|
|
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Item 1.
|
||
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||
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||
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||
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Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
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PART II. OTHER INFORMATION
|
|
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Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
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March 28, 2015
|
|
January 3, 2015
|
|
March 22, 2014
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||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
219,416
|
|
|
$
|
911,615
|
|
|
$
|
134,831
|
|
Restricted cash
|
3,189
|
|
|
5,000
|
|
|
—
|
|
|||
Settlement receivables, net
|
237,233
|
|
|
526,587
|
|
|
184,395
|
|
|||
Accounts receivable, net
|
176,620
|
|
|
181,431
|
|
|
117,614
|
|
|||
Deferred income taxes
|
33,713
|
|
|
38,456
|
|
|
20,145
|
|
|||
Other current assets
|
93,860
|
|
|
95,658
|
|
|
64,945
|
|
|||
Total current assets
|
764,031
|
|
|
1,758,747
|
|
|
521,930
|
|
|||
Property, equipment and technology, net
|
132,014
|
|
|
130,008
|
|
|
82,156
|
|
|||
Intangible assets, net
|
161,040
|
|
|
170,957
|
|
|
93,351
|
|
|||
Goodwill
|
328,510
|
|
|
331,265
|
|
|
133,633
|
|
|||
Deferred income taxes
|
330,686
|
|
|
1,678
|
|
|
727
|
|
|||
Other assets
|
86,285
|
|
|
93,086
|
|
|
82,194
|
|
|||
TOTAL ASSETS
|
$
|
1,802,566
|
|
|
$
|
2,485,741
|
|
|
$
|
913,991
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
See accompanying notes to condensed consolidated financial statements
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(In thousands, except par value)
(Unaudited)
|
|||||||||||
|
March 28, 2015
|
|
January 3, 2015
|
|
March 22, 2014
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Settlement payables
|
$
|
462,346
|
|
|
$
|
1,383,481
|
|
|
$
|
370,757
|
|
Consumer and customer deposits
|
103,575
|
|
|
133,772
|
|
|
55,093
|
|
|||
Accounts payable and accrued operating expenses
|
103,887
|
|
|
117,118
|
|
|
76,577
|
|
|||
Note payable, current portion
|
37,384
|
|
|
11,211
|
|
|
—
|
|
|||
Notes payable to Safeway
|
19,449
|
|
|
27,678
|
|
|
113,000
|
|
|||
Bank line of credit
|
10,000
|
|
|
—
|
|
|
—
|
|
|||
Other current liabilities
|
57,883
|
|
|
102,352
|
|
|
36,595
|
|
|||
Total current liabilities
|
794,524
|
|
|
1,775,612
|
|
|
652,022
|
|
|||
Deferred income taxes
|
8,101
|
|
|
45,375
|
|
|
24,501
|
|
|||
Note payable
|
325,208
|
|
|
362,543
|
|
|
—
|
|
|||
Other liabilities
|
10,096
|
|
|
14,432
|
|
|
7,549
|
|
|||
Total liabilities
|
1,137,929
|
|
|
2,197,962
|
|
|
684,072
|
|
|||
Commitments and contingencies (see Note 8)
|
|
|
|
|
|
||||||
Stockholders’ equity:
|
|
|
|
|
|
||||||
Preferred stock: $0.001 par value; 10,000 shares authorized; no shares outstanding
|
—
|
|
|
—
|
|
|
—
|
|
|||
Class A common stock: $0.001 par value; 125,000 shares authorized; 13,265, 13,068 and 12,419 shares outstanding, respectively
|
13
|
|
|
13
|
|
|
12
|
|
|||
Class B common stock: $0.001 par value; 125,000 shares authorized; 40,606, 40,437 and 40,168 shares outstanding, respectively
|
41
|
|
|
41
|
|
|
41
|
|
|||
Additional paid-in capital
|
519,668
|
|
|
137,916
|
|
|
112,546
|
|
|||
Treasury stock
|
—
|
|
|
—
|
|
|
(305
|
)
|
|||
Accumulated other comprehensive loss
|
(29,059
|
)
|
|
(19,470
|
)
|
|
(3,397
|
)
|
|||
Retained earnings
|
167,081
|
|
|
162,439
|
|
|
114,067
|
|
|||
Total Blackhawk Network Holdings, Inc. equity
|
657,744
|
|
|
280,939
|
|
|
222,964
|
|
|||
Non-controlling interests
|
6,893
|
|
|
6,840
|
|
|
6,955
|
|
|||
Total stockholders’ equity
|
664,637
|
|
|
287,779
|
|
|
229,919
|
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,802,566
|
|
|
$
|
2,485,741
|
|
|
$
|
913,991
|
|
|
12 weeks ended
|
||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||
OPERATING REVENUES:
|
|
|
|
||||
Commissions and fees
|
$
|
220,402
|
|
|
$
|
178,095
|
|
Program, interchange, marketing and other fees
|
73,104
|
|
|
35,665
|
|
||
Product sales
|
26,225
|
|
|
19,355
|
|
||
Total operating revenues
|
319,731
|
|
|
233,115
|
|
||
OPERATING EXPENSES:
|
|
|
|
||||
Partner distribution expense
|
155,354
|
|
|
124,307
|
|
||
Processing and services
|
64,208
|
|
|
41,625
|
|
||
Sales and marketing
|
43,593
|
|
|
33,078
|
|
||
Costs of products sold
|
24,903
|
|
|
19,304
|
|
||
General and administrative
|
18,748
|
|
|
14,603
|
|
||
Transition and acquisition
|
175
|
|
|
2
|
|
||
Amortization of acquisition intangibles
|
5,974
|
|
|
4,409
|
|
||
Change in fair value of contingent consideration
|
(4,139
|
)
|
|
—
|
|
||
Total operating expenses
|
308,816
|
|
|
237,328
|
|
||
OPERATING INCOME (LOSS)
|
10,915
|
|
|
(4,213
|
)
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
||||
Interest income and other income (expense), net
|
(801
|
)
|
|
(409
|
)
|
||
Interest expense
|
(2,757
|
)
|
|
(45
|
)
|
||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
7,357
|
|
|
(4,667
|
)
|
||
INCOME TAX EXPENSE (BENEFIT)
|
2,620
|
|
|
(1,783
|
)
|
||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
4,737
|
|
|
(2,884
|
)
|
||
Net (income) loss attributable to non-controlling interests, net of tax
|
(31
|
)
|
|
43
|
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
4,706
|
|
|
$
|
(2,841
|
)
|
EARNINGS (LOSS) PER SHARE:
|
|
|
|
||||
Basic – Class A and Class B
|
$
|
0.09
|
|
|
$
|
(0.06
|
)
|
Diluted – Class A and Class B
|
$
|
0.08
|
|
|
$
|
(0.06
|
)
|
Weighted average shares outstanding—basic
|
53,323
|
|
|
52,095
|
|
||
Weighted average shares outstanding—diluted
|
55,416
|
|
|
52,095
|
|
|
12 weeks ended
|
||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
$
|
4,737
|
|
|
$
|
(2,884
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Currency translation adjustments
|
(9,567
|
)
|
|
(522
|
)
|
||
COMPREHENSIVE LOSS BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(4,830
|
)
|
|
(3,406
|
)
|
||
Comprehensive (income) loss attributable to non-controlling interests (net of tax)
|
(53
|
)
|
|
41
|
|
||
COMPREHENSIVE LOSS ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(4,883
|
)
|
|
$
|
(3,365
|
)
|
|
12 weeks ended
|
||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss) before allocation to non-controlling interests
|
$
|
4,737
|
|
|
$
|
(2,884
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization of property, equipment and technology
|
8,395
|
|
|
5,386
|
|
||
Amortization of intangibles
|
6,999
|
|
|
5,532
|
|
||
Amortization of program development costs
|
6,454
|
|
|
5,657
|
|
||
Employee stock-based compensation expense
|
4,989
|
|
|
2,670
|
|
||
Distribution partner mark-to-market expense
|
—
|
|
|
622
|
|
||
Change in fair value of contingent consideration
|
(4,139
|
)
|
|
—
|
|
||
Excess tax benefit from stock-based awards
|
(2,491
|
)
|
|
(779
|
)
|
||
Deferred income taxes
|
13,371
|
|
|
—
|
|
||
Other
|
1,308
|
|
|
956
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Settlement receivables
|
284,100
|
|
|
625,608
|
|
||
Settlement payables
|
(914,632
|
)
|
|
(1,109,862
|
)
|
||
Accounts receivable, current and long-term
|
4,934
|
|
|
15,134
|
|
||
Prepaid expenses and other current assets
|
(4,027
|
)
|
|
5,446
|
|
||
Other assets
|
(529
|
)
|
|
(4,978
|
)
|
||
Consumer and customer deposits
|
(30,198
|
)
|
|
178
|
|
||
Accounts payable and accrued operating expenses
|
(10,507
|
)
|
|
(22,249
|
)
|
||
Other current and long-term liabilities
|
(21,403
|
)
|
|
(24,048
|
)
|
||
Income taxes, net
|
(22,583
|
)
|
|
(21,475
|
)
|
||
Net cash used in operating activities
|
(675,222
|
)
|
|
(519,086
|
)
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for property, equipment and technology
|
(13,843
|
)
|
|
(8,538
|
)
|
||
Business acquisitions, net of cash received
|
—
|
|
|
(1,341
|
)
|
||
Change in restricted cash
|
1,811
|
|
|
—
|
|
||
Net cash used in investing activities
|
(12,032
|
)
|
|
(9,879
|
)
|
||
|
|
|
|
||||
|
|
|
|
||||
See accompanying notes to condensed consolidated financial statements
|
|
12 Weeks Ended March 22, 2014
|
||
Total revenues
|
$
|
260,738
|
|
Net loss attributable to Blackhawk Network Holdings, Inc.
|
(2,405
|
)
|
|
March 28, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
2,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,100
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,428
|
|
|
$
|
3,428
|
|
|
January 3, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
618,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
618,200
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,567
|
|
|
$
|
7,567
|
|
|
March 22, 2014
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
11,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,000
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
March 28, 2015
|
|
March 22, 2014
|
||||
Contingent Consideration
|
|
|
|
||||
Balance – beginning of period
|
$
|
7,567
|
|
|
$
|
—
|
|
Decrease in fair value of contingent consideration
|
(4,139
|
)
|
|
—
|
|
||
Settlements
|
—
|
|
|
—
|
|
||
Balance – end of period
|
$
|
3,428
|
|
|
$
|
—
|
|
|
March 28, 2015
|
|
January 3, 2015
|
|
March 22, 2014
|
||||||
Inventory
|
$
|
41,379
|
|
|
$
|
37,061
|
|
|
$
|
31,714
|
|
Deferred expenses
|
11,228
|
|
|
16,339
|
|
|
6,490
|
|
|||
Income tax receivables
|
25,173
|
|
|
30,997
|
|
|
11,711
|
|
|||
Other
|
16,080
|
|
|
11,261
|
|
|
15,030
|
|
|||
Total other current assets
|
$
|
93,860
|
|
|
$
|
95,658
|
|
|
$
|
64,945
|
|
|
March 28, 2015
|
|
January 3, 2015
|
|
March 22, 2014
|
||||||
Program development costs
|
$
|
56,216
|
|
|
$
|
59,889
|
|
|
$
|
56,250
|
|
Other receivables
|
9,077
|
|
|
9,324
|
|
|
12,217
|
|
|||
Income taxes receivable
|
6,368
|
|
|
6,368
|
|
|
5,527
|
|
|||
Deferred financing costs
|
1,860
|
|
|
2,003
|
|
|
—
|
|
|||
Other
|
12,764
|
|
|
15,502
|
|
|
8,200
|
|
|||
Total other assets
|
$
|
86,285
|
|
|
$
|
93,086
|
|
|
$
|
82,194
|
|
|
March 28, 2015
|
|
January 3, 2015
|
|
March 22, 2014
|
||||||
Deferred revenue
|
$
|
35,755
|
|
|
$
|
48,114
|
|
|
$
|
17,818
|
|
Income taxes payable
|
1,527
|
|
|
22,784
|
|
|
2,432
|
|
|||
Payroll and related liabilities
|
17,206
|
|
|
24,131
|
|
|
11,737
|
|
|||
Acquisition liability
|
—
|
|
|
1,811
|
|
|
—
|
|
|||
Other payables and accrued liabilities
|
3,395
|
|
|
5,512
|
|
|
4,608
|
|
|||
Total other current liabilities
|
$
|
57,883
|
|
|
$
|
102,352
|
|
|
$
|
36,595
|
|
|
March 28, 2015
|
|
January 3, 2015
|
|
March 22, 2014
|
||||||
Acquisition liability
|
$
|
3,428
|
|
|
$
|
7,567
|
|
|
$
|
—
|
|
Payable to content provider
|
2,476
|
|
|
2,476
|
|
|
5,613
|
|
|||
Income taxes payable
|
1,405
|
|
|
1,599
|
|
|
—
|
|
|||
Deferred revenue and other liabilities
|
2,787
|
|
|
2,790
|
|
|
1,936
|
|
|||
Total other liabilities
|
$
|
10,096
|
|
|
$
|
14,432
|
|
|
$
|
7,549
|
|
|
March 28, 2015
|
||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Total
|
||||||||
Balance, beginning of year
|
$
|
42,729
|
|
|
$
|
32,150
|
|
|
$
|
256,386
|
|
|
$
|
331,265
|
|
Foreign currency translation adjustments
|
—
|
|
|
(2,372
|
)
|
|
(383
|
)
|
|
(2,755
|
)
|
||||
Balance, end of period
|
$
|
42,729
|
|
|
$
|
29,778
|
|
|
$
|
256,003
|
|
|
$
|
328,510
|
|
|
March 28, 2015
|
|
January 3, 2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Depreciation and amortization
|
$
|
292,336
|
|
|
$
|
—
|
|
Net operating loss carryforwards
|
31,470
|
|
|
33,128
|
|
||
Accrued expenses
|
10,650
|
|
|
8,736
|
|
||
Non-deductible reserves
|
1,852
|
|
|
6,617
|
|
||
Deferred revenue
|
11,982
|
|
|
11,739
|
|
||
Stock-based compensation
|
8,625
|
|
|
11,156
|
|
||
Other
|
2,160
|
|
|
931
|
|
||
Deferred tax assets
|
359,075
|
|
|
72,307
|
|
||
Valuation allowance
|
(1,393
|
)
|
|
(1,633
|
)
|
||
Total deferred tax assets
|
357,682
|
|
|
70,674
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
—
|
|
|
(75,915
|
)
|
||
Prepaid expenses
|
(1,384
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
(1,384
|
)
|
|
(75,915
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
356,298
|
|
|
$
|
(5,241
|
)
|
|
12 weeks ended
|
||||||||||||||||||
|
March 28, 2015
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
199,909
|
|
|
$
|
79,423
|
|
|
$
|
40,399
|
|
|
$
|
—
|
|
|
$
|
319,731
|
|
Partner distribution expense
|
94,184
|
|
|
56,609
|
|
|
4,561
|
|
|
—
|
|
|
155,354
|
|
|||||
Operating revenues, net of Partner distribution expense
|
105,725
|
|
|
22,814
|
|
|
35,838
|
|
|
—
|
|
|
164,377
|
|
|||||
Other operating expenses
|
62,492
|
|
|
19,727
|
|
|
31,398
|
|
|
39,845
|
|
|
153,462
|
|
|||||
Segment profit (loss) / Operating income
|
$
|
43,233
|
|
|
$
|
3,087
|
|
|
$
|
4,440
|
|
|
$
|
(39,845
|
)
|
|
10,915
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(3,558
|
)
|
|||||||||
Income before income tax expense
|
|
|
|
|
|
|
|
|
$
|
7,357
|
|
|
12 weeks ended
|
||||||||||||||||||
|
March 22, 2014
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
161,326
|
|
|
$
|
62,504
|
|
|
$
|
9,285
|
|
|
$
|
—
|
|
|
$
|
233,115
|
|
Partner distribution expense
|
81,748
|
|
|
41,412
|
|
|
1,147
|
|
|
—
|
|
|
124,307
|
|
|||||
Operating revenues, net of Partner distribution expense
|
79,578
|
|
|
21,092
|
|
|
8,138
|
|
|
—
|
|
|
108,808
|
|
|||||
Other operating expenses
|
48,310
|
|
|
20,165
|
|
|
8,364
|
|
|
36,182
|
|
|
113,021
|
|
|||||
Segment profit (loss) / Operating loss
|
$
|
31,268
|
|
|
$
|
927
|
|
|
$
|
(226
|
)
|
|
$
|
(36,182
|
)
|
|
(4,213
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(454
|
)
|
|||||||||
Loss before income tax expense
|
|
|
|
|
|
|
|
|
$
|
(4,667
|
)
|
|
12 weeks ended
|
||||||||||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
4,706
|
|
|
$
|
4,706
|
|
|
$
|
(2,841
|
)
|
|
$
|
(2,841
|
)
|
Distributed and undistributed earnings allocated to participating securities
|
(52
|
)
|
|
(51
|
)
|
|
(38
|
)
|
|
(38
|
)
|
||||
Net income (loss) attributable to common stockholders
|
$
|
4,654
|
|
|
$
|
4,655
|
|
|
$
|
(2,879
|
)
|
|
$
|
(2,879
|
)
|
Weighted-average common shares outstanding
|
53,323
|
|
|
53,323
|
|
|
52,095
|
|
|
52,095
|
|
||||
Common share equivalents
|
|
|
2,093
|
|
|
|
|
|
—
|
|
|||||
Weighted-average shares outstanding
|
|
|
|
55,416
|
|
|
|
|
|
52,095
|
|
||||
Earnings (loss) per share– Class A and Class B
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
12 weeks ended
|
||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||
|
(in thousands, except percentages, average transaction value and per share amounts)
|
||||||
Transaction dollar volume
|
$
|
3,110,533
|
|
|
$
|
2,187,704
|
|
Transaction count
|
60,280
|
|
|
44,638
|
|
||
Average transaction value
|
$
|
51.60
|
|
|
$
|
49.01
|
|
Prepaid and processing revenues
|
$
|
278,775
|
|
|
$
|
205,534
|
|
Prepaid and processing revenues as a % of transaction dollar volume
|
9.0
|
%
|
|
9.4
|
%
|
||
Partner distribution expense as a % of prepaid and processing revenues
|
55.7
|
%
|
|
60.5
|
%
|
||
Adjusted operating revenues (1)
|
$
|
164,377
|
|
|
$
|
110,763
|
|
Adjusted EBITDA (1)
|
$
|
27,159
|
|
|
$
|
11,952
|
|
Adjusted EBITDA margin (1)
|
16.5
|
%
|
|
10.8
|
%
|
||
Adjusted net income (1)
|
$
|
18,942
|
|
|
$
|
5,176
|
|
Adjusted diluted earnings per share (1)
|
$
|
0.34
|
|
|
$
|
0.10
|
|
(1)
|
Our Adjusted operating revenues, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted diluted earnings per share are non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute for or superior to, operating revenues, operating income, operating margin, cash flows, or other measures of the financial performance prepared in accordance with GAAP.
|
•
|
adjusting our operating revenues for distribution commissions paid and other compensation to our retail distribution partners and business clients is useful to understanding our operating margin;
|
•
|
EBITDA and Adjusted EBITDA are widely used by investors and securities analysts to measure a company’s operating performance without regard to items that can vary substantially from company to company and from period to period depending upon their financing, accounting and tax methods, the book value of their assets, their capital structures and the method by which their assets were acquired;
|
•
|
Adjusted EBITDA margin provides a measure of operating efficiency based on Adjusted operating revenues and without regard to items that can vary substantially from company to company and from period to period depending upon their financing, accounting and tax methods, the book value of their assets, their capital structures and the method by which their assets were acquired;
|
•
|
non-cash equity grants made to employees and distribution partners at a certain price and point in time do not necessarily reflect how our business is performing at any particular time and the related expenses are not key measures of our core operating performance;
|
•
|
intangible asset amortization expenses can vary substantially from company to company and from period to period depending upon the applicable financing and accounting methods, the fair value and average expected life of the acquired intangible assets, the capital structure and the method by which the intangible assets were acquired and, as such, we do not believe that these adjustments are reflective of our core operating performance;
|
•
|
non-cash fair value adjustments to contingent business acquisition liability do not directly reflect how our business is performing at any particular time and the related expense adjustment amounts are not key measures of our core operating performance; and
|
•
|
cash tax savings resulting from the step up in tax basis of our assets resulting from the Section 336(e) election due to our Spin-Off and the Safeway Merger and cash tax savings from amortization of goodwill and other intangibles or utilization of net operating loss carryforwards from business acquisitions represent significant cash savings that are useful for understanding our overall operating results. See “—Liquidity and Capital Resources—Cash Flows from Operating Activities” and
Note 7—Income Taxes
in the notes to our condensed consolidated financial statements for additional information.
|
|
12 weeks ended
|
||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||
|
(in thousands, except percentages and per share amounts)
|
||||||
Prepaid and processing revenues:
|
|
|
|
||||
Commissions and fees
|
$
|
220,402
|
|
|
$
|
178,095
|
|
Program, interchange, marketing and other fees
|
73,104
|
|
|
35,665
|
|
||
Marketing revenue
|
(14,731
|
)
|
|
(8,226
|
)
|
||
Prepaid and processing revenues
|
$
|
278,775
|
|
|
$
|
205,534
|
|
Adjusted operating revenues:
|
|
|
|
||||
Total operating revenues
|
$
|
319,731
|
|
|
$
|
233,115
|
|
Issuing bank contract amendments (a)
|
—
|
|
|
1,955
|
|
||
Partner distribution expense
|
(155,354
|
)
|
|
(124,307
|
)
|
||
Adjusted operating revenues
|
$
|
164,377
|
|
|
$
|
110,763
|
|
Adjusted EBITDA:
|
|
|
|
||||
Net income (loss) before allocation to non-controlling interests
|
$
|
4,737
|
|
|
$
|
(2,884
|
)
|
Interest income and other income (expense), net
|
801
|
|
|
409
|
|
||
Interest expense
|
2,757
|
|
|
45
|
|
||
Income tax expense (benefit)
|
2,620
|
|
|
(1,783
|
)
|
||
Depreciation and amortization
|
15,394
|
|
|
10,918
|
|
||
EBITDA
|
26,309
|
|
|
6,705
|
|
||
Adjustments to EBITDA:
|
|
|
|
||||
Employee stock-based compensation
|
4,989
|
|
|
2,670
|
|
||
Distribution partner mark-to-market expense (b)
|
—
|
|
|
622
|
|
||
Issuing bank contract amendments (a)
|
—
|
|
|
1,955
|
|
||
Change in fair value of contingent consideration (c)
|
(4,139
|
)
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
27,159
|
|
|
$
|
11,952
|
|
Adjusted EBITDA margin:
|
|
|
|
||||
Total operating revenues
|
$
|
319,731
|
|
|
$
|
233,115
|
|
Operating income (loss)
|
$
|
10,915
|
|
|
$
|
(4,213
|
)
|
Operating margin
|
3.4
|
%
|
|
(1.8
|
)%
|
||
Adjusted operating revenues
|
$
|
164,377
|
|
|
$
|
110,763
|
|
Adjusted EBITDA
|
$
|
27,159
|
|
|
$
|
11,952
|
|
Adjusted EBITDA margin
|
16.5
|
%
|
|
10.8
|
%
|
|
12 weeks ended
|
||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||
|
(in thousands except per share data)
|
||||||
Adjusted net income:
|
|
|
|
||||
Income (loss) before income tax expense
|
$
|
7,357
|
|
|
$
|
(4,667
|
)
|
Employee stock-based compensation
|
4,989
|
|
|
2,670
|
|
||
Distribution partner mark-to-market expense (b)
|
—
|
|
|
622
|
|
||
Issuing bank contract amendments (a)
|
—
|
|
|
1,955
|
|
||
Change in fair value of contingent consideration (c)
|
(4,139
|
)
|
|
—
|
|
||
Amortization of intangibles (d)
|
6,999
|
|
|
5,532
|
|
||
Adjusted income before income tax expense
|
15,206
|
|
|
6,112
|
|
||
Income tax expense (benefit)
|
2,620
|
|
|
(1,783
|
)
|
||
Tax expense on adjustments (e)
|
2,921
|
|
|
4,134
|
|
||
Adjusted income tax expense before cash tax benefits
|
5,541
|
|
|
2,351
|
|
||
Reduction in cash taxes payable resulting from amortization of spin-off tax basis step-up (f)
|
(6,618
|
)
|
|
—
|
|
||
Reduction in cash taxes payable from amortization of acquisition intangibles and utilization of acquired NOLs (g)
|
(2,690
|
)
|
|
(1,372
|
)
|
||
Adjusted income tax expense (benefit)
|
(3,767
|
)
|
|
979
|
|
||
Adjusted net income before allocation to non-controlling interests
|
18,973
|
|
|
5,133
|
|
||
Net (income) loss attributable to non-controlling interests, net of tax
|
(31
|
)
|
|
43
|
|
||
Adjusted net income attributable to Blackhawk Network Holdings, Inc.
|
$
|
18,942
|
|
|
$
|
5,176
|
|
Adjusted diluted earnings per share:
|
|
|
|
||||
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
4,706
|
|
|
$
|
(2,841
|
)
|
Distributed and undistributed earnings allocated to participating securities
|
(51
|
)
|
|
(38
|
)
|
||
Net income (loss) attributable to common shareholders
|
$
|
4,655
|
|
|
$
|
(2,879
|
)
|
Diluted weighted-average shares outstanding
|
55,416
|
|
|
52,095
|
|
||
Diluted earnings (loss) per share
|
$
|
0.08
|
|
|
$
|
(0.06
|
)
|
Adjusted net income attributable to Blackhawk Network Holdings, Inc.
|
$
|
18,942
|
|
|
$
|
5,176
|
|
Adjusted distributed and undistributed earnings allocated to participating securities
|
(97
|
)
|
|
(59
|
)
|
||
Adjusted net income attributable to common shareholders
|
$
|
18,845
|
|
|
$
|
5,117
|
|
Diluted weighted average shares outstanding
|
55,416
|
|
|
52,095
|
|
||
Increase in common share equivalents
|
—
|
|
|
1,597
|
|
||
Adjusted diluted weighted average shares outstanding
|
55,416
|
|
|
53,692
|
|
||
Adjusted diluted earnings per share
|
$
|
0.34
|
|
|
$
|
0.10
|
|
(a)
|
During 2014, we entered into contractual amendments with certain of our issuing banks that substituted a program management fee for account service fees or card expiration fees for certain open-loop gift and incentive cards. A portion of the fees related to cards sold in prior periods. Adjusted operating revenues, Adjusted EBITDA and Adjusted net income for the 12 weeks ended March 28, 2014 have been adjusted to recognized the revenues as if the contract amendment had been in force at the beginning of the fiscal year.
|
(b)
|
Distribution partner equity instruments are generally marked to market at each reporting date to fair value until the instrument is vested.
|
(c)
|
Adjustments to reflect a contingent business acquisition liability at its estimated fair value.
|
(d)
|
Non-cash expense resulting from the amortization of intangible assets, including distribution partner relationships resulting from the issuance of fully vested awards, recorded in
Partner distribution expense
and the amortization of intangible assets from business combination, recorded in
Amortization of acquisition intangibles
.
|
(e)
|
Assumes our statutory tax rate adjusted for certain amounts that are not deductible or taxable for tax purposes.
|
(f)
|
As a result of Safeway's merger with Albertsons and our and Safeway's intended Section 336(e) Election, we recognized a deferred tax asset that we will amortize as a reduction of our taxes payable over 15 years. See “—Liquidity and Capital Resources—Cash Flows from Operating Activities” and
Note 7—Income Taxes
in the notes to our condensed consolidated financial statements for additional information.
|
(g)
|
As a result of certain acquisitions, we acquired net operating loss carryforwards that we can use to reduce our income taxes payable. Additionally, for certain acquisitions, we may amortize intangible assets, including goodwill, for tax purposes to reduce income taxes payable.
|
|
12 Weeks Ended March 28, 2015
|
|
% of Total Operating Revenues
|
|
12 Weeks Ended March 22, 2014
|
|
% of Total Operating Revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
220,402
|
|
|
68.9
|
%
|
|
$
|
178,095
|
|
|
76.4
|
%
|
Program, interchange, marketing and other fees
|
73,104
|
|
|
22.9
|
%
|
|
35,665
|
|
|
15.3
|
%
|
||
Product sales
|
26,225
|
|
|
8.2
|
%
|
|
19,355
|
|
|
8.3
|
%
|
||
Total operating revenues
|
319,731
|
|
|
100.0
|
%
|
|
233,115
|
|
|
100.0
|
%
|
||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||
Partner distribution expense
|
155,354
|
|
|
48.6
|
%
|
|
124,307
|
|
|
53.3
|
%
|
||
Processing and services
|
64,208
|
|
|
20.1
|
%
|
|
41,625
|
|
|
17.9
|
%
|
||
Sales and marketing
|
43,593
|
|
|
13.6
|
%
|
|
33,078
|
|
|
14.2
|
%
|
||
Costs of products sold
|
24,903
|
|
|
7.8
|
%
|
|
19,304
|
|
|
8.3
|
%
|
||
General and administrative
|
18,748
|
|
|
5.9
|
%
|
|
14,603
|
|
|
6.3
|
%
|
||
Transition and acquisition
|
175
|
|
|
0.1
|
%
|
|
2
|
|
|
—
|
%
|
||
Amortization of acquisition intangibles
|
5,974
|
|
|
1.9
|
%
|
|
4,409
|
|
|
1.9
|
%
|
||
Change in fair value of contingent consideration
|
(4,139
|
)
|
|
(1.3
|
)%
|
|
—
|
|
|
—
|
%
|
||
Total operating expenses
|
308,816
|
|
|
96.6
|
%
|
|
237,328
|
|
|
101.8
|
%
|
||
OPERATING INCOME (LOSS)
|
10,915
|
|
|
3.4
|
%
|
|
(4,213
|
)
|
|
(1.8
|
)%
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||||||
Interest income and other income (expense), net
|
(801
|
)
|
|
(0.3
|
)%
|
|
(409
|
)
|
|
(0.2
|
)%
|
||
Interest expense
|
(2,757
|
)
|
|
(0.9
|
)%
|
|
(45
|
)
|
|
—
|
%
|
||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
7,357
|
|
|
2.3
|
%
|
|
(4,667
|
)
|
|
(2.0
|
)%
|
||
INCOME TAX EXPENSE (BENEFIT)
|
2,620
|
|
|
0.8
|
%
|
|
(1,783
|
)
|
|
(0.8
|
)%
|
||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
4,737
|
|
|
1.5
|
%
|
|
(2,884
|
)
|
|
(1.2
|
)%
|
||
Net (income) loss attributable to non-controlling interests, net of tax
|
(31
|
)
|
|
—
|
%
|
|
43
|
|
|
—
|
%
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
4,706
|
|
|
1.5
|
%
|
|
$
|
(2,841
|
)
|
|
(1.2
|
)%
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 28, 2015
|
|
March 22, 2014
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|||||||
Commissions and fees
|
$
|
220,402
|
|
|
$
|
178,095
|
|
|
$
|
42,307
|
|
|
23.8
|
%
|
Program, interchange, marketing and other fees
|
73,104
|
|
|
35,665
|
|
|
37,439
|
|
|
105.0
|
%
|
|||
Product sales
|
26,225
|
|
|
19,355
|
|
|
6,870
|
|
|
35.5
|
%
|
|||
Total operating revenues
|
$
|
319,731
|
|
|
$
|
233,115
|
|
|
$
|
86,616
|
|
|
37.2
|
%
|
Partner distribution expense
|
155,354
|
|
|
124,307
|
|
|
31,047
|
|
|
25.0
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
164,377
|
|
|
$
|
108,808
|
|
|
$
|
55,569
|
|
|
51.1
|
%
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 28, 2015
|
|
March 22, 2014
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
199,909
|
|
|
$
|
161,326
|
|
|
$
|
38,583
|
|
|
23.9
|
%
|
Partner distribution expense
|
94,184
|
|
|
81,748
|
|
|
12,436
|
|
|
15.2
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
105,725
|
|
|
$
|
79,578
|
|
|
$
|
26,147
|
|
|
32.9
|
%
|
Transaction dollar volume
|
$
|
1,963,620
|
|
|
$
|
1,560,109
|
|
|
$
|
403,511
|
|
|
25.9
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
8.5
|
%
|
|
9.1
|
%
|
|
(0.6
|
)%
|
|
(6.6
|
)%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
56.2
|
%
|
|
57.8
|
%
|
|
(1.6
|
)%
|
|
(2.8
|
)%
|
•
|
Transaction dollar volume
—Increased due to higher sales of prepaid products through our retail distribution partner network from increased per-store productivity through most of our network and expansion of our retail network, as well as an increase in sales through our online distribution channel.
|
•
|
Prepaid and processing revenues as a percentage of transaction dollar volume
—Decreased due to increases in the proportion of program-managed Visa gift and financial services products sold, a decrease in prepaid and processing revenues as a percentage of transaction dollar volume for open loop gift products sold and a decrease in the overall commission rate for closed loop gift cards due to mix. The total of the consumer purchase fees and resulting program management fees, interchange and other fees that we earn from our program management services to issuing banks on these products (collectively, program revenues, presented in
Program, interchange, marketing and other fees
) is less than the average content provider commissions we receive on the sale of closed loop gift and telecom products. Additionally, the expanded availability of variable load Visa gift products decreased the prepaid and processing revenue rate in 2015 as these products have a fixed consumer fee and higher average transaction values.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—Decreased due to increases in the proportion of program managed Visa gift and financial services products sold, as well as a decrease in noncash distribution partner warrant amortization expense. We share a smaller portion of our total revenues with our retail distribution partners for open loop products as compared to the portion of content provider commissions for closed loop and telecom products that we pay to our retail distribution partners as distribution partner commissions, mainly due to the higher processing and services expenses we incur related to the open loop products. As a result, increases in these program revenues reduce the overall compensation to our retail distribution partners and decrease
Partner distribution expense as a percentage of prepaid and processing revenues
.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 28, 2015
|
|
March 22, 2014
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
79,423
|
|
|
$
|
62,504
|
|
|
$
|
16,919
|
|
|
27.1
|
%
|
Partner distribution expense
|
56,609
|
|
|
41,412
|
|
|
15,197
|
|
|
36.7
|
%
|
|||
Operating revenues net of Partner distribution expense
|
$
|
22,814
|
|
|
$
|
21,092
|
|
|
$
|
1,722
|
|
|
8.2
|
%
|
Transaction dollar volume
|
$
|
644,718
|
|
|
$
|
500,047
|
|
|
$
|
144,671
|
|
|
28.9
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
11.1
|
%
|
|
10.9
|
%
|
|
0.2
|
%
|
|
1.8
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
79.1
|
%
|
|
75.6
|
%
|
|
3.5
|
%
|
|
4.6
|
%
|
•
|
Transaction dollar volume
—Increased primarily due to sales through our sub-distributor relationships in Japan and South Korea which was partially offset by decreases in sales through our sub-distributor relationship in South Africa. Transaction dollar volume also increased due to increases in Germany, Mexico and the UK, partially offset by a decrease in Australia. Additionally, transaction dollar volume was negatively impacted by changes in foreign exchange rates. On a constant currency basis, transaction dollar volume increased 48.8%.
|
•
|
Prepaid and processing revenues as a percentage of transaction dollar volume
—Increased due to an increase in the proportion of products sold through sub-distributor relationships, which sell a mix of products with higher content provider commissions than our retail distribution partners.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—Increased due to increases in the proportion of our products sold through sub-distributor relationships for which we share a substantially larger portion of our commissions and fees revenue, but also incur minimal other operating expenses. This increase was partially offset by sales through Retailo which shares a lower portion of its commission revenue with its retail distribution partners, as well as a decrease in noncash mark-to-market expense of
$0.6 million
, or from
1.0%
of prepaid and processing revenue for the
12 weeks ended
March 22, 2014
to
0.0%
for the
12 weeks ended
March 28, 2015
.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 28, 2015
|
|
March 22, 2014
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
40,399
|
|
|
$
|
9,285
|
|
|
$
|
31,114
|
|
|
335.1
|
%
|
Partner distribution expense
|
4,561
|
|
|
1,147
|
|
|
3,414
|
|
|
297.6
|
%
|
|||
Operating revenues net of Partner distribution expense
|
$
|
35,838
|
|
|
$
|
8,138
|
|
|
$
|
27,700
|
|
|
340.4
|
%
|
Transaction dollar volume
|
$
|
502,195
|
|
|
$
|
127,548
|
|
|
$
|
374,647
|
|
|
293.7
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
7.9
|
%
|
|
7.3
|
%
|
|
0.6
|
%
|
|
8.2
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
11.5
|
%
|
|
12.4
|
%
|
|
(0.9
|
)%
|
|
(7.3
|
)%
|
•
|
Transaction dollar volume
—Increased due to increases in sales of prepaid products through InteliSpend and our acquisitions of Parago and CardLab in 2014.
|
•
|
Prepaid and processing revenues as a percentage of transaction dollar volume
—Increased due to an increase in the proportion of products sold for which we earn program management fees from our issuing banks. In the second quarter of 2014, we amended our contract with our U.S. issuing bank for our InteliSpend products to replace monthly maintenance fees (which we recognized when deducted) to a program management fees which we recognize over the card life. Additionally, we also earn program management fees for open loop products sold through Parago and CardLab. This increase was partially offset by the portion of Parago's transaction dollar volume for which we receive only rebate processing and check fulfillment fees.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenue
—Decreased due to a smaller proportion of transaction volume sold through business clients for which we recognize net pricing discounts as an expense.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 28, 2015
|
|
March 22, 2014
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|||||||
Partner distribution expense
|
155,354
|
|
|
124,307
|
|
|
31,047
|
|
|
25.0
|
%
|
|||
Processing and services
|
64,208
|
|
|
41,625
|
|
|
22,583
|
|
|
54.3
|
%
|
|||
Sales and marketing
|
43,593
|
|
|
33,078
|
|
|
10,515
|
|
|
31.8
|
%
|
|||
Costs of products sold
|
24,903
|
|
|
19,304
|
|
|
5,599
|
|
|
29.0
|
%
|
|||
General and administrative
|
18,748
|
|
|
14,603
|
|
|
4,145
|
|
|
28.4
|
%
|
|||
Transition and acquisition
|
175
|
|
|
2
|
|
|
173
|
|
|
8,650.0
|
%
|
|||
Amortization of acquisition intangibles
|
5,974
|
|
|
4,409
|
|
|
1,565
|
|
|
35.5
|
%
|
|||
Change in fair value of contingent consideration
|
(4,139
|
)
|
|
—
|
|
|
(4,139
|
)
|
|
N/M
|
||||
Total operating expenses
|
$
|
308,816
|
|
|
$
|
237,328
|
|
|
$
|
71,488
|
|
|
30.1
|
%
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 28, 2015
|
|
March 22, 2014
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|||||||
Interest income and other income (expense), net
|
$
|
(801
|
)
|
|
$
|
(409
|
)
|
|
$
|
(392
|
)
|
|
95.8
|
%
|
Interest expense
|
(2,757
|
)
|
|
(45
|
)
|
|
(2,712
|
)
|
|
6,026.7
|
%
|
|||
Total other income (expense)
|
$
|
(3,558
|
)
|
|
$
|
(454
|
)
|
|
$
|
(3,104
|
)
|
|
683.7
|
%
|
INCOME TAX EXPENSE (BENEFIT)
|
$
|
2,620
|
|
|
$
|
(1,783
|
)
|
|
$
|
4,403
|
|
|
(246.9
|
)%
|
EFFECTIVE TAX RATE
|
35.6
|
%
|
|
38.2
|
%
|
|
(2.6
|
)%
|
|
|
|
12 weeks ended
|
||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||
|
(in thousands, except percentages)
|
||||||
Income (loss) before income tax expense
|
$
|
7,357
|
|
|
$
|
(4,667
|
)
|
Income tax expense (benefit)
|
$
|
2,620
|
|
|
$
|
(1,783
|
)
|
Effective income tax rate
|
35.6
|
%
|
|
38.2
|
%
|
||
Adjusted income before income tax expense
|
$
|
15,206
|
|
|
$
|
6,112
|
|
Adjusted income tax expense before realization of cash tax benefits
|
$
|
5,541
|
|
|
$
|
2,351
|
|
Adjusted effective income tax rate
|
36.4
|
%
|
|
38.5
|
%
|
|
12 weeks ended
|
||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||
|
(in thousands)
|
||||||
Net cash used in operating activities
|
$
|
(675,222
|
)
|
|
$
|
(519,086
|
)
|
Net cash used in investing activities
|
(12,032
|
)
|
|
(9,879
|
)
|
||
Net cash provided by financing activities
|
321
|
|
|
114,904
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(5,266
|
)
|
|
(1,488
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(692,199
|
)
|
|
$
|
(415,549
|
)
|
|
12 weeks ended
|
||||||
|
March 28, 2015
|
|
March 22, 2014
|
||||
|
(in thousands)
|
||||||
Net cash used in operating activities
|
$
|
(675,222
|
)
|
|
$
|
(519,086
|
)
|
Changes in settlement payables and consumer and customer deposits, net of settlement receivables
|
660,730
|
|
|
484,076
|
|
||
Adjusted net cash used in operating activities (1)
|
(14,492
|
)
|
|
(35,010
|
)
|
||
Expenditures for property, equipment and technology
|
(13,843
|
)
|
|
(8,538
|
)
|
||
Free cash flow (1)
|
$
|
(28,335
|
)
|
|
$
|
(43,548
|
)
|
(1)
|
Our
Adjusted net cash flow used in operating activities
and
Free cash flow
are non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. This measure, however, should be considered in addition to, and not as a substitute for or superior to, cash flows or other measures of the financial performance prepared in accordance with GAAP.
|
Blackhawk Network Holdings, Inc.
|
|
/s/ Jerry Ulrich
|
Jerry Ulrich
|
Chief Financial Officer and Chief Administrative Officer
|
(Principal Financial Officer and Duly Authorized Signatory)
|
|
|
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Exhibit No.
|
|
Description of Exhibit
|
|
Form
|
|
File No.
|
|
Exhibit(s)
|
|
Filing Date
|
|
|
10.1†
|
|
Amendment to Stock Purchase Warrant, dated as of March 31, 2015.
|
|
|
|
|
|
|
|
|
|
X
|
10.2+
|
|
Form of 2015 Performance Share Award Agreement for 2013 Equity Incentive Award Plan.
|
|
|
|
|
|
|
|
|
|
X
|
10.3+
|
|
Non-Employee Director Compensation Program (Effective January 4, 2015).
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification of Principal Executive Officer Required Under Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification of Principal Financial Officer Required Under Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
|
|
|
|
X
|
32.1
|
|
Certification of Principal Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended and 18 U.S.C. Section §1350.
|
|
|
|
|
|
|
|
|
|
X
|
32.2
|
|
Certification of Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended and 18 U.S.C. Section §1350.
|
|
|
|
|
|
|
|
|
|
X
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
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X
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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X
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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X
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101.LAB
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XBRL Taxonomy Extension Label Linkbase
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X
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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X
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+
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Indicates a management contract or compensatory plan.
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†
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Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the SEC.
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Participant:
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[__________________________]
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Grant Date:
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[_____________]
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Target Number of Performance Shares:
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[_____________]
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Performance Periods:
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[_____________]
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Performance Goals:
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Except as otherwise set forth in the Performance Share Award Agreement, the Participant is eligible to receive Shares based upon the Company’s attainment, during the Performance Period, of the Performance Goals set forth in
Exhibit A-1
attached hereto.
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Termination:
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If the Participant experiences a Termination of Service prior to the Regular Vesting Date (as defined in the Performance Share Award Agreement), all Performance Shares that have not become vested on or prior to the date of such Termination of Service (after taking into consideration any vesting that may occur in connection with such Termination of Service, if any) will thereupon be automatically forfeited by the Participant without payment of any consideration therefor.
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Non-Employee Director:
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$60,000
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Chair of Audit Committee:
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$15,000
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Chair of Compensation Committee:
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$10,000
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Chair of Nominating and Corporate Governance Committee:
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$5,000
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Audit Committee Member (for both non-Chair and Chair members):
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$10,000
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Compensation Committee Member (for both non-Chair and Chair members):
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$7,500
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Nominating and Corporate Governance Committee Member (for both non-Chair and Chair members):
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$7,500
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Lead Independent Director:
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$6,000
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Annual Restricted Stock Award:
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Each Non-Employee Director serving on the Board on the date of each annual stockholder meeting of the Company (each, an “
Annual Meeting
”) shall be granted Restricted Stock with a value of $140,000 (valued based on the average market closing price per share of the Common Stock over the 30-day period ending on the Friday immediately preceding the applicable Annual Meeting) under the Plan or any other applicable Company equity incentive plan then-maintained by the Company (the “
Annual RSA
”).
The Annual RSA will be automatically granted, without further action, on the date of the applicable Annual Meeting, and will vest in full on the earlier to occur of (i) the first (1
st
) anniversary of the date of grant and (ii) the date of the Annual Meeting immediately following the date of grant, subject in each case to continued service through the vesting date.
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1.
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I have reviewed this report on Form 10-Q of Blackhawk Network Holdings, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report
;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e), for the registrant and have
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared
;
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b)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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c)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting
.
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/s/ William Y. Tauscher
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William Y. Tauscher
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Chief Executive Officer and Chairman of the Board
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Date: May 5, 2015
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1.
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I have reviewed this report on Form 10-Q of Blackhawk Network Holdings, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e), for the registrant and have
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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c)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Jerry Ulrich
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Jerry Ulrich
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Chief Financial Officer and Chief Administrative Officer
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Date: May 5, 2015
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ William Y. Tauscher
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William Y. Tauscher
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Chief Executive Officer and Chairman of the Board
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(Principal Executive Officer)
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Date: May 5, 2015
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Jerry Ulrich
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Jerry Ulrich
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Chief Financial Officer and Chief Administrative Officer
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(Principal Financial Officer)
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Date: May 5, 2015
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