|
|
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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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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
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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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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June 18, 2016
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|
January 2, 2016
|
|
June 20, 2015
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
263,988
|
|
|
$
|
914,576
|
|
|
$
|
276,733
|
|
Restricted cash
|
2,500
|
|
|
3,189
|
|
|
3,189
|
|
|||
Settlement receivables, net
|
340,925
|
|
|
626,077
|
|
|
311,250
|
|
|||
Accounts receivable, net
|
226,929
|
|
|
241,729
|
|
|
178,305
|
|
|||
Other current assets
|
103,061
|
|
|
103,319
|
|
|
93,553
|
|
|||
Total current assets
|
937,403
|
|
|
1,888,890
|
|
|
863,030
|
|
|||
Property, equipment and technology, net
|
165,246
|
|
|
159,357
|
|
|
134,792
|
|
|||
Intangible assets, net
|
302,435
|
|
|
240,898
|
|
|
159,443
|
|
|||
Goodwill
|
511,808
|
|
|
402,489
|
|
|
330,493
|
|
|||
Deferred income taxes
|
349,286
|
|
|
339,558
|
|
|
363,662
|
|
|||
Other assets
|
67,597
|
|
|
81,764
|
|
|
80,557
|
|
|||
TOTAL ASSETS
|
$
|
2,333,775
|
|
|
$
|
3,112,956
|
|
|
$
|
1,931,977
|
|
|
|
|
|
|
|
||||||
See accompanying notes to condensed consolidated financial statements
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(In thousands, except par value)
(Unaudited)
|
|||||||||||
|
June 18, 2016
|
|
January 2, 2016
|
|
June 20, 2015
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Settlement payables
|
$
|
607,463
|
|
|
$
|
1,605,021
|
|
|
$
|
556,502
|
|
Consumer and customer deposits
|
132,662
|
|
|
84,761
|
|
|
113,219
|
|
|||
Accounts payable and accrued operating expenses
|
97,717
|
|
|
119,087
|
|
|
112,830
|
|
|||
Deferred revenue
|
111,941
|
|
|
113,458
|
|
|
36,616
|
|
|||
Note payable, current portion
|
156,091
|
|
|
37,296
|
|
|
37,393
|
|
|||
Notes payable to Safeway
|
3,753
|
|
|
4,129
|
|
|
14,932
|
|
|||
Bank line of credit
|
100,000
|
|
|
—
|
|
|
—
|
|
|||
Other current liabilities
|
48,259
|
|
|
57,342
|
|
|
33,236
|
|
|||
Total current liabilities
|
1,257,886
|
|
|
2,021,094
|
|
|
904,728
|
|
|||
Deferred income taxes
|
20,168
|
|
|
18,652
|
|
|
7,630
|
|
|||
Note payable
|
268,571
|
|
|
324,412
|
|
|
325,287
|
|
|||
Other liabilities
|
24,196
|
|
|
14,700
|
|
|
4,047
|
|
|||
Total liabilities
|
1,570,821
|
|
|
2,378,858
|
|
|
1,241,692
|
|
|||
Commitments and contingencies (see Note 9)
|
|
|
|
|
|
||||||
Stockholders’ equity:
|
|
|
|
|
|
||||||
Preferred stock: $0.001 par value; 10,000 shares authorized; no shares outstanding
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock: $0.001 par value; 210,000 shares authorized; 56,289, 55,794 and 54,582 shares outstanding, respectively
|
56
|
|
|
56
|
|
|
55
|
|
|||
Additional paid-in capital
|
581,712
|
|
|
561,939
|
|
|
538,357
|
|
|||
Accumulated other comprehensive loss
|
(32,065
|
)
|
|
(40,195
|
)
|
|
(24,795
|
)
|
|||
Retained earnings
|
208,895
|
|
|
207,973
|
|
|
169,985
|
|
|||
Total Blackhawk Network Holdings, Inc. equity
|
758,598
|
|
|
729,773
|
|
|
683,602
|
|
|||
Non-controlling interests
|
4,356
|
|
|
4,325
|
|
|
6,683
|
|
|||
Total stockholders’ equity
|
762,954
|
|
|
734,098
|
|
|
690,285
|
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
2,333,775
|
|
|
$
|
3,112,956
|
|
|
$
|
1,931,977
|
|
|
12 weeks ended
|
|
24 weeks ended
|
||||||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
June 18, 2016
|
|
June 20, 2015
|
||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
||||||||
Commissions and fees
|
$
|
262,931
|
|
|
$
|
257,445
|
|
|
$
|
502,555
|
|
|
$
|
477,847
|
|
Program and other fees
|
67,419
|
|
|
52,153
|
|
|
142,861
|
|
|
110,526
|
|
||||
Marketing
|
20,696
|
|
|
28,070
|
|
|
34,155
|
|
|
42,801
|
|
||||
Product sales
|
40,160
|
|
|
34,580
|
|
|
78,097
|
|
|
60,805
|
|
||||
Total operating revenues
|
391,206
|
|
|
372,248
|
|
|
757,668
|
|
|
691,979
|
|
||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Partner distribution expense
|
191,231
|
|
|
176,987
|
|
|
363,386
|
|
|
332,341
|
|
||||
Processing and services
|
76,134
|
|
|
65,818
|
|
|
149,241
|
|
|
130,026
|
|
||||
Sales and marketing
|
60,511
|
|
|
63,106
|
|
|
113,849
|
|
|
106,699
|
|
||||
Costs of products sold
|
38,309
|
|
|
32,113
|
|
|
74,041
|
|
|
57,016
|
|
||||
General and administrative
|
23,298
|
|
|
21,302
|
|
|
47,629
|
|
|
40,050
|
|
||||
Transition and acquisition
|
641
|
|
|
641
|
|
|
1,586
|
|
|
816
|
|
||||
Amortization of acquisition intangibles
|
15,259
|
|
|
5,503
|
|
|
25,157
|
|
|
11,477
|
|
||||
Change in fair value of contingent consideration
|
800
|
|
|
(3,428
|
)
|
|
800
|
|
|
(7,567
|
)
|
||||
Total operating expenses
|
406,183
|
|
|
362,042
|
|
|
775,689
|
|
|
670,858
|
|
||||
OPERATING INCOME (LOSS)
|
(14,977
|
)
|
|
10,206
|
|
|
(18,021
|
)
|
|
21,121
|
|
||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||||||||
Interest income and other income (expense), net
|
486
|
|
|
284
|
|
|
898
|
|
|
(517
|
)
|
||||
Interest expense
|
(4,118
|
)
|
|
(2,578
|
)
|
|
(8,184
|
)
|
|
(5,335
|
)
|
||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
(18,609
|
)
|
|
7,912
|
|
|
(25,307
|
)
|
|
15,269
|
|
||||
INCOME TAX EXPENSE (BENEFIT)
|
(7,290
|
)
|
|
5,105
|
|
|
(10,527
|
)
|
|
7,725
|
|
||||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(11,319
|
)
|
|
2,807
|
|
|
(14,780
|
)
|
|
7,544
|
|
||||
Loss (income) attributable to non-controlling interests, net of tax
|
(18
|
)
|
|
97
|
|
|
(110
|
)
|
|
66
|
|
||||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(11,337
|
)
|
|
$
|
2,904
|
|
|
$
|
(14,890
|
)
|
|
$
|
7,610
|
|
EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.20
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.27
|
)
|
|
$
|
0.14
|
|
Diluted
|
$
|
(0.20
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.27
|
)
|
|
$
|
0.14
|
|
Weighted average shares outstanding—basic
|
56,134
|
|
|
54,042
|
|
|
55,944
|
|
|
53,682
|
|
||||
Weighted average shares outstanding—diluted
|
56,134
|
|
|
55,896
|
|
|
55,944
|
|
|
55,689
|
|
|
12 weeks ended
|
|
24 weeks ended
|
||||||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
June 18, 2016
|
|
June 20, 2015
|
||||||||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
$
|
(11,319
|
)
|
|
$
|
2,807
|
|
|
$
|
(14,780
|
)
|
|
$
|
7,544
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Currency translation adjustments
|
2,985
|
|
|
4,285
|
|
|
8,051
|
|
|
(5,282
|
)
|
||||
COMPREHENSIVE INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(8,334
|
)
|
|
7,092
|
|
|
(6,729
|
)
|
|
2,262
|
|
||||
Comprehensive loss (income) attributable to non-controlling interests, net of tax
|
71
|
|
|
76
|
|
|
(31
|
)
|
|
23
|
|
||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(8,263
|
)
|
|
$
|
7,168
|
|
|
$
|
(6,760
|
)
|
|
$
|
2,285
|
|
|
24 weeks ended
|
||||||
|
June 18, 2016
|
|
June 20, 2015
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss) before allocation to non-controlling interests
|
$
|
(14,780
|
)
|
|
$
|
7,544
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization of property, equipment and technology
|
21,684
|
|
|
17,944
|
|
||
Amortization of intangibles
|
27,459
|
|
|
13,528
|
|
||
Amortization of deferred program and contract costs
|
12,544
|
|
|
13,150
|
|
||
Employee stock-based compensation expense
|
16,572
|
|
|
12,739
|
|
||
Change in fair value of contingent consideration
|
800
|
|
|
(7,567
|
)
|
||
Deferred income taxes
|
—
|
|
|
13,371
|
|
||
Other
|
963
|
|
|
3,194
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Settlement receivables
|
293,441
|
|
|
209,373
|
|
||
Settlement payables
|
(1,005,723
|
)
|
|
(822,327
|
)
|
||
Accounts receivable, current and long-term
|
16,964
|
|
|
5,886
|
|
||
Other current assets
|
16,914
|
|
|
(9,895
|
)
|
||
Other assets
|
(2,544
|
)
|
|
(4,559
|
)
|
||
Consumer and customer deposits
|
31,974
|
|
|
(20,554
|
)
|
||
Accounts payable and accrued operating expenses
|
(33,574
|
)
|
|
(2,218
|
)
|
||
Deferred revenue
|
493
|
|
|
(11,498
|
)
|
||
Other current and long-term liabilities
|
(21,742
|
)
|
|
(1,173
|
)
|
||
Income taxes, net
|
(4,722
|
)
|
|
(12,181
|
)
|
||
Net cash used in operating activities
|
(643,277
|
)
|
|
(595,243
|
)
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for property, equipment and technology
|
(20,281
|
)
|
|
(25,622
|
)
|
||
Business acquisitions, net of cash acquired
|
(144,477
|
)
|
|
—
|
|
||
Change in restricted cash
|
689
|
|
|
1,811
|
|
||
Other
|
(2,500
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(166,569
|
)
|
|
(23,811
|
)
|
||
|
|
|
|
||||
|
|
|
|
||||
See accompanying notes to condensed consolidated financial statements
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(Unaudited)
|
|||||||
|
24 weeks ended
|
||||||
|
June 18, 2016
|
|
June 20, 2015
|
||||
FINANCING ACTIVITIES:
|
|
|
|
||||
Payments for acquisition liability
|
—
|
|
|
(1,811
|
)
|
||
Proceeds from issuance of note payable
|
100,000
|
|
|
—
|
|
||
Repayment of note payable
|
(37,500
|
)
|
|
(11,250
|
)
|
||
Borrowings under revolving bank line of credit
|
1,502,675
|
|
|
903,500
|
|
||
Repayments on revolving bank line of credit
|
(1,402,675
|
)
|
|
(903,500
|
)
|
||
Repayment on notes payable to Safeway
|
(376
|
)
|
|
(4,517
|
)
|
||
Repayment of debt assumed in business acquisitions
|
(8,964
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock from exercise of employee stock options and employee stock purchase plans
|
3,452
|
|
|
7,579
|
|
||
Other stock-based compensation related
|
(2,002
|
)
|
|
(790
|
)
|
||
Other
|
—
|
|
|
(199
|
)
|
||
Net cash provided by (used in) financing activities
|
154,610
|
|
|
(10,988
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
4,648
|
|
|
(4,840
|
)
|
||
Decrease in cash and cash equivalents
|
(650,588
|
)
|
|
(634,882
|
)
|
||
Cash and cash equivalents—beginning of period
|
914,576
|
|
|
911,615
|
|
||
Cash and cash equivalents—end of period
|
$
|
263,988
|
|
|
$
|
276,733
|
|
|
|
|
|
||||
NONCASH FINANCING AND INVESTING ACTIVITIES
|
|
|
|
||||
Net deferred tax assets recognized for tax basis step-up with offset to
Additional paid-in capital
|
$
|
—
|
|
|
$
|
366,306
|
|
Note payable to Safeway
contributed to
Additional paid-in capital
|
$
|
—
|
|
|
$
|
8,229
|
|
Financing of business acquisition with contingent consideration
|
$
|
20,100
|
|
|
$
|
—
|
|
Intangible assets recognized for warrants issued
|
$
|
—
|
|
|
$
|
3,147
|
|
Cash
|
$
|
3,985
|
|
Consumer and customer deposits
|
(5,429
|
)
|
|
Accounts payable and accrued operating expenses
|
(9,860
|
)
|
|
Other tangible assets, net
|
873
|
|
|
Debt
|
(5,807
|
)
|
|
Identifiable technology and intangible assets
|
49,530
|
|
|
Goodwill
|
70,656
|
|
|
Total purchase consideration
|
$
|
103,948
|
|
|
Fair Value
|
|
Useful Life
|
||
Customer relationships
|
$
|
19,770
|
|
|
10 years
|
Backlog
|
15,170
|
|
|
3 years
|
|
Domain name
|
11,000
|
|
|
10 years
|
|
Technology
|
3,590
|
|
|
5 years
|
|
Total identifiable technology and intangible assets
|
$
|
49,530
|
|
|
|
Cash
|
$
|
14,191
|
|
Settlement receivables
|
4,884
|
|
|
Settlement payables
|
(3,272
|
)
|
|
Consumer and customer deposits
|
(17,045
|
)
|
|
Other tangible liabilities, net
|
(1,155
|
)
|
|
Debt
|
(3,157
|
)
|
|
Deferred income taxes
|
2,066
|
|
|
Identifiable technology and intangible assets
|
45,260
|
|
|
Goodwill
|
36,516
|
|
|
Total purchase consideration
|
$
|
78,288
|
|
|
Fair Value
|
|
Useful Life
|
||
Customer relationships
|
$
|
38,960
|
|
|
10 years
|
Backlog
|
1,600
|
|
|
3 years
|
|
Technology
|
4,700
|
|
|
5 years
|
|
Total identifiable technology and intangible assets
|
$
|
45,260
|
|
|
|
|
12 weeks ended
|
|
24 weeks ended
|
||||||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
June 18, 2016
|
|
June 20, 2015
|
||||||||
Total revenues
|
$
|
392,317
|
|
|
$
|
381,882
|
|
|
$
|
762,976
|
|
|
$
|
708,548
|
|
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
(8,002
|
)
|
|
1,516
|
|
|
(11,459
|
)
|
|
2,066
|
|
||||
Pro forma EPS—Basic
|
$
|
(0.14
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.04
|
|
Pro forma EPS—Diluted
|
$
|
(0.14
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.04
|
|
|
June 18, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
11,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,100
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,900
|
|
|
$
|
20,900
|
|
|
January 2, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
370,070
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
370,070
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
June 20, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
46,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46,100
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
June 18, 2016
|
|
June 20, 2015
|
||||
Contingent Consideration
|
|
|
|
||||
Balance, beginning of period
|
$
|
—
|
|
|
$
|
7,567
|
|
Issuance of contingent consideration
|
20,100
|
|
|
—
|
|
||
Change in fair value of contingent consideration
|
800
|
|
|
(7,567
|
)
|
||
Balance, end of period
|
$
|
20,900
|
|
|
$
|
—
|
|
|
June 18, 2016
|
|
January 2, 2016
|
|
June 20, 2015
|
||||||
Other current assets:
|
|
|
|
|
|
||||||
Inventory
|
$
|
34,154
|
|
|
$
|
36,528
|
|
|
$
|
43,192
|
|
Deferred expenses
|
12,656
|
|
|
18,182
|
|
|
11,274
|
|
|||
Income tax receivables
|
25,639
|
|
|
14,831
|
|
|
18,997
|
|
|||
Other
|
30,612
|
|
|
33,778
|
|
|
20,090
|
|
|||
Total other current assets
|
$
|
103,061
|
|
|
$
|
103,319
|
|
|
$
|
93,553
|
|
Other assets:
|
|
|
|
|
|
||||||
Deferred program and contract costs
|
$
|
43,527
|
|
|
$
|
50,717
|
|
|
$
|
53,632
|
|
Other receivables
|
2,810
|
|
|
2,281
|
|
|
5,826
|
|
|||
Income taxes receivable
|
—
|
|
|
6,155
|
|
|
6,368
|
|
|||
Deferred financing costs
|
1,675
|
|
|
2,100
|
|
|
2,326
|
|
|||
Other
|
19,585
|
|
|
20,511
|
|
|
12,405
|
|
|||
Total other assets
|
$
|
67,597
|
|
|
$
|
81,764
|
|
|
$
|
80,557
|
|
Other current liabilities
:
|
|
|
|
|
|
||||||
Payroll and related liabilities
|
$
|
24,336
|
|
|
$
|
34,530
|
|
|
$
|
19,184
|
|
Income taxes payable
|
2,333
|
|
|
3,216
|
|
|
3,768
|
|
|||
Acquisition liability
|
10,850
|
|
|
—
|
|
|
—
|
|
|||
Other payables and accrued liabilities
|
10,740
|
|
|
19,596
|
|
|
10,284
|
|
|||
Total other current liabilities
|
$
|
48,259
|
|
|
$
|
57,342
|
|
|
$
|
33,236
|
|
Other liabilities:
|
|
|
|
|
|
||||||
Acquisition liability
|
$
|
10,050
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Payable to content provider
|
—
|
|
|
—
|
|
|
825
|
|
|||
Income taxes payable
|
6,186
|
|
|
4,249
|
|
|
1,431
|
|
|||
Deferred income and other liabilities
|
7,960
|
|
|
10,451
|
|
|
1,791
|
|
|||
Total other liabilities
|
$
|
24,196
|
|
|
$
|
14,700
|
|
|
$
|
4,047
|
|
|
June 18, 2016
|
||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
42,729
|
|
|
$
|
49,156
|
|
|
$
|
310,604
|
|
|
$
|
402,489
|
|
Re-allocation of e-Commerce goodwill
|
2,671
|
|
|
—
|
|
|
(2,671
|
)
|
|
—
|
|
||||
Acquisition of GiftCards
|
33,545
|
|
|
—
|
|
|
37,111
|
|
|
70,656
|
|
||||
Acquisition of NimbleCommerce
|
10,365
|
|
|
—
|
|
|
—
|
|
|
10,365
|
|
||||
Acquisition of Extrameasures
|
—
|
|
|
—
|
|
|
26,150
|
|
|
26,150
|
|
||||
Measurement period adjustment
|
—
|
|
|
—
|
|
|
(1,234
|
)
|
|
(1,234
|
)
|
||||
Foreign currency translation adjustments
|
—
|
|
|
1,890
|
|
|
1,492
|
|
|
3,382
|
|
||||
Balance, end of period
|
$
|
89,310
|
|
|
$
|
51,046
|
|
|
$
|
371,452
|
|
|
$
|
511,808
|
|
|
12 weeks ended
|
|
24 weeks ended
|
||||||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
June 18, 2016
|
|
June 20, 2015
|
||||||||
Processing and services
|
$
|
1,486
|
|
|
$
|
1,486
|
|
|
$
|
2,895
|
|
|
$
|
2,836
|
|
Sales and marketing
|
3,027
|
|
|
2,286
|
|
|
5,841
|
|
|
3,485
|
|
||||
Cost of products sold
|
42
|
|
|
17
|
|
|
58
|
|
|
12
|
|
||||
General and administrative
|
4,017
|
|
|
3,961
|
|
|
7,778
|
|
|
6,406
|
|
||||
Total stock-based compensation expense
|
$
|
8,572
|
|
|
$
|
7,750
|
|
|
$
|
16,572
|
|
|
$
|
12,739
|
|
|
12 weeks ended
|
||||||||||||||||||
|
June 18, 2016
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
239,007
|
|
|
$
|
90,327
|
|
|
$
|
61,872
|
|
|
$
|
—
|
|
|
$
|
391,206
|
|
Partner distribution expense
|
120,998
|
|
|
65,183
|
|
|
5,050
|
|
|
—
|
|
|
191,231
|
|
|||||
Operating revenues, net of Partner distribution expense
|
118,009
|
|
|
25,144
|
|
|
56,822
|
|
|
—
|
|
|
199,975
|
|
|||||
Other operating expenses
|
77,571
|
|
|
22,298
|
|
|
53,469
|
|
|
61,614
|
|
|
214,952
|
|
|||||
Segment profit (loss) / Operating loss
|
$
|
40,438
|
|
|
$
|
2,846
|
|
|
$
|
3,353
|
|
|
$
|
(61,614
|
)
|
|
(14,977
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(3,632
|
)
|
|||||||||
Loss before income tax expense
|
|
|
|
|
|
|
|
|
$
|
(18,609
|
)
|
||||||||
Non-cash charges
|
$
|
1,846
|
|
|
$
|
1,662
|
|
|
$
|
7,360
|
|
|
|
|
|
|
12 weeks ended
|
||||||||||||||||||
|
June 20, 2015
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
245,134
|
|
|
$
|
88,155
|
|
|
$
|
38,959
|
|
|
$
|
—
|
|
|
$
|
372,248
|
|
Partner distribution expense
|
117,554
|
|
|
55,997
|
|
|
3,436
|
|
|
—
|
|
|
176,987
|
|
|||||
Operating revenues, net of Partner distribution expense
|
127,580
|
|
|
32,158
|
|
|
35,523
|
|
|
—
|
|
|
195,261
|
|
|||||
Other operating expenses
|
77,487
|
|
|
31,187
|
|
|
32,390
|
|
|
43,991
|
|
|
185,055
|
|
|||||
Segment profit (loss) / Operating income
|
$
|
50,093
|
|
|
$
|
971
|
|
|
$
|
3,133
|
|
|
$
|
(43,991
|
)
|
|
10,206
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(2,294
|
)
|
|||||||||
Income before income tax expense
|
|
|
|
|
|
|
|
|
$
|
7,912
|
|
||||||||
Non-cash charges
|
$
|
1,244
|
|
|
$
|
222
|
|
|
$
|
2,850
|
|
|
|
|
|
|
24 weeks ended
|
||||||||||||||||||
|
June 18, 2016
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
455,278
|
|
|
$
|
179,242
|
|
|
$
|
123,148
|
|
|
$
|
—
|
|
|
$
|
757,668
|
|
Partner distribution expense
|
226,682
|
|
|
128,862
|
|
|
7,842
|
|
|
—
|
|
|
363,386
|
|
|||||
Operating revenues, net of Partner distribution expense
|
228,596
|
|
|
50,380
|
|
|
115,306
|
|
|
—
|
|
|
394,282
|
|
|||||
Other operating expenses
|
144,192
|
|
|
43,976
|
|
|
104,017
|
|
|
120,118
|
|
|
412,303
|
|
|||||
Segment profit (loss) / Operating loss
|
$
|
84,404
|
|
|
$
|
6,404
|
|
|
$
|
11,289
|
|
|
$
|
(120,118
|
)
|
|
(18,021
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(7,286
|
)
|
|||||||||
Loss before income tax expense
|
|
|
|
|
|
|
|
|
$
|
(25,307
|
)
|
||||||||
Non-cash charges
|
$
|
3,406
|
|
|
$
|
2,669
|
|
|
$
|
13,370
|
|
|
|
|
|
|
24 weeks ended
|
||||||||||||||||||
|
June 20, 2015
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
445,043
|
|
|
$
|
167,578
|
|
|
$
|
79,358
|
|
|
$
|
—
|
|
|
$
|
691,979
|
|
Partner distribution expense
|
211,738
|
|
|
112,606
|
|
|
7,997
|
|
|
—
|
|
|
332,341
|
|
|||||
Operating revenues, net of Partner distribution expense
|
233,305
|
|
|
54,972
|
|
|
71,361
|
|
|
—
|
|
|
359,638
|
|
|||||
Other operating expenses
|
139,979
|
|
|
50,914
|
|
|
63,788
|
|
|
83,836
|
|
|
338,517
|
|
|||||
Segment profit (loss) / Operating income
|
$
|
93,326
|
|
|
$
|
4,058
|
|
|
$
|
7,573
|
|
|
$
|
(83,836
|
)
|
|
21,121
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(5,852
|
)
|
|||||||||
Income before income tax expense
|
|
|
|
|
|
|
|
|
$
|
15,269
|
|
||||||||
Non-cash charges
|
$
|
2,471
|
|
|
$
|
429
|
|
|
$
|
5,255
|
|
|
|
|
|
|
12 weeks ended
|
||||||||||||||
|
June 18, 2016
|
|
June 20, 2015
|
||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
(11,337
|
)
|
|
$
|
(11,337
|
)
|
|
$
|
2,904
|
|
|
$
|
2,904
|
|
Distributed and undistributed earnings allocated to participating securities
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||
Net income (loss) attributable to common stockholders
|
$
|
(11,337
|
)
|
|
$
|
(11,337
|
)
|
|
$
|
2,898
|
|
|
$
|
2,898
|
|
Weighted-average common shares outstanding
|
56,134
|
|
|
56,134
|
|
|
54,042
|
|
|
54,042
|
|
||||
Common share equivalents
|
|
|
—
|
|
|
|
|
|
1,854
|
|
|||||
Weighted-average shares outstanding
|
|
|
56,134
|
|
|
|
|
55,896
|
|
||||||
Earnings (loss) per share
|
$
|
(0.20
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
24 weeks ended
|
||||||||||||||
|
June 18, 2016
|
|
June 20, 2015
|
||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
(14,890
|
)
|
|
$
|
(14,890
|
)
|
|
$
|
7,610
|
|
|
$
|
7,610
|
|
Distributed and undistributed earnings allocated to participating securities
|
(15
|
)
|
|
(15
|
)
|
|
(57
|
)
|
|
(56
|
)
|
||||
Net income (loss) attributable to common stockholders
|
$
|
(14,905
|
)
|
|
$
|
(14,905
|
)
|
|
$
|
7,553
|
|
|
$
|
7,554
|
|
Weighted-average common shares outstanding
|
55,944
|
|
|
55,944
|
|
|
53,682
|
|
|
53,682
|
|
||||
Common share equivalents
|
|
|
—
|
|
|
|
|
|
2,007
|
|
|||||
Weighted-average shares outstanding
|
|
|
55,944
|
|
|
|
|
55,689
|
|
||||||
Earnings (loss) per share
|
$
|
(0.27
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
As of July 27, 2016
|
||
2017
|
$
|
10,000
|
|
2018
|
7,500
|
|
|
2019
|
7,500
|
|
|
2020
|
15,000
|
|
|
2021
|
110,000
|
|
|
2022
|
500,000
|
|
|
Total long-term debt
|
$
|
650,000
|
|
|
12 weeks ended
|
|
24 weeks ended
|
||||||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
June 18, 2016
|
|
June 20, 2015
|
||||||||
|
(in thousands, except percentages and per share amounts)
|
||||||||||||||
Transaction dollar volume
|
$
|
3,385,630
|
|
|
$
|
3,381,991
|
|
|
$
|
6,558,531
|
|
|
$
|
6,492,524
|
|
Prepaid and processing revenues
|
$
|
330,350
|
|
|
$
|
309,598
|
|
|
$
|
645,416
|
|
|
$
|
588,373
|
|
Prepaid and processing revenues as a % of transaction dollar volume
|
9.8
|
%
|
|
9.2
|
%
|
|
9.8
|
%
|
|
9.1
|
%
|
||||
Partner distribution expense as a % of prepaid and processing revenues
|
57.9
|
%
|
|
57.2
|
%
|
|
56.3
|
%
|
|
56.5
|
%
|
||||
Adjusted operating revenues (1)
|
$
|
183,718
|
|
|
$
|
167,191
|
|
|
$
|
368,336
|
|
|
$
|
316,837
|
|
Prepaid and processing revenues:
|
|
|
|
|
|
|
|
||||||||
Commissions and fees
|
$
|
262,931
|
|
|
$
|
257,445
|
|
|
$
|
502,555
|
|
|
$
|
477,847
|
|
Program and other fees
|
67,419
|
|
|
52,153
|
|
|
142,861
|
|
|
110,526
|
|
||||
Prepaid and processing revenues
|
$
|
330,350
|
|
|
$
|
309,598
|
|
|
$
|
645,416
|
|
|
$
|
588,373
|
|
Adjusted operating revenues:
|
|
|
|
|
|
|
|
||||||||
Total operating revenues
|
$
|
391,206
|
|
|
$
|
372,248
|
|
|
$
|
757,668
|
|
|
$
|
691,979
|
|
Revenue adjustment from purchase accounting (2)
|
4,439
|
|
|
—
|
|
|
8,209
|
|
|
—
|
|
||||
Marketing revenue
|
(20,696
|
)
|
|
(28,070
|
)
|
|
(34,155
|
)
|
|
(42,801
|
)
|
||||
Partner distribution expense
|
(191,231
|
)
|
|
(176,987
|
)
|
|
(363,386
|
)
|
|
(332,341
|
)
|
||||
Adjusted operating revenues
|
$
|
183,718
|
|
|
$
|
167,191
|
|
|
$
|
368,336
|
|
|
$
|
316,837
|
|
(1)
|
Our Adjusted operating revenues is a non-GAAP financial measure. 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, operating revenues, operating income, operating margin, cash flows, or other measures of the financial performance prepared in accordance with GAAP.
|
(2)
|
Impact on revenues recognized resulting from the step down in basis of deferred revenue from its carrying value to fair value in a business combination at the acquisition date.
|
•
|
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;
|
•
|
adjusting our operating revenues for marketing revenue, which has offsetting marketing expense, is useful for understanding our operating margin;
|
•
|
in a business combination, a company records an adjustment to reduce the carrying value of deferred revenue to its fair value and reduces the company’s revenues from what it would have recorded otherwise, and as such we do not believe is indicative of our core operating performance.
|
|
12 Weeks Ended June 18, 2016
|
|
% of Total Operating Revenues
|
|
12 Weeks Ended June 20, 2015
|
|
% of Total Operating Revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
262,931
|
|
|
67.2
|
%
|
|
$
|
257,445
|
|
|
69.2
|
%
|
Program and other fees
|
67,419
|
|
|
17.2
|
%
|
|
52,153
|
|
|
14.0
|
%
|
||
Marketing
|
20,696
|
|
|
5.3
|
%
|
|
28,070
|
|
|
7.5
|
%
|
||
Product sales
|
40,160
|
|
|
10.3
|
%
|
|
34,580
|
|
|
9.3
|
%
|
||
Total operating revenues
|
391,206
|
|
|
100.0
|
%
|
|
372,248
|
|
|
100.0
|
%
|
||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||
Partner distribution expense
|
191,231
|
|
|
48.8
|
%
|
|
176,987
|
|
|
47.5
|
%
|
||
Processing and services
|
76,134
|
|
|
19.5
|
%
|
|
65,818
|
|
|
17.7
|
%
|
||
Sales and marketing
|
60,511
|
|
|
15.5
|
%
|
|
63,106
|
|
|
17.0
|
%
|
||
Costs of products sold
|
38,309
|
|
|
9.8
|
%
|
|
32,113
|
|
|
8.6
|
%
|
||
General and administrative
|
23,298
|
|
|
6.0
|
%
|
|
21,302
|
|
|
5.7
|
%
|
||
Transition and acquisition
|
641
|
|
|
0.2
|
%
|
|
641
|
|
|
0.2
|
%
|
||
Amortization of acquisition intangibles
|
15,259
|
|
|
3.9
|
%
|
|
5,503
|
|
|
1.5
|
%
|
||
Change in fair value of contingent consideration
|
800
|
|
|
0.2
|
%
|
|
(3,428
|
)
|
|
(0.9
|
)%
|
||
Total operating expenses
|
406,183
|
|
|
103.9
|
%
|
|
362,042
|
|
|
97.3
|
%
|
||
OPERATING INCOME (LOSS)
|
(14,977
|
)
|
|
(3.8
|
)%
|
|
10,206
|
|
|
2.7
|
%
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||||||
Interest income and other income (expense), net
|
486
|
|
|
0.1
|
%
|
|
284
|
|
|
0.1
|
%
|
||
Interest expense
|
(4,118
|
)
|
|
(1.1
|
)%
|
|
(2,578
|
)
|
|
(0.7
|
)%
|
||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
(18,609
|
)
|
|
(4.8
|
)%
|
|
7,912
|
|
|
2.1
|
%
|
||
INCOME TAX EXPENSE (BENEFIT)
|
(7,290
|
)
|
|
(1.9
|
)%
|
|
5,105
|
|
|
1.4
|
%
|
||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(11,319
|
)
|
|
(2.9
|
)%
|
|
2,807
|
|
|
0.8
|
%
|
||
Loss (income) attributable to non-controlling interests, net of tax
|
(18
|
)
|
|
—
|
%
|
|
97
|
|
|
—
|
%
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(11,337
|
)
|
|
(2.9
|
)%
|
|
$
|
2,904
|
|
|
0.8
|
%
|
|
24 Weeks Ended June 18, 2016
|
|
% of Total Operating Revenues
|
|
24 Weeks Ended June 20, 2015
|
|
% of Total Operating Revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
502,555
|
|
|
66.3
|
%
|
|
$
|
477,847
|
|
|
69.1
|
%
|
Program and other fees
|
142,861
|
|
|
18.9
|
%
|
|
110,526
|
|
|
15.9
|
%
|
||
Marketing
|
34,155
|
|
|
4.5
|
%
|
|
42,801
|
|
|
6.2
|
%
|
||
Product sales
|
78,097
|
|
|
10.3
|
%
|
|
60,805
|
|
|
8.8
|
%
|
||
Total operating revenues
|
757,668
|
|
|
100.0
|
%
|
|
691,979
|
|
|
100.0
|
%
|
||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||
Partner distribution expense
|
363,386
|
|
|
47.9
|
%
|
|
332,341
|
|
|
48.0
|
%
|
||
Processing and services
|
149,241
|
|
|
19.7
|
%
|
|
130,026
|
|
|
18.8
|
%
|
||
Sales and marketing
|
113,849
|
|
|
15.0
|
%
|
|
106,699
|
|
|
15.4
|
%
|
||
Costs of products sold
|
74,041
|
|
|
9.8
|
%
|
|
57,016
|
|
|
8.2
|
%
|
||
General and administrative
|
47,629
|
|
|
6.3
|
%
|
|
40,050
|
|
|
5.8
|
%
|
||
Transition and acquisition
|
1,586
|
|
|
0.2
|
%
|
|
816
|
|
|
0.1
|
%
|
||
Amortization of acquisition intangibles
|
25,157
|
|
|
3.3
|
%
|
|
11,477
|
|
|
1.7
|
%
|
||
Change in fair value of contingent consideration
|
800
|
|
|
0.1
|
%
|
|
(7,567
|
)
|
|
(1.1
|
)%
|
||
Total operating expenses
|
775,689
|
|
|
102.3
|
%
|
|
670,858
|
|
|
96.9
|
%
|
||
OPERATING INCOME (LOSS)
|
(18,021
|
)
|
|
(2.4
|
)%
|
|
21,121
|
|
|
3.1
|
%
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||||||
Interest income and other income (expense), net
|
898
|
|
|
0.1
|
%
|
|
(517
|
)
|
|
(0.1
|
)%
|
||
Interest expense
|
(8,184
|
)
|
|
(1.1
|
)%
|
|
(5,335
|
)
|
|
(0.8
|
)%
|
||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
(25,307
|
)
|
|
(3.3
|
)%
|
|
15,269
|
|
|
2.2
|
%
|
||
INCOME TAX EXPENSE (BENEFIT)
|
(10,527
|
)
|
|
(1.4
|
)%
|
|
7,725
|
|
|
1.1
|
%
|
||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(14,780
|
)
|
|
(2.0
|
)%
|
|
7,544
|
|
|
1.1
|
%
|
||
Loss (income) attributable to non-controlling interests, net of tax
|
(110
|
)
|
|
—
|
%
|
|
66
|
|
|
—
|
%
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(14,890
|
)
|
|
(2.0
|
)%
|
|
$
|
7,610
|
|
|
1.1
|
%
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|||||||
Commissions and fees
|
$
|
262,931
|
|
|
$
|
257,445
|
|
|
$
|
5,486
|
|
|
2.1
|
%
|
Program and other fees
|
67,419
|
|
|
52,153
|
|
|
15,266
|
|
|
29.3
|
%
|
|||
Marketing
|
20,696
|
|
|
28,070
|
|
|
(7,374
|
)
|
|
(26.3
|
)%
|
|||
Product sales
|
40,160
|
|
|
34,580
|
|
|
5,580
|
|
|
16.1
|
%
|
|||
Total operating revenues
|
$
|
391,206
|
|
|
$
|
372,248
|
|
|
$
|
18,958
|
|
|
5.1
|
%
|
Partner distribution expense
|
191,231
|
|
|
176,987
|
|
|
14,244
|
|
|
8.0
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
199,975
|
|
|
$
|
195,261
|
|
|
$
|
4,714
|
|
|
2.4
|
%
|
|
24 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|||||||
Commissions and fees
|
$
|
502,555
|
|
|
$
|
477,847
|
|
|
$
|
24,708
|
|
|
5.2
|
%
|
Program and other fees
|
142,861
|
|
|
110,526
|
|
|
32,335
|
|
|
29.3
|
%
|
|||
Marketing
|
34,155
|
|
|
42,801
|
|
|
(8,646
|
)
|
|
(20.2
|
)%
|
|||
Product sales
|
78,097
|
|
|
60,805
|
|
|
17,292
|
|
|
28.4
|
%
|
|||
Total operating revenues
|
$
|
757,668
|
|
|
$
|
691,979
|
|
|
$
|
65,689
|
|
|
9.5
|
%
|
Partner distribution expense
|
363,386
|
|
|
332,341
|
|
|
31,045
|
|
|
9.3
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
394,282
|
|
|
$
|
359,638
|
|
|
$
|
34,644
|
|
|
9.6
|
%
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
239,007
|
|
|
$
|
245,134
|
|
|
$
|
(6,127
|
)
|
|
(2.5
|
)%
|
Partner distribution expense
|
120,998
|
|
|
117,554
|
|
|
3,444
|
|
|
2.9
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
118,009
|
|
|
$
|
127,580
|
|
|
$
|
(9,571
|
)
|
|
(7.5
|
)%
|
Transaction dollar volume
|
$
|
2,121,454
|
|
|
$
|
2,306,245
|
|
|
$
|
(184,791
|
)
|
|
(8.0
|
)%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
9.2
|
%
|
|
8.7
|
%
|
|
0.5
|
%
|
|
5.7
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
61.9
|
%
|
|
58.6
|
%
|
|
3.3
|
%
|
|
5.6
|
%
|
|
24 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
455,278
|
|
|
$
|
445,043
|
|
|
$
|
10,235
|
|
|
2.3
|
%
|
Partner distribution expense
|
226,682
|
|
|
211,738
|
|
|
14,944
|
|
|
7.1
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
228,596
|
|
|
$
|
233,305
|
|
|
$
|
(4,709
|
)
|
|
(2.0
|
)%
|
Transaction dollar volume
|
$
|
4,059,865
|
|
|
$
|
4,269,865
|
|
|
$
|
(210,000
|
)
|
|
(4.9
|
)%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
9.3
|
%
|
|
8.6
|
%
|
|
0.7
|
%
|
|
8.1
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
60.1
|
%
|
|
57.5
|
%
|
|
2.6
|
%
|
|
4.5
|
%
|
•
|
Transaction dollar volume
—On October 1, 2015, the payment card industry shifted liability for certain debit and credit card transactions to retailers who do not accept EMV chip technology transactions. As a result, some of our non-EMV compliant retail distribution partners have taken restrictive measures around the sale of gift cards, in particular higher denomination open loop gift cards and some closed loop gift cards. These measures include establishing lower limits on credit card purchases of gift cards and removing higher denomination products from displays in impacted markets to mitigate their liability for fraudulent credit card activity in their stores, which decreased our transaction dollar volume. Although EMV implementation at these retail distribution partners is not under our control, based on our most current information provided by such non-EMV compliant retail distribution partners, we expect the negative impact of restricted sales of high-denomination open loop gift cards to continue through our third quarter while they become compliant over such periods. Additionally, we discontinued certain low-margin financial services programs, which also decreased transaction dollar volume. These decreases were partially offset by higher sales of other prepaid products through most of our retail distribution partner network due to increased per-store productivity as well as an increase in sales through our online distribution channels, partially as a result of our acquisition of GiftCards in the first quarter of 2016.
|
•
|
Prepaid and processing revenues as a percentage of transaction dollar volume
—Increased for the
second
quarter and
first 24 weeks of 2016
due to the discontinuation of certain low-margin financial services programs. Additionally, the prepaid and processing revenue rate for open loop gift increased due to i) a higher commissions and fees rate and ii) revenue for interchange and deferred revenue from sales in the first quarter of 2016 that we recognized in the second quarter that were proportionately higher. Both the higher rates and the higher interchange resulted from shift in mix from higher denomination cards to lower denomination cards as a result of the restrictions at non-EMV compliant distribution partners. The increase in the prepaid and processing revenue rate for open loop gift cards was partially offset by a lower program management fees rate that will continue to decrease as a result of a contract amendment with one of our issuing banks based on changing redemption patterns for open loop gift products. The prepaid and processing revenue rate for closed loop gift changed insignificantly for the
second
quarter and
first 24 weeks of 2016
. Our adoption of ASU 2016-04 in the
first 24 weeks of 2016
also did not have a material impact on our prepaid and processing revenue rate for the
second
quarter and
first 24 weeks of 2016
(see
Note 1—Recently Issued or Adopted Accounting Pronouncements
in the notes to our condensed consolidated financial statements).
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—Increased for the
second
quarter and
first 24 weeks of 2016
due to i) an increase in the proportion of sales through retail distribution partners with higher commission share rates and ii) a decrease in the proportion of open loop gift products sold as we share a smaller portion of our total revenues with our retail distribution partners for our program-managed Visa gift products. These increases were partially offset by an increase in sales through our online distribution channels since we do not incur such expense for sales through our proprietary websites.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
90,327
|
|
|
$
|
88,155
|
|
|
$
|
2,172
|
|
|
2.5
|
%
|
Partner distribution expense
|
65,183
|
|
|
55,997
|
|
|
9,186
|
|
|
16.4
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
25,144
|
|
|
$
|
32,158
|
|
|
$
|
(7,014
|
)
|
|
(21.8
|
)%
|
Transaction dollar volume
|
$
|
766,064
|
|
|
$
|
660,084
|
|
|
$
|
105,980
|
|
|
16.1
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
10.8
|
%
|
|
10.9
|
%
|
|
(0.1
|
)%
|
|
(0.9
|
)%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
78.4
|
%
|
|
77.9
|
%
|
|
0.5
|
%
|
|
0.6
|
%
|
|
24 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
179,242
|
|
|
$
|
167,578
|
|
|
$
|
11,664
|
|
|
7.0
|
%
|
Partner distribution expense
|
128,862
|
|
|
112,606
|
|
|
16,256
|
|
|
14.4
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
50,380
|
|
|
$
|
54,972
|
|
|
$
|
(4,592
|
)
|
|
(8.4
|
)%
|
Transaction dollar volume
|
$
|
1,498,730
|
|
|
$
|
1,304,802
|
|
|
$
|
193,928
|
|
|
14.9
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
11.0
|
%
|
|
11.0
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
78.3
|
%
|
|
78.5
|
%
|
|
(0.2
|
)%
|
|
(0.3
|
)%
|
•
|
Transaction dollar volume
—Increased for both the
second
quarter and
first 24 weeks of 2016
primarily due to increases in sales in Europe, primarily Germany, and through our sub-distributor relationships in Japan and South Korea, partially offset by decreases in Mexico and our sub-distributor relationship in South Africa. On a constant currency basis, transaction dollar volume increased 13.4% and 15.6% for the
second
quarter and
first 24 weeks of 2016
, respectively.
|
•
|
Prepaid and processing revenues as a percentage of transaction dollar volume
—As a result of our adoption of ASU 2016-04, we recognized $1.4 and $2.5 million of breakage revenue in the
second
quarter and
first 24 weeks of 2016
, respectively. Excluding this benefit, the prepaid and processing revenue rates were 10.7% and 10.8% for the
second
quarter and
first 24 weeks of 2016
, respectively. The prepaid and processing revenue rate decreased due to an increase in the proportion of products sold in Germany which generates a lower prepaid and processing revenue rate.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—The adoption of ASU 2016-04 decreased the partner distribution expense rate for both
second
quarter and
first 24 weeks of 2016
, since certain cards for which we record breakage revenue are higher margin products. Excluding this benefit, the partner distribution expense rate increased to 79.8% and 79.5% for the
second
quarter and
first 24 weeks of 2016
, respectively, due to an increase in the proportion of sales through sub-distributor relationships, primarily Japan (which have higher commission share arrangements but for which we incur minimal other operating expenses), partially offset by increase in proportion of sales in Germany where we have lower commission sharing arrangements.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
61,872
|
|
|
$
|
38,959
|
|
|
$
|
22,913
|
|
|
58.8
|
%
|
Partner distribution expense
|
5,050
|
|
|
3,436
|
|
|
1,614
|
|
|
47.0
|
%
|
|||
Operating revenues net of Partner distribution expense
|
$
|
56,822
|
|
|
$
|
35,523
|
|
|
$
|
21,299
|
|
|
60.0
|
%
|
Transaction dollar volume
|
$
|
498,112
|
|
|
$
|
415,662
|
|
|
$
|
82,450
|
|
|
19.8
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
10.4
|
%
|
|
8.9
|
%
|
|
1.5
|
%
|
|
16.9
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
9.8
|
%
|
|
9.3
|
%
|
|
0.5
|
%
|
|
5.4
|
%
|
|
24 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
123,148
|
|
|
$
|
79,358
|
|
|
$
|
43,790
|
|
|
55.2
|
%
|
Partner distribution expense
|
7,842
|
|
|
7,997
|
|
|
(155
|
)
|
|
(1.9
|
)%
|
|||
Operating revenues net of Partner distribution expense
|
$
|
115,306
|
|
|
$
|
71,361
|
|
|
$
|
43,945
|
|
|
61.6
|
%
|
Transaction dollar volume
|
$
|
999,936
|
|
|
$
|
917,857
|
|
|
$
|
82,079
|
|
|
8.9
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
10.3
|
%
|
|
8.4
|
%
|
|
1.9
|
%
|
|
22.6
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
7.6
|
%
|
|
10.4
|
%
|
|
(2.8
|
)%
|
|
(26.9
|
)%
|
•
|
Transaction dollar volume
—Increased for the
second
quarter of 2016 due to our acquisition of Achievers in the third quarter of 2015 and increases in e-Commerce sales, primarily due to our acquisition of GiftCards in the first quarter of 2016 and Extrameasures in the second quarter of 2016, partially offset by the loss of certain business clients which had lower margin programs.
|
•
|
Prepaid and processing revenues as a percentage of transaction dollar volume
—In the first quarter of 2016, we entered into a contractual amendment with one of our issuing banks to settle our right to receive future fees for cards issued under a legacy contract. The amendment resulted in a one-time benefit of $4.3 million which we recognized in
Program and other fees
. Excluding this benefit, our prepaid and processing revenue rate was 9.9% for the
first 24 weeks of 2016
. Additionally, in the
second
quarter of 2016, we transitioned cards sold from our acquisition of GiftCards to a program management fee arrangement, which covered cards sold in the first quarter of 2016, resulting in approximately $1.6 million of revenue that we would have recognized in the first quarter if the amendment had been effective at the time we acquired GiftCards. Excluding the impact for revenue related to the first quarter, the prepaid and processing revenue rate was 10.1% for
second
quarter of 2016. Excluding these benefits, our prepaid and processing revenue rate increased for both
second
quarter and
first 24 weeks of 2016
due to our acquisition of Achievers, which generates a higher prepaid and processing revenue rate from its software revenue and the loss of certain business clients which had lower margin programs.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenue
—Changes in the partner distribution expense rate reflect changes in transaction volume sold through business clients for which we recognize net pricing discounts as an expense.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|||||||
Partner distribution expense
|
191,231
|
|
|
176,987
|
|
|
14,244
|
|
|
8.0
|
%
|
|||
Processing and services
|
76,134
|
|
|
65,818
|
|
|
10,316
|
|
|
15.7
|
%
|
|||
Sales and marketing
|
60,511
|
|
|
63,106
|
|
|
(2,595
|
)
|
|
(4.1
|
)%
|
|||
Costs of products sold
|
38,309
|
|
|
32,113
|
|
|
6,196
|
|
|
19.3
|
%
|
|||
General and administrative
|
23,298
|
|
|
21,302
|
|
|
1,996
|
|
|
9.4
|
%
|
|||
Transition and acquisition
|
641
|
|
|
641
|
|
|
—
|
|
|
—
|
%
|
|||
Amortization of acquisition intangibles
|
15,259
|
|
|
5,503
|
|
|
9,756
|
|
|
177.3
|
%
|
|||
Change in fair value of contingent consideration
|
800
|
|
|
(3,428
|
)
|
|
4,228
|
|
|
N/M
|
||||
Total operating expenses
|
$
|
406,183
|
|
|
$
|
362,042
|
|
|
$
|
44,141
|
|
|
12.2
|
%
|
|
24 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|||||||
Partner distribution expense
|
363,386
|
|
|
332,341
|
|
|
31,045
|
|
|
9.3
|
%
|
|||
Processing and services
|
149,241
|
|
|
130,026
|
|
|
19,215
|
|
|
14.8
|
%
|
|||
Sales and marketing
|
113,849
|
|
|
106,699
|
|
|
7,150
|
|
|
6.7
|
%
|
|||
Costs of products sold
|
74,041
|
|
|
57,016
|
|
|
17,025
|
|
|
29.9
|
%
|
|||
General and administrative
|
47,629
|
|
|
40,050
|
|
|
7,579
|
|
|
18.9
|
%
|
|||
Transition and acquisition
|
1,586
|
|
|
816
|
|
|
770
|
|
|
94.4
|
%
|
|||
Amortization of acquisition intangibles
|
25,157
|
|
|
11,477
|
|
|
13,680
|
|
|
119.2
|
%
|
|||
Change in fair value of contingent consideration
|
800
|
|
|
(7,567
|
)
|
|
8,367
|
|
|
N/M
|
||||
Total operating expenses
|
$
|
775,689
|
|
|
$
|
670,858
|
|
|
$
|
104,831
|
|
|
15.6
|
%
|
•
|
$4.2 million
increase for technology and operations personnel costs (
$11.2 million
for the
first 24 weeks of 2016
), including employee and contractor compensation, benefits and travel related costs;
|
•
|
$3.3 million
increase for our technology infrastructure (
$5.9 million
for the
first 24 weeks of 2016
), including depreciation of capitalized software and related hardware, data center lease, hosting and connectivity, activation transaction processing and other equipment costs;
|
•
|
$1.7 million
increase for our program management services (
$1.2 million
for the
first 24 weeks of 2016
), including card production, redemption transaction processing and customer care primarily for our Visa gift and open loop incentive cards, reflecting the increase in open loop cards sold in our Incentives & Rewards segment, partially offset by the decrease in the US Retail segment due to restrictions at our non-EMV compliant retail distribution partners;
|
•
|
$2.3 million
increase in other net costs (
$2.0 million
for the
first 24 weeks of 2016
);
|
•
|
$1.1 million
decrease in costs for maintaining our distribution network (
$1.1 million
for the
first 24 weeks of 2016
), including fulfillment and merchandising expenses.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|||||||
Interest income and other income (expense), net
|
$
|
486
|
|
|
$
|
284
|
|
|
$
|
202
|
|
|
71.1
|
%
|
Interest expense
|
(4,118
|
)
|
|
(2,578
|
)
|
|
(1,540
|
)
|
|
59.7
|
%
|
|||
Total other income (expense)
|
$
|
(3,632
|
)
|
|
$
|
(2,294
|
)
|
|
$
|
(1,338
|
)
|
|
58.3
|
%
|
INCOME TAX EXPENSE (BENEFIT)
|
$
|
(7,290
|
)
|
|
$
|
5,105
|
|
|
$
|
(12,395
|
)
|
|
(242.8
|
)%
|
EFFECTIVE TAX RATE
|
39.2
|
%
|
|
64.5
|
%
|
|
(25.3
|
)%
|
|
|
|
24 weeks ended
|
|
|
|
|
|||||||||
|
June 18, 2016
|
|
June 20, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|||||||
Interest income and other income (expense), net
|
$
|
898
|
|
|
$
|
(517
|
)
|
|
$
|
1,415
|
|
|
(273.7
|
)%
|
Interest expense
|
(8,184
|
)
|
|
(5,335
|
)
|
|
(2,849
|
)
|
|
53.4
|
%
|
|||
Total other income (expense)
|
$
|
(7,286
|
)
|
|
$
|
(5,852
|
)
|
|
$
|
(1,434
|
)
|
|
24.5
|
%
|
INCOME TAX EXPENSE (BENEFIT)
|
$
|
(10,527
|
)
|
|
$
|
7,725
|
|
|
$
|
(18,252
|
)
|
|
(236.3
|
)%
|
EFFECTIVE TAX RATE
|
41.6
|
%
|
|
50.6
|
%
|
|
(9.0
|
)%
|
|
|
|
24 weeks ended
|
||||||
|
June 18, 2016
|
|
June 20, 2015
|
||||
|
(in thousands)
|
||||||
Net cash used in operating activities
|
$
|
(643,277
|
)
|
|
$
|
(595,243
|
)
|
Net cash used in investing activities
|
(166,569
|
)
|
|
(23,811
|
)
|
||
Net cash provided by (used in) financing activities
|
154,610
|
|
|
(10,988
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
4,648
|
|
|
(4,840
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(650,588
|
)
|
|
$
|
(634,882
|
)
|
•
|
pre-tax income, adjusted for noncash reconciling items (excluding deferred income taxes), decreased
$13.5 million
, or
19.8%
, to
$54.7 million
from
$68.3 million
, reflecting higher operating expenses relative to our increase in operating revenues due to the impact on revenue derived at non-EMV compliant retail distribution partners;
|
•
|
offset by a decrease of
$12.6 million
in our income tax payments to
$6.2 million
in net refunds for the
24 weeks ended
June 18, 2016
from
$6.4 million
payment for the
24 weeks ended
June 20, 2015
, primarily due to settlement of income tax receivables from Safeway related to periods before our initial public offering and our use of net operating loss carryforwards; and
|
•
|
use of cash for non-settlement related operating assets and liabilities totaled
$23.5 million
and
$23.5 million
, for the
24 weeks ended
June 18, 2016
and
June 20, 2015
, respectively. The use of cash for the
24 weeks ended
June 18, 2016
includes payments of
$9.1 million
for acquisition-related liabilities that we assumed in conjunction with our acquisitions of GiftCards and NimbleCommerce that we paid upon closing.
|
Period
|
|
Total Number of Shares Purchased (1)
|
|
Average Price Paid per Share (2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(3)
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
March 27, 2016 to April 23, 2016
|
|
4,497
|
|
|
$
|
33.02
|
|
|
—
|
|
|
$
|
—
|
|
April 24, 2016 to May 21, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
May 22, 2016 to June 18, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Total
|
|
4,497
|
|
|
$
|
33.02
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
This table does not include shares of Common Stock that we withheld in order to satisfy minimum tax withholding requirements in connection with the vesting of restricted stock units or exercise of options or stock appreciation rights. The numbers represent the shares of Common Stock that we withheld in order to satisfy minimum tax withholding requirements in connection with the vesting of restricted stock awards.
|
(2)
|
Average price paid per shares of Common Stock does not include brokerage commissions.
|
(3)
|
The Company does not have any share repurchase program.
|
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 No. 4 to Servicing Agreement, dated as of May 6, 2016, between Blackhawk Network, Inc. and MetaBank, dba Meta Payment Systems.
|
|
|
|
|
|
|
|
|
|
X
|
10.2†
|
|
Amendment No. 5 to Servicing Agreement, dated as of June 16, 2016, between Blackhawk Network, Inc. and MetaBank, dba Meta Payment Systems.
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification Required Under Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification Required Under Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
|
|
|
|
X
|
32.1*
|
|
Certification 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
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
†
|
Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the SEC.
|
*
|
The certification attached as Exhibit 32.1 to this report is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this report), irrespective of any general incorporation language contained in such filing.
|
1.
|
The following sentence will be added to the end of Section 3.1:
|
2.
|
The first sentence of Section 9.1 is hereby deleted in its entirety and replaced with the following:
|
3.
|
Section 9.4 Suspension Rights is hereby deleted in its entirety and replaced with the following:
|
4.
|
Section 14.8 Notices is hereby deleted in its entirety and replaced with the following:
|
Bank to:
|
MetaBank
d/b/a Meta Payment Systems
5501 S. Broadband Lane
Sioux Falls, SD 57108
Attention: General Counsel
Facsimile Number: (605) 338-0596
|
Servicer to:
|
Chief Executive Officer
Blackhawk Network, Inc.
6220 Stoneridge Mall Road
Pleasanton, CA 94588
Facsimile Number: (925) 226-9083
|
With Copy to:
|
Blackhawk Network, Inc.
6220 Stoneridge Mall Road
Pleasanton, CA 94588
Attn: Legal Department – General Counsel
Facsimile Number: (925) 226-9728
|
5.
|
Schedule E is hereby added to the Agreement as set forth on
Attachment 1
to this Amendment No. 4 and the following paragraph is added immediately following the first paragraph of Section II(b) of Schedule A to the Agreement, as amended by Amendment No. 3 to the Servicing Agreement:
|
6.
|
Schedule D to the Agreement is hereby deleted in its entirety.
|
7.
|
Section II(d) of Schedule A is hereby deleted in its entirety and replaced with the following:
|
8.
|
Except as specifically modified by this Amendment No. 4, the Agreement shall remain in full force and effect. This Amendment No. 4 may not be amended or modified except pursuant to a written agreement signed by each of the Parties hereto. This Amendment shall bind, and inure to the benefit of, Servicer and Bank and their successors and permitted assigns. This Amendment No. 4 may be executed in counterparts, which execution may be by facsimile or other electronic means, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
|
Blackhawk Network, Inc.
|
|
MetaBank, dba Meta Payment Systems
|
||
|
|
|
|
|
By:
|
/s/ Jerry Ulrich
|
|
By:
|
/s/ Brad Hanson
|
Name:
|
Jerry Ulrich
|
|
Name:
|
Brad Hanson
|
Title:
|
CFO&CAO
|
|
Title:
|
President
|
Date:
|
5/6/2016
|
|
Date:
|
5/6/2016
|
Calendar Quarter of Card Activation
|
Applicable Supplemental Fee Rate*
|
|
[**]
|
[**]
|
|
[**]
|
[**]
|
|
[**]
|
[**]
|
|
[**]
|
[**]
|
|
[**]
|
[**]
|
|
[**]
|
[**]
|
|
[**]
|
[**]
|
|
[**]
|
[**]
|
|
AFTER [**]
|
[**]
|
|
•
|
The calculated Supplemental Fee is payable [**].
|
I.
|
Definitions
. Section 1.1 of the Agreement if hereby amended by adding or amending the following definitions:
|
II.
|
Reporting and Compensation
. Only with regard to certain [**] retail consumer gift card program(s) (“[**]”), the following is hereby added as Section II.A and II.B of Schedule A of the Agreement:
|
1.
|
[**]
.
Bank shall provide a monthly electronic statement, no later than [**] of each month (if a business day, or if not, the next business day), setting forth the following information for the immediately preceding calendar month: [**].
|
2.
|
[**]
.
|
a.
|
Servicer shall provide a report (the “[**]”) to Bank within [**] days of the last day (if a business day, or if not, the next business day) of each calendar month (the “[**]”) setting forth [**].
|
b.
|
For illustration purposes only, if a [**].
|
3.
|
[**]
.
Servicer shall provide a report (the “[**]”) to Bank within [**]:
|
a.
|
[**] a report for each [**].
|
1.
|
[**]
.
As compensation for services provided pursuant to this Agreement with respect to [**], Bank shall pay to Servicer a sum (such sum, the “[**]”) equal to the total [**]. Bank shall pay the [**] to Servicer as follows:
|
a.
|
[**]: Bank shall pay to Servicer a [**] equal to the [**] in accordance with the provisions of Section II(b) of Schedule A to the Agreement, as amended by Amendment No. 3 and Amendment No. 4; and
|
b.
|
[**]:
|
(1)
|
[**]:
|
[a]
|
[**].
|
[b]
|
[**].
|
Blackhawk Network, Inc.
|
|
MetaBank, dba Meta Payment Systems
|
||
|
|
|
|
|
By:
|
/s/ Jerry Ulrich
|
|
By:
|
/s/ Ian Stromberg
|
Name:
|
Jerry Ulrich
|
|
Name:
|
Ian Stromberg
|
Title:
|
CFO
|
|
Title:
|
SVP
|
Date:
|
6/16/2016
|
|
Date:
|
6/16/2016
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Blackhawk Network Holdings, Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
|
a)
|
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;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
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
|
d)
|
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; and
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
Date: July 28, 2016
|
|
/s/ Talbott Roche
|
Talbott Roche
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Blackhawk Network Holdings, Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
|
a)
|
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;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
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
|
d)
|
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; and
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
Date: July 28, 2016
|
|
/s/ Jerry Ulrich
|
Jerry Ulrich
|
Chief Financial Officer and Chief Administrative Officer
|
(Principal Financial Officer)
|
1.
|
The Company’s Quarterly Report on Form 10-Q for the period ended
June 18, 2016
(the “Quarterly Report”), to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and
|
2.
|
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Talbott Roche
|
|
/s/ Jerry Ulrich
|
Talbott Roche
|
|
Jerry Ulrich
|
President and Chief Executive Officer
|
|
Chief Financial Officer and Chief Administrative Officer
|
(Principal Executive Officer)
|
|
(Principal Financial Officer)
|