|
|
|
ý
|
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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||
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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.
|
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Item 5.
|
||
Item 6.
|
||
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September 10, 2016
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January 2, 2016
|
|
September 12, 2015
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
300,349
|
|
|
$
|
914,576
|
|
|
$
|
214,722
|
|
Restricted cash
|
2,500
|
|
|
3,189
|
|
|
43,043
|
|
|||
Settlement receivables, net
|
275,471
|
|
|
626,077
|
|
|
240,273
|
|
|||
Accounts receivable, net
|
199,552
|
|
|
241,729
|
|
|
188,912
|
|
|||
Other current assets
|
123,919
|
|
|
103,319
|
|
|
107,950
|
|
|||
Total current assets
|
901,791
|
|
|
1,888,890
|
|
|
794,900
|
|
|||
Property, equipment and technology, net
|
168,865
|
|
|
159,357
|
|
|
154,085
|
|
|||
Intangible assets, net
|
293,034
|
|
|
240,898
|
|
|
230,213
|
|
|||
Goodwill
|
508,607
|
|
|
402,489
|
|
|
382,803
|
|
|||
Deferred income taxes
|
352,683
|
|
|
339,558
|
|
|
361,284
|
|
|||
Other assets
|
69,039
|
|
|
81,764
|
|
|
78,294
|
|
|||
TOTAL ASSETS
|
$
|
2,294,019
|
|
|
$
|
3,112,956
|
|
|
$
|
2,001,579
|
|
|
|
|
|
|
|
||||||
See accompanying notes to condensed consolidated financial statements
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(In thousands, except par value)
(Unaudited)
|
|||||||||||
|
September 10, 2016
|
|
January 2, 2016
|
|
September 12, 2015
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Settlement payables
|
$
|
522,133
|
|
|
$
|
1,605,021
|
|
|
$
|
469,590
|
|
Consumer and customer deposits
|
115,085
|
|
|
84,761
|
|
|
102,633
|
|
|||
Accounts payable and accrued operating expenses
|
103,920
|
|
|
119,087
|
|
|
112,753
|
|
|||
Deferred revenue
|
113,867
|
|
|
113,458
|
|
|
91,474
|
|
|||
Note payable, current portion
|
9,846
|
|
|
37,296
|
|
|
37,378
|
|
|||
Notes payable to Safeway
|
3,239
|
|
|
4,129
|
|
|
13,129
|
|
|||
Bank line of credit
|
—
|
|
|
—
|
|
|
100,000
|
|
|||
Other current liabilities
|
48,630
|
|
|
57,342
|
|
|
43,320
|
|
|||
Total current liabilities
|
916,720
|
|
|
2,021,094
|
|
|
970,277
|
|
|||
Deferred income taxes
|
19,930
|
|
|
18,652
|
|
|
14,735
|
|
|||
Note payable
|
137,848
|
|
|
324,412
|
|
|
325,151
|
|
|||
Convertible notes payable
|
425,833
|
|
|
—
|
|
|
—
|
|
|||
Other liabilities
|
25,429
|
|
|
14,700
|
|
|
4,867
|
|
|||
Total liabilities
|
1,525,760
|
|
|
2,378,858
|
|
|
1,315,030
|
|
|||
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; 55,368, 55,794 and 54,641 shares outstanding, respectively
|
55
|
|
|
56
|
|
|
55
|
|
|||
Additional paid-in capital
|
594,739
|
|
|
561,939
|
|
|
547,230
|
|
|||
Accumulated other comprehensive loss
|
(34,398
|
)
|
|
(40,195
|
)
|
|
(31,535
|
)
|
|||
Retained earnings
|
203,791
|
|
|
207,973
|
|
|
166,370
|
|
|||
Total Blackhawk Network Holdings, Inc. equity
|
764,187
|
|
|
729,773
|
|
|
682,120
|
|
|||
Non-controlling interests
|
4,072
|
|
|
4,325
|
|
|
4,429
|
|
|||
Total stockholders’ equity
|
768,259
|
|
|
734,098
|
|
|
686,549
|
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
2,294,019
|
|
|
$
|
3,112,956
|
|
|
$
|
2,001,579
|
|
|
12 weeks ended
|
|
36 weeks ended
|
||||||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
September 10, 2016
|
|
September 12, 2015
|
||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
||||||||
Commissions and fees
|
$
|
248,138
|
|
|
$
|
231,492
|
|
|
$
|
750,693
|
|
|
$
|
709,339
|
|
Program and other fees
|
64,857
|
|
|
61,416
|
|
|
207,718
|
|
|
171,942
|
|
||||
Marketing
|
17,943
|
|
|
16,311
|
|
|
52,098
|
|
|
59,112
|
|
||||
Product sales
|
30,622
|
|
|
43,446
|
|
|
108,719
|
|
|
104,251
|
|
||||
Total operating revenues
|
361,560
|
|
|
352,665
|
|
|
1,119,228
|
|
|
1,044,644
|
|
||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Partner distribution expense
|
178,363
|
|
|
161,852
|
|
|
541,749
|
|
|
494,193
|
|
||||
Processing and services
|
75,090
|
|
|
68,246
|
|
|
224,331
|
|
|
198,272
|
|
||||
Sales and marketing
|
52,327
|
|
|
49,954
|
|
|
166,176
|
|
|
156,653
|
|
||||
Costs of products sold
|
29,122
|
|
|
40,577
|
|
|
103,163
|
|
|
97,593
|
|
||||
General and administrative
|
22,501
|
|
|
22,136
|
|
|
70,130
|
|
|
62,186
|
|
||||
Transition and acquisition
|
2,574
|
|
|
5,275
|
|
|
4,160
|
|
|
6,091
|
|
||||
Amortization of acquisition intangibles
|
10,376
|
|
|
6,875
|
|
|
35,533
|
|
|
18,352
|
|
||||
Change in fair value of contingent consideration
|
1,300
|
|
|
—
|
|
|
2,100
|
|
|
(7,567
|
)
|
||||
Total operating expenses
|
371,653
|
|
|
354,915
|
|
|
1,147,342
|
|
|
1,025,773
|
|
||||
OPERATING INCOME (LOSS)
|
(10,093
|
)
|
|
(2,250
|
)
|
|
(28,114
|
)
|
|
18,871
|
|
||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||||||||
Interest income and other income (expense), net
|
2,360
|
|
|
(1,421
|
)
|
|
3,258
|
|
|
(1,938
|
)
|
||||
Interest expense
|
(5,684
|
)
|
|
(3,231
|
)
|
|
(13,868
|
)
|
|
(8,566
|
)
|
||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
(13,417
|
)
|
|
(6,902
|
)
|
|
(38,724
|
)
|
|
8,367
|
|
||||
INCOME TAX EXPENSE (BENEFIT)
|
(8,357
|
)
|
|
(3,290
|
)
|
|
(18,884
|
)
|
|
4,435
|
|
||||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(5,060
|
)
|
|
(3,612
|
)
|
|
(19,840
|
)
|
|
3,932
|
|
||||
Loss (income) attributable to non-controlling interests, net of tax
|
(42
|
)
|
|
(3
|
)
|
|
(152
|
)
|
|
63
|
|
||||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(5,102
|
)
|
|
$
|
(3,615
|
)
|
|
$
|
(19,992
|
)
|
|
$
|
3,995
|
|
EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.09
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
0.07
|
|
Diluted
|
$
|
(0.09
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
0.07
|
|
Weighted average shares outstanding—basic
|
55,668
|
|
|
54,467
|
|
|
55,851
|
|
|
53,941
|
|
||||
Weighted average shares outstanding—diluted
|
55,668
|
|
|
54,467
|
|
|
55,851
|
|
|
55,994
|
|
|
12 weeks ended
|
|
36 weeks ended
|
||||||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
September 10, 2016
|
|
September 12, 2015
|
||||||||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
$
|
(5,060
|
)
|
|
$
|
(3,612
|
)
|
|
$
|
(19,840
|
)
|
|
$
|
3,932
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Currency translation adjustments
|
(2,504
|
)
|
|
(7,104
|
)
|
|
5,547
|
|
|
(12,386
|
)
|
||||
COMPREHENSIVE INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(7,564
|
)
|
|
(10,716
|
)
|
|
(14,293
|
)
|
|
(8,454
|
)
|
||||
Comprehensive loss (income) attributable to non-controlling interests, net of tax
|
129
|
|
|
361
|
|
|
98
|
|
|
384
|
|
||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(7,435
|
)
|
|
$
|
(10,355
|
)
|
|
$
|
(14,195
|
)
|
|
$
|
(8,070
|
)
|
|
36 weeks ended
|
||||||
|
September 10, 2016
|
|
September 12, 2015
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss) before allocation to non-controlling interests
|
$
|
(19,840
|
)
|
|
$
|
3,932
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization of property, equipment and technology
|
33,096
|
|
|
27,765
|
|
||
Amortization of intangibles
|
38,988
|
|
|
21,634
|
|
||
Amortization of deferred program and contract costs
|
18,805
|
|
|
20,032
|
|
||
Employee stock-based compensation expense
|
24,865
|
|
|
19,856
|
|
||
Change in fair value of contingent consideration
|
2,100
|
|
|
(7,567
|
)
|
||
Deferred income taxes
|
—
|
|
|
13,371
|
|
||
Other
|
5,780
|
|
|
5,496
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Settlement receivables
|
359,398
|
|
|
274,941
|
|
||
Settlement payables
|
(1,091,151
|
)
|
|
(906,181
|
)
|
||
Accounts receivable, current and long-term
|
44,585
|
|
|
(3,573
|
)
|
||
Other current assets
|
3,940
|
|
|
(20,562
|
)
|
||
Other assets
|
(9,299
|
)
|
|
(9,996
|
)
|
||
Consumer and customer deposits
|
13,963
|
|
|
(31,140
|
)
|
||
Accounts payable and accrued operating expenses
|
(28,775
|
)
|
|
(9,695
|
)
|
||
Deferred revenue
|
2,703
|
|
|
(8,105
|
)
|
||
Other current and long-term liabilities
|
(24,912
|
)
|
|
4,385
|
|
||
Income taxes, net
|
(13,883
|
)
|
|
(15,492
|
)
|
||
Net cash used in operating activities
|
(639,637
|
)
|
|
(620,899
|
)
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for property, equipment and technology
|
(33,522
|
)
|
|
(37,310
|
)
|
||
Business acquisitions, net of cash acquired
|
(144,284
|
)
|
|
(78,394
|
)
|
||
Investment in unconsolidated entities
|
(3,901
|
)
|
|
—
|
|
||
Change in restricted cash
|
689
|
|
|
(38,043
|
)
|
||
Other
|
4,000
|
|
|
(561
|
)
|
||
Net cash used in investing activities
|
(177,018
|
)
|
|
(154,308
|
)
|
||
|
|
|
|
||||
|
|
|
|
||||
See accompanying notes to condensed consolidated financial statements
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(Unaudited)
|
|||||||
|
36 weeks ended
|
||||||
|
September 10, 2016
|
|
September 12, 2015
|
||||
FINANCING ACTIVITIES:
|
|
|
|
||||
Payments for acquisition liability
|
—
|
|
|
(1,811
|
)
|
||
Repayment of debt assumed in business acquisitions
|
(8,964
|
)
|
|
—
|
|
||
Proceeds from issuance of note payable
|
250,000
|
|
|
—
|
|
||
Repayment of note payable
|
(463,750
|
)
|
|
(11,250
|
)
|
||
Payments of financing costs
|
(15,926
|
)
|
|
(724
|
)
|
||
Borrowings under revolving bank line of credit
|
1,959,749
|
|
|
1,536,083
|
|
||
Repayments on revolving bank line of credit
|
(1,959,749
|
)
|
|
(1,436,083
|
)
|
||
Proceeds from convertible debt
|
500,000
|
|
|
—
|
|
||
Payments for bond hedges
|
(75,750
|
)
|
|
—
|
|
||
Proceeds from warrants
|
47,000
|
|
|
—
|
|
||
Repayment on notes payable to Safeway
|
(890
|
)
|
|
(6,320
|
)
|
||
Proceeds from issuance of common stock from exercise of employee stock options and employee stock purchase plans
|
4,491
|
|
|
8,055
|
|
||
Other stock-based compensation related
|
(2,135
|
)
|
|
(675
|
)
|
||
Repurchase of common stock
|
(34,845
|
)
|
|
—
|
|
||
Other
|
(155
|
)
|
|
(1,494
|
)
|
||
Net cash provided by financing activities
|
199,076
|
|
|
85,781
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
3,352
|
|
|
(7,467
|
)
|
||
Decrease in cash and cash equivalents
|
(614,227
|
)
|
|
(696,893
|
)
|
||
Cash and cash equivalents—beginning of period
|
914,576
|
|
|
911,615
|
|
||
Cash and cash equivalents—end of period
|
$
|
300,349
|
|
|
$
|
214,722
|
|
|
|
|
|
||||
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
|
893
|
|
|
Debt
|
(5,807
|
)
|
|
Identifiable technology and intangible assets
|
52,460
|
|
|
Goodwill
|
67,706
|
|
|
Total purchase consideration
|
$
|
103,948
|
|
|
Fair Value
|
|
Useful Life
|
||
Customer relationships
|
$
|
27,570
|
|
|
10 years
|
Backlog
|
10,780
|
|
|
3 years
|
|
Domain name
|
10,520
|
|
|
10 years
|
|
Technology
|
3,590
|
|
|
5 years
|
|
Total identifiable technology and intangible assets
|
$
|
52,460
|
|
|
|
Cash
|
$
|
14,191
|
|
Settlement receivables
|
4,884
|
|
|
Settlement payables
|
(3,272
|
)
|
|
Consumer and customer deposits
|
(18,009
|
)
|
|
Other tangible liabilities, net
|
(1,155
|
)
|
|
Debt
|
(3,157
|
)
|
|
Deferred income taxes
|
2,066
|
|
|
Identifiable technology and intangible assets
|
45,540
|
|
|
Goodwill
|
37,525
|
|
|
Total purchase consideration
|
$
|
78,613
|
|
|
Fair Value
|
|
Useful Life
|
||
Customer relationships
|
$
|
39,230
|
|
|
10 years
|
Backlog
|
1,610
|
|
|
3 years
|
|
Technology
|
4,700
|
|
|
5 years
|
|
Total identifiable technology and intangible assets
|
$
|
45,540
|
|
|
|
|
12 weeks ended
|
|
36 weeks ended
|
||||||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
September 10, 2016
|
|
September 12, 2015
|
||||||||
Total revenues
|
$
|
364,129
|
|
|
$
|
364,400
|
|
|
$
|
1,127,178
|
|
|
$
|
1,068,882
|
|
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
(3,626
|
)
|
|
(3,959
|
)
|
|
(14,469
|
)
|
|
(1,124
|
)
|
||||
Pro forma EPS—Basic
|
$
|
(0.07
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.02
|
)
|
Pro forma EPS—Diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.02
|
)
|
|
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
|
|
|
September 10, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
5,112
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,112
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,200
|
|
|
$
|
22,200
|
|
|
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
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
September 12, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
5,070
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,070
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
36 weeks ended
|
||||||
|
September 10, 2016
|
|
September 12, 2015
|
||||
Contingent Consideration
|
|
|
|
||||
Balance, beginning of period
|
$
|
—
|
|
|
$
|
7,567
|
|
Issuance of contingent consideration
|
20,100
|
|
|
—
|
|
||
Change in fair value of contingent consideration
|
2,100
|
|
|
(7,567
|
)
|
||
Balance, end of period
|
$
|
22,200
|
|
|
$
|
—
|
|
|
September 10, 2016
|
|
January 2, 2016
|
|
September 12, 2015
|
||||||
Other current assets:
|
|
|
|
|
|
||||||
Inventory
|
$
|
35,634
|
|
|
$
|
36,528
|
|
|
$
|
47,272
|
|
Deferred expenses
|
12,099
|
|
|
18,182
|
|
|
10,854
|
|
|||
Income tax receivables
|
38,427
|
|
|
14,831
|
|
|
20,632
|
|
|||
Other
|
37,759
|
|
|
33,778
|
|
|
29,192
|
|
|||
Total other current assets
|
$
|
123,919
|
|
|
$
|
103,319
|
|
|
$
|
107,950
|
|
Other assets:
|
|
|
|
|
|
||||||
Deferred program and contract costs
|
$
|
44,388
|
|
|
$
|
50,717
|
|
|
$
|
52,428
|
|
Other receivables
|
1,390
|
|
|
2,281
|
|
|
4,734
|
|
|||
Income taxes receivable
|
—
|
|
|
6,155
|
|
|
6,368
|
|
|||
Deferred financing costs
|
2,871
|
|
|
2,100
|
|
|
2,002
|
|
|||
Other
|
20,390
|
|
|
20,511
|
|
|
12,762
|
|
|||
Total other assets
|
$
|
69,039
|
|
|
$
|
81,764
|
|
|
$
|
78,294
|
|
Other current liabilities
:
|
|
|
|
|
|
||||||
Payroll and related liabilities
|
$
|
25,425
|
|
|
$
|
34,530
|
|
|
$
|
23,103
|
|
Income taxes payable
|
3,158
|
|
|
3,216
|
|
|
2,122
|
|
|||
Acquisition liability
|
11,250
|
|
|
—
|
|
|
607
|
|
|||
Other payables and accrued liabilities
|
8,797
|
|
|
19,596
|
|
|
17,488
|
|
|||
Total other current liabilities
|
$
|
48,630
|
|
|
$
|
57,342
|
|
|
$
|
43,320
|
|
Other liabilities:
|
|
|
|
|
|
||||||
Acquisition liability
|
$
|
10,950
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Payable to content provider
|
—
|
|
|
—
|
|
|
825
|
|
|||
Income taxes payable
|
6,213
|
|
|
4,249
|
|
|
2,418
|
|
|||
Deferred income and other liabilities
|
8,266
|
|
|
10,451
|
|
|
1,624
|
|
|||
Total other liabilities
|
$
|
25,429
|
|
|
$
|
14,700
|
|
|
$
|
4,867
|
|
|
September 10, 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
|
34,427
|
|
|
—
|
|
|
33,279
|
|
|
67,706
|
|
||||
Acquisition of NimbleCommerce
|
10,365
|
|
|
—
|
|
|
—
|
|
|
10,365
|
|
||||
Acquisition of Extrameasures
|
—
|
|
|
—
|
|
|
27,160
|
|
|
27,160
|
|
||||
Measurement period adjustment
|
—
|
|
|
—
|
|
|
(1,234
|
)
|
|
(1,234
|
)
|
||||
Foreign currency translation adjustments
|
—
|
|
|
1,639
|
|
|
482
|
|
|
2,121
|
|
||||
Balance, end of period
|
$
|
90,192
|
|
|
$
|
50,795
|
|
|
$
|
367,620
|
|
|
$
|
508,607
|
|
BALANCE—January 2, 2016
|
$
|
561,939
|
|
Cumulative adjustment upon modified retrospective adoption of ASU 2016-09 (see
Note 1—The Company and Significant Accounting Policies)
|
650
|
|
|
Employee-related stock-based activity
|
28,940
|
|
|
Equity component of convertible notes issuance (see
Note 3—Financing)
|
63,434
|
|
|
Equity component of convertible notes issuance costs (see
Note 3—Financing)
|
(1,792
|
)
|
|
Purchase of convertible notes hedges (see
Note 3—Financing)
|
(75,750
|
)
|
|
Proceeds from sale of warrants (see
Note 3—Financing)
|
47,000
|
|
|
Deferred tax assets recognized for convertible notes (see
Note 3—Financing)
|
5,161
|
|
|
Repurchase of common stock (996 shares at an average price of $34.98 per share)
|
(34,843
|
)
|
|
BALANCE— September 10, 2016
|
$
|
594,739
|
|
BALANCE—January 2, 2016
|
$
|
207,973
|
|
Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and 2016-09 (see
Note 1—The Company and Significant Accounting Policies)
|
15,854
|
|
|
Net loss
|
(19,992
|
)
|
|
Dividends paid
|
(44
|
)
|
|
BALANCE— September 10, 2016
|
$
|
203,791
|
|
|
12 weeks ended
|
|
36 weeks ended
|
||||||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
September 10, 2016
|
|
September 12, 2015
|
||||||||
Processing and services
|
$
|
1,364
|
|
|
$
|
1,530
|
|
|
$
|
4,259
|
|
|
$
|
4,366
|
|
Sales and marketing
|
2,759
|
|
|
2,038
|
|
|
8,600
|
|
|
5,523
|
|
||||
Cost of products sold
|
31
|
|
|
13
|
|
|
89
|
|
|
25
|
|
||||
General and administrative
|
4,139
|
|
|
3,536
|
|
|
11,917
|
|
|
9,942
|
|
||||
Total stock-based compensation expense
|
$
|
8,293
|
|
|
$
|
7,117
|
|
|
$
|
24,865
|
|
|
$
|
19,856
|
|
|
12 weeks ended
|
||||||||||||||||||
|
September 10, 2016
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
197,081
|
|
|
$
|
100,069
|
|
|
$
|
64,410
|
|
|
$
|
—
|
|
|
$
|
361,560
|
|
Partner distribution expense
|
103,601
|
|
|
69,841
|
|
|
4,921
|
|
|
—
|
|
|
178,363
|
|
|||||
Operating revenues, net of Partner distribution expense
|
93,480
|
|
|
30,228
|
|
|
59,489
|
|
|
—
|
|
|
183,197
|
|
|||||
Other operating expenses
|
58,192
|
|
|
25,158
|
|
|
50,779
|
|
|
59,161
|
|
|
193,290
|
|
|||||
Segment profit (loss) / Operating income (loss)
|
$
|
35,288
|
|
|
$
|
5,070
|
|
|
$
|
8,710
|
|
|
$
|
(59,161
|
)
|
|
(10,093
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(3,324
|
)
|
|||||||||
Loss before income tax expense
|
|
|
|
|
|
|
|
|
$
|
(13,417
|
)
|
||||||||
Non-cash charges
|
$
|
1,570
|
|
|
$
|
772
|
|
|
$
|
7,562
|
|
|
26,715
|
|
|
|
|
|
12 weeks ended
|
||||||||||||||||||
|
September 12, 2015
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
214,941
|
|
|
$
|
83,671
|
|
|
$
|
54,053
|
|
|
$
|
—
|
|
|
$
|
352,665
|
|
Partner distribution expense
|
101,890
|
|
|
56,972
|
|
|
2,990
|
|
|
—
|
|
|
161,852
|
|
|||||
Operating revenues, net of Partner distribution expense
|
113,051
|
|
|
26,699
|
|
|
51,063
|
|
|
—
|
|
|
190,813
|
|
|||||
Other operating expenses
|
69,877
|
|
|
22,751
|
|
|
46,674
|
|
|
53,761
|
|
|
193,063
|
|
|||||
Segment profit (loss) / Operating income (loss)
|
$
|
43,174
|
|
|
$
|
3,948
|
|
|
$
|
4,389
|
|
|
$
|
(53,761
|
)
|
|
(2,250
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(4,652
|
)
|
|||||||||
Income before income tax expense
|
|
|
|
|
|
|
|
|
$
|
(6,902
|
)
|
||||||||
Non-cash charges
|
$
|
1,270
|
|
|
$
|
431
|
|
|
$
|
6,233
|
|
|
22,934
|
|
|
|
|
36 weeks ended
|
||||||||||||||||||
|
September 10, 2016
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
652,359
|
|
|
$
|
279,311
|
|
|
$
|
187,558
|
|
|
$
|
—
|
|
|
$
|
1,119,228
|
|
Partner distribution expense
|
330,283
|
|
|
198,703
|
|
|
12,763
|
|
|
—
|
|
|
541,749
|
|
|||||
Operating revenues, net of Partner distribution expense
|
322,076
|
|
|
80,608
|
|
|
174,795
|
|
|
—
|
|
|
577,479
|
|
|||||
Other operating expenses
|
202,384
|
|
|
69,134
|
|
|
154,796
|
|
|
179,279
|
|
|
605,593
|
|
|||||
Segment profit (loss) / Operating income (loss)
|
$
|
119,692
|
|
|
$
|
11,474
|
|
|
$
|
19,999
|
|
|
$
|
(179,279
|
)
|
|
(28,114
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(10,610
|
)
|
|||||||||
Loss before income tax expense
|
|
|
|
|
|
|
|
|
$
|
(38,724
|
)
|
||||||||
Non-cash charges
|
$
|
4,976
|
|
|
$
|
3,441
|
|
|
$
|
20,932
|
|
|
80,680
|
|
|
|
|
36 weeks ended
|
||||||||||||||||||
|
September 12, 2015
|
||||||||||||||||||
|
US Retail
|
|
International Retail
|
|
Incentives & Rewards
|
|
Corporate and Unallocated
|
|
Consolidated
|
||||||||||
Total operating revenues
|
$
|
659,984
|
|
|
$
|
251,249
|
|
|
$
|
133,411
|
|
|
$
|
—
|
|
|
$
|
1,044,644
|
|
Partner distribution expense
|
313,628
|
|
|
169,578
|
|
|
10,987
|
|
|
—
|
|
|
494,193
|
|
|||||
Operating revenues, net of Partner distribution expense
|
346,356
|
|
|
81,671
|
|
|
122,424
|
|
|
—
|
|
|
550,451
|
|
|||||
Other operating expenses
|
209,856
|
|
|
73,665
|
|
|
110,462
|
|
|
137,597
|
|
|
531,580
|
|
|||||
Segment profit (loss) / Operating income (loss)
|
$
|
136,500
|
|
|
$
|
8,006
|
|
|
$
|
11,962
|
|
|
$
|
(137,597
|
)
|
|
18,871
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
(10,504
|
)
|
|||||||||
Income before income tax expense
|
|
|
|
|
|
|
|
|
$
|
8,367
|
|
||||||||
Non-cash charges
|
$
|
3,741
|
|
|
$
|
860
|
|
|
$
|
11,488
|
|
|
51,423
|
|
|
|
|
12 weeks ended
|
||||||||||||||
|
September 10, 2016
|
|
September 12, 2015
|
||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
(5,102
|
)
|
|
$
|
(5,102
|
)
|
|
$
|
(3,615
|
)
|
|
$
|
(3,615
|
)
|
Distributed and undistributed earnings allocated to participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income (loss) attributable to common stockholders
|
$
|
(5,102
|
)
|
|
$
|
(5,102
|
)
|
|
$
|
(3,615
|
)
|
|
$
|
(3,615
|
)
|
Weighted-average common shares outstanding
|
55,668
|
|
|
55,668
|
|
|
54,467
|
|
|
54,467
|
|
||||
Common share equivalents
|
|
|
—
|
|
|
|
|
|
—
|
|
|||||
Weighted-average shares outstanding
|
|
|
55,668
|
|
|
|
|
54,467
|
|
||||||
Earnings (loss) per share
|
$
|
(0.09
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.07
|
)
|
|
36 weeks ended
|
||||||||||||||
|
September 10, 2016
|
|
September 12, 2015
|
||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
(19,992
|
)
|
|
$
|
(19,992
|
)
|
|
$
|
3,995
|
|
|
$
|
3,995
|
|
Distributed and undistributed earnings allocated to participating securities
|
(15
|
)
|
|
(15
|
)
|
|
(46
|
)
|
|
(46
|
)
|
||||
Net income (loss) attributable to common stockholders
|
$
|
(20,007
|
)
|
|
$
|
(20,007
|
)
|
|
$
|
3,949
|
|
|
$
|
3,949
|
|
Weighted-average common shares outstanding
|
55,851
|
|
|
55,851
|
|
|
53,941
|
|
|
53,941
|
|
||||
Common share equivalents
|
|
|
—
|
|
|
|
|
|
2,053
|
|
|||||
Weighted-average shares outstanding
|
|
|
55,851
|
|
|
|
|
55,994
|
|
||||||
Earnings (loss) per share
|
$
|
(0.36
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
12 weeks ended
|
|
36 weeks ended
|
||||||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
September 10, 2016
|
|
September 12, 2015
|
||||||||
|
(in thousands, except percentages and per share amounts)
|
||||||||||||||
Transaction dollar volume
|
$
|
3,212,272
|
|
|
$
|
3,167,719
|
|
|
$
|
9,770,803
|
|
|
$
|
9,660,243
|
|
Prepaid and processing revenues
|
$
|
312,995
|
|
|
$
|
292,908
|
|
|
$
|
958,411
|
|
|
$
|
881,281
|
|
Prepaid and processing revenues as a % of transaction dollar volume
|
9.7
|
%
|
|
9.2
|
%
|
|
9.8
|
%
|
|
9.1
|
%
|
||||
Partner distribution expense as a % of prepaid and processing revenues
|
57.0
|
%
|
|
55.3
|
%
|
|
56.5
|
%
|
|
56.1
|
%
|
||||
Adjusted operating revenues (1)
|
$
|
168,920
|
|
|
$
|
177,108
|
|
|
$
|
537,256
|
|
|
$
|
493,945
|
|
Prepaid and processing revenues:
|
|
|
|
|
|
|
|
||||||||
Commissions and fees
|
$
|
248,138
|
|
|
$
|
231,492
|
|
|
$
|
750,693
|
|
|
$
|
709,339
|
|
Program and other fees
|
64,857
|
|
|
61,416
|
|
|
207,718
|
|
|
171,942
|
|
||||
Prepaid and processing revenues
|
$
|
312,995
|
|
|
$
|
292,908
|
|
|
$
|
958,411
|
|
|
$
|
881,281
|
|
Adjusted operating revenues:
|
|
|
|
|
|
|
|
||||||||
Total operating revenues
|
$
|
361,560
|
|
|
$
|
352,665
|
|
|
$
|
1,119,228
|
|
|
$
|
1,044,644
|
|
Revenue adjustment from purchase accounting (2)
|
3,666
|
|
|
2,606
|
|
|
11,875
|
|
|
2,606
|
|
||||
Marketing revenue
|
(17,943
|
)
|
|
(16,311
|
)
|
|
(52,098
|
)
|
|
(59,112
|
)
|
||||
Partner distribution expense
|
(178,363
|
)
|
|
(161,852
|
)
|
|
(541,749
|
)
|
|
(494,193
|
)
|
||||
Adjusted operating revenues
|
$
|
168,920
|
|
|
$
|
177,108
|
|
|
$
|
537,256
|
|
|
$
|
493,945
|
|
(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 September 10, 2016
|
|
% of Total Operating Revenues
|
|
12 Weeks Ended September 12, 2015
|
|
% of Total Operating Revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
248,138
|
|
|
68.6
|
%
|
|
$
|
231,492
|
|
|
65.6
|
%
|
Program and other fees
|
64,857
|
|
|
17.9
|
%
|
|
61,416
|
|
|
17.4
|
%
|
||
Marketing
|
17,943
|
|
|
5.0
|
%
|
|
16,311
|
|
|
4.6
|
%
|
||
Product sales
|
30,622
|
|
|
8.5
|
%
|
|
43,446
|
|
|
12.3
|
%
|
||
Total operating revenues
|
361,560
|
|
|
100.0
|
%
|
|
352,665
|
|
|
100.0
|
%
|
||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||
Partner distribution expense
|
178,363
|
|
|
49.2
|
%
|
|
161,852
|
|
|
45.9
|
%
|
||
Processing and services
|
75,090
|
|
|
20.8
|
%
|
|
68,246
|
|
|
19.4
|
%
|
||
Sales and marketing
|
52,327
|
|
|
14.5
|
%
|
|
49,954
|
|
|
14.2
|
%
|
||
Costs of products sold
|
29,122
|
|
|
8.1
|
%
|
|
40,577
|
|
|
11.5
|
%
|
||
General and administrative
|
22,501
|
|
|
6.2
|
%
|
|
22,136
|
|
|
6.3
|
%
|
||
Transition and acquisition
|
2,574
|
|
|
0.7
|
%
|
|
5,275
|
|
|
1.5
|
%
|
||
Amortization of acquisition intangibles
|
10,376
|
|
|
2.9
|
%
|
|
6,875
|
|
|
1.9
|
%
|
||
Change in fair value of contingent consideration
|
1,300
|
|
|
0.4
|
%
|
|
—
|
|
|
—
|
%
|
||
Total operating expenses
|
371,653
|
|
|
102.8
|
%
|
|
354,915
|
|
|
100.6
|
%
|
||
OPERATING INCOME (LOSS)
|
(10,093
|
)
|
|
(2.8
|
)%
|
|
(2,250
|
)
|
|
(0.6
|
)%
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||||||
Interest income and other income (expense), net
|
2,360
|
|
|
0.7
|
%
|
|
(1,421
|
)
|
|
(0.4
|
)%
|
||
Interest expense
|
(5,684
|
)
|
|
(1.6
|
)%
|
|
(3,231
|
)
|
|
(0.9
|
)%
|
||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
(13,417
|
)
|
|
(3.7
|
)%
|
|
(6,902
|
)
|
|
(2.0
|
)%
|
||
INCOME TAX EXPENSE (BENEFIT)
|
(8,357
|
)
|
|
(2.3
|
)%
|
|
(3,290
|
)
|
|
(0.9
|
)%
|
||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(5,060
|
)
|
|
(1.4
|
)%
|
|
(3,612
|
)
|
|
(1.0
|
)%
|
||
Loss (income) attributable to non-controlling interests, net of tax
|
(42
|
)
|
|
—
|
%
|
|
(3
|
)
|
|
—
|
%
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(5,102
|
)
|
|
(1.4
|
)%
|
|
$
|
(3,615
|
)
|
|
(1.0
|
)%
|
|
36 Weeks Ended September 10, 2016
|
|
% of Total Operating Revenues
|
|
36 Weeks Ended September 12, 2015
|
|
% of Total Operating Revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
750,693
|
|
|
67.1
|
%
|
|
$
|
709,339
|
|
|
67.9
|
%
|
Program and other fees
|
207,718
|
|
|
18.6
|
%
|
|
171,942
|
|
|
16.4
|
%
|
||
Marketing
|
52,098
|
|
|
4.7
|
%
|
|
59,112
|
|
|
5.7
|
%
|
||
Product sales
|
108,719
|
|
|
9.7
|
%
|
|
104,251
|
|
|
10.0
|
%
|
||
Total operating revenues
|
1,119,228
|
|
|
100.1
|
%
|
|
1,044,644
|
|
|
100.0
|
%
|
||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||
Partner distribution expense
|
541,749
|
|
|
48.3
|
%
|
|
494,193
|
|
|
47.3
|
%
|
||
Processing and services
|
224,331
|
|
|
20.0
|
%
|
|
198,272
|
|
|
19.0
|
%
|
||
Sales and marketing
|
166,176
|
|
|
14.8
|
%
|
|
156,653
|
|
|
15.0
|
%
|
||
Costs of products sold
|
103,163
|
|
|
9.2
|
%
|
|
97,593
|
|
|
9.3
|
%
|
||
General and administrative
|
70,130
|
|
|
6.3
|
%
|
|
62,186
|
|
|
6.0
|
%
|
||
Transition and acquisition
|
4,160
|
|
|
0.4
|
%
|
|
6,091
|
|
|
0.6
|
%
|
||
Amortization of acquisition intangibles
|
35,533
|
|
|
3.2
|
%
|
|
18,352
|
|
|
1.8
|
%
|
||
Change in fair value of contingent consideration
|
2,100
|
|
|
0.2
|
%
|
|
(7,567
|
)
|
|
(0.7
|
)%
|
||
Total operating expenses
|
1,147,342
|
|
|
102.4
|
%
|
|
1,025,773
|
|
|
98.3
|
%
|
||
OPERATING INCOME (LOSS)
|
(28,114
|
)
|
|
(2.5
|
)%
|
|
18,871
|
|
|
1.8
|
%
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||||||
Interest income and other income (expense), net
|
3,258
|
|
|
0.3
|
%
|
|
(1,938
|
)
|
|
(0.2
|
)%
|
||
Interest expense
|
(13,868
|
)
|
|
(1.2
|
)%
|
|
(8,566
|
)
|
|
(0.8
|
)%
|
||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
(38,724
|
)
|
|
(3.5
|
)%
|
|
8,367
|
|
|
0.8
|
%
|
||
INCOME TAX EXPENSE (BENEFIT)
|
(18,884
|
)
|
|
(1.7
|
)%
|
|
4,435
|
|
|
0.4
|
%
|
||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(19,840
|
)
|
|
(1.8
|
)%
|
|
3,932
|
|
|
0.4
|
%
|
||
Loss (income) attributable to non-controlling interests, net of tax
|
(152
|
)
|
|
—
|
%
|
|
63
|
|
|
—
|
%
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(19,992
|
)
|
|
(1.8
|
)%
|
|
$
|
3,995
|
|
|
0.4
|
%
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|||||||
Commissions and fees
|
$
|
248,138
|
|
|
$
|
231,492
|
|
|
$
|
16,646
|
|
|
7.2
|
%
|
Program and other fees
|
64,857
|
|
|
61,416
|
|
|
3,441
|
|
|
5.6
|
%
|
|||
Marketing
|
17,943
|
|
|
16,311
|
|
|
1,632
|
|
|
10.0
|
%
|
|||
Product sales
|
30,622
|
|
|
43,446
|
|
|
(12,824
|
)
|
|
(29.5
|
)%
|
|||
Total operating revenues
|
$
|
361,560
|
|
|
$
|
352,665
|
|
|
$
|
8,895
|
|
|
2.5
|
%
|
Partner distribution expense
|
178,363
|
|
|
161,852
|
|
|
16,511
|
|
|
10.2
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
183,197
|
|
|
$
|
190,813
|
|
|
$
|
(7,616
|
)
|
|
(4.0
|
)%
|
|
36 weeks ended
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|||||||
Commissions and fees
|
$
|
750,693
|
|
|
$
|
709,339
|
|
|
$
|
41,354
|
|
|
5.8
|
%
|
Program and other fees
|
207,718
|
|
|
171,942
|
|
|
35,776
|
|
|
20.8
|
%
|
|||
Marketing
|
52,098
|
|
|
59,112
|
|
|
(7,014
|
)
|
|
(11.9
|
)%
|
|||
Product sales
|
108,719
|
|
|
104,251
|
|
|
4,468
|
|
|
4.3
|
%
|
|||
Total operating revenues
|
$
|
1,119,228
|
|
|
$
|
1,044,644
|
|
|
$
|
74,584
|
|
|
7.1
|
%
|
Partner distribution expense
|
541,749
|
|
|
494,193
|
|
|
47,556
|
|
|
9.6
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
577,479
|
|
|
$
|
550,451
|
|
|
$
|
27,028
|
|
|
4.9
|
%
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
197,081
|
|
|
$
|
214,941
|
|
|
$
|
(17,860
|
)
|
|
(8.3
|
)%
|
Partner distribution expense
|
103,601
|
|
|
101,890
|
|
|
1,711
|
|
|
1.7
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
93,480
|
|
|
$
|
113,051
|
|
|
$
|
(19,571
|
)
|
|
(17.3
|
)%
|
Transaction dollar volume
|
$
|
1,844,666
|
|
|
$
|
2,040,745
|
|
|
$
|
(196,079
|
)
|
|
(9.6
|
)%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
9.2
|
%
|
|
8.5
|
%
|
|
0.7
|
%
|
|
8.2
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
61.1
|
%
|
|
58.6
|
%
|
|
2.5
|
%
|
|
4.3
|
%
|
|
36 weeks ended
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
652,359
|
|
|
$
|
659,984
|
|
|
$
|
(7,625
|
)
|
|
(1.2
|
)%
|
Partner distribution expense
|
330,283
|
|
|
313,628
|
|
|
16,655
|
|
|
5.3
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
322,076
|
|
|
$
|
346,356
|
|
|
$
|
(24,280
|
)
|
|
(7.0
|
)%
|
Transaction dollar volume
|
$
|
5,904,531
|
|
|
$
|
6,310,610
|
|
|
$
|
(406,079
|
)
|
|
(6.4
|
)%
|
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
|
60.4
|
%
|
|
57.9
|
%
|
|
2.5
|
%
|
|
4.3
|
%
|
•
|
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 that our top U.S. distribution partners for our open loop gift products will have completed their EMV implementations in the vast majority of their store locations by the end of October 2016. We expect that the distributions partners would continue to remove the limits and controls implemented by them before they were EMV compliant and finish restoring our products to their displays during our fourth quarter. We expect the negative impact of restricted sales of high-denomination open loop gift cards to continue while they take these steps and message to their customers that such products are once again available for purchase using credit cards. Additionally, we discontinued certain low-margin financial services programs, including certain co-branded GPR products, which also decreased transaction dollar volume. These decreases were partially offset by higher sales of other prepaid products through our retail distribution partner network 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
third
quarter and
first 36 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 from interchange and deferred revenue from sales in prior periods that were proportionately higher. The higher commission and fees rate 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 decreased slightly for the
third
quarter and
first 36 weeks of 2016
. Our adoption of ASU 2016-04 in the
first 36 weeks of 2016
also did not have a material impact on our prepaid and processing revenue rate for the
third
quarter and
first 36 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
third
quarter and
first 36 weeks of 2016
due to i) an increase in the proportion of sales through retail distribution partners with higher commission share rates and ii) partially offset by 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 impacts 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
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
100,069
|
|
|
$
|
83,671
|
|
|
$
|
16,398
|
|
|
19.6
|
%
|
Partner distribution expense
|
69,841
|
|
|
56,972
|
|
|
12,869
|
|
|
22.6
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
30,228
|
|
|
$
|
26,699
|
|
|
$
|
3,529
|
|
|
13.2
|
%
|
Transaction dollar volume
|
$
|
826,746
|
|
|
$
|
661,890
|
|
|
$
|
164,856
|
|
|
24.9
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
10.8
|
%
|
|
11.2
|
%
|
|
(0.4
|
)%
|
|
(3.6
|
)%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
78.4
|
%
|
|
77.2
|
%
|
|
1.2
|
%
|
|
1.6
|
%
|
|
36 weeks ended
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
279,311
|
|
|
$
|
251,249
|
|
|
$
|
28,062
|
|
|
11.2
|
%
|
Partner distribution expense
|
198,703
|
|
|
169,578
|
|
|
29,125
|
|
|
17.2
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
80,608
|
|
|
$
|
81,671
|
|
|
$
|
(1,063
|
)
|
|
(1.3
|
)%
|
Transaction dollar volume
|
$
|
2,325,476
|
|
|
$
|
1,966,692
|
|
|
$
|
358,784
|
|
|
18.2
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
10.9
|
%
|
|
11.0
|
%
|
|
(0.1
|
)%
|
|
(0.9
|
)%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
78.3
|
%
|
|
78.0
|
%
|
|
0.3
|
%
|
|
0.4
|
%
|
•
|
Transaction dollar volume
—Increased for both the
third
quarter and
first 36 weeks of 2016
primarily due to increases in sales in Canada and Europe, primarily Germany and our acquisition of Didix in the fourth quarter of 2015, and through our sub-distributor relationships in Japan and South Korea, partially offset by decreases in Australia. Transaction dollar volume for the
first 36 weeks of 2016
also decreased in Mexico and our sub-distributor relationship in South Africa but increased and remained flat for the
third
quarter of 2016 for these countries, respectively. On a constant currency basis, transaction dollar volume increased 17.1% and 16.1% for the
third
quarter and
first 36 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 $4.0 million of breakage revenue in the
third
quarter and
first 36 weeks of 2016
, respectively. Excluding this benefit, the prepaid and processing revenue rates were 10.6% and 10.7% for the
third
quarter and
first 36 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
third
quarter and
first 36 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 79.7% and 79.6% for the
third
quarter and
first 36 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
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
64,410
|
|
|
$
|
54,053
|
|
|
$
|
10,357
|
|
|
19.2
|
%
|
Partner distribution expense
|
4,921
|
|
|
2,990
|
|
|
1,931
|
|
|
64.6
|
%
|
|||
Operating revenues net of Partner distribution expense
|
$
|
59,489
|
|
|
$
|
51,063
|
|
|
$
|
8,426
|
|
|
16.5
|
%
|
Transaction dollar volume
|
$
|
540,860
|
|
|
$
|
465,084
|
|
|
$
|
75,776
|
|
|
16.3
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
10.1
|
%
|
|
9.7
|
%
|
|
0.4
|
%
|
|
4.1
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
9.0
|
%
|
|
6.6
|
%
|
|
2.4
|
%
|
|
36.4
|
%
|
|
36 weeks ended
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
187,558
|
|
|
$
|
133,411
|
|
|
$
|
54,147
|
|
|
40.6
|
%
|
Partner distribution expense
|
12,763
|
|
|
10,987
|
|
|
1,776
|
|
|
16.2
|
%
|
|||
Operating revenues net of Partner distribution expense
|
$
|
174,795
|
|
|
$
|
122,424
|
|
|
$
|
52,371
|
|
|
42.8
|
%
|
Transaction dollar volume
|
$
|
1,540,796
|
|
|
$
|
1,382,941
|
|
|
$
|
157,855
|
|
|
11.4
|
%
|
Prepaid and processing revenues as a percentage of transaction dollar volume
|
10.3
|
%
|
|
8.8
|
%
|
|
1.5
|
%
|
|
17.0
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
8.1
|
%
|
|
9.0
|
%
|
|
(0.9
|
)%
|
|
(10.0
|
)%
|
•
|
Transaction dollar volume
—Increased for the
third
quarter and
first 36 weeks of 2016
due to our acquisition and growth 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 10.0% for the
first 36 weeks of 2016
, and our prepaid and processing revenue rate increased for both
third
quarter and
first 36 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
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|||||||
Partner distribution expense
|
178,363
|
|
|
161,852
|
|
|
16,511
|
|
|
10.2
|
%
|
|||
Processing and services
|
75,090
|
|
|
68,246
|
|
|
6,844
|
|
|
10.0
|
%
|
|||
Sales and marketing
|
52,327
|
|
|
49,954
|
|
|
2,373
|
|
|
4.8
|
%
|
|||
Costs of products sold
|
29,122
|
|
|
40,577
|
|
|
(11,455
|
)
|
|
(28.2
|
)%
|
|||
General and administrative
|
22,501
|
|
|
22,136
|
|
|
365
|
|
|
1.6
|
%
|
|||
Transition and acquisition
|
2,574
|
|
|
5,275
|
|
|
(2,701
|
)
|
|
(51.2
|
)%
|
|||
Amortization of acquisition intangibles
|
10,376
|
|
|
6,875
|
|
|
3,501
|
|
|
50.9
|
%
|
|||
Change in fair value of contingent consideration
|
1,300
|
|
|
—
|
|
|
1,300
|
|
|
N/M
|
||||
Total operating expenses
|
$
|
371,653
|
|
|
$
|
354,915
|
|
|
$
|
16,738
|
|
|
4.7
|
%
|
|
36 weeks ended
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|||||||
Partner distribution expense
|
541,749
|
|
|
494,193
|
|
|
47,556
|
|
|
9.6
|
%
|
|||
Processing and services
|
224,331
|
|
|
198,272
|
|
|
26,059
|
|
|
13.1
|
%
|
|||
Sales and marketing
|
166,176
|
|
|
156,653
|
|
|
9,523
|
|
|
6.1
|
%
|
|||
Costs of products sold
|
103,163
|
|
|
97,593
|
|
|
5,570
|
|
|
5.7
|
%
|
|||
General and administrative
|
70,130
|
|
|
62,186
|
|
|
7,944
|
|
|
12.8
|
%
|
|||
Transition and acquisition
|
4,160
|
|
|
6,091
|
|
|
(1,931
|
)
|
|
(31.7
|
)%
|
|||
Amortization of acquisition intangibles
|
35,533
|
|
|
18,352
|
|
|
17,181
|
|
|
93.6
|
%
|
|||
Change in fair value of contingent consideration
|
2,100
|
|
|
(7,567
|
)
|
|
9,667
|
|
|
N/M
|
||||
Total operating expenses
|
$
|
1,147,342
|
|
|
$
|
1,025,773
|
|
|
$
|
121,569
|
|
|
11.9
|
%
|
•
|
$1.6 million
increase for technology and operations personnel costs (
$12.8 million
for the
first 36 weeks of 2016
), including employee and contractor compensation, benefits and travel related costs;
|
•
|
$3.7 million
increase for our technology infrastructure (
$7.9 million
for the
first 36 weeks of 2016
), including depreciation of capitalized software and related hardware, data center lease, hosting and connectivity, activation transaction processing and other equipment costs;
|
•
|
$1.3 million
increase for our program management services (
$3.3 million
for the
first 36 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;
|
•
|
$1.2 million
increase in other net costs (
$3.7 million
for the
first 36 weeks of 2016
);
|
•
|
$0.5 million
decrease in costs for maintaining our distribution network (
$1.6 million
for the
first 36 weeks of 2016
), including fulfillment and merchandising expenses.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|||||||
Interest income and other income (expense), net
|
$
|
2,360
|
|
|
$
|
(1,421
|
)
|
|
$
|
3,781
|
|
|
(266.1
|
)%
|
Interest expense
|
(5,684
|
)
|
|
(3,231
|
)
|
|
(2,453
|
)
|
|
75.9
|
%
|
|||
Total other income (expense)
|
$
|
(3,324
|
)
|
|
$
|
(4,652
|
)
|
|
$
|
1,328
|
|
|
(28.5
|
)%
|
INCOME TAX EXPENSE (BENEFIT)
|
$
|
(8,357
|
)
|
|
$
|
(3,290
|
)
|
|
$
|
(5,067
|
)
|
|
154.0
|
%
|
EFFECTIVE TAX RATE
|
62.3
|
%
|
|
47.7
|
%
|
|
14.6
|
%
|
|
|
|
36 weeks ended
|
|
|
|
|
|||||||||
|
September 10, 2016
|
|
September 12, 2015
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|||||||
Interest income and other income (expense), net
|
$
|
3,258
|
|
|
$
|
(1,938
|
)
|
|
$
|
5,196
|
|
|
(268.1
|
)%
|
Interest expense
|
(13,868
|
)
|
|
(8,566
|
)
|
|
(5,302
|
)
|
|
61.9
|
%
|
|||
Total other income (expense)
|
$
|
(10,610
|
)
|
|
$
|
(10,504
|
)
|
|
$
|
(106
|
)
|
|
1.0
|
%
|
INCOME TAX EXPENSE (BENEFIT)
|
$
|
(18,884
|
)
|
|
$
|
4,435
|
|
|
$
|
(23,319
|
)
|
|
(525.8
|
)%
|
EFFECTIVE TAX RATE
|
48.8
|
%
|
|
53.0
|
%
|
|
(4.2
|
)%
|
|
|
|
36 weeks ended
|
||||||
|
September 10, 2016
|
|
September 12, 2015
|
||||
|
(in thousands)
|
||||||
Net cash used in operating activities
|
$
|
(639,637
|
)
|
|
$
|
(620,899
|
)
|
Net cash used in investing activities
|
(177,018
|
)
|
|
(154,308
|
)
|
||
Net cash provided by financing activities
|
199,076
|
|
|
85,781
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
3,352
|
|
|
(7,467
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(614,227
|
)
|
|
$
|
(696,893
|
)
|
•
|
pre-tax income, adjusted for noncash reconciling items (excluding deferred income taxes), decreased
$10.7 million
, or
11.2%
, to
$84.9 million
from
$95.6 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
$11.4 million
in our income tax payments to
$5.0 million
in net refunds for the
36 weeks ended
September 10, 2016
from
$6.4 million
payment for the
36 weeks ended
September 12, 2015
, which include refunds of
$0.9 million
and
$6.3 million
for the
36 weeks ended
September 10, 2016
and the
36 weeks ended
September 12, 2015
, respectively, for overpayments for Spin-Off taxes to certain states which we repaid to Safeway and present such repayment in financing activities. Excluding these refunds, our net income tax payments decreased by
$16.8 million
from a net refund of
$4.1 million
for the
36 weeks ended
September 10, 2016
from a net payment of
$12.7 million
36 weeks ended
September 12, 2015
, 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.
|
•
|
use of cash for non-settlement related operating assets and liabilities totaled
$11.8 million
and
$47.5 million
, for the
36 weeks ended
September 10, 2016
and
September 12, 2015
, respectively, reflecting a significantly greater use of cash from accounts receivable for the
36 weeks ended
September 12, 2015
.
|
Period
|
|
Total Number of Shares Purchased (1)
|
|
Average Price Paid per Share (4)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(5)
|
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||||
June 19, 2016 to July 16, 2016
|
|
45
|
|
(2)
|
|
$
|
33.29
|
|
|
—
|
|
|
|
$
|
—
|
|
July 17, 2016 to August 13, 2016
|
|
996,400
|
|
(3)
|
|
$
|
34.97
|
|
|
—
|
|
|
|
$
|
—
|
|
August 14, 2016 to September 10, 2016
|
|
—
|
|
|
|
$
|
—
|
|
|
—
|
|
|
|
$
|
—
|
|
Total
|
|
996,445
|
|
|
|
$
|
—
|
|
|
—
|
|
|
|
$
|
—
|
|
(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.
|
(2)
|
The number represents 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.
|
(3)
|
In conjunction with the issuance of the 2022 Notes, following a press release announcement of July 20, 2016, we repurchased shares of our common stock for
$34.8 million
(out of an approved amount of $35 million) at a price per share of
$34.97
on July 27, 2016. There will be no further repurchases in connection with this transaction.
|
(4)
|
Average price paid per share of Common Stock does not include brokerage commissions.
|
(5)
|
The Company does not currently have a 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
|
|
|
4.1
|
|
Indenture related to the 1.50% Convertible Senior Notes due 2022, dated as of July 27, 2016, among Blackhawk Network Holdings, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee
|
|
8-K
|
|
001-35882
|
|
4.1
|
|
July 28, 2016
|
|
|
4.2
|
|
Form of 1.50% Convertible Senior Note due 2022 (included with Exhibit 4.1)
|
|
8-K
|
|
001-35882
|
|
4.2
|
|
July 28, 2016
|
|
|
10.1
|
|
Letter Agreement, dated July 21, 2016, between the Company and Wells Fargo Bank, National Association, regarding Note Hedge Transaction
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
July 28, 2016
|
|
|
10.2
|
|
Letter Agreement, dated July 21, 2016, between the Company and Bank of America, N.A., regarding Note Hedge Transaction
|
|
8-K
|
|
001-35882
|
|
10.2
|
|
July 28, 2016
|
|
|
10.3
|
|
Letter Agreement, dated July 21, 2016, between the Company and Bank of Montreal, regarding Note Hedge Transaction
|
|
8-K
|
|
001-35882
|
|
10.3
|
|
July 28, 2016
|
|
|
10.4
|
|
Letter Agreement, dated July 21, 2016, between the Company and Wells Fargo Bank, National Association, regarding Warrant Transaction
|
|
8-K
|
|
001-35882
|
|
10.4
|
|
July 28, 2016
|
|
|
10.5
|
|
Letter Agreement, dated July 21, 2016, between the Company and Bank of America, N.A., regarding Warrant Transaction
|
|
8-K
|
|
001-35882
|
|
10.5
|
|
July 28, 2016
|
|
|
10.6
|
|
Letter Agreement, dated July 21, 2016, between the Company and Bank of Montreal, regarding Warrant Transaction
|
|
8-K
|
|
001-35882
|
|
10.6
|
|
July 28, 2016
|
|
|
10.7
|
|
Letter Agreement, dated July 22, 2016, between the Company and Wells Fargo Bank, National Association, regarding Note Hedge Transaction
|
|
8-K
|
|
001-35882
|
|
10.7
|
|
July 28, 2016
|
|
|
10.8
|
|
Letter Agreement, dated July 22, 2016, between the Company and Bank of America, N.A., regarding Note Hedge Transaction
|
|
8-K
|
|
001-35882
|
|
10.8
|
|
July 28, 2016
|
|
|
10.9
|
|
Letter Agreement, dated July 22, 2016, between the Company and Bank of Montreal, regarding Note Hedge Transaction
|
|
8-K
|
|
001-35882
|
|
10.9
|
|
July 28, 2016
|
|
|
10.10
|
|
Letter Agreement, dated July 22, 2016, between the Company and Wells Fargo Bank, National Association, regarding Warrant Transaction
|
|
8-K
|
|
001-35882
|
|
10.10
|
|
July 28, 2016
|
|
|
10.11
|
|
Letter Agreement, dated July 22, 2016, between the Company and Bank of America, N.A., regarding Warrant Transaction
|
|
8-K
|
|
001-35882
|
|
10.11
|
|
July 28, 2016
|
|
|
10.12
|
|
Letter Agreement, dated July 22, 2016, between the Company and Bank of Montreal, regarding Warrant Transaction
|
|
8-K
|
|
001-35882
|
|
10.12
|
|
July 28, 2016
|
|
|
|
|
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Exhibit No
|
|
Description of Exhibit
|
|
Form
|
|
File No.
|
|
Exhibit(s)
|
|
Filing Date
|
|
|
10.13
|
|
Amended and Restated Credit Agreement dated as of July 27, 2016, by and among the Company and the lenders identified on the signature pages thereto, including Wells Fargo Bank, National Association, as both lender and administrative agent
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
August 1, 2016
|
|
|
10.14
|
|
Reaffirmation Agreement dated as of July 27, 2016, executed by the Company and certain of its subsidiaries in favor of Wells Fargo Bank, National Association, as administrative agent
|
|
8-K
|
|
001-35882
|
|
10.2
|
|
August 1, 2016
|
|
|
10.15
|
|
First Amendment to Lease Agreement, effective as of September 22, 2016, between Blackhawk Network, Inc. and 6200 Stoneridge Mall Road Investors LLC
|
|
|
|
|
|
|
|
|
|
X
|
10.16
|
|
Separation Agreement, dated as of October 17, 2016, by and between Blackhawk Network, Inc. and Christopher Crum
|
|
|
|
|
|
|
|
|
|
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
|
*
|
The certification attached as Exhibit 32.1 to this Quarterly 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 Quarterly Report), irrespective of any general incorporation language contained in such filing.
|
1.
|
RECITALS
|
2.
|
DEFINITIONS
|
3.
|
OPTION TO TERMINATE
|
4.
|
PARKING AND SITE PLAN
|
5.
|
GENERAL PROVISIONS
|
|
LANDLORD:
|
6200 STONERIDGE MALL ROAD INVESTORS, LLC,
|
|||
|
|
a Delaware limited liability company
|
|||
|
|
|
|
|
|
|
|
By:
|
TPF Equity REIT Operating Partnership
|
||
|
|
|
LP, a Delaware limited partnership,
|
||
|
|
|
its sole member
|
||
|
|
|
|
|
|
|
|
|
By:
|
TPF Equity REIT Operating Partnership GP
|
|
|
|
|
|
LLC, a Delaware limited liability company,
|
|
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Thomas Enger
|
|
|
|
|
Name:
|
Thomas Enger
|
|
|
|
|
Title:
|
Managing Director
|
|
|
|
|
Date:
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Andrew Wietstock
|
|
|
|
|
Name:
|
Andrew Wietstock
|
|
|
|
|
Title:
|
Associate Director
|
|
|
|
|
Date:
|
September 30, 2016
|
|
|
|
|
|
|
|
TENANT:
|
BLACKHAWK NETWORK, INC.,
|
|||
|
|
an Arizona corporation
|
|||
|
|
|
|
|
|
|
|
By:
|
/s/ Jerry N. Ulrich
|
||
|
|
Name:
|
Jerry N. Ulrich
|
||
|
|
Title:
|
Chief Financial Officer and Chief Administrative Officer
|
||
|
|
Date:
|
September 28, 2016
|
||
|
|
|
|
|
|
|
|
By:
|
/s/ Suzanne Kinner
|
||
|
|
Name:
|
Suzanne Kinner
|
||
|
|
Title:
|
General Vice President
|
||
|
|
Date:
|
September 28, 2016
|
A.
|
Severance
. Subject to and in accordance with the terms of this Release Agreement, Blackhawk agrees to pay to Releasor One Hundred Seventy-Nine Thousand Four Hundred Seventy-Seven Dollars and Sixty-One cents ($179,477.61), which represents Twenty-Six (26) weeks of severance pay at his final base salary. These payments shall be made after the Effective Date and during the Severance Period, as defined below, paid as follows: bi-weekly installments will be made for the first Eight (8) weeks according to Blackhawk’s existing pay periods; and a lump sum payment will be made for the Eighteen (18) weeks which is the remainder of the severance pay. Provided that Releasor does not exercise the right of revocation provided for in Paragraph 10(c) below, then (i) the installment severance payment will begin within five (5) business days of the pay period following the expiration of the seven (7) day revocation period described in Paragraph 10(c), and (ii) the lump sum severance payment will be made within ten (10) business days following the expiration of the seven (7) day revocation period described in Paragraph 10(c). If Releasor becomes employed in any other position with Blackhawk during the period the severance payment is paid, the employment will begin promptly, at which time the Severance Period and severance payments will end. The period during which Releasor is entitled to receive severance pay per the terms of this Release Agreement shall be referred to herein as the “Severance Period.”
|
B.
|
Employee Benefits
. Except as otherwise provided in this Release Agreement, Releasor’s employee benefits as a regular employee of Blackhawk shall terminate on the last day of the month of the Effective Date, in accordance with their respective terms and conditions. Blackhawk will reimburse Releasor for six (6) month(s) of COBRA insurance premiums upon Releasor’s submission of evidence of payment of such premiums.
|
C.
|
Severance Allocation
. You agree that the severance payments described in Paragraph A are allocated as follows: (1) ninety percent (90%) of the payments are allocated as consideration for your fulfillment of the obligations needed to avoid termination of payments under Paragraph 2 below, and (2) ten percent (10%) of the payments are allocated as consideration for the Release Agreement’s remaining Releasor obligations.
|
General Release and Settlement of Claims-Blackhawk Christopher Crum
|
Page
1
of 6
|
Blackhawk Confidential
|
D.
|
Accelerated Vesting
. As further consideration for Releasor’s promises made and obligations under this Agreement, Blackhawk shall obtain necessary approval from the appropriate governance body to cause seven thousand one hundred fifty-five (7,155) shares which represent fifty percent (50%) of the Performance Shares that have Performance-Vested (as defined in the 2014 PSU) prior to the Effective Date (as defined below) pursuant to the 2014 Performance Share Agreement (the “2014 PSU”) entered into by Releasor under the Blackhawk Network Holdings, Inc. 2013 Equity Incentive Award Plan to become Vested (as defined in the 2014 PSU) as of the Effective Date. For the avoidance of doubt, Blackhawk shall cause one share of common stock to be paid for each such Vested Performance Share as soon as administrative practicable following the Effective Date, in accordance with the 2014 PSU, and the remaining Performance Shares under the 2014 PSU shall be forfeited.
|
E.
|
Tax Withholding
. Releasor shall be responsible, and agrees to hold harmless and indemnify Blackhawk, for any tax liabilities that he incurs as a result of the severance payment, any other consideration provided by Blackhawk under this Agreement and the issuance of other equity to the Releasor pursuant to the equity award agreements to which the Releasor is a party. Any payments made to Releasor under Sections A-D above shall be less any tax withholdings required by law.
|
F.
|
Existing Equity Plans
. Except as set forth above in Section D, all of Releasor’s outstanding equity grants will be treated strictly in accordance with the terms of the respective grants and plans.
|
General Release and Settlement of Claims-Blackhawk Christopher Crum
|
Page
2
of 6
|
Blackhawk Confidential
|
General Release and Settlement of Claims-Blackhawk Christopher Crum
|
Page
3
of 6
|
Blackhawk Confidential
|
General Release and Settlement of Claims-Blackhawk Christopher Crum
|
Page
4
of 6
|
Blackhawk Confidential
|
General Release and Settlement of Claims-Blackhawk Christopher Crum
|
Page
5
of 6
|
Blackhawk Confidential
|
Dated:
|
October 13, 2016
|
|
|
/s/ Christopher Crum
|
|
(“Execution Date”)
|
|
|
Christopher Crum
|
|
|
|
|
|
Dated:
|
October 17, 2016
|
|
|
Blackhawk Network Inc.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Suzanne Kinner
|
|
|
|
Name:
|
Suzanne Kinner
|
|
|
|
Its:
|
GVP, Human Resources
|
General Release and Settlement of Claims-Blackhawk Christopher Crum
|
Page
6
of 6
|
Blackhawk Confidential
|
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: October 18, 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;
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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) 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:
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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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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;
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c)
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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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d)
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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; and
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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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Date: October 18, 2016
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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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1.
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The Company’s Quarterly Report on Form 10-Q for the period ended
September 10, 2016
, to which this Certification is attached as Exhibit 32.1 (this “Quarterly Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and
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2.
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The information contained in this Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Talbott Roche
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/s/ Jerry Ulrich
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Talbott Roche
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Jerry Ulrich
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President and Chief Executive Officer
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Chief Financial Officer and Chief Administrative Officer
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(Principal Executive Officer)
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(Principal Financial Officer)
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