|
|
|
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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6220 Stoneridge Mall Road
Pleasanton, CA
|
|
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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Emerging growth company
|
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¨
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Page
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PART I. FINANCIAL STATEMENTS
|
|
|
|
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Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
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PART II. OTHER INFORMATION
|
|
|
|
|
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Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
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March 25, 2017
|
|
December 31, 2016
|
|
March 26, 2016
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
214,536
|
|
|
$
|
1,008,125
|
|
|
$
|
212,950
|
|
Restricted cash
|
56,832
|
|
|
10,793
|
|
|
3,189
|
|
|||
Settlement receivables, net
|
319,557
|
|
|
641,691
|
|
|
317,585
|
|
|||
Accounts receivable, net
|
259,138
|
|
|
262,672
|
|
|
224,559
|
|
|||
Other current assets
|
177,463
|
|
|
131,375
|
|
|
100,361
|
|
|||
Total current assets
|
1,027,526
|
|
|
2,054,656
|
|
|
858,644
|
|
|||
Property, equipment and technology, net
|
173,403
|
|
|
172,381
|
|
|
166,223
|
|
|||
Intangible assets, net
|
340,846
|
|
|
350,185
|
|
|
278,734
|
|
|||
Goodwill
|
570,313
|
|
|
570,398
|
|
|
486,472
|
|
|||
Deferred income taxes
|
361,404
|
|
|
362,302
|
|
|
351,161
|
|
|||
Other assets
|
85,647
|
|
|
85,856
|
|
|
80,083
|
|
|||
TOTAL ASSETS
|
$
|
2,559,139
|
|
|
$
|
3,595,778
|
|
|
$
|
2,221,317
|
|
|
|
|
|
|
|
||||||
See accompanying notes to condensed consolidated financial statements
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(In thousands, except par value)
(Unaudited)
|
|||||||||||
|
March 25, 2017
|
|
December 31, 2016
|
|
March 26, 2016
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Settlement payables
|
$
|
547,179
|
|
|
$
|
1,626,827
|
|
|
$
|
532,419
|
|
Consumer and customer deposits
|
199,822
|
|
|
173,344
|
|
|
97,100
|
|
|||
Accounts payable and accrued operating expenses
|
143,858
|
|
|
153,885
|
|
|
105,492
|
|
|||
Deferred revenue
|
140,834
|
|
|
150,582
|
|
|
110,560
|
|
|||
Note payable, current portion
|
7,390
|
|
|
9,856
|
|
|
155,851
|
|
|||
Notes payable to Safeway
|
2,909
|
|
|
3,163
|
|
|
4,129
|
|
|||
Bank line of credit
|
14,415
|
|
|
—
|
|
|
114,672
|
|
|||
Other current liabilities
|
85,651
|
|
|
51,176
|
|
|
40,583
|
|
|||
Total current liabilities
|
1,142,058
|
|
|
2,168,833
|
|
|
1,160,806
|
|
|||
Deferred income taxes
|
28,200
|
|
|
27,887
|
|
|
19,534
|
|
|||
Note payable
|
130,560
|
|
|
137,984
|
|
|
268,584
|
|
|||
Convertible notes payable
|
431,941
|
|
|
429,026
|
|
|
—
|
|
|||
Other liabilities
|
37,745
|
|
|
39,653
|
|
|
15,062
|
|
|||
Total liabilities
|
1,770,504
|
|
|
2,803,383
|
|
|
1,463,986
|
|
|||
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; 56,290, 55,667 and 56,131 shares outstanding, respectively
|
56
|
|
|
56
|
|
|
57
|
|
|||
Additional paid-in capital
|
612,328
|
|
|
608,568
|
|
|
569,728
|
|
|||
Accumulated other comprehensive loss
|
(42,861
|
)
|
|
(48,877
|
)
|
|
(35,139
|
)
|
|||
Retained earnings
|
214,833
|
|
|
228,451
|
|
|
218,258
|
|
|||
Total Blackhawk Network Holdings, Inc. equity
|
784,356
|
|
|
788,198
|
|
|
752,904
|
|
|||
Non-controlling interests
|
4,279
|
|
|
4,197
|
|
|
4,427
|
|
|||
Total stockholders’ equity
|
788,635
|
|
|
792,395
|
|
|
757,331
|
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
2,559,139
|
|
|
$
|
3,595,778
|
|
|
$
|
2,221,317
|
|
|
12 weeks ended
|
||||||
|
March 25, 2017
|
|
March 26, 2016
|
||||
OPERATING REVENUES:
|
|
|
|
||||
Commissions and fees
|
$
|
255,206
|
|
|
$
|
239,624
|
|
Program and other fees
|
100,910
|
|
|
75,442
|
|
||
Marketing
|
14,281
|
|
|
13,459
|
|
||
Product sales
|
36,839
|
|
|
37,937
|
|
||
Total operating revenues
|
407,236
|
|
|
366,462
|
|
||
OPERATING EXPENSES:
|
|
|
|
||||
Partner distribution expense
|
179,476
|
|
|
172,155
|
|
||
Processing and services
|
102,272
|
|
|
73,941
|
|
||
Sales and marketing
|
62,785
|
|
|
53,338
|
|
||
Costs of products sold
|
36,193
|
|
|
35,732
|
|
||
General and administrative
|
29,025
|
|
|
23,497
|
|
||
Transition and acquisition
|
451
|
|
|
945
|
|
||
Amortization of acquisition intangibles
|
13,025
|
|
|
9,898
|
|
||
Change in fair value of contingent consideration
|
1,040
|
|
|
—
|
|
||
Total operating expenses
|
424,267
|
|
|
369,506
|
|
||
OPERATING INCOME (LOSS)
|
(17,031
|
)
|
|
(3,044
|
)
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
||||
Interest income and other income (expense), net
|
836
|
|
|
412
|
|
||
Interest expense
|
(6,943
|
)
|
|
(4,066
|
)
|
||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
(23,138
|
)
|
|
(6,698
|
)
|
||
INCOME TAX EXPENSE (BENEFIT)
|
(9,775
|
)
|
|
(3,237
|
)
|
||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(13,363
|
)
|
|
(3,461
|
)
|
||
Loss (income) attributable to non-controlling interests, net of tax
|
(123
|
)
|
|
(92
|
)
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(13,486
|
)
|
|
$
|
(3,553
|
)
|
EARNINGS (LOSS) PER SHARE:
|
|
|
|
||||
Basic
|
$
|
(0.24
|
)
|
|
$
|
(0.06
|
)
|
Diluted
|
$
|
(0.24
|
)
|
|
$
|
(0.06
|
)
|
Weighted average shares outstanding—basic
|
55,904
|
|
|
55,752
|
|
||
Weighted average shares outstanding—diluted
|
55,904
|
|
|
55,752
|
|
|
12 weeks ended
|
||||||
|
March 25, 2017
|
|
March 26, 2016
|
||||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
$
|
(13,363
|
)
|
|
$
|
(3,461
|
)
|
Other comprehensive income (loss):
|
|
|
|
||||
Currency translation adjustments
|
5,975
|
|
|
5,066
|
|
||
COMPREHENSIVE INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(7,388
|
)
|
|
1,605
|
|
||
Comprehensive loss (income) attributable to non-controlling interests, net of tax
|
(82
|
)
|
|
(102
|
)
|
||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(7,470
|
)
|
|
$
|
1,503
|
|
|
12 weeks ended
|
||||||
|
March 25, 2017
|
|
March 26, 2016
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss) before allocation to non-controlling interests
|
$
|
(13,363
|
)
|
|
$
|
(3,461
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization of property, equipment and technology
|
11,600
|
|
|
9,915
|
|
||
Amortization of intangibles
|
14,218
|
|
|
11,048
|
|
||
Amortization of deferred program and contract costs
|
7,397
|
|
|
7,166
|
|
||
Amortization of deferred financing costs and debt discount
|
3,162
|
|
|
440
|
|
||
Loss on property, equipment and technology disposal/write-down
|
108
|
|
|
5
|
|
||
Employee stock-based compensation expense
|
8,401
|
|
|
8,000
|
|
||
Change in fair value of contingent consideration
|
1,040
|
|
|
—
|
|
||
Other
|
1,605
|
|
|
34
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Settlement receivables
|
330,177
|
|
|
311,722
|
|
||
Settlement payables
|
(1,080,989
|
)
|
|
(1,072,424
|
)
|
||
Accounts receivable, current and long-term
|
(7,666
|
)
|
|
18,053
|
|
||
Other current assets
|
(2,215
|
)
|
|
7,355
|
|
||
Other assets
|
(3,158
|
)
|
|
(4,476
|
)
|
||
Consumer and customer deposits
|
(24,484
|
)
|
|
14,690
|
|
||
Accounts payable and accrued operating expenses
|
(4,218
|
)
|
|
(27,404
|
)
|
||
Deferred revenue
|
3,585
|
|
|
(7,745
|
)
|
||
Other current and long-term liabilities
|
(1,403
|
)
|
|
(16,332
|
)
|
||
Income taxes, net
|
(9,944
|
)
|
|
(4,271
|
)
|
||
Net cash (used in) provided by operating activities
|
(766,147
|
)
|
|
(747,685
|
)
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for property, equipment and technology
|
(16,697
|
)
|
|
(9,160
|
)
|
||
Business acquisitions, net of cash acquired
|
(10,881
|
)
|
|
(113,114
|
)
|
||
Investment in unconsolidated entities
|
(5,200
|
)
|
|
—
|
|
||
Net cash (used in) provided by investing activities
|
(32,778
|
)
|
|
(122,274
|
)
|
||
|
|
|
|
||||
|
|
|
|
||||
See accompanying notes to condensed consolidated financial statements
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(Unaudited)
|
|||||||
|
12 weeks ended
|
||||||
|
March 25, 2017
|
|
March 26, 2016
|
||||
FINANCING ACTIVITIES:
|
|
|
|
||||
Repayment of debt assumed in business acquisitions
|
—
|
|
|
(8,964
|
)
|
||
Proceeds from issuance of note payable
|
—
|
|
|
100,000
|
|
||
Repayment of note payable
|
(10,000
|
)
|
|
(37,500
|
)
|
||
Borrowings under revolving bank line of credit
|
667,936
|
|
|
636,445
|
|
||
Repayments on revolving bank line of credit
|
(653,521
|
)
|
|
(521,773
|
)
|
||
Repayment on notes payable to Safeway
|
(254
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock from exercise of employee stock options and employee stock purchase plans
|
3,700
|
|
|
432
|
|
||
Other stock-based compensation related
|
(8,897
|
)
|
|
(1,752
|
)
|
||
Net cash (used in) provided by financing activities
|
(1,036
|
)
|
|
166,888
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
6,372
|
|
|
1,445
|
|
||
Decrease in cash and cash equivalents
|
(793,589
|
)
|
|
(701,626
|
)
|
||
Cash and cash equivalents—beginning of period
|
1,008,125
|
|
|
914,576
|
|
||
Cash and cash equivalents—end of period
|
$
|
214,536
|
|
|
$
|
212,950
|
|
|
|
|
|
||||
NONCASH FINANCING AND INVESTING ACTIVITIES:
|
|
|
|
||||
Financing of business acquisition with contingent consideration
|
$
|
2,000
|
|
|
$
|
—
|
|
|
As of April 20, 2017
|
||
2018
|
$
|
10,000
|
|
2019
|
10,000
|
|
|
2020
|
20,000
|
|
|
2021
|
150,000
|
|
|
2022
|
500,000
|
|
|
Total long-term debt
|
$
|
690,000
|
|
|
March 25, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
4,073
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,073
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,096
|
|
|
$
|
21,096
|
|
|
December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
300,015
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
300,015
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,752
|
|
|
$
|
23,752
|
|
|
March 26, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
5,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,100
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
12 weeks ended
|
||||||
|
March 25, 2017
|
|
March 26, 2016
|
||||
|
|
|
|
||||
Balance, beginning of period
|
$
|
23,752
|
|
|
$
|
—
|
|
Addition from acquisition (see
Note 2—Business Acquisitions
)
|
2,000
|
|
|
—
|
|
||
Change in fair value of contingent consideration
|
1,040
|
|
|
—
|
|
||
Settlements
|
(5,696
|
)
|
|
—
|
|
||
Balance, end of period
|
$
|
21,096
|
|
|
$
|
—
|
|
|
March 25, 2017
|
|
December 31, 2016
|
|
March 26, 2016
|
||||||
Other current assets:
|
|
|
|
|
|
||||||
Inventory
|
$
|
48,683
|
|
|
$
|
43,950
|
|
|
$
|
40,506
|
|
Deferred expenses
|
16,556
|
|
|
22,148
|
|
|
11,833
|
|
|||
Income tax receivables
|
22,960
|
|
|
13,599
|
|
|
18,259
|
|
|||
Other
|
44,313
|
|
|
51,678
|
|
|
29,763
|
|
|||
Assets held for sale
|
44,951
|
|
|
—
|
|
|
—
|
|
|||
Total other current assets
|
$
|
177,463
|
|
|
$
|
131,375
|
|
|
$
|
100,361
|
|
Other assets:
|
|
|
|
|
|
||||||
Deferred program and contract costs
|
$
|
43,677
|
|
|
$
|
48,066
|
|
|
$
|
46,103
|
|
Other receivables
|
1,475
|
|
|
2,713
|
|
|
3,239
|
|
|||
Income taxes receivable
|
2,358
|
|
|
2,358
|
|
|
6,155
|
|
|||
Deferred financing costs
|
2,552
|
|
|
2,688
|
|
|
1,888
|
|
|||
Other
|
35,585
|
|
|
30,031
|
|
|
22,698
|
|
|||
Total other assets
|
$
|
85,647
|
|
|
$
|
85,856
|
|
|
$
|
80,083
|
|
Other current liabilities:
|
|
|
|
|
|
||||||
Payroll and related liabilities
|
$
|
28,198
|
|
|
$
|
24,944
|
|
|
$
|
23,444
|
|
Income taxes payable
|
3,860
|
|
|
4,199
|
|
|
1,822
|
|
|||
Acquisition liability
|
9,047
|
|
|
6,672
|
|
|
—
|
|
|||
Other payables and accrued liabilities
|
9,836
|
|
|
15,361
|
|
|
15,317
|
|
|||
Liabilities held for sale
|
34,710
|
|
|
—
|
|
|
—
|
|
|||
Total other current liabilities
|
$
|
85,651
|
|
|
$
|
51,176
|
|
|
$
|
40,583
|
|
Other liabilities:
|
|
|
|
|
|
||||||
Acquisition liability
|
$
|
17,744
|
|
|
$
|
17,080
|
|
|
$
|
—
|
|
Income taxes payable
|
7,056
|
|
|
6,957
|
|
|
4,839
|
|
|||
Deferred income and other liabilities
|
12,945
|
|
|
15,616
|
|
|
10,223
|
|
|||
Total other liabilities
|
$
|
37,745
|
|
|
$
|
39,653
|
|
|
$
|
15,062
|
|
|
March 25, 2017
|
||
|
|
||
Accounts receivable, net
|
$
|
14,677
|
|
Other current assets
|
11,478
|
|
|
Property, equipment and technology, net
|
992
|
|
|
Goodwill
|
11,267
|
|
|
Intangible assets, net
|
5,483
|
|
|
Deferred income taxes
|
1,054
|
|
|
Total assets held for sale
|
$
|
44,951
|
|
|
|
||
Settlement payables
|
$
|
11,141
|
|
Accounts payable and accrued operating expenses
|
4,243
|
|
|
Consumer and customer deposits
|
1,712
|
|
|
Other current liabilities
|
3,536
|
|
|
Deferred revenue
|
13,965
|
|
|
Deferred income taxes
|
113
|
|
|
Total liabilities held for sale
|
$
|
34,710
|
|
|
March 25, 2017
|
||||||||||||||
|
U.S. Retail
|
|
Incentives & Rewards
|
|
International
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
99,685
|
|
|
$
|
366,508
|
|
|
$
|
104,205
|
|
|
$
|
570,398
|
|
Re-allocation of goodwill to International
|
—
|
|
|
(7,152
|
)
|
|
7,152
|
|
|
—
|
|
||||
Acquisition (see
Note 2—Business Acquisitions
)
|
—
|
|
|
9,098
|
|
|
—
|
|
|
9,098
|
|
||||
Asset held for sale (see
Note 5—Consolidated Financial Statement Details
)
|
—
|
|
|
—
|
|
|
(11,267
|
)
|
|
(11,267
|
)
|
||||
Foreign currency translation adjustments
|
—
|
|
|
103
|
|
|
1,981
|
|
|
2,084
|
|
||||
Balance, end of period
|
$
|
99,685
|
|
|
$
|
368,557
|
|
|
$
|
102,071
|
|
|
$
|
570,313
|
|
|
12 weeks ended
|
||||||
|
March 25, 2017
|
|
March 26, 2016
|
||||
Processing and services
|
$
|
1,702
|
|
|
$
|
1,409
|
|
Sales and marketing
|
2,812
|
|
|
2,814
|
|
||
Cost of products sold
|
17
|
|
|
16
|
|
||
General and administrative
|
3,870
|
|
|
3,761
|
|
||
Total stock-based compensation expense
|
$
|
8,401
|
|
|
$
|
8,000
|
|
|
12 weeks ended
|
||||||||||||||
|
March 25, 2017
|
||||||||||||||
|
U.S. Retail
|
|
Incentives & Rewards
|
|
International
|
|
Consolidated
|
||||||||
Total operating revenues
|
$
|
207,638
|
|
|
$
|
63,225
|
|
|
$
|
136,373
|
|
|
$
|
407,236
|
|
Partner distribution expense
|
101,713
|
|
|
4,086
|
|
|
73,677
|
|
|
179,476
|
|
||||
Operating revenues, net of Partner distribution expense
|
105,925
|
|
|
59,139
|
|
|
62,696
|
|
|
227,760
|
|
||||
Other operating expenses
|
108,287
|
|
|
67,182
|
|
|
69,322
|
|
|
244,791
|
|
||||
Segment profit (loss) / Operating income (loss)
|
$
|
(2,362
|
)
|
|
$
|
(8,043
|
)
|
|
$
|
(6,626
|
)
|
|
(17,031
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
(6,107
|
)
|
|||||||
Loss before income tax expense
|
|
|
|
|
|
|
$
|
(23,138
|
)
|
||||||
Noncash charges
|
$
|
14,084
|
|
|
$
|
15,598
|
|
|
$
|
7,593
|
|
|
|
|
|
12 weeks ended
|
||||||||||||||
|
March 26, 2016
|
||||||||||||||
|
U.S. Retail
|
|
Incentives & Rewards
|
|
International
|
|
Consolidated
|
||||||||
Total operating revenues
|
$
|
216,271
|
|
|
$
|
61,276
|
|
|
$
|
88,915
|
|
|
$
|
366,462
|
|
Partner distribution expense
|
105,684
|
|
|
2,792
|
|
|
63,679
|
|
|
172,155
|
|
||||
Operating revenues, net of Partner distribution expense
|
110,587
|
|
|
58,484
|
|
|
25,236
|
|
|
194,307
|
|
||||
Other operating expenses
|
102,062
|
|
|
63,971
|
|
|
31,318
|
|
|
197,351
|
|
||||
Segment profit (loss) / Operating income (loss)
|
$
|
8,525
|
|
|
$
|
(5,487
|
)
|
|
$
|
(6,082
|
)
|
|
(3,044
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
(3,654
|
)
|
|||||||
Income (loss) before income tax expense
|
|
|
|
|
|
|
$
|
(6,698
|
)
|
||||||
Noncash charges
|
$
|
12,085
|
|
|
$
|
16,448
|
|
|
$
|
3,515
|
|
|
|
|
12 weeks ended
|
||||||||||||||
|
March 25, 2017
|
|
March 26, 2016
|
||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
(13,486
|
)
|
|
$
|
(13,486
|
)
|
|
$
|
(3,553
|
)
|
|
$
|
(3,553
|
)
|
Distributed and undistributed earnings allocated to participating securities
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
||||
Net income (loss) attributable to common stockholders
|
$
|
(13,486
|
)
|
|
$
|
(13,486
|
)
|
|
$
|
(3,568
|
)
|
|
$
|
(3,568
|
)
|
Weighted-average common shares outstanding
|
55,904
|
|
|
55,904
|
|
|
55,752
|
|
|
55,752
|
|
||||
Common share equivalents
|
|
|
—
|
|
|
|
|
|
—
|
|
|||||
Weighted-average shares outstanding
|
|
|
55,904
|
|
|
|
|
55,752
|
|
||||||
Earnings (loss) per share
|
$
|
(0.24
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
12 weeks ended
|
||||||
|
March 25, 2017
|
|
March 26, 2016
|
||||
|
(in thousands, except percentages and per share amounts)
|
||||||
Prepaid and processing revenues
|
$
|
356,116
|
|
|
$
|
315,066
|
|
Partner distribution expense as a % of prepaid and processing revenues
|
50.4
|
%
|
|
54.6
|
%
|
||
Prepaid and processing revenues:
|
|
|
|
||||
Commissions and fees
|
$
|
255,206
|
|
|
$
|
239,624
|
|
Program and other fees
|
100,910
|
|
|
75,442
|
|
||
Prepaid and processing revenues
|
$
|
356,116
|
|
|
$
|
315,066
|
|
Total operating revenues
|
$
|
407,236
|
|
|
$
|
366,462
|
|
Revenue adjustment from purchase accounting (2)
|
1,984
|
|
|
3,770
|
|
||
Marketing revenue and other pass-through revenue
|
(16,980
|
)
|
|
(13,459
|
)
|
||
Partner distribution expense
|
(179,476
|
)
|
|
(172,155
|
)
|
||
Adjusted operating revenues (1)
|
$
|
212,764
|
|
|
$
|
184,618
|
|
(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 and other pass-through revenue, which has offsetting 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 March 25, 2017
|
|
% of Total Operating Revenues
|
|
12 weeks ended March 26, 2016
|
|
% of Total Operating Revenues
|
||||||
|
(in thousands, except percentages)
|
||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
255,206
|
|
|
62.7
|
%
|
|
$
|
239,624
|
|
|
65.4
|
%
|
Program and other fees
|
100,910
|
|
|
24.8
|
%
|
|
75,442
|
|
|
20.6
|
%
|
||
Marketing
|
14,281
|
|
|
3.5
|
%
|
|
13,459
|
|
|
3.6
|
%
|
||
Product sales
|
36,839
|
|
|
9.0
|
%
|
|
37,937
|
|
|
10.4
|
%
|
||
Total operating revenues
|
407,236
|
|
|
100.0
|
%
|
|
366,462
|
|
|
100.0
|
%
|
||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
||||||
Partner distribution expense
|
179,476
|
|
|
44.1
|
%
|
|
172,155
|
|
|
47.0
|
%
|
||
Processing and services
|
102,272
|
|
|
25.1
|
%
|
|
73,941
|
|
|
20.2
|
%
|
||
Sales and marketing
|
62,785
|
|
|
15.4
|
%
|
|
53,338
|
|
|
14.6
|
%
|
||
Costs of products sold
|
36,193
|
|
|
8.9
|
%
|
|
35,732
|
|
|
9.8
|
%
|
||
General and administrative
|
29,025
|
|
|
7.1
|
%
|
|
23,497
|
|
|
6.4
|
%
|
||
Transition and acquisition
|
451
|
|
|
0.1
|
%
|
|
945
|
|
|
0.3
|
%
|
||
Amortization of acquisition intangibles
|
13,025
|
|
|
3.2
|
%
|
|
9,898
|
|
|
2.7
|
%
|
||
Change in fair value of contingent consideration
|
1,040
|
|
|
0.3
|
%
|
|
—
|
|
|
—
|
%
|
||
Total operating expenses
|
424,267
|
|
|
104.2
|
%
|
|
369,506
|
|
|
100.8
|
%
|
||
OPERATING INCOME (LOSS)
|
(17,031
|
)
|
|
(4.2
|
)%
|
|
(3,044
|
)
|
|
(0.8
|
)%
|
||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||||||
Interest income and other income (expense), net
|
836
|
|
|
0.2
|
%
|
|
412
|
|
|
0.1
|
%
|
||
Interest expense
|
(6,943
|
)
|
|
(1.7
|
)%
|
|
(4,066
|
)
|
|
(1.1
|
)%
|
||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
(23,138
|
)
|
|
(5.7
|
)%
|
|
(6,698
|
)
|
|
(1.8
|
)%
|
||
INCOME TAX EXPENSE (BENEFIT)
|
(9,775
|
)
|
|
(2.4
|
)%
|
|
(3,237
|
)
|
|
(0.9
|
)%
|
||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(13,363
|
)
|
|
(3.3
|
)%
|
|
(3,461
|
)
|
|
(0.9
|
)%
|
||
Loss (income) attributable to non-controlling interests, net of tax
|
(123
|
)
|
|
—
|
%
|
|
(92
|
)
|
|
—
|
%
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(13,486
|
)
|
|
(3.3
|
)%
|
|
$
|
(3,553
|
)
|
|
(1.0
|
)%
|
•
|
U.S. Retail - sale of prepaid cards to consumers in the U.S. through our physical retail distribution partners as well as through our various online distribution channels.
|
•
|
Incentives & Rewards - our incentives businesses in the U.S., which provide software, services and prepaid products to business clients for their loyalty, incentive and reward programs, as well as our Achievers business in Canada.
|
•
|
International - our retail and incentives businesses outside of the United States, except for our Achievers business in Canada, which is reported in the Incentives & Rewards segment.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 25, 2017
|
|
March 26, 2016
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|||||||
Commissions and fees
|
$
|
255,206
|
|
|
$
|
239,624
|
|
|
$
|
15,582
|
|
|
6.5
|
%
|
Program and other fees
|
100,910
|
|
|
75,442
|
|
|
25,468
|
|
|
33.8
|
%
|
|||
Marketing
|
14,281
|
|
|
13,459
|
|
|
822
|
|
|
6.1
|
%
|
|||
Product sales
|
36,839
|
|
|
37,937
|
|
|
(1,098
|
)
|
|
(2.9
|
)%
|
|||
Total operating revenues
|
$
|
407,236
|
|
|
$
|
366,462
|
|
|
$
|
40,774
|
|
|
11.1
|
%
|
Partner distribution expense
|
179,476
|
|
|
172,155
|
|
|
7,321
|
|
|
4.3
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
227,760
|
|
|
$
|
194,307
|
|
|
$
|
33,453
|
|
|
17.2
|
%
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 25, 2017
|
|
March 26, 2016
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
207,638
|
|
|
$
|
216,271
|
|
|
$
|
(8,633
|
)
|
|
(4.0
|
)%
|
Partner distribution expense
|
101,713
|
|
|
105,684
|
|
|
(3,971
|
)
|
|
(3.8
|
)%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
105,925
|
|
|
$
|
110,587
|
|
|
$
|
(4,662
|
)
|
|
(4.2
|
)%
|
Transaction dollar volume (1)
|
$
|
1,797,721
|
|
|
$
|
1,938,411
|
|
|
$
|
(140,690
|
)
|
|
(7.3
|
)%
|
Prepaid and processing revenues
|
$
|
178,370
|
|
|
$
|
181,832
|
|
|
$
|
(3,462
|
)
|
|
(1.9
|
)%
|
Prepaid and processing revenues as a percentage of transaction dollar volume (2)
|
9.9
|
%
|
|
9.4
|
%
|
|
0.5
|
%
|
|
5.3
|
%
|
|||
Partner distribution expense as a percentage of prepaid and processing revenues
|
57.0
|
%
|
|
58.1
|
%
|
|
(1.1
|
)%
|
|
(1.9
|
)%
|
(1)
|
Transaction dollar volume
represents the total dollar amount of value loaded onto any of our prepaid products. The dollar amount and volume of card sales and rebates processed directly affect the amount of our revenues and direct costs. We measure and monitor
Transaction dollar volume
by retail distribution partner channel and content provider program.
|
(2)
|
Prepaid and processing revenues as a percentage of transaction dollar volume
—
Represents the total amount of
Commissions and fees
and
Program and other fees
recognized during the period as a percentage of
Transaction dollar volume
for the same period. Our prepaid product revenues vary among our various product offerings: closed loop gift and prepaid telecom cards generate the highest rates due to the content provider commissions; open loop gift cards also generate high rates due to program management fees, interchange and other fees included in
Program and other fees
in addition to the consumer purchase fees included in
Commissions and fees
; financial services products generate the lowest rates due to
higher average transaction values
. This metric helps us understand and manage overall margins from our product offerings.
|
•
|
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. During 2016, our non-EMV compliant distribution partners placed restrictions on the sale of open loop gift cards and some close loop gift cards
|
•
|
Prepaid and processing revenues as a percentage of transaction dollar volume
—Increased 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 higher commissions and fees rates, which resulted from a shift in mix from higher denomination cards to lower denomination cards due to 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 fee rate that will continue to decrease as a result of a contract amendment with MetaBank, our primary issuing bank, based on changing redemption patterns for open loop gift products.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—Decreased due to an increase in the proportion of products sold for which we share a smaller portion of our total revenues with our retail distribution partners; as well as an increase in sales through our online distribution channels where we do not incur such expense for sales through our proprietary websites.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 25, 2017
|
|
March 26, 2016
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
63,225
|
|
|
$
|
61,276
|
|
|
$
|
1,949
|
|
|
3.2
|
%
|
Partner distribution expense
|
4,086
|
|
|
2,792
|
|
|
1,294
|
|
|
46.3
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
59,139
|
|
|
$
|
58,484
|
|
|
$
|
655
|
|
|
1.1
|
%
|
Prepaid and processing revenues
|
$
|
49,255
|
|
|
$
|
51,726
|
|
|
$
|
(2,471
|
)
|
|
(4.8
|
)%
|
Partner distribution expense as a percentage of prepaid and processing revenues
|
8.3
|
%
|
|
5.4
|
%
|
|
2.9
|
%
|
|
53.7
|
%
|
•
|
Prepaid and processing revenues
—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 with one of our acquired entities. The amendment resulted in a one-time benefit of $4.3 million which we recognized in
Program and other fees
. During the first quarter of 2017, we also realigned certain businesses previously reported in the Incentives & Rewards segment; those certain businesses are now reported in the U.S. Retail and International segments, reflecting a $4.5 million decrease in prepaid and processing revenues. These decreases are partially offset by higher prepaid and processing revenues from 888extramoney.com LLC (“Extrameasures”), which we acquired during the second quarter of 2016 and growth in our employee engagement business.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenue
—Increased due to higher proportion of sales through business clients for which we recognize net pricing discounts as an expense.
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 25, 2017
|
|
March 26, 2016
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
Total operating revenues
|
$
|
136,373
|
|
|
$
|
88,915
|
|
|
$
|
47,458
|
|
|
53.4
|
%
|
Partner distribution expense
|
73,677
|
|
|
63,679
|
|
|
9,998
|
|
|
15.7
|
%
|
|||
Operating revenues, net of Partner distribution expense
|
$
|
62,696
|
|
|
$
|
25,236
|
|
|
$
|
37,460
|
|
|
148.4
|
%
|
Prepaid and processing revenues
|
$
|
128,491
|
|
|
$
|
81,508
|
|
|
$
|
46,983
|
|
|
57.6
|
%
|
Partner distribution expense as a percentage of prepaid and processing revenues
|
57.3
|
%
|
|
78.1
|
%
|
|
(20.8
|
)%
|
|
(26.6
|
)%
|
•
|
Prepaid and processing revenues
—Our acquisition of The Grass Roots Group Holdings Limited and its subsidiaries (collectively, “Grass Roots”) in the fourth quarter of 2016 accounted for a $30.1 million increase to our prepaid and processing revenues for the
first
quarter of
2017
. Prepaid and processing revenues also increased $15.3 million due to increased sales volume in all regions, primarily Germany, Mexico and from our sub-distributor relationships in Japan and South Korea. In addition, as we realigned certain businesses between our segments beginning the first quarter of 2017, the results for the International segment also includes $1.6 million prepaid and processing revenues of certain businesses previously reported in the Incentives & Rewards segment.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—Decreased due to our acquisitions, which have minimal partner distribution expense along with a decrease in proportion of sales through our sub-distributor relationships, primarily Japan (which have higher commission share arrangements but for which we incur minimal other operating expenses).
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 25, 2017
|
|
March 26, 2016
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|||||||
Partner distribution expense
|
$
|
179,476
|
|
|
$
|
172,155
|
|
|
$
|
7,321
|
|
|
4.3
|
%
|
Processing and services
|
102,272
|
|
|
73,941
|
|
|
28,331
|
|
|
38.3
|
%
|
|||
Sales and marketing
|
62,785
|
|
|
53,338
|
|
|
9,447
|
|
|
17.7
|
%
|
|||
Costs of products sold
|
36,193
|
|
|
35,732
|
|
|
461
|
|
|
1.3
|
%
|
|||
General and administrative
|
29,025
|
|
|
23,497
|
|
|
5,528
|
|
|
23.5
|
%
|
|||
Transition and acquisition
|
451
|
|
|
945
|
|
|
(494
|
)
|
|
(52.3
|
)%
|
|||
Amortization of acquisition intangibles
|
13,025
|
|
|
9,898
|
|
|
3,127
|
|
|
31.6
|
%
|
|||
Change in fair value of contingent consideration
|
1,040
|
|
|
—
|
|
|
1,040
|
|
|
N/M
|
||||
Total operating expenses
|
$
|
424,267
|
|
|
$
|
369,506
|
|
|
$
|
54,761
|
|
|
14.8
|
%
|
|
12 weeks ended
|
|
|
|
|
|||||||||
|
March 25, 2017
|
|
March 26, 2016
|
|
Change
|
|||||||||
|
(in thousands, except percentages)
|
|||||||||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|||||||
Interest income and other income (expense), net
|
$
|
836
|
|
|
$
|
412
|
|
|
$
|
424
|
|
|
102.9
|
%
|
Interest expense
|
(6,943
|
)
|
|
(4,066
|
)
|
|
(2,877
|
)
|
|
70.8
|
%
|
|||
Total other income (expense)
|
$
|
(6,107
|
)
|
|
$
|
(3,654
|
)
|
|
$
|
(2,453
|
)
|
|
67.1
|
%
|
INCOME TAX EXPENSE (BENEFIT)
|
$
|
(9,775
|
)
|
|
$
|
(3,237
|
)
|
|
$
|
(6,538
|
)
|
|
202.0
|
%
|
EFFECTIVE TAX RATE
|
42.2
|
%
|
|
48.3
|
%
|
|
(6.1
|
)%
|
|
|
|
12 weeks ended
|
||||||
|
March 25, 2017
|
|
March 26, 2016
|
||||
|
(in thousands)
|
||||||
Net cash (used in) provided by operating activities
|
$
|
(766,147
|
)
|
|
$
|
(747,685
|
)
|
Net cash (used in) provided by investing activities
|
(32,778
|
)
|
|
(122,274
|
)
|
||
Net cash (used in) provided by financing activities
|
(1,036
|
)
|
|
166,888
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
6,372
|
|
|
1,445
|
|
||
Net decrease in cash and cash equivalents
|
$
|
(793,589
|
)
|
|
$
|
(701,626
|
)
|
•
|
cash used in non-settlement related operating assets and liabilities totaled
$15.1 million
and
$30.5 million
, for the
12 weeks ended
March 25, 2017
and
March 26, 2016
, respectively, reflecting a larger reduction of our operating liabilities during the
12 weeks ended
March 26, 2016
;
|
•
|
a decrease of
$1.2 million
in our net income tax payments for the
12 weeks ended
March 25, 2017
compared to the
12 weeks ended
March 26, 2016
;
|
•
|
partially offset by pre-tax income, adjusted for noncash reconciling items (excluding deferred income taxes), which decreased
$5.5 million
, from
$29.9 million
to
$24.4 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.
|
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
|
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||||
January 1, 2017 to January 28, 2017
|
|
315
|
|
|
|
$
|
37.47
|
|
|
—
|
|
|
|
$
|
—
|
|
January 29, 2017 to February 25, 2017
|
|
217
|
|
|
|
$
|
36.50
|
|
|
—
|
|
|
|
$
|
—
|
|
February 26, 2017 to March 25, 2017
|
|
332
|
|
|
|
$
|
35.50
|
|
|
—
|
|
|
|
$
|
—
|
|
Total
|
|
864
|
|
|
|
$
|
36.47
|
|
|
—
|
|
|
|
$
|
—
|
|
(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 share of common stock does not include brokerage commissions.
|
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
|
|
Cooperation Agreement, dated March 16, 2017, by and between JANA Partners LLC and Blackhawk Network Holdings, Inc.
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
March 20, 2017
|
|
|
10.2†
|
|
Amendment No. 7 to Servicing Agreement, dated as of March 24, 2017, 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 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.
|
The following definition is added to Article I of the Agreement:
|
2.
|
The following sentences shall be added to the end of the first paragraph of Section II(b) of Schedule A to the Agreement, as previously deleted and replaced in Amendment No. 3 as well as amended in Amendment No. 4, and all references to “Activated” in this Section II(b) of Schedule A to the Agreement are hereby replaced with the term “Loaded”:
|
3.
|
Section II(e) of Schedule A to the Agreement is hereby deleted in its entirety and replaced with the following:
|
(i)
|
Servicer shall pay to Bank a fee of [**] for each Card Loaded with funds after January 1, 2017 (the “
Card Fee
”).
|
(ii)
|
Bank shall calculate the average daily Net Deposits for each month (the “
Average Daily Net Deposits
”). “
Net Deposits
” means (i) the total amount of deposits in the Operating Accounts, Funding Accounts and Settlement Accounts and Proceeds Account, less (ii) the cumulative amount of Supplement Fees that have been paid to Servicer pursuant to this Agreement or pursuant to the Card Program Management Agreement between the Parties dated June 29, 2007.
|
(iii)
|
At the end of the 2017 calendar year and at the end of each calendar year thereafter during the Term, Bank shall calculate an average of that year’s Average Daily Net
|
4.
|
Schedule E is hereby amended by adding the provisions set forth on
Attachment 2
to this Amendment No. 7.
|
5.
|
The Letter Agreement (referred to therein as the “Addendum”) between the Parties dated March 30, 2012, related to the payment of a commission on deposits to Servicer, is terminated effective December 31, 2016.
|
6.
|
Paragraph I of Amendment No. 6 is hereby amended by adding the following sentence to the end of the paragraph:
|
7.
|
Except as specifically modified by this Amendment No. 7, the Agreement shall remain in full force and effect. This Amendment No. 7 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. 7 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.
|
Calendar Quarter of Card Load
|
Applicable Supplemental Fee Rate*
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
AFTER [**]
|
To be agreed based on Parties quarterly rate review meetings
|
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: May 2, 2017
|
|
/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
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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: May 2, 2017
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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
March 25, 2017
, 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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