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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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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
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94588
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(Address of Principal Executive Offices)
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(Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.001 per share
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The Nasdaq Stock Market LLC
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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.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV.
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Item 15.
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Item 16.
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Products and Services
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How We Earn Fees
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Closed Loop Gift Cards
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For our third-party gift card and first-party digital gift card businesses, content providers pay us commission and fees based on transaction dollar volume. For our third-party gift card business, we share commissions with our retail distribution partners where applicable.
For aggregated category gift cards that are issued and/or program-managed by Blackhawk, we earn commissions from the retail participants on redeemed balances, and also recognize revenues for unredeemed balances.
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Open Loop Gift Cards
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Consumers pay a purchase fee upon card activation depending on transaction dollar volume. We share this fee with our retail distribution partners and content providers.
Our issuing banks pay us additional program management fees and other fees for our Visa gift cards, based, in part, on unspent balances. We also earn a portion of merchant interchange fees when customers use our proprietary Visa gift card for purchases. Merchants pay us a commission on “cash-back” cards when redeemed with them. |
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Incentive, Loyalty and Engagement Programs
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We earn fees when we sell incentive cards to our business clients.
We earn fees for processing and fulfillment of consumer rebates. Our issuing banks pay us additional program management fees and other fees for our open loop incentive cards. We earn a portion of merchant interchange fees when consumers use our open loop incentive cards for purchases. We earn additional commissions when consumer make purchases using our restricted authorization network cards. We earn revenues when employees redeem points for merchandise or prepaid cards. We earn subscription or periodic fees for use by customers of our employee engagement software platform. |
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Cardpool Exchange Services
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We earn a markup on the sale of pre-owned closed loop gift cards, which we purchase from consumers at a discount to the amount of funds remaining on a card.
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Digital Services for Online and Mobile Applications
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Content providers pay us commission and fees based on transaction dollar volume for digital products sold using our technology platform that integrates prepaid products with other parties’ online, digital and mobile applications.
We also earn commissions from our digital distribution partners that offer gift cards and eGifts for purchase or for redemption in their online and mobile applications. Revenue contribution from the digital services business is incorporated into the operating revenues for the related businesses. |
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Other Fee Categories
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Content providers pay us marketing funds to support programs that we coordinate with our retail distribution partners for the in-store or online promotion of their gift cards.
We earn revenue for card production and packaging services for content providers.
We earn fees related to certain closed loop card programs. We earn a split and/or fees on merchant promotions purchased through the NimbleCommerce.com website.
We earn management fees, transaction fees and technology fees from our business clients.
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•
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federal anti-money laundering laws and regulations, including the USA PATRIOT Act (the “Patriot Act”), the Bank Secrecy Act (the “BSA”), anti-terrorist financing laws and regulations and anti-bribery and corrupt practices laws and regulations in the U.S., and similar international laws and regulations;
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•
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state unclaimed property laws and regulations and state money transmitter or similar licensing laws and regulations;
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•
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federal and state consumer protection laws, including the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “CARD Act”), and the Durbin Amendment to Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), and laws and regulations relating to privacy and data security; and
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•
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foreign jurisdiction payment services industry laws and regulations.
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•
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we may experience negative reactions from the financial markets, including negative impacts on our stock price, and it is uncertain when, if ever, the price of the shares would return to the prices at which the shares currently trade;
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•
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we may experience negative publicity, which could have an adverse effect on our ongoing operations including, but not limited to, retaining and attracting employees, distribution partners, content partners, business clients, customers, providers, advertisers and others with whom we do business;
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•
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we will still be required to pay certain significant costs relating to the Merger, such as legal, accounting, financial advisor, printing and other professional services fees, which may relate to activities that we would not have undertaken other than in connection with the Merger;
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•
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we may be required to pay a cash termination fee and/or expense reimbursement as required under the Merger Agreement;
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•
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the Merger Agreement places certain restrictions on the conduct of our business, which may have delayed or prevented us from undertaking business opportunities that, absent the Merger Agreement, we may have pursued;
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matters relating to the Merger require substantial commitments of time and resources by our management, which could result in the distraction of management from ongoing business operations and pursuing other opportunities that could have been beneficial to us; and
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litigation related to the Merger or related to any enforcement proceeding commenced against us to perform our obligations under the Merger Agreement.
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•
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changes in consumer and corporate preferences and demand for the products and services that we offer;
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•
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our ability to retain and attract new retail and corporate customers;
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our ability to maintain and expand our distribution network and business partners;
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our ability to maintain and expand the supply and variety of products and services that we distribute and offer;
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our ability to increase the productivity of our distribution partners’ stores;
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our ability to anticipate and adapt to technological changes in the industry, as well as to develop new technologies to deliver our product and service offerings;
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our ability to maintain our relationships with banks that issue open loop prepaid cards (“card issuing banks”) and other industry participants;
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pricing pressure in the face of increasing competition and other market forces;
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regulatory changes or uncertainties that increase compliance costs, decrease the attractiveness of the products and services we offer or make it more difficult or less attractive for us, our distribution partners or our content providers, including card issuing banks, to participate in our industry; and
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consumer acceptance of our product and services offerings in international markets, and our ability to grow our international operations and manage related regulatory compliance and foreign currency fluctuations.
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the addition or loss of one or more significant distribution partners or content providers;
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consumer spending patterns and preferences;
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business spending patterns and preferences;
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general economic conditions affecting consumer spending;
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the overall business condition of our distribution partners and content providers;
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the development and expansion of new product and service offerings by our competitors;
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changes in pricing and fee structures, whether driven by competitive factors, card issuing banks, card associations, regulatory requirements or otherwise;
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changes to our product and service offerings or changes in the way our products and services are sold, whether due to regulatory requirements or otherwise;
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changes in our product and service mix;
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changes in regulations or changes in interpretations of existing regulations;
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the institution of new, or the adverse resolution of pending, litigation or regulatory investigations applicable to us;
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business and service interruptions resulting from natural disasters, fraud, security breach or cyber attack, or network infrastructure failures;
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the timing of our distribution partners’ roll out of new programs and content; and
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other factors discussed elsewhere in this “Risk Factors” section.
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potentially increased regulatory and compliance requirements;
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potential regulatory restrictions on revenue streams of acquired businesses;
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implementation or remediation of controls, procedures and policies at the acquired company;
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diversion of management time and focus from operation of our then-existing business to acquisition integration challenges;
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coordination of product, sales, marketing and program and systems management functions;
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transition of the acquired company’s users and customers onto our systems;
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retention of employees from the acquired company;
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integration of employees from the acquired company into our organization;
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integration of the acquired company’s accounting, information management, human resources and other administrative systems and operations into our systems and operations;
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integration of the acquired companies’ technology and platforms into our environment;
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liability for activities of the acquired company prior to the acquisition, including violations of law, commercial disputes, escheat and tax and other known and unknown liabilities; and
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litigation or other claims in connection with the acquired company, including claims brought by terminated employees, customers, former stockholders or other third parties.
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•
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federal and state anti-money laundering laws and regulations, including the USA PATRIOT Act (the “Patriot Act”), the Bank Secrecy Act (“BSA”), anti-terrorist financing laws and regulations, anti-bribery and corrupt practice laws and regulations and similar international laws and regulations;
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consumer protection laws, regulations and rules, including those issued by the Consumer Financial Protection Bureau (“CFPB”);
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federal economic sanctions laws overseen by the Office of Foreign Assets Control (“OFAC”);
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state unclaimed property (escheat) laws and regulations;
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state money transmitter licensing laws and regulations;
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data privacy protection and cyber-security laws and regulations; and
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foreign jurisdiction payment services industry laws and regulations.
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impair or eliminate our ability to conduct certain aspects of our business;
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increase our compliance and other costs of doing business;
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require significant product redesign or systems redevelopment;
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prohibit or suspend our data transfer from the European Union to the United States;
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render our products or services less profitable, obsolete or less attractive compared to competing products;
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affect our distribution partners’ or content providers’ willingness to do business with us or operate in our industry;
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•
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affect our Cardpool exchange partners’ willingness to do business with us;
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reduce the amount of revenues that we derive from unredeemed prepaid products;
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cause loyalty, awards and promotional cards to be treated like other prepaid cards; and
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discourage distribution partners from offering, and consumers from purchasing, our prepaid products.
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•
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challenges caused by distance, language and cultural differences;
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multiple, conflicting and changing laws and regulations, and difficulties in understanding and ensuring compliance with those laws by our employees and business partners, including compliance of data privacy regulations which may affect how we transfer data in our various markets;
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foreign laws and regulations that impose greater compliance obligations and costs;
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foreign currency fluctuations;
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differing and potentially adverse tax laws and interpretations;
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foreign tax authorities requiring tax collection or withholding from non-residents of the foreign jurisdiction;
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higher costs associated with doing business internationally, such as costs associated with tax planning and repatriating funds to the United States, administrative costs associated with payment settlement and other compliance costs related to doing business in foreign jurisdictions;
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difficulties in staffing and managing international operations;
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restrictions on the transfer of funds among countries and back to the United States;
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differing levels of social and technological acceptance of prepaid products and services;
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•
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limitations on the level of intellectual property protection;
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•
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trade sanctions, political unrest, terrorism, war and epidemics or threats of any of these events;
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•
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lack of acceptance of our distributed products or of prepaid products generally;
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•
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the potential for disputes with our business partners; and
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•
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competitive environments that favor local businesses.
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•
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failure to sustain an active, liquid trading market for our shares;
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changes in financial estimates or recommendations by securities analysts or failure to meet analysts’ performance expectations;
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changes in market valuations of similar companies;
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changes in our capital structure, such as future issuances of securities or the incurrence of debt;
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sales of our capital stock by our directors or executive officers;
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•
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the gain or loss of significant distribution partners, content providers, or business clients;
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•
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actual or anticipated developments in our business or our competitors’ businesses, such as announcements by us or our competitors of significant contracts, acquisitions or strategic alliances, or in the competitive landscape generally;
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litigation involving us, our industry or both;
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•
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additions or departures of key personnel;
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regulatory developments in the United States and/or foreign countries;
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•
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investors’ general perception of us; and
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•
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changes in general economic, industry and market conditions.
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•
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no cumulative voting in the election of directors, which may have an effect to prevent the minority stockholders from electing director candidates;
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the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
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•
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a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
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•
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special meetings of our stockholders can be called only by the Chairman of the Board or by our corporate secretary at the direction of our board of directors;
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•
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advance notice and other requirements that stockholders, must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company;
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•
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a majority stockholder vote is required for removal of a director only for cause (and a director may only be removed for cause), and a 75% stockholder vote is required for the amendment, repeal or modification of certain provisions of our certificate of incorporation and bylaws; and
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•
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our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control.
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•
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granting liens on or with respect to any of our property;
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High
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Low
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||||
Fiscal Year Ended December 30, 2017
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||||
Quarter ended March 25, 2017
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$
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39.55
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$
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33.50
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Quarter ended June 17, 2017
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$
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44.90
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$
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37.75
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Quarter ended September 9, 2017
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$
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46.70
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$
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40.85
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Quarter ended December 30, 2017
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$
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45.55
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$
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32.60
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High
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Low
|
||||
Fiscal Year Ended December 31, 2016
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|
|
||||
Quarter ended March 26, 2016
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$
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43.67
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$
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29.91
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Quarter ended June 18, 2016
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$
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35.77
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$
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31.00
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Quarter ended September 10, 2016
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$
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37.62
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$
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31.14
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Quarter ended December 31, 2016
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$
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39.10
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$
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28.88
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Period
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Total Number of Shares Purchased (1)
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Average Price Paid per Share (2)
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3)
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Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (3)
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||||||||||
September 10, 2017 to October 7, 2017
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75
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$
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44.35
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—
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$
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100,000,000
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|
||||
October 8, 2017 to November 4, 2017
|
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108
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$
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37.23
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|
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1,176,069
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$
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60,000,029
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||||
November 5, 2017 to December 2, 2017
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36
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$
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36.55
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—
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$
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60,000,029
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|
||||
December 3, 2017 to December 30, 2017
|
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72
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$
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34.30
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—
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$
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60,000,029
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||||
Total
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291
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$
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38.26
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1,176,069
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$
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60,000,029
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(1)
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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.
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(2)
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Average price paid per share of common stock does not include brokerage commissions.
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(3)
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In October 2016, the Company's Board of Directors approved a stock repurchase program that authorizes the Company to purchase up to $100 million of the Company's outstanding common stock over a period of up to two (2) years. Under the repurchase program, purchases of shares of common stock may be made from time to time in the open market, or in privately negotiated transactions, or as otherwise may be determined by the authorized officers of the Company, in compliance with applicable state and federal securities laws. The timing and amounts of any purchases are based on market conditions and other factors including price, regulatory requirements, and capital availability. The stock repurchase program does not obligate the company to acquire any specific number of shares in any period. In October 2017, we repurchased 1,176,069 shares for approximately $40.0 million. As of year-end 2017, approximately $60.0 million remained available under this stock repurchase program.
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2017
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2016
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2015
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2014
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2013
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||||||||||
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(in thousands, except per share data)
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||||||||||||||||||
Total operating revenues
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$
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2,231,606
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|
|
$
|
1,899,778
|
|
|
$
|
1,801,078
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$
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1,444,963
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|
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$
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1,138,088
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Net income (loss) attributable to Blackhawk Network Holdings, Inc. (1)
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$
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(155,768
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)
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$
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4,658
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|
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$
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45,609
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|
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$
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45,547
|
|
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$
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54,104
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Earnings (loss) per share:
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|
|
|
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||||||||||
Basic
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$
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(2.77
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)
|
|
$
|
0.08
|
|
|
$
|
0.84
|
|
|
$
|
0.86
|
|
|
$
|
1.04
|
|
Diluted
|
$
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(2.77
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)
|
|
$
|
0.08
|
|
|
$
|
0.81
|
|
|
$
|
0.83
|
|
|
$
|
1.02
|
|
Weighted average shares outstanding—basic
|
56,287
|
|
|
55,734
|
|
|
54,294
|
|
|
52,531
|
|
|
51,164
|
|
|||||
Weighted average shares outstanding—diluted
|
56,287
|
|
|
57,260
|
|
|
56,313
|
|
|
54,309
|
|
|
52,402
|
|
|
As of Year-End
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
CONSOLIDATED BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
4,139,680
|
|
|
$
|
3,595,778
|
|
|
$
|
3,112,956
|
|
|
$
|
2,449,109
|
|
|
$
|
1,964,348
|
|
Note payable (2)
|
$
|
213,103
|
|
|
$
|
147,840
|
|
|
$
|
361,708
|
|
|
$
|
373,754
|
|
|
$
|
—
|
|
Notes payable to Safeway
|
$
|
3,941
|
|
|
$
|
3,163
|
|
|
$
|
4,129
|
|
|
$
|
27,678
|
|
|
$
|
—
|
|
Convertible notes payable (3)
|
$
|
441,655
|
|
|
$
|
429,026
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Significant charges related to goodwill impairment and income tax provision contributed to the net loss for 2017. See
Note 7
—
Goodwill and Other Intangible Assets
and
Note 10
—
Income Taxes
included in Item 8, Financial Statement Supplementary Data, in the notes to our consolidated financial statements.
|
(2)
|
Includes current and long-term portion of our term loan. See
Note 4
—
Financing
included in Item 8, Financial Statement Supplementary Data, in the notes to our consolidated financial statements.
|
(3)
|
On July 27, 2016, we issued $500 million aggregate principal amount of 1.50% Convertible Senior Notes due in January 2022. See
Note 4
—
Financing
included in Item 8, Financial Statement Supplementary Data, in the notes to our consolidated financial statements.
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(dollars in thousands, except number of selling stores)
|
||||||||||
Prepaid and processing revenues:
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
1,468,867
|
|
|
$
|
1,315,755
|
|
|
$
|
1,259,801
|
|
Program and other fees
|
477,884
|
|
|
336,317
|
|
|
268,661
|
|
|||
Prepaid and processing revenues
|
$
|
1,946,751
|
|
|
$
|
1,652,072
|
|
|
$
|
1,528,462
|
|
Partner distribution expense as a % of prepaid and processing revenues
|
53.4
|
%
|
|
56.5
|
%
|
|
57.2
|
%
|
|||
Selling stores
|
252,000
|
|
|
244,000
|
|
|
215,000
|
|
|||
Total operating revenues
|
$
|
2,231,606
|
|
|
$
|
1,899,778
|
|
|
$
|
1,801,078
|
|
Revenue adjustment from purchase accounting (2)
|
5,558
|
|
|
16,930
|
|
|
7,073
|
|
|||
Marketing revenue and other pass-through revenue
|
(117,189
|
)
|
|
(94,298
|
)
|
|
(104,871
|
)
|
|||
Partner distribution expense
|
(1,040,306
|
)
|
|
(933,142
|
)
|
|
(874,043
|
)
|
|||
Adjusted operating revenues (1)
|
$
|
1,079,669
|
|
|
$
|
889,268
|
|
|
$
|
829,237
|
|
(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 and other pass-through revenues, which has offsetting expense, is useful for understanding our operating margin; and
|
•
|
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.
|
•
|
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, our e-commerce incentives business, as well as our Achievers business in Canada.
|
•
|
International - our retail and incentives businesses outside of the U.S., except for our Achievers business in Canada, which is reported in the Incentives & Rewards segment.
|
|
2017
|
|
2016
|
|
2015
|
|
Change
2017 - 2016 |
|
Change
2016 - 2015 |
||||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commissions and fees
|
$
|
1,468,867
|
|
|
$
|
1,315,755
|
|
|
$
|
1,259,801
|
|
|
$
|
153,112
|
|
|
11.6
|
%
|
|
$
|
55,954
|
|
|
4.4
|
%
|
Program and other fees
|
477,884
|
|
|
336,317
|
|
|
268,661
|
|
|
141,567
|
|
|
42.1
|
%
|
|
67,656
|
|
|
25.2
|
%
|
|||||
Marketing
|
102,841
|
|
|
94,298
|
|
|
104,871
|
|
|
8,543
|
|
|
9.1
|
%
|
|
(10,573
|
)
|
|
(10.1
|
)%
|
|||||
Product sales
|
182,014
|
|
|
153,408
|
|
|
167,745
|
|
|
28,606
|
|
|
18.6
|
%
|
|
(14,337
|
)
|
|
(8.5
|
)%
|
|||||
Total operating revenues
|
2,231,606
|
|
|
1,899,778
|
|
|
1,801,078
|
|
|
331,828
|
|
|
17.5
|
%
|
|
98,700
|
|
|
5.5
|
%
|
|||||
Partner distribution expense
|
1,040,306
|
|
|
933,142
|
|
|
874,043
|
|
|
107,164
|
|
|
11.5
|
%
|
|
59,099
|
|
|
6.8
|
%
|
|||||
Operating revenues, net of Partner distribution expense
|
$
|
1,191,300
|
|
|
$
|
966,636
|
|
|
$
|
927,035
|
|
|
$
|
224,664
|
|
|
23.2
|
%
|
|
$
|
39,601
|
|
|
4.3
|
%
|
|
2017
|
|
2016
|
|
2015
|
|
Change
2017 - 2016 |
|
Change
2016 - 2015 |
||||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Total operating revenues
|
$
|
1,233,861
|
|
|
$
|
1,125,757
|
|
|
$
|
1,165,828
|
|
|
$
|
108,104
|
|
|
9.6
|
%
|
|
$
|
(40,071
|
)
|
|
(3.4
|
)%
|
Partner distribution expense
|
665,088
|
|
|
595,893
|
|
|
577,661
|
|
|
69,195
|
|
|
11.6
|
%
|
|
18,232
|
|
|
3.2
|
%
|
|||||
Operating revenues, net of Partner distribution expense
|
$
|
568,773
|
|
|
$
|
529,864
|
|
|
$
|
588,167
|
|
|
$
|
38,909
|
|
|
7.3
|
%
|
|
$
|
(58,303
|
)
|
|
(9.9
|
)%
|
Transaction dollar volume (1)
|
$
|
11,924,091
|
|
|
$
|
10,566,424
|
|
|
$
|
11,246,903
|
|
|
$
|
1,357,667
|
|
|
12.8
|
%
|
|
$
|
(680,479
|
)
|
|
(6.1
|
)%
|
Prepaid and processing revenues
|
$
|
1,102,616
|
|
|
$
|
977,011
|
|
|
$
|
979,106
|
|
|
$
|
125,605
|
|
|
12.9
|
%
|
|
$
|
(2,095
|
)
|
|
(0.2
|
)%
|
Prepaid and processing revenues as a percentage of transaction dollar volume (2)
|
9.2
|
%
|
|
9.2
|
%
|
|
8.7
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.5
|
%
|
|
5.7
|
%
|
|||||
Partner distribution expense as a percentage of prepaid and processing revenues
|
60.3
|
%
|
|
61.0
|
%
|
|
59.0
|
%
|
|
(0.7
|
)%
|
|
(1.1
|
)%
|
|
2.0
|
%
|
|
3.4
|
%
|
•
|
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 closed loop gift cards until they completed their EMV implementation. By the end of 2016, most of our distribution partners were EMV compliant and had lifted those restrictions. In 2017, the negative impact of restricted sales has gradually decreased which is reflected in higher transaction dollar volume for the year. Additionally, the increase in transaction dollar volume was also primarily driven by higher sales for our closed gift and open loop products, online distribution channels, as well as our acquisition of CashStar in the third quarter of 2017. These increases were partially offset by the discontinuation of certain low-margin financial services programs, including certain co-branded GPR products in 2016.
|
•
|
Prepaid and processing revenues as a percentage of Transaction dollar volume
—Remained constant primarily due to increased sales of higher-margin products and the discontinuation of certain low-margin financial services programs,
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—Decreased due to higher sales 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) as well as an increase in sales through our online distribution channels where we do not incur partner distribution expense. This decrease was partially offset by higher partner distribution expense as a percentage of prepaid and processing revenue on sales of our closed loop gift products. The Company has recently experienced increasing competitive pressures in some U.S. retail markets which are expected to result in higher partner distribution expense as a percentage of prepaid and processing revenue.
|
•
|
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, in 2016 some of our non-EMV compliant retail distribution partners had 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 included 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 during 2016. By the end of 2016, most of our distribution partners were EMV compliant and had lifted many of the EMV related restrictions. 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 acquisitions of GiftCards and NimbleCommerce in the first quarter of 2016.
|
•
|
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 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 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. The prepaid and processing revenue rate for closed loop gift products decreased slightly in 2016. In addition, the adoption of ASU 2016-04 in the first quarter of 2016 did not have a material impact on our prepaid and processing revenue rate for 2016.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—Increased due to an increase in the proportion of sales through retail distribution partners with higher commission share rates, 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 where we do not incur such distribution expense for sales through our proprietary websites.
|
|
2017
|
|
2016
|
|
2015
|
|
Change
2017 - 2016 |
|
Change
2016 - 2015 |
||||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Total operating revenues
|
$
|
338,311
|
|
|
$
|
280,217
|
|
|
$
|
197,060
|
|
|
$
|
58,094
|
|
|
20.7
|
%
|
|
$
|
83,157
|
|
|
42.2
|
%
|
Partner distribution expense
|
22,793
|
|
|
20,419
|
|
|
16,591
|
|
|
2,374
|
|
|
11.6
|
%
|
|
3,828
|
|
|
23.1
|
%
|
|||||
Operating revenues, net of Partner distribution expense
|
$
|
315,518
|
|
|
$
|
259,798
|
|
|
$
|
180,469
|
|
|
$
|
55,720
|
|
|
21.4
|
%
|
|
$
|
79,329
|
|
|
44.0
|
%
|
Prepaid and processing revenues
|
$
|
240,428
|
|
|
$
|
229,303
|
|
|
$
|
174,681
|
|
|
$
|
11,125
|
|
|
4.9
|
%
|
|
$
|
54,622
|
|
|
31.3
|
%
|
Partner distribution expense as a percentage of prepaid and processing revenues
|
9.5
|
%
|
|
8.9
|
%
|
|
9.5
|
%
|
|
0.6
|
%
|
|
6.7
|
%
|
|
(0.6
|
)%
|
|
(6.3
|
)%
|
•
|
Prepaid and processing revenues
—Prepaid and processing revenues increased
$12.6 million
in
2017
, primarily due to an increase in 2017 of
$9.2 million
in our rebate and incentives business and an increase of
$7.7 million
in our employee engagement business. These increases were partially offset by a one-time benefit of
$4.3 million
in 2016 as a result of a contractual amendment with one of our issuing banks that did not repeat in 2017.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—Increased primarily due to the one-time benefit of $4.3 million recognized in
Program and other fees
, in 2016,
as a result of a contractual agreement with one of our issuing banks that did not repeat in 2017.
|
•
|
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 between the bank and one of our acquired entities. This 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 revenues increased
$50.3 million
in 2016 driven by overall growth in all areas including
$24.7 million
in our e-commerce business as well as
$21.8 million
in our employee engagement business and
$1.8 million
in our rebate and incentives business, partially offset by a decrease of
$2.3 million
in our loyalty program.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—Decreased primarily due to a one-time benefit of $4.3 million in 2016 as a result of a contractual amendment with one of our issuing banks;
|
|
2017
|
|
2016
|
|
2015
|
|
Change
2017 - 2016 |
|
Change
2016 - 2015 |
||||||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Total operating revenues
|
$
|
659,434
|
|
|
$
|
493,804
|
|
|
$
|
438,190
|
|
|
$
|
165,630
|
|
|
33.5
|
%
|
|
$
|
55,614
|
|
|
12.7
|
%
|
Partner distribution expense
|
352,425
|
|
|
316,830
|
|
|
279,791
|
|
|
35,595
|
|
|
11.2
|
%
|
|
37,039
|
|
|
13.2
|
%
|
|||||
Operating revenues, net of Partner distribution expense
|
$
|
307,009
|
|
|
$
|
176,974
|
|
|
$
|
158,399
|
|
|
$
|
130,035
|
|
|
73.5
|
%
|
|
$
|
18,575
|
|
|
11.7
|
%
|
Prepaid and processing revenues
|
$
|
603,707
|
|
|
$
|
445,758
|
|
|
$
|
374,675
|
|
|
$
|
157,949
|
|
|
35.4
|
%
|
|
$
|
71,083
|
|
|
19.0
|
%
|
Partner distribution expense as a percentage of prepaid and processing revenues
|
58.4
|
%
|
|
71.1
|
%
|
|
74.7
|
%
|
|
(12.7
|
)%
|
|
(17.9
|
)%
|
|
(3.6
|
)%
|
|
(4.8
|
)%
|
•
|
Prepaid and processing revenues
—Our acquisition of Grass Roots in the fourth quarter of 2016 accounted for an increase in 2017 of
$96.5 million
, of which
$47.6 million
related to the Meetings & Events business (“M&E”) (
see Note 2—Business Acquisitions and Divestiture
). Prepaid and processing revenues also increased
$61.4 million
due to increased sales volume in all regions, but mostly in Germany, South Korea, Australia and Mexico.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenue
—Decreased mainly due to our acquisition of Grass Roots, which incurs minimal partner distribution expense. Excluding Grass Roots, our partner distribution expense as a percentage of prepaid and processing revenues decreased from
75.1%
to
72.8%
, primarily due to a decrease in proportion of sales through our sub-distributor relationships in Japan (for which we share a higher portion of commission but for which we incur minimal other operating expenses).
|
•
|
Prepaid and processing revenues
—Our acquisition of Grass Roots in the fourth quarter of 2016 accounted for an increase of
$24.2 million
in prepaid and processing revenues in 2016. Prepaid and processing revenues also increased
$46.9 million
due to increased sales volume in the European and Asian regions, primarily Germany and Japan, slightly offset by lower sales volume in the Americas, particularly Mexico.
|
•
|
Partner distribution expense as a percentage of prepaid and processing revenues
—The adoption of ASU 2016-04 decreased the partner distribution expense rate for 2016, since certain cards for which we record breakage revenue are higher margin products. Excluding this benefit of
$6.7 million
, the
Partner distribution expense
as a percentage of
Prepaid and processing revenues
decreased to
72.2%
due to increased sales in the Netherlands and Germany where we have lower commission sharing arrangements, partially offset by increased sales in Japan where we have higher commission share rates with our sub-distributors.
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
345,501
|
|
|
$
|
185,231
|
|
|
$
|
204,680
|
|
Net cash used in investing activities
|
(289,098
|
)
|
|
(289,761
|
)
|
|
(172,383
|
)
|
|||
Net cash provided by (used in) financing activities
|
15,499
|
|
|
204,121
|
|
|
(18,815
|
)
|
|||
Effect of exchange rates on cash
|
16,168
|
|
|
(6,042
|
)
|
|
(10,521
|
)
|
|||
Net increase in cash and cash equivalents
|
$
|
88,070
|
|
|
$
|
93,549
|
|
|
$
|
2,961
|
|
•
|
pre-tax income, adjusted for noncash reconciling items (excluding deferred income taxes), increased
$34.4 million
, or
17.5%
, to
$230.9 million
from
$196.5 million
in 2016, reflecting higher operating revenues;
|
•
|
Year-over-year cash provided from non-settlement related operating assets and liabilities increased by
$119.8 million
, from
$65.0 million
in cash provided by operating activities in 2017 compared to a use of cash of
$54.8 million
in 2016, reflecting a decrease in accounts receivable from collections in 2017 and higher cash flows from deferred revenue.
|
•
|
a
$16.7 million
reduction in our income tax payments from
$13.9 million
payment last year to
$2.9 million
refund this year, which include refunds of
$0.9 million
and
$14.3 million
for 2016 and 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 net refunds increased by
$3.3 million
from
$0.4 million
in 2015 to
$3.7 million
in 2016, due to settlement of income tax receivables from Safeway related to periods before our initial public offering, our use of acquired net operating loss carryforwards, and a full year of Section 336(e) Election amortization deductions;
|
•
|
pre-tax income, adjusted for noncash reconciling items (excluding deferred income taxes), decreased
$8.8 million
, or
4.3%
, to
$196.5 million
from
$205.3 million
in 2015, reflecting higher operating expenses relative to our increase in operating revenues due primarily to the impact on revenue due to restrictive actions taken by non-EMV compliant retail distribution partners;
|
•
|
Year-over-year use of cash in non-settlement related operating assets and liabilities reduced from
$66.6 million
in 2015 to
$54.8 million
in 2016, reflecting a lower increase in accounts receivable and higher cash flows from deferred revenue.
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
||||||||
Business acquisitions, net of cash acquired
|
$
|
(168,995
|
)
|
|
$
|
(220,605
|
)
|
|
$
|
(115,481
|
)
|
Business divestiture, net of cash sold
|
13,779
|
|
|
—
|
|
|
—
|
|
|||
Change in restricted cash related to business acquisitions
|
(744
|
)
|
|
(7,691
|
)
|
|
1,811
|
|
|||
Total investing activities related to business acquisitions
|
(155,960
|
)
|
|
(228,296
|
)
|
|
(113,670
|
)
|
|||
Repayment of debt assumed in business acquisitions
|
(8,585
|
)
|
|
(8,964
|
)
|
|
—
|
|
|||
Payments for acquisition liability
|
(5,503
|
)
|
|
—
|
|
|
(1,811
|
)
|
|||
Total financing activities related to business acquisitions
|
(14,088
|
)
|
|
(8,964
|
)
|
|
(1,811
|
)
|
|||
Settlement payables and Consumer and customer deposits assumed, net of settlement receivables
|
(16,328
|
)
|
|
(65,829
|
)
|
|
(10,079
|
)
|
|||
Net working capital acquired/divested (deficit assumed)
|
6,190
|
|
|
30,121
|
|
|
(35,621
|
)
|
|||
Total investment in business acquisitions
|
$
|
(180,186
|
)
|
|
$
|
(272,968
|
)
|
|
$
|
(161,181
|
)
|
|
Payments due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than 1 Year
|
|
1 to 3 Years
|
|
3 to 5 Years
|
|
More Than 5 Years
|
||||||||||
Long-term debt
|
$
|
774,852
|
|
|
$
|
26,732
|
|
|
$
|
64,912
|
|
|
$
|
683,208
|
|
|
$
|
—
|
|
Distribution partner commitments
|
255,476
|
|
|
123,922
|
|
|
78,229
|
|
|
53,325
|
|
|
—
|
|
|||||
Operating leases
|
101,968
|
|
|
19,829
|
|
|
30,199
|
|
|
24,536
|
|
|
27,404
|
|
|||||
Contingent consideration
|
3,886
|
|
|
2,012
|
|
|
1,874
|
|
|
—
|
|
|
—
|
|
|||||
Other long-term liabilities
|
8,775
|
|
|
—
|
|
|
8,775
|
|
|
—
|
|
|
—
|
|
|||||
Total by period
|
$
|
1,144,957
|
|
|
$
|
172,495
|
|
|
$
|
183,989
|
|
|
$
|
761,069
|
|
|
$
|
27,404
|
|
Distribution partner commitments (uncertainty in timing of future payments)
|
6,232
|
|
|
|
|
|
|
|
|
|
|||||||||
Total
|
$
|
1,151,189
|
|
|
|
|
|
|
|
|
|
|
Year-end 2017
|
|
Q3 2017
|
|
Q2 2017
|
|
Q1 2017
|
|
Year-end 2016
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
1,096,195
|
|
|
$
|
304,904
|
|
|
$
|
295,071
|
|
|
$
|
214,536
|
|
|
$
|
1,008,125
|
|
Settlement receivables
|
1,038,347
|
|
|
429,494
|
|
|
401,758
|
|
|
319,557
|
|
|
641,691
|
|
|||||
Settlement payables
|
(2,074,673
|
)
|
|
(646,160
|
)
|
|
(622,653
|
)
|
|
(547,179
|
)
|
|
(1,626,827
|
)
|
|||||
Consumer and customer deposits
|
(252,822
|
)
|
|
(267,642
|
)
|
|
(226,727
|
)
|
|
(199,822
|
)
|
|
(173,344
|
)
|
|||||
Net settlement position
|
$
|
(192,953
|
)
|
|
$
|
(179,404
|
)
|
|
$
|
(152,551
|
)
|
|
$
|
(212,908
|
)
|
|
$
|
(150,355
|
)
|
|
Year-end
2017 |
|
Year-end
2016 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,096,195
|
|
|
$
|
1,008,125
|
|
Restricted cash
|
135,345
|
|
|
10,793
|
|
||
Settlement receivables, net
|
1,038,347
|
|
|
641,691
|
|
||
Accounts receivable, net
|
184,994
|
|
|
262,672
|
|
||
Other current assets
|
165,374
|
|
|
131,375
|
|
||
Total current assets
|
2,620,255
|
|
|
2,054,656
|
|
||
Property, equipment and technology, net
|
172,607
|
|
|
172,381
|
|
||
Intangible assets, net
|
431,681
|
|
|
350,185
|
|
||
Goodwill
|
563,405
|
|
|
570,398
|
|
||
Deferred income taxes
|
236,496
|
|
|
362,302
|
|
||
Other assets
|
115,236
|
|
|
85,856
|
|
||
TOTAL ASSETS
|
$
|
4,139,680
|
|
|
$
|
3,595,778
|
|
|
|
|
|
||||
|
|||||||
See accompanying notes to consolidated financial statements
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (continued)
(In thousands, except par value)
|
|||||||
|
Year-end
2017 |
|
Year-end
2016 |
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Settlement payables
|
$
|
2,074,673
|
|
|
$
|
1,626,827
|
|
Consumer and customer deposits
|
252,822
|
|
|
173,344
|
|
||
Accounts payable and accrued operating expenses
|
156,182
|
|
|
153,885
|
|
||
Deferred revenue
|
179,684
|
|
|
150,582
|
|
||
Note payable, current portion
|
10,662
|
|
|
9,856
|
|
||
Notes payable to Safeway
|
3,941
|
|
|
3,163
|
|
||
Other current liabilities
|
102,823
|
|
|
51,176
|
|
||
Total current liabilities
|
2,780,787
|
|
|
2,168,833
|
|
||
Deferred income taxes
|
28,083
|
|
|
27,887
|
|
||
Note payable
|
202,441
|
|
|
137,984
|
|
||
Convertible notes payable
|
441,655
|
|
|
429,026
|
|
||
Other liabilities
|
16,747
|
|
|
39,653
|
|
||
Total liabilities
|
3,469,713
|
|
|
2,803,383
|
|
||
Commitments and contingencies (see Note 11)
|
|
|
|
||||
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; 55,767 and 55,667 shares outstanding, respectively
|
56
|
|
|
56
|
|
||
Additional paid-in capital
|
649,546
|
|
|
608,568
|
|
||
Treasury stock, at cost: 1,176 and no shares, respectively
|
(40,023
|
)
|
|
—
|
|
||
Accumulated other comprehensive loss
|
(16,049
|
)
|
|
(48,877
|
)
|
||
Retained earnings
|
72,571
|
|
|
228,451
|
|
||
Total Blackhawk Network Holdings, Inc. equity
|
666,101
|
|
|
788,198
|
|
||
Non-controlling interests
|
3,866
|
|
|
4,197
|
|
||
Total stockholders’ equity
|
669,967
|
|
|
792,395
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
4,139,680
|
|
|
$
|
3,595,778
|
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
||||||
|
2017
|
|
2016
|
|
2015
|
||||||
OPERATING REVENUES:
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
1,468,867
|
|
|
$
|
1,315,755
|
|
|
$
|
1,259,801
|
|
Program and other fees
|
477,884
|
|
|
336,317
|
|
|
268,661
|
|
|||
Marketing
|
102,841
|
|
|
94,298
|
|
|
104,871
|
|
|||
Product sales
|
182,014
|
|
|
153,408
|
|
|
167,745
|
|
|||
Total operating revenues
|
2,231,606
|
|
|
1,899,778
|
|
|
1,801,078
|
|
|||
OPERATING EXPENSES:
|
|
|
|
|
|
||||||
Partner distribution expense
|
1,040,306
|
|
|
933,142
|
|
|
874,043
|
|
|||
Processing and services
|
448,657
|
|
|
355,268
|
|
|
304,232
|
|
|||
Sales and marketing
|
329,983
|
|
|
274,799
|
|
|
260,638
|
|
|||
Costs of products sold
|
170,493
|
|
|
143,267
|
|
|
154,625
|
|
|||
General and administrative
|
113,621
|
|
|
99,428
|
|
|
92,172
|
|
|||
Transition and acquisition
|
7,797
|
|
|
11,465
|
|
|
7,639
|
|
|||
Amortization of acquisition intangibles
|
62,794
|
|
|
57,060
|
|
|
27,550
|
|
|||
Change in fair value of contingent consideration
|
(14,937
|
)
|
|
2,100
|
|
|
(7,567
|
)
|
|||
Goodwill impairment
|
77,500
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
2,236,214
|
|
|
1,876,529
|
|
|
1,713,332
|
|
|||
OPERATING INCOME (LOSS)
|
(4,608
|
)
|
|
23,249
|
|
|
87,746
|
|
|||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
||||||
Interest income and other income (expense), net
|
(390
|
)
|
|
(449
|
)
|
|
(1,970
|
)
|
|||
Interest expense
|
(32,092
|
)
|
|
(21,864
|
)
|
|
(13,171
|
)
|
|||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
|
(37,090
|
)
|
|
936
|
|
|
72,605
|
|
|||
INCOME TAX EXPENSE (BENEFIT)
|
117,800
|
|
|
(4,102
|
)
|
|
26,796
|
|
|||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(154,890
|
)
|
|
5,038
|
|
|
45,809
|
|
|||
Income attributable to non-controlling interests, net of tax
|
(878
|
)
|
|
(380
|
)
|
|
(200
|
)
|
|||
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(155,768
|
)
|
|
$
|
4,658
|
|
|
$
|
45,609
|
|
EARNINGS (LOSS) PER SHARE:
|
|
|
|
|
|
||||||
Basic
|
$
|
(2.77
|
)
|
|
$
|
0.08
|
|
|
$
|
0.84
|
|
Diluted
|
$
|
(2.77
|
)
|
|
$
|
0.08
|
|
|
$
|
0.81
|
|
Weighted average shares outstanding—basic
|
56,287
|
|
|
55,734
|
|
|
54,294
|
|
|||
Weighted average shares outstanding—diluted
|
56,287
|
|
|
57,260
|
|
|
56,313
|
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
||||||
|
2017
|
|
2016
|
|
2015
|
||||||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
$
|
(154,890
|
)
|
|
$
|
5,038
|
|
|
$
|
45,809
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Currency translation adjustments
|
31,962
|
|
|
(9,034
|
)
|
|
(21,413
|
)
|
|||
COMPREHENSIVE INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS
|
(122,928
|
)
|
|
(3,996
|
)
|
|
24,396
|
|
|||
Comprehensive loss (income) attributable to non-controlling interests (net of tax)
|
(12
|
)
|
|
(28
|
)
|
|
488
|
|
|||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC.
|
$
|
(122,940
|
)
|
|
$
|
(4,024
|
)
|
|
$
|
24,884
|
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
||||||
|
2017
|
|
2016
|
|
2015
|
||||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income (loss) before allocation to non-controlling interests
|
$
|
(154,890
|
)
|
|
$
|
5,038
|
|
|
$
|
45,809
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization of property, equipment and technology
|
55,419
|
|
|
48,379
|
|
|
40,983
|
|
|||
Goodwill impairment
|
77,500
|
|
|
—
|
|
|
—
|
|
|||
Amortization of intangibles
|
67,912
|
|
|
62,045
|
|
|
32,366
|
|
|||
Amortization of deferred program and contract costs
|
30,584
|
|
|
29,015
|
|
|
28,991
|
|
|||
Amortization of deferred financing costs and debt discount
|
13,837
|
|
|
6,506
|
|
|
1,187
|
|
|||
Employee stock-based compensation expense
|
32,708
|
|
|
32,592
|
|
|
30,130
|
|
|||
Change in fair value of contingent consideration
|
(14,937
|
)
|
|
2,100
|
|
|
(7,567
|
)
|
|||
Loss on property, equipment and technology disposal / write-down
|
6,802
|
|
|
9,838
|
|
|
1,761
|
|
|||
Deferred income taxes
|
110,276
|
|
|
(8,899
|
)
|
|
29,810
|
|
|||
Other
|
(1,805
|
)
|
|
5,093
|
|
|
4,800
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Settlement receivables
|
(350,138
|
)
|
|
6,076
|
|
|
(111,678
|
)
|
|||
Settlement payables
|
411,248
|
|
|
19,907
|
|
|
231,662
|
|
|||
Accounts receivable, current and long-term
|
44,857
|
|
|
(13,012
|
)
|
|
(57,171
|
)
|
|||
Other current assets
|
(14,914
|
)
|
|
(13,891
|
)
|
|
(17,210
|
)
|
|||
Other assets
|
(40,490
|
)
|
|
(24,690
|
)
|
|
(20,434
|
)
|
|||
Restricted cash related to operating activities
|
(56,279
|
)
|
|
—
|
|
|
—
|
|
|||
Consumer and customer deposits
|
46,931
|
|
|
13,772
|
|
|
(54,402
|
)
|
|||
Accounts payable and accrued operating expenses
|
8,703
|
|
|
(14,835
|
)
|
|
(2,988
|
)
|
|||
Deferred revenue
|
31,458
|
|
|
33,362
|
|
|
14,363
|
|
|||
Other current and long-term liabilities
|
35,422
|
|
|
(21,707
|
)
|
|
16,877
|
|
|||
Income taxes, net
|
5,297
|
|
|
8,542
|
|
|
(2,609
|
)
|
|||
Net cash provided by operating activities
|
345,501
|
|
|
185,231
|
|
|
204,680
|
|
|||
INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Expenditures for property, equipment and technology
|
(64,599
|
)
|
|
(52,332
|
)
|
|
(52,738
|
)
|
|||
Business acquisitions, net of cash acquired
|
(168,995
|
)
|
|
(220,605
|
)
|
|
(115,481
|
)
|
|||
Proceeds from divestiture of business
|
13,779
|
|
|
—
|
|
|
—
|
|
|||
Investments in unconsolidated entities
|
(6,201
|
)
|
|
(10,541
|
)
|
|
(5,877
|
)
|
|||
Change in restricted cash
|
(59,838
|
)
|
|
(7,691
|
)
|
|
1,811
|
|
|||
Other
|
(3,244
|
)
|
|
1,408
|
|
|
(98
|
)
|
|||
Net cash used in investing activities
|
(289,098
|
)
|
|
(289,761
|
)
|
|
(172,383
|
)
|
|||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
See accompanying notes to consolidated financial statements
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
|
|||||||||||
|
52 Weeks Ended
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
||||||
|
2017
|
|
2016
|
|
2015
|
||||||
FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from issuance of note payable
|
75,000
|
|
|
250,000
|
|
|
—
|
|
|||
Repayment of note payable
|
(10,000
|
)
|
|
(463,750
|
)
|
|
(11,250
|
)
|
|||
Payments of financing costs
|
(1,025
|
)
|
|
(16,544
|
)
|
|
(2,063
|
)
|
|||
Borrowings under revolving bank line of credit
|
3,011,270
|
|
|
2,985,490
|
|
|
2,473,529
|
|
|||
Repayments on revolving bank line of credit
|
(3,011,270
|
)
|
|
(2,985,490
|
)
|
|
(2,473,529
|
)
|
|||
Payments for acquisition liability
|
(5,503
|
)
|
|
—
|
|
|
(1,811
|
)
|
|||
Repayments on notes payable to Safeway
|
(253
|
)
|
|
(890
|
)
|
|
(14,285
|
)
|
|||
Repayment of debt assumed in business acquisitions
|
(8,585
|
)
|
|
(8,964
|
)
|
|
—
|
|
|||
Proceeds from convertible debt
|
—
|
|
|
500,000
|
|
|
—
|
|
|||
Payments for note hedges
|
—
|
|
|
(75,750
|
)
|
|
—
|
|
|||
Proceeds from warrants
|
—
|
|
|
47,000
|
|
|
—
|
|
|||
Proceeds from issuance of common stock from exercise of employee stock options and employee stock purchase plans
|
16,782
|
|
|
10,302
|
|
|
13,817
|
|
|||
Other stock-based compensation related
|
(10,551
|
)
|
|
(2,284
|
)
|
|
(1,729
|
)
|
|||
Repurchase of common stock
|
(40,023
|
)
|
|
(34,843
|
)
|
|
—
|
|
|||
Other
|
(343
|
)
|
|
(156
|
)
|
|
(1,494
|
)
|
|||
Net cash provided by (used in) financing activities
|
15,499
|
|
|
204,121
|
|
|
(18,815
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
16,168
|
|
|
(6,042
|
)
|
|
(10,521
|
)
|
|||
Increase in cash and cash equivalents
|
88,070
|
|
|
93,549
|
|
|
2,961
|
|
|||
Cash and cash equivalents—beginning of year
|
1,008,125
|
|
|
914,576
|
|
|
911,615
|
|
|||
Cash and cash equivalents—end of year
|
$
|
1,096,195
|
|
|
$
|
1,008,125
|
|
|
$
|
914,576
|
|
|
|
|
|
|
|
||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
||||||
Cash payments during the year for:
|
|
|
|
|
|
||||||
Interest paid (net of amounts capitalized)
|
$
|
18,008
|
|
|
$
|
12,756
|
|
|
$
|
11,691
|
|
Income taxes paid (refunded)
|
$
|
2,587
|
|
|
$
|
(2,854
|
)
|
|
$
|
13,880
|
|
Spin-Off income taxes paid (refunds received), funded by (remitted to) Safeway (see
Note 1—Income Taxes
)
|
$
|
(253
|
)
|
|
$
|
(890
|
)
|
|
$
|
(14,285
|
)
|
Noncash investing and financing activities:
|
|
|
|
|
|
||||||
Net deferred tax assets recognized for tax basis step-up with offset to
Additional paid-in capital
(see
Note 10—Income Taxes
)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
363,889
|
|
Note payable to Safeway
contributed to
Additional paid-in capital
(see
Note 10—Income Taxes
)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,229
|
|
Financing of business acquisition with contingent consideration
|
$
|
1,640
|
|
|
$
|
21,652
|
|
|
$
|
—
|
|
Forgiveness of notes receivable and accrued interest as part of business acquisition and divestiture
|
$
|
973
|
|
|
$
|
5,445
|
|
|
$
|
—
|
|
Intangible assets recognized for the issuance of fully vested warrants
|
$
|
20,000
|
|
|
$
|
—
|
|
|
$
|
3,147
|
|
Conversion of income tax payable and deferred taxes to (from) additional paid-in capital
|
$
|
(91
|
)
|
|
$
|
—
|
|
|
$
|
(882
|
)
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
|
|||||||||||||||||||||||
|
Common Stock
|
|
|
|
|
|
|
||||||||||||||||
|
Shares
|
Amount
|
Additional Paid-In Capital
|
Accumulated Other Comprehensive Income (loss)
|
Retained Earnings
|
Total Blackhawk Network Holdings, Inc. Equity
|
Non-Controlling Interests
|
Total Stock-holders’ Equity
|
|||||||||||||||
BALANCE—January 3, 2015
|
53,505
|
|
$
|
54
|
|
$
|
137,916
|
|
$
|
(19,470
|
)
|
$
|
162,439
|
|
$
|
280,939
|
|
$
|
6,840
|
|
$
|
287,779
|
|
Comprehensive income
|
—
|
|
—
|
|
—
|
|
(20,725
|
)
|
45,609
|
|
24,884
|
|
(488
|
)
|
24,396
|
|
|||||||
Stock-based employee compensation expense
|
—
|
|
—
|
|
30,130
|
|
—
|
|
—
|
|
30,130
|
|
—
|
|
30,130
|
|
|||||||
Exercise of options
|
783
|
|
1
|
|
9,958
|
|
—
|
|
—
|
|
9,959
|
|
—
|
|
9,959
|
|
|||||||
Surrender of stock-based equity awards for taxes
|
(10
|
)
|
—
|
|
(1,654
|
)
|
—
|
|
—
|
|
(1,654
|
)
|
—
|
|
(1,654
|
)
|
|||||||
Excess tax benefit from stock-based awards, net
|
—
|
|
—
|
|
6,816
|
|
—
|
|
—
|
|
6,816
|
|
—
|
|
6,816
|
|
|||||||
Issuance of common stock upon vesting of restricted stock units
|
231
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Shares purchased under employee stock purchase plan
|
124
|
|
—
|
|
3,857
|
|
—
|
|
—
|
|
3,857
|
|
—
|
|
3,857
|
|
|||||||
Reclassification of income taxes payable and deferred taxes to additional paid-in capital
|
—
|
|
—
|
|
(882
|
)
|
—
|
|
—
|
|
(882
|
)
|
—
|
|
(882
|
)
|
|||||||
Net deferred tax assets recognized for tax basis step-up
|
—
|
|
—
|
|
372,118
|
|
—
|
|
—
|
|
372,118
|
|
—
|
|
372,118
|
|
|||||||
Exercise of warrant
|
1,161
|
|
1
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|||||||
Warrants issued to strategic partners
|
—
|
|
—
|
|
3,147
|
|
—
|
|
—
|
|
3,147
|
|
—
|
|
3,147
|
|
|||||||
Repurchase of non-controlling interests
|
—
|
|
—
|
|
533
|
|
—
|
|
—
|
|
533
|
|
(1,893
|
)
|
(1,360
|
)
|
|||||||
Dividends paid
|
—
|
|
—
|
|
—
|
|
—
|
|
(75
|
)
|
(75
|
)
|
(134
|
)
|
(209
|
)
|
|||||||
BALANCE—January 2, 2016
|
55,794
|
|
$
|
56
|
|
$
|
561,939
|
|
$
|
(40,195
|
)
|
$
|
207,973
|
|
$
|
729,773
|
|
$
|
4,325
|
|
$
|
734,098
|
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
|
|||||||||||||||||||||||
|
Common Stock
|
|
|
|
|
|
|
||||||||||||||||
|
Shares
|
Amount
|
Additional Paid-In Capital
|
Accumulated Other Comprehensive Income (loss)
|
Retained Earnings
|
Total Blackhawk Network Holdings, Inc. Equity
|
Non-Controlling Interests
|
Total Stock-holders’ Equity
|
|||||||||||||||
BALANCE—January 2, 2016
|
55,794
|
|
$
|
56
|
|
$
|
561,939
|
|
$
|
(40,195
|
)
|
$
|
207,973
|
|
$
|
729,773
|
|
$
|
4,325
|
|
$
|
734,098
|
|
Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and ASU 2016-09 (
Note 1—The Company and Significant Accounting Policies
)
|
—
|
|
—
|
|
650
|
|
—
|
|
15,871
|
|
16,521
|
|
—
|
|
16,521
|
|
|||||||
BALANCE —After adoption of recent accounting pronouncements
|
55,794
|
|
56
|
|
562,589
|
|
(40,195
|
)
|
223,844
|
|
746,294
|
|
4,325
|
|
750,619
|
|
|||||||
Comprehensive income / (loss)
|
—
|
|
—
|
|
—
|
|
(8,682
|
)
|
4,658
|
|
(4,024
|
)
|
28
|
|
(3,996
|
)
|
|||||||
Stock-based employee compensation expense
|
—
|
|
—
|
|
34,685
|
|
—
|
|
—
|
|
34,685
|
|
—
|
|
34,685
|
|
|||||||
Exercise of options
|
299
|
|
—
|
|
5,018
|
|
—
|
|
—
|
|
5,018
|
|
—
|
|
5,018
|
|
|||||||
Surrender of stock-based equity awards for taxes
|
(8
|
)
|
—
|
|
(2,233
|
)
|
—
|
|
—
|
|
(2,233
|
)
|
—
|
|
(2,233
|
)
|
|||||||
Issuance of common stock upon vesting of restricted stock units, net of forfeitures
|
385
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Shares purchased under employee stock purchase plan
|
193
|
|
—
|
|
5,284
|
|
—
|
|
—
|
|
5,284
|
|
—
|
|
5,284
|
|
|||||||
Equity component of convertible notes including related tax benefits, net (
Note 4
—
Financing
)
|
—
|
|
—
|
|
66,818
|
|
—
|
|
—
|
|
66,818
|
|
—
|
|
66,818
|
|
|||||||
Purchase of convertible note hedges (
Note 4
—
Financing
)
|
—
|
|
—
|
|
(75,750
|
)
|
—
|
|
—
|
|
(75,750
|
)
|
—
|
|
(75,750
|
)
|
|||||||
Issuance of warrants (
Note 4
—
Financing
)
|
—
|
|
—
|
|
47,000
|
|
—
|
|
—
|
|
47,000
|
|
—
|
|
47,000
|
|
|||||||
Repurchase of common stock (
Note 4
—
Financing
)
|
(996
|
)
|
—
|
|
(34,843
|
)
|
—
|
|
—
|
|
(34,843
|
)
|
—
|
|
(34,843
|
)
|
|||||||
Dividends paid
|
—
|
|
—
|
|
—
|
|
—
|
|
(51
|
)
|
(51
|
)
|
(156
|
)
|
(207
|
)
|
|||||||
BALANCE—December 31, 2016
|
55,667
|
|
$
|
56
|
|
$
|
608,568
|
|
$
|
(48,877
|
)
|
$
|
228,451
|
|
$
|
788,198
|
|
$
|
4,197
|
|
$
|
792,395
|
|
BLACKHAWK NETWORK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
|
||||||||||||||||||||||||||
|
Common Stock
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Shares
|
Amount
|
Additional Paid-In Capital
|
Treasury Stock
|
Accumulated Other Comprehensive Income (loss)
|
Retained Earnings
|
Total Blackhawk Network Holdings, Inc. Equity
|
Non-Controlling Interests
|
Total Stock-holders’ Equity
|
|||||||||||||||||
BALANCE—December 31, 2016
|
55,667
|
|
$
|
56
|
|
$
|
608,568
|
|
$
|
—
|
|
$
|
(48,877
|
)
|
$
|
228,451
|
|
$
|
788,198
|
|
$
|
4,197
|
|
$
|
792,395
|
|
Comprehensive income / (loss)
|
—
|
|
—
|
|
—
|
|
—
|
|
32,828
|
|
(155,768
|
)
|
(122,940
|
)
|
12
|
|
(122,928
|
)
|
||||||||
Stock-based employee compensation expense
|
—
|
|
—
|
|
34,726
|
|
—
|
|
—
|
|
—
|
|
34,726
|
|
—
|
|
34,726
|
|
||||||||
Exercise of options
|
465
|
|
—
|
|
11,311
|
|
—
|
|
—
|
|
—
|
|
11,311
|
|
—
|
|
11,311
|
|
||||||||
Surrender of stock-based equity awards for taxes
|
(10
|
)
|
—
|
|
(10,439
|
)
|
—
|
|
—
|
|
—
|
|
(10,439
|
)
|
—
|
|
(10,439
|
)
|
||||||||
Issuance of common stock upon vesting of restricted stock units, net of forfeitures
|
631
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
||||||||
Shares purchased under employee stock purchase plan
|
190
|
|
—
|
|
5,471
|
|
—
|
|
—
|
|
—
|
|
5,471
|
|
—
|
|
5,471
|
|
||||||||
Reclassification of income taxes payable and deferred taxes to additional paid-in capital
|
—
|
|
—
|
|
(91
|
)
|
—
|
|
—
|
|
—
|
|
(91
|
)
|
—
|
|
(91
|
)
|
||||||||
Repurchase of common stock (
Note 13
—
Earnings Per Share
)
|
(1,176
|
)
|
(1
|
)
|
—
|
|
(40,023
|
)
|
—
|
|
—
|
|
(40,024
|
)
|
—
|
|
(40,024
|
)
|
||||||||
Dividends paid
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(112
|
)
|
(112
|
)
|
(343
|
)
|
(455
|
)
|
||||||||
BALANCE—December 30, 2017
|
55,767
|
|
$
|
56
|
|
$
|
649,546
|
|
$
|
(40,023
|
)
|
$
|
(16,049
|
)
|
$
|
72,571
|
|
$
|
666,101
|
|
$
|
3,866
|
|
$
|
669,967
|
|
|
2017
|
||||||||||
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Assets:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
165,374
|
|
|
$
|
(21,892
|
)
|
|
$
|
143,482
|
|
Intangible assets, net
|
$
|
431,681
|
|
|
$
|
(703
|
)
|
|
$
|
430,978
|
|
Deferred income taxes
|
$
|
236,496
|
|
|
$
|
(699
|
)
|
|
$
|
235,797
|
|
Other assets
|
$
|
115,236
|
|
|
$
|
6,434
|
|
|
$
|
121,670
|
|
Total assets
|
$
|
4,139,680
|
|
|
$
|
(16,860
|
)
|
|
$
|
4,122,820
|
|
Liabilities:
|
|
|
|
|
|
||||||
Consumer and customer deposits
|
$
|
252,822
|
|
|
$
|
73,863
|
|
|
$
|
326,685
|
|
Deferred revenue
|
$
|
179,684
|
|
|
$
|
(125,510
|
)
|
|
$
|
54,174
|
|
Other current liabilities
|
$
|
102,823
|
|
|
$
|
6,434
|
|
|
$
|
109,257
|
|
Deferred income taxes, long-term
|
$
|
28,083
|
|
|
$
|
1,002
|
|
|
$
|
29,085
|
|
Other liabilities
|
$
|
16,747
|
|
|
$
|
22,130
|
|
|
$
|
38,877
|
|
Total liabilities
|
$
|
3,469,713
|
|
|
$
|
(22,081
|
)
|
|
$
|
3,447,632
|
|
Stockholders’ equity:
|
|
|
|
|
|
||||||
Accumulated other comprehensive loss
|
$
|
(16,049
|
)
|
|
$
|
(72
|
)
|
|
$
|
(16,121
|
)
|
Retained earnings
|
$
|
72,571
|
|
|
$
|
5,293
|
|
|
$
|
77,864
|
|
Total stockholder’s equity
|
$
|
669,967
|
|
|
$
|
5,221
|
|
|
$
|
675,188
|
|
|
2016
|
||||||||||
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Assets:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
131,375
|
|
|
$
|
(16,496
|
)
|
|
$
|
114,879
|
|
Intangible assets, net
|
$
|
350,185
|
|
|
$
|
(2,637
|
)
|
|
$
|
347,548
|
|
Deferred income taxes
|
$
|
362,302
|
|
|
$
|
(1,704
|
)
|
|
$
|
360,598
|
|
Other assets
|
$
|
85,856
|
|
|
$
|
5,641
|
|
|
$
|
91,497
|
|
Total assets
|
$
|
3,595,778
|
|
|
$
|
(15,196
|
)
|
|
$
|
3,580,582
|
|
Liabilities:
|
|
|
|
|
|
||||||
Consumer and customer deposits
|
$
|
173,344
|
|
|
$
|
58,653
|
|
|
$
|
231,997
|
|
Deferred revenue
|
$
|
150,582
|
|
|
$
|
(100,617
|
)
|
|
$
|
49,965
|
|
Other current liabilities
|
$
|
51,176
|
|
|
$
|
7,258
|
|
|
$
|
58,434
|
|
Deferred income taxes, long-term
|
$
|
27,887
|
|
|
$
|
622
|
|
|
$
|
28,509
|
|
Other liabilities
|
$
|
39,653
|
|
|
$
|
13,849
|
|
|
$
|
53,502
|
|
Total liabilities
|
$
|
2,803,383
|
|
|
$
|
(20,235
|
)
|
|
$
|
2,783,148
|
|
Stockholders’ equity:
|
|
|
|
|
|
||||||
Accumulated other comprehensive loss
|
$
|
(48,877
|
)
|
|
$
|
(108
|
)
|
|
$
|
(48,985
|
)
|
Retained earnings
|
$
|
228,451
|
|
|
$
|
5,147
|
|
|
$
|
233,598
|
|
Total stockholder’s equity
|
$
|
792,395
|
|
|
$
|
5,039
|
|
|
$
|
797,434
|
|
|
2015
|
||||||||||
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Assets:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
103,319
|
|
|
$
|
(17,002
|
)
|
|
$
|
86,317
|
|
Intangible assets, net
|
$
|
240,898
|
|
|
$
|
(649
|
)
|
|
$
|
240,249
|
|
Deferred income taxes
|
$
|
339,558
|
|
|
$
|
(7,264
|
)
|
|
$
|
332,294
|
|
Other assets
|
$
|
81,764
|
|
|
$
|
2,065
|
|
|
$
|
83,829
|
|
Total assets
|
$
|
3,112,956
|
|
|
$
|
(22,850
|
)
|
|
$
|
3,090,106
|
|
Liabilities:
|
|
|
|
|
|
||||||
Consumer and customer deposits
|
$
|
84,761
|
|
|
$
|
55,515
|
|
|
$
|
140,276
|
|
Deferred revenue
|
$
|
113,458
|
|
|
$
|
(95,569
|
)
|
|
$
|
17,889
|
|
Other current liabilities
|
$
|
57,342
|
|
|
$
|
—
|
|
|
$
|
57,342
|
|
Deferred income taxes, long-term
|
$
|
18,652
|
|
|
$
|
419
|
|
|
$
|
19,071
|
|
Other liabilities
|
$
|
14,700
|
|
|
$
|
3,136
|
|
|
$
|
17,836
|
|
Total liabilities
|
$
|
2,378,858
|
|
|
$
|
(36,499
|
)
|
|
$
|
2,342,359
|
|
Stockholders’ equity:
|
|
|
|
|
|
||||||
Accumulated other comprehensive loss
|
$
|
(40,195
|
)
|
|
$
|
(94
|
)
|
|
$
|
(40,289
|
)
|
Retained earnings
|
$
|
207,973
|
|
|
$
|
13,743
|
|
|
$
|
221,716
|
|
Total stockholder’s equity
|
$
|
734,098
|
|
|
$
|
13,649
|
|
|
$
|
747,747
|
|
|
2017
|
||||||||||
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Operating revenues:
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
1,468,867
|
|
|
$
|
4,346
|
|
|
$
|
1,473,213
|
|
Program and other fees
|
$
|
477,884
|
|
|
$
|
7,214
|
|
|
$
|
485,098
|
|
Product sales
|
$
|
182,014
|
|
|
$
|
(55,404
|
)
|
|
$
|
126,610
|
|
Total operating revenues
|
$
|
2,231,606
|
|
|
$
|
(43,844
|
)
|
|
$
|
2,187,762
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Partner distribution expense
|
$
|
1,040,306
|
|
|
$
|
4,574
|
|
|
$
|
1,044,880
|
|
Processing and services
|
$
|
448,657
|
|
|
$
|
1,379
|
|
|
$
|
450,036
|
|
Sales and marketing
|
$
|
329,983
|
|
|
$
|
(1,650
|
)
|
|
$
|
328,333
|
|
Costs of products sold
|
$
|
170,493
|
|
|
$
|
(45,732
|
)
|
|
$
|
124,761
|
|
Amortization of acquisition intangibles
|
$
|
62,794
|
|
|
$
|
(1,934
|
)
|
|
$
|
60,860
|
|
Total operating expenses
|
$
|
2,236,214
|
|
|
$
|
(43,363
|
)
|
|
$
|
2,192,851
|
|
Income tax expense (benefit)
|
$
|
117,800
|
|
|
$
|
(627
|
)
|
|
$
|
117,173
|
|
Net loss attributable to Blackhawk Network Holdings, Inc.
|
$
|
(155,768
|
)
|
|
$
|
146
|
|
|
$
|
(155,622
|
)
|
Diluted loss per share
|
$
|
(2.77
|
)
|
|
$
|
0.01
|
|
|
$
|
(2.76
|
)
|
|
2016
|
||||||||||
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Operating revenues:
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
1,315,755
|
|
|
$
|
(7,357
|
)
|
|
$
|
1,308,398
|
|
Program and other fees
|
$
|
336,317
|
|
|
$
|
(12,905
|
)
|
|
$
|
323,412
|
|
Product sales
|
$
|
153,408
|
|
|
$
|
(46,734
|
)
|
|
$
|
106,674
|
|
Total operating revenues
|
$
|
1,899,778
|
|
|
$
|
(66,996
|
)
|
|
$
|
1,832,782
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Partner distribution expense
|
$
|
933,142
|
|
|
$
|
(1,148
|
)
|
|
$
|
931,994
|
|
Processing and services
|
$
|
355,268
|
|
|
$
|
1,776
|
|
|
$
|
357,044
|
|
Sales and marketing
|
$
|
274,799
|
|
|
$
|
(2,717
|
)
|
|
$
|
272,082
|
|
Costs of products sold
|
$
|
143,267
|
|
|
$
|
(41,233
|
)
|
|
$
|
102,034
|
|
Amortization of acquisition intangibles
|
$
|
57,060
|
|
|
$
|
(9,723
|
)
|
|
$
|
47,337
|
|
Total operating expenses
|
$
|
1,876,529
|
|
|
$
|
(53,045
|
)
|
|
$
|
1,823,484
|
|
Income tax expense (benefit)
|
$
|
(4,102
|
)
|
|
$
|
(5,356
|
)
|
|
$
|
(9,458
|
)
|
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
4,658
|
|
|
$
|
(8,595
|
)
|
|
$
|
(3,937
|
)
|
Diluted earnings per share
|
$
|
0.08
|
|
|
$
|
(0.15
|
)
|
|
$
|
(0.07
|
)
|
|
2015
|
||||||||||
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Operating revenues:
|
|
|
|
|
|
||||||
Commissions and fees
|
$
|
1,259,801
|
|
|
$
|
(76
|
)
|
|
$
|
1,259,725
|
|
Program and other fees
|
$
|
268,661
|
|
|
$
|
1,896
|
|
|
$
|
270,557
|
|
Product sales
|
$
|
167,745
|
|
|
$
|
(19,884
|
)
|
|
$
|
147,861
|
|
Total operating revenues
|
$
|
1,801,078
|
|
|
$
|
(18,064
|
)
|
|
$
|
1,783,014
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Partner distribution expense
|
$
|
874,043
|
|
|
$
|
1,466
|
|
|
$
|
875,509
|
|
Processing and services
|
$
|
304,232
|
|
|
$
|
809
|
|
|
$
|
305,041
|
|
Sales and marketing
|
$
|
260,638
|
|
|
$
|
(2,068
|
)
|
|
$
|
258,570
|
|
Costs of products sold
|
$
|
154,625
|
|
|
$
|
(17,602
|
)
|
|
$
|
137,023
|
|
Amortization of acquisition intangibles
|
$
|
27,550
|
|
|
$
|
(3,384
|
)
|
|
$
|
24,166
|
|
Total operating expenses
|
$
|
1,713,332
|
|
|
$
|
(20,779
|
)
|
|
$
|
1,692,553
|
|
Income tax expense (benefit)
|
$
|
26,796
|
|
|
$
|
808
|
|
|
$
|
27,604
|
|
Net income attributable to Blackhawk Network Holdings, Inc.
|
$
|
45,609
|
|
|
$
|
1,907
|
|
|
$
|
47,516
|
|
Diluted earnings per share
|
$
|
0.81
|
|
|
$
|
0.03
|
|
|
$
|
0.84
|
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities;
|
Level 2
|
Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable;
|
Level 3
|
Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the inputs that market participants would use in pricing.
|
Cash and cash equivalents
|
$
|
17,200
|
|
Restricted cash
|
5,527
|
|
|
Settlement receivables, net
|
1,912
|
|
|
Identifiable technology and intangible assets
|
105,290
|
|
|
Goodwill
|
81,850
|
|
|
Other tangible assets, net
|
97
|
|
|
Settlement payables
|
(14,939
|
)
|
|
Consumer and customer deposits
|
(4,600
|
)
|
|
Accounts payable and accrued operating expenses
|
(4,705
|
)
|
|
Debt assumed
|
(8,285
|
)
|
|
Deferred income taxes
|
(13,379
|
)
|
|
Total purchase consideration
|
$
|
165,968
|
|
|
Fair Value
|
|
Useful Life
|
||
Customer relationships
|
$
|
103,000
|
|
|
10 years
|
Technology
|
2,290
|
|
|
1.5 years
|
|
Total identifiable technology and intangible assets
|
$
|
105,290
|
|
|
|
|
2017 (Unaudited)
|
|
2016 (Unaudited)
|
||||
Total revenues
|
$
|
2,259,191
|
|
|
$
|
1,939,859
|
|
Net loss attributable to Blackhawk Network Holdings, Inc.
|
$
|
(163,561
|
)
|
|
$
|
(7,544
|
)
|
Pro forma EPS—Basic
|
$
|
(2.91
|
)
|
|
$
|
(0.14
|
)
|
Pro forma EPS—Diluted
|
$
|
(2.91
|
)
|
|
$
|
(0.14
|
)
|
Cash and cash equivalents
|
$
|
38,957
|
|
Settlement receivables, net
|
24,290
|
|
|
Accounts receivables, net
|
10,692
|
|
|
Identifiable technology and intangible assets
|
64,825
|
|
|
Goodwill
|
52,901
|
|
|
Consumer and customer deposits
|
(35,636
|
)
|
|
Accounts payable and accrued operating expenses
|
(30,984
|
)
|
|
Deferred revenue
|
(7,215
|
)
|
|
Deferred income taxes, net
|
(9,274
|
)
|
|
Other tangible assets, net
|
3,096
|
|
|
Purchase consideration excluding GREBT
|
111,652
|
|
|
Restricted cash (GREBT)
|
8,541
|
|
|
Total purchase consideration including GREBT
|
$
|
120,193
|
|
|
Fair Value
|
|
Useful Life
|
||
Technology
|
$
|
1,586
|
|
|
1 to 3 years
|
Customer relationships
|
57,633
|
|
|
10 years
|
|
Customer backlog
|
2,911
|
|
|
1 year
|
|
Trade name
|
2,695
|
|
|
10 years
|
|
Total identifiable technology and intangible assets
|
$
|
64,825
|
|
|
|
Total revenues
|
$
|
24,210
|
|
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
(5
|
)
|
Cash and cash equivalents
|
$
|
24,976
|
|
Settlement receivables, net
|
1,743
|
|
|
Accounts receivable, net
|
15,141
|
|
|
Other current assets
|
2,617
|
|
|
Property, equipment and technology, net
|
863
|
|
|
Intangible assets, net
|
3,772
|
|
|
Goodwill
|
28,843
|
|
|
Deferred income taxes
|
1,388
|
|
|
Total assets
|
$
|
79,343
|
|
|
|
||
Settlement payables
|
$
|
(8,589
|
)
|
Consumer and customer deposits
|
(1,855
|
)
|
|
Accounts payable and accrued operating expenses
|
(8,468
|
)
|
|
Deferred revenue
|
(3,739
|
)
|
|
Other current liabilities
|
(12,248
|
)
|
|
Total liabilities
|
$
|
(34,899
|
)
|
Cash and cash equivalents
|
$
|
1,032
|
|
Settlement receivables, net
|
2,182
|
|
|
Settlement payables
|
(2,273
|
)
|
|
Consumer and customer deposits
|
(26,080
|
)
|
|
Other tangible assets, net
|
5,549
|
|
|
Identifiable intangible assets
|
21,271
|
|
|
Goodwill
|
15,549
|
|
|
Deferred income taxes
|
(1,009
|
)
|
|
Total purchase consideration
|
$
|
16,221
|
|
|
Fair Value
|
|
Useful Life
|
||
Customer relationships
|
$
|
19,083
|
|
|
10 years
|
Trade name
|
2,188
|
|
|
10 years
|
|
Total identifiable intangible assets
|
$
|
21,271
|
|
|
|
Cash and cash equivalents
|
$
|
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
|
Customer 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 and cash equivalents
|
$
|
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
|
)
|
|
Identifiable technology and intangible assets
|
45,540
|
|
|
Deferred income taxes
|
1,926
|
|
|
Goodwill
|
37,865
|
|
|
Total purchase consideration
|
$
|
78,813
|
|
|
Fair Value
|
|
Useful Life
|
||
Customer relationships
|
$
|
39,230
|
|
|
10 years
|
Customer backlog
|
1,610
|
|
|
3 years
|
|
Technology
|
4,700
|
|
|
5 years
|
|
Total identifiable technology and intangible assets
|
$
|
45,540
|
|
|
|
|
2016 (Unaudited)
|
|
2015 (Unaudited)
|
||||
Total revenues
|
$
|
2,031,871
|
|
|
$
|
2,030,066
|
|
Net income attributable to Blackhawk Network Holdings, Inc.
|
$
|
22,745
|
|
|
$
|
23,381
|
|
Pro forma EPS—Basic
|
$
|
0.41
|
|
|
$
|
0.43
|
|
Pro forma EPS—Diluted
|
$
|
0.40
|
|
|
$
|
0.42
|
|
Cash and cash equivalents
|
$
|
24,367
|
|
Accounts payables and accrued operating expenses
|
(11,580
|
)
|
|
Deferred revenue
|
(48,735
|
)
|
|
Deferred income taxes
|
(14,019
|
)
|
|
Identifiable technology and intangible assets
|
94,800
|
|
|
Goodwill
|
58,659
|
|
|
Total purchase consideration
|
$
|
103,492
|
|
|
Fair Value
|
|
Useful Life
|
||
Customer relationships
|
$
|
73,210
|
|
|
15 years
|
Technology
|
17,000
|
|
|
6 years
|
|
Customer backlog
|
4,590
|
|
|
4 years
|
|
Total identifiable technology and intangible assets
|
$
|
94,800
|
|
|
|
Total revenues
|
$
|
29,223
|
|
Net income (loss) attributable to Blackhawk Network Holdings, Inc.
|
$
|
(9,676
|
)
|
|
2015 (Unaudited)
|
||
Total revenues
|
$
|
1,830,848
|
|
Net income attributable to Blackhawk Network Holdings, Inc.
|
$
|
41,752
|
|
Pro forma EPS—Basic
|
$
|
0.77
|
|
Pro forma EPS—Diluted
|
$
|
0.74
|
|
Cash and cash equivalents
|
$
|
4,733
|
|
Tangible assets, net
|
2,093
|
|
|
Cardholder liability
|
(6,167
|
)
|
|
Deferred income taxes
|
(6,723
|
)
|
|
Identifiable intangible and technology assets
|
26,892
|
|
|
Goodwill
|
20,385
|
|
|
Total purchase consideration
|
$
|
41,213
|
|
|
Fair Value
|
|
Useful Life
|
||
Content provider relationships
|
$
|
17,382
|
|
|
10 years
|
Distribution relationships
|
4,614
|
|
|
5 years
|
|
Trade name
|
4,106
|
|
|
10 years
|
|
Technology
|
790
|
|
|
4 years
|
|
Total identifiable technology and intangible assets
|
$
|
26,892
|
|
|
|
|
|
2017
|
|
2016
|
||||||||
|
|
Carrying Value
|
|
Ownership Percentage
|
|
Carrying Value
|
|
Ownership Percentage
|
||||
Equity method investments
|
|
|
|
|
|
|
|
|
||||
Investment in China entity
|
|
$
|
8,831
|
|
|
42.0%
|
|
$
|
4,576
|
|
|
26.5%
|
Investment in Australia entity
|
|
6,823
|
|
|
51.2%
|
|
6,392
|
|
|
51.2%
|
||
Other equity method investments
|
|
330
|
|
|
42.5%
|
|
—
|
|
|
—%
|
||
Total equity method investments
|
|
15,984
|
|
|
|
|
10,968
|
|
|
|
||
Cost method investments
|
|
7,954
|
|
|
|
|
7,954
|
|
|
|
||
Total unconsolidated entities
|
|
$
|
23,938
|
|
|
|
|
$
|
18,922
|
|
|
|
|
As of
|
As of
|
||||
|
December 30, 2017
|
January 11, 2018
|
||||
2018
|
$
|
11,250
|
|
$
|
15,000
|
|
2019
|
11,250
|
|
15,000
|
|
||
2020
|
22,500
|
|
30,000
|
|
||
2021
|
170,000
|
|
230,000
|
|
||
2022
|
500,000
|
|
500,000
|
|
||
Total amount due
|
715,000
|
|
790,000
|
|
||
Unamortized discount and debt issuance fees
|
(60,242
|
)
|
(59,734
|
)
|
||
Note payable, net
|
$
|
654,758
|
|
$
|
730,266
|
|
|
2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
694,075
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
694,075
|
|
Contingent asset
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,131
|
|
|
$
|
6,131
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Warrants
|
$
|
—
|
|
|
$
|
20,000
|
|
|
$
|
—
|
|
|
$
|
20,000
|
|
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,886
|
|
|
$
|
3,886
|
|
|
2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
300,015
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
300,015
|
|
Contingent asset
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Warrants
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,752
|
|
|
$
|
23,752
|
|
|
2017
|
2016
|
||||
Balance – beginning of year
|
$
|
23,752
|
|
$
|
—
|
|
Addition from acquisition of Extrameasures
|
—
|
|
20,300
|
|
||
Addition from acquisition of Spafinder
|
—
|
|
1,352
|
|
||
Addition from other acquisition (see
Note 2—Business Acquisitions and Divestiture
)
|
1,640
|
|
—
|
|
||
Divestiture of M&E business
|
934
|
|
—
|
|
||
Change in fair value of contingent consideration
|
(14,937
|
)
|
2,100
|
|
||
Settlements
|
(7,503
|
)
|
—
|
|
||
Balance – end of year
|
$
|
3,886
|
|
$
|
23,752
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning balance
|
$
|
8,657
|
|
|
$
|
8,046
|
|
|
$
|
5,547
|
|
Provision
|
1,617
|
|
|
4,544
|
|
|
4,656
|
|
|||
Charges against allowances, net of recoveries
|
(1,855
|
)
|
|
(3,933
|
)
|
|
(2,157
|
)
|
|||
Ending balance
|
$
|
8,419
|
|
|
$
|
8,657
|
|
|
$
|
8,046
|
|
|
2017
|
|
2016
|
||||
Inventory
|
$
|
37,007
|
|
|
$
|
43,950
|
|
Deferred expenses
|
29,172
|
|
|
22,148
|
|
||
Income tax receivables
|
10,823
|
|
|
13,599
|
|
||
Assets held for sale
|
23,462
|
|
|
—
|
|
||
Other
|
64,910
|
|
|
51,678
|
|
||
Total other current assets
|
$
|
165,374
|
|
|
$
|
131,375
|
|
|
Useful Lives in Years
|
|
2017
|
|
2016
|
||||
Leasehold improvements
|
5
|
|
$
|
13,754
|
|
|
$
|
9,018
|
|
Computers and related equipment
|
3 - 5
|
|
50,944
|
|
|
45,910
|
|
||
Technology
|
5
|
|
331,192
|
|
|
291,124
|
|
||
Total property, equipment and technology
|
|
|
395,890
|
|
|
346,052
|
|
||
Less accumulated depreciation and amortization
|
|
|
(223,283
|
)
|
|
(173,671
|
)
|
||
Property, equipment and technology, net
|
|
|
$
|
172,607
|
|
|
$
|
172,381
|
|
|
2017
|
|
2016
|
||||
Deferred program and contract costs
|
$
|
53,565
|
|
|
$
|
48,066
|
|
Investments (see
Note 3—Investment in Unconsolidated Entities
)
|
23,938
|
|
|
18,922
|
|
||
Other receivables
|
9,235
|
|
|
2,713
|
|
||
Income taxes receivable
|
2,321
|
|
|
2,358
|
|
||
Deferred financing costs
|
2,759
|
|
|
2,688
|
|
||
Other
|
23,418
|
|
|
11,109
|
|
||
Total other assets
|
$
|
115,236
|
|
|
$
|
85,856
|
|
|
2017
|
|
2016
|
||||
Payroll and related liabilities
|
$
|
43,022
|
|
|
$
|
24,944
|
|
Income taxes payable
|
8,056
|
|
|
4,199
|
|
||
Acquisition liability
|
4,012
|
|
|
6,672
|
|
||
Warrant liability
|
20,000
|
|
|
—
|
|
||
Other payables and accrued liabilities
|
25,292
|
|
|
15,361
|
|
||
Liability held for sale
|
2,441
|
|
|
—
|
|
||
Total other current liabilities
|
$
|
102,823
|
|
|
$
|
51,176
|
|
|
2017
|
|
2016
|
||||
Acquisition liability
|
$
|
1,874
|
|
|
$
|
17,080
|
|
Income taxes payable
|
3,883
|
|
|
6,957
|
|
||
Deferred income and other liabilities
|
10,990
|
|
|
15,616
|
|
||
Total other liabilities
|
$
|
16,747
|
|
|
$
|
39,653
|
|
|
December 30, 2017
|
||
Other current assets
|
$
|
5,513
|
|
Property, equipment and technology, net
|
8,527
|
|
|
Goodwill
|
8,991
|
|
|
Intangible assets, net
|
431
|
|
|
Total assets
|
$
|
23,462
|
|
|
|
||
Accounts payable and accrued operating expenses
|
$
|
1,745
|
|
Other current liabilities
|
450
|
|
|
Deferred revenue
|
246
|
|
|
Total liabilities
|
$
|
2,441
|
|
|
2017
|
||||||||||||||
|
U.S. Retail
|
|
Incentives & Rewards
|
|
International
|
|
Total
|
||||||||
Balance, beginning of period
|
$
|
99,685
|
|
|
$
|
366,508
|
|
|
$
|
104,205
|
|
|
$
|
570,398
|
|
Goodwill impairment
|
(31,500
|
)
|
|
(46,000
|
)
|
|
—
|
|
|
(77,500
|
)
|
||||
Re-allocation of international Incentives goodwill
|
—
|
|
|
(7,152
|
)
|
|
7,152
|
|
|
—
|
|
||||
Re-allocation of e-commerce goodwill
|
(10,505
|
)
|
|
10,505
|
|
|
—
|
|
|
—
|
|
||||
Acquisitions (see
Note 2—Business Acquisitions and Divestiture
)
|
81,850
|
|
|
9,919
|
|
|
1,948
|
|
|
93,717
|
|
||||
Measurement period adjustments for 2016 acquisitions
|
2,121
|
|
|
—
|
|
|
(1,509
|
)
|
|
612
|
|
||||
Asset held for sale (see
Note 6—Consolidated Financial Statement Details
)
|
(8,991
|
)
|
|
—
|
|
|
—
|
|
|
(8,991
|
)
|
||||
Divestiture of business (see
Note 2—Business Acquisitions and Divestiture
)
|
—
|
|
|
—
|
|
|
(28,843
|
)
|
|
(28,843
|
)
|
||||
Foreign currency translation adjustments
|
—
|
|
|
1,518
|
|
|
12,494
|
|
|
14,012
|
|
||||
Balance, end of year
|
$
|
132,660
|
|
|
$
|
335,298
|
|
|
$
|
95,447
|
|
|
$
|
563,405
|
|
|
2016
|
||||||||||||||
|
U.S. Retail
|
|
Incentives & Rewards
|
|
International
|
|
Total
|
||||||||
Balance, beginning of year
|
$
|
42,729
|
|
|
$
|
310,604
|
|
|
$
|
49,156
|
|
|
$
|
402,489
|
|
Re-allocation of e-commerce goodwill
|
2,671
|
|
|
(2,671
|
)
|
|
—
|
|
|
—
|
|
||||
Acquisition of GiftCards
|
34,427
|
|
|
33,279
|
|
|
—
|
|
|
67,706
|
|
||||
Acquisition of NimbleCommerce
|
10,505
|
|
|
—
|
|
|
—
|
|
|
10,505
|
|
||||
Acquisition of Extrameasures
|
—
|
|
|
27,360
|
|
|
—
|
|
|
27,360
|
|
||||
Acquisition of Grass Roots
|
—
|
|
|
—
|
|
|
54,219
|
|
|
54,219
|
|
||||
Acquisition of Samba
|
—
|
|
|
—
|
|
|
4,074
|
|
|
4,074
|
|
||||
Acquisition of Spafinder
|
9,353
|
|
|
—
|
|
|
—
|
|
|
9,353
|
|
||||
Measurement period adjustments for 2015 acquisitions
|
—
|
|
|
(1,235
|
)
|
|
—
|
|
|
(1,235
|
)
|
||||
Foreign currency translation adjustments
|
—
|
|
|
(829
|
)
|
|
(3,244
|
)
|
|
(4,073
|
)
|
||||
Balance, end of year
|
$
|
99,685
|
|
|
$
|
366,508
|
|
|
$
|
104,205
|
|
|
$
|
570,398
|
|
|
Weighted-Average Remaining Life in Years
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||
Distribution partner and customer relationships, including backlog
|
9
|
|
$
|
569,445
|
|
|
$
|
(157,618
|
)
|
|
$
|
411,827
|
|
Patents
|
5
|
|
5,003
|
|
|
(4,584
|
)
|
|
419
|
|
|||
Domain names, trade names and other intangibles
|
8
|
|
24,699
|
|
|
(5,264
|
)
|
|
19,435
|
|
|||
Total intangible assets
|
|
|
$
|
599,147
|
|
|
$
|
(167,466
|
)
|
|
$
|
431,681
|
|
|
Weighted-Average Remaining Life in Years
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
||||||
Distribution partner and customer relationships, including backlog
|
10
|
|
$
|
447,665
|
|
|
$
|
(117,639
|
)
|
|
$
|
330,026
|
|
Patents
|
7
|
|
6,944
|
|
|
(4,547
|
)
|
|
2,397
|
|
|||
Domain names, trade names and other intangibles
|
10
|
|
21,238
|
|
|
(3,476
|
)
|
|
17,762
|
|
|||
Total intangible assets
|
|
|
$
|
475,847
|
|
|
$
|
(125,662
|
)
|
|
$
|
350,185
|
|
Fiscal Year
|
Total
|
||
2018
|
$
|
65,278
|
|
2019
|
57,569
|
|
|
2020
|
53,629
|
|
|
2021
|
49,980
|
|
|
2022
|
47,097
|
|
|
Thereafter
|
158,128
|
|
|
Total amortization
|
$
|
431,681
|
|
|
|
2016
|
|
2015
|
Expected term (in years)
|
|
5
|
|
5
|
Expected volatility
|
|
34.8% - 34.9%
|
|
36.6% - 37.3%
|
Risk-free rate
|
|
1.1% - 1.9%
|
|
1.4% - 1.7%
|
Expected dividend yield
|
|
0%
|
|
0%
|
|
Stock Options and Appreciation Rights
(in shares)
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life
(in years)
|
|
Aggregate Intrinsic Value
(in thousands)
|
|||||
Outstanding, year-end 2016
|
3,065,293
|
|
|
$
|
26.57
|
|
|
3.6
|
|
$
|
35,381
|
|
2017 activity:
|
|
|
|
|
|
|
|
|||||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Canceled
|
(86,083
|
)
|
|
$
|
35.37
|
|
|
|
|
|
||
Exercised
|
(621,697
|
)
|
|
$
|
19.75
|
|
|
|
|
|
||
Outstanding, year-end 2017
|
2,357,513
|
|
|
$
|
28.04
|
|
|
2.8
|
|
$
|
20,784
|
|
Exercisable, year-end 2017
|
1,633,701
|
|
|
$
|
24.21
|
|
|
2.1
|
|
$
|
19,757
|
|
|
Restricted Stock and Restricted Stock Unit Awards
|
|
Weighted Average Grant-Date Fair Value
|
|||
Nonvested, year-end 2016
|
1,981,654
|
|
|
$
|
35.45
|
|
2017 activity:
|
|
|
|
|||
Granted
|
1,219,419
|
|
|
$
|
38.44
|
|
Vested
|
(686,160
|
)
|
|
$
|
33.80
|
|
Forfeited
|
(357,209
|
)
|
|
$
|
37.13
|
|
Nonvested, year-end 2017
|
2,157,704
|
|
|
$
|
37.39
|
|
|
Performance Stock Unit Awards
|
|
Weighted Average Grant-Date Fair Value
|
|||
Nonvested, year-end 2016
|
328,106
|
|
|
$
|
33.07
|
|
2017 activity:
|
|
|
|
|||
Granted
|
208,925
|
|
|
$
|
38.45
|
|
Vested
|
(134,010
|
)
|
|
$
|
26.73
|
|
Forfeited
|
(135,608
|
)
|
|
$
|
36.31
|
|
Nonvested, year-end 2017
|
267,413
|
|
|
$
|
38.80
|
|
|
2017
|
|
2016
|
|
2015
|
Expected term (in years)
|
0.5
|
|
0.5
|
|
0.5
|
Expected volatility
|
30.65% - 40.63%
|
|
30.12% - 36.72%
|
|
32.40% - 34.96%
|
Risk-free rate
|
1.0% - 1.3%
|
|
0.4% - 0.5%
|
|
0.1% - 0.3%
|
Expected dividend yield
|
0%
|
|
0%
|
|
0%
|
|
2017
|
|
2016
|
|
2015
|
||||||
Processing and services
|
$
|
7,301
|
|
|
$
|
5,831
|
|
|
$
|
6,594
|
|
Sales and marketing
|
11,320
|
|
|
10,856
|
|
|
8,536
|
|
|||
Cost of products sold
|
54
|
|
|
102
|
|
|
37
|
|
|||
General and administrative
|
14,033
|
|
|
15,803
|
|
|
14,963
|
|
|||
Total stock-based compensation expense
|
$
|
32,708
|
|
|
$
|
32,592
|
|
|
$
|
30,130
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Domestic
|
$
|
(49,833
|
)
|
|
$
|
(3,533
|
)
|
|
$
|
72,298
|
|
Foreign
|
12,743
|
|
|
4,469
|
|
|
307
|
|
|||
Income before income tax expense (benefit)
|
$
|
(37,090
|
)
|
|
$
|
936
|
|
|
$
|
72,605
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
483
|
|
|
$
|
(1,215
|
)
|
|
$
|
(6,403
|
)
|
State
|
(707
|
)
|
|
949
|
|
|
(942
|
)
|
|||
Foreign
|
7,748
|
|
|
5,063
|
|
|
4,331
|
|
|||
Total current
|
7,524
|
|
|
4,797
|
|
|
(3,014
|
)
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
118,974
|
|
|
(3,186
|
)
|
|
28,650
|
|
|||
State
|
(4,772
|
)
|
|
(1,275
|
)
|
|
6,003
|
|
|||
Foreign
|
(3,926
|
)
|
|
(4,438
|
)
|
|
(4,843
|
)
|
|||
Total deferred
|
110,276
|
|
|
(8,899
|
)
|
|
29,810
|
|
|||
Income tax expense (benefit)
|
$
|
117,800
|
|
|
$
|
(4,102
|
)
|
|
$
|
26,796
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|||||||||
Income tax expense (benefit) at federal statutory rate
|
$
|
(12,982
|
)
|
|
35.0
|
%
|
|
$
|
327
|
|
|
35.0
|
%
|
|
$
|
25,412
|
|
|
35.0
|
%
|
State income tax expense (benefit), net of federal impact
|
(3,854
|
)
|
|
10.4
|
%
|
|
439
|
|
|
46.9
|
%
|
|
3,469
|
|
|
4.8
|
%
|
|||
Foreign rate differential
|
(761
|
)
|
|
2.1
|
%
|
|
(939
|
)
|
|
(100.3
|
)%
|
|
(773
|
)
|
|
(1.1
|
)%
|
|||
Change in fair value of contingent consideration
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(2,978
|
)
|
|
(4.1
|
)%
|
|||
Compensation subject to certain limits
|
702
|
|
|
(1.9
|
)%
|
|
894
|
|
|
95.5
|
%
|
|
1,180
|
|
|
1.6
|
%
|
|||
Stock-based compensation
|
(2,341
|
)
|
|
6.3
|
%
|
|
(956
|
)
|
|
(102.1
|
)%
|
|
316
|
|
|
0.4
|
%
|
|||
Change in valuation allowance
|
1,732
|
|
|
(4.7
|
)%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Acquisition related
|
152
|
|
|
(0.4
|
)%
|
|
(2,945
|
)
|
|
(314.6
|
)%
|
|
758
|
|
|
1.0
|
%
|
|||
R&D credits
|
(948
|
)
|
|
2.6
|
%
|
|
(1,440
|
)
|
|
(153.9
|
)%
|
|
(1,130
|
)
|
|
(1.5
|
)%
|
|||
Goodwill impairment
|
10,670
|
|
|
(28.8
|
)%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
U.S. Tax Reform Impact
|
126,198
|
|
|
(340.2
|
)%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Other
|
(768
|
)
|
|
2.0
|
%
|
|
518
|
|
|
55.2
|
%
|
|
542
|
|
|
0.8
|
%
|
|||
Total income tax expense (benefit) /effective tax rate
|
$
|
117,800
|
|
|
(317.6
|
)%
|
|
$
|
(4,102
|
)
|
|
(438.3
|
)%
|
|
$
|
26,796
|
|
|
36.9
|
%
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Depreciation and amortization
|
$
|
112,642
|
|
|
$
|
217,497
|
|
Net operating loss carryforwards
|
38,070
|
|
|
49,473
|
|
||
Accrued expenses
|
7,019
|
|
|
4,932
|
|
||
Non-deductible reserves
|
6,829
|
|
|
9,450
|
|
||
Deferred revenue
|
32,198
|
|
|
29,803
|
|
||
Stock-based compensation
|
10,293
|
|
|
21,497
|
|
||
Convertible debt
|
2,416
|
|
|
4,636
|
|
||
Other
|
8,787
|
|
|
8,622
|
|
||
Deferred tax assets
|
218,254
|
|
|
345,910
|
|
||
Valuation allowance
|
(8,641
|
)
|
|
(8,283
|
)
|
||
Total deferred tax assets
|
209,613
|
|
|
337,627
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Prepaids
|
(1,200
|
)
|
|
(3,212
|
)
|
||
Total deferred tax liabilities
|
(1,200
|
)
|
|
(3,212
|
)
|
||
Net deferred tax assets
|
$
|
208,413
|
|
|
$
|
334,415
|
|
Balance sheet presentation:
|
|
|
|
|
|
||
Long-term deferred tax assets
|
236,496
|
|
|
362,302
|
|
||
Long-term deferred tax liabilities
|
(28,083
|
)
|
|
(27,887
|
)
|
||
Net deferred tax assets
|
$
|
208,413
|
|
|
$
|
334,415
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gross unrecognized tax benefits, beginning balance
|
$
|
13,877
|
|
|
$
|
12,680
|
|
|
$
|
3,808
|
|
Increase for tax position from prior fiscal years and current year acquisitions
|
6,004
|
|
|
977
|
|
|
8,633
|
|
|||
Decrease for tax position from prior fiscal years
|
(2,234
|
)
|
|
(388
|
)
|
|
(446
|
)
|
|||
Settlements
|
(177
|
)
|
|
—
|
|
|
—
|
|
|||
Increases for tax positions taken during current fiscal year
|
601
|
|
|
760
|
|
|
938
|
|
|||
Lapses of statutes of limitations
|
(2,879
|
)
|
|
(41
|
)
|
|
(161
|
)
|
|||
Foreign exchange rate difference
|
151
|
|
|
(111
|
)
|
|
(92
|
)
|
|||
Gross unrecognized tax benefits, ending balance
|
$
|
15,343
|
|
|
$
|
13,877
|
|
|
$
|
12,680
|
|
Fiscal Year
|
Operating Leases
|
||
2018
|
$
|
19,829
|
|
2019
|
16,099
|
|
|
2020
|
14,100
|
|
|
2021
|
13,838
|
|
|
2022
|
10,698
|
|
|
Thereafter
|
27,404
|
|
|
Total minimum lease payments
|
$
|
101,968
|
|
Fiscal Year
|
Distribution Partner Commitments
|
||
2018
|
$
|
123,922
|
|
2019
|
47,771
|
|
|
2020
|
30,458
|
|
|
2021
|
26,751
|
|
|
2022 and after
|
26,574
|
|
|
Distribution partner commitments (uncertainty in timing of future payments)
|
6,232
|
|
|
Total
|
$
|
261,708
|
|
|
2017
|
||||||||||||||
|
U.S. Retail
|
|
Incentives & Rewards
|
|
International
|
|
Consolidated
|
||||||||
Total operating revenues
|
$
|
1,233,861
|
|
|
$
|
338,311
|
|
|
$
|
659,434
|
|
|
$
|
2,231,606
|
|
Partner distribution expense
|
665,088
|
|
|
22,793
|
|
|
352,425
|
|
|
1,040,306
|
|
||||
Operating revenue net of distribution partner expense
|
568,773
|
|
|
315,518
|
|
|
307,009
|
|
|
1,191,300
|
|
||||
Other operating expenses
|
538,977
|
|
|
353,511
|
|
|
303,420
|
|
|
1,195,908
|
|
||||
Segment profit (loss) / Operating income (loss)
|
$
|
29,796
|
|
|
$
|
(37,993
|
)
|
|
$
|
3,589
|
|
|
(4,608
|
)
|
|
Other income (expense)
|
|
|
|
|
|
|
(32,482
|
)
|
|||||||
Income (loss) before income tax expense
|
|
|
|
|
|
|
$
|
(37,090
|
)
|
||||||
Significant noncash charges
|
$
|
98,097
|
|
|
$
|
94,597
|
|
|
$
|
36,793
|
|
|
|
|
2016
|
||||||||||||||
|
U.S. Retail
|
|
Incentives & Rewards
|
|
International
|
|
Consolidated
|
||||||||
Total operating revenues
|
$
|
1,125,757
|
|
|
$
|
280,217
|
|
|
$
|
493,804
|
|
|
$
|
1,899,778
|
|
Partner distribution expense
|
595,893
|
|
|
20,419
|
|
|
316,830
|
|
|
933,142
|
|
||||
Operating revenue net of distribution partner expense
|
529,864
|
|
|
259,798
|
|
|
176,974
|
|
|
966,636
|
|
||||
Other operating expenses
|
467,203
|
|
|
287,882
|
|
|
188,302
|
|
|
943,387
|
|
||||
Segment profit (loss) / Operating income
|
$
|
62,661
|
|
|
$
|
(28,084
|
)
|
|
$
|
(11,328
|
)
|
|
23,249
|
|
|
Other income (expense)
|
|
|
|
|
|
|
(22,313
|
)
|
|||||||
Income before income tax expense
|
|
|
|
|
|
|
$
|
936
|
|
||||||
Significant noncash charges
|
$
|
53,751
|
|
|
$
|
85,171
|
|
|
$
|
27,029
|
|
|
|
|
2015
|
||||||||||||||
|
U.S. Retail
|
|
Incentives & Rewards
|
|
International
|
|
Consolidated
|
||||||||
Total operating revenues
|
$
|
1,165,828
|
|
|
$
|
197,060
|
|
|
$
|
438,190
|
|
|
$
|
1,801,078
|
|
Partner distribution expense
|
577,661
|
|
|
16,591
|
|
|
279,791
|
|
|
874,043
|
|
||||
Operating revenue net of distribution partner expense
|
588,167
|
|
|
180,469
|
|
|
158,399
|
|
|
927,035
|
|
||||
Other operating expenses
|
465,464
|
|
|
206,121
|
|
|
167,704
|
|
|
839,289
|
|
||||
Segment profit (loss) / Operating income
|
$
|
122,703
|
|
|
$
|
(25,652
|
)
|
|
$
|
(9,305
|
)
|
|
87,746
|
|
|
Other income (expense)
|
|
|
|
|
|
|
(15,141
|
)
|
|||||||
Income before income tax expense
|
|
|
|
|
|
|
$
|
72,605
|
|
||||||
Significant noncash charges
|
$
|
46,719
|
|
|
$
|
45,678
|
|
|
$
|
13,806
|
|
|
|
•
|
Retail—
Revenues resulting from the sale of prepaid products to consumers at our retail distribution partners and online and the sale of telecom handsets to retail distribution partners for resale to consumers.
|
•
|
Incentives—
Revenues resulting from the sale of prepaid products, software and services to our business clients.
|
•
|
Other—
Revenues from our secondary card market and card production.
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
Revenue
|
|
Percent of Total Revenue
|
|
Revenue
|
|
Percent of Total Revenue
|
|
Revenue
|
|
Percent of Total Revenue
|
|||||||||
Retail
|
$
|
1,764,092
|
|
|
79.0
|
%
|
|
$
|
1,383,499
|
|
|
72.8
|
%
|
|
$
|
1,453,129
|
|
|
80.6
|
%
|
Incentives
|
338,311
|
|
|
15.2
|
%
|
|
289,140
|
|
|
15.2
|
%
|
|
211,964
|
|
|
11.8
|
%
|
|||
Other
|
129,203
|
|
|
5.8
|
%
|
|
227,139
|
|
|
12.0
|
%
|
|
135,985
|
|
|
7.6
|
%
|
|||
Total
|
$
|
2,231,606
|
|
|
100.0
|
%
|
|
$
|
1,899,778
|
|
|
100.0
|
%
|
|
$
|
1,801,078
|
|
|
100.0
|
%
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
Revenue
|
|
Percent of Total Revenue
|
|
Revenue
|
|
Percent of Total Revenue
|
|
Revenue
|
|
Percent of Total Revenue
|
|||||||||
United States
|
$
|
1,546,898
|
|
|
69.3
|
%
|
|
$
|
1,382,188
|
|
|
72.8
|
%
|
|
$
|
1,352,872
|
|
|
75.1
|
%
|
International
|
684,708
|
|
|
30.7
|
%
|
|
517,590
|
|
|
27.2
|
%
|
|
448,206
|
|
|
24.9
|
%
|
|||
Total
|
$
|
2,231,606
|
|
|
100.0
|
%
|
|
$
|
1,899,778
|
|
|
100.0
|
%
|
|
$
|
1,801,078
|
|
|
100.0
|
%
|
|
2017
|
|
2016
|
|
||||||||||
|
Long-Lived Assets
|
|
Percent of Total Long-Lived Assets
|
|
Long-Lived Assets
|
|
Percent of Total Long-Lived Assets
|
|
||||||
United States
|
$
|
145,607
|
|
|
84.3
|
%
|
|
$
|
149,020
|
|
|
86.4
|
%
|
|
Canada
|
18,054
|
|
|
10.5
|
%
|
|
16,002
|
|
|
9.3
|
%
|
|
||
Other foreign countries
|
8,946
|
|
|
5.2
|
%
|
|
7,359
|
|
|
4.3
|
%
|
|
||
Total
|
$
|
172,607
|
|
|
100.0
|
%
|
|
$
|
172,381
|
|
|
100.0
|
%
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||||||
Net income attributable to Blackhawk Network Holdings, Inc.
|
$
|
(155,768
|
)
|
|
$
|
(155,768
|
)
|
|
$
|
4,658
|
|
|
$
|
4,658
|
|
|
$
|
45,609
|
|
|
$
|
45,609
|
|
Distributed and undistributed earnings allocated to participating securities
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
(28
|
)
|
|
(151
|
)
|
|
(147
|
)
|
||||||
Net income attributable to common stockholders
|
$
|
(155,768
|
)
|
|
$
|
(155,768
|
)
|
|
$
|
4,630
|
|
|
$
|
4,630
|
|
|
$
|
45,458
|
|
|
$
|
45,462
|
|
Weighted-average common shares outstanding
|
56,287
|
|
|
56,287
|
|
|
55,734
|
|
|
55,734
|
|
|
54,294
|
|
|
54,294
|
|
||||||
Common share equivalents
|
|
|
—
|
|
|
|
|
1,526
|
|
|
|
|
2,019
|
|
|||||||||
Weighted-average shares outstanding
|
|
|
56,287
|
|
|
|
|
57,260
|
|
|
|
|
56,313
|
|
|||||||||
Earnings (loss) per share
|
$
|
(2.77
|
)
|
|
$
|
(2.77
|
)
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.84
|
|
|
$
|
0.81
|
|
|
Q4'17
|
|
Q3'17
|
|
Q2'17
|
|
Q1'17
|
|
Q4'16
|
|
Q3'16
|
|
Q2'16
|
|
Q1'16
|
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Operating revenues
|
$
|
941,965
|
|
|
$
|
419,259
|
|
|
$
|
463,146
|
|
|
$
|
407,236
|
|
|
$
|
780,550
|
|
|
$
|
361,560
|
|
|
$
|
391,206
|
|
|
$
|
366,462
|
|
Operating income (loss) (1)
|
$
|
29,525
|
|
|
$
|
(12,701
|
)
|
|
$
|
(4,401
|
)
|
|
$
|
(17,031
|
)
|
|
$
|
51,363
|
|
|
$
|
(10,093
|
)
|
|
$
|
(14,977
|
)
|
|
$
|
(3,044
|
)
|
Net income (loss) attributable to Blackhawk Network Holdings, Inc. (2)
|
$
|
(128,165
|
)
|
|
$
|
(7,766
|
)
|
|
$
|
(6,351
|
)
|
|
$
|
(13,486
|
)
|
|
$
|
24,650
|
|
|
$
|
(5,102
|
)
|
|
$
|
(11,337
|
)
|
|
$
|
(3,553
|
)
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(2.28
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
0.44
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.06
|
)
|
Diluted
|
$
|
(2.28
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
0.43
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.06
|
)
|
(1)
|
We recorded goodwill impairment charges of
$9.0 million
and
$68.5 million
in the third and fourth quarters of
2017
, respectively. See
Note 7
—
Goodwill and Other Intangible Assets
for additional information on these charges.
|
(2)
|
As a result of the Tax Reform Act that was signed into law on December 22, 2017, we recorded income tax expense for the remeasurement of the net deferred tax assets of
$125.1 million
to our income tax expense during the fourth quarter of 2017.
See Note 10
—
Income Taxes
for additional information on these charges.
|
|
|
|
|
Incorporated by Reference
|
||||||||
Exhibit No.
|
|
Description of Exhibit
|
|
Form
|
|
File No.
|
|
Exhibit(s)
|
|
Filing Date
|
|
Filed Herewith
|
2.1
|
|
|
8-K
|
|
001-35882
|
|
2.1
|
|
September 25, 2014
|
|
|
|
2.2
|
|
|
8-K
|
|
001-35882
|
|
2.1
|
|
October 10, 2014
|
|
|
|
2.3
|
|
|
8-K
|
|
001-35882
|
|
2.1
|
|
January 16, 2018
|
|
|
|
3.1
|
|
|
8-A 12B/A
|
|
001-35882
|
|
3.1
|
|
May 13, 2015
|
|
|
|
3.2
|
|
|
8-K
|
|
001-35882
|
|
3.1
|
|
June 9, 2017
|
|
|
|
3.3
|
|
|
8-K
|
|
001-35882
|
|
3.1
|
|
April 25, 2013
|
|
|
|
3.4
|
|
|
8-K
|
|
001-35882
|
|
3.1
|
|
April 18, 2017
|
|
|
|
3.5
|
|
|
8-K
|
|
001-35882
|
|
3.2
|
|
June 9, 2017
|
|
|
|
4.1
|
|
|
8-A 12B/A
|
|
001-35882
|
|
4.1
|
|
May 13, 2015
|
|
|
|
4.2
|
|
|
8-K
|
|
001-35882
|
|
4.1
|
|
July 28, 2016
|
|
|
4.3
|
|
|
8-K
|
|
001-35882
|
|
4.2
|
|
July 28, 2016
|
|
|
|
10.1
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
August 1, 2016
|
|
|
|
10.2
|
|
|
8-K
|
|
001-35882
|
|
10.2
|
|
August 1, 2016
|
|
|
|
10.3
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
April 27, 2017
|
|
|
|
10.4
|
|
|
10-Q
|
|
001-35882
|
|
10.1
|
|
October 17, 2017
|
|
|
|
10.5
|
|
|
10-Q
|
|
001-35882
|
|
10.2
|
|
October 17, 2017
|
|
|
|
10.6
|
|
|
8-K
|
|
001-35882
|
|
10.2
|
|
April 1, 2014
|
|
|
|
10.7
|
|
|
8-K
|
|
001-35882
|
|
10.3
|
|
April 1, 2014
|
|
|
|
10.8
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
July 28, 2016
|
|
|
|
10.9
|
|
|
8-K
|
|
001-35882
|
|
10.2
|
|
July 28, 2016
|
|
|
|
10.10
|
|
|
8-K
|
|
001-35882
|
|
10.3
|
|
July 28, 2016
|
|
|
|
10.11
|
|
|
8-K
|
|
001-35882
|
|
10.4
|
|
July 28, 2016
|
|
|
|
10.12
|
|
|
8-K
|
|
001-35882
|
|
10.5
|
|
July 28, 2016
|
|
|
|
10.13
|
|
|
8-K
|
|
001-35882
|
|
10.6
|
|
July 28, 2016
|
|
|
|
10.14
|
|
|
8-K
|
|
001-35882
|
|
10.7
|
|
July 28, 2016
|
|
|
|
10.15
|
|
|
8-K
|
|
001-35882
|
|
10.8
|
|
July 28, 2016
|
|
|
10.16
|
|
|
8-K
|
|
001-35882
|
|
10.9
|
|
July 28, 2016
|
|
|
|
10.17
|
|
|
8-K
|
|
001-35882
|
|
10.10
|
|
July 28, 2016
|
|
|
|
10.18
|
|
|
8-K
|
|
001-35882
|
|
10.11
|
|
July 28, 2016
|
|
|
|
10.19
|
|
|
8-K
|
|
001-35882
|
|
10.12
|
|
July 28, 2016
|
|
|
|
10.20
|
|
|
10-K
|
|
001-35882
|
|
10.8
|
|
March 2, 2016
|
|
|
|
10.21
|
|
|
10-Q
|
|
001-35882
|
|
10.15
|
|
October 19, 2016
|
|
|
|
10.22
|
|
|
10-Q
|
|
001-35882
|
|
10.4
|
|
July 26, 2017
|
|
|
|
10.23
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
April 14, 2014
|
|
|
|
10.24+
|
|
|
S-1/A
|
|
333-187325
|
|
10.19
|
|
April 3, 2013
|
|
|
|
10.25+
|
|
|
S-1
|
|
333-187325
|
|
10.20
|
|
March 18, 2013
|
|
|
|
10.26+
|
|
|
S-1
|
|
333-187325
|
|
10.21
|
|
March 18, 2013
|
|
|
|
10.27+
|
|
|
S-1/A
|
|
333-187325
|
|
10.22
|
|
April 3, 2013
|
|
|
|
10.28+
|
|
|
S-1
|
|
333-187325
|
|
10.23
|
|
March 18, 2013
|
|
|
|
10.29+
|
|
|
S-1
|
|
333-187325
|
|
10.24
|
|
March 18, 2013
|
|
|
|
10.30+
|
|
|
S-8
|
|
333-188455
|
|
10.4
|
|
May 8, 2013
|
|
|
|
10.31+
|
|
|
DEF 14A
|
|
001-35882
|
|
Annex B
|
|
April 8, 2015
|
|
|
|
10.32+
|
|
|
DEF 14A
|
|
001-35882
|
|
Annex A
|
|
April 20, 2017
|
|
|
|
10.33+
|
|
|
10-Q
|
|
001-35882
|
|
10.7
|
|
May 14, 2013
|
|
|
10.34+
|
|
|
10-Q
|
|
001-35882
|
|
10.8
|
|
May 14, 2013
|
|
|
|
10.35+
|
|
|
10-Q
|
|
001-35882
|
|
10.9
|
|
May 14, 2013
|
|
|
|
10.36+
|
|
|
10-Q
|
|
001-35882
|
|
10.10
|
|
May 14, 2013
|
|
|
|
10.37+
|
|
|
10-Q
|
|
001-35882
|
|
10.1
|
|
October 14, 2014
|
|
|
|
10.38+
|
|
|
10-Q
|
|
001-35882
|
|
10.2
|
|
October 14, 2014
|
|
|
|
10.39+
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.40+
|
|
|
10-Q
|
|
001-35882
|
|
10.4
|
|
April 30, 2014
|
|
|
|
10.41+
|
|
|
10-Q
|
|
001-35882
|
|
10.2
|
|
May 5, 2015
|
|
|
|
10.42+
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
December 9, 2016
|
|
|
|
10.43+
|
|
|
8-K
|
|
001-35882
|
|
10.2
|
|
February 17, 2017
|
|
|
|
10.44+
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
May 1, 2015
|
|
|
|
10.45+
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
December 5, 2017
|
|
|
|
10.46+
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
February 17, 2017
|
|
|
|
10.47+
|
|
|
10-Q
|
|
001-35882
|
|
10.1
|
|
July 22, 2014
|
|
|
|
10.48+
|
|
|
S-1/A
|
|
333-187325
|
|
10.27
|
|
April 15, 2013
|
|
|
|
10.49+
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
May 22, 2017
|
|
|
|
10.50+
|
|
|
10-Q
|
|
001-35882
|
|
10.16
|
|
October 19, 2016
|
|
|
|
10.51+
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.52
|
|
|
S-1
|
|
333-187325
|
|
10.28
|
|
March 18, 2013
|
|
|
|
10.53
|
|
|
8-K
|
|
001-35882
|
|
10.1
|
|
March 20, 2017
|
|
|
|
10.54†
|
|
|
S-1/A
|
|
333-187325
|
|
10.29
|
|
March 27, 2013
|
|
|
|
10.55†
|
|
|
10-K
|
|
001-35882
|
|
10.37
|
|
March 17, 2014
|
|
|
|
10.56†
|
|
|
10-Q
|
|
001-35882
|
|
10.2
|
|
July 22, 2014
|
|
|
10.57†
|
|
|
10-Q
|
|
001-35882
|
|
10.4
|
|
October 14, 2014
|
|
|
|
10.58†
|
|
|
10-K
|
|
001-35882
|
|
10.35
|
|
March 2, 2016
|
|
|
|
10.59†
|
|
|
10-Q/A
|
|
001-35882
|
|
10.1
|
|
February 24, 2017
|
|
|
|
10.60†
|
|
|
10-Q
|
|
001-35882
|
|
10.2
|
|
July 28, 2016
|
|
|
|
10.61†
|
|
|
10-K
|
|
001-35882
|
|
10.57
|
|
February 27, 2017
|
|
|
|
10.62†
|
|
|
10-Q
|
|
001-35882
|
|
10.2
|
|
May 2, 2017
|
|
|
|
10.63†
|
|
|
10-Q
|
|
001-35882
|
|
10.3
|
|
October 17, 2017
|
|
|
|
10.64†
|
|
|
|
|
|
|
|
|
|
|
X
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
23.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1*
|
|
|
|
|
|
|
|
|
|
|
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
|
|
+
|
Indicates a management contract or compensatory plan.
|
†
|
Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the SEC.
|
*
|
The certification attached as Exhibit 32.1 to this report is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this report), irrespective of any general incorporation language contained in such filing.
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Blackhawk Network Holdings, Inc.
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/s/ Charles O. Garner
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Charles O. Garner
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Chief Financial Officer
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(Principal Financial Officer and Duly Authorized Signatory)
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Signature
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Title
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Date
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/s/ Talbott Roche
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President, Chief Executive Officer and Director
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February 27, 2018
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Talbott Roche
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(Principal Executive Officer)
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/s/ Charles O. Garner
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Chief Financial Officer
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February 27, 2018
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Charles O. Garner
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(Principal Financial Officer)
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/s/ Joan B. Lockie
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Chief Accounting Officer
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February 27, 2018
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Joan B. Lockie
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(Principal Accounting Officer)
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/s/ William Y. Tauscher
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Chairman of the Board and Executive Chairman
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February 27, 2018
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William Y. Tauscher
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/s/ Anil D. Aggarwal
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Director
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February 27, 2018
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Anil D. Aggarwal
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/s/ Richard H. Bard
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Director
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February 27, 2018
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Richard H. Bard
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/s/ Thomas Barnds
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Director
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February 27, 2018
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Thomas Barnds
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/s/ Steven A. Burd
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Director
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February 27, 2018
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Steven A. Burd
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/s/ Robert L. Edwards
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Director
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February 27, 2018
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Robert L. Edwards
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/s/ Mohan S. Gyani
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Director
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February 27, 2018
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Mohan S. Gyani
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/s/ Paul Hazen
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Director
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February 27, 2018
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Paul Hazen
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/s/ Robert B. Henske
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Director
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February 27, 2018
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Robert B. Henske
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/s/ Arun Sarin
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Director
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February 27, 2018
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Arun Sarin
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/s/ Jane J. Thompson
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Director
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February 27, 2018
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Jane J. Thompson
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Participant:
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[__________________________]
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Grant Date:
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[__________________________]
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Total Number of RSUs:
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[_____________]
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Vesting Commencement Date:
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[_____________]
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Vesting Schedule:
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[4-year ratable vesting]
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Termination:
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If the Participant experiences a Termination of Service prior to the applicable vesting date, all RSUs that have not become vested on or prior to the date of such Termination of Service (after taking into consideration any vesting that may occur in connection with such Termination of Service, if any) will thereupon be automatically forfeited by the Participant without payment of any consideration therefor.
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Dated:____________
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_____________________________
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Signature of Spouse
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Accepted by:
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/s/ Charles O. Garner
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October 19, 2017
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Signature
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Date
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Charles O. Garner
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Print Name
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October 23, 2017
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Anticipated Start Date
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A.
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Severance.
Subject to and in accordance with the terms of this Release Agreement, Blackhawk agrees to pay to EMPLOYEE NAME __Thousand, ___Hundred ___ Dollars and ___Cents ($), which represents ___ (#) weeks of severance pay at his/her final base salary. This lump sum severance payment will be subject to tax withholding. Provided that EMLOYEE NAME does not exercise the right of revocation provided for in Section 10(c), below, the severance payment will be processed as soon as reasonably practicable following the expiration of the seven (7) day revocation period described in Paragraph 10(c).
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B.
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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 () month(s) of COBRA insurance premiums upon Releasor’s submission of evidence of payment of such premiums.
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C.
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Consideration 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.
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(a)
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he/she has a period of twenty-one (21) days to consider this Release Agreement and determine whether he/she wishes to execute the same (Releasor may waive this 21-day period);
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(b)
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any rights or claims that may arise after the Effective Date of this Release Agreement are not waived by his/her execution of the Release;
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(c)
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he/she has a non-waivable period of seven (7) days after the Execution Date (as defined in the signature block, below), within which he/she may revoke the Release Agreement and that the Release Agreement shall not become effective or enforceable until the seven-day revocation period has expired; and
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(d)
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in the event that Releasor fails timely to execute this Release Agreement and return the executed original thereof to Blackhawk, or if Releasor timely exercises the right of revocation provided for in Paragraph 10(c), above, then Blackhawk shall be relieved of any and all obligations to Releasor under this Release Agreement.
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Dated: ____________________, 2017
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("Execution Date")
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[EMPLOYEE]
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Dated: ____________________, 2017
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Blackhawk Network, Inc.
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By:
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Name:
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Suzanne Kinner
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Its:
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GVP. Human Resources
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1.
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Schedule E is hereby amended by adding the provisions set forth on
Attachment 3
to this Amendment No. 9.
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2.
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Except as specifically modified by this Amendment No. 9, the Agreement shall remain in full force and effect. This Amendment No. 9 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. 9 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.
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Blackhawk Network, Inc.
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Metabank, dba Meta Payment Systems
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By: /s/ Talbott Roche
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By: /s/ Linda M. Loof
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Name: Talbott Roche
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Name: Linda M. Loof
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Title: President & CEO
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Title: SVP, Strategic Accounts
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Date: December 21, 2017
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Date: December 21, 2017
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Calendar Quarter of Card Load
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Applicable Supplemental Fee Rate*
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[**]
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[**]
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[**]
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[**]
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[**]
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[**]
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[**]
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[**]
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AFTER [**]
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To be agreed based on Parties quarterly rate review meetings
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Subsidiary
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Jurisdiction
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Blackhawk Network, Inc.
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Arizona
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Blackhawk Network California, Inc.
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California
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Cardlab, Inc.
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Delaware
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Blackhawk Engagement Solutions (DE), Inc.
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Delaware
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Blackhawk Engagement Solutions, Inc.
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Maryland
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Achievers Corp.
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Delaware
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Achievers LLC
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Delaware
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Cardpool, Inc
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Delaware
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Omni Prepaid, LLC
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Delaware
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OmniCard, LLC
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Delaware
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The Grass Roots Group Holdings Limited
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United Kingdom
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The Grass Roots Group UK Limited
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United Kingdom
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/s/ Talbott Roche
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Talbott Roche
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President and Chief Executive Officer
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Date: February 27, 2018
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/s/ Charles O. Garner
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Charles O. Garner
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Chief Financial Officer
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Date: February 27, 2018
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1.
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The Company’s Annual Report on Form 10-K for the period ended
December 30, 2017
(the “Annual Report”), to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and
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2.
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The information contained in the Annual 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/ Charles O. Garner
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Talbott Roche
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Charles O. Garner
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President and Chief Executive Officer
|
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Chief Financial Officer
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(Principal Executive Officer)
|
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(Principal Financial Officer)
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