Document and Entity Information
Document and Entity Information - shares | 8 Months Ended | |
Sep. 10, 2016 | Oct. 12, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 10, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | BLACKHAWK NETWORK HOLDINGS, INC | |
Entity Central Index Key | 1,411,488 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 55,377,000 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - Unaudited - USD ($) $ in Thousands | Sep. 10, 2016 | Jan. 02, 2016 | Sep. 12, 2015 |
Current assets: | |||
Cash and cash equivalents | $ 300,349 | $ 914,576 | $ 214,722 |
Restricted cash | 2,500 | 3,189 | 43,043 |
Settlement receivables, net | 275,471 | 626,077 | 240,273 |
Accounts receivable, net | 199,552 | 241,729 | 188,912 |
Other current assets | 123,919 | 103,319 | 107,950 |
Total current assets | 901,791 | 1,888,890 | 794,900 |
Property, equipment and technology, net | 168,865 | 159,357 | 154,085 |
Intangible assets, net | 293,034 | 240,898 | 230,213 |
Goodwill | 508,607 | 402,489 | 382,803 |
Deferred income taxes | 352,683 | 339,558 | 361,284 |
Other assets | 69,039 | 81,764 | 78,294 |
TOTAL ASSETS | 2,294,019 | 3,112,956 | 2,001,579 |
Current liabilities: | |||
Settlement payables | 522,133 | 1,605,021 | 469,590 |
Consumer and customer deposits | 115,085 | 84,761 | 102,633 |
Accounts payable and accrued operating expenses | 103,920 | 119,087 | 112,753 |
Deferred revenue | 113,867 | 113,458 | 91,474 |
Note payable, current portion | 9,846 | 37,296 | 37,378 |
Notes payable to Safeway | 3,239 | 4,129 | 13,129 |
Bank line of credit | 0 | 0 | 100,000 |
Other current liabilities | 48,630 | 57,342 | 43,320 |
Total current liabilities | 916,720 | 2,021,094 | 970,277 |
Deferred income taxes | 19,930 | 18,652 | 14,735 |
Note payable | 137,848 | 324,412 | 325,151 |
Convertible notes payable | 425,833 | 0 | 0 |
Other liabilities | 25,429 | 14,700 | 4,867 |
Total liabilities | 1,525,760 | 2,378,858 | 1,315,030 |
Commitments and contingencies (see Note 9) | |||
Stockholders’ equity: | |||
Preferred stock: $0.001 par value; 10,000 shares authorized; no shares outstanding | 0 | 0 | 0 |
Common stock: $0.001 par value; 210,000 shares authorized; 55,368, 55,794 and 54,641 shares outstanding, respectively | 55 | 56 | 55 |
Additional paid-in capital | 594,739 | 561,939 | 547,230 |
Accumulated other comprehensive loss | (34,398) | (40,195) | (31,535) |
Retained earnings | 203,791 | 207,973 | 166,370 |
Total Blackhawk Network Holdings, Inc. equity | 764,187 | 729,773 | 682,120 |
Non-controlling interests | 4,072 | 4,325 | 4,429 |
Total stockholders’ equity | 768,259 | 734,098 | 686,549 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 2,294,019 | $ 3,112,956 | $ 2,001,579 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets - Unaudited (Parenthetical) - $ / shares | Sep. 10, 2016 | Jan. 02, 2016 | Sep. 12, 2015 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 210,000,000 | 210,000,000 | 210,000,000 |
Common stock, shares outstanding | 55,368,000 | 55,794,000 | 54,641,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) - Unaudited - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2016 | Sep. 12, 2015 | Sep. 10, 2016 | Sep. 12, 2015 | |
OPERATING REVENUES: | ||||
Commissions and fees | $ 248,138 | $ 231,492 | $ 750,693 | $ 709,339 |
Program and other fees | 64,857 | 61,416 | 207,718 | 171,942 |
Marketing | 17,943 | 16,311 | 52,098 | 59,112 |
Product sales | 30,622 | 43,446 | 108,719 | 104,251 |
Total operating revenues | 361,560 | 352,665 | 1,119,228 | 1,044,644 |
OPERATING EXPENSES: | ||||
Partner distribution expense | 178,363 | 161,852 | 541,749 | 494,193 |
Processing and services | 75,090 | 68,246 | 224,331 | 198,272 |
Sales and marketing | 52,327 | 49,954 | 166,176 | 156,653 |
Costs of products sold | 29,122 | 40,577 | 103,163 | 97,593 |
General and administrative | 22,501 | 22,136 | 70,130 | 62,186 |
Transition and acquisition | 2,574 | 5,275 | 4,160 | 6,091 |
Amortization of acquisition intangibles | 10,376 | 6,875 | 35,533 | 18,352 |
Change in fair value of contingent consideration | 1,300 | 0 | 2,100 | (7,567) |
Total operating expenses | 371,653 | 354,915 | 1,147,342 | 1,025,773 |
OPERATING INCOME (LOSS) | (10,093) | (2,250) | (28,114) | 18,871 |
OTHER INCOME (EXPENSE): | ||||
Interest income and other income (expense), net | 2,360 | (1,421) | 3,258 | (1,938) |
Interest expense | (5,684) | (3,231) | (13,868) | (8,566) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (13,417) | (6,902) | (38,724) | 8,367 |
INCOME TAX EXPENSE (BENEFIT) | (8,357) | (3,290) | (18,884) | 4,435 |
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | (5,060) | (3,612) | (19,840) | 3,932 |
Loss (income) attributable to non-controlling interests, net of tax | (42) | (3) | (152) | 63 |
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC. | $ (5,102) | $ (3,615) | $ (19,992) | $ 3,995 |
EARNINGS (LOSS) PER SHARE: | ||||
Basic (in usd per share) | $ (0.09) | $ (0.07) | $ (0.36) | $ 0.07 |
Diluted (in usd per share) | $ (0.09) | $ (0.07) | $ (0.36) | $ 0.07 |
Weighted average shares outstanding—basic (in shares) | 55,668 | 54,467 | 55,851 | 53,941 |
Weighted average shares outstanding—diluted (in shares) | 55,668 | 54,467 | 55,851 | 55,994 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - Unaudited - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2016 | Sep. 12, 2015 | Sep. 10, 2016 | Sep. 12, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | $ (5,060) | $ (3,612) | $ (19,840) | $ 3,932 |
Other comprehensive income (loss): | ||||
Currency translation adjustments | (2,504) | (7,104) | 5,547 | (12,386) |
COMPREHENSIVE INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | (7,564) | (10,716) | (14,293) | (8,454) |
Comprehensive loss (income) attributable to non-controlling interests, net of tax | 129 | 361 | 98 | 384 |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC. | $ (7,435) | $ (10,355) | $ (14,195) | $ (8,070) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - Unaudited - USD ($) $ in Thousands | 8 Months Ended | |
Sep. 10, 2016 | Sep. 12, 2015 | |
OPERATING ACTIVITIES: | ||
Net income (loss) before allocation to non-controlling interests | $ (19,840) | $ 3,932 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization of property, equipment and technology | 33,096 | 27,765 |
Amortization of intangibles | 38,988 | 21,634 |
Amortization of deferred program and contract costs | 18,805 | 20,032 |
Employee stock-based compensation expense | 24,865 | 19,856 |
Change in fair value of contingent consideration | 2,100 | (7,567) |
Deferred income taxes | 0 | 13,371 |
Other | 5,780 | 5,496 |
Changes in operating assets and liabilities: | ||
Settlement receivables | 359,398 | 274,941 |
Settlement payables | (1,091,151) | (906,181) |
Accounts receivable, current and long-term | 44,585 | (3,573) |
Other current assets | 3,940 | (20,562) |
Other assets | (9,299) | (9,996) |
Consumer and customer deposits | 13,963 | (31,140) |
Accounts payable and accrued operating expenses | (28,775) | (9,695) |
Deferred revenue | 2,703 | (8,105) |
Other current and long-term liabilities | (24,912) | 4,385 |
Income taxes, net | (13,883) | (15,492) |
Net cash used in operating activities | (639,637) | (620,899) |
INVESTING ACTIVITIES: | ||
Expenditures for property, equipment and technology | (33,522) | (37,310) |
Business acquisitions, net of cash acquired | (144,284) | (78,394) |
Investment in unconsolidated entities | (3,901) | 0 |
Change in restricted cash | 689 | (38,043) |
Other | 4,000 | (561) |
Net cash used in investing activities | (177,018) | (154,308) |
FINANCING ACTIVITIES: | ||
Payments for acquisition liability | 0 | (1,811) |
Repayment of debt assumed in business acquisitions | (8,964) | 0 |
Proceeds from issuance of note payable | 250,000 | 0 |
Repayment of note payable | (463,750) | (11,250) |
Payments of financing costs | (15,926) | (724) |
Borrowings under revolving bank line of credit | 1,959,749 | 1,536,083 |
Repayments on revolving bank line of credit | (1,959,749) | (1,436,083) |
Proceeds from convertible debt | 500,000 | 0 |
Payments for bond hedges | (75,750) | 0 |
Proceeds from warrants | 47,000 | 0 |
Repayment on notes payable to Safeway | (890) | (6,320) |
Proceeds from issuance of common stock from exercise of employee stock options and employee stock purchase plans | 4,491 | 8,055 |
Other stock-based compensation related | (2,135) | (675) |
Repurchase of common stock | (34,845) | 0 |
Other | (155) | (1,494) |
Net cash provided by financing activities | 199,076 | 85,781 |
Effect of exchange rate changes on cash and cash equivalents | 3,352 | (7,467) |
Decrease in cash and cash equivalents | (614,227) | (696,893) |
Cash and cash equivalents—beginning of period | 914,576 | 911,615 |
Cash and cash equivalents—end of period | 300,349 | 214,722 |
NONCASH FINANCING AND INVESTING ACTIVITIES | ||
Net deferred tax assets recognized for tax basis step-up with offset to Additional paid-in capital | 0 | 366,306 |
Note payable to Safeway contributed to Additional paid-in capital | 0 | 8,229 |
Financing of business acquisition with contingent consideration | 20,100 | 0 |
Intangible assets recognized for warrants issued | $ 0 | $ 3,147 |
The Company and Significant Acc
The Company and Significant Accounting Policies | 8 Months Ended |
Sep. 10, 2016 | |
Accounting Policies [Abstract] | |
The Company and Significant Accounting Policies | The Company and Significant Accounting Policies The Company Blackhawk Network Holdings, Inc., together with its subsidiaries (we, us, our, the Company), is a leading prepaid payment network utilizing proprietary technology to offer a broad range of prepaid gift, telecom and debit cards, in physical and electronic forms, as well as related prepaid products and payment services in the United States and 23 other countries . Our product offerings include single-use gift cards; loyalty, incentive and reward products and services; prepaid telecom products and prepaid financial services products, including general purpose reloadable (GPR) cards, and our reload network (collectively, prepaid products). We offer gift cards from leading consumer brands (known as closed loop) as well as branded gift and incentive cards from leading payment network card associations such as American Express, Discover, MasterCard and Visa (known as open loop) and prepaid telecom products offered by prepaid wireless telecom carriers. We also distribute GPR cards and operate a proprietary reload network named Reloadit, which allows consumers to reload funds onto their previously purchased GPR cards. We distribute these prepaid products across multiple high-traffic channels such as grocery, convenience, specialty and online retailers (referred to as retail distribution partners) in the Americas, Europe, Africa, Australia and Asia and provide these prepaid products and related services to business clients for their loyalty, incentive and reward programs. Basis of Presentation The accompanying condensed consolidated financial statements of Blackhawk Network Holdings, Inc. are unaudited. We have prepared our unaudited interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. We have condensed or omitted certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP pursuant to such rules and regulations. Accordingly, our interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K, filed with the SEC on March 2, 2016 (the Annual Report). We have prepared our condensed consolidated financial statements on the same basis as our annual audited consolidated financial statements and, in the opinion of management, have reflected all adjustments, which include only normal recurring adjustments, necessary to present fairly our financial position and results of operations for the interim periods presented. Our results for the interim periods are not necessarily reflective of the results to be expected for the year ending December 31, 2016 or for any other interim period or other future year. Our condensed consolidated balance sheet as of January 2, 2016 , included herein was derived from our audited consolidated financial statements as of that date but does not include all disclosures required by GAAP for annual financial statements, including notes to the financial statements. Seasonality A significant portion of gift card sales occurs in late December of each year during the holiday selling season. As a result, we earn a significant portion of revenues, net income and cash inflows during the fourth fiscal quarter of each year and remit the majority of the cash, less commissions, to our content providers in January of the following year. The timing of our fiscal year-end, December holiday sales and the related January cash settlement with content providers significantly increases our Cash and cash equivalents , Settlement receivables and Settlement payables balances at the end of each fiscal year relative to normal daily balances. The cash settlement with our content providers in January accounts for the majority of the use of cash from operating activities in our condensed consolidated statements of cash flows during our first three fiscal quarters. Additionally, our operating income may fluctuate significantly during our first three fiscal quarters due to lower revenues and timing of certain expenses during such fiscal periods. As a result, quarterly financial results are not necessarily reflective of the results to be expected for the year, any other interim period or other future year. Recently Issued or Adopted Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides additional guidance on the presentation and classification of certain items in the statement of cash flows . Early adoption is permitted and the standard shall be applied retrospectively. We early adopted ASU 2016-15 during our third quarter of 2016. Adoption did not result in significant changes to our existing accounting policies or presentation. In April and May 2016, the FASB issued ASU 2016-10, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606), which provides additional guidance, narrow-scope improvements and practical expedients to the new revenue standard (Topic 606) that will be applicable for reporting periods beginning after December 15, 2017. Early adoption is not permitted. Management is evaluating the impact of this guidance on our financial statements. In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments, which clarifies the requirements for assessing certain contingent put or call options in debt instruments. Early adoption is permitted and the standard shall be applied using a modified retrospective basis. We early adopted ASU 2016-06 during our third quarter of 2016 in conjunction with our issuance of the Convertible Senior Notes (see Note 3 — Financing ). Adoption did not result in significant changes to our existing accounting policies. In March 2016, the FASB issued ASU 2016-04 Liabilities—Extinguishment of Liabilities (Subtopic 405-20) : Recognition of Breakage for Certain Prepaid Stored-Value Cards, effective for fiscal years beginning after December 15, 2017. ASU 2016-04 defines liabilities related to the sale of certain prepaid stored-value cards as financial liabilities and provides guidance for the derecognition of liabilities and recognition of revenue related to the portion of the stored value that ultimately is not redeemed by customers (breakage). Early adoption is permitted and the standard shall be applied using either a modified retrospective basis or a retrospective basis. We early adopted ASU 2016-04 during our first quarter of 2016 on a modified retrospective basis because we believe that derecognition of these liabilities more accurately reflects the economics of such transactions. Accordingly, we recognized a cumulative adjustment benefit of $6.1 million , net of income taxes, to beginning Retained earnings as of January 3, 2016. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. We early adopted ASU 2016-09 during our first quarter of 2016 on a modified retrospective basis for the income statement impact of forfeitures and income taxes and have retrospectively applied ASU 2016-09 to our condensed consolidated statements of cash flows for the impact of excess tax benefits. Accordingly, we recognized a cumulative adjustment charge of $0.3 million for the adoption of the impact of forfeitures, net of income taxes, and a cumulative adjustment benefit of $10.1 million for the excess tax benefit for the exercise of warrants from prior fiscal years to beginning Retained earnings as of January 3, 2016. Significant Accounting Policies There have been no material changes to our significant accounting policies, as compared to the significant accounting policies described in the audited consolidated financial statements and related notes included in the Annual Report. As a result of early adopting ASU 2016-04 and ASU 2016-09 (discussed above), we provide below our policies with respect to breakage and stock-based compensation. Breakage Revenue We refer to the portion of the dollar value of prepaid-stored value cards that consumers do not ultimately redeem as breakage. Where we expect to be entitled to a breakage amount, we recognize revenue using estimated breakage rates ratably over the estimated card life, provided that a significant reversal of the amount of breakage revenue recognized is not probable and record adjustments to such estimates when redemption is remote or we are legally defeased of the obligation, if applicable. We estimate breakage rates based on historical redemption patterns, market-specific trends, escheatment rules and existing economic conditions for each program. In card programs where we do not expect to be entitled to a breakage amount, we recognize breakage revenue when we consider redemption remote or we are legally defeased of the obligation, if applicable. Stock-based Compensation As a result of our adoption of ASU 2016-09, we recognize the impact of forfeitures when they occur with no adjustment for estimated forfeitures and recognize excess tax benefits as a reduction of income tax expense regardless of whether the benefit reduces income taxes payable. Additionally, we recognize the cash flow impact of such excess tax benefits in operating activities in our condensed consolidated statements of cash flows. Reclassification In our condensed consolidated statements of income (loss), we have reclassified Marketing revenue to a separate line item, previously reported in Program, interchange, marketing and other fees and have renamed such line as Program and other fees . As a result of our retrospective adoption ASU 2015-17 in the fourth quarter of 2015 to classify all deferred income taxes as long-term assets or liabilities, we have retrospectively applied the guidance to our deferred income taxes as of September 12, 2015 . |
Business Acquisitions
Business Acquisitions | 8 Months Ended |
Sep. 10, 2016 | |
Business Combinations [Abstract] | |
Business Acquisitions | Business Acquisitions 2016 Acquisitions Omni Prepaid On January 5, 2016, we acquired Omni Prepaid, LLC and its subsidiaries GiftCards.com, LLC, which sells digital and physical prepaid gift card solutions to consumers through a high-trafficked gift card U.S. website, and OmniCard, LLC, which sells customized prepaid incentive and reward solutions for business clients (collectively, GiftCards). The new sites and customers will expand our e-commerce businesses. The purchase consideration totaled $103.9 million in cash which we funded using a combination of cash on hand and borrowings under our Credit Agreement. The following table presents our initial estimates of the purchase price allocation, and we may make adjustments to these amounts through the one year measurement period as we finalize information regarding our forecasts, valuation assumptions, income taxes and contingencies (in thousands): Cash $ 3,985 Consumer and customer deposits (5,429 ) Accounts payable and accrued operating expenses (9,860 ) Other tangible assets, net 893 Debt (5,807 ) Identifiable technology and intangible assets 52,460 Goodwill 67,706 Total purchase consideration $ 103,948 At closing, we repaid the assumed debt, which we present in financing activities in our condensed consolidated statements of cash flows, and paid $8.1 million of GiftCards' transaction expenses included above within accounts payable and accrued operating expenses, which we present in operating activities in our condensed consolidated statements of cash flows. Goodwill primarily represents the value of cash flows from future customers. We expect to deduct goodwill and the identifiable technology and intangible assets for tax purposes. The following table presents the components of the identifiable technology and intangible assets and the estimated useful lives (in thousands): Fair Value Useful Life Customer relationships $ 27,570 10 years Backlog 10,780 3 years Domain name 10,520 10 years Technology 3,590 5 years Total identifiable technology and intangible assets $ 52,460 Customer relationships represent the estimated fair value of the underlying relationships and agreements with GiftCards' business clients and consumers. Backlog represents the estimated fair value resulting from cards issued before the acquisition date, resulting from revenues, including interchange and account service fees. Domain name represents the estimated fair value of the giftcards.com domain name. Technology represents internal-use software used for the order, fulfillment and management of customer orders. We valued customer relationships, backlog and domain name using the income approach and the technology using the cost approach. Significant assumptions include forecasts of revenues, costs of revenue, development costs and sales, general and administrative expenses and estimated attrition rates for business clients and consumers. We discounted the cash flows at various rates from 6.0% to 11.0% , reflecting the different risk profiles of the assets. Acquisition-related expenses totaled $0.4 million , which we report in Transition and acquisition expense. Other 2016 Acquisitions During the first quarter of 2016, we also acquired NimbleCommerce, a digital commerce platform and network for promotions. NimbleCommerce also allows merchants and brands to manage their own prepaid offer and gift card programs, or resell through a network of retailer and publisher branded sites. During the second quarter of 2016, we acquired substantially all of the net assets of Extrameasures, a prepaid consumer promotions and incentives company. Through its customized rebate programs, Extrameasures offers Visa prepaid cards and private label merchant-specific reward and gift cards with a proprietary platform to help businesses drive consumer acquisition, engagement and loyalty. The purchase consideration for NimbleCommerce and Extrameasures totaled $78.6 million , consisting of $58.5 million in cash and $20.1 million in the estimated fair value of contingent consideration. Contingent consideration resulting from our acquisition of Extrameasures consists of three cash payments of up to $15 million each, based on the financial performance of Extrameasures for each of the three annual post-acquisition periods. Approximately 10% of the earnout payments will be allocated to employees. Accordingly, we exclude such amounts from the estimated fair value of the contingent consideration and accrue estimated amounts due over the service period. We estimated the fair value of contingent consideration using the income approach at a discount rate of 17% . The following table presents our initial estimates of the purchase price allocation, and we may make adjustments to these amounts through the one year measurement period as we finalize information regarding our forecasts, valuation assumptions, income taxes and contingencies (in thousands): Cash $ 14,191 Settlement receivables 4,884 Settlement payables (3,272 ) Consumer and customer deposits (18,009 ) Other tangible liabilities, net (1,155 ) Debt (3,157 ) Deferred income taxes 2,066 Identifiable technology and intangible assets 45,540 Goodwill 37,525 Total purchase consideration $ 78,613 At closing, we repaid the assumed debt, which we present in financing activities in our condensed consolidated statements of cash flows, and paid $1.0 million of transaction expenses, which we present in operating activities in our condensed consolidated statements of cash flows. Goodwill primarily represents the value of cash flows from future customers. We expect to deduct approximately $1.4 million of the total $10.4 million goodwill from our acquisition of NimbleCommerce for tax purposes and may currently deduct up to $2.3 million of the total $27.2 million goodwill from our acquisition of Extrameasures for tax purposes. For Extrameasures, we will be able to deduct additional goodwill based on the actual payments made under the contingent earnout and settlement of contingent liabilities. The following table presents the components of the identifiable technology and intangible assets and the estimated useful lives (in thousands): Fair Value Useful Life Customer relationships $ 39,230 10 years Backlog 1,610 3 years Technology 4,700 5 years Total identifiable technology and intangible assets $ 45,540 We valued customer relationships, backlog and certain technology using the income approach and certain technology using the cost approach. Significant assumptions include forecasts of revenues, costs of revenue, development costs and sales, general and administrative expenses and estimated attrition rates for business clients. We discounted the cash flows at various rates from 9.0% to 16.0% , reflecting the different risk profiles of the assets. Acquisition-related expenses totaled $0.9 million , which we include in Transition and acquisition expense. Pro Forma Financial Information The following pro forma financial information summarizes the combined results of operations of us, GiftCards and Extrameasures as though we had been combined as of the beginning of fiscal 2015 (in thousands, except per share amounts): 12 weeks ended 36 weeks ended September 10, 2016 September 12, 2015 September 10, 2016 September 12, 2015 Total revenues $ 364,129 $ 364,400 $ 1,127,178 $ 1,068,882 Net income (loss) attributable to Blackhawk Network Holdings, Inc. (3,626 ) (3,959 ) (14,469 ) (1,124 ) Pro forma EPS—Basic $ (0.07 ) $ (0.07 ) $ (0.26 ) $ (0.02 ) Pro forma EPS—Diluted $ (0.07 ) $ (0.07 ) $ (0.26 ) $ (0.02 ) The pro forma financial information includes adjustments to reclassify acquisition-related costs from 2016 to 2015, to amortize technology and intangible assets starting at the beginning of 2015, and to reflect the impact on revenue resulting from the step-down in basis of consumer and customer deposits from its book value to its fair value as of the beginning of 2015. We have not presented separate results of operations since closing for GiftCards because its integration with our existing operations makes it impractical to do so. In addition, results of operations for Extrameasures and NimbleCommerce are immaterial, both individually and in the aggregate. Subsequent Event On October 6, 2016, we acquired the outstanding common stock of Grass Roots Group Holdings, Ltd. and its subsidiaries, a leading provider of employee and customer engagement solutions, for purchase consideration of £93.7 million , or $119.1 million based on the exchange rate on the acquisition date. The acquisition broadens the global capabilities of our incentives and engagement business. We are in the process of gathering the information to allocate the purchase price and accordingly are unable to provide initial allocation estimates nor provide pro forma financial information. 2015 Acquisitions During the 36 weeks ended September 10, 2016 , we recorded a measurement period adjustment for Achievers, acquired in June 2015, which decreased deferred revenue by $3.6 million , intangible assets by $1.9 million , goodwill by $1.2 million and deferred income tax assets by $0.5 million . The measurement periods for Achievers and Didix are now closed. |
Financing
Financing | 8 Months Ended |
Sep. 10, 2016 | |
Debt Disclosure [Abstract] | |
Financing | Financing Credit Agreement On January 25, 2016, we exercised our option to draw down an incremental $100 million term loan under our Credit Agreement. On July 27, 2016, in conjunction with the issuance of the Convertible Senior Notes, as described below, we entered into an amendment and restatement to our Credit Agreement (the Restated Credit Agreement). We repaid all amounts outstanding under our revolving line of credit and $276 million of the $426 million outstanding under our term loan such that $150 million remained outstanding under our term loan. The Restated Credit Agreement provides for the extension of credit in an aggregate principal amount up to $700 million , consisting of revolving loans up to $400 million (the Revolving Credit Facility) and term loans up to $300 million (the Term Loan Facility). The term loan has $150 million outstanding with a delayed draw option for up to an additional $150 million . The Restated Credit Agreement also includes an ability to increase aggregate commitments by up to an incremental $300 million if certain criteria are met and lenders choose to participate. The Restated Credit Agreement extended the term of the Credit Agreement to July 2021 and made certain modifications to the financial and other covenants to add operating flexibility, including modification of the leverage covenant and removal of the net worth covenant and the dollar limitation on acquisitions. Convertible Senior Notes On July 27, 2016, we issued $500 million aggregate principal amount of 1.50% Convertible Senior Notes due in January 2022 (the Notes), in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 (the Securities Act). The Notes have not been registered under the Securities Act, or applicable state securities laws or blue sky laws, and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or available exemptions from the registration requirements. The Notes are senior unsecured obligations and rank equally in right of payment with all of our future senior unsecured indebtedness and are junior to our existing and future secured indebtedness. The Notes pay interest in cash semi-annually (January and July) at a rate of 1.50% per annum. On or after September 15, 2021, until the second scheduled trading day immediately preceding the maturity date, the Notes may be converted at the option of the holders. Holders may convert the Notes at their option prior to September 15, 2021 only under the following circumstances: 1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2016 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; 2) during the five business day period after any five consecutive trading day period (the measurement period) in which the “trading price” per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or 3) upon the occurrence of specified corporate events, including if there is a fundamental change. Upon conversion, we will pay or deliver cash, shares of our own common stock or a combination, at our election. The conversion rate is initially 20.0673 shares of common stock per $1,000 principal amount of the Notes (equivalent to an initial conversion price of approximately $49.83 per share of common stock), subject to certain adjustments. We may not redeem the Notes prior to the maturity date. At an event of default, holders may, upon satisfaction of certain conditions, accelerate the principal amount of the Notes plus accrued and unpaid interest. If we undergo a fundamental change, a holder may require us to repurchase for cash all or any portion of its Notes at a price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest. We separately account for the liability and equity components of the Notes. The initial debt component of the Notes was valued at $436.6 million based on the contractual cash flows discounted at an appropriate comparable market non-convertible debt borrowing rate at the date of issuance of 4.1% , with the equity component representing the residual amount of the proceeds which was recorded as a debt discount. We allocated the issuance costs pro-rata based on the relative initial carrying amounts of the debt and equity components, including the Note Hedges and Warrants transactions described below. As a result, $1.8 million of the issuance costs were allocated to the equity component of the Notes and $12.3 million of issuance costs were allocated to the liability component of the Notes and accounted for as a debt discount . We amortize the issuance costs allocated to the liability component as additional interest expense over the term of the Notes using the effective interest method. The effective interest rate of the Notes is 4.65% per annum ( 1.50% coupon rate plus 3.15% of non-cash accretion expense). Convertible Note Hedges and Warrants Concurrent with the pricing of the Notes, we purchased call options for our own common stock to hedge the Notes (the Note Hedges) and sold call options for our own common stock (the Warrants). We structured the Note Hedges to reduce potential dilution to our common stock upon any conversion of Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be. However, the Warrants could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the strike price of the Warrants. The Note Hedges —On July 21 and 22, 2016, we purchased Note Hedges from certain counterparties for an aggregate price of approximately $75.8 million . The Note Hedges are exercisable upon conversion of the Notes for cash, a number of shares of our common stock or a combination of cash and shares of our common stock generally based on the amount by which the market price per share of our common stock, as measured under the terms of the Note Hedges during the relevant valuation period, is greater than the strike price of the Note Hedges. The strike price of the Note Hedges initially corresponds to the conversion price of the Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes, subject to certain exceptions. Under the terms of the Note Hedges, we will receive cash, shares or a combination of cash and shares that offsets share dilution caused by conversion of the Notes. Warrants —On July 21 and 22, 2016, we sold call options to the same counterparties for approximately $47.0 million , which give the counterparties the right to buy from us up to approximately 10.0 million shares of our common stock, subject to adjustments, at an exercise price of $61.20 per share, subject to adjustments, over a series of days commencing on April 18, 2022 and ending August 9, 2022. Upon each exercise of the Warrants, we will be obligated to deliver shares of our common stock having a value equal to the difference between the market price on the exercise date and the strike price of the Warrants. The Note Hedges and Warrants are classified in stockholders’ equity on our condensed consolidated balance sheets. We also recognized a $5.2 million deferred tax asset with an offset to Additional paid-in capital for excess tax interest deductions relating to the Notes and Note Hedges. Maturities of Long-Term Debt As a result of the Amendment and the Notes, the following table presents the amounts due by year of maturity for our term loan and the Notes (in thousands): As of July 27, 2016 2017 $ 10,000 2018 7,500 2019 7,500 2020 15,000 2021 110,000 2022 500,000 Total long-term debt $ 650,000 Share Repurchase In conjunction with the issuance of the Notes, on July 27, 2016, we repurchased approximately 1.0 million shares of our common stock for $34.8 million . |
Fair Value Measurements
Fair Value Measurements | 8 Months Ended |
Sep. 10, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements We measure certain assets and liabilities at fair value on a recurring basis. The table below summarizes the fair values of these assets and liabilities as of September 10, 2016 , January 2, 2016 and September 12, 2015 (in thousands): September 10, 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 5,112 $ — $ — $ 5,112 Liabilities Contingent consideration $ — $ — $ 22,200 $ 22,200 January 2, 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 370,070 $ — $ — $ 370,070 Liabilities Contingent consideration $ — $ — $ — $ — September 12, 2015 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 5,070 $ — $ — $ 5,070 Liabilities Contingent consideration $ — $ — $ — $ — Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities. Level 1 investments include money market mutual funds. Level 2 — Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable. Level 2 investments include commercial paper. In the 36 weeks ended September 10, 2016 , there were no transfers between Level 1 and Level 2. 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. Level 3 includes the estimated fair value of our contingent consideration liabilities. Contingent Consideration —We estimate the fair value of the contingent consideration based on our estimates of the probability of achieving the relevant targets and discount rates reflecting the risk of meeting these targets. Term loan —As of September 10, 2016 , using Level 2 inputs, we estimate the fair value of our term loan to be approximately $150.0 million . Convertible notes payable —As of September 10, 2016 , using Level 2 inputs, we estimate the fair value of our convertible notes payable to be approximately $490.6 million . The changes in fair value of contingent consideration for the 36 weeks ended September 10, 2016 and September 12, 2015 are as follows (in thousands): 36 weeks ended September 10, 2016 September 12, 2015 Contingent Consideration Balance, beginning of period $ — $ 7,567 Issuance of contingent consideration 20,100 — Change in fair value of contingent consideration 2,100 (7,567 ) Balance, end of period $ 22,200 $ — We present the change in the fair value of contingent consideration in Change in fair value of contingent consideration and as a non-cash adjustment to net income in our condensed consolidated statements of cash flows. The decrease in fair value of contingent consideration related to our acquisition of CardLab for the 36 weeks ended September 12, 2015 resulted from the projected failure of financial targets to be met relating to the launch of incentive programs during the contingent earn-out measurement period. Such measurement period concluded during the 36 weeks ended September 10, 2016 with no amounts due. The issuance and increase in fair value of contingent consideration during the 36 weeks ended September 10, 2016 related to our acquisition of Extrameasures (see Note 2 — Business Acquisitions ). The increase in fair value reflects the passage of time and increases in our projections of the payment of portions of the earn-out. As of September 10, 2016 , we estimated the fair value of the remaining contingent consideration based on our estimates of the amounts payable for and probability of achieving the relevant targets and a discount rate of 17% . A significant increase (decrease) in our estimates of the amounts payable for and probability of achieving the relevant targets or a significant decrease (increase) in the discount rate could materially increase (decrease) the estimated fair value of contingent consideration. |
Consolidated Financial Statemen
Consolidated Financial Statement Details | 8 Months Ended |
Sep. 10, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated Financial Statement Details | Consolidated Financial Statement Details The following tables represent the components of Other current assets , Other assets , Other current liabilities and Other liabilities as of September 10, 2016 , January 2, 2016 and September 12, 2015 consisted of the following (in thousands): September 10, 2016 January 2, 2016 September 12, 2015 Other current assets: Inventory $ 35,634 $ 36,528 $ 47,272 Deferred expenses 12,099 18,182 10,854 Income tax receivables 38,427 14,831 20,632 Other 37,759 33,778 29,192 Total other current assets $ 123,919 $ 103,319 $ 107,950 Other assets: Deferred program and contract costs $ 44,388 $ 50,717 $ 52,428 Other receivables 1,390 2,281 4,734 Income taxes receivable — 6,155 6,368 Deferred financing costs 2,871 2,100 2,002 Other 20,390 20,511 12,762 Total other assets $ 69,039 $ 81,764 $ 78,294 Other current liabilities : Payroll and related liabilities $ 25,425 $ 34,530 $ 23,103 Income taxes payable 3,158 3,216 2,122 Acquisition liability 11,250 — 607 Other payables and accrued liabilities 8,797 19,596 17,488 Total other current liabilities $ 48,630 $ 57,342 $ 43,320 Other liabilities: Acquisition liability $ 10,950 $ — $ — Payable to content provider — — 825 Income taxes payable 6,213 4,249 2,418 Deferred income and other liabilities 8,266 10,451 1,624 Total other liabilities $ 25,429 $ 14,700 $ 4,867 |
Goodwill
Goodwill | 8 Months Ended |
Sep. 10, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill We have assigned goodwill to our US Retail, International Retail and Incentives & Rewards segments. To date, we have not recorded any impairment charges against or disposed of any reporting units with goodwill. During the first quarter of 2016, as a result of changes in reporting financial results to our Chief Operating Decision Maker, we concluded that we should split our historical e-Commerce operating segment, which we had reported in Incentives & Rewards reportable segment, into two operating segments: e-Commerce Retail, which we now report in US Retail reportable segment, and e-Commerce Incentives, which we continue to report in Incentives & Rewards reportable segment. Accordingly, we allocated the goodwill from the historical e-Commerce segment between these two segments based on their relative fair values. We allocated the goodwill from our acquisition of GiftCards between these two segments. A summary of changes in goodwill during the 36 weeks ended September 10, 2016 is as follows (in thousands): September 10, 2016 US Retail International Retail Incentives & Rewards Total Balance, beginning of period $ 42,729 $ 49,156 $ 310,604 $ 402,489 Re-allocation of e-Commerce goodwill 2,671 — (2,671 ) — Acquisition of GiftCards 34,427 — 33,279 67,706 Acquisition of NimbleCommerce 10,365 — — 10,365 Acquisition of Extrameasures — — 27,160 27,160 Measurement period adjustment — — (1,234 ) (1,234 ) Foreign currency translation adjustments — 1,639 482 2,121 Balance, end of period $ 90,192 $ 50,795 $ 367,620 $ 508,607 |
Stockholders' Equity and Stock
Stockholders' Equity and Stock Based Compensation | 8 Months Ended |
Sep. 10, 2016 | |
Equity [Abstract] | |
Stockholders' Equity and Stock Based Compensation | Stockholders’ Equity and Stock Based Compensation Stockholders’ Equity During the 36 weeks ended September 10, 2016 , the issuance of our Convertible Senior Notes, the purchase of the Note Hedges, the sale of the Warrants (see Note 3 — Financing ) and our adoption of ASU 2016-04 and 2016-09 on a modified retrospective basis had a significant impact on Additional paid-in capital and Retained earnings . Accordingly, we present in the tables below a reconciliation of such balances from January 2, 2016 to September 10, 2016 . The following table presents the changes within Additional paid-in capital during the 36 weeks ended September 10, 2016 (in thousands except average price per share): BALANCE—January 2, 2016 $ 561,939 Cumulative adjustment upon modified retrospective adoption of ASU 2016-09 (see Note 1—The Company and Significant Accounting Policies) 650 Employee-related stock-based activity 28,940 Equity component of convertible notes issuance (see Note 3—Financing) 63,434 Equity component of convertible notes issuance costs (see Note 3—Financing) (1,792 ) Purchase of convertible notes hedges (see Note 3—Financing) (75,750 ) Proceeds from sale of warrants (see Note 3—Financing) 47,000 Deferred tax assets recognized for convertible notes (see Note 3—Financing) 5,161 Repurchase of common stock (996 shares at an average price of $34.98 per share) (34,843 ) BALANCE— September 10, 2016 $ 594,739 The following table presents the changes within Retained earnings during the 36 weeks ended September 10, 2016 (in thousands): BALANCE—January 2, 2016 $ 207,973 Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and 2016-09 (see Note 1—The Company and Significant Accounting Policies) 15,854 Net loss (19,992 ) Dividends paid (44 ) BALANCE— September 10, 2016 $ 203,791 Stock Based Compensation During the 36 weeks ended September 10, 2016 , our Board of Directors granted 1,129,019 restricted stock units, 172,300 performance stock units and 584,350 stock options at a weighted-average exercise price of $37.90 per share. The following table presents total stock-based compensation expense according to the income statement line in our condensed consolidated statements of income (loss) for the 12 and 36 weeks ended September 10, 2016 and September 12, 2015 (in thousands): 12 weeks ended 36 weeks ended September 10, 2016 September 12, 2015 September 10, 2016 September 12, 2015 Processing and services $ 1,364 $ 1,530 $ 4,259 $ 4,366 Sales and marketing 2,759 2,038 8,600 5,523 Cost of products sold 31 13 89 25 General and administrative 4,139 3,536 11,917 9,942 Total stock-based compensation expense $ 8,293 $ 7,117 $ 24,865 $ 19,856 |
Income Taxes
Income Taxes | 8 Months Ended |
Sep. 10, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective tax rates were 62.3% and 47.7% for the 12 weeks ended September 10, 2016 and September 12, 2015 , respectively, and 48.8% and 53.0% for the 36 weeks ended September 10, 2016 and September 12, 2015 , respectively. The effective rate for the 12 weeks ended September 10, 2016 was higher due to a discrete tax benefit for a tax return to provision true-up, resulting in an increase to the effective tax rate due to pre-tax loss, and permanent tax adjustments from deemed foreign income and nondeductible acquisition expenses. The effective rate for the 36 weeks ended September 10, 2016 was lower due to a net reduction in 2015 in the value of our deferred tax assets from changes in certain state tax apportionment laws (which resulted in an increase to the effective tax rate for the 36 weeks ended September 12, 2015), partially offset by a discrete tax benefit for a tax return to provision true-up and excess tax benefits for employee stock based compensation, both increasing the effective tax rate due to pre-tax loss. |
Commitments and Contingencies
Commitments and Contingencies | 8 Months Ended |
Sep. 10, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingencies From time to time, we enter into contracts containing provisions that require us to indemnify various parties against certain potential claims from third parties. Under contracts with certain issuing banks, we are responsible to the banks for any unrecovered overdrafts on cardholders’ accounts. Under contracts with certain content providers, retail distribution partners and issuing banks, we are responsible for potential losses resulting from certain claims from third parties. Because the indemnity amounts associated with these agreements are not explicitly stated, the maximum amount of the obligation cannot be reasonably estimated. Historically, we have paid immaterial amounts pursuant to these indemnification provisions. We are subject to audits related to various indirect taxes, including, but not limited to, sales and use taxes, value-added tax, and goods and services tax, in various foreign and state jurisdictions. We evaluate our exposure related to these audits and potential audits and do not believe that it is probable that any audit would hold us liable for any material amounts due. Legal Matters There are various claims and lawsuits arising in the normal course of business pending against us, including the matters described below, some of which seek damages and other relief which, if granted, may require future cash expenditures. Management does not believe that it is probable that the resolution of these matters would result in any liability that would materially affect our results of operations or financial condition. On March 30, 2015, Greg Haney in his capacity as Seller Representative for CardLab, Inc. filed a lawsuit against us in the Delaware Chancery Court (CardLab, Inc. v. Blackhawk Network Holdings, Inc., Case No. 10851). The complaint generally alleges that we failed to disclose material information relating to a potential earn-out payment in connection with our acquisition of CardLab, Inc. in 2014. We believe that the suit is without merit, and are vigorously defending ourselves against these claims. On June 8, 2015, we filed a motion to dismiss the complaint. On June 22, 2015, the plaintiff filed an amended complaint. On July 7, 2015, we filed a motion to dismiss the case in its entirety. On February 26, 2016, the Court granted the motion to dismiss in part, dismissing two claims of the amended complaint. On March 25, 2016 we filed our answer denying the remaining claims and a counterclaim for attorneys’ fees pursuant to the merger agreement between the parties. On June 22, 2016, the plaintiff filed a motion to dismiss our counterclaim for indemnification. On July 22, 2016, we filed an amended counterclaim in response. The litigation is in the early stage of discovery. We believe the likelihood of loss is remote. In addition, we transact business in non-U.S. markets and may, from time to time, be subject to disputes and tax audits by foreign tax authorities related to indirect taxes typically on commissions or fees we receive from non-resident content providers. As a result of an indemnification that we received, our exposure has decreased from $12 million as reported in our Annual Report to approximately $5 million , primarily in a single jurisdiction. In that jurisdiction, we have lost an appeal over a dispute related to a specific period. Even if we were to be assessed for other periods, which we currently estimate could be up to approximately $5 million , we believe it is more likely than not that we will prevail upon appeal. |
Segment Reporting
Segment Reporting | 8 Months Ended |
Sep. 10, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting Our three reportable segments are US Retail, International Retail and Incentives & Rewards. During the first quarter of 2016, as a result of changes in reporting financial results to our Chief Operating Decision Maker (CODM), we concluded that we should split our historical e-Commerce segment, which we had reported in Incentives & Rewards, into two segments: e-Commerce Retail, which we report in US Retail, and e-Commerce Incentives, which we report in Incentives & Rewards. We have not retroactively adjusted 2015 segment information as the results of the e-Commerce Retail segment were immaterial. We do not assess performance based on assets and do not provide information on the assets of our reportable segments to our CODM. The key metrics used by our CODM to assess segment performance include Operating revenues , Operating revenues, net of Partner distribution expense and segment profit. We exclude from the determination of segment profit and report in Corporate and Unallocated: i) certain US operations, account management and marketing personnel who primarily support our US Retail segment (as these costs are not included in segment profit reviewed by the CODM), ii) the substantial majority of our technology personnel and related depreciation and amortization of technology and related hardware which support our US Retail and International Retail segments, iii) US accounting, finance, legal, human resources and other administrative functions which may support all segments and iv) noncash charges including amortization of acquisition intangibles, stock-based compensation and change in fair value of contingent consideration, as we do not include these costs in segment profit reviewed by our CODM. Segment profit for our International Retail segment includes all sales and marketing personnel and the substantial majority of operations, legal, accounting, finance and other administrative personnel in such international regions, and segment profit for our Incentives & Rewards segment includes all sales, marketing, technology, operations, legal, certain accounting, finance and other administrative personnel supporting that segment, as well as substantially all depreciation and amortization specifically related to that segment. The following tables present the key metrics used by our CODM for the evaluation of segment performance, including certain significant noncash charges (consisting of certain depreciation and amortization of property, equipment and technology and distribution partner stock-based compensation expense) which have been deducted from the segment profit amounts shown below, and reconciliations of these amounts to our consolidated financial statements (in thousands): 12 weeks ended September 10, 2016 US Retail International Retail Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 197,081 $ 100,069 $ 64,410 $ — $ 361,560 Partner distribution expense 103,601 69,841 4,921 — 178,363 Operating revenues, net of Partner distribution expense 93,480 30,228 59,489 — 183,197 Other operating expenses 58,192 25,158 50,779 59,161 193,290 Segment profit (loss) / Operating income (loss) $ 35,288 $ 5,070 $ 8,710 $ (59,161 ) (10,093 ) Other income (expense) (3,324 ) Loss before income tax expense $ (13,417 ) Non-cash charges $ 1,570 $ 772 $ 7,562 26,715 12 weeks ended September 12, 2015 US Retail International Retail Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 214,941 $ 83,671 $ 54,053 $ — $ 352,665 Partner distribution expense 101,890 56,972 2,990 — 161,852 Operating revenues, net of Partner distribution expense 113,051 26,699 51,063 — 190,813 Other operating expenses 69,877 22,751 46,674 53,761 193,063 Segment profit (loss) / Operating income (loss) $ 43,174 $ 3,948 $ 4,389 $ (53,761 ) (2,250 ) Other income (expense) (4,652 ) Income before income tax expense $ (6,902 ) Non-cash charges $ 1,270 $ 431 $ 6,233 22,934 36 weeks ended September 10, 2016 US Retail International Retail Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 652,359 $ 279,311 $ 187,558 $ — $ 1,119,228 Partner distribution expense 330,283 198,703 12,763 — 541,749 Operating revenues, net of Partner distribution expense 322,076 80,608 174,795 — 577,479 Other operating expenses 202,384 69,134 154,796 179,279 605,593 Segment profit (loss) / Operating income (loss) $ 119,692 $ 11,474 $ 19,999 $ (179,279 ) (28,114 ) Other income (expense) (10,610 ) Loss before income tax expense $ (38,724 ) Non-cash charges $ 4,976 $ 3,441 $ 20,932 80,680 36 weeks ended September 12, 2015 US Retail International Retail Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 659,984 $ 251,249 $ 133,411 $ — $ 1,044,644 Partner distribution expense 313,628 169,578 10,987 — 494,193 Operating revenues, net of Partner distribution expense 346,356 81,671 122,424 — 550,451 Other operating expenses 209,856 73,665 110,462 137,597 531,580 Segment profit (loss) / Operating income (loss) $ 136,500 $ 8,006 $ 11,962 $ (137,597 ) 18,871 Other income (expense) (10,504 ) Income before income tax expense $ 8,367 Non-cash charges $ 3,741 $ 860 $ 11,488 51,423 |
Earnings Per Share
Earnings Per Share | 8 Months Ended |
Sep. 10, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table provides reconciliations of net income and shares used in calculating basic EPS to those used in calculating diluted EPS (in thousands, except per share amounts): 12 weeks ended September 10, 2016 September 12, 2015 Basic Diluted Basic Diluted Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ (5,102 ) $ (5,102 ) $ (3,615 ) $ (3,615 ) Distributed and undistributed earnings allocated to participating securities — — — — Net income (loss) attributable to common stockholders $ (5,102 ) $ (5,102 ) $ (3,615 ) $ (3,615 ) Weighted-average common shares outstanding 55,668 55,668 54,467 54,467 Common share equivalents — — Weighted-average shares outstanding 55,668 54,467 Earnings (loss) per share $ (0.09 ) $ (0.09 ) $ (0.07 ) $ (0.07 ) 36 weeks ended September 10, 2016 September 12, 2015 Basic Diluted Basic Diluted Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ (19,992 ) $ (19,992 ) $ 3,995 $ 3,995 Distributed and undistributed earnings allocated to participating securities (15 ) (15 ) (46 ) (46 ) Net income (loss) attributable to common stockholders $ (20,007 ) $ (20,007 ) $ 3,949 $ 3,949 Weighted-average common shares outstanding 55,851 55,851 53,941 53,941 Common share equivalents — 2,053 Weighted-average shares outstanding 55,851 55,994 Earnings (loss) per share $ (0.36 ) $ (0.36 ) $ 0.07 $ 0.07 The weighted-average common shares outstanding for diluted EPS excluded approximately 4,416,000 and 5,020,000 potential common shares outstanding for the 12 weeks ended September 10, 2016 and September 12, 2015 and 4,329,000 for the 36 weeks ended September 10, 2016 due to the net loss attributable to common shareholders. Also excluded were approximately 1,850,000 and 576,000 potential common stock outstanding for the 12 weeks ended September 10, 2016 and September 12, 2015 , respectively, and 1,642,000 and 555,000 for the 36 weeks ended September 10, 2016 and September 12, 2015 , respectively, because the effect would have reduced weighted-average shares outstanding. Potential common stock outstanding results in fewer common share equivalents as a result of the treasury stock method. |
The Company and Significant A18
The Company and Significant Accounting Policies (Policies) | 8 Months Ended |
Sep. 10, 2016 | |
Accounting Policies [Abstract] | |
The Company | The Company Blackhawk Network Holdings, Inc., together with its subsidiaries (we, us, our, the Company), is a leading prepaid payment network utilizing proprietary technology to offer a broad range of prepaid gift, telecom and debit cards, in physical and electronic forms, as well as related prepaid products and payment services in the United States and 23 other countries . Our product offerings include single-use gift cards; loyalty, incentive and reward products and services; prepaid telecom products and prepaid financial services products, including general purpose reloadable (GPR) cards, and our reload network (collectively, prepaid products). We offer gift cards from leading consumer brands (known as closed loop) as well as branded gift and incentive cards from leading payment network card associations such as American Express, Discover, MasterCard and Visa (known as open loop) and prepaid telecom products offered by prepaid wireless telecom carriers. We also distribute GPR cards and operate a proprietary reload network named Reloadit, which allows consumers to reload funds onto their previously purchased GPR cards. We distribute these prepaid products across multiple high-traffic channels such as grocery, convenience, specialty and online retailers (referred to as retail distribution partners) in the Americas, Europe, Africa, Australia and Asia and provide these prepaid products and related services to business clients for their loyalty, incentive and reward programs. |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of Blackhawk Network Holdings, Inc. are unaudited. We have prepared our unaudited interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. We have condensed or omitted certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP pursuant to such rules and regulations. Accordingly, our interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K, filed with the SEC on March 2, 2016 (the Annual Report). We have prepared our condensed consolidated financial statements on the same basis as our annual audited consolidated financial statements and, in the opinion of management, have reflected all adjustments, which include only normal recurring adjustments, necessary to present fairly our financial position and results of operations for the interim periods presented. Our results for the interim periods are not necessarily reflective of the results to be expected for the year ending December 31, 2016 or for any other interim period or other future year. Our condensed consolidated balance sheet as of January 2, 2016 , included herein was derived from our audited consolidated financial statements as of that date but does not include all disclosures required by GAAP for annual financial statements, including notes to the financial statements. |
Seasonality | Seasonality A significant portion of gift card sales occurs in late December of each year during the holiday selling season. As a result, we earn a significant portion of revenues, net income and cash inflows during the fourth fiscal quarter of each year and remit the majority of the cash, less commissions, to our content providers in January of the following year. The timing of our fiscal year-end, December holiday sales and the related January cash settlement with content providers significantly increases our Cash and cash equivalents , Settlement receivables and Settlement payables balances at the end of each fiscal year relative to normal daily balances. The cash settlement with our content providers in January accounts for the majority of the use of cash from operating activities in our condensed consolidated statements of cash flows during our first three fiscal quarters. Additionally, our operating income may fluctuate significantly during our first three fiscal quarters due to lower revenues and timing of certain expenses during such fiscal periods. As a result, quarterly financial results are not necessarily reflective of the results to be expected for the year, any other interim period or other future year. |
Recently Issued or Adopted Accounting Pronouncements | Recently Issued or Adopted Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides additional guidance on the presentation and classification of certain items in the statement of cash flows . Early adoption is permitted and the standard shall be applied retrospectively. We early adopted ASU 2016-15 during our third quarter of 2016. Adoption did not result in significant changes to our existing accounting policies or presentation. In April and May 2016, the FASB issued ASU 2016-10, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606), which provides additional guidance, narrow-scope improvements and practical expedients to the new revenue standard (Topic 606) that will be applicable for reporting periods beginning after December 15, 2017. Early adoption is not permitted. Management is evaluating the impact of this guidance on our financial statements. In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments, which clarifies the requirements for assessing certain contingent put or call options in debt instruments. Early adoption is permitted and the standard shall be applied using a modified retrospective basis. We early adopted ASU 2016-06 during our third quarter of 2016 in conjunction with our issuance of the Convertible Senior Notes (see Note 3 — Financing ). Adoption did not result in significant changes to our existing accounting policies. In March 2016, the FASB issued ASU 2016-04 Liabilities—Extinguishment of Liabilities (Subtopic 405-20) : Recognition of Breakage for Certain Prepaid Stored-Value Cards, effective for fiscal years beginning after December 15, 2017. ASU 2016-04 defines liabilities related to the sale of certain prepaid stored-value cards as financial liabilities and provides guidance for the derecognition of liabilities and recognition of revenue related to the portion of the stored value that ultimately is not redeemed by customers (breakage). Early adoption is permitted and the standard shall be applied using either a modified retrospective basis or a retrospective basis. We early adopted ASU 2016-04 during our first quarter of 2016 on a modified retrospective basis because we believe that derecognition of these liabilities more accurately reflects the economics of such transactions. Accordingly, we recognized a cumulative adjustment benefit of $6.1 million , net of income taxes, to beginning Retained earnings as of January 3, 2016. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. We early adopted ASU 2016-09 during our first quarter of 2016 on a modified retrospective basis for the income statement impact of forfeitures and income taxes and have retrospectively applied ASU 2016-09 to our condensed consolidated statements of cash flows for the impact of excess tax benefits. Accordingly, we recognized a cumulative adjustment charge of $0.3 million for the adoption of the impact of forfeitures, net of income taxes, and a cumulative adjustment benefit of $10.1 million for the excess tax benefit for the exercise of warrants from prior fiscal years to beginning Retained earnings as of January 3, 2016. |
Breakage Revenue | Breakage Revenue We refer to the portion of the dollar value of prepaid-stored value cards that consumers do not ultimately redeem as breakage. Where we expect to be entitled to a breakage amount, we recognize revenue using estimated breakage rates ratably over the estimated card life, provided that a significant reversal of the amount of breakage revenue recognized is not probable and record adjustments to such estimates when redemption is remote or we are legally defeased of the obligation, if applicable. We estimate breakage rates based on historical redemption patterns, market-specific trends, escheatment rules and existing economic conditions for each program. In card programs where we do not expect to be entitled to a breakage amount, we recognize breakage revenue when we consider redemption remote or we are legally defeased of the obligation, if applicable. |
Stock-based Compensation | Stock-based Compensation As a result of our adoption of ASU 2016-09, we recognize the impact of forfeitures when they occur with no adjustment for estimated forfeitures and recognize excess tax benefits as a reduction of income tax expense regardless of whether the benefit reduces income taxes payable. Additionally, we recognize the cash flow impact of such excess tax benefits in operating activities in our condensed consolidated statements of cash flows. |
Reclassification | Reclassification In our condensed consolidated statements of income (loss), we have reclassified Marketing revenue to a separate line item, previously reported in Program, interchange, marketing and other fees and have renamed such line as Program and other fees . As a result of our retrospective adoption ASU 2015-17 in the fourth quarter of 2015 to classify all deferred income taxes as long-term assets or liabilities, we have retrospectively applied the guidance to our deferred income taxes as of September 12, 2015 . |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 8 Months Ended |
Sep. 10, 2016 | |
Business Combinations [Abstract] | |
Schedule of Initial Purchase Price Allocation | The following table presents our initial estimates of the purchase price allocation, and we may make adjustments to these amounts through the one year measurement period as we finalize information regarding our forecasts, valuation assumptions, income taxes and contingencies (in thousands): Cash $ 14,191 Settlement receivables 4,884 Settlement payables (3,272 ) Consumer and customer deposits (18,009 ) Other tangible liabilities, net (1,155 ) Debt (3,157 ) Deferred income taxes 2,066 Identifiable technology and intangible assets 45,540 Goodwill 37,525 Total purchase consideration $ 78,613 The following table presents our initial estimates of the purchase price allocation, and we may make adjustments to these amounts through the one year measurement period as we finalize information regarding our forecasts, valuation assumptions, income taxes and contingencies (in thousands): Cash $ 3,985 Consumer and customer deposits (5,429 ) Accounts payable and accrued operating expenses (9,860 ) Other tangible assets, net 893 Debt (5,807 ) Identifiable technology and intangible assets 52,460 Goodwill 67,706 Total purchase consideration $ 103,948 |
Summary of Identifiable Technology and Intangible Assets at Date of Acquisition | The following table presents the components of the identifiable technology and intangible assets and the estimated useful lives (in thousands): Fair Value Useful Life Customer relationships $ 39,230 10 years Backlog 1,610 3 years Technology 4,700 5 years Total identifiable technology and intangible assets $ 45,540 The following table presents the components of the identifiable technology and intangible assets and the estimated useful lives (in thousands): Fair Value Useful Life Customer relationships $ 27,570 10 years Backlog 10,780 3 years Domain name 10,520 10 years Technology 3,590 5 years Total identifiable technology and intangible assets $ 52,460 |
Summary of Pro Forma Financial Information | The following pro forma financial information summarizes the combined results of operations of us, GiftCards and Extrameasures as though we had been combined as of the beginning of fiscal 2015 (in thousands, except per share amounts): 12 weeks ended 36 weeks ended September 10, 2016 September 12, 2015 September 10, 2016 September 12, 2015 Total revenues $ 364,129 $ 364,400 $ 1,127,178 $ 1,068,882 Net income (loss) attributable to Blackhawk Network Holdings, Inc. (3,626 ) (3,959 ) (14,469 ) (1,124 ) Pro forma EPS—Basic $ (0.07 ) $ (0.07 ) $ (0.26 ) $ (0.02 ) Pro forma EPS—Diluted $ (0.07 ) $ (0.07 ) $ (0.26 ) $ (0.02 ) |
Financing (Tables)
Financing (Tables) | 8 Months Ended |
Sep. 10, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt | As a result of the Amendment and the Notes, the following table presents the amounts due by year of maturity for our term loan and the Notes (in thousands): As of July 27, 2016 2017 $ 10,000 2018 7,500 2019 7,500 2020 15,000 2021 110,000 2022 500,000 Total long-term debt $ 650,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 8 Months Ended |
Sep. 10, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value of Assets, Liabilities and Equity Instruments on Recurring Basis | The table below summarizes the fair values of these assets and liabilities as of September 10, 2016 , January 2, 2016 and September 12, 2015 (in thousands): September 10, 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 5,112 $ — $ — $ 5,112 Liabilities Contingent consideration $ — $ — $ 22,200 $ 22,200 January 2, 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 370,070 $ — $ — $ 370,070 Liabilities Contingent consideration $ — $ — $ — $ — September 12, 2015 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 5,070 $ — $ — $ 5,070 Liabilities Contingent consideration $ — $ — $ — $ — |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The changes in fair value of contingent consideration for the 36 weeks ended September 10, 2016 and September 12, 2015 are as follows (in thousands): 36 weeks ended September 10, 2016 September 12, 2015 Contingent Consideration Balance, beginning of period $ — $ 7,567 Issuance of contingent consideration 20,100 — Change in fair value of contingent consideration 2,100 (7,567 ) Balance, end of period $ 22,200 $ — |
Consolidated Financial Statem22
Consolidated Financial Statement Details (Tables) | 8 Months Ended |
Sep. 10, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Other Current Assets | The following tables represent the components of Other current assets , Other assets , Other current liabilities and Other liabilities as of September 10, 2016 , January 2, 2016 and September 12, 2015 consisted of the following (in thousands): September 10, 2016 January 2, 2016 September 12, 2015 Other current assets: Inventory $ 35,634 $ 36,528 $ 47,272 Deferred expenses 12,099 18,182 10,854 Income tax receivables 38,427 14,831 20,632 Other 37,759 33,778 29,192 Total other current assets $ 123,919 $ 103,319 $ 107,950 Other assets: Deferred program and contract costs $ 44,388 $ 50,717 $ 52,428 Other receivables 1,390 2,281 4,734 Income taxes receivable — 6,155 6,368 Deferred financing costs 2,871 2,100 2,002 Other 20,390 20,511 12,762 Total other assets $ 69,039 $ 81,764 $ 78,294 Other current liabilities : Payroll and related liabilities $ 25,425 $ 34,530 $ 23,103 Income taxes payable 3,158 3,216 2,122 Acquisition liability 11,250 — 607 Other payables and accrued liabilities 8,797 19,596 17,488 Total other current liabilities $ 48,630 $ 57,342 $ 43,320 Other liabilities: Acquisition liability $ 10,950 $ — $ — Payable to content provider — — 825 Income taxes payable 6,213 4,249 2,418 Deferred income and other liabilities 8,266 10,451 1,624 Total other liabilities $ 25,429 $ 14,700 $ 4,867 |
Schedule of Other Assets | The following tables represent the components of Other current assets , Other assets , Other current liabilities and Other liabilities as of September 10, 2016 , January 2, 2016 and September 12, 2015 consisted of the following (in thousands): September 10, 2016 January 2, 2016 September 12, 2015 Other current assets: Inventory $ 35,634 $ 36,528 $ 47,272 Deferred expenses 12,099 18,182 10,854 Income tax receivables 38,427 14,831 20,632 Other 37,759 33,778 29,192 Total other current assets $ 123,919 $ 103,319 $ 107,950 Other assets: Deferred program and contract costs $ 44,388 $ 50,717 $ 52,428 Other receivables 1,390 2,281 4,734 Income taxes receivable — 6,155 6,368 Deferred financing costs 2,871 2,100 2,002 Other 20,390 20,511 12,762 Total other assets $ 69,039 $ 81,764 $ 78,294 Other current liabilities : Payroll and related liabilities $ 25,425 $ 34,530 $ 23,103 Income taxes payable 3,158 3,216 2,122 Acquisition liability 11,250 — 607 Other payables and accrued liabilities 8,797 19,596 17,488 Total other current liabilities $ 48,630 $ 57,342 $ 43,320 Other liabilities: Acquisition liability $ 10,950 $ — $ — Payable to content provider — — 825 Income taxes payable 6,213 4,249 2,418 Deferred income and other liabilities 8,266 10,451 1,624 Total other liabilities $ 25,429 $ 14,700 $ 4,867 |
Schedule of Other Current Liabilities | The following tables represent the components of Other current assets , Other assets , Other current liabilities and Other liabilities as of September 10, 2016 , January 2, 2016 and September 12, 2015 consisted of the following (in thousands): September 10, 2016 January 2, 2016 September 12, 2015 Other current assets: Inventory $ 35,634 $ 36,528 $ 47,272 Deferred expenses 12,099 18,182 10,854 Income tax receivables 38,427 14,831 20,632 Other 37,759 33,778 29,192 Total other current assets $ 123,919 $ 103,319 $ 107,950 Other assets: Deferred program and contract costs $ 44,388 $ 50,717 $ 52,428 Other receivables 1,390 2,281 4,734 Income taxes receivable — 6,155 6,368 Deferred financing costs 2,871 2,100 2,002 Other 20,390 20,511 12,762 Total other assets $ 69,039 $ 81,764 $ 78,294 Other current liabilities : Payroll and related liabilities $ 25,425 $ 34,530 $ 23,103 Income taxes payable 3,158 3,216 2,122 Acquisition liability 11,250 — 607 Other payables and accrued liabilities 8,797 19,596 17,488 Total other current liabilities $ 48,630 $ 57,342 $ 43,320 Other liabilities: Acquisition liability $ 10,950 $ — $ — Payable to content provider — — 825 Income taxes payable 6,213 4,249 2,418 Deferred income and other liabilities 8,266 10,451 1,624 Total other liabilities $ 25,429 $ 14,700 $ 4,867 |
Schedule of Other Liabilities | The following tables represent the components of Other current assets , Other assets , Other current liabilities and Other liabilities as of September 10, 2016 , January 2, 2016 and September 12, 2015 consisted of the following (in thousands): September 10, 2016 January 2, 2016 September 12, 2015 Other current assets: Inventory $ 35,634 $ 36,528 $ 47,272 Deferred expenses 12,099 18,182 10,854 Income tax receivables 38,427 14,831 20,632 Other 37,759 33,778 29,192 Total other current assets $ 123,919 $ 103,319 $ 107,950 Other assets: Deferred program and contract costs $ 44,388 $ 50,717 $ 52,428 Other receivables 1,390 2,281 4,734 Income taxes receivable — 6,155 6,368 Deferred financing costs 2,871 2,100 2,002 Other 20,390 20,511 12,762 Total other assets $ 69,039 $ 81,764 $ 78,294 Other current liabilities : Payroll and related liabilities $ 25,425 $ 34,530 $ 23,103 Income taxes payable 3,158 3,216 2,122 Acquisition liability 11,250 — 607 Other payables and accrued liabilities 8,797 19,596 17,488 Total other current liabilities $ 48,630 $ 57,342 $ 43,320 Other liabilities: Acquisition liability $ 10,950 $ — $ — Payable to content provider — — 825 Income taxes payable 6,213 4,249 2,418 Deferred income and other liabilities 8,266 10,451 1,624 Total other liabilities $ 25,429 $ 14,700 $ 4,867 |
Goodwill (Tables)
Goodwill (Tables) | 8 Months Ended |
Sep. 10, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Goodwill | A summary of changes in goodwill during the 36 weeks ended September 10, 2016 is as follows (in thousands): September 10, 2016 US Retail International Retail Incentives & Rewards Total Balance, beginning of period $ 42,729 $ 49,156 $ 310,604 $ 402,489 Re-allocation of e-Commerce goodwill 2,671 — (2,671 ) — Acquisition of GiftCards 34,427 — 33,279 67,706 Acquisition of NimbleCommerce 10,365 — — 10,365 Acquisition of Extrameasures — — 27,160 27,160 Measurement period adjustment — — (1,234 ) (1,234 ) Foreign currency translation adjustments — 1,639 482 2,121 Balance, end of period $ 90,192 $ 50,795 $ 367,620 $ 508,607 |
Stockholers' Equity and Stock B
Stockholers' Equity and Stock Based Compensation (Tables) | 8 Months Ended |
Sep. 10, 2016 | |
Equity [Abstract] | |
Schedule of Changes in Additional Paid-In Capital | The following table presents the changes within Additional paid-in capital during the 36 weeks ended September 10, 2016 (in thousands except average price per share): BALANCE—January 2, 2016 $ 561,939 Cumulative adjustment upon modified retrospective adoption of ASU 2016-09 (see Note 1—The Company and Significant Accounting Policies) 650 Employee-related stock-based activity 28,940 Equity component of convertible notes issuance (see Note 3—Financing) 63,434 Equity component of convertible notes issuance costs (see Note 3—Financing) (1,792 ) Purchase of convertible notes hedges (see Note 3—Financing) (75,750 ) Proceeds from sale of warrants (see Note 3—Financing) 47,000 Deferred tax assets recognized for convertible notes (see Note 3—Financing) 5,161 Repurchase of common stock (996 shares at an average price of $34.98 per share) (34,843 ) BALANCE— September 10, 2016 $ 594,739 |
Schedule of Changes in Retained Earnings | The following table presents the changes within Retained earnings during the 36 weeks ended September 10, 2016 (in thousands): BALANCE—January 2, 2016 $ 207,973 Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and 2016-09 (see Note 1—The Company and Significant Accounting Policies) 15,854 Net loss (19,992 ) Dividends paid (44 ) BALANCE— September 10, 2016 $ 203,791 |
Schedule of Stock-Based Compensation Expense | The following table presents total stock-based compensation expense according to the income statement line in our condensed consolidated statements of income (loss) for the 12 and 36 weeks ended September 10, 2016 and September 12, 2015 (in thousands): 12 weeks ended 36 weeks ended September 10, 2016 September 12, 2015 September 10, 2016 September 12, 2015 Processing and services $ 1,364 $ 1,530 $ 4,259 $ 4,366 Sales and marketing 2,759 2,038 8,600 5,523 Cost of products sold 31 13 89 25 General and administrative 4,139 3,536 11,917 9,942 Total stock-based compensation expense $ 8,293 $ 7,117 $ 24,865 $ 19,856 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 8 Months Ended |
Sep. 10, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | The following tables present the key metrics used by our CODM for the evaluation of segment performance, including certain significant noncash charges (consisting of certain depreciation and amortization of property, equipment and technology and distribution partner stock-based compensation expense) which have been deducted from the segment profit amounts shown below, and reconciliations of these amounts to our consolidated financial statements (in thousands): 12 weeks ended September 10, 2016 US Retail International Retail Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 197,081 $ 100,069 $ 64,410 $ — $ 361,560 Partner distribution expense 103,601 69,841 4,921 — 178,363 Operating revenues, net of Partner distribution expense 93,480 30,228 59,489 — 183,197 Other operating expenses 58,192 25,158 50,779 59,161 193,290 Segment profit (loss) / Operating income (loss) $ 35,288 $ 5,070 $ 8,710 $ (59,161 ) (10,093 ) Other income (expense) (3,324 ) Loss before income tax expense $ (13,417 ) Non-cash charges $ 1,570 $ 772 $ 7,562 26,715 12 weeks ended September 12, 2015 US Retail International Retail Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 214,941 $ 83,671 $ 54,053 $ — $ 352,665 Partner distribution expense 101,890 56,972 2,990 — 161,852 Operating revenues, net of Partner distribution expense 113,051 26,699 51,063 — 190,813 Other operating expenses 69,877 22,751 46,674 53,761 193,063 Segment profit (loss) / Operating income (loss) $ 43,174 $ 3,948 $ 4,389 $ (53,761 ) (2,250 ) Other income (expense) (4,652 ) Income before income tax expense $ (6,902 ) Non-cash charges $ 1,270 $ 431 $ 6,233 22,934 36 weeks ended September 10, 2016 US Retail International Retail Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 652,359 $ 279,311 $ 187,558 $ — $ 1,119,228 Partner distribution expense 330,283 198,703 12,763 — 541,749 Operating revenues, net of Partner distribution expense 322,076 80,608 174,795 — 577,479 Other operating expenses 202,384 69,134 154,796 179,279 605,593 Segment profit (loss) / Operating income (loss) $ 119,692 $ 11,474 $ 19,999 $ (179,279 ) (28,114 ) Other income (expense) (10,610 ) Loss before income tax expense $ (38,724 ) Non-cash charges $ 4,976 $ 3,441 $ 20,932 80,680 36 weeks ended September 12, 2015 US Retail International Retail Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 659,984 $ 251,249 $ 133,411 $ — $ 1,044,644 Partner distribution expense 313,628 169,578 10,987 — 494,193 Operating revenues, net of Partner distribution expense 346,356 81,671 122,424 — 550,451 Other operating expenses 209,856 73,665 110,462 137,597 531,580 Segment profit (loss) / Operating income (loss) $ 136,500 $ 8,006 $ 11,962 $ (137,597 ) 18,871 Other income (expense) (10,504 ) Income before income tax expense $ 8,367 Non-cash charges $ 3,741 $ 860 $ 11,488 51,423 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 8 Months Ended |
Sep. 10, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliations of Net Income and Shares Used in Calculating Basic and Diluted EPS | The following table provides reconciliations of net income and shares used in calculating basic EPS to those used in calculating diluted EPS (in thousands, except per share amounts): 12 weeks ended September 10, 2016 September 12, 2015 Basic Diluted Basic Diluted Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ (5,102 ) $ (5,102 ) $ (3,615 ) $ (3,615 ) Distributed and undistributed earnings allocated to participating securities — — — — Net income (loss) attributable to common stockholders $ (5,102 ) $ (5,102 ) $ (3,615 ) $ (3,615 ) Weighted-average common shares outstanding 55,668 55,668 54,467 54,467 Common share equivalents — — Weighted-average shares outstanding 55,668 54,467 Earnings (loss) per share $ (0.09 ) $ (0.09 ) $ (0.07 ) $ (0.07 ) 36 weeks ended September 10, 2016 September 12, 2015 Basic Diluted Basic Diluted Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ (19,992 ) $ (19,992 ) $ 3,995 $ 3,995 Distributed and undistributed earnings allocated to participating securities (15 ) (15 ) (46 ) (46 ) Net income (loss) attributable to common stockholders $ (20,007 ) $ (20,007 ) $ 3,949 $ 3,949 Weighted-average common shares outstanding 55,851 55,851 53,941 53,941 Common share equivalents — 2,053 Weighted-average shares outstanding 55,851 55,994 Earnings (loss) per share $ (0.36 ) $ (0.36 ) $ 0.07 $ 0.07 |
The Company and Significant A27
The Company and Significant Accounting Policies (Detail) $ in Thousands | Sep. 10, 2016USD ($)country | Jan. 02, 2016USD ($) |
United States | ||
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Number of countries in which entity operates | country | 1 | |
Foreign Countries | ||
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Number of countries in which entity operates | country | 23 | |
Retained Earnings | ||
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and 2016-09 | $ 15,854 | |
Retained Earnings | New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-04 | ||
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and 2016-09 | $ 6,100 | |
Retained Earnings | New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09, Forfeiture Rate Component | ||
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and 2016-09 | (300) | |
Retained Earnings | New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09, Tax Benefits Of Warrants | ||
New Accounting Pronouncement, Early Adoption [Line Items] | ||
Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and 2016-09 | $ 10,100 |
Business Acquisitions (Details)
Business Acquisitions (Details) £ in Millions | Oct. 06, 2016USD ($) | Oct. 06, 2016GBP (£) | Jan. 05, 2016USD ($) | Sep. 10, 2016USD ($) | Jun. 18, 2016USD ($)payment | Mar. 26, 2016USD ($) | Sep. 12, 2015USD ($) | Jun. 18, 2016USD ($) | Sep. 10, 2016USD ($) | Sep. 12, 2015USD ($) | Jan. 02, 2016USD ($) |
Business Acquisition | |||||||||||
Discount rate | 17.00% | ||||||||||
Transition and acquisition expenses | $ 2,574,000 | $ 5,275,000 | $ 4,160,000 | $ 6,091,000 | |||||||
Goodwill | 508,607,000 | $ 382,803,000 | 508,607,000 | $ 382,803,000 | $ 402,489,000 | ||||||
Omni Prepaid | |||||||||||
Business Acquisition | |||||||||||
Purchase consideration | $ 103,900,000 | ||||||||||
Repayment of acquisition-related transaction expenses | $ 8,100,000 | ||||||||||
Transition and acquisition expenses | 400,000 | ||||||||||
Goodwill | $ 67,706,000 | ||||||||||
NimbleCommerce and Extrameasures | |||||||||||
Business Acquisition | |||||||||||
Purchase consideration | $ 58,500,000 | ||||||||||
Repayment of acquisition-related transaction expenses | 1,000,000 | ||||||||||
Transition and acquisition expenses | 900,000 | ||||||||||
Total consideration transferred | 78,600,000 | ||||||||||
Contingent consideration transferred | 20,100,000 | ||||||||||
Goodwill | $ 37,525,000 | 37,525,000 | |||||||||
Extrameasures | |||||||||||
Business Acquisition | |||||||||||
Contingent consideration, number of cash payments | payment | 3 | ||||||||||
Contingent earnout payable | $ 15,000,000 | $ 15,000,000 | |||||||||
Contingent earnout percentage for employees | 10.00% | ||||||||||
Achievers | |||||||||||
Business Acquisition | |||||||||||
Business combination, measurement period adjustment, deferred revenue | 3,600,000 | ||||||||||
Business combination, measurement period adjustment, intangibles | 1,900,000 | ||||||||||
Business combination, measurement period adjustment, goodwill | 1,200,000 | ||||||||||
Business combination, measurement period adjustment, deferred tax assets | 500,000 | ||||||||||
Grass Roots, Inc. | Subsequent Event | |||||||||||
Business Acquisition | |||||||||||
Purchase consideration | $ 119,100,000 | £ 93.7 | |||||||||
Operating Segments | |||||||||||
Business Acquisition | |||||||||||
Goodwill | 508,607,000 | 508,607,000 | 402,489,000 | ||||||||
Operating Segments | US Retail | |||||||||||
Business Acquisition | |||||||||||
Goodwill | 90,192,000 | 90,192,000 | 42,729,000 | ||||||||
Operating Segments | US Retail | NimbleCommerce | |||||||||||
Business Acquisition | |||||||||||
Goodwill, expected tax deductible amount | 1,400,000 | $ 1,400,000 | |||||||||
Goodwill | 10,400,000 | 10,400,000 | |||||||||
Operating Segments | Incentives and Rewards | |||||||||||
Business Acquisition | |||||||||||
Goodwill | $ 367,620,000 | $ 367,620,000 | $ 310,604,000 | ||||||||
Operating Segments | Incentives and Rewards | Extrameasures | |||||||||||
Business Acquisition | |||||||||||
Goodwill, expected tax deductible amount | 2,300,000 | 2,300,000 | |||||||||
Goodwill | $ 27,200,000 | $ 27,200,000 | |||||||||
Income Approach Valuation Technique | Extrameasures | |||||||||||
Business Acquisition | |||||||||||
Discount rate | 17.00% | ||||||||||
Income Approach Valuation Technique | Finite-Lived Intangible Assets | Minimum | Omni Prepaid | |||||||||||
Business Acquisition | |||||||||||
Discount rate | 6.00% | ||||||||||
Income Approach Valuation Technique | Finite-Lived Intangible Assets | Minimum | NimbleCommerce and Extrameasures | |||||||||||
Business Acquisition | |||||||||||
Discount rate | 9.00% | ||||||||||
Income Approach Valuation Technique | Finite-Lived Intangible Assets | Maximum | Omni Prepaid | |||||||||||
Business Acquisition | |||||||||||
Discount rate | 11.00% | ||||||||||
Income Approach Valuation Technique | Finite-Lived Intangible Assets | Maximum | NimbleCommerce and Extrameasures | |||||||||||
Business Acquisition | |||||||||||
Discount rate | 16.00% |
Business Acquisitions - Schedul
Business Acquisitions - Schedule of Initial Purchase Price Allocation (Details) - USD ($) $ in Thousands | Sep. 10, 2016 | Jun. 18, 2016 | Jan. 05, 2016 | Jan. 02, 2016 | Sep. 12, 2015 |
Business Acquisition | |||||
Goodwill | $ 508,607 | $ 402,489 | $ 382,803 | ||
Omni Prepaid | |||||
Business Acquisition | |||||
Cash | $ 3,985 | ||||
Consumer and customer deposits | (5,429) | ||||
Accounts payable and accrued operating expenses | (9,860) | ||||
Other tangible assets, net | 893 | ||||
Debt | (5,807) | ||||
Identifiable technology and intangible assets | 52,460 | ||||
Goodwill | 67,706 | ||||
Total purchase consideration | $ 103,948 | ||||
NimbleCommerce and Extrameasures | |||||
Business Acquisition | |||||
Cash | $ 14,191 | ||||
Settlement receivables | 4,884 | ||||
Settlement payables | (3,272) | ||||
Consumer and customer deposits | (18,009) | ||||
Other tangible liabilities, net | (1,155) | ||||
Debt | (3,157) | ||||
Deferred income taxes | 2,066 | ||||
Identifiable technology and intangible assets | 45,540 | ||||
Goodwill | 37,525 | ||||
Total purchase consideration | $ 78,613 |
Business Acquisitions - Summary
Business Acquisitions - Summary of Identifiable Technology and Intangible Assets at Date of Acquisition (Details) - USD ($) $ in Thousands | Jan. 05, 2016 | Jun. 18, 2016 |
Omni Prepaid | ||
Business Acquisition | ||
Total identifiable technology and intangible assets | $ 52,460 | |
NimbleCommerce and Extrameasures | ||
Business Acquisition | ||
Total identifiable technology and intangible assets | $ 45,540 | |
Customer relationships | Omni Prepaid | ||
Business Acquisition | ||
Total identifiable technology and intangible assets | $ 27,570 | |
Weighted average useful life (in years) | 10 years | |
Customer relationships | NimbleCommerce and Extrameasures | ||
Business Acquisition | ||
Total identifiable technology and intangible assets | $ 39,230 | |
Weighted average useful life (in years) | 10 years | |
Backlog | Omni Prepaid | ||
Business Acquisition | ||
Total identifiable technology and intangible assets | $ 10,780 | |
Weighted average useful life (in years) | 3 years | |
Backlog | NimbleCommerce and Extrameasures | ||
Business Acquisition | ||
Total identifiable technology and intangible assets | $ 1,610 | |
Weighted average useful life (in years) | 3 years | |
Domain name | Omni Prepaid | ||
Business Acquisition | ||
Total identifiable technology and intangible assets | $ 10,520 | |
Weighted average useful life (in years) | 10 years | |
Technology | Omni Prepaid | ||
Business Acquisition | ||
Total identifiable technology and intangible assets | $ 3,590 | |
Weighted average useful life (in years) | 5 years | |
Technology | NimbleCommerce and Extrameasures | ||
Business Acquisition | ||
Total identifiable technology and intangible assets | $ 4,700 | |
Weighted average useful life (in years) | 5 years |
Business Acquisitions - Summa31
Business Acquisitions - Summary of Pro Forma Financial Information (Details) - Giftcards and Extrameasures - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2016 | Sep. 12, 2015 | Sep. 10, 2016 | Sep. 12, 2015 | |
Business Acquisition | ||||
Total revenues | $ 364,129 | $ 364,400 | $ 1,127,178 | $ 1,068,882 |
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | $ (3,626) | $ (3,959) | $ (14,469) | $ (1,124) |
Pro forma EPS—Basic (in usd per share) | $ (0.07) | $ (0.07) | $ (0.26) | $ (0.02) |
Pro forma EPS—Diluted (in usd per share) | $ (0.07) | $ (0.07) | $ (0.26) | $ (0.02) |
Financing - Credit Agreement (D
Financing - Credit Agreement (Details) - USD ($) | Jul. 27, 2016 | Jan. 25, 2016 | Sep. 10, 2016 | Sep. 12, 2015 | Jul. 26, 2016 |
Debt Instrument [Line Items] | |||||
Proceeds from issuance of note payable | $ 100,000,000 | $ 250,000,000 | $ 0 | ||
Term loan, repayments | $ 463,750,000 | $ 11,250,000 | |||
Restated Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Restated credit agreement, maximum borrowing capacity | $ 700,000,000 | ||||
Term loan, incremental borrowing capacity | 300,000,000 | ||||
Restated Credit Agreement | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility, current borrowing capacity | 400,000,000 | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Term loan, repayments | 276,000,000 | ||||
Term loan, balance outstanding | 150,000,000 | $ 426,000,000 | |||
Term loan, incremental borrowing capacity | 150,000,000 | ||||
Term Loan | Restated Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Term loan, maximum borrowing capacity | $ 300,000,000 |
Financing - Convertible Senior
Financing - Convertible Senior Notes (Details) - Convertible Debt | Jul. 27, 2016USD ($)day$ / shares |
Debt Instrument [Line Items] | |
Debt instrument, face amount | $ 500,000,000 |
Debt instrument, stated interest rate | 1.50% |
Debt instrument, initial conversion rate per $1,000 principal amount of notes | 0.0200673 |
Debt instrument, conversion price (in usd per share) | $ / shares | $ 49.83 |
Debt instrument, initial debt component of the notes | $ 436,600,000 |
Debt instrument, estimated non-convertible debt borrowing rate | 4.10% |
Debt instrument, interest rate, effective percentage | 4.65% |
Debt instrument, non-cash accretion expense, percentage | 3.15% |
Convertible Senior Notes, Equity Component | |
Debt Instrument [Line Items] | |
Debt issuance costs | $ 1,800,000 |
Convertible Senior Notes, Debt Component | |
Debt Instrument [Line Items] | |
Debt issuance costs | $ 12,300,000 |
Debt Instrument, Redemption Option One | |
Debt Instrument [Line Items] | |
Debt instrument, trading days threshold | day | 20 |
Debt instrument, consecutive trading days threshold | 30 days |
Debt instrument, redemption price | 130.00% |
Debt Instrument, Redemption Option Two | |
Debt Instrument [Line Items] | |
Debt instrument, consecutive trading days threshold | 5 days |
Debt instrument, redemption price | 98.00% |
Debt instrument, number of business days | day | 5 |
Financing - Convertible Note He
Financing - Convertible Note Hedges and Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | Jul. 22, 2016 | Jul. 21, 2016 | Sep. 10, 2016 | Sep. 12, 2015 |
Debt Instrument [Line Items] | ||||
Aggregate payment for note hedges | $ 75,750 | $ 0 | ||
Proceeds from warrants | 47,000 | $ 0 | ||
Deferred tax asset, related to note hedges and warrants | 5,200 | |||
Additional Paid-in Capital | ||||
Debt Instrument [Line Items] | ||||
Aggregate payment for note hedges | 75,750 | |||
Adjustments to additional paid in capital, deferred tax assets, convertible notes | $ 5,161 | |||
Call Option | ||||
Debt Instrument [Line Items] | ||||
Aggregate payment for note hedges | $ 75,800 | $ 75,800 | ||
Call Option Warrants | ||||
Debt Instrument [Line Items] | ||||
Proceeds from warrants | $ 47,000 | $ 47,000 | ||
Shares issuable under warrant (in shares) | 10 | 10 | ||
Exercise price (in usd per share) | $ 61.20 | $ 61.20 |
Financing - Maturities of Long-
Financing - Maturities of Long-Term Debt (Details) $ in Thousands | Jul. 27, 2016USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2,017 | $ 10,000 |
2,018 | 7,500 |
2,019 | 7,500 |
2,020 | 15,000 |
2,021 | 110,000 |
2,022 | 500,000 |
Total long-term debt | $ 650,000 |
Financing - Shares Repurchased
Financing - Shares Repurchased (Details) - USD ($) shares in Thousands, $ in Millions | Jul. 27, 2016 | Sep. 10, 2016 | Sep. 10, 2016 |
Debt Disclosure [Abstract] | |||
Stock repurchased during period (in shares) | 1,000 | 996 | |
Stock repurchased during period | $ 34.8 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value of Assets, Liabilities and Equity Instruments on Recurring Basis (Detail) - Fair Value Measurements, Recurring - USD ($) $ in Thousands | Sep. 10, 2016 | Jan. 02, 2016 | Sep. 12, 2015 |
Liabilities | |||
Contingent consideration | $ 22,200 | $ 0 | $ 0 |
Money Market Mutual Funds | |||
Assets | |||
Cash and cash equivalents | 5,112 | 370,070 | 5,070 |
Level 1 | |||
Liabilities | |||
Contingent consideration | 0 | 0 | 0 |
Level 1 | Money Market Mutual Funds | |||
Assets | |||
Cash and cash equivalents | 5,112 | 370,070 | 5,070 |
Level 2 | |||
Liabilities | |||
Contingent consideration | 0 | 0 | 0 |
Level 2 | Money Market Mutual Funds | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | 0 |
Level 3 | |||
Liabilities | |||
Contingent consideration | 22,200 | 0 | 0 |
Level 3 | Money Market Mutual Funds | |||
Assets | |||
Cash and cash equivalents | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Sum38
Fair Value Measurements - Summary of Changes in Fair Value of Contingent Consideration Classified as Level 3 (Details) - USD ($) $ in Thousands | 8 Months Ended | |
Sep. 10, 2016 | Sep. 12, 2015 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance - beginning of period | $ 0 | $ 7,567 |
Issuance of contingent consideration | 20,100 | 0 |
Change in fair value of contingent consideration | 2,100 | (7,567) |
Balance - end of period | $ 22,200 | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Detail) $ in Millions | 8 Months Ended |
Sep. 10, 2016USD ($) | |
Business Acquisition | |
Fair value inputs, discount rate percentage | 17.00% |
Level 2 | Term Loan | |
Business Acquisition | |
Fair value of debt instrument | $ 150 |
Level 2 | Convertible Notes Payable [Member] | |
Business Acquisition | |
Fair value of debt instrument | $ 490.6 |
Consolidated Financial Statem40
Consolidated Financial Statement Details (Detail) - USD ($) $ in Thousands | Sep. 10, 2016 | Jan. 02, 2016 | Sep. 12, 2015 |
Other current assets: | |||
Inventory | $ 35,634 | $ 36,528 | $ 47,272 |
Deferred expenses | 12,099 | 18,182 | 10,854 |
Income tax receivables | 38,427 | 14,831 | 20,632 |
Other | 37,759 | 33,778 | 29,192 |
Total other current assets | 123,919 | 103,319 | 107,950 |
Other assets: | |||
Deferred program and contract costs | 44,388 | 50,717 | 52,428 |
Other receivables | 1,390 | 2,281 | 4,734 |
Income taxes receivable | 0 | 6,155 | 6,368 |
Deferred financing costs | 2,871 | 2,100 | 2,002 |
Other | 20,390 | 20,511 | 12,762 |
Total other assets | 69,039 | 81,764 | 78,294 |
Other current liabilities: | |||
Payroll and related liabilities | 25,425 | 34,530 | 23,103 |
Income taxes payable | 3,158 | 3,216 | 2,122 |
Acquisition liability | 11,250 | 0 | 607 |
Other payables and accrued liabilities | 8,797 | 19,596 | 17,488 |
Total other current liabilities | 48,630 | 57,342 | 43,320 |
Other liabilities: | |||
Acquisition liability | 10,950 | 0 | 0 |
Payable to content provider | 0 | 0 | 825 |
Accrued Income Taxes, Noncurrent | 6,213 | 4,249 | 2,418 |
Deferred income and other liabilities | 8,266 | 10,451 | 1,624 |
Total other liabilities | $ 25,429 | $ 14,700 | $ 4,867 |
Goodwill - Summary of Changes i
Goodwill - Summary of Changes in Goodwill (Detail) $ in Thousands | 3 Months Ended | 8 Months Ended |
Mar. 26, 2016USD ($)segment | Sep. 10, 2016USD ($) | |
Goodwill | ||
Balance, beginning of period | $ 402,489 | $ 402,489 |
Balance, end of period | 508,607 | |
Operating Segments | ||
Goodwill | ||
Balance, beginning of period | 402,489 | 402,489 |
Re-allocation of e-Commerce goodwill | 0 | |
Measurement period adjustment | (1,234) | |
Foreign currency translation adjustments | 2,121 | |
Balance, end of period | 508,607 | |
Operating Segments | GiftCards | ||
Goodwill | ||
Goodwill acquired during period | 67,706 | |
Operating Segments | NimbleCommerce | ||
Goodwill | ||
Goodwill acquired during period | 10,365 | |
Operating Segments | Extrameasures | ||
Goodwill | ||
Goodwill acquired during period | 27,160 | |
Operating Segments | US Retail | ||
Goodwill | ||
Balance, beginning of period | 42,729 | 42,729 |
Re-allocation of e-Commerce goodwill | 2,671 | |
Measurement period adjustment | 0 | |
Foreign currency translation adjustments | 0 | |
Balance, end of period | 90,192 | |
Operating Segments | US Retail | GiftCards | ||
Goodwill | ||
Goodwill acquired during period | 34,427 | |
Operating Segments | US Retail | NimbleCommerce | ||
Goodwill | ||
Goodwill acquired during period | 10,365 | |
Operating Segments | US Retail | Extrameasures | ||
Goodwill | ||
Goodwill acquired during period | 0 | |
Operating Segments | International Retail | ||
Goodwill | ||
Balance, beginning of period | 49,156 | 49,156 |
Re-allocation of e-Commerce goodwill | 0 | |
Measurement period adjustment | 0 | |
Foreign currency translation adjustments | 1,639 | |
Balance, end of period | 50,795 | |
Operating Segments | International Retail | GiftCards | ||
Goodwill | ||
Goodwill acquired during period | 0 | |
Operating Segments | International Retail | NimbleCommerce | ||
Goodwill | ||
Goodwill acquired during period | 0 | |
Operating Segments | International Retail | Extrameasures | ||
Goodwill | ||
Goodwill acquired during period | 0 | |
Operating Segments | Incentives and Rewards | ||
Goodwill | ||
Balance, beginning of period | $ 310,604 | 310,604 |
Re-allocation of e-Commerce goodwill | (2,671) | |
Measurement period adjustment | (1,234) | |
Foreign currency translation adjustments | 482 | |
Balance, end of period | 367,620 | |
Operating Segments | Incentives and Rewards | GiftCards | ||
Goodwill | ||
Goodwill acquired during period | 33,279 | |
Operating Segments | Incentives and Rewards | NimbleCommerce | ||
Goodwill | ||
Goodwill acquired during period | 0 | |
Operating Segments | Incentives and Rewards | Extrameasures | ||
Goodwill | ||
Goodwill acquired during period | $ 27,160 | |
ECommerce | ||
Goodwill | ||
Number of operating segments | segment | 2 |
Stockholders' Equity and Stoc42
Stockholders' Equity and Stock Based Compensation - Schedule of Changes in Additional Paid-in Capital (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Jul. 27, 2016 | Sep. 10, 2016 | Sep. 10, 2016 | Sep. 12, 2015 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 561,939 | |||
Payments for bond hedges | (75,750) | $ 0 | ||
Repurchase of common stock (996 shares at an average price of $34.98 per share) | $ (34,800) | |||
Ending balance | 594,739 | $ 594,739 | $ 547,230 | |
Stock repurchased during period (in shares) | 1,000 | 996 | ||
Average price per share of repurchased shares (in usd per share) | $ 34.98 | |||
Additional Paid-in Capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 561,939 | |||
Cumulative adjustment upon modified retrospective adoption of ASU 2016-09 | 650 | 650 | ||
Employee-related stock-based activity | 28,940 | |||
Equity component of convertible notes issuance | 63,434 | |||
Equity component of convertible notes issuance costs | (1,792) | (1,792) | ||
Payments for bond hedges | (75,750) | |||
Proceeds from sale of warrants | 47,000 | |||
Deferred tax assets recognized for convertible notes | 5,161 | |||
Repurchase of common stock (996 shares at an average price of $34.98 per share) | (34,843) | |||
Ending balance | $ 594,739 | $ 594,739 |
Stockholders' Equity and Stoc43
Stockholders' Equity and Stock Based Compensation - Schedule of Changes in Retained Earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2016 | Sep. 12, 2015 | Sep. 10, 2016 | Sep. 12, 2015 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 207,973 | |||
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | $ (5,102) | $ (3,615) | (19,992) | $ 3,995 |
Ending balance | 203,791 | $ 166,370 | 203,791 | $ 166,370 |
Retained Earnings | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 207,973 | |||
Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and 2016-09 | 15,854 | 15,854 | ||
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | (19,992) | |||
Dividends paid | (44) | |||
Ending balance | $ 203,791 | $ 203,791 |
Stockholders' Equity and Stoc44
Stockholders' Equity and Stock Based Compensation (Detail) | 8 Months Ended |
Sep. 10, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Weighted average exercise price (in usd per share) | $ / shares | $ 37.90 |
Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Stock awards and stock units granted during period (in shares) | 1,129,019 |
Performance Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Stock awards and stock units granted during period (in shares) | 172,300 |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Stock options granted during period (in shares) | 584,350 |
Stockholders' Equity and Stoc45
Stockholders' Equity and Stock Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2016 | Sep. 12, 2015 | Sep. 10, 2016 | Sep. 12, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Stock-based compensation expense | $ 8,293 | $ 7,117 | $ 24,865 | $ 19,856 |
Processing and services | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Stock-based compensation expense | 1,364 | 1,530 | 4,259 | 4,366 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Stock-based compensation expense | 2,759 | 2,038 | 8,600 | 5,523 |
Cost of products sold | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Stock-based compensation expense | 31 | 13 | 89 | 25 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Stock-based compensation expense | $ 4,139 | $ 3,536 | $ 11,917 | $ 9,942 |
Income Taxes (Detail)
Income Taxes (Detail) | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2016 | Sep. 12, 2015 | Sep. 10, 2016 | Sep. 12, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate (percentage) | 62.30% | 47.70% | 48.80% | 53.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Feb. 26, 2016claim | Sep. 10, 2016USD ($) | Jan. 02, 2016USD ($) |
Foreign Tax Jurisdiction | |||
Loss Contingencies [Line Items] | |||
Estimate of possible loss, tax liability | $ | $ 5 | $ 12 | |
Pending Litigation | CardLab, Inc. v. Blackhawk Network Holdings, Inc., Case No. 10851 | |||
Loss Contingencies [Line Items] | |||
Number of claims dismissed | claim | 2 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Information (Detail) $ in Thousands | 3 Months Ended | 8 Months Ended | |||
Sep. 10, 2016USD ($) | Mar. 26, 2016segment | Sep. 12, 2015USD ($) | Sep. 10, 2016USD ($)segment | Sep. 12, 2015USD ($) | |
Segment Reporting Information | |||||
Number of reportable segments | segment | 3 | ||||
Total operating revenues | $ 361,560 | $ 352,665 | $ 1,119,228 | $ 1,044,644 | |
Partner distribution expense | 178,363 | 161,852 | 541,749 | 494,193 | |
Operating revenues, net of Partner distribution expense | 183,197 | 190,813 | 577,479 | 550,451 | |
Other operating expenses | 193,290 | 193,063 | 605,593 | 531,580 | |
OPERATING INCOME (LOSS) | (10,093) | (2,250) | (28,114) | 18,871 | |
Other income (expense) | (3,324) | (4,652) | (10,610) | (10,504) | |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (13,417) | (6,902) | (38,724) | 8,367 | |
Operating Segments | US Retail | |||||
Segment Reporting Information | |||||
Total operating revenues | 197,081 | 214,941 | 652,359 | 659,984 | |
Partner distribution expense | 103,601 | 101,890 | 330,283 | 313,628 | |
Operating revenues, net of Partner distribution expense | 93,480 | 113,051 | 322,076 | 346,356 | |
Other operating expenses | 58,192 | 69,877 | 202,384 | 209,856 | |
OPERATING INCOME (LOSS) | 35,288 | 43,174 | 119,692 | 136,500 | |
Non-cash charges | 1,570 | 1,270 | 4,976 | 3,741 | |
Operating Segments | International Retail | |||||
Segment Reporting Information | |||||
Total operating revenues | 100,069 | 83,671 | 279,311 | 251,249 | |
Partner distribution expense | 69,841 | 56,972 | 198,703 | 169,578 | |
Operating revenues, net of Partner distribution expense | 30,228 | 26,699 | 80,608 | 81,671 | |
Other operating expenses | 25,158 | 22,751 | 69,134 | 73,665 | |
OPERATING INCOME (LOSS) | 5,070 | 3,948 | 11,474 | 8,006 | |
Non-cash charges | 772 | 431 | 3,441 | 860 | |
Operating Segments | Incentives and Rewards | |||||
Segment Reporting Information | |||||
Total operating revenues | 64,410 | 54,053 | 187,558 | 133,411 | |
Partner distribution expense | 4,921 | 2,990 | 12,763 | 10,987 | |
Operating revenues, net of Partner distribution expense | 59,489 | 51,063 | 174,795 | 122,424 | |
Other operating expenses | 50,779 | 46,674 | 154,796 | 110,462 | |
OPERATING INCOME (LOSS) | 8,710 | 4,389 | 19,999 | 11,962 | |
Non-cash charges | 7,562 | 6,233 | 20,932 | 11,488 | |
Corporate and Unallocated | |||||
Segment Reporting Information | |||||
Total operating revenues | 0 | 0 | 0 | 0 | |
Partner distribution expense | 0 | 0 | 0 | 0 | |
Operating revenues, net of Partner distribution expense | 0 | 0 | 0 | 0 | |
Other operating expenses | 59,161 | 53,761 | 179,279 | 137,597 | |
OPERATING INCOME (LOSS) | (59,161) | (53,761) | (179,279) | (137,597) | |
Non-cash charges | $ 26,715 | $ 22,934 | $ 80,680 | $ 51,423 | |
ECommerce | |||||
Segment Reporting Information | |||||
Number of operating segments | segment | 2 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliations of Net Income and Shares Used in Calculating Basic and Diluted EPS (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2016 | Sep. 12, 2015 | Sep. 10, 2016 | Sep. 12, 2015 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | $ (5,102) | $ (3,615) | $ (19,992) | $ 3,995 |
Basic | ||||
Distributed and undistributed earnings allocated to participating securities - basic | 0 | 0 | (15) | (46) |
Net income (loss) attributable to common stockholders, basic | $ (5,102) | $ (3,615) | $ (20,007) | $ 3,949 |
Weighted-average common shares outstanding-basic (in shares) | 55,668 | 54,467 | 55,851 | 53,941 |
Basic earnings (loss) per share (in usd per share) | $ (0.09) | $ (0.07) | $ (0.36) | $ 0.07 |
Diluted | ||||
Distributed and undistributed earnings allocated to participating securities - diluted | $ 0 | $ 0 | $ (15) | $ (46) |
Net Income (Loss) attributable to common stockholders, diluted | $ (5,102) | $ (3,615) | $ (20,007) | $ 3,949 |
Weighted-average common shares outstanding-basic (in shares) | 55,668 | 54,467 | 55,851 | 53,941 |
Common share equivalents (in shares) | 0 | 0 | 0 | 2,053 |
Weighted-average common shares outstanding-diluted (in shares) | 55,668 | 54,467 | 55,851 | 55,994 |
Diluted earnings (loss) per share (in usd per share) | $ (0.09) | $ (0.07) | $ (0.36) | $ 0.07 |
Earnings Per Share (Detail)
Earnings Per Share (Detail) - shares shares in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 10, 2016 | Sep. 12, 2015 | Sep. 10, 2016 | Sep. 12, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,850 | 576 | 1,642 | 555 |
Potential Common Shares Excluded Due to Net Loss | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4,416 | 5,020 | 4,329 |